Stillwater Mining Company Announces Third Quarter Results
DENVER, Colo., Oct. 25 /PRNewswire/ -- Stillwater Mining Co reported a net loss of $812,000, $.04 per
share, on revenue of $17.2 million for the third quarter of 1996. This is compared to a net loss of $722,000,
$.04 per share, on revenue of $10.6 million in the third quarter of 1995. For the nine-month period ending
September 30, 1996, the Company reported net income of $12.4 million, $.61 per share, compared to a net
loss of $204,000, $.01 per share, for the same period in 1995. Net income for the 1996 nine-month period
includes $13.9 million from the cumulative effect, after taxes, of a change in accounting policy whereby mine
development costs previously expensed are now being capitalized.
Factors affecting the second quarter and nine month results are as follows:
-- Revenue for the third quarter increased 62% partly due to higher production, but primarily due to the
successful start-up of the base metals refinery which allowed the Company to realize revenue from platinum
and palladium recovered from in-process inventories. Total ounces sold for the quarter were 81,000
compared to 61,000 ounces produced. Stillwater's revenue for the nine months of 1996 was $42.9 million
compared to $42.8 million for the same period in 1995.
-- Cost of metals sold for the third quarter increased to $15.9 million compared to $10.5 million for the same
period in 1995. This increase was due to higher ounces sold in the quarter as a result of the base metals
refinery start-up. For the nine months of 1996, cost of metals sold was $38.6 million compared to $39.7 for the
same period in 1995.
-- During the third quarter, mill throughput increased by 14% over the same period in 1995. This increase in
tons milled was offset by a decline in the mill feed grade for the 1996 quarter. Tons milled were up 6% for the
1996 nine months compared to the same period in 1995, and the grade was 0.65 ounce per ton for both the
1996 and 1995 periods.
-- The combined average realized price per ounce of metal sold for the third quarter was $214 compared to
$218 for the same period a year ago. The combined average realized price per ounce sold for the nine
months of 1996 was $217 compared to $233 for the same period in 1995. For the third quarter and
nine-month periods of 1996, the Company's hedging program provided higher realized prices than the
combined market price of platinum and palladium.
-- Interest expense for the 1996 third quarter was $506,000 compared to $69,000 for the same period in
1995. For the 1996 nine months, interest expense was $1.1 million compared to $211,000 for the 1995 nine
months. The increase in interest expense was primarily due to an increase in long-term debt as a result of the
sale of $51.5 million of convertible notes in the second quarter of 1996 to fund strategic growth programs.
Depreciation, depletion and amortization also increased in both the quarter and nine-month periods as a
result of heavy capital spending for the Company's expansion program.
"The record amount of tonnage we mined in the third quarter strained our materials handling systems and
adversely affected the grade of ore being delivered to the mill," said Charles R. Engles, Chairman and Chief
Executive Officer. "To correct this problem, a more stringent control system has been introduced that will
improve the segregation of ore and waste and decrease the dilution factor. In addition, the new vertical shaft
is expected to be handling all the ore coming out of the mine by the second quarter of 1997, which will make
the segregation of ore and waste much simpler in the future."
OPERATIONS
Trends in tonnage moved since the beginning of 1996 have been very good with a 23% increase in tons
milled, from 95,000 in the first quarter to 117,000 in the third quarter. This trend is expected to accelerate in
the fourth quarter. During the second quarter of 1996, both cash costs per ton of ore milled and cash costs per
ounce of production were artificially lowered as a result of stockpiled material being processed. In the third
quarter of 1996, the same number of ounces were produced as in the second quarter. However, this was
accomplished without stockpiled material being run through the mill. In addition, in the third quarter of 1996,
the Company expanded its mining work force by 17%, which increased per ounce costs as the new miners
were undergoing orientation and training. Stillwater is relying on this increase in the work force to be
instrumental in achieving its fourth quarter production increase.
