Timminco Ltd (TSX:TIM)
Shares Issued 104,004,588
Last Close 6/3/2008 $30.60
Wednesday June 04 2008 - Street Wire

by Lee M. Webb

Timminco Ltd., a hot solar play trading on the Toronto Stock Exchange (TSX), treated investors attending its annual general meeting in Toronto on May 29 to an upbeat presentation about the company's accomplishments over the past year and its bright prospects as a low-cost producer of solar-grade silicon, thanks to a secret proprietary process.

Chief executive officer Heinz Schimmelbusch also offered some thoughts on short sellers and recent negative media coverage, warning critics of the black-box project that they will be sued if they cross some company-determined line.

Shuffle and schmooze

Annual meetings are often sparsely attended, but Timminco had to scramble to book a bigger room to accommodate a larger turnout than previously expected. As part of the room shuffle announced on May 26, the company also had to change the time of the meeting, moving it from 1 p.m. to 4 p.m. on May 29.

The increased interest in Timminco's annual meeting was apparently prompted in part by a recent spate of less than boosterish news reports about the company, which has seen its stock price rocket from pennies to more than $30 per share over the past year.

In another late wrinkle, Timminco executives decided to schmooze with some reporters in a media briefing in another meeting room at Toronto's Royal York Hotel an hour ahead of the shareholders meeting.

It is not clear just how many reporters made it to the schmooze session, but The Globe and Mail was represented at both the media briefing and the subsequent shareholders meeting.

As Globe reporters Andy Hoffman and Derek DeCloet remarked in a double-bylined report on May 30, it has been almost 15 years since Mr. Schimmelbusch has garnered this much attention.

It is not likely that Mr. Schimmelbusch has fond memories of the media attention he received when he was caught up in a billion-dollar trading scandal in the early 1990s.

In 1993, Mr. Schimmelbusch was sacked as chief executive officer of the once mighty Metallgesselschaft AG, a German conglomerate that he brought to the brink of bankruptcy with some bad bets in oil futures that reportedly led to approximately $1-billion in trading losses.

If Timminco's brass hoped that the May 29 media briefing would get reporters back onside pumping out puff pieces, the fact that the Globe's May 30 article by Mr. Hoffman and Mr. DeCloet opened with a reference to the Metallgesselschaft debacle might not be seen as an auspicious harbinger.

In any case, following the special premeeting chinwag with reporters, Mr. Schimmelbusch and his fellow Timminco executives bustled off to the main event.

Dog-and-pony show

Before calling the annual general meeting to order, Mr. Schimmelbusch apologized for any inconvenience caused by the late room shuffle and rescheduling.

"I won't apologize for the fact that Timminco's share price today, at the date of the annual meeting, has reached its all-time high and costs $30 per share," Mr. Schimmelbusch went on to a round of applause.

The humdrum official business of the meeting including electing the slate of seven directors and, among other things, amending the company's stock option plan was wrapped up in less than 15 minutes and Mr. Schimmelbusch moved on to deliver a "management presentation," commonly known as a dog-and-pony show, to the approximately 100 people in attendance.

Mr. Schimmelbusch kicked off the upbeat presentation with a review of key Timminco events through 2007, which he characterized as a "pivotal year" marking the company's transformation to a low-cost supplier of solar-grade silicon for the booming solar energy industry.

Timminco's leader went on to offer something of a primer on solar silicon, noting that the company's plant in Becancour, Que., had been engaged in the production of silicon metal for more than 30 years before turning its attention to the production of much more valuable solar-grade silicon.

Most solar-grade silicon is produced through what is known as the Siemens process, which yields polysilicon that has a 99.99999-per-cent purity level.

Polysilicon is actually too pure to be used in solar cells, so the purity level is reduced to 99.999 per cent through adding primarily boron and phosophorous in a process known as "doping."

According to Mr. Schimmelbusch, the process is extremely expensive and can cost an experienced producer between $25 per kilogram and $30 per kilogram while a new entrant could face costs as high as $70 per kilogram.

Timminco claims that it has developed a secret low-cost proprietary process to produce upgraded metallurgical silicon that meets the 99.999-per-cent purity level of solar-grade silicon.