Stillwater Mining Reports Increased Earnings for Second Quarter
BILLINGS, MT -- (Marketwire) -- 07/28/10 -- STILLWATER MINING COMPANY (NYSE: SWC)
-- Stronger PGM prices result in increased earnings
-- Recycling business continues to strengthen
-- Ground support issues, diversion of production resources and lower ore
grades result in lower mine production at Stillwater Mine in the
quarter -- measures are underway to improve
Stillwater Mining Company today reported net profit for the 2010 second
quarter of $14.6 million, or $0.15 per diluted share, on revenues of $134.9
million. This compares to second quarter 2009 net income of $4.6 million,
or $0.05 per diluted share, on revenues of $94.8 million. Stronger
realized PGM prices in the 2010 second quarter more than offset
substantially lower ounce production compared to the second quarter of
2009.
For the first six months of 2010, Stillwater Mining Company (the 'Company')
reported net income of $27.9 million, or $0.28 per fully diluted share, on
revenues of $268.3 million. In the first six months of 2009, the Company
reported a net loss of $7.1 million, or $0.07 per diluted share, on
revenues of $180.6 million. The first half of 2010 was characterized by
higher PGM prices and stronger performance from the Company's recycling
segment than in the same period last year.
With regard to sales, combined sales realizations continued to improve
during second quarter 2010 for mined palladium and platinum ounces,
averaging $725 per ounce, well above the $530 per ounce realized in second
quarter 2009. The total quantity of mined palladium and platinum sold
decreased to 116,700 ounces in the second quarter of 2010, compared to
135,700 ounces sold during the same period in 2009, reflecting the lower
2010 production to date at the Stillwater Mine.
The Company mines palladium and platinum from two underground mines located
in south-central Montana. The mines produced a total of 112,600 ounces of
palladium and platinum during the second quarter 2010, an 18.2% decrease
from the 137,700 ounces produced during the second quarter 2009. Production
at the Company's Stillwater Mine decreased to 79,200 ounces in the second
quarter of 2010, compared to 103,000 ounces in the same quarter of 2009.
Production at the Company's East Boulder Mine was 33,400 ounces in the
second quarter of 2010, compared to 34,700 ounces in the same quarter of
2009.
While, overall, ore tons mined were consistent with planned production, ore
grades were lower, particularly in the off-shaft area of the Stillwater
Mine. A sharp production decline in the off-shaft area during the second
quarter was attributable to several factors, including lower grade ore from
the mix of stopes being mined, diversion of production resources for a time
into safety compliance, infrastructure rehabilitation and increased ground
support requirements that impeded mining in some key areas for several
weeks.
Production costs increased during second quarter 2010 compared to the year
earlier. Total cash costs (a non-GAAP measure defined below) averaged $393
per ounce in the second quarter of 2010, compared to total cash costs of
$331 per ounce for the same period in 2009. The Stillwater Mine's total
cash costs averaged $387 per ounce in the second quarter of 2010, compared
to the $318 per ounce achieved in the second quarter of 2009. The East
Boulder mine costs averaged $407 per ounce during 2010 second quarter,
compared to the $371 per ounce during second quarter 2009. These increases
reflected increased development activities, lower overall mine production
and the effect on royalties and taxes of higher PGM prices.
The Company's smelting and refining complex in Columbus, Montana processes
mine concentrates and recycles spent catalyst material received from third
parties. A portion of the recycling material is purchased for the Company's
own account and the balance is toll processed on behalf of others. In
total, the Company processed recycling material containing 99,200 ounces of
platinum, palladium and rhodium through the smelter and refinery during
second quarter 2010, up nearly 64% above the 60,600 ounces recycled during
second quarter 2009. The higher volume in 2010 is the result of higher PGM
prices and the correspondingly stronger incentive to collect material for
recycling. The recycling segment had net income for the second quarter of
2010 of $3.4 million (including financing income), compared to income of
$2.1 million in second quarter 2009.
Francis R. McAllister, Stillwater Chairman and CEO, commented, 'I am
pleased to report that the Company's earnings for the 2010 second quarter
and first six months are higher than in the corresponding periods last
year. I also would note, though, that this earnings improvement is almost
entirely attributable to strong PGM prices. Our East Boulder Mine
operations and the upper-west portion of the Stillwater Mine have continued
to perform well, with good cost and production. However, the off-shaft area
at Stillwater, normally the area with the highest ore grades, encountered
difficult mining conditions and had a very challenging second quarter.
Problems in the off-shaft portion of the mine included the need to increase
ground support efforts in localized areas due to unanticipated
deterioration of structural conditions. This effort limited access to
several key high grade stopes and also diverted production labor into non
production activities and into lower grade alternate stopes during the
second quarter. In part because we lowered development spending in 2009,
there was limited flexibility to divert production into other higher-grade
stopes -- thus resources have been diverted into mine development in an
effort to improve performance going forward. Further, a higher than usual
proportion of mining stopes in the off-shaft area are currently either
early or late in their production life -- and ore grades tend to be more
variable at those points in the life cycle than on average. These
challenges in the off-shaft area are likely to continue into this year's
third quarter but should improve by the fourth quarter. Overall at the
Stillwater Mine, increased production in the upper-west area of the mine to
date has essentially offset the tonnage shortfall in the
off-shaft area, and total ore tons produced are nearly at the level
planned. However, because grades in the upper west are substantially lower
than in the off-shaft area, produced ounces are well short of plan.
'We had commented in our first quarter analysis that the Company's
production outlook for the second quarter was likely to fall short of
performance in the first quarter, but left our full-year guidance unchanged
at that time. However, the production challenges we encountered during the
second quarter were more severe than anticipated, and after reviewing their
likely effect on the second and third quarters, we have concluded to adjust
our full-year guidance downward. Our initial guidance for 2010 was for
total palladium and platinum production from the mines of 515,000 ounces at
a combined total cash cost of $360 per ounce. Capital spending was
projected at $50 million for the year. We now are forecasting total 2010
mine production at 490,000 ounces at a combined total cash cost of $385 per
ounce. The Company's board of directors also has approved increasing
capital expenditures for the year to about $57 million. Most of the
increased capital spending is accelerated from 2011 and will be allocated
toward additional mine development.
