(COMTEX) B: STILLWATER MINING REPORTS RECORD EARNINGS
B: STILLWATER MINING REPORTS RECORD EARNINGS
DENVER, Oct. 13 /PRNewswire/ -- Stillwater Mining Company (Amex: SWC)
reported net income for the third quarter of 1998 of $3.8 million, $.18
per share, on revenue of $28.2 million compared to a net loss of $1.7
million, $.08 per share, on revenue of $17.0 million in the third
quarter of 1997. For the nine months of 1998, the Company reported net
income of $7.8 million, $.38 per share, on revenue of $76.2 million
compared to a net loss of $4.5 million, $.22 per share, on revenue of
$55.3 million for the 1997 nine-month period.
"We are pleased with our quarter-to-quarter trend for 1998. We met our
operating targets for the quarter with 22% more ounces produced than
the 1997 quarter, and cash costs per ounce were 11% lower than the 1997
quarter. In addition, we are receiving higher metal prices as a result
of our decreasing below-market hedge position," said Bill Nettles,
Chairman and Chief Executive Officer. "As this position is eliminated
in the fourth quarter, we expect to be able to enjoy the benefits of
what we believe is a very favorable market for our metals."
During the quarter and nine months, the following factors affected the
Company's performance:
* For the third quarter of 1998, Stillwater Mining realized a 66%
increase in revenues to $28.2 million compared to $17.0 million for the
third quarter of 1997. For the nine months of 1998, revenues increased
38% to $76.2 million compared to $55.3 million for the same period in
1997. This increase was due to an increase in the number of ounces of
palladium and platinum produced and sold and a higher combined average
realized price per ounce of metal sold.
* Stillwater Mining realized $53 more per ounce of metal sold in the
third quarter of 1998 than the third quarter of 1997, $244 per ounce
versus $191 per ounce. This was due to a higher average market price
for palladium, $294 per ounce versus $197 per ounce, and an increase in
the number of ounces sold at the average market price rather than the
Company's hedged price. For the nine months of 1998, the Company
realized a combined average price of $231 per ounce compared to $207
per ounce for the 1997 nine-month period. During the third quarter of
1998, the combined average market price of palladium and platinum was
$312 per ounce, $62 per ounce higher than the price for the same period
one year ago of $250 per ounce. For the nine months of 1998, the
combined average market price was $305 per ounce, $82 per ounce higher
than the 1997 nine-month period price of $223.
Stillwater Mining reports a combined average realized price of
palladium and platinum at the same ratio as ounces are produced from
the base metals refinery, that is 3.2 ounces of palladium to one ounce
of platinum. This ratio is applied to the combined average market
price as well.
* Cost of metals sold increased 11% to $17.2 million for the third
quarter 1998 compared to $15.5 million for the third quarter of 1997,
as a result of higher tons mined and ounces processed. For the nine
months of 1998, cost of metals sold was $49.7 million compared to $50.6
million for the 1997 nine months. As a result of the higher tonnage
through the mill and higher ounces produced, cash costs per ounce were
favorably impacted. For the third quarter of 1998, cash costs per
ounce were $18 per ounce lower at $151 compared to $169 for the third
quarter of 1997. For the nine-month period of 1998, cash costs per
were $150, $30 per ounce lower than the same period in 1997.
* For the third quarter of 1998, capital expenditures were $24.7
million compared to $2.5 million for the same period in 1997. Capital
expenditures for the 1998 nine-month period increased to $40.8 million
compared to $12.6 million for the same period in 1997. These increases
for the third quarter and nine-month period were as a result of the
expansion of the Stillwater Mine and the development of the East
Boulder project.
* Cash flow from operations increased in the third quarter of 1998 to
$6.6 million compared to $5.1 million for the same period in 1997. For
the 1998 nine-month period, cash flow from operations increased to
$18.7 million compared to a negative cash flow of $3.1 million in the
same nine-month period in 1997.
* During the third quarter of 1998, interest expense decreased to $645,
000 compared to $1.3 million in the third quarter of 1997, due to the
start-up of the Stillwater Mine expansion and higher capitalized
interest on the East Boulder project in the third quarter of 1998. For
the nine months of 1998, interest expense decreased to $2.6 million
compared to $3.2 million for the same period in 1997, as a result of
higher capitalization of interest.
KEY DEVELOPMENTS
During the third quarter 1998, Stillwater Mining announced two key
developments in its long term strategy to increase production to an
annual rate of 1.2 million ounces in 2001. In early September, the
Company announced it had signed sales contracts with four major end
users of palladium and platinum. The contracts provide for an average
floor price of approximately $225 per ounce on almost all of the
Company's production of palladium beginning in 1999 through 2003. The
ten-year historical average price of palladium is $130 per ounce.
