Stillwater Mining Company Reports 2012 Earnings
BILLINGS, MT -- (Marketwire) -- 02/27/13 -- STILLWATER MINING COMPANY (NYSE: SWC) (TSX: SWC.U)
- Net income attributable to common stockholders of $55.0 million or $0.46 per diluted share
- Montana mining operations show strong 2012 results:
- Total mine production of 513,700 PGM ounces exceeds 2012 guidance of 500,000 ounces
- Total cash costs at $484 per ounce beat 2012 guidance of $500 per ounce
- Safety performance in 2012 at a Company best
- Montana proven ore reserves expanded to an all-time high in 2012
- Strong cash and investment position of $642 million supporting PGM growth projects
- Solid PGM market fundamentals and outlook
Stillwater Mining Company today reported 2012 net income attributable to common stockholders of $55.0 million, or $0.46 per diluted share, on revenues of $800.2 million, compared to net income attributable to common stockholders of $144.3 million, or $1.30 per diluted share, on revenues of $906.0 million in 2011. The Company's mines produced a total of 513,700 ounces of palladium and platinum during 2012, which exceeded the Company's 2012 guidance of 500,000 ounces; and compared to 517,900 ounces produced in 2011. The modest decrease in ounces produced between 2011 and 2012 resulted primarily from normal variability in mining conditions, as well as the array of stopes available for mining from period to period.
Progress continued during 2012 on the Company's PGM development projects. Spending in 2012 was heavily focused on Montana, where the Graham Creek and Blitz projects are under way. The tunnel boring machine, or TBM, drive at Graham Creek had advanced approximately 6,500 feet by the end of 2012, with completion of the full 8,200 feet of development expected during the first half of 2013. The newly acquired TBM at the Blitz project was installed on the east side of the Stillwater Mine during the second half of 2012 and started cutting during December. The machine is expected to develop about 23,000 feet of new TBM drift over the next several years. Also during 2012, the Company identified a new development area within the Stillwater Mine, the Far West project, that will accelerate the opportunity to increase annual mine production at the mine. About 92.6% of 2012 capital spending was committed to the Montana operations. These projects are expected to increase annual PGM production at the Montana operations to about the 600,000 ounce level as they are advanced over the next several years.
Along with these new developments, the Company also more than replaced the reserves it extracted from the existing mines during 2012, increasing proven ore reserves to 3.1 million in-situ ounces at the end of 2012 from 2.6 million ounces at the end of 2011. The year-end 2012 proven ore reserves included 2.4 million ounces of palladium and 0.7 million ounces of platinum. In addition to the growth in proven reserves, the Company also increased its Montana probable reserves of palladium and platinum to 18.4 million ounces from 17.4 million ounces at the end of 2011.
The Company enjoyed excellent safety performance during 2012, achieving the lowest incidence rate of reportable injuries for any year in its history. The Company began adopting the National Mining Association-sponsored CoreSafety program during 2012, layering the modules that this new program provides over its existing framework of safety practices.
Sales and earnings in 2012 were principally affected by lower PGM prices and higher costs. Average prices realized for mined ounces of palladium were $641 in 2012, compared to $739 in 2011, and for platinum were $1,551 in 2012 compared to $1,705 in 2011. Of the $800.2 million of revenues recorded in 2012, $455.4 million was attributable to sales from mine production and $344.8 million was generated by the Company's recycling activities. Comparable revenues for 2011 of $906.0 million included $528.0 million from mine production, $376.8 million from recycling, and $1.1 million from the resale of purchased metal.
Total cash costs per ounce of palladium and platinum produced (total cash cost is a non-GAAP measure of extraction efficiency described in more detail below) averaged $484 per ounce in 2012, which was better than the Company's guidance of $500 per ounce for the year, due primarily to higher-than-planned ounces produced in 2012. The 2012 total cash cost per ounce was approximately 15% higher than the $420 per ounce experienced in 2011. These higher costs were essentially in line with the 2012 mining plan and included the anticipated effect of increasing infrastructure and miner travel times as distances from mine access increase ("receding face"), contractual wage increases, an aggressive new-miner training program (both to support current production levels and to prepare for the Company's three Montana-based PGM growth initiatives), and some catch-up spending (in terms of infrastructure/administrative support) following the sharp cutbacks in 2009 and 2010.
Total revenues for the fourth quarter of 2012 were $203.4 million, down from $259.7 million in the 2011 fourth quarter. Average prices realized in the fourth quarter of 2012 for mined ounces of palladium were $647, compared to $644 in 2011 and for platinum were $1,594 in the fourth quarter of 2012 compared to $1,518 in 2011. For the 2012 fourth quarter, consolidated net income attributable to common stockholders was $16.9 million, or $0.13 per diluted share. Net income attributable to common stockholders reported for the fourth quarter of 2011 was $24.7 million, or $0.21 per diluted share on revenues of $259.7 million. The fourth quarter 2012 results reflect lower PGM sales volumes and higher consolidated total cash costs than in last year's fourth quarter and include a $2.2 million foreign currency transaction gain and exploration expenses of $1.2 million.
The Company's recycling business earned $10.5 million in 2012, down from $18.8 million in 2011. The Company's total volume of recycling material processed was 445,200 combined ounces of palladium, platinum and rhodium compared with 486,700 combined ounces in 2011. Fourth quarter 2012 recycling earnings were $2.5 million, down from $8.1 million in the fourth quarter of 2011 on lower sales volumes and lower realized prices during 2012.
Commenting on the Company's 2012 annual results, Frank McAllister, the Company's Chairman and Chief Executive Officer, observed, "The Company's mining and processing operations performed exceptionally well during the year. Combined safety performance in 2012 at our two Montana mines was the best in the Company's history. Production has been steady and better than planned. While palladium and platinum prices on average were substantially lower in 2012 than in the prior year, resulting in lower earnings, PGM market fundamentals currently are robust, particularly with respect to palladium.
