Timminco Limited
TSX : TIM

Timminco Limited

May 12, 2009 16:29 ET

Timminco Reports First Quarter Fiscal 2009 Results

TORONTO, ONTARIO--(Marketwire - May 12, 2009) - Timminco Limited ("Timminco" or the "Company") (TSX:TIM) today announced its financial results for the first quarter of fiscal 2009 ended March 31, 2009 (all figures are in Canadian dollars unless otherwise stated).

First Quarter Fiscal 2009 Developments

- Shipped 131 metric tons of solar grade silicon at average selling price of $58 per kilogram, generating gross revenue of $7.6 million;

- Consolidated sales were $37.7 million compared with $47.6 million for the first quarter of 2008;

- Earnings before interest, taxes, depreciation, and amortization (EBITDA) (1) was negative $15.9 million compared with $1.4 million for the first quarter of 2008;

- Net loss was $22.3 million, or $0.20 per share, compared with a net loss of $0.6 million, or $0.01 per share, for the first quarter of 2008.

- Adjusted loss (2) was $22.6 million compared with an adjusted loss of $0.6 million for the first quarter of 2008;

- Completed commissioning of sixth and seventh solar grade silicon purification lines;

- Initiated cost containment plan that includes the temporary curtailment of silicon metal production, the reduction of solar grade silicon production to levels that are in line with customer orders and the deferral of further capacity expansion of the solar grade silicon facility pending recovery of demand for solar grade silicon;

- Completed an equity offering by way of a private placement to AMG Advanced Metallurgical Group N.V. and other investors, generating net proceeds of $24.2 million;

- Signed a non-binding letter of intent to merge the principal components of the Company's magnesium business with Winca Tech Limited, a China-based producer of magnesium products; and

- Commenced a wind down of operations at the Company's magnesium extrusion facility in Aurora, Colorado.

Developments Subsequent to the End of the First Quarter Fiscal 2009

- Completed an equity offering by way of a private placement to AMG Advanced Metallurgical Group N.V., generating net proceeds of approximately $14.7 million;

- Promoted John Fenger, President - Light Metals at Timminco, to President and Chief Operating Officer of Timminco;

- Announced an update on discussions with solar grade silicon customers, which have been focused on alternatives to existing contractual commitments in the context of the challenging market conditions affecting the solar industry, with the objective of maintaining long-term relationships;

- Amended its credit agreement to adjust the financial covenants, such that the Company is currently in compliance with these revised covenants as of March 31, 2009, and to extend the maturity of the revolving credit facility to July 2, 2010; and

- Executed a definitive agreement with respect to the merger of the principal components of the Company's magnesium business with Winca Tech Limited.

Global economic conditions have negatively impacted financial and industrial markets in North America, Europe and Asia during the first quarter of 2009. These developments have had a substantial impact on the Company's operations. Many of the Company's customers are experiencing financial constraints and have reduced or deferred their purchases. The resulting reduction in revenue, combined with unabsorbed overheads and significant capital expenditures, has led the Company to raise additional common equity capital in February and April 2009. In addition, the Company has during the first quarter and subsequent to the quarter end announced certain initiatives in both its Silicon and Magnesium Groups to reduce expenditures and accelerate reduction of working capital. The Company believes that difficult economic and market conditions will continue to impact its operations and financial results in the foreseeable future.

"The weakness in the global economy and its impact on solar energy and silicon metal industries has had a significant impact on our business operations and our financial results," said Dr. Heinz Schimmelbusch, Chairman of the Board and Chief Executive Officer of Timminco. "Specifically, our financial results were impacted by lower demand for each of our Silicon Group product lines, significant costs incurred in our solar grade silicon operations as we continued to refine our process and utilized expanded and available capacity to recycle by-products of production, as well as reorganization costs related to the closure of our Aurora, Colorado magnesium facility as part of our divestiture of that business."