'We view these challenges in the off-shaft area as largely transitional, a
convergence of factors that largely will be worked through before the end
of 2010. Some of the issues that contributed to the quarter's production
shortfall already have been resolved. Others will take more time to
complete. We expect production in the fourth quarter to be back to about
the 515,000-ounce annual rate.
'The imminent start-up of electric truck haulage, using dedicated ramps
from the lower off-shaft area of the Stillwater Mine up to the bottom of
the shaft (at the 3200 foot level), will facilitate development of deeper
mining stopes (ultimately down to the 2000 foot level or below) and
simplify haulage logistics from the lower off-shaft portion of the mine,
further improving mining flexibility in the lower off-shaft. This new
haulage initially will benefit development, and probably will not
significantly affect production for another year or two.
'Our increased development effort will be to accelerate progressing
westward on several strategic levels underground from the existing
off-shaft area of the mine toward a new mining zone, the 'lower-west' area,
at Stillwater. This effort has entailed developing through an extensive
zone of unproductive material in order to access the new mining area.
Active ore production from the lower-west area is projected to begin within
the next year in an effort to determine if it can become a major source of
long-term production.
'Turning to the recycling side of our business, the new projects we
discussed at some length in our 2009 Annual Report are now progressing
toward completion. The new recycle crushing and sampling facility at the
Columbus smelter is currently being commissioned and should be fully
operational in August. The automated x-ray assay system has been shipped
and should be assembled and ready to calibrate during the fourth quarter.
This x-ray facility will use state-of-the-art technology that is faster and
more accurate than conventional fire assay methods. The Company's old
electric smelter furnace is being refurbished and redesigned to allow for
slag cleaning capabilities in the future. The resulting ability to increase
residence time in the furnace should increase our metal recoveries. And our
recycling and processing facilities are soon to be placed into a separate
subsidiary, Stillwater Metals Company, which will focus separately on metal
processing opportunities. We believe all of these efforts should position
the Company to become a leader in the recycling industry.'
Concluding his remarks, Mr. McAllister added, 'Despite the operational
issues we encountered during the past quarter, the Company's financial
resources continued to grow. Most of our operations are functioning very
well, and I appreciate the dedicated efforts of our employees in continuing
to improve and strengthen our performance. While undoubtedly the markets
for PGMs will continue to experience significant volatility, I believe the
longer-term case for our metals is compelling. Our aim is to position
Stillwater with adequate financial resources to weather economic downturns
while improving our ability to capitalize on periods when our markets are
strong. We have made significant progress toward those objectives over the
past few quarters.'
Cash Flow and Liquidity
At June 30, 2010, the Company's available cash and cash equivalents
(excluding $38.1 million of restricted cash) totaled $80.0 million, down
$75.1 million from March 31, 2010, and down $86.7 million from December 31,
2009, as a substantial portion of the Company's cash balance was
transferred into longer-term investments. If we include the Company's
available-for-sale investments, total available cash and investments at
June 30, 2010, was $228.1 million, up $7.5 million from $220.6 million at
March 31, 2010 and up $26.9 million from $201.2 million at the end of last
year. Net working capital -- comprised of total current assets including
available cash and investments, less current liabilities -- increased
during the second quarter of 2010 to $316.9 million, from $297.6 million at
March 31, 2010, and from $269.5 million at December 31, 2009. Recycling
inventories and advances increased by $11.7 million during the quarter.
Net cash provided by operating activities (which includes changes in
working capital) totaled $21.1 million in this year's second quarter,
compared to $6.7 million of cash provided by operations in the second
quarter of 2009. The increase in cash from operations in the 2010 second
quarter mostly reflects the earnings benefit of higher PGM prices. Capital
expenditures were $13.9 million in the second quarter of 2010, up slightly
from $13.0 million in the second quarter of 2009.
Outstanding debt at June 30, 2010, was $196.0 million, essentially
unchanged from March 31, 2010, and December 31, 2009. The Company's total
debt includes $166.5 million outstanding in the form of debentures due in
2028 and $29.5 million of Exempt Facility Revenue Bonds due in 2020.
Second quarter Results - Details
For the second quarter of 2010, the Company's mine production was 112,600
PGM ounces including 79,200 ounces from the Stillwater Mine and 33,400
ounces from the East Boulder Mine. For the comparable quarter of 2009, the
mines produced 137,700 ounces including 103,000 ounces at the Stillwater
Mine and 34,700 ounces at the East Boulder Mine. The sharp production
decline at the Stillwater Mine was attributable to several factors,
including lower grades from the mix of stopes being mined, diversion of
production resources into maintenance projects, and increased ground
control measures in a key part of the off-shaft that impeded mining for
several weeks.
Sales out of mine production totaled 116,700 ounces in the second quarter
of 2010 at an overall average realization of $725 per ounce, up from
135,700 ounces at $530 per ounce in the second quarter of 2009. Mine
revenues increased to $92.6 million in the 2010 second quarter from $78.8
million in the same quarter of 2009. The higher 2010 mine revenues resulted
from higher PGM prices in 2010. The Company's average realization on
palladium sales from mine production was $491 per ounce in the 2010 second
quarter, compared to $364 per ounce for the same period in 2009 reflecting
the average floor price in the automotive contracts in place during 2009.
The Company's average net realization on platinum was $1,526 per ounce in
the second quarter of 2010 and $1,118 per ounce in the 2009 second quarter.
Comparing these prices to the market, the London Bullion Metals Association
afternoon posted prices per ounce for palladium and platinum were $446 and
$1,532, respectively, on June 30, 2010, and $249 and $1,186, respectively,
on June 30, 2009.
