Timminco Limited
TSX : TIM

Timminco Limited

April 08, 2009 18:37 ET

Timminco Signs Definitive Agreements With Winca to Merge Magnesium Businesses

TORONTO, ONTARIO--(Marketwire - April 8, 2009) - Timminco Limited ("Timminco") (TSX:TIM) announced today that, further to its announcement on February 18, 2009, Timminco has executed definitive agreements with Winca Tech Limited, a leading Chinese-based producer of magnesium products ("Winca"), to merge the principal components of Timminco's magnesium and specialty metals business with all of Winca's magnesium operations. The combined business will be known as Applied Magnesium International ("AMI") and will be based in Denver, Colorado. Timminco's equity interest in AMI will be approximately 20%. Personnel from Timminco's magnesium business are expected to fill key management positions within AMI, and Timminco will also have representation on the board of directors of AMI, along with Winca and independent representatives.

The merger is expected to be completed by mid 2009. In the interim, Timminco and Winca will operate under certain inventory transitional arrangements that are designed to ensure that customer orders for magnesium products and specialty metals continue to be fulfilled and allow Timminco to negotiate future customer supply agreements for the benefit of AMI. Completion of the merger is subject to a number of conditions, including financing for AMI's operations, Timminco's senior lender approval, and negotiation and execution of ancillary agreements and arrangements regarding the structure and operation of the combined business.

In addition, Timminco confirmed that the closure of its Aurora magnesium extrusion operations and the recovery of working capital from its magnesium business are proceeding as planned. Timminco expects to generate net cash proceeds from these announced plans during 2009.

"We are very pleased to have concluded these binding agreements with Winca," said John Fenger, President - Light Metals of Timminco. "We have identified numerous ways in which the merger of Timminco's and Winca's operations will allow the two companies to build a strong market position in magnesium and specialty metals, resulting in an enhanced position to serve existing and new customers via a compelling and stable value proposition."

"More than ever, we believe that the manufacturing presence and technology synergies that exist between Winca and Timminco will allow AMI to become one of the lowest cost and best quality magnesium manufacturers in the world," said Dr. He Xu, Chairman of Winca. "Our customers will be the ultimate winners with this partnership in that AMI can now offer them high quality products via a much lower cost and more reliable supply chain coupled with a highly experienced technical sales and marketing team," added Dr. Aaron Fu, President of Winca USA.

Established in 1996, Winca specializes in the production and sales of magnesium alloy sacrificial anodes for electro-chemical corrosion control, high purity magnesium, magnesium alloys, and magnesium extrusions. The Winca College of Magnesium, located in Hebi, Henan province of China, was co-established by Winca, the Hebi Institute of Technology and the China Magnesium Association.

About Timminco

Timminco is a leader in the production of low cost solar grade silicon for the rapidly growing 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: the timing and completion of the proposed merger of Timminco's and Winca's magnesium operations; the future growth, competitive position and profitability of AMI; and the recovery of working capital and generating net cash proceeds from the announced events. 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: deteriorating global economic conditions; future growth plans and strategic objectives; liquidity risks; limitations under existing credit facilities; long-term contracts for supplying solar grade silicon; solar grade silicon production cost targets; selling prices of solar grade silicon and silicon metal; achieving and maintaining the purity of solar grade silicon; production capacity expansion at the Becancour facilities; pricing and availability of raw materials for the silicon business; customer capabilities in producing ingots; limited history with the solar grade silicon business; dependence upon power supply for silicon metal production; protection of intellectual property rights; government and economic incentives; closure of the magnesium facilities and the completion of related proposed transactions; cost and availability of magnesium metal; dependence upon key customers of magnesium extruded and fabricated products; credit risk exposure; customer concentration; equipment failures; labour disputes; foreign currency exchange; dependence upon key executives and employees; completion and integration of potential acquisitions, partnerships or joint ventures; risks with foreign operations and suppliers; environmental, health and safety laws and liabilities; transportation disruptions; conflicts of interest; interest rates; intellectual property infringement claims; new regulatory requirements; changes in tax laws; and climate change. These factors are discussed in greater detail in Timminco's Annual Information Form for the year ended December 31, 2008, and 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.

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