Mr. Schimmelbusch added, "We have established a solar grade silicon business based on our proprietary process to produce upgraded metallurgical silicon. However, faced with extremely challenging market conditions, in the short term we are focused on containing costs and preserving capital to favourably position the Company when the solar energy and silicon metal markets improve. We remain confident in the long-term prospects for the solar energy industry and believe that upgraded metallurgical silicon will have a significant role to play in the future of the industry."

Financial Results

Timminco has two reporting segments: the Silicon Group, which includes the silicon metal and solar grade silicon product lines, and the Magnesium Group, which includes the magnesium extrusion, fabrication and specialty metals product lines.

Consolidated sales for the first quarter of 2009 were $37.7 million compared with $47.6 million for the first quarter of 2008. The decrease was the result of lower sales for the Company's Silicon Group, which were partially offset by higher sales for the Company's Magnesium Group.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2009 was negative $15.9 million compared with EBITDA of $1.4 million for the first quarter of 2008. The decrease is primarily attributable to significant costs incurred in the Company's solar grade silicon operations.

Net loss for the first quarter of 2009 was $22.3 million, or $0.20 per share, compared with a net loss of $0.6 million, or $0.01 per share, for the first quarter of 2008. Net loss for the first quarter of fiscal 2009 included reorganization costs of $3.8 million related to closure of the Magnesium Group's Aurora, Colorado facility as well as an additional write down of $0.7 million the impairment of the Fundo Wheels investment and $0.1 million for environmental remediation costs, which were offset by future recoverable tax losses of $4.9 million. Excluding these items, adjusted loss for the first quarter of 2009 was $22.6 million.

During the first quarter of 2009, Timminco invested approximately $19.5 million to support the expansion of its solar grade silicon production facility. On March 17, 2009, the Company announced that it will defer further capacity expansion of its solar grade silicon facility until customer orders for solar grade silicon exceed existing capacity.

Cash, cash equivalents and short-term investments at March 31, 2009 were $6.7 million compared with $4.6 million at December 31, 2008. The Company had funds available to it through its revolving credit facility at March 31, 2009 of US$5.5 million. During the first quarter, Timminco completed an equity offering of 7.04 million common shares at a price of $3.55 per share for aggregate gross proceeds of $25.0 million (net proceeds of $24.2 million). Subsequent to quarter end, the Company completed an equity offering of 7.4 million common shares at a price of $2.02 per share for aggregate gross proceeds of $15.0 million (net proceeds of approximately $14.7 million). Also subsequent to quarter end, Timminco amended its credit agreement to adjust the financial covenants, such that the Company is currently in compliance with these revised covenants as of March 31, 2009, and to extend the maturity of its revolving credit facility from March 31, 2010 to July 2, 2010.

Silicon Group

Sales for the Silicon Group for the first quarter of 2009 were $23.6 million compared with $34.7 million for the first quarter of 2008. The decrease was due to lower sales volumes and lower average selling prices for each of the solar grade silicon and silicon metal product lines. Shipments of solar grade silicon for the first quarter of fiscal 2009 were 131 metric tons at an average price of $58 per kilogram, generating gross revenue of $7.6 million compared with shipments for the first quarter of fiscal 2008 of 100 metric tons at an average price of $65 per kilogram, generating gross revenue of $6.5 million. Sales of silicon metal for the first quarter of fiscal 2009 were $16.4 million compared with $28.2 million for the first quarter of fiscal 2008. The weakness of the Canadian dollar relative to the US dollar and the Euro had a favourable impact on sales of $2.7 million for the first quarter of 2008.