"With growing PGM demand and constrained supply, in our view prices for both palladium and platinum are likely to increase from their current strong levels. Importantly, with the sharp reduction in Russian government exports of palladium, and the persistent growth in demand from the auto industry for catalytic converters, the traditional steep discount in the price of palladium relative to platinum has narrowed substantially. From 2003 through mid-2010, the price of palladium typically ranged between 20% and 25% of the price of platinum; since the middle of 2010 it has averaged between 40% and 45% of the platinum price. The Company's mines produce on average about 3.4 times as much palladium as platinum, so this pricing realignment has and will benefit the Company's earnings and the Company's relative cost position to that of other PGM producers.
"With respect to our Montana PGM development projects, we continue to actively pursue all three (Graham Creek, Far West and Blitz), and anticipate these three projects will result in a 20% increase in our annual production rate over the next several years. The Graham Creek project is now well advanced, expanding to the west in areas adjacent to our existing operations at the East Boulder Mine. Through the end of 2012, the TBM has completed about 6,500 feet of new development to the west, out of its total targeted footage of 8,200 feet. The TBM drive should be finished in the first half of 2013, after which we will begin developing two new ventilation shafts to the surface there. These shafts should be completed in early 2015. Once completed, Graham Creek is projected to increase East Boulder Mine production by approximately 30,000 ounces of palladium and platinum per year. We estimate the total cost of the Graham Creek project will be approximately $13 million, of which $3.5 million has been incurred through the end of 2012.
"We also recently announced an opportunity to accelerate some key development in an area located within the existing boundary of the Stillwater Mine. This area, known as the Far West, is situated below the Upper West section of the Stillwater Mine, which has been actively mined for many years. Far West is an area that has been reflected in our long-term mine plans and as our underground development headings have now reached that area, ore grades there appear to be a bit better than are typically found in the Upper West section. Because we expect to have access to production from the Blitz area in the future to help maintain Stillwater's longer-term PGM production, we believe it makes sense to accelerate development at Far West now, which should allow us to increase annual production at the Stillwater Mine ahead of the timetable for Blitz. Developing this project will require pulling forward from future years approximately $28 million of capital spending into the next three years, including approximately $8.6 million into 2013. Once operational this area is projected to add production of approximately 20,000 PGM ounces in 2016 and about 45,000 PGM ounces per year thereafter.
"As reported previously, a newly acquired TBM is now in operation at the Blitz project. This new TBM is located inside the 5000 East portal at the Stillwater Mine and ultimately will drive a 23,000 foot access drift towards the east along the J-M Reef. Simultaneously, a mining team is driving a parallel tunnel about 600 feet above the TBM, using conventional drill and blast methods. Both tunnels eventually will intersect a decline to be developed from a new surface portal located about four miles to the east of the existing Stillwater Mine surface facilities that will provide ventilation and emergency egress for the Blitz area. The Blitz project, which provides a backbone for our planned future operations to the east of the Stillwater Mine, is targeted for completion in late 2017 or 2018. While it is still too early to estimate future annual production from the Blitz area with any precision, we preliminarily expect Blitz production to replace depleting production in the off-shaft area of the Stillwater Mine, as well as to contribute approximately 25,000 ounces of incremental PGM production on an annual basis. Total cost to complete the Blitz project currently is estimated at about $209 million, of which about $35.1 million has been incurred through the end of 2012."
Turning to the Company's Marathon PGM-copper project in Canada, Mr. McAllister commented, "Our efforts at Marathon are focused primarily on two fronts right now -- advancing the joint federal/provincial environmental review of the Marathon project, and completing the definitive engineering study now underway. Marathon remains our key palladium priority outside of Montana and we expect completion of an updated engineering study in the third quarter of 2013."
Regarding the Company's Altar copper-gold exploration project in northwestern Argentina, Mr. McAllister noted, "Although the Altar exploration and related support expenditures were budgeted at about $25 million for 2012, in the end we spent about $17.5 million (including administrative expenses). Altar continues to provide a low-cost insurance option going forward, with significant upside resource potential as last year's successful drilling demonstrated. We will continue to employ a highly disciplined exploration program there to determine prudently the extent and quality of the Altar system without diverting resources from our core PGM commitment."
"Importantly, with the recent financing proceeds in hand, we now have extremely strong balance sheet liquidity, which in conjunction with our expected cash flows from operations, should enable us to aggressively pursue our PGM growth initiatives at a time when many of our industry peers are facing significant operational and financial challenges."
Commenting on costs Mr. McAllister observed, "Our advance guidance for 2013 total cash cost is $560 per ounce at a production level of 500,000 ounces of palladium and platinum, which would represent about a 16% year-on-year increase over the $484 per ounce averaged in 2012. I noted earlier that the mines' 2012 average total cash cost of $484 per ounce (a non-GAAP measure) was about 15% higher than the $420 per ounce experienced in 2011.
"These back-to-back annual increases in total cash cost per ounce of 15% in 2012 and almost 16% in 2013 are in line with our planning. As already noted, there are a number of cost pressures inherent in our business that all underground mining companies share. Our mining costs are driven in part by the ongoing effect of ever-expanding operations underground ("receding face"); at times by lower cut-off grades made possible by higher prices; by contractual wage increases; and underlying inflation in materials costs. These higher costs also in part reflect the investment in our new-miner training program necessary both to support current production levels and to prepare for the Company's three Montana-based PGM growth initiatives.