Thirty percent of palladium production is subject to a $400 per ounce
cap. In addition, approximately 20% of the Company's platinum
production for the same period will be sold at prices between $350 and
$425 per ounce, with the remaining 80% to be sold at market prices.
On October 1, 1998, Stillwater Mining announced the acceleration of its
expansion, as well as plans for financing this expansion. The Company
expects to reach an annual production rate of 1.2 million ounces of
palladium and platinum during 2001. This will be achieved through a
two-stage program. First the Stillwater Mine, Nye, Montana, will be
expanded to a concentrator throughput rate of 3,000 tons-per-day, a 700,
000 to 725,000 ounce-per-year production rate. Second, the East
Boulder project, Big Timber, Montana, is being developed and is
expected to a produce between 450,000 to 500,000 ounces of metal
annually. Capital for both projects is expected to be about $385
million. Engineering for the expansion was undertaken by Stillwater
Mining, with assistance from MRDI Canada, a subsidiary of H.A. Simons
Mining Group, for the Stillwater Mine expansion and Kilborn
International, Inc., Denver, Colorado, for the development of East
Boulder.
The Company has a commitment from The Bank of Nova Scotia, Toronto,
Canada, for a $175 million credit facility. The facility includes a
$50 million revolver and a $125 million project financing. The project
financing is predicated on securing $50 million of equity capital.
"We were very pleased to announce the acceleration of our expansion
objective of increasing our annual production rate to 1.2 million
ounces," said Nettles. "We have taken a three-pronged approach to the
expansion, and now the critical pieces are coming together. First, we
evaluated the engineering for both projects carefully to determine the
best way to proceed, and this has been confirmed by third-party
engineering consultants. Second, we have entered into long term
contracts for the sale of our metals that remove a significant portion
of the market risk. And, third, completion of the engineering analysis
and execution of the sales contracts have enabled us to ensure a
commitment for the financing to fund a large portion of the expansion."
OPERATIONS
In the third quarter of 1998, the Stillwater Mine delivered a
record 199,601 tons to the concentrator (2,200 tons per calendar day),
36% higher than the same period in 1997. A record number of tons were
milled during the quarter as well, 191,000 (2,100 tons per calendar
day), 30% higher than the same period in 1997. For the nine months of
1998, tons mined were 547,000, 36% higher than the same period in 1997.
Tons milled increased to 537,000, 34% higher than the nine months of
1997. The grade delivered to the mill during the quarter was 0.66
ounce per ton, which was 8% lower than the 0.72 grade in the same
quarter a year ago. For the nine months of 1998, the grade is 3% lower
than the same period a year ago, 0.69 ounce per ton compared to 0.71.
The grade of the J-M Reef can vary on a quarterly basis by up to 10%
above and below a grade of 0.70 ounce per ton of ore milled.
Production for the third quarter of 1998 was 113,000 ounces of
palladium and platinum, 22% higher than the 93,000 ounces produced in
the same period in 1997. Cash costs per ounce of metal produced in the
third quarter of 1998 were $151, 11% lower than the same period in
1997. The nine-month 1998 production was 333,000 ounces, 33% higher
than the same period in 1997. Cash costs of production for the 1998
nine-month period were $150 per ounce, 17% lower than the 1997
nine-month period.
Since the end of the second quarter of 1998, twenty-one miners have
been added to the workforce. The Company has an ongoing training
program that is expected to produce about two new miners per week and
is engaged in an aggressive recruiting effort throughout the U.S.
During the third quarter, the Stillwater Mine Department established a
record of 200,000 hours worked without a lost time accident.
EXPANSION
Stillwater Mine
In early October, the Environmental Impact Statement for the
construction of a long-term tailings facility and expansion of the
Stillwater Mine to a 3,000 ton-per-day milling rate was finalized and
recorded in the Federal Register. A record of decision is expected
before the end of 1998.
East Boulder
At the end of the third quarter, the tunnel boring machine (TBM)
had advanced 3,200 feet from the access portal at East Boulder and is
now boring through the rocks of the Stillwater Complex. The second or
west portal, is substantially complete, and work has commenced on
excavation of the launch chamber and conveyor take-up chamber for the
second TBM, which was purchased used and is currently being
refurbished. Foundation excavations for the support facility for the
underground operations have been completed, and site preparation and
grading continues using rock produced from the tunnel boring operations.