Gross profit for the first quarter of 2009 was negative $10.3 million, or negative 43.4% of sales, compared with $4.5 million, or 12.9% of sales, for the first quarter of 2008. The decrease in gross profit was primarily the result of lower sales volumes of the Company's solar grade silicon and silicon metal product lines, as well as higher costs for the Company's solar grade silicon product line. Based upon progress made in the fourth quarter of 2008, during the first quarter of 2009 the Company proceeded with further efforts to optimize its production process, primarily through the introduction of a new feedstock combination that was intended to reduce the costs of UMSi production and enhance the consistency of UMSi production at the quality and purity levels contemplated under customer contracts. The new feedstock combination, however, created unexpected processing challenges and resulted in lower production yields of UMSi than had been achieved in the fourth quarter. A consequence of lower production yields is the generation of a higher level of by-products requiring reprocessing, and this reprocessing utilizes production capacity. Given the completion of the commissioning of the sixth and seventh purification lines in the quarter, the Company had higher available production capacity and therefore higher production costs in the quarter. The production costs attributable to the reprocessing of by-products into saleable material cannot be fully recovered through the selling price of these products and therefore are appropriately expensed as incurred in the period as inventory is carried at the lower of average production cost and net realizable value.

EBITDA for the first quarter of 2009 was negative $11.7 million compared with $2.5 million for the first quarter of 2008. The decrease is primarily the result of the significant costs incurred in the Company's solar grade silicon operations.

Net loss for the first quarter of 2009 was $10.5 million compared with net income of $1.0 million for the first quarter of 2008.

Magnesium Group

Sales for the Magnesium Group for the first quarter of 2009 were $14.1 million compared with $12.8 million for the first quarter of 2008. The increase is primarily the result of price increases across most product lines in response to higher magnesium metal costs, which were partially offset by lower sales volumes due to the weak US economy.

Gross profit for the first quarter of 2009 was $1.0 million, or 6.8% of sales, compared with $1.2 million, or 9.6% of sales, for the first quarter of 2008.

EBITDA for the first quarter of 2009 was negative $1.1 million compared with $0.1 million for the first quarter of 2008.

Net loss for the first quarter of 2009 was $5.1 million compared with a net loss of $0.1 million for the first quarter of 2008. The increase in net loss is primarily attributable to reorganization costs related to the closure of the Aurora, Colorado facility.

Subsequent to quarter end, Timminco executed a definitive agreement to merge the principal components of its Magnesium Group with Winca Tech Limited, a China-based producer of magnesium products. The merger is expected to be completed mid-2009. In addition, in February 2009, the Company commenced a wind down of operations at its magnesium extrusion facility in Aurora, Colorado.



Financial Summary
($000's except per share amounts)
Three Months Ended (unaudited)
Mar. 31, Mar. 31,
2009 2008
Sales 37,744 47,557

Gross profit (9,299) 5,701

Gross profit percentage (24.6%) 12.0%

EBITDA (15,947) 1,354

Net income (22,317) (556)

Loss per common share, basic and diluted (0.20) (0.01)
Working capital (excluding available cash items) 27,541 38,969
Total assets 306,658 185,674
Cash, cash equivalents and short-term investments 6,748 11,338
Bank debt 53,100 11
Total long term liabilities 34,213 25,057
Weighted average number of 108,874 103,999
Common shares outstanding, basic and diluted



Summary of Operations
--------------------------------------------------------------------------
($000's, except per share amounts) Three Months Ended (unaudited)
--------------------------------------------------------------------------
First Quarter 2009 First Quarter 2008
--------------------------------------------------------------------------
Sales
--------------------------------------------------------------------------
Silicon 23,638 34,731
--------------------------------------------------------------------------
Magnesium 14,106 12,826
--------------------------------------------------------------------------
Total 37,744 47,557
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Gross Profit(1)
--------------------------------------------------------------------------
Silicon (10,257) 4,470
--------------------------------------------------------------------------
Magnesium 958 1,231
--------------------------------------------------------------------------
Total (9,299) 5,701
--------------------------------------------------------------------------

