Canada’s Timminco Ltd (TIM.TO) said on Tuesday it was in talks with Icelandic power company Orkuveita Reykjavikur for a power supply contract for its planned silicon metal facility in Iceland, sending its shares up as much as 24 percent.
Timminco, a silicon producer, said it has secured about $1 million in convertible debt financing from Icelandic private equity firm Strokkur Energy, and will use the proceeds to fund preliminary engineering work for a conceptual study.
The new silicon metal production facility is expected to be built outside Reykjavik and would have a nominal annual production capacity of 50,000 million tons of silicon metal, Timminco said in a statement.
The Toronto-based company purifies silicon for use in the aluminum and chemical industries, which includes companies that manufacture solar panels and semiconductors. It also produces solar-grade silicon for the solar photovoltaic energy industry.
“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,” Timminco Chief Executive Heinz Schimmelbusch said in a statement.
Orkuveita, also known as Reykjavik Energy, has agreed in principle on the key terms for a proposed agreement to supply up to 85 megawatts of electricity, for a minimum of 20 years, from a proposed new geothermal power plant in Iceland, which is expected to become operational in the latter half of 2013.
Both companies have targeted to complete negotiations on a definitive power contract by April 15.
Timminco, a unit of Dutch-based Advanced Metallurgical Group NV (AMG.AS), has been hard hit by a global slump in the solar energy market due to a dearth of funding and an oversupply of solar panels and parts, forcing it to scale back production and staff.
Shares of the Toronto-based company closed at C$1.33 Tuesday on the Toronto Stock Exchange. (Reporting by R. Manikandan, Abhiram Nandakumar in Bangalore; Editing by Jarshad Kakkrakandy, Unnikrishnan Nair)