"It is useful to take a longer view of the Company's cost growth. If the Company's developed state is sufficiently robust, then during temporary down cycles in metals prices, some capital and operating costs can temporarily be scaled back in order to conserve cash. Ultimately, this deferred spending must be caught back up or production rates will suffer. To some extent, capital and operating expenditures during 2012 and 2013 include additional maintenance and infrastructure spending to compensate for cutbacks made to conserve cash during the economic downturn in 2009 and 2010. The cumulative annual growth rate in total cash costs per mined ounce for the five years from 2008 projected through 2013, taking into account the economic downturn and subsequent recovery, averages about 7% per year -- about what would be expected assuming low underlying inflation and taking the receding face issue into account. Other analyses of relative costs suggest that the Company's cost structure has become increasingly more competitive within the PGM industry over the past several years as competitor costs have escalated sharply. A 7% annual growth rate in cash cost per ounce over that period also compares very favorably to the much higher cost growth many other companies in the mining industry experienced over that period.
"Specifically, our plans include miner training programs at the two Montana mines which involve hiring on the order of 50 new miners each year who are not expected to reach their full productive potential as miners for three to five years. These new miners, once fully trained, are intended to step into future mining roles as employees retire or otherwise leave the Company, and also represent the investment in manpower necessary to support the production growth we are envisioning from our Montana operations over the next several years. In our view, making this investment now will pay for itself many times over as we realize value on our advancing growth projects. With regard to manpower, the total number of Montana employees has increased to 1,632 at the end of 2012, up from 1,522 at the end of 2011, reflecting hiring of additional qualified miners, miner trainees and mine support personnel.
"Regarding the growth in costs each year is to be expected at underground mines. Each year, mining continually gets deeper and travel ways extend further, increasing the time and resources needed to transport people and materials to and from the mining faces. Our mine planning models suggest that this effect alone can increase costs by as much as 5% to 6% per year. In this regard, one early advantage of the Blitz project as it comes into production is that its initial mining areas should be located much closer to the mine portals."
Commenting on the Company's downstream processing facilities, Mr. McAllister added, "At the smelter in Columbus, Montana we now have two electric furnaces in operation. After we commissioned our new No. 2 smelting furnace in May of 2009, we stripped the brick out of the old No. 1 furnace in anticipation of refurbishing it to become a slag cleaning circuit. During 2011, we rebricked the old furnace and completed the necessary engineering to allow us to transfer slag directly from our primary No. 2 furnace into the slag cleaning bath in the No. 1 furnace. Initial construction of the slag cleaning circuit was completed in late 2012, although we have made a few minor modifications subsequently. Later this year, we intend to temporarily shut down the No. 2 furnace for rebricking, operating the refurbished No. 1 furnace as primary until furnace No. 2 is ready to restart. We estimate this refurbishing will probably take four to five weeks. An additional benefit of operating a second furnace is we don't have to stockpile concentrates and recycle materials while the furnace is being refurbished.
"Finally, we would like to acknowledge and welcome Mr. George Bee as a new director recently appointed to our Company's board. George brings with him an extensive breadth of worldwide mining and management experience. We are very pleased to have him join the Board, and we look forward to the benefit of his perspective on our Company's activities."
Quarterly Results
Production during the fourth quarter of 2012 totaled 132,500 ounces of palladium and platinum, an increase of 16.2% from the 114,000 ounces produced in the fourth quarter of 2011 and a 4.3% increase from the 127,000 ounces produced during the third quarter of 2012.
2012 Mine Production by Quarter:
First Second Third Fourth Year
(Produced ounces) Quarter Quarter Quarter Quarter 2012
------- ------- ------- ------- -------
Stillwater Mine 87,700 98,100 94,100 97,500 377,400
Palladium 67,600 75,300 72,000 75,200 290,100
Platinum 20,100 22,800 22,100 22,300 87,300
East Boulder 33,100 35,300 32,900 35,000 136,300
Palladium 25,800 27,500 25,500 27,100 105,900
Platinum 7,300 7,800 7,400 7,900 30,400
Company Total 120,800 133,400 127,000 132,500 513,700
Palladium 93,400 102,800 97,500 102,300 396,000
Platinum 27,400 30,600 29,500 30,200 117,700
The Company processed recycling material containing 118,600 ounces of palladium, platinum and rhodium through its smelter and refinery during the fourth quarter of 2012, an increase from the 112,400 ounces recycled during the fourth quarter of 2011. Recycling sales volumes decreased to 86,500 ounces in the fourth quarter of 2012, from 115,300 ounces in the fourth quarter of 2011. Revenues from sales of purchased recycling materials totaled $87.6 million in the 2012 fourth quarter, down from $137.9 million in the same period last year. Tolling revenues declined to $0.3 million in this year's fourth quarter, compared to $0.5 million in the comparable quarter of 2011. The Company's recycling segment had income for the 2012 fourth quarter of $2.5 million (including financing income), compared to income of $8.1 million reported for the fourth quarter of 2011. The Company's combined average realized price for sales of recycled palladium, platinum and rhodium declined to $1,012 per ounce in the fourth quarter of 2012 from $1,196 per ounce in the fourth quarter of 2011.
2012 Recycling Activity by Quarter:
First Second Third Fourth Year
Quarter Quarter Quarter Quarter 2012
------- ------- ------- ------- -------
Tons fed per day 18.3 20.8 14.8 20.5 18.6
PGM ounces fed 107,300 123,100 96,200 118,600 445,200
PGM ounces sold 82,445 92,904 74,580 86,535 336,464
PGM toll oz. returned 25,243 39,595 22,430 11,488 98,756
Capital Outlay
The Company's 2012 capital outlay totaled $116.6 million, less than the Company's original 2012 guidance of $135 million but an increase over 2011 outlay of $104.1 million. The increased capital outlay was driven primarily by the Blitz and Graham Creek development projects in Montana and by engineering and environmental work at the Company's Marathon PGM-copper project in Canada. Exploration expense totaled $15.0 million in 2012, up from $2.5 million in 2011. The increase in exploration expense reflected drilling activity during the first half of 2012 at the Company's Altar project in Argentina. The table below provides detail on capital spending by project in 2012 and 2011.