--------------------------------------------------------------------------

--------------------------------------------------------------------------
Gross Profit Percentage(1)
--------------------------------------------------------------------------
Silicon (43.4%) 12.9%
--------------------------------------------------------------------------
Magnesium 6.8% 9.6%
--------------------------------------------------------------------------
Total (24.6%) 12.0%
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Net Income (Loss)
--------------------------------------------------------------------------
Silicon (10,541) 1,012
--------------------------------------------------------------------------
Magnesium (5,095) (67)
--------------------------------------------------------------------------
Corporate / Other (6,681) (1,501)
--------------------------------------------------------------------------
Total (22,317) (556)
--------------------------------------------------------------------------

--------------------------------------------------------------------------
EBITDA(1)
--------------------------------------------------------------------------
Silicon (11,720) 2,472
--------------------------------------------------------------------------
Magnesium (1,139) 125
--------------------------------------------------------------------------
Corporate / Other (3.088) (1,243)
--------------------------------------------------------------------------
Total (15,947) 1,354
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Adjusted Income (Loss)(1)
--------------------------------------------------------------------------
Silicon (15,451) 1,088
--------------------------------------------------------------------------
Magnesium (1,177) (59)
--------------------------------------------------------------------------
Corporate / Other (5,983) (1,604)
--------------------------------------------------------------------------
Total (22,611) (575)
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Loss per common share, basic and diluted (0.20) (0.01)

--------------------------------------------------------------------------
Weighted average number of common shares 108,874 103,999
outstanding, basic and diluted
--------------------------------------------------------------------------
(1) See "Non-GAAP Accounting
Definitions".
--------------------------------------------------------------------------


Timminco will file its unaudited consolidated financial statements for the first quarter ended March 31, 2009 and related management's discussion and analysis (MD&A) with securities regulatory authorities within the applicable timelines. Such financial statements, MD&A and related documents will be available through SEDAR at www.sedar.com as well as through Timminco's website, www.timminco.com.

Conference call

Timminco will host a conference call today (Tuesday, May 12, 2009) at 5:00 pm ET to discuss its financial results for the first quarter ended March 31, 2009. To access the conference call by telephone, dial 416-644-3417 or 1-800-732-0232. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Tuesday, May 19, 2009 at midnight. To access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 21303846#.

A live audio webcast of the conference call will be also available at www.timminco.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be available for replay at www.timminco.com following the live presentation.

About Timminco

Timminco produces solar grade silicon for the solar photovoltaic energy industry. Using its proprietary, patent pending technology, Timminco purifies silicon metal into solar grade silicon (also known as upgraded metallurgical silicon) for use in the manufacture of solar cells. Timminco also produces silicon metal, magnesium extrusions and other specialty metals for use in a broad range of industrial applications serving the aluminum, chemical, pharmaceutical, electronics and automotive industries.

