AMG subsidiary Timminco completes next phase of magnesium strategy
- PROPOSED MERGER WITH WINCA
- CLOSURE OF AURORA FACILITY
Amsterdam, 18 February 2009 — AMG Advanced Metallurgical Group N.V.’s (“AMG,” EURONEXT AMSTERDAM: “AMG”) 50.7% owned subsidiary, Timminco Limited (“Timminco”; TSX: TIM), consistent with its strategy of positioning its magnesium business for profitability and strategic divestiture, has entered into a non-binding letter of intent with Winca Tech Limited (“Winca”), a leading Chinese-based producer of magnesium products, to merge the principal components of Timminco’s magnesium and specialty metals business, including its manufacturing facility in Nuevo Laredo, Mexico, with all of Winca’s magnesium operations. Timminco expects to retain a minority equity interest in the combined business, which will be known as Applied Magnesium International (“AMI”). The head office of AMI is expected to be in Denver, Colorado. The proposed merger is subject to a number of conditions, including financing and the negotiation and execution of definitive agreements, and is expected to be completed in the second quarter of 2009.
Timminco will immediately start winding down production operations at its existing magnesium extrusion facility in Aurora, Colorado, and close this facility later this year. This facility currently employs 52 people. Some of the existing staff and management are expected to be transferred to AMI, along with certain assets and technology.
“The merger of Timminco’s and Winca’s magnesium operations will allow the two companies to leverage Timminco’s pure magnesium and extrusion technology, quality, service and market presence in extruded products with Winca’s low cost production base, recently modernized manufacturing facilities and strong market position in magnesium cathodic protection,” said John Fenger, President – Light Metals of Timminco. “The closure of our magnesium extrusion operations in Aurora, Colorado, although difficult, is consistent with the divestiture strategy of our magnesium business.”
“Incorporating Timminco’s magnesium production and extrusion technology into our recently upgraded Chinese operations will allow us to further extend our technical and quality leadership with minimal capital, making us one of the lowest cost producers in the world,”, said Dr. He Xu, Chairman of Winca. “It will certainly differentiate Applied Magnesium International from our competition and, most importantly, allow us to provide excellent products and services to our customers for many years to come.” 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.
The closure of the Aurora magnesium extrusion operations will result in severance payments and other cash closure costs of approximately $3 million, which will be incurred in 2009. Timminco expects to record charges in the first half of 2009 relating to these costs. The majority of the production assets of the Aurora facility were deemed to be impaired during 2006 and written down to fair market value at that time. To the extent that estimated proceeds of disposition, if any, are less than the carrying value of such assets, a charge will be taken in the first half of 2009. Timminco currently expects to recover a significant portion of its investment in working capital as the business is transitioned to AMI. Timminco expects to generate net cash proceeds from these announced plans during 2009.
AMG, incorporated in the Netherlands, is a global leader in the production of highly engineered specialty metal products and advanced vacuum furnace systems. AMG serves growing industries worldwide with its unique combination of metallurgical engineering expertise and production know-how. AMG is a market leader in many of its products and systems, which are critical to the production of key components for the aerospace, energy (including solar and nuclear), electronics, optics, chemicals, construction and transportation industries. AMG has two operating divisions of businesses, Advanced Materials and Engineering Systems, and owns majority interests in publicly-listed companies Timminco Limited (TSX: “TIM”) and Graphit Kropfmühl AG (Deutsche Börse: GKR.DE).
The Advanced Materials Division develops and produces niche specialty metals and complex metals products, many of which are used in demanding, safety-critical, high-stress environments. AMG is one of a limited number of significant producers globally of niche specialty metals, such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys and additives, chromium metal and ferrotitanium, used by steel, aluminum, chemical and superalloy producers for aerospace, automotive, energy, electronics, optics, chemicals, construction and other applications. Other key products produced by AMG include specialty alloys for titanium and superalloys, coating materials, tantalum and niobium oxides, vanadium chemicals and antimony trioxide.
The Engineering Systems Division designs, engineers and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities. AMG is a global leader in supplying technologically-advanced vacuum furnace systems to customers in the aerospace, energy (including solar and nuclear), transportation, electronics, superalloys and specialty steel industries. Examples of furnace systems produced by AMG include vacuum remelting, solar silicon melting and crystallization, vacuum induction melting, vacuum heat treatment and high pressure gas quenching, vacuum precision casting, turbine blade coating and sintering. AMG also provides vacuum case-hardening heat treatment services on a tolling basis to customers through facilities equipped with vacuum heat treatment furnaces.
Timminco Limited is a majority controlled, publicly listed subsidiary of AMG. Timminco is a leader in the production of upgraded metallurgical silicon for the rapidly growing solar photovoltaic energy industry. Timminco also produces silicon metal and magnesium products for use in a broad range of industrial applications.
Graphit Kropfmühl AG is a majority controlled, publicly listed subsidiary of AMG. Based on its secure raw material sources in Africa, China and Europe, Graphit Kropfmühl is a specialist in the production of silicon metal and the extraction, processing and refining of natural crystalline graphite for a wide range of energy saving industrial applications.
AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, the United States, Canada, Mexico, Brazil, Sri Lanka and Australia and also has sales and customer service offices in Belgium, Russia, China and Japan (website: www.amg-nv.com).
For further information please contact:
AMG Advanced Metallurgical Group N.V. +1 610 975 4901
Director of Corporate Communications
Timminco Limited +1 416 364 5171
Executive Vice President and CFO
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