(In millions) 2013 Plan 2012 Outlay 2011 Outlay
--------- ----------- -----------
CAPITAL OUTLAY (1)
Stillwater Mine $ 87.4 $ 57.9 $ 52.5
East Boulder Mine $ 21.8 $ 18.5 $ 17.3
Blitz $ 16.5 $ 19.4 $ 15.7
Graham Creek $ 4.7 $ 3.5 $ -
Processing and Other $ 20.5 $ 8.7 $ 4.2
--------- ----------- -----------
Total Montana Outlay $ 150.9 $ 108.0 $ 89.7
--------- ----------- -----------
Marathon $ 21.9 $ 8.6 $ 14.4
--------- ----------- -----------
Total Capital Outlay $ 172.8 $ 116.6 $ 104.1
========= =========== ===========
(1) Capital outlay excludes approximately $6.3 million of anticipated non-cash capitalized interest in 2013. Capital outlay in 2012 excludes $0.9 million of non-cash capitalized interest. No non-cash capitalized interest was recorded in 2011.
The Company's planned 2013 capital spending is expected to total about $172.8 million, reflecting substantial 2013 investment in the Company's expansion projects. Spending at the Stillwater Mine will include accelerated development in the Far West area of the mine, which is projected to allow for increased production at Stillwater beginning in 2016. Other Stillwater Mine spending will include expansion of the Kiruna electric haulage deeper into the mine and purchase of some additional ore haulage equipment necessary as distances underground increase. Expenditures at the Blitz project include development along two parallel drifts extending to the east from the existing Stillwater Mine infrastructure, while Graham Creek finishes up its TBM drift to the west of the East Boulder Mine in early 2013 and begins development of two ventilation raises to surface. Engineering and environmental review continue at the Marathon project in an effort to finalize the design criteria and project economics.
The Company has evaluated its 2013 capital and exploratory budgets and has concluded that, at recent metals prices, its available liquidity and cash flow from operations are adequate to support its capital and exploratory spending plans for 2013. However, the Company also maintains significant discretion in its spending plans and can adjust the allocation and, to a reasonable extent, the timing of spending as necessary. The Company currently has several capital intensive development projects in its pipeline. While all of these projects are considered important to the organization, the Company has prioritized these efforts during its budgeting process. The Company's first priority is clearly to sustain the developed state of its current mining operations, including the Graham Creek project, which is essentially an extension of the East Boulder Mine and is relatively low cost. The Blitz project, which is designed to extend underground access and ultimately to maintain and grow annual production at the Stillwater Mine, has a less critical timeline at this point, although its potential to grow value is significant.
Review of Investor Guidance for 2013
The Company's Montana mining operations as currently configured, function well at a production rate of approximately 500,000 combined ounces of palladium and platinum per year. Mine plans for 2013 once again have been structured to achieve that level of production. It is anticipated that total cash cost per ounce (a non-GAAP measure) for the two Montana mines will average approximately $560 in 2013, 15.7% higher than the $484 per ounce averaged in 2012. The projected year-on-year increase in total cash costs per ounce reflects expected 2013 general inflation in supply costs, the effect of the underground receding face, contractual wage increases, continued growth in the Company's new-miner training program, and slightly lower 2013 planned mine production.
Capital expenditures are budgeted to total approximately $172.8 million for 2013, up from $116.6 million in 2012. The increase is attributable primarily to additional capital requirements at the Marathon project, along with the acceleration of the Far West development area within the Stillwater Mine. Development spending plans established for 2013 are comprised of approximately $16.5 million for the Blitz project, $4.7 million for Graham Creek and $21.9 million for the Marathon PGM-copper project.
Cash Flow and Liquidity
At December 31, 2012, the Company's total available cash and cash equivalents was $379.7 million, compared to $109.1 million at December 31, 2011. If highly liquid short-term investments are included with available cash, the Company's balance sheet liquidity totaled $641.7 million at December 31, 2012, an increase from $158.6 million at December 31, 2011. Most of the net increase in cash during 2012 is attributable to the sale of $396.75 million of convertible debentures in October. Of the Company's cash balance at the end of 2012, $43.4 million is dedicated to the Marathon project (and other related properties) and is unavailable for other corporate purposes. Net working capital -- comprised of total current assets (including available cash and short-term investments), less current liabilities -- increased to $606.0 million at December 31, 2012, from $251.6 million at year end 2011. The December 31, 2012 amount includes $166.5 million reclassified as the current portion of long-term debt, reflecting the Company's existing 1.875% convertible debentures that are expected to be redeemed in cash by their holders on March 15, 2013.
Net cash provided by operating activities (which includes changes in working capital) in the fourth quarter of 2012 totaled $3.8 million, compared to $91.8 million of cash provided in the fourth quarter of 2011. Capital expenditures (adjusted to include incurred but unpaid obligations at the end of each period) were $30.6 million in the fourth quarter of 2012, a little higher than the $27.0 million reported for the fourth quarter of 2011. For the full year 2012, net cash provided by operating activities totaled $103.9 million, down from $219.7 million for the year 2011, reflecting lower PGM prices and higher cash costs in 2012. Capital expenditures for the full year 2012 totaled $117.1 million (including capitalized interest and obligations incurred but unpaid at year end), compared to $104.1 million for the year 2011.