Cautionary Note on Forward-Looking Information

This news release contains "forward-looking information", as such term is defined in applicable Canadian securities legislation, concerning Timminco's future financial or operating performance and other statements that express management's expectations or estimates of future developments, circumstances or results. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "believes", "anticipates", "budget", "scheduled", "estimates", "forecasts", "intends", "plans" and variations of such words and phrases, or by statements that certain actions, events or results "may", "will", "could", "would" or "might" "be taken", "occur" or "be achieved". In this news release, such information includes statements regarding: Timminco's liquidity; the impact of global economic conditions on Timminco's operations and financial results in 2009; the significance of the future role of upgraded metallurgical silicon on the solar energy industry; and the completion of the proposed merger of Timminco's magnesium business with that of Winca Tech Limited. Forward-looking information is based on a number of assumptions and estimates that, while considered reasonable by management based on the business and markets in which Timminco operates, are inherently subject to significant operational, economic and competitive uncertainties and contingencies.
Timminco cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause Timminco's actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to: global economic conditions; customer commitments under long-term contracts for solar grade silicon; limitations under existing credit facilities; cost of solar grade silicon production; protection of intellectual property rights; increasing and maintaining the purity of solar grade silicon; selling prices for solar grade silicon; price volatility for silicon metal; pricing and availability of raw materials for silicon metal and solar grade silicon production; expansion of solar grade silicon production and sales; production capacity expansion at the Becancour facilities; limited history with solar grade silicon production; dependence upon power supply for silicon metal production; closure of magnesium facilities and execution of proposed joint venture for the magnesium business; price volatility for magnesium metal; magnesium supply chain interruptions; dependence upon key customers of magnesium extruded and fabricated products; financing requirements for capital expenditures; foreign currency exchange; dependence upon key executives and employees; customer concentration; completion and integration of potential acquisitions, partnerships or joint ventures; risks with foreign operations and suppliers; environmental, health and safety laws and liabilities; equipment failures; transportation disruptions; conflicts of interest; intellectual property infringement claims; new regulatory requirements; labour disputes; and changes in tax laws. These factors are discussed in greater detail in Timminco's Annual Information Form for the year ended December 31, 2008, and in Timminco's most recent Management's Discussion and Analysis, each of which is available via the SEDAR website at www.sedar.com. Although Timminco has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this news release is made as of the date of this news release and Timminco disclaims any intention or obligation to update or revise such information, except as required by applicable law.

Non-GAAP Financial Measures

(1) EBITDA is not a recognized measure under Canadian generally accepted accounting principles ("GAAP"). Management believes that, in addition to net income (loss), EBITDA is a useful supplemental measure as it provides investors with an indication of cash available for distribution prior to debt service, past pension service obligations, capital expenditures, income taxes and restructuring cash payments. Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net income (loss) determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Company's method of calculating EBITDA may differ from other companies and, accordingly, EBITDA may not be comparable to measures used by other companies. EBITDA is calculated as follows:



----------------------------------------------------------------------------
EBITDA (Earnings Before Interest Taxes
Depreciation and Amortization)
----------------------------------------------------------------------------
($000's)
----------------------------------------------------------------------------
Three Months Ended (unaudited)
----------------------------------------------------------------------------
First Quarter First Quarter
2009 2008
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Net loss (22,317) (556)
----------------------------------------------------------------------------
Add back(subtract):
----------------------------------------------------------------------------
Income taxes (4,876) 84
----------------------------------------------------------------------------
Impairment of Fundo Wheels AS 698 -
----------------------------------------------------------------------------
Equity in the loss (earnings) of Fundo Wheels AS - (103)
----------------------------------------------------------------------------
Interest 934 12
----------------------------------------------------------------------------
Amortization of intangible assets 235 138
----------------------------------------------------------------------------
Amortization of property, plant and equipment 3,534 1,430
----------------------------------------------------------------------------
Reorganization costs 3,752 -
----------------------------------------------------------------------------
Environmental remediation costs 132 -
----------------------------------------------------------------------------
Stock-based compensation 1,961 349
----------------------------------------------------------------------------

----------------------------------------------------------------------------
EBITDA (15,947) 1,354
----------------------------------------------------------------------------


(2) Adjusted income (loss) is not a recognized measure under GAAP. However, management believes that, in addition to net income (loss), adjusted income (loss) is a useful supplemental measure as it provides investors with an indication of the ongoing profits generated on products sold to customers after corporate overhead expenses. Management defines adjusted income (loss) as net income before income taxes, impairment of investment in Fundo Wheels, equity in the loss of Fundo Wheels, environmental remediation costs and reorganization costs. Adjusted income (loss) is calculated as follows:



