AMG affiliate Timminco Limited pursuing opportunities to expand silicon metal production - AMG Corporate

AMG affiliate Timminco Limited pursuing opportunities to expand silicon metal production

Amsterdam, 16 February 2010 — AMG Advanced Metallurgical Group N.V.’s (“AMG,” EURONEXT AMSTERDAM: “AMG”) 42.5% owned affiliate, Timminco Limited (“Timminco”; TSX: TIM) announced today that it is pursuing opportunities to expand its silicon metal capacity, through a potential new silicon metal production facility in Iceland based on geothermal power.  To this end, Timminco and Orkuveita Reykjavíkur, an Icelandic power company, have agreed in principle on the terms of a long-term power supply contract for such a facility.  Timminco has also secured convertible debt financing from Stokkur Energy ehf (“Strokkur”), an Icelandic private equity firm, to fund preliminary expenses associated with this project.


“The production of silicon metal for the chemical and aluminum industries is the core of Timminco’s business,” said Dr. Heinz C. Schimmelbusch, Chairman of the Board and CEO of Timminco.  “Our Becancour silicon metal facility is now operating at full capacity.  As the markets for our silicon metal products continue to grow, we are developing opportunities to expand the capacity, both for our traditional customers as well as for our solar grade silicon product line once the solar photovoltaic market strengthens.  The Timminco management team has the technical expertise to pursue these opportunities, as well as experience with silicon-related project development in Iceland.”


Orkuveita Reykjavíkur, also known as Reykjavik Energy, has agreed in principle on the key terms for a proposed agreement to supply up to 85 MW of electrical power from a proposed new geothermal power plant to be built in Hverahlid, Iceland, which is expected to become operational in the latter half of 2013.  The power would be supplied for a minimum 20-year term, priced in U.S. dollars at internationally competitive rates, to a greenfield silicon metal plant expected to be built in Olfus Municipality, about 50 km from Reykjavik.  This new silicon metal facility, which is expected to have a nominal annual production capacity of up to approximately 50,000 mt of silicon metal when fully operational, would be based on the silicon metal processing technology and leverage the know-how of Timminco’s wholly-owned subsidiary, Bécancour Silicon Inc.  The parties have targeted to complete their negotiations on definitive power contract by a deadline of April 15, 2010.


“We are looking forward to developing our relationship with Timminco and the Olfus Municipality and thereby diversifying our energy clientele.  Utilizing Iceland’s eco-friendly geothermal resources plays a vital part in this country’s economy,” said Hjörleifur B. Kvaran, CEO of Orkuveita Reykjavíkur. “I am optimistic that this move towards supplying renewable energy to silicon metal and solar grade silicon production will strengthen Iceland as the home of pure energy.”


In pursuing this project, Timminco has also partnered with Strokkur, which is focused on investments in power intensive industries.  Strokkur has agreed to provide initial financing for certain activities to be undertaken during the preliminary phase of this project in parallel with negotiations on the power contract.  This financing will be in the form of a convertible bond in the principal amount of $1 million (the “Bond”).  The proceeds will be used to fund preliminary engineering work to be performed by an international engineering consulting firm engaged to conduct a conceptual study, which is expected to be completed by mid-April.  In the event of a positive outcome from such study, and subject to successful negotiations on the power contract and preliminary commitments from one or more silicon metal customers, a full feasibility study for the project would be commissioned, with an expected completion in the latter half of this year.  This feasibility study would assist in securing long-term off-take agreements with customers and external financing for the construction of the proposed new facility, which are two of the key conditions for proceeding with the project.


The Bond will be a direct obligation of Thorsil ehf (“Thorsil”), a special purpose vehicle in Iceland that is currently owned by Timminco and Strokkur.  The Bond will have a maturity date of May 1, 2010, subject to extension if the deadline for signing the power contract is extended.  The Bond will bear interest at 12% per annum, payable on maturity.  The outstanding principal and interest will be reduced by 10% if the power contract is not signed by the agreed deadline and, in such event, the maturity date would be extended to June 19, 2010.  The Bond will be convertible, at Strokkur’s option, into Thorsil common shares at a nominal value, or into Timminco common shares at a conversion price that is the lesser of C$1.09 per share and the 5-day weighted average trading price per share on the Toronto Stock Exchange (“TSX”) on the date of notice of conversion, with the US dollar amount converted into Canadian dollars at a fixed exchange rate of $0.95.  Any notice of conversion shall be given within 5 days after the power contract has been signed or the agreed deadline has passed.  The net proceeds of the Bond financing will be used exclusively for agreed project expenses.  Completion of the Bond financing is expected to occur on February 19, 2010, subject to certain conditions, including approval of the TSX.



About AMG


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), infrastructure and specialty chemicals and metals industries.  AMG has two operating units – Advanced Materials and Engineering Systems, and owns interests in publicly-listed companies Graphit Kropfmühl AG (Deutsche Börse: GKR.DE) and Timminco Limited (TSX: “TIM”).


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.


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. 


Timminco Limited is a publicly listed affiliate 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 for use in a broad range of 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:  



For further information please contact:


AMG Advanced Metallurgical Group N.V.      +1 610 975 4901

Jonathan Costello

Vice President of Corporate Communications




Certain statements in this press release are not historical facts and are “forward looking.”  Forward looking statements include statements concerning AMG’s plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans and intentions relating to acquisitions, AMG’s competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, AMG’s business strategy and the trends AMG anticipates in the industries and the political and legal environment in which it operates and other information that is not historical information.  When used in this press release, the words “expects,” “believes,” “anticipates,” “plans,” “may,” “will,” “should,” and similar expressions, and the negatives thereof, are intended to identify forward looking statements.  By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved.  These forward looking statements speak only as of the date of this press release.  AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statement contained herein to reflect any change in AMG’s expectations with regard thereto or any change in events, conditions, or circumstances on which any forward looking statement is based.






AMG Advanced Metallurgical Group N.V.
+1 610 975 4979

Michele Fischer