Outstanding debt at December 31, 2012, was $461.1 million, up from $196.0 million at December 31, 2011. The Company's debt includes $424.7 million outstanding in the form of convertible debentures, $29.6 million of exempt facility revenue bonds due in 2020, a capital lease of $6.5 million and $0.3 million for a small installment land purchase. On October 17, 2012, the Company completed the issuance and sale of $396.75 million of 1.75% convertible senior unsecured notes due in 2032. In accordance with U.S. generally accepted accounting principles, the value of these newly-issued convertible debentures, which can be settled upon conversion in any combination of cash and common shares at the Company's discretion, has been bifurcated into a $255.2 million long-term debt component and a $141.5 million equity component that reflects the value of the embedded conversion feature. The Company intends to use the net proceeds from this offering to repay amounts that may come due under the Company's outstanding 1.875% convertible debentures in March 2013, and for general corporate purposes.
Year End Results Webcast and Conference Call
Stillwater Mining Company will conduct a conference call to discuss fourth quarter results at approximately 12:00 p.m. Eastern Daylight Time on Wednesday, February 27, 2013.
Dial-In Numbers:
United States: (800) 230-1093
International: (612) 288-0329
The conference call will be simultaneously webcast through the Company's website at www.stillwatermining.com in the Investor Relations section.
A telephone replay of the call will be available for one week following the event. The replay dial-in numbers are (800) 475-6701 (U.S.) and (320) 365-3844 (International), access code 281224. In addition, the call transcript will be archived in the Investor Relations section of the Company's website.
About Stillwater Mining Company
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 and on the Toronto Stock Exchange under the symbol SWC.U. Information on Stillwater Mining can be found at its website: www.stillwatermining.com.
Some statements contained in this news release 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. Additional information regarding factors that could cause results to differ materially from management's expectations is found in the section entitled "Risk Factors" in the Company's 2011 Annual Report on Form 10-K, in its quarterly Form 10-Q filings, and in corresponding filings with Canadian securities regulatory authorities. The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The Company disclaims any obligation to update forward-looking statements.
Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended Twelve Months
December 31, Ended December 31,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
REVENUES
Mine production $115,475 $121,261 $455,426 $528,007
PGM recycling 87,899 138,390 344,818 376,820
Other - - - 1,142
-------- -------- -------- --------
Total revenues 203,374 259,651 800,244 905,969
COSTS AND EXPENSES
Costs of metals sold
Mine production 69,987 73,223 288,922 269,573
PGM recycling 85,589 130,524 334,949 358,566
Other - - - 1,141
-------- -------- -------- --------
Total costs of metals sold 155,576 203,747 623,871 629,280
Depletion, depreciation and
amortization
Mine production 14,112 14,757 56,960 61,312
PGM recycling 262 270 1,055 1,066
-------- -------- -------- --------
Total depletion, depreciation
and amortization 14,374 15,027 58,015 62,378
-------- -------- -------- --------
Total costs of revenues 169,950 218,774 681,886 691,658
Loss on inventory purchases 140 150 590 600
(Gain)/Loss on disposal of
property, plant and equipment 85 14 448 (128)
Research and development 295 633 1,159 2,238
Loss on long-term investments 865 - 2,562 -
Abandonment of non-producing
property - - 2,835 -
Marketing 3,296 3,820 11,170 11,810
Exploration 1,225 2,148 15,010 2,513
General and administrative 8,921 13,118 40,948 42,072
-------- -------- -------- --------
Total costs and expenses 184,777 238,657 756,608 750,763
OPERATING INCOME 18,597 20,994 43,636 155,206
OTHER INCOME (EXPENSE)
Other (486) 42 181 68
Interest income 619 735 2,325 3,574
Interest expense (6,559) (1,641) (10,920) (6,548)
Foreign currency transaction gain,
net 2,174 3,190 15,155 3,230
-------- -------- -------- --------
INCOME BEFORE INCOME TAX PROVISION 14,345 23,320 50,377 155,530
Income tax benefit (provision) 2,531 1,344 4,039 (11,235)
-------- -------- -------- --------
NET INCOME $ 16,876 $ 24,664 $ 54,416 $144,295
-------- -------- -------- --------
Net income (loss) attributable to
noncontrolling interest 2 - (629) -
-------- -------- -------- --------
NET INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS $ 16,874 $ 24,664 $ 55,045 $144,295
-------- -------- -------- --------
Other comprehensive income/(loss),
net of tax
Net unrealized gains/(losses) on
securities available-for-sale 242 230 862 (109)
-------- -------- -------- --------
COMPREHENSIVE INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ 17,116 $ 24,894 $ 55,907 $144,186
-------- -------- -------- --------
Comprehensive income (loss)
attributable to noncontrolling
interest 2 - (629) -
-------- -------- -------- --------
TOTAL COMPREHENSIVE INCOME $ 17,118 $ 24,894 $ 55,278 $144,186
======== ======== ======== ========
Weighted average common shares
outstanding