In its recycling activities, the Company processes material purchased from
third parties and toll material that is processed on behalf of others for a
fee, normally recovering platinum, palladium and rhodium. During the second
quarter of 2010, the Company processed 99,200 total ounces of PGMs from
recycled catalytic materials, including both purchased and tolled material.
By comparison, in the second quarter of 2009, the Company processed 60,600
ounces of recycled material. The Company delivered for sale a total of
36,700 ounces of platinum, palladium and rhodium from recycled inventories
during the second quarter 2010 at an overall average price of $1,106 per
ounce; for the second quarter of 2009, the Company sold 18,300 recycled
ounces at an average realization of $643 per ounce. The increased level of
activity in the second quarter of 2010 reflected a much higher level of PGM
recycling activity worldwide as a result of higher metals prices.
Revenues for the second quarter of 2010 were $134.9 million, up 42.3% from
the $94.8 million recorded in the second quarter of 2009. Proceeds from
sales of mined PGMs and by-products totaled $92.6 million in the 2010
second quarter, 17.5% higher than the $78.8 million in the same quarter of
2009, again resulting from higher PGM prices in the second quarter of 2010.
Recycling revenues increased to $42.3 million from $12.5 million in last
year's second quarter. Resales of purchased metal generated $3.5 million in
revenue during the 2009 second quarter. There were no resales of purchased
metal during the second quarter of 2010.
Costs of metals sold (before depreciation and amortization expense)
increased to $94.2 million in the 2010 second quarter from $65.1 million in
the second quarter of 2009. Mining costs included in costs of metals sold
increased to $55.0 million in the 2010 second quarter from $51.1 million in
the 2009 second quarter. Recycling costs, which primarily reflect the cost
of acquiring spent catalytic materials for processing, totaled $39.3
million in the second quarter of 2010, much higher than the $10.5 million
reported in the second quarter of 2009. The increase was due to higher
recycling volumes processed and sold and the higher value of the materials
acquired for processing. Second quarter 2009 costs also included the
purchase for resale of 2,700 ounces of palladium and 2,700 ounces of
platinum at a cost of $3.5 million in 2009. There were no costs incurred
during the second quarter of 2010 for the resale of purchased metal.
Depreciation and amortization expense decreased to $16.6 million in the
2010 second quarter from $17.1 million in the same period of 2009. The
decrease is attributable to lower mined ounces produced and sold in the
2010 second quarter.
General and administrative ('G&A') costs, including marketing and
exploration expenses, increased to $8.1 million in the second quarter of
2010 from $6.0 million in the same period of 2009, resulting from higher
than planned expenses for business development and marketing efforts in
2010. Additional G&A cost included in the 2009 second quarter was a $0.3
million write-down of the Company's trade receivables and a write off of
$0.5 million on advances for inventory purchases.
Reported net before-tax income of $14.8 million for the second quarter of
2010 included, by business segment, net income of $21.0 million from mining
operations and net income of $3.4 million from recycling activities, less
corporate costs including $8.1 million of G&A expense and $1.5 million of
unallocated net interest expense.
The reported net income of $4.6 million for the second quarter of 2009
included, by business segment, a net income of $10.8 million from mining
operations and net income of $2.1 million from recycling activities, less
corporate costs including $6.0 million of G&A expense, $1.5 million of
unallocated net interest expense, and the $0.8 million of asset-related
expenses.
First Six Months' Results - Details
In the first six months of 2010, the Company's mining operations produced
241,600 PGM ounces including 175,500 ounces from the Stillwater Mine and
66,100 ounces from the East Boulder Mine. For the comparable period in
2009, total mine production of 262,500 ounces included Stillwater Mine
production of 195,900 ounces and East Boulder production of 66,600.
Challenges at the Stillwater Mine this year have included lower-grade
mining areas, diversion of production resources for a period into mine
maintenance, and increased ground control measures in a key part of the
off-shaft that impeded mining for several weeks.
Sales of palladium and platinum from mine production totaled 251,700 ounces
in the first six months of 2010 at an overall average realization of $681
per ounce, up from 250,300 ounces at $521 per ounce in the same period of
2009. The Company's average realization to date in 2010 on palladium sales
from mine production was $449 per ounce, compared to $364 per ounce in the
2009 first half, reflecting the average floor price in the automotive
contracts during 2009. The comparable average realization on platinum, net
of contractual ceiling prices on 14% of mine production, was $1,473 per
ounce for the first six months of 2010 and $1,037 per ounce in the 2009
first half.
During the first half of 2010, the Company processed about 218,500 ounces
of PGMs from recycled catalytic materials, including both purchased
catalyst and toll material processed on behalf of others for a fee. By
comparison, in the first six months of 2009, the Company processed about
99,200 ounces of recycled material. Of the purchased catalyst processed,
the Company sold a total of 72,700 ounces of platinum, palladium and
rhodium during the first half of 2010 at an overall average price of about
$1,003 per ounce; for the first half of 2009, the Company sold about 36,100
recycled ounces at an average realization of $885 per ounce.
Revenues for the first six months of 2010 totaled $268.3 million, up 48.6%
from $180.6 million in the first six months of 2009. Proceeds from sales of
mined PGMs totaled $187.8 million in the 2010 first half, up from $141.1
million in the same period of 2009. Recycling revenues increased to $75.9
million from $34.0 million in last year's first half. Higher total revenue
in 2010 was a result of both higher sales volumes and higher PGM prices.
Re-sales of purchased metal generated $4.6 million and $5.5 million in
revenue during the 2010 and 2009 periods, respectively.