METALS MARKETING
As of the end of the third quarter 1998, the Company had 38,350
ounces of palladium sold forward at an average price of $150 per ounce,
all to be delivered in the fourth quarter of 1998. The Company has 250
ounces of palladium sold forward for delivery in 1999 at an average
price of $277 per ounce.
Platinum ounces sold forward in the fourth quarter of 1998 are 12,400
at an average price of $379 per ounce. It is expected the metal for
these contracts will be delivered during the fourth quarter of 1998.
In 1999, the Company has 8,500 ounces of platinum sold forward at an
average price of $392 per ounce.
MARKET DISCUSSION
During the third quarter, palladium traded as high as $343 per
ounce in mid-July, then dropped to a low of $273 per ounce in late
August. The average for the quarter was $294 per ounce.
Platinum traded at a high of $397 per ounce in mid-July and hit its low
for the quarter of $347 per ounce at the end of September. The average
for the quarter was $369 per ounce.
Stillwater Mining Company is the only U.S. producer of palladium and
platinum and the only significant primary producer of platinum group
metals outside of South Africa. The Company is traded on the American
Stock Exchange under the symbol SWC.
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Some
statements contained in this release are forward-looking and,
therefore, involve uncertainties or risks that could cause actual
results to differ materially. Such forward-looking statements include
comments regarding increased profitability, operating performance,
expansion plans for the Stillwater Mine and the East Boulder project,
capital expenditures, future production, costs of production, cash
flow, ability to hire new miners, increased capacity in the mill and
flotation circuit, sources of capital, and palladium and platinum
prices and markets. Factors that could cause actual results to differ
materially include price volatility of palladium and platinum, economic
and political events affecting supply and demand for palladium and
platinum, availability of financing on acceptable terms when needed,
performance under the sales contracts, unexpected events during
expansion, fluctuations in ore grade, tons mined, crushed or milled,
variations in smelter or refinery operation and geological, technical,
mining or processing problems. These and other factors are discussed
in more detail in the Company's filings with the Securities and
Exchange Commission, including the "Risk Factors" contained in the
Company's Annual Report on Form 10-K and its Registration Statement on
Form S-3, filed on July 1, 1998. Descriptions of events relating to
the palladium and platinum markets are not intended to be complete, and
readers are advised to obtain their own information and advice
regarding commodities markets. The Company disclaims any obligation to
update forward-looking statements.
Stillwater Mining Company
Key Factors
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
Ounces produced
Palladium (000) 87 71 255 191
Platinum (000) 26 22 78 59
Total 113 93 333 250
Tons mined 200 147 547 402
Tons milled (000) 191 147 537 402
Mill head grade
(ounces per ton) 0.66 0.72 0.69 0.71
Mill recovery (%) 92 89 92 88
Cash costs per ton milled $90 $107 $93 $112
Cash costs per ounce(a) $151 $169 $150 $180
Depreciation and
amortization 27 31 27 35
Total costs per
ounce produced(a) $178 $200 $177 $215
Ounces sold
Palladium (000) 88 68 253 203
Platinum (000) 28 21 77 64
Total 116 89 330 267
Average realized price
per ounce
Palladium $204 $131 $184 $149
Platinum $369 $386 $383 $391
Combined (b) $244 $191 $231 $207
Average market price
per ounce
Palladium $294 $197 $285 $169
Platinum $369 $422 $381 $396
Combined (b) $312 $250 $305 $223
(a) Cash costs include cash costs of mine operations, processing and
administrative expenses at the mine site (including overhead, taxes
other than income taxes, royalties, and credits for metals produced
other than palladium and platinum). Total costs of production
include cash costs plus depreciation and amortization. Income taxes,
general and administrative expense and interest income and expense
are not included in either total or cash costs.
(b) Stillwater Mining reports a combined average realized price of
palladium and platinum at the same ratio as ounces are produced from
the base metals refinery. The same ratio is applied to the combined
average market price.