Basic 116,888 114,793 116,162 105,846
Diluted 153,974 122,765 131,441 113,946
Basic earnings per share
attributable to common stockholders $ 0.14 $ 0.21 $ 0.47 $ 1.36
Diluted earnings per share
attributable to common stockholders $ 0.13 $ 0.21 $ 0.46 $ 1.30
======== ======== ======== ========
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share data)
December 31, December 31,
2012 2011
------------- -------------
ASSETS
Cash and cash equivalents $ 379,680 $ 109,097
Investments, at fair market value 261,983 49,533
Inventories 153,208 131,856
Trade receivables 9,953 6,188
Deferred income taxes 21,304 19,819
Other current assets 26,734 9,433
------------- -------------
Total current assets 852,862 325,926
Mineral properties and mine development, net
of $325,977 and $285,237 of accumulated
deletion and amortization 899,225 865,034
Property, plant and equipment, net of
$169,933 and $151,375 of accumulated
depreciation 122,677 99,379
Restricted cash 35 25,070
Deferred debt issuance costs 9,609 2,899
Other noncurrent assets 6,355 9,016
------------- -------------
Total assets $ 1,890,763 $ 1,327,324
============= =============
LIABILITIES AND EQUITY
Accounts payable $ 28,623 $ 26,880
Accrued compensation and benefits 31,369 27,573
Property, production and franchise taxes
payable 13,722 14,071
Current portion of long-term debt and capital
lease obligations 168,432 -
Income taxes payable - 1,235
Other current liabilities 4,702 4,576
------------- -------------
Total current liabilities 246,848 74,335
Long-term debt and capital lease obligations 292,685 196,046
Deferred income taxes 199,802 193,884
Accrued workers compensation 5,815 6,056
Asset retirement obligation 7,965 7,331
Other noncurrent liabilities 5,068 5,704
------------- -------------
Total liabilities 758,183 483,356
------------- -------------
EQUITY
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; 116,951,081 and
115,375,604 shares issued and outstanding 1,170 1,154
Paid-in capital 1,058,978 878,050
Accumulated earnings (deficit) 20,770 (34,275)
Accumulated other comprehensive loss (99) (961)
------------- -------------
Total stockholders' equity 1,080,819 843,968
------------- -------------
Noncontrolling interest 51,761 -
------------- -------------
Total equity 1,132,580 843,968
------------- -------------
Total liabilities and equity $ 1,890,763 $ 1,327,324
============= =============
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ----------------------
2012 2011 2012 2011
--------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 16,876 $ 24,664 $ 54,416 $ 144,295
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depletion, depreciation and
amortization 14,374 15,027 58,015 62,378
Loss on inventory purchases 140 150 590 600
(Gain)/Loss on disposal of
property, plant and
equipment 85 14 448 (128)
Loss on long-term
investments 865 - 2,562 -
Deferred taxes 976 - (3,937) -
Foreign currency
transaction gain, net (2,785) (3) (15,155) (3,230)
Abandonment of non-
producing property - - 2,835 -
Accretion of asset
retirement obligation 164 151 634 584
Amortization of debt
issuance costs 621 251 1,495 988
Accretion of convertible
debenture debt discount 3,059 - 3,097 -
Share based compensation
and other benefits 3,470 3,257 16,369 12,358
Changes in operating assets
and liabilities:
Inventories (26,179) 45,144 (19,958) (34,143)
Trade receivables (38) 893 (3,765) 1,192
Accrued compensation and
benefits 1,317 (1,142) 3,575 2,822
Accounts payable (179) (4,003) (1,772) 4,012
Property, production and
franchise taxes payable (2,011) 162 (970) 4,338
Income taxes payable - (1,344) (1,235) 1,235
Workers compensation (731) (849) (241) (1,099)
Restricted cash 9,210 10,000 25,035 13,000
Excess tax benefit from
stock-based compensation (7,737) - (7,737) -
Other (7,705) (578) (10,407) 10,481
--------- ---------- ---------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,792 91,794 103,894 219,683
--------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures (27,715) (27,708) (112,071) (101,940)
Purchase of Peregrine
Metals Ltd. assets - (166,361) - (166,361)
Purchase of long-term
investment - - - (616)
Proceeds from disposal of
property, plant and
equipment 183 41 222 277
Purchases of investments (211,987) (750) (280,273) (106,417)
Proceeds from maturities of
investments 25,311 41,067 67,314 245,464
--------- ---------- ---------- ----------
NET CASH (USED IN) INVESTING
ACTIVITIES (214,208) (153,711) (324,808) (129,593)
--------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from sale of
noncontrolling interest,
net of transaction costs - - 93,821 -
Excess tax benefit from
stock-based compensation 7,737 - 7,737 -
Issuance of long-term debt 396,750 - 403,926 -
Payments on long-term debt
and capital lease
obligations (448) - (1,394) -
Payments for issuance costs (12,418) (1,143) (12,637) (1,143)
Issuance of common stock - 2 44 787
--------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED
IN) FINANCING 391,621 (1,141) 491,497 (356)
--------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS
Net increase (decrease) 181,205 (63,058) 270,583 89,734
Balance at beginning of
period 198,475 172,155 109,097 19,363
--------- ----------
BALANCE AT END OF PERIOD $ 379,680 $ 109,097 $ 379,680 $ 109,097
========= ========== ========== ==========
Stillwater Mining Company
Key Operating Factors