--------------------------------------------------------------------------
Adjusted Income (Loss)
--------------------------------------------------------------------------
($000's)
--------------------------------------------------------------------------
Three Months Ended (unaudited)
--------------------------------------------------------------------------
First Quarter 2009 First Quarter 2008
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Net loss (22,317) (556)
--------------------------------------------------------------------------
Add back(subtract):
--------------------------------------------------------------------------
Income taxes (4,876) 84
--------------------------------------------------------------------------
Impairment of Fundo Wheels AS 698 -
--------------------------------------------------------------------------
Equity in the loss (earnings) of
Fundo Wheels AS - (103)
--------------------------------------------------------------------------
Reorganization costs 3,752 -
--------------------------------------------------------------------------
Environmental remediation costs 132 -
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Adjusted Income (Loss) (22,611) (575)
--------------------------------------------------------------------------


(3) Gross profit is not a recognized measure under GAAP. Management believes that in addition to net income (loss), gross profit is a useful supplemental measure as it provides investors with an indication of the profits generated on products sold to customers before corporate overhead expenses. Investors should be cautioned, however, that gross profit should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the Company's profitability. The Company's method of calculating gross profit may differ from other companies and accordingly, gross profit may not be comparable to measures used by other companies. Gross profit is calculated as follows:



--------------------------------------------------------------------------
Gross Profit
--------------------------------------------------------------------------
($000's)
--------------------------------------------------------------------------
Three Months Ended (unaudited)
--------------------------------------------------------------------------
First Quarter 2009 First Quarter 2008
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Sales 37,744 47,557
--------------------------------------------------------------------------
Cost of Goods Sold 47,043 41,856
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Gross Profit (9,299) 5,701
--------------------------------------------------------------------------



Timminco Limited

Consolidated Balance Sheets
(unaudited)

As at
March 31 December 31
2009 2008
----------------------------------------------------------------------------
(in thousands of Canadian dollars)

ASSETS
Current Assets
Cash and cash equivalents $ 6,631 $ 4,512
Short term investments 117 116
Accounts receivable 30,196 37,243
Due from affiliated companies 481 -
Inventories 91,258 95,920
Prepaid expenses and deposits 2,551 2,353
Future income taxes 7,898 3,235
------------ ------------
139,132 143,379
------------ ------------

Long term receivables 1,329 1,329
Property, plant and equipment 136,068 130,847
Employee future benefits 510 510
Future income taxes 5,721 5,825
Intangible assets 7,071 4,305
Goodwill 16,827 16,827
------------ ------------
$ 306,658 $ 303,022
------------ ------------
------------ ------------

LIABILITIES
Current Liabilities
Bank indebtedness $ 53,100 $ 51,439
Accounts payable and accrued liabilities 53,609 61,087
Liability related to customer advances 45,107 25,568
Due to affiliated companies 8,156 7,661
Future income taxes 608 -
Current portion of long term provisions 5,150 2,501
------------ ------------
165,730 148,256

Other long term liabilities 171 195
Advances from customers - 18,036
Employee future benefits 19,457 19,080
Future income taxes 8,324 9,284
Long term provisions 6,261 5,966
------------ ------------
199,943 200,817
------------ ------------

SHAREHOLDERS' EQUITY
Capital stock 223,856 199,688
Equity component of convertible notes 2,521 2,521
Contributed surplus 7,030 5,069
Deficit (126,522) (104,205)
Accumulated other comprehensive loss (170) (868)
------------ ------------
106,715 102,205
------------ ------------
$ 306,658 $ 303,022
------------ ------------
------------ ------------



Timminco Limited

Consolidated Statements of Operations and Comprehensive Loss
(unaudited)

----------------------------------------------------------------------------
Three months ended March 31 2009 2008
----------------------------------------------------------------------------
(in thousands of Canadian dollars, except
for loss per share information)

Sales $ 37,744 $ 47,557

Expenses
Cost of goods sold 47,043 41,856
Selling and administrative 6,932 4,077
Amortization of property, plant and
equipment 3,534 1,430
Amortization of intangible assets 235 138
Interest 934 12
Foreign exchange loss 1,677 619
------------ ------------

Loss before the undernoted (22,611) (575)

