Stillwater Mining Produces Record Ounces in 4th Quarter
Reports 19% Increase In Proven/Probable Reserves;
Reports Mineral Resource Inventory For The First Time
DENVER, Jan. 28 /PRNewswire/ -- Stillwater Mining Co made significant progress in 1996 in its efforts to
achieve its operating goal of producing at a rate of 2,000 tons of ore per day and lowering cash operating
costs at the Stillwater Mine in Nye, Montana. In the fourth quarter of 1996, Stillwater Mining set an all-time
record of 77,000 ounces of platinum and palladium produced in a quarter. This was 31% higher than the
59,000 ounces produced in the 1995 fourth quarter. For the year, Stillwater Mining produced 16% more
ounces of platinum and palladium than in 1995, 255,000 ounces compared to 220,000 ounces.
In comparing the fourth quarter of 1996 to the third quarter of 1996, all the mine operating statistics improved.
The total tons milled increased from 117,000 to 126,000. The mill head grade improved 21% from 0.61 ounce
per ton to 0.74 ounce per ton of ore, and production increased 26% from 61,000 ounces to 77,000 ounces.
For the year, 1996, the Company reported a net loss, before the cumulative effect of an accounting change, of
$2.8 million, $.13 per share, on revenue of $56.2 million compared to 1995 net income of $68,000, less than
one cent per share, on revenue of $51.3 million. Including the cumulative effect of the accounting change, net
income for 1996 was $11.1 million, $.54 per share. Effective January 1, 1996, the Company implemented a
change in accounting policy whereby certain direct and indirect mining costs related to development activities
which were previously expensed are now being capitalized. The cumulative after-tax effect of this change was
$13.9 million, $.67 per share.
As of December 31, 1996, proven and probable ore reserves at the JM Reef deposit in Montana have
increased as a result of extensive development and diamond drilling in 1995 and 1996. Through examination
of the data generated by this drilling, the Company has determined that total proven and probable reserves
increased to 27.1 million tons of ore at an average grade of 0.80 ounce per ton, equivalent to 21.6 million
ounces of platinum and palladium. This is a 19% increase over the December 31, 1995 proven and probable
reserves of 22.6 million tons of ore at an average grade of 0.80 ounce per ton, which is equivalent to 18.2
million ounces of platinum and palladium. All of the increase in reserves came from the Stillwater Mine,
currently the only producing mine for the Company.
Stillwater Mining is also reporting for the first time a mineral resource inventory for the JM Reef of 31.5 million
tons at an average grade of 0.80 ounce of metal per ton of ore. This mineral resource inventory is in addition to
proven and probable reserves. At this time, this material does not meet the criteria for classification as proven
and probable reserves, but it does have the potential to be classified as proven and probable reserves in the
future if certain technical and economic factors are determined.
For the fourth quarter of 1996, Stillwater Mining reported a net loss of $1.3 million, $.06 per share, on revenue
of $15.4 million compared to fourth quarter 1995 net income of $272,000, $.01 per share, on revenue of $10.8
million. As previously announced, the Company took a $1.7 million pre-tax charge to earnings in the quarter
that reduced net income by $1.0 million, $.05 per share, primarily related to the write-down of an asset,
property tax accruals and payroll and inventory adjustments.
Charles R. Engles, Chairman and Chief Executive Officer, said, "In the fourth quarter we began to see results
from our heavy investment in people, systems and infrastructure over the past two and a half years. The
benefits from our major investment, the new production shaft, will begin to be realized in the second half of
1997 as we ramp up to our planned 2,000 tons-per-day operating rate." He added, "There are additional
benefits to be gained by optimizing the performance of our new assets, and this will be a key priority in 1997.
With further cost reductions we expect to realize this year, we should be in a position to weather the current low
platinum and palladium prices and capitalize significantly on their expected recovery."
The following factors affected earnings for the 1996 year and fourth quarter:
* Revenue for the year ended December 31, 1996 was 10% higher at $56.2 million compared to $51.3 million
for the same period for 1995. This was due to a 16% increase in ounces produced in 1996, 255,000 ounces
versus 220,000 ounces in 1995. The increase in ounces produced was offset by a 7% lower combined
average realized price for platinum and palladium ounces sold, $204 per ounce versus $219 per ounce in
1995.