EXPANSION
Stillwater's 2,000 ton-per-day expansion program moved ahead in the third quarter with substantial
underground development adjacent to the new production shaft. The development contractor has reached the
ore body on the lowest and intermediate levels accessed by the shaft and has begun to drive footwall laterals
along the strike length of the ore body. Probe drilling from these new levels has confirmed the structure and
mineralization of the JM Reef at depth. Most of the development work adjacent to the shaft, however,
continues to be on infrastructure -- ramps, tip cross cuts, ore passes and the crusher station -- needed to
bring the shaft into full production early next year.
Site preparation work continued on the East Boulder project with the excavation of settling ponds, pouring of
the concrete portal ring and pre- grouting around the proposed tunnel excavation.
In commenting on the Company's strategic goals, Engles said, "As we look ahead to 1997, we are confident
we can improve our operating performance, which should allow us to achieve our long-term growth objectives.
However, we are concerned about the current low level of metals prices. The cyclical downturn in electronics
this year has curtailed demand for palladium, yet Russian inventory sales remain strong. Platinum prices have
moved lower as the price of gold has trended down. We will begin to feel the full effect of these lower prices in
the fourth quarter and in 1997 as we deplete our portfolio of higher priced hedges."
Engles continued, "Although the long-term fundamentals of the platinum and palladium markets remain
favorable, we are adjusting our 1997 plans to reflect the current price environment. We recently raised the
cutoff grade in our stopes to 0.50 ounce per ton and have begun to see positive results. We are also
refocusing our capital spending on projects directly related to increasing production and completing the
expansion plan in order to maintain adequate cash balances until prices improve." He added, "After we finish
our initial site preparation work at East Boulder at the end of 1996, only environmental baseline data
collection will continue on the project until metals prices improve sufficiently."
Stillwater Mining Company is the only U.S. producer of platinum and palladium and the only significant primary
source of platinum groups metals outside of South Africa. Stillwater's vast ore body in southern Montana is the
richest known deposit of these metals in the world and contains sufficient proven and probable reserves to
make Stillwater one of the largest precious metals companies in North America on a gold equivalent basis.
Some of the statements contained in this release are forward looking in nature. The accuracy of these
statements cannot be guaranteed as they are subject to a variety of risks, including, but not limited to,
changes in platinum and palladium prices, fluctuation in ore grades, tons mined or milled from those expected
and other related factors detailed in the Company's filings with the Securities and Exchange Commission.
FINANCIAL HIGHLIGHTS
Selected Financial Information: Third Quarter ended Nine Months ended
(in thousands, except per share data) September 30, September 30,
1996 1995 1996 1995
Revenue $17,248 $10,645 $42,932 $42,774
Operating income (loss) $(1,550) $(1,675) $(2,872) $(2,389)
Net income (loss) $(812) $(722) $12,400* $(204)
Net income (loss) per share $(.04) $(.04) $.60 $(.01)
Weighted avg. shares and share
equivalents outstanding 20,579 20,527 20,606 20,496
Production Data:
(in thousands, except head grade)
Tons milled 117 103 320 302
Head grade (ounces Pt + Pd per ton) .61 .62 .65 .65
Ounces of platinum produced 14 13 41 37
Ounces of palladium produced 47 43 137 124
Total ounces produced 61 56 178 161
Ounces of platinum sold 19 10 45 42
Ounces of palladium sold 62 39 153 141
Total ounces sold 81 49 198 183
Price and Cost Data:
Avg. realized price per platinum ounce$403 $427 $413 $429
Avg. realized price per palladium ounce $138 $153 $147 $160
Combined realized price per ounce $214 $218 $217 $233
Cash costs per ounce produced $215 $216 $201 $235
Total costs per ounce produced $255 $239 $235 $260
Cash costs per ton milled $113 $119 $112 $124
Total costs per ton milled $133 $131 $131 $137
* Includes after tax cumulative effect of accounting change. SOURCE Stillwater Mining Company |
