Third Quarter Fiscal 2009 Developments

- Consolidated sales were $19.1 million compared with $69.0 million for third quarter of 2008;

- Earnings before interest, taxes, depreciation and amortization (EBITDA)(1) were negative $7.7 million, compared with positive $6.9 million for the third quarter of 2008;

- Net loss was $18.5 million, or $0.15 per share, compared with a net loss of $13.7 million, or $0.13 per share, for the third quarter of 2008;

- Restarted two of three electric arc furnaces in response to increased customer demand for silicon metal;

- Completed a $25.0 million two-year subordinated term loan financing from Investissement Quebec;

- Settled a claim with a solar grade silicon customer regarding repayment of an outstanding deposit liability of US$3.9 million through the issuance of 3.4 million Timminco common shares;

- Issued 7.2 million Timminco common shares in payment of US$3.25 million of principal and accrued interest on a convertible note;

- Completed the wind down of operations at the magnesium extrusion facility in Aurora, Colorado; and

- Completed the sale of the principal components of the remaining magnesium business to Applied Magnesium International.

Developments Subsequent to the End of the Third Quarter Fiscal 2009

- Restarted the third of three electric arc furnaces for the production of silicon metal in response to improved customer demand for silicon metal;

- Settled a claim with a solar grade silicon customer regarding repayment of an outstanding deposit liability and accrued interest of $20.5 million through the issuance of 10.0 million Timminco common shares. The settlement concluded negotiations with all solar grade silicon customers who had advanced deposits against future shipments of solar grade silicon in 2008, and who had claimed earlier this year that their contracts were terminated; and

- Amended the Credit Agreement with Bank of America, N.A., to provide for revised financial covenants, requiring minimum EBITDA levels and maximum capital expenditure levels. As well, the minimum availability reserve will increase from US$2.0 million to US$7.0 million as of February 1, 2010 and for a period of 45 days, which will effectively reduce availability under the revolving credit facility by US$5.0 million during such period.

"Our financial results for the third quarter continued to reflect the extremely challenging conditions of our markets, which have severely impacted the financial results throughout 2009," said Dr. Heinz Schimmelbusch, Chairman of the Board and Chief Executive Officer of Timminco. "We are, however, experiencing improved demand for silicon metal products from Timminco's traditional chemical, aluminum and electronics customers and have responded by restarting all three of our silicon metal furnaces. Based on these developments, we expect, in December, to produce silicon metal at capacity on an annualized basis."

"We continue to make progress in our efforts to meet the higher quality demanded by our solar grade silicon customers in the current market environment where there appears to be a large supply of low-priced polysilicon. Ongoing refinements to our proprietary purification process and the development of ingoting techniques are advancing towards the goal of enabling our customers to produce wafers and cells with characteristics that are indistinguishable from those of wafers and cells made from polysilicon."

Financial Results

The Company believes that the extremely difficult conditions in its markets have eased subsequent to the end of the third quarter of 2009 for its silicon metal operations based upon demand from traditional customers for silicon metal products in both the fourth quarter of 2009 and in 2010. However, market conditions in the solar industry continue to adversely influence the development of the Company's solar grade silicon product line, including demand for its solar grade silicon products, and are expected to continue to impact its operations and financial results in the foreseeable future, thereby subjecting the Company to substantial liquidity risk and creating uncertainty as to the ability of the Company to continue as a going concern.

The Company's financial results for the three and nine-month periods ended September 30, 2009 include the performance of its Silicon Group, which includes the silicon metal and solar grade silicon product lines. The results for each of these periods also include the operations of the Company's Magnesium Group, which consisted of magnesium extrusion, fabrication and specialty metals product lines, until the completion of its divestiture on July 22, 2009.

Consolidated Results Highlights
($000's except per share amounts)
           Three Months Ended (unaudited)      Nine Months Ended (unaudited)
         Sept. 30, 2009   Sept. 30, 2008    Sept. 30, 2009   Sept. 30, 2008
Sales            19,063           68,990            79,100          179,835
Gross
 profit       
 (loss)          (5,425)          13,465           (23,772)          31,440
Gross
 profit
 (loss)
 percentage      (28.5%)           19.5%            (30.1%)           17.5%
EBITDA           (7,692)           6,889           (33,499)          14,856
Net loss        (18,522)         (13,727)          (64,819)         (21,331)
Loss per
 common
 share,
 basic and
 diluted          (0.15)           (0.13)            (0.56)           (0.20)
Working
 capital
 (excluding
 available
 cash and
 bank
 indebtedness)      190           58,351               190           58,351
Total assets    280,449          242,547           280,449          242,547
Cash, cash
 equivalents
 and short-
 term
 investments      5,335            2,525             5,335            2,525
Bank debt        43,421           24,349            43,421           24,349
Total
 long-term
 liabilities     70,529           48,594            70,529           48,594
Weighted
 average
 number of
 Common shares
 outstanding,
 basic and
 diluted        122,925          104,147           116,607          104,076

