As Timminco Shares Go Up, LDK Deal Raises Questions

By Ucilia Wang

Timminco (TIMNF.PK) shares rose 17.2% Friday after LDK Solar (LDK) announced a deal to process silicon into solar wafers for Q-Cells AG Thalheim (QCLSF.PK).

LDK said it had signed an 11-year contract to process refined metallurgical silicon provided by Q-Cells, the world's largest solar-cell maker and one that doesn't produce its own silicon, starting this year.

What's the connection with Timminco?

Well, there may not be one. But the announcement set tongues wagging about the source of silicon, and investors and analysts have wondered whether Timminco is the silicon supplier.

It's not a difficult connection to make. Timminco, based in Canada, has announced deals to sell upgraded metallurgical silicon to Q-Cells. Meanwhile, Q-Cells has announced contracts to buy wafers from LDK without saying where the silicon will come from.

LDK, headquartered in China, is building its own silicon production plants, but plans to make higher-grade silicon from scratch, rather than upgrading less-pure metallurgical-grade silicon.

The announcement drew more attention than usual, as the mystery launched a torrent of speculation about the possibility of a polyamorous relationship among the three high-profile companies.

Timminco is one of a handful of companies to have signed contracts to sell upgraded metallurgical silicon, which is potentially less costly than the silicon that has been widely used to make solar cells. Skeptics have questioned whether the refining technology can really deliver silicon that is good enough for solar cells more cheaply.

Meanwhile, Timminco announced earlier this year that it had inked a contract with a "leading manufacturer of wafers" to sell about 1,150 metric tons of its refined metallurgical silicon through December 2009. Timminco began shipping silicon to this unnamed customer earlier this year.

Timminco CEO Heinz C. Schimmelbusch wouldn't say whether the wafer maker was LDK when asked by an analyst during a second-quarter earnings call last month (see LDK 2Q Profit Triples, Margin Falls).

The company's investor relations representative also declined to comment on LDK's announcement Friday. LDK and Q-Cells representatives didn't immediately respond to emails requesting more information.

But investors seemed to have come to their own conclusions, pushing Timminco's stock up C$2 to close at C$13.65 ($12.88) per share Friday. LDK's stock rose a tiny 0.12% to close at $40.76 per share.

The company said:

Under the contract with Q-Cells, LDK will process at least 20,000 metric tons of solar-grade silicon from 2008 to 2018, with the possibility of processing 21,000 metric tons more during the same period.

The contract is related to a previous announcement that LDK would provide Q-Cells with up to 5 gigawatts of silicon wafers between 2009 and 2018.

Comments

[canb888:]

I am so disappointed with Greentechmedia for:
1. Making a very positive news for LDK look like it is negative, look at the tilte of this article - need I say more?
2. Not having the facts straight, i.e., that this is related to a previously announced 5GW deal. No, the previous 6GW deal stands and there is a NEW MOU for a 5GW deal attached to this new contract.

2008 Sep 15 02:04 PM

[ahmed:]

You idiot. This is a new 5GW deal which LDK has inked with Q-cells.
Why do seeking alpha hire such morons to write important articles? I demand immediate apology to all the investors of LDK.

2008 Sep 15 07:54 PM

[ibcnu2day69:]

greentech media articles are obviously biased consistently against LDK...

i think their reporters/editors should be fired!!!

2008 Sep 15 11:38 PM

[tessant:]

what does Greentech have against LDK?
The bias sucks...
Solarfeeds is unbiased...

2008 Sep 16 12:13 AM

[morley61212:]

I need to ask.
What is the connection with Greentechmedia and Asensio?. This sound very much like his "reasoning" and both LDK and Timminco has indeed been on his bashing list.

This finally moves GreentechMedia away from my unbiased list and into the "paid talking heads for naked shorters" list.
Ucilia Wang and her "sources" should be invistigated.

2008 Sep 16 02:03 AM

[chulove1:]

You Ucilia Wang seems got nothing else to say to bring LDK down! Questioning the contract between two big companys?? I demand immediate apology to all the investors of LDK too

2008 Sep 16 03:33 AM

[chulove1:]

Now I really need so rethink about Seeking Alpha's responsibility. seems all their comments are bullshit. worth nothing but less than a penny. where do they hire those uneducated writers?

2008 Sep 16 03:36 AM

[Jmichael:]

Worthless rag and author.. The financial media will dig their own grave just like all the major networks. The tittle of this article makes it look like the credibility of LDK is about to be questioned. It seems as if someone is being paid to try to keep a negative cloud around one of the fastest well funded growth companies out there. It is comical that the author takes a page out of asensio's short hype statements about fake contracts being announced.. It';s almost ebarrassing to see the desperate media publish them. These people are either being paid off, or they are so hard up for something to write they have to make it up.

2008 Sep 16 07:46 AM

[gebby:]

greentech media had another name not long ago. they have bad recommendations. forget about them.

2008 Sep 16 10:21 AM