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except where
noted) 2012 2011 2012 2011
----------- ----------- ----------- -----------
OPERATING AND COST DATA FOR
MINE PRODUCTION
Consolidated:
Ounces produced
Palladium 98 88 396 399
Platinum 35 26 118 119
----------- ----------- ----------- -----------
Total 133 114 514 518
=========== =========== =========== ===========
Tons milled 281 258 1,081 1,131
Mill head grade (ounce per
ton) 0.51 0.48 0.51 0.49
Sub-grade tons milled (1) 20 15 69 79
Sub-grade tons mill head
grade (ounce per ton) 0.14 0.13 0.16 0.17
Total tons milled(1) 301 273 1,150 1,210
Combined mill head grade
(ounce per ton) 0.49 0.46 0.49 0.47
Total mill recovery (%) 92 91 92 91
Total operating costs per
ounce (Non-GAAP) (2) $ 411 $ 337 $ 407 $ 327
Total cash costs per ounce
(Non-GAAP) (2) $ 475 $ 422 $ 484 $ 420
Total production costs per
ounce (Non-GAAP) (2) $ 595 $ 537 $ 599 $ 532
Total operating costs per
ton milled (Non-GAAP)(2) $ 181 $ 141 $ 182 $ 140
Total cash costs per ton
milled (Non-GAAP) (2) $ 209 $ 176 $ 216 $ 180
Total production costs per
ton milled (Non-GAAP) (2) $ 262 $ 224 $ 267 $ 228
Stillwater Mine:
Ounces produced
Palladium 75 64 290 297
Platinum 23 19 88 90
----------- ----------- ----------- -----------
Total 98 83 378 387
=========== =========== =========== ===========
Tons milled 176 163 673 736
Mill head grade (ounce per
ton) 0.60 0.55 0.60 0.56
Sub-grade tons milled (1) 10 9 36 57
Sub-grade tons mill head
grade (ounce per ton) 0.20 0.15 0.21 0.20
Total tons milled (1) 186 172 709 793
Combined mill head grade
(ounce per ton) 0.58 0.53 0.58 0.53
Total mill recovery (%) 92 91 92 92
Total operating costs per
ounce (Non-GAAP) (2) $ 392 $ 317 $ 384 $ 313
Total cash costs per ounce
(Non-GAAP) (2) $ 453 $ 400 $ 456 $ 401
Total production costs per
ounce (Non-GAAP) (2) $ 578 $ 522 $ 575 $ 520
Total operating costs per
ton milled (Non-GAAP) (2) $ 206 $ 152 $ 205 $ 153
Total cash costs per ton
milled (Non-GAAP) (2) $ 238 $ 192 $ 243 $ 195
Total production costs per
ton milled (Non-GAAP) (2) $ 303 $ 251 $ 306 $ 253
Stillwater Mining Company
Key Operating Factors (continued)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
----------- ----------- ------------ ------------
OPERATING AND COST DATA
FOR MINE PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced
Palladium 27 24 106 102
Platinum 8 7 30 29
----------- ----------- ------------ ------------
Total 35 31 136 131
=========== =========== ============ ============
Tons milled 104 95 408 395
Mill head grade (ounce per
ton) 0.37 0.37 0.37 0.37
Sub-grade tons milled (1) 11 6 33 22
Sub-grade tons mill head
grade (ounce per ton) 0.09 0.10 0.10 0.10
Total tons milled (1) 115 101 441 417
Combined mill head grade
(ounce per ton) 0.34 0.35 0.35 0.35
Total mill recovery (%) 90 89 90 89
Total operating costs per
ounce (Non-GAAP) (2) $ 463 $ 389 $ 470 $ 368
Total cash costs per ounce
(Non-GAAP) (2) $ 537 $ 481 $ 562 $ 475
Total production costs per
ounce (Non-GAAP) (2) $ 641 $ 576 $ 666 $ 569
Total operating costs per
ton milled (Non-GAAP) (2) $ 141 $ 121 $ 145 $ 116
Total cash costs per ton
milled (Non-GAAP) (2) $ 163 $ 149 $ 174 $ 150
Total production costs per
ton milled (Non-GAAP) (2) $ 195 $ 178 $ 206 $ 179
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 2011 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-downs, 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.
Stillwater Mining Company
Key Operating Factors (continued)
(Unaudited)
(In thousands, except for Three Months Ended Twelve Months Ended
average prices) December 31, December 31,
--------------------- -------------------------
2012 2011 2012 2011
---------- ---------- ------------ ------------
SALES AND PRICE DATA
Ounces sold
Mine production:
Palladium (oz.) 96 95 386 402
Platinum (oz.) 29 32 114 114
---------- ---------- ------------ ------------
Total 125 127 500 516
---------- ---------- ------------ ------------
PGM recycling: (1)
Palladium (oz.) 47 62 192 169
Platinum (oz.) 33 44 119 114
Rhodium (oz.) 6 9 25 23
---------- ---------- ------------ ------------
Total 86 115 336 306
---------- ---------- ------------ ------------
Other: (5)
Platinum (oz.) - - - 1
By-products from mining: (2)
Rhodium (oz.) 1 3 4 5
Gold (oz.) 2 3 9 9
Silver (oz.) 2 2 6 6
Copper (lb.) 173 176 742 788
Nickel (lb.) 284 291 1,120 1,263
Average realized price per
ounce(3)
Mine production:
Palladium ($/oz.) $ 647 $ 644 $ 641 $ 739
Platinum ($/oz.) $ 1,594 $ 1,518 $ 1,551 $ 1,705
Combined ($/oz.)(4) $ 867 $ 866 $ 849 $ 953
PGM recycling: (1)
Palladium ($/oz.) $ 628 $ 721 $ 645 $ 736
Platinum ($/oz.) $ 1,534 $ 1,736 $ 1,542 $ 1,757
Rhodium ($/oz.) $ 1,168 $ 1,842 $ 1,377 $ 2,098
Combined ($/oz.)(4) $ 1,012 $ 1,196 $ 1,018 $ 1,218
Other: (5)
Platinum ($/oz.) $ - $ - $ - $ 1,774
By-products from mining: (2)
Rhodium ($/oz.) $ 1,074 $ 1,553 $ 1,258 $ 1,668
Gold ($/oz.) $ 1,694 $ 1,661 $ 1,667 $ 1,563
Silver ($/oz.) $ 32 $ 32 $ 31 $ 35
Copper ($/lb.) $ 3.42 $ 3.21 $ 3.42 $ 3.82
Nickel ($/lb.) $ 6.63 $ 6.81 $ 6.74 $ 9.03
Average market price per
ounce(3)
Palladium ($/oz.) $ 650 $ 629 $ 643 $ 734
Platinum ($/oz.) $ 1,603 $ 1,537 $ 1,551 $ 1,722
Combined ($/oz.)(4) $ 872 $ 860 $ 850 $ 952
1. Ounces sold and average realized price per ounce from PGM recycling
relate to ounces produced from processing of catalyst materials.
