TORONTO (miningweekly.com) – Shares in Canadian silicon producer Timminco jumped 48,8% on Monday, after the company announced it reached a new five-year supply agreement with Frankfurt-listed Q-Cells for solar-grade silicon.

Timminco stock gained C$0,60, to C$1,83 apiece by 16:58 in Toronto. It rose as high as C$1,93 a share earlier in the afternoon.

The movement raised eyebrows because the stock leapt earlier in the day, and was eventually briefly halted at around 14:00 before the announcement.

The contract will replace an agreement signed in 2008 for the five-year period ending in 2013, the company said.

Timminco has agreed to deliver 100 tons of solar-grade silicon for the remainder of this year, and volumes and pricing for the next three years will be negotiated by the end of this year, “in the context of prevailing solar industry market conditions”, Timminco said in a statement.

Timminco has also agreed to return an outstanding deposit of about €8,9-million to Q-Cells, after the companies agreed on a repayment schedule that will begin in the first quarter of 2010 and be completed by the end of the year.

The Canadian firm said last month that it was negotiating with customers in the solar industry, some of which had terminated their contracts due to “noncompliance”, and wanted to have deposits repaid.

"Q-Cells is a valued customer of Timminco," said Rene Boisvert, president of Timminco subsidiary Becancour Silicon.

"We look forward to continuing to build a long-term relationship with Q-Cells based upon application of our UMG-Si technology."

Meanwhile, Timminco is also facing a C$520-million class-action lawsuit, in which investors allege that the company made misleading statements about the earnings potential of its technology and processes to convert metallurgical-grade silicon into solar-grade silicon.

The company has said that it will defend itself against the legal challenge.

Netherlands-based Advanced Metallurgical Group owns a controlling interest in Timminco, which reported a C$22,3-million loss for the first three months of this year, and has reduced production levels because of flagging demand for its silicon.

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