Environmental remediation costs (132) -
Reorganization costs (3,752) -
Equity in the earnings of Fundo Wheels AS - 103
Realized foreign exchange loss on Fundo
investment bankruptcy (698) -
------------ ------------

Loss before income taxes (27,193) (472)
Income tax expense (recovery)
Current 34 8
Future (4,910) 76
------------ ------------
(4,876) 84

------------ ------------
Net loss $ (22,317) $ (556)
------------ ------------

Other comprehensive income, net of
income taxes

Unrealized gain on translating financial
statements of self-sustaining foreign
operation - Fundo Wheels AS - 719

Realized foreign exchange loss on Fundo
investment bankruptcy (Note 11) 698 -

------------ ------------
Comprehensive income (loss) $ (21,619) $ 163
------------ ------------
------------ ------------

Loss per common share - basic and diluted $ (0.20) $ (0.01)
------------ ------------
------------ ------------

Weighted average number of common shares
outstanding - basic and diluted 108,874,021 103,999,368
------------ ------------
------------ ------------



Consolidated Statements of Deficit

----------------------------------------------------------------------------
Three months ended March 31 2009 2008
----------------------------------------------------------------------------
(in thousands of Canadian dollars)

Deficit at beginning of period $ (104,205) $ (81,596)
Net loss (22,317) (556)
------------ ------------

Deficit at end of period $ (126,522) $ (82,152)
------------ ------------
------------ ------------



Timminco Limited

Consolidated Statements of Cash Flows
(unaudited)

----------------------------------------------------------------------------
Three months ended March 31 2009 2008
----------------------------------------------------------------------------
(in thousands of Canadian dollars)

Cash flows from (used in) operating
activities
Net loss $ (22,317) $ (556)
Adjustments for items not requiring cash
Amortization of property, plant and
equipment 3,534 1,430
Amortization of intangible assets 235 138
Accretion of convertible debt 204 158
Stock based compensation 1,961 349
Reorganization costs 3,752 -
Environmental remediation costs 132 73
Benefits plan expense 1,126 852
Unrealized foreign exchange loss 1,132 -
Future income taxes (4,910) 76
Equity earnings of Fundo Wheels AS - (103)
Realized foreign exchange loss on Fundo
investment bankruptcy 698 -
Defined benefit pension plan contributions (749) (384)
Expenditures charged against provision for
reorganization (486) (85)
Expenditures charged against other
long term provisions (153) (71)

Change in non-cash working capital items
(Increase) decrease in accounts receivable 6,566 (1,048)
(Increase) decrease in inventories 4,225 (5,315)
(Increase) decrease in prepaid expenses
and deposits (198) 600
Increase (decrease) in accounts payable
and accrued liabilities 690 (475)
Decrease in deposits (88) -
------------ ------------
(4,646) (4,361)
------------ ------------

Cash flows from (used in) investing
activities
Capital expenditures (21,071) (16,524)
Development costs capitalized (3,001) -
Decrease in short term investments - 9,305
Investment in convertible notes - (1,851)
Proceeds on disposal of property, plant
and equipment 4,810 -
Other - (404)
------------ ------------
(19,262) (9,474)
------------ ------------

Cash flows from (used in) financing
activities
Issuance of common shares 24,168 11
Increase in bank indebtedness 1,661 (10)
Repayment of other liabilities and long
term debt (24) (22)
(Decrease) increase in loans from
affiliated company 222 (115)
------------ ------------
26,027 (136)
------------ ------------

Net increase (decrease) in cash during
the period 2,119 (13,971)

Cash and cash equivalents at beginning
of period 4,512 19,463

------------ ------------
Cash and cash equivalents at end of
period $ 6,631 $ 5,492
------------ ------------
------------ ------------

Supplemental cash flow information
Cash paid during the period:
Interest $ 590 $ 221
------------ ------------
------------ ------------
Income taxes $ 47 $ 92
------------ ------------
------------ ------------


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