2. 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.
3. The Company's average realized price represents revenues, which include
the effect of 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 a combined average
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 Other relate to
ounces purchased in the open market for resale.
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 of 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 Consolidated Statement of Operations and Comprehensive Income) 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 earnings or 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 as a whole, this measure is equal to total costs of revenues, as reported in the Consolidated Statement of Operations and Comprehensive Income. For the Stillwater Mine, the East Boulder Mine, and other PGM activities, the Company segregates the expenses within total costs of revenues that are directly associated with each of these activities and then allocates the remaining facility costs included in total cost of revenues in proportion to the monthly volumes from each activity. The resulting total costs of revenues measures for Stillwater Mine, East Boulder Mine and other PGM activities are equal in total to total costs of revenues as reported in the Company's Consolidated Statement of Operations and Comprehensive Income.
Total Production Costs (Non-GAAP): Calculated as total costs of revenues (for each mine or combined) adjusted to exclude gains or losses on asset dispositions, costs and profit from recycling activities, revenues from the sale of mined by-products and timing differences resulting from changes in product inventories. This non-GAAP measure provides a comparative measure of the total costs incurred in association with production and processing activities in a period, and may be compared to prior periods or between the Company's mines.
When divided by the total tons milled in the respective period, Total Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- 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. 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 combined --- 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 by excluding the depreciation and amortization and asset retirement costs from Total Production Costs (Non-GAAP) for each mine or combined. The Company uses this measure as a comparative indication of the cash costs related to production and processing in any period.
When divided by the total tons milled in the respective period, Total Cash Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- 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. 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 combined -- 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 cash 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 combined 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.
When divided by the total tons milled in the respective period, Total Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- 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. 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 combined -- 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 Twelve Months
December 31, Ended December 31,
------------------ ------------------
(In thousands) 2012 2011 2012 2011
-------- -------- -------- --------
Consolidated:
Reconciliation to consolidated costs
of revenues:
Total operating costs (Non-GAAP) $ 54,383 $ 38,410 $209,069 $169,375
Royalties, taxes and other 8,571 9,714 39,593 47,965
-------- -------- -------- --------
Total cash costs (Non-GAAP) $ 62,954 $ 48,124 $248,662 $217,340
Asset retirement costs 165 151 635 584
Depletion, depreciation and
amortization 14,111 14,757 56,960 61,312
Depletion, depreciation and
amortization (in inventory) 1,534 (1,824) 1,393 (3,492)
-------- -------- -------- --------
Total production costs (Non-GAAP) $ 78,764 $ 61,208 $307,650 $275,744
Change in product inventories (4,425) 7,048 (3,452) 903
Cost of PGM recycling 85,589 130,524 334,949 358,566
PGM recycling - depreciation 262 270 1,055 1,066
Add: Profit from by-products 7,079 11,455 30,642 35,963
Add: Profit from PGM recycling 2,681 8,269 11,042 19,416
-------- -------- -------- --------
Total consolidated costs of revenues $169,950 $218,774 $681,886 $691,658
======== ======== ======== ========
Stillwater Mine:
Reconciliation to costs of revenues:
Total operating costs (Non-GAAP) $ 38,199 $ 26,171 $145,037 $121,134
Royalties, taxes and other 5,982 6,831 27,062 33,922
-------- -------- -------- --------
Total cash costs (Non-GAAP) $ 44,181 $ 33,002 $172,099 $155,056
Asset retirement costs 153 140 588 541
Depletion, depreciation and
amortization 10,653 11,477 43,329 47,759
Depletion, depreciation and
amortization (in inventory) 1,377 (1,507) 924 (2,144)
-------- -------- -------- --------
Total production costs (Non-GAAP) $ 56,364 $ 43,112 $216,940 $201,212
Change in product inventories (3,414) 5,293 (2,326) (252)
Add: Profit from by-products 4,499 7,563 19,793 23,397
Add: Profit from PGM recycling 2,005 6,014 8,124 14,387
-------- -------- -------- --------
Total costs of revenues $ 59,454 $ 61,982 $242,531 $238,744
======== ======== ======== ========
East Boulder Mine:
Reconciliation to costs of revenues:
Total operating costs (Non-GAAP) $ 16,184 $ 12,239 $ 64,032 $ 48,241
Royalties, taxes and other 2,589 2,883 12,531 14,043
-------- -------- -------- --------
Total cash costs (Non-GAAP) $ 18,773 $ 15,122 $ 76,563 $ 62,284
Asset retirement costs 12 11 47 43
Depletion, depreciation and
amortization 3,458 3,280 13,631 13,553
Depletion, depreciation and
amortization (in inventory) 157 (317) 469 (1,348)
-------- -------- -------- --------
Total production costs (Non-GAAP) $ 22,400 $ 18,096 $ 90,710 $ 74,532
Change in product inventories (1,011) 1,755 (1,126) 14
Add: Profit from by-products 2,580 3,892 10,849 12,566
Add: Profit from PGM recycling 676 2,255 2,918 5,029
-------- -------- -------- --------
Total costs of revenues $ 24,645 $ 25,998 $103,351 $ 92,141
======== ======== ======== ========
PGM Recycling
Reconciliation to costs of revenues:
Cost of open market purchases $ - $ - $ - $ 1,141
PGM recycling - depreciation 262 270 1,055 1,066
Cost of PGM recycling 85,589 130,524 334,949 358,566
-------- -------- -------- --------
Total costs of revenues $ 85,851 $130,794 $336,004 $360,773
======== ======== ======== ========