Costs of metals sold (before depreciation and amortization expense)
increased to $187.7 million in the 2010 first six months from $137.3
million in the first half of 2009. Mining costs included in costs of metals
sold increased to $112.8 million in the 2010 first half from $100.9 million
in the 2009 period. Recycling costs, largely comprised of the cost to
purchase spent catalytic materials for processing, totaled $70.3 million in
the first half of 2010, up from $30.9 million in the first six months of
2009. The increase in cost was attributable to the higher value of the
contained metals in the material purchased for recycling and the higher
volumes purchased. The 2010 first half costs also included $4.6 million for
the purchase of 10,000 ounces of palladium for resale; first half 2009
costs included about $5.5 million for the purchase of 12,300 ounces of
palladium and 2,800 ounces of platinum for resale.
Depreciation and amortization expense increased to $35.1 million in the
2010 first half compared to $34.3 million in the same period of 2009. The
increase is attributable to slightly higher sales of mined ounces and to
higher amortization rates per ton in 2010.
General and administrative costs (G&A), including marketing and exploration
expenses, totaled $14.9 million for the first six months of 2010 and $12.8
million in the 2009 first half plus an additional $0.8 million of
asset-related expenses. The increase was primarily a result of higher
business development and marketing spending.
The Company's reported net before-tax income of $28.4 million for the first
six months of 2010 included, by business segment, $40.1 million of income
from mining operations and $6.3 million of income from recycling
activities, less corporate costs including $14.9 million of G&A expense and
$3.0 million of unallocated net interest expense.
The Company's reported net loss of $7.1 million for the first six months of
2009 included, by business segment, $5.9 million of income from mining
operations and $3.3 million of income from recycling activities, less
corporate costs including $12.8 million of G&A expense, $2.7 million of
unallocated net interest expense and $0.8 million of asset-related
expenses.
Stillwater Mining Company has scheduled its 2010 second quarter results
conference call at 10:00 a.m. Mountain Daylight Time (12:00 p.m. Eastern
Daylight Time) on July 28, 2010. Dial-in numbers:
United States: (800) 553-0358
International: (612) 332-0345
The conference call will also be simultaneously webcast on the Company's
website www.stillwatermining.com in the Investor Relations section. A
replay of the conference call will be available on the Company's website or
by a telephone replay, numbers (800) 475-6701 (U.S.) and (320) 365-3844
(International), access code 166232, through August 4, 2010, ending at
11:59 p.m. Mountain Daylight Time.
Stillwater Mining Company is the only U.S. producer of palladium and
platinum and is the largest primary producer of platinum group metals
outside of South Africa and the Russian Federation. The Company's shares
are traded on the New York Stock Exchange under the symbol SWC. Information
on Stillwater Mining can be found at its Website: www.stillwatermining.com.
Some statements contained in this report are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and, therefore, involve uncertainties or risks that could cause
actual results to differ materially. These statements may contain words
such as 'desires,' 'believes,' 'anticipates,' 'plans,' 'expects,'
'intends,' 'estimates' or similar expressions. These statements are not
guarantees of the Company's future performance and are subject to risks,
uncertainties and other important factors that could cause its actual
performance or achievements to differ materially from those expressed or
implied by these forward-looking statements. Such statements include, but
are not limited to, comments regarding the effects of restructuring the
Company's operations and maintaining a skilled work force; the global
automotive market and the health of the automobile manufacturers; expansion
plans and realignment of operations; costs, grade, production and recovery
rates; permitting; labor matters; financing needs and the terms of future
credit facilities; capital expenditures; increases in processing capacity;
cost reduction measures; safety performance; timing for engineering
studies; environmental permitting and compliance; litigation exposures; and
anticipated changes in global supply and demand and prices for PGM
materials. Additional information regarding factors that could cause
results to differ materially from management's expectations is found in the
Company's 2009 Annual Report on Form 10-K on file with the United States
Securities and Exchange Commission and available on the Company's website.
Financial Statements and Key Factors Tables
Stillwater Mining Company
Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Revenues
Mine production $ 92,570 $ 78,826 $ 187,769 $ 141,139
PGM recycling 42,291 12,486 75,941 33,959
Other - 3,475 4,622 5,507
--------- --------- --------- ---------
Total revenues 134,861 94,787 268,332 180,605
Costs and expenses
Costs of metals sold
Mine production 54,980 51,078 112,843 100,938
PGM recycling 39,256 10,541 70,251 30,910
Other - 3,471 4,622 5,498
--------- --------- --------- ---------
Total costs of metals sold 94,236 65,090 187,716 137,346
Depletion, depreciation and
amortization
Mine production 16,589 17,043 35,046 34,163
PGM recycling 39 44 83 89
--------- --------- --------- ---------
Total depletion,
depreciation and
amortization 16,628 17,087 35,129 34,252
--------- --------- --------- ---------
Total costs of revenues 110,864 82,177 222,845 171,598
Marketing 807 394 1,275 1,235
General and administrative 7,251 6,406 13,672 12,247
