UPDATE 1-Timminco to merge magnesium business with Winca

* Says to close Colorado facility later this year

* Sees C$3 mln related charge

Feb 18 (Reuters) - Timminco Ltd TIM.TO, a producer of solar grade silicon, said it agreed with China-based Winca Tech Ltd to merge the main components of its magnesium and speciality metal business with Winca's magnesium operations.

Timminco said it expects to retain a minority equity interest in the combined businesses which will be known as Applied Magnesium International, or AMI.

The company said it will immediately start winding down production operations at its magnesium extrusion facility in Aurora, Colorado, which 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 company said.

Timminco said it expects to record a charge of about C$3 million ($2.38 million) related to severance in the first half of the year, and the merger is expected to be completed in the second quarter of the year.

Shares of the company, which have lost more than 55 percent in the last three months, closed at C$2.65 Wednesday on the Toronto Stock Exchange. ($1=1.260 Canadian Dollar) (Reporting by Isheeta Sanghi in Bangalore; Editing by Jarshad Kakkrakandy)