Stillwater Mining Company
Consolidated Statement of Operations
(Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
Revenues $28,198 $16,998 $76,234 $55,293
Costs and expenses
Cost of metals sold 17,178 15,540 49,698 50,549
Depreciation and
amortization 3,049 2,876 8,814 8,606
Total cost of sales 20,227 18,416 58,512 59,155
General administrative
expense and other 1,314 281 3,096 1,091
Total costs and
expenses 21,541 18,697 61,608 60,246
Operating income (loss) 6,657 (1,699) 14,626 (4,953)
Other income (expense)
Interest income 149 248 662 775
Interest expense, net of
capitalized interest
of $565, $22, $1,140
and $764 (645) (1,256) (2,550) (3,192)
Income (loss) before
income taxes 6,161 (2,707) 12,738 (7,370)
Income tax (provision)
benefit (2,371) 1,043 (4,904) 2,838
Net income (loss) $3,790 $(1,664) $7,834 $(4,532)
Basic and diluted
earnings per share $0.18 $(0.08) $0.38 $(0.22)
Weighted average common shares
outstanding
Basic 20,608 20,341 20,506 20,230
Diluted 21,030 20,341 20,884 20,230
Stillwater Mining Company
Consolidated Balance Sheet
(in thousands, except share and per share amounts)
(Unaudited)
September 30, December 31,
1998 1997
ASSETS
Current assets
Cash and cash equivalents $6,658 $4,191
Short-term investments -- 13,468
Inventories 8,035 7,380
Accounts receivable 16,375 6,926
Other current assets 2,422 1,349
Deferred income taxes 1,989 1,989
Total current assets 35,479 35,303
Property, plant and
equipment, net 213,780 191,254
Other noncurrent assets 2,478 2,662
Total assets $251,737 $229,219
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term
debt and capital lease
obligations $1,562 $1,982
Accounts payable 6,440 2,709
Accrued payroll and benefits 2,116 1,972
Property, production and
franchise taxes payable 4,063 3,682
Other current liabilities 4,310 1,904
Total current liabilities 18,491 12,249
Long-term liabilities
Long-term debt and capital
lease obligations 60,491 61,513
Other noncurrent liabilities 3,536 2,283
Deferred income taxes 16,686 11,782
Total liabilities 99,204 87,827
Shareholders' equity
Preferred stock, $.01 par value,
1,000,000 shares
Authorized, none issued -- --
Common stock, $.01 par value,
50,000,000 shares
Authorized, 20,651,448 and 20,377,623
issued and outstanding 207 204
Paid-in capital 144,497 141,193
Accumulated earnings (deficit) 7,829 (5)
Total shareholders' equity 152,533 141,392
Total liabilities and shareholders'
equity $251,737 $229,219
Stillwater Mining Company
Consolidated Statement of Cash Flows
(Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
Cash flows from
operating activities
Net income (loss) $3,790 $(1,664) $7,834 $(4,532)
Adjustments to reconcile
net income (loss)
to net cash provided
by (used in) operating
activities:
Depreciation and
amortization 3,065 2,885 8,814 8,606
Deferred income taxes 2,371 (1,043) 4,904 (2,838)
Other 241 154 263 729
Changes in operating
assets and liabilities:
Decrease (increase)
in inventories (314) (180) (655) 4,881
Decrease (increase) in
accounts receivable (7,449) 4,374 (9,449) (6,015)
Decrease (increase)
in other current
assets (877) 3,159 (1,073) (481)
Decrease in other
noncurrent assets 51 96 184 288
Increase (decrease)
in accounts payable 2,680 56 3,731 (2,913)
Increase (decrease) in
other current
liabilities 2,947 (3,476) 2,931 (1,590)
Increase in noncurrent
liabilities 131 753 1,253 793
Net cash provided by
(used in) operating
activities 6,636 5,114 18,737 (3,072)
Cash flows from investing
activities
Capital expenditures (24,700) (2,525) (40,809) (12,596)
Purchase of
short-term investments -- (2,242) (2,256) (10,412)
Proceeds from maturity
of short-term
investments 7,047 2,000 15,724 14,177
Proceeds from sale
leaseback operating
lease 9,206 -- 9,206
Net cash used in
investing activities (8,447) (2,767) (18,135) (8,831)
Cash flows from financing
activities
Issuance of common stock 644 15 3,307 1,511
Payments on long-term
debt and capital lease
obligations (521) (373) (1,442) (1,034)
Proceeds from capital
lease and debt issue,
net of debt issue
costs -- -- -- 855
Net cash provided by
financing activities 123 (358) 1,865 1,332
Cash and cash equivalents
Net increase
(decrease) (1,688) 1,989 2,467 (10,571)
Balance at beginning
of period 8,346 3,829 4,191 16,389
Balance at end of
period $6,658 $5,818 $6,658 $5,818
SOURCE Stillwater Mining Company
-0- 10/13/98 /CONTACT: Gina Wilson of
Stillwater Mining Company, 303-352-2070/
/Company News On-Call: prnewswire.com or
fax, 800-758-5804, ext. 119504/
(SWC)
CO: Stillwater Mining Company ST: Colorado IN: MNG SU: ERN
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