Loss on long-term investments - - - 119
(Gain)/loss on disposal of
property, plant and equipment 9 (5) (208) 200
--------- --------- --------- ---------
Total costs and expenses 118,931 88,972 237,584 185,399
Operating income (loss) 15,930 5,815 30,748 (4,794)
Other income (expense)
Other 3 49 9 49
Interest income 532 427 933 1,085
Interest expense (1,636) (1,729) (3,269) (3,458)
--------- --------- --------- ---------
Income (loss) before income tax
provision 14,829 4,562 28,421 (7,118)
Income tax provision (239) - (472) -
--------- --------- --------- ---------
Net income (loss) $ 14,590 $ 4,562 $ 27,949 $ (7,118)
--------- --------- --------- ---------
Other comprehensive income
(loss), net of tax 16 81 (178) 47
--------- --------- --------- ---------
Comprehensive income (loss) $ 14,606 $ 4,643 $ 27,771 $ (7,071)
========= ========= ========= =========
Weighted average common shares
outstanding
Basic 97,735 94,308 97,390 94,094
Diluted 105,932 94,664 105,616 94,094
Basic earnings (loss) per share
--------- --------- --------- ---------
Net income (loss) $ 0.15 $ 0.05 $ 0.29 $ (0.07)
========= ========= ========= =========
Diluted earnings (loss) per
share
--------- --------- --------- ---------
Net income (loss) $ 0.15 $ 0.05 $ 0.28 $ (0.07)
========= ========= ========= =========
Stillwater Mining Company
Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
June 30, December 31,
2010 2009
------------ ------------
ASSETS
Cash and cash equivalents $ 79,981 $ 166,656
Investments, at fair market value 148,157 34,515
Inventories 108,567 88,967
Trade receivables 6,295 2,073
Deferred income taxes 19,055 18,130
Other current assets 9,801 8,680
------------ ------------
Total current assets 371,856 319,021
Property, plant and equipment, net of $345,315
and $311,449 accumulated depletion,
depreciation and amortization 348,724 358,866
Restricted cash 38,070 38,045
Other noncurrent assets 9,273 9,263
------------ ------------
Total assets $ 767,923 $ 725,195
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 14,284 $ 8,901
Accrued compensation and benefits 26,031 26,481
Property, production and franchise taxes
payable 10,461 10,405
Other current liabilities 4,196 3,689
------------ ------------
Total current liabilities 54,972 49,476
Long-term debt 195,993 195,977
Deferred income taxes 19,055 18,130
Accrued workers compensation 6,486 4,737
Asset retirement obligation 6,472 6,209
Other noncurrent liabilities 4,440 3,855
------------ ------------
Total liabilities $ 287,418 $ 278,384
------------ ------------
Stockholders' equity
Preferred stock, $0.01 par value, 1,000,000
shares authorized; none issued - -
Common stock, $0.01 par value, 200,000,000
shares authorized; 97,766,471
and 96,732,185 shares issued and outstanding 978 967
Paid-in capital 680,781 674,869
Accumulated deficit (200,986) (228,935)
Accumulated other comprehensive loss (268) (90)
------------ ------------
Total stockholders' equity 480,505 446,811
------------ ------------
Total liabilities and stockholders' equity $ 767,923 $ 725,195
============ ============
Stillwater Mining Company
Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Cash flows from operating
activities
Net income (loss) $ 14,590 $ 4,562 $ 27,949 $ (7,118)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depletion, depreciation and
amortization 16,628 17,087 35,129 34,252
Lower of cost or market
inventory adjustment - 146 - 5,631
Loss on long-term investments - - - 119
(Gain)/loss on disposal of
property, plant and equipment 9 (5) (208) 200
Asset retirement obligation 133 150 263 297
Amortization of debt issuance
costs 245 265 490 529
Stock based compensation and
other benefits 2,523 2,687 5,489 5,312
Changes in operating assets and
liabilities:
Inventories (13,243) (13,660) (20,178) (13,554)
Trade receivables 835 (1,167) (4,222) 50
Accrued compensation and
benefits 202 1,645 (457) 1,059
Accounts payable 1,739 2,894 5,383 (86)
Property, production and
franchise taxes payable (624) (1,015) 641 (350)
Workers compensation 875 39 1,749 (923)
Restricted cash - (2,450) (25) (2,450)
Other (2,810) (4,429) (1,138) (2,956)
--------- --------- --------- ---------
Net cash provided by operating
activities 21,102 6,749 50,865 20,012
--------- --------- --------- ---------
Cash flows from investing
activities
Capital expenditures (13,860) (13,032) (24,587) (25,188)
Proceeds from disposal of
property, plant and equipment - 21 265 46
Purchases of investments (82,586) (16,961) (126,632) (20,947)
Proceeds from maturities of
investments - 6,912 12,973 18,786
--------- --------- --------- ---------
Net cash used in investing
activities (96,446) (23,060) (137,981) (27,303)
--------- --------- --------- ---------
Cash flows from financing
activities
Payments on debt - (97) - (97)
Issuance of common stock 190 - 441 -
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities 190 (97) 441 (97)
--------- --------- --------- ---------
Cash and cash equivalents
Net decrease (75,154) (16,408) (86,675) (7,388)
Balance at beginning of
period 155,135 170,815 166,656 161,795
--------- --------- --------- ---------
Balance at end of period $ 79,981 $ 154,407 $ 79,981 $ 154,407
========= ========= ========= =========
Stillwater Mining Company
Key Factors
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
OPERATING AND COST DATA FOR
MINE PRODUCTION
Consolidated:
Ounces produced (000)
Palladium 87 106 186 202
Platinum 26 32 56 61
---------- ---------- ---------- ----------
Total 113 138 242 263
========== ========== ========== ==========
Tons milled (000) 263 270 534 533
Mill head grade (ounce per ton) 0.46 0.55 0.48 0.53
Sub-grade tons milled (000) (1) 22 25 46 46
Sub-grade tons mill head grade
(ounce per ton) 0.14 0.18 0.17 0.18
Total tons milled (000) (1) 285 295 580 579
Combined mill head grade (ounce
