Timminco Silences Its Critics: Is It for Real?

Timminco (TIMNF.PK) was, without a doubt, one of the great solar plays of 2007. The Toronto-based company, which has yet to turn a profit, claims it has come up with a process to produce solar-grade metallurgical silicon with cell efficiencies of about 14%. Metallurgical silicon allows for important energy cost savings in the production process (~70%), so being able to approach cell efficiencies reached by conventional solar-grade silicon processes could mean an important cost advantage for metallurgical silicon producers when measured on a per watt basis.

Eventually, certain people began publicly doubting Timminco's claim, partially because no hard evidence had been put forth (besides a few positive client testimonials), and partially because some were eager to cover short positions probably taken while the stock was shooting up. As a result, the stock came under pressure.

Finally, last week, Timminco silenced its critics by announcing that a third-party had verified and lauded its technology, and by upgrading a major contract. The third-party is Photon Consulting, a solar market research agency with a strong reputation.

But, while the Photon folks seem to have nothing but good things to say about the Timminco process, others are doubting whether Photon has sufficient technology and production process expertise to make a call on the veracity of Timminco's claims (from what I could gather, these "others" are mainly competitors). Judging by the stock's moves since the announcement, it seems as though investors are siding with management for now.

The full results of Photon's analysis won't be known until the close of markets Wednesday. Seeing as the Photon principal in charge of this project said that Timminco had the potential to "reshap[e] the silicon industry," it will certainly be interesting to hear the full details of what he has to say. Interested in finding out more about what could be a breakthrough in solar cell manufacturing? Be sure to tune in to the call on Wednesday at EST4:30pm. All details are available here (PDF document).

DISCLOSURE: The author does not have a position on Timminco.

Comments

[sliman:]

Much bigger companies have tried and failed to produce silicon cheaply. Be careful. I have no position.

2008 May 14 09:13 AM

[TIMCO:]

Timminco's analysts have no experience in evaluating the cost and capacity, and proprietary position, of a plant that purifies smelted silicon.

In the absence of this experience and independent verifiable information on Timminco's capacity and costs, Timminco's analysts have wrongly relied on a previous announcement of a contract with Q-Cells to support their blind Timminco recommendations. In fact, Q-Cells had not provided any information that analysts or investors should have reasonably relied upon to verify Timminco's capacity and cost claims.

2008 May 14 11:52 AM

[Piggybank:]

Actually Q-cells did react when Timminco's share's began to drop recently due to criticism. And they supported them, read this:

today.reuters.com/news...

2008 May 14 01:48 PM

[aquaculture:]

The solar commodity market is complex (and getting more so by the day) and investors should be aware of this. There is also a management quality issue here. If they know the market and their own products, why have they not given a revenue guidance?
What is their definition of solar grade si?
Solar grade costs > $200 $ these days. Yet Timminco sold for around $60???
Is it upgraded metallurgical grade of some 99% + purity to be blended, with virgin poly?

Timminco has been unprofitable.
Will it be profitable with solar grade si?
Timminco's recently available patent application reveals a crude high temp. oxidation process (they heat commodity si in a rotary oven powered by NATURAL GAS) that uses turbulance, stirring and large amounts of slag and omits significant prior art that itself is proven to be uneconomical.
So the key issue to investors is how many times the silicon must pass through the process to achieve the desired purity.
The company has not said what its energy costs are for each pass, how much slag is used or how much commodity grade si is needed to produce 1 kg of solar grade si.
NO ONE, BESIDES MANAGEMENT, CAN GIVE A GUIDANCE, NOR CAN ANYONE MAKE A REASONABLE ESTIMATE OF FUTURE EPS.

What photon consulting will say is how great the future of the silicon solar sector is, what a blessing upgraded metallurgical si is to the sector and that they are very happy to have Timminco on the solar train bla bla -all very true.

And Q cells AG?
On april 21 they acknowledged that Q cells is not involved with Timminco's disclosures on individual batch purities.

2008 May 14 01:50 PM

[aquaculture:]

Since very few people translate German correctly these days, I'll write on Q cells, their plans, motivations later. Interesting stuff! Gotta trade.

2008 May 14 03:26 PM

[Piggybank:]

However you put it, ill take the words of Q-cells chief Milner above some speculator's anyday. You can argue that Q-cells doesn't have all the info, though i think they have more than enough of it due to their close cooperation, but i would certainly argue that the people trying to bash on Timminco lately should atleast have even far less inside info in this company, and their arguments are far more speculative.

I don't own shares in Timminco, i just follow this story because Q-cells came out to support them and i have a heavy interrest in Q-cells, wich is a superb company in the solar space and my favourite in the sector by far. Usually when Q-cells says something good of an other company, ill check it to see it move on it, Timminco did just that when Q-cells backed them. Criticism about timminco is easy to make and their can easily be ulterior motives for this to do, so i would take the criticism with a grain of salt.

The financials however are an other matter. Realisticly speaking, the market cap is high, and it would need Timminco to make a far higher revenue and certainly profit to justify this valuation. I won't argue on this regard, hence why i don't own shares. However i do not see much point to bash on their product, and i get the feeling that some may see a good short selling opportunity in this stock and hence would bash on the product to make certain of a fair down move.

2008 May 14 04:38 PM