DJ UPDATE:Timminco Gains Despite News Of Smaller Q-Cells Deal

TORONTO (Dow Jones)--Timminco Ltd.'s (TIM.T) stock held on to big gains accumulated Monday before the company announced a drastically scaled down supply contract with Q-Cells S.E. (QCE.XE).

The stock surged 46% to C$1.80 Monday on heavy volume before being halted Monday at 1:53 p.m. EDT. The Q-Cells deal was announced about a minute later. There was no obvious reason for the increase before the news, prompting one analyst to speculate word of a deal may have leaked.

Monday's move may have been aided by Penny Chaser, a Web site that flags fast-moving stocks. The site flagged Timminco after the stock had moved up 22% early in the session, and that may have sparked retail buying.

The original Q-Cells deal called for Timminco to ship 3,000 metric tons of its solar-grade silicon to Q-Cells this year, and 6,000 tons annually from 2010-2013. The replacement contract "contemplates" shipments of just 100 tons to Q-Cells for the remainder of the year. Volumes and pricing for subsequent years is now subject to negotiation.

"Is this incrementally good news for the company? No," the analyst said.

Whoever bought ahead of this news will be disappointed, the analyst added.

That's not the case so far. In Toronto, Timminco closed up 60 Canadian cents to C$1.83 on 12.2 million shares. The shares resumed trading after about 40 minutes.

One insititutional investor with a "negative" view of the stock said he, too, was at a loss to explain Monday's increase. "If someone can explain why the stock price is up he deserves a Nobel prize," the investor said.

The investor noted Timminco will have to refund Q-Cells EUR8.9 million deposit that was paid under the original contract, saying he found it curious that Q-Cells would demand its money back when it's planning future orders.

Officials from Timminco and Q-Cells weren't immediately available for comment.

Timminco's stock traded above C$35 last year, in part due to the promise of the Q-Cells deal and supply agreements with other companies. However, solar-power projects dried up with the onset of the recession, and demand for solar cells and modules has plummeted.

In recent months, Timmincos troubles have mounted. In April, the company said some customers are attempting to terminate contracts and recover deposits due to non-compliance by Timminco. Earlier this month, the company posted a larger-than-expected first-quarter loss, and the company was also served with a C$520 million class action lawsuit.

Company Web Site: http://www.timminco.com -Stuart Weinberg, Dow Jones Newswires; 416-306-2026; [email protected]

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(END) Dow Jones Newswires

May 25, 2009 16:45 ET (20:45 GMT)

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