per ton) 0.44 0.52 0.46 0.50
Total mill recovery (%) 91 91 91 91
Total operating costs per ounce
(Non-GAAP) (2) $ 321 $ 279 $ 310 $ 315
Total cash costs per ounce
(Non-GAAP) (2) $ 393 $ 331 $ 378 $ 366
Total production costs per
ounce (Non-GAAP) (2) $ 540 $ 457 $ 521 $ 497
Total operating costs per ton
milled (Non-GAAP) (2) $ 126 $ 130 $ 129 $ 143
Total cash costs per ton milled
(Non-GAAP) (2) $ 155 $ 155 $ 157 $ 166
Total production costs per ton
milled (Non-GAAP) (2) $ 213 $ 214 $ 217 $ 225
Stillwater Mine:
Ounces produced (000)
Palladium 61 79 135 150
Platinum 18 24 41 46
---------- ---------- ---------- ----------
Total 79 103 176 196
========== ========== ========== ==========
Tons milled (000) 166 181 345 361
Mill head grade (ounce per ton) 0.51 0.61 0.54 0.59
Sub-grade tons milled (000) (1) 20 12 35 22
Sub-grade tons mill head grade
(ounce per ton) 0.15 0.17 0.16 0.17
Total tons milled (000) (1) 186 193 381 383
Combined mill head grade (ounce
per ton) 0.47 0.59 0.51 0.56
Total mill recovery (%) 92 91 92 92
Total operating costs per ounce
(Non-GAAP) (2) $ 316 $ 270 $ 296 $ 305
Total cash costs per ounce
(Non-GAAP) (2) $ 387 $ 318 $ 361 $ 351
Total production costs per
ounce (Non-GAAP) (2) $ 532 $ 433 $ 496 $ 470
Total operating costs per ton
milled (Non-GAAP) (2) $ 135 $ 144 $ 136 $ 156
Total cash costs per ton milled
(Non-GAAP) (2) $ 165 $ 169 $ 166 $ 179
Total production costs per ton
milled (Non-GAAP) (2) $ 227 $ 231 $ 229 $ 240
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three Months Ended Six Months Ended June
June 30, 30,
--------------------- ---------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
OPERATING AND COST DATA FOR
MINE PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced (000)
Palladium 26 27 51 52
Platinum 8 8 15 15
---------- ---------- ---------- ----------
Total 34 35 66 67
========== ========== ========== ==========
Tons milled (000) 97 89 189 173
Mill head grade (ounce per ton) 0.38 0.41 0.38 0.41
Sub-grade tons milled (000) (1) 3 12 10 23
Sub-grade tons mill head grade
(ounce per ton) 0.09 0.19 0.18 0.19
Total tons milled (000) (1) 100 102 199 196
Combined mill head grade (ounce
per ton) 0.37 0.39 0.37 0.38
Total mill recovery (%) 90 89 90 89
Total operating costs per ounce
(Non-GAAP) (2) $ 331 $ 306 $ 347 $ 347
Total cash costs per ounce
(Non-GAAP) (2) $ 407 $ 371 $ 423 $ 411
Total production costs per
ounce (Non-GAAP) (2) $ 562 $ 530 $ 589 $ 577
Total operating costs per ton
milled (Non-GAAP) (2) $ 110 $ 104 $ 115 $ 118
Total cash costs per ton milled
(Non-GAAP) (2) $ 136 $ 127 $ 140 $ 140
Total production costs per ton
milled (Non-GAAP) (2) $ 187 $ 181 $ 196 $ 196
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three Months Ended Six Months Ended
(in thousands, where noted) June 30, June 30,
--------------------- ---------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
SALES AND PRICE DATA
Ounces sold (000)
Mine production:
Palladium (oz.) 90 106 194 192
Platinum (oz.) 27 30 58 58
---------- ---------- ---------- ----------
Total 117 136 252 250
---------- ---------- ---------- ----------
PGM recycling: (5)
Palladium (oz.) 18 11 37 19
Platinum (oz.) 15 6 29 14
Rhodium (oz.) 4 2 7 4
---------- ---------- ---------- ----------
Total 37 19 73 37
---------- ---------- ---------- ----------
Other: (6)
Palladium (oz.) - 2 10 12
Platinum (oz.) - 3 - 3
---------- ---------- ---------- ----------
Total - 5 10 15
---------- ---------- ---------- ----------
By-products from mining: (7)
Rhodium (oz.) 1 2 2 3
Gold (oz.) 2 2 4 4
Silver (oz.) 1 1 3 3
Copper (lb.) 217 217 478 389
Nickel (lb.) 343 301 655 430
Average realized price per
ounce (3)
Mine production:
Palladium ($/oz.) $ 491 $ 364 $ 449 $ 364
Platinum ($/oz.) $ 1,526 $ 1,118 $ 1,473 $ 1,037
Combined ($/oz.)(4) $ 725 $ 530 $ 681 $ 521
PGM recycling: (5)
Palladium ($/oz.) $ 444 $ 271 $ 403 $ 261
Platinum ($/oz.) $ 1,556 $ 1,057 $ 1,475 $ 1,040
Rhodium ($/oz.) $ 2,527 $ 1,284 $ 2,226 $ 2,886
Other: (6)
Palladium ($/oz.) $ - $ 238 $ 462 $ 212
Platinum ($/oz.) $ - $ 1,033 $ - $ 1,033
By-products from mining: (7)
Rhodium ($/oz.) $ 2,660 $ 1,375 $ 2,540 $ 1,308
Gold ($/oz.) $ 1,203 $ 920 $ 1,148 $ 923
Silver ($/oz.) $ 18 $ 13 $ 17 $ 13
Copper ($/lb.) $ 3.01 $ 1.92 $ 3.05 $ 1.66
Nickel ($/lb.) $ 9.25 $ 6.80 $ 8.75 $ 6.32
Average market price per ounce
(3)
Palladium ($/oz.) $ 494 $ 234 $ 467 $ 216
Platinum ($/oz.) $ 1,628 $ 1,172 $ 1,595 $ 1,096
Combined ($/oz.)(4) $ 750 $ 440 $ 723 $ 421
(1) Sub-grade tons milled includes reef waste material only. Total tons
milled includes ore tons and sub-grade tons only. See 'Proven and
Probable Ore Reserves - Discussion' in the Company's 2009 Annual Report
on Form 10-K for further information.
(2) Total operating costs include costs of mining, processing and
administrative expenses at the mine site (including mine site overhead
and credits for metals produced other than palladium and platinum from
mine production). Total cash costs include total operating costs plus
royalties, insurance and taxes other than income taxes. Total
production costs include total cash costs plus asset retirement costs
and depreciation and amortization. Income taxes, corporate general
and administrative expenses, asset impairment write-down's, gain or
loss on disposal of property, plant and equipment, restructuring costs
and interest income and expense are not included in total operating
costs, total cash costs or total production costs. Operating costs per
ton, operating costs per ounce, cash costs per ton, cash costs per
ounce, production costs per ton and production costs per ounce are
non-GAAP measurements that management uses to monitor and evaluate the
efficiency of its mining operations. These measures of cost are not
defined under U.S. Generally Accepted Accounting Principles (GAAP).
