Surface Engineered Products announces 100,000 foot per year plant expansion to meet increasing demand for CoatAlloy^TM anti-coking products

CALGARY, ALBERTA, CANADA - The Westaim Corporation announced today that for the first quarter of 1999 it recorded a net loss of $5.4 million, or seven cents per share, on revenues of $22.9 million. For the same period last year, the Company recorded a net loss of $544,000, or one cent per share, on revenues of $22.2 million.

The higher net loss reflects planned increases in activity and investment in Westaim's three technology subsidiaries. Earnings from Westaim's industrial businesses improved year-over-year from $5.1 million to $6.0 million, primarily due to earnings growth in the aerospace products division. At March 31, 1999, Westaim had cash reserves of $181 million and no debt.

Westaim also announced today that by June 30, 2000, its subsidiary Surface Engineered Products Corp., will triple the capacity of its Edmonton, Alberta plant to meet strong demand from ethylene producers for its CoatAlloy^TM anti-coking products.

"This capacity increase is a demonstration of our commitment to realize the full market potential of our technologies as quickly as possible," said Kevin Jenkins, President and CEO of Westaim. "All three of our technology subsidiaries continue to meet the aggressive targets we have set and are well on their way with their commercialization strategies."

"The decision to further expand our surface engineering plant stems from discussions with our customers about their upcoming re-tubing needs," said Ted Redmond, President of Surface Engineered Products. "Adding this capacity will reduce our growing order backlog and help us to increase market share at the fastest possible rate."

Plant capacity was already planned to increase from 50,000 feet per year of 2-inch tubes to 66,000 feet per year by June 1999. With today's announcement, the company will add an additional 100,000 feet per year of capacity, for a total of 166,000 feet per year by June 2000. The estimated cost of the new capacity is $12 million. At 166,000 feet per year, Surface Engineered Products will be capable of servicing seven per cent of the worldwide ethylene furnace tube market.

Surface Engineered Products develops, manufactures and markets proprietary products and services which reduce operating costs and increase productivity in high-severity operating environments found in the petrochemical and other process industries. Its first product, CoatAlloy^TM coated tubes and fittings, targets the ethylene industry, which loses $2 billion in annual production due to the build up of coke (carbon) in ethylene furnace tubes.

CoatAlloy^TM coated tubes and fittings reduce the rate of coking in ethylene pyrolysis furnace tubes by up to 90 per cent and increase the throughput of ethylene plants by 2 to 8 per cent, leading to lower unit-production costs and increased profitability for ethylene producers.

The Westaim Corporation specializes in launching high-potential technologies into the marketplace. In addition to Surface Engineered Products, Westaim's other technology businesses include: Westaim Biomedical Corp., which has developed an infection control technology for use in the treatment of wounds; and Westaim Advanced Display Technologies Inc., which is developing a revolutionary low-cost flat panel display. Westaim also operates three industrial businesses, which produce aerospace materials, coin blanks and chemical products. A TSE 300 company, Westaim's common shares are listed on The Toronto Stock Exchange, The Alberta Stock Exchange and The Montreal Exchange under the trading symbol WED.

*CoatAlloy is a trademark of Surface Engineered Products Corp.

CONTACT:

Tony Johnston
Senior Vice President, Corporate Affairs
(403) 234-3103
e-mail: tjohnsto@westaim.com
Website: www.westaim.com
e-mail: info@westaim.com