Net loss for the third quarter of 2009 ("Q3-09") was $18.5 million, or $0.15 per share, compared with a net loss of $13.7 million, or $0.13 per share, for the third quarter of 2008 ("Q3-08"). Net loss for Q3-09 included a loss of $2.2 million related to the disposal of the magnesium business. Net loss for the first nine months of fiscal 2009 ("YTD-09") was $64.8 million, or $0.56 per share, compared with a net loss of $21.3 million, or $0.20 per share, for the corresponding period of 2008 ("YTD-08"). Net loss for YTD-09 included a loss of $2.2 million related to the disposal of the magnesium business, reorganization costs of $3.8 million related to closure of the Magnesium Group's Aurora, Colorado facility, an additional write down of $0.7 million on the impairment of the Fundo Wheels investment and environmental remediation costs of $0.4 million and future income tax expenses of $1.8 million.

Cash, cash equivalents and short-term investments at September 30, 2009 were $5.3 million compared with $4.5 million at December 31, 2008. The Company had US$0.2 million of availability under its revolving credit facility at September 30, 2009.

During Q3-09, the Company received the proceeds of a two-year subordinated term loan in the principal amount of $25.0 million from Investissement Quebec ("IQ").

Silicon Group

During Q3-09, the Silicon Group faced challenging market conditions for both its silicon metal and solar grade silicon products.

Silicon Group sales for Q3-09 were $17.1 million compared with $51.1 million for Q3-08. For Q3-09, the weakness of the Canadian dollar against the U.S. dollar and the Euro had a favourable impact on sales of $0.4 million compared to Q3-08. Sales for YTD-09 were $47.7 million compared with $130.9 million for YTD-08. For YTD-09, the weakness of the Canadian dollar against the U.S. dollar and the Euro had a favourable impact on sales of $3.7 million compared to YTD-08. The decreases in sales were due to lower sales volumes and reduced average selling prices for both silicon metal and solar grade silicon.

Silicon metal product sales for Q3-09 were $16.6 million compared with $35.6 million for Q3-08. Sales of silicon metal for YTD-09 were $40.0 million compared with $95.1 million for YTD-08. The decreases in silicon metal product sales resulted from lower volumes in 2009 due to weak demand for silicon metal globally.

Solar grade silicon net revenues for Q3-09 were $0.4 million (16 mt) compared with $15.6 million (300 mt) for Q3-08. Shipment of 80 mt of solar grade silicon to AMG Conversion was accounted for as deferred revenue. Solar grade silicon net revenues for YTD-09 were $9.0 million (171 mt) compared with $35.8 million (621 mt) for YTD-08.

The average selling price for solar grade silicon shipped for Q3-09 was $39 per kg compared with $62 per kg for Q3-08 and the average selling price of solar grade silicon shipped for YTD-09 was $48 per kg compared with $59 per kg for YTD-08. The decreases in the average selling price for solar grade silicon reflect the weaker market conditions in 2009.

Gross profit for Q3-09 was negative $5.4 million (negative 32% of sales) compared with positive gross profit of $10.1 million (20% of sales) for Q3-08. Gross profit for YTD-09 was negative $23.8 million (negative 49% of sales) compared with positive $24.7 million (19% of sales) for YTD-08. The negative margin for the Silicon Group is primarily attributable to the low volume of both silicon metal and solar grade silicon produced relative to available production capacity, Cost of sales of the solar grade silicon product are comprised of raw materials, utilities, labour and an allocation of manufacturing overhead expenses, including depreciation. Total solar grade silicon product cost of sales for Q3-09 and YTD-09 were $4.9 million and $35.3 million, respectively. EBITDA for Q3-09 was negative $9.9 million compared with positive EBITDA of $8.8 million for Q3-08. EBITDA for YTD-09 was negative $29.5 million compared with $20.4 million for YTD-08.

Net loss for Q3-09 was $13.5 million compared with a net income of $5.6 million for Q3-08. Net loss for YTD-09 was $42.5 million compared with net income of $12.4 million for YTD-08. The net losses were due to lower revenues from both the silicon metal and solar grade silicon product lines, as well as higher cost of production for solar grade silicon, amortization costs related to property, plant and equipment and income taxes in Q3-09 and YTD-09.

Magnesium Group

During Q3-09, Timminco completed the sale of the principal components of its remaining magnesium business to Applied Magnesium International Limited, in which Timminco acquired a 19.5% equity interest. The Company also completed the closure of its former magnesium extrusion facility in Aurora, Colorado.