Please see 'Reconciliation of Non-GAAP Measures to Costs of Revenues'
and the accompanying discussion for additional detail.
(3) The Company's average realized price represents revenues, which include
the effect of any applicable agreement floor and ceiling prices,
hedging gains and losses realized on commodity instruments and
agreement discounts, divided by ounces sold. The average market price
represents the average London Bullion Market Association afternoon
postings for the actual months of the period.
(4) The Company reports a combined average realized and market price of
palladium and platinum at the same ratio as ounces that are produced
from the base metal refinery.
(5) Ounces sold and average realized price per ounce from PGM recycling
relate to ounces produced from processing of catalyst materials.
(6) Ounces sold and average realized price per ounce from other relate to
ounces purchased in the open market for resale.
(7) By-product metals sold reflect contained metal. Realized prices
reflect net values (discounted due to product form and transportation
and marketing charges) per unit received.
Reconciliation of Non-GAAP measures to costs of revenues
The Company utilizes certain non-GAAP measures as indicators in assessing
the performance of its mining and processing operations during any period.
Because of the processing time required to complete the extraction of
finished PGM products, there are typically lags from one to three months
between ore production and sale of the finished product. Sales in any
period include some portion of material mined and processed from prior
periods as the revenue recognition process is completed. Consequently,
while costs of revenues (a GAAP measure included in the Company's Statement
of Operations and Comprehensive Income/(Loss)) appropriately reflects the
expense associated with the materials sold in any period, the Company has
developed certain non-GAAP measures to assess the costs associated with its
producing and processing activities in a particular period and to compare
those costs between periods.
While the Company believes that these non-GAAP measures may also be of
value to outside readers, both as general indicators of the Company's
mining efficiency from period to period and as insight into how the Company
internally measures its operating performance, these non-GAAP measures are
not standardized across the mining industry and in most cases will not be
directly comparable to similar measures that may be provided by other
companies. These non-GAAP measures are only useful as indicators of
relative operational performance in any period, and because they do not
take into account the inventory timing differences that are included in
costs of revenues, they cannot meaningfully be used to develop measures of
profitability. A reconciliation of these measures to costs of revenues for
each period shown is provided as part of the following tables, and a
description of each non-GAAP measure is provided below.
Total Costs of Revenues: For the Company on a consolidated basis, this
measure is equal to consolidated costs of revenues, as reported in the
Statement of Operations and Comprehensive Income/ (Loss). For the
Stillwater Mine, the East Boulder Mine, and other PGM activities, the
Company segregates the expenses within costs of revenues that are directly
associated with each of these activities and then allocates the remaining
facility costs included in consolidated costs of revenues in proportion to
the monthly volumes from each activity. The resulting total costs of
revenues measures for the Stillwater Mine, the East Boulder Mine and other
PGM activities are equal in total to consolidated costs of revenues as
reported in the Company's Statement of Operations and Comprehensive
Income/(Loss).
Total Production Costs (Non-GAAP): Calculated as total costs of revenues
(for each mine or consolidated) adjusted to exclude gains or losses on
asset dispositions, costs and profit from secondary recycling, and changes
in product inventories. This non-GAAP measure provides an indication of the
total costs incurred in association with production and processing in a
period, before taking into account the timing differences resulting from
inventory changes and before any effect of asset dispositions or secondary
recycling activities. The Company uses it as a comparative measure of the
level of total production and processing activities in a period, and may be
compared to prior periods or between the Company's mines. As noted above,
because this measure does not take into account the inventory timing
differences that are included in costs of revenues, it cannot be used to
develop meaningful measures of earnings or profitability.
When divided by the total tons milled in the respective period, Total
Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or
consolidated -- provides an indication of the cost per ton milled in that
period. Because of variability of ore grade in the Company's mining
operations, production efficiency underground is frequently measured
against ore tons produced rather than contained PGM ounces. And because ore
tons are first actually weighed as they are fed into the mill, mill feed is
the first point at which production tons are measured precisely.
Consequently, Total Production Cost per Ton Milled (Non-GAAP) is a general
measure of production efficiency, and is affected both by the level of
Total Production Costs (Non-GAAP) and by the volume of tons produced and
fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Production Cost per Ounce (Non-GAAP) -- measured
for each mine or consolidated -- provides an indication of the cost per
ounce produced in that period. Recoverable PGM ounces from production are
an indication of the amount of PGM product extracted through mining in any
period. Because extracting PGM material is ultimately the objective of
mining, the cost per ounce of extracting and processing PGM ounces in a
period is a useful measure for comparing extraction efficiency between
periods and between the Company's mines. Consequently, Total Production
Cost per Ounce (Non-GAAP) in any period is a general measure of extraction
efficiency, and is affected by the level of Total Production Costs
(Non-GAAP), by the grade of the ore produced and by the volume of ore
produced in the period.
Total Cash Costs (Non-GAAP): This non-GAAP measure is calculated (for each
mine or consolidated) as total costs of revenues adjusted to exclude gains
or losses on asset dispositions, costs and profit from recycling
activities, depreciation and amortization and asset retirement costs and
changes in product inventories. The Company uses this measure as a
comparative indication of the cash costs related to production and
processing in any period. As noted above, because this measure does not
take into account the inventory timing differences that are included in
costs of revenues, it cannot be used to develop meaningful measures of
earnings or profitability.
When divided by the total tons milled in the respective period, Total Cash
Cost per Ton Milled (Non-GAAP) -- measured for each mine or consolidated --
provides an indication of the level of cash costs incurred per ton milled
in that period. Because of variability of ore grade in the Company's mining
operations, production efficiency underground is frequently measured
against ore tons produced rather than contained PGM ounces. And because ore
tons are first weighed as they are fed into the mill, mill feed is the
first point at which production tons are measured precisely. Consequently,
Total Cash Cost per Ton Milled (Non-GAAP) is a general measure of
production efficiency, and is affected both by the level of Total Cash
Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Cash Cost per Ounce (Non-GAAP) -- measured for
each mine or consolidated -- provides an indication of the level of cash
costs incurred per PGM ounce produced in that period. Recoverable PGM
ounces from production are an indication of the amount of PGM product
extracted through mining in any period. Because ultimately extracting PGM
material is the objective of mining, the cost per ounce of extracting and
processing PGM ounces in a period is a useful measure for comparing
extraction efficiency between periods and between the Company's mines.
Consequently, Total Cash Cost per Ounce (Non-GAAP) in any period is a
general measure of extraction efficiency, and is affected by the level of
Total Cash Costs (Non-GAAP), by the grade of the ore produced and by the
volume of ore produced in the period.
Total Operating Costs (Non-GAAP): This non-GAAP measure is derived from
Total Cash Costs (Non-GAAP) for each mine or consolidated by excluding
royalty, tax and insurance expenses from Total Cash Costs (Non-GAAP).
Royalties, taxes and insurance costs are contractual or governmental
obligations outside of the control of the Company's mining operations, and
in the case of royalties and most taxes, are driven more by the level of
sales realizations rather than by operating efficiency. Consequently, Total
Operating Costs (Non-GAAP) is a useful indicator of the level of production
and processing costs incurred in a period that are under the control of
mining operations. As noted above, because this measure does not take into
account the inventory timing differences that are included in costs of
revenues, it cannot be used to develop meaningful measures of earnings or
profitability.
When divided by the total tons milled in the respective period, Total
Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or
consolidated -- provides an indication of the level of controllable cash
costs incurred per ton milled in that period. Because of variability of ore
grade in the Company's mining operations, production efficiency underground
is frequently measured against ore tons produced rather than contained PGM
ounces. And because ore tons are first actually weighed as they are fed
into the mill, mill feed is the first point at which production tons are
measured precisely. Consequently, Total Operating Cost per Ton Milled
(Non-GAAP) is a general measure of production efficiency, and is affected
both by the level of Total Operating Costs (Non-GAAP) and by the volume of
tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Operating Cost per Ounce (Non-GAAP) -- measured
for each mine or consolidated -- provides an indication of the level of
controllable cash costs incurred per PGM ounce produced in that period.
Recoverable PGM ounces from production are an indication of the amount of
PGM product extracted through mining in any period. Because ultimately
extracting PGM material is the objective of mining, the cost per ounce of
extracting and processing PGM ounces in a period is a useful measure for
comparing extraction efficiency between periods and between the Company's
mines. Consequently, Total Operating Cost per Ounce (Non-GAAP) in any
period is a general measure of extraction efficiency, and is affected by
the level of Total Operating Costs (Non-GAAP), by the grade of the ore
produced and by the volume of ore produced in the period.
Reconciliation of Non-GAAP Measures to Costs of Revenues
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2010 2009 2010 2009
--------- --------- --------- ---------
Consolidated:
Reconciliation to consolidated
costs of revenues:
Total operating costs
(Non-GAAP) $ 36,093 $ 38,409 $ 74,834 $ 82,748
Royalties, taxes and other 8,154 7,149 16,416 13,303
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 44,247 $ 45,558 $ 91,250 $ 96,051
Asset retirement costs 133 150 263 297
Depletion, depreciation and
amortization 16,589 17,043 35,045 34,163
Depletion, depreciation and
amortization (in inventory) (136) 185 (577) (56)
--------- --------- --------- ---------
Total production costs
(Non-GAAP) $ 60,833 $ 62,936 $ 125,981 $ 130,455
Change in product inventories (653) (36) 4,038 (3,654)
Cost of PGM recycling 39,256 10,541 70,251 30,910
PGM recycling - depreciation 39 44 83 89
Add: Profit from PGM recycling 3,367 1,723 6,266 2,979
--------- --------- --------- ---------
Total consolidated costs of
revenues (2) $ 102,842 $ 75,208 $ 206,619 $ 160,779
========= ========= ========= =========
Stillwater Mine:
Reconciliation to costs of
revenues:
Total operating costs
(Non-GAAP) $ 25,057 $ 27,813 $ 51,922 $ 59,637
Royalties, taxes and other 5,609 4,896 11,400 9,044
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 30,666 $ 32,709 $ 63,322 $ 68,681
Asset retirement costs 123 126 244 249
Depletion, depreciation and
amortization 11,305 11,499 24,002 22,781
Depletion, depreciation and
amortization (in inventory) (1) 215 (520) 319
--------- --------- --------- ---------
Total production costs
(Non-GAAP) $ 42,093 $ 44,549 $ 87,048 $ 92,030
Change in product inventories (417) (2,354) 51 (5,367)
Add: Profit from PGM recycling 2,370 1,288 4,535 2,230
--------- --------- --------- ---------
Total costs of revenues $ 44,046 $ 43,483 $ 91,634 $ 88,893
========= ========= ========= =========
East Boulder Mine:
Reconciliation to costs of
revenues:
Total operating costs
(Non-GAAP) $ 11,036 $ 10,596 $ 22,912 $ 23,111
Royalties, taxes and other 2,545 2,253 5,016 4,259
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 13,581 $ 12,849 $ 27,928 $ 27,370
Asset retirement costs 10 24 19 48
Depletion, depreciation and
amortization 5,284 5,544 11,043 11,382
Depletion, depreciation and
amortization (in inventory) (135) (30) (57) (375)
--------- --------- --------- ---------
Total production costs
(Non-GAAP) $ 18,740 $ 18,387 $ 38,933 $ 38,425
Change in product inventories (236) (1,153) (635) (3,785)
Add: Profit from PGM recycling 997 435 1,731 749
--------- --------- --------- ---------
Total costs of revenues $ 19,501 $ 17,669 $ 40,029 $ 35,389