* For the fourth quarter of 1996, revenue was 43% higher at $15.4 million compared to $10.8 million for the
same period in 1995. Production for the quarter was 31% higher at 77,000 ounces compared to 59,000
ounces for the 1995 quarter. The combined average realized price per ounce of metals sold was $195, $12
per ounce or 6% lower in the fourth quarter of 1996 compared to the fourth quarter of 1995.
* Cost of metals sold increased in 1996 by $4.3 million, from $45.9 million in 1995 to $50.2 million. For the
fourth quarter of 1996, cost of metals sold increased to $13.9 million from $8.3 million for the same period in
1995. This was due to an increase in ounces sold for both the 1996 quarter and year compared to the 1995
periods. For the year, the higher ounces sold was also a result of the successful start-up of the base metals
refinery which significantly shortened the time period between shipment of matte to contract refineries and the
sale of refined metals.
* Depreciation, depletion and amortization increased by $3.0 million for 1996 compared to 1995 as a result of
equipment and facilities related to the Stillwater Mine expansion program being placed in service in 1996. The
fourth quarter of 1996 amount was higher as well at $2.5 million compared to the same period in 1995 of $1.6
million, for the same reason.
* In 1996, interest expense increased to $1.5 million compared to $431,000 in 1995, primarily due to interest
on the 7% convertible subordinated notes that were sold in the second quarter of 1996, net of capitalized
interest. After the first quarter of 1997, the capital spending program for the mine expansion will be essentially
complete. As a result, there will be less interest capitalized in 1997. Reported interest expense in 1997 should
be higher and in the range of approximately $3.5 to $4.0 million.
It was the Company's practice in prior periods to account for the sale of by-product metals as revenue. To bring
the Company in line with common practice in the precious metals industry, the revenue received from these
metals is now being reflected as a credit against production costs. For the fourth quarter of 1996, the effect of
this change is a $7 reduction in cash costs per ton and a $12 reduction in cash costs per ounce. For the full
year of 1996, the effect is a reduction of $7 in cash costs per ton and $12 in cash costs per ounce. All financial
and operating statistics for 1995 have been conformed to this treatment.
OPERATIONS
In 1996, the average mill head grade was as expected, 0.67 ounce per ton of ore, essentially the same level as
in 1995. However, the Company's production and cost results were positively impacted by improvements
made in mining methods, underground ore control systems and investment in developed reserves.
Improvements to ore handling were made in the fourth quarter which led to a higher average mill grade than the
average for the year, 0.74 ounce per ton of ore compared to 0.67 ounce per ton, respectively. Systems are
now in place which should mitigate ore handling problems until the shaft is fully operational, at which time
materials handling will be significantly improved.
The Stillwater Mine began to show the benefits of the expansion to increase production in the fourth quarter of
1996. For the quarter, tons milled increased 31% over the same period in 1995. Tons milled increased by 12%
for the year to 446,000, and this was a record for the mine. The average tons-per-day mill rate for 1996 was
1,220, and the fourth quarter rate was 1,370. Although these rates are well below our target rate of 2,000
tons-per- day, the mine was able to achieve significant unit cost reductions based on the production increases
through the end of the year.
Cash costs per ton milled were significantly lower than at any time in the history of the Company. For the fourth
quarter, cash costs per ton milled were $103 per ounce, a 16% reduction over the same period in 1995. For
the full year 1996, cash costs per ton milled were $105, a 12% reduction over the 1995 period costs.
OUTLOOK FOR 1997
The new shaft is currently being used to hoist most of the development waste out of the mine. It is expected that
the underground crusher will be commissioned in the second quarter of 1997, at which time ore will be hoisted
to the surface through the shaft. This should enable the mine to operate at the 2,000 tons-per-day rate in the
second half of 1997. This is expected to significantly increase Stillwater Mining's annual production rate and
lower cash costs per ton milled and cash costs per ounce produced accordingly.
The concentrator will be shut down for a week in the first quarter to reline and modify the SAG mill to allow for
the 2,000 tons-per-day processing level. In addition, the smelter will be idle for a month as the electric furnace
is rebricked and modified and the second oxygen-propane converter (Top Blown Rotary Converter) is brought
on-line to accommodate the increase in concentrate production from the mine. Concentrate produced during
the furnace shutdown will be stockpiled, and it is expected that the smelter will be able to catch up in
processing this stockpiled material during the year. It is not anticipated that either of these events will affect
projected annual production for 1997.
At the current time, the Company has some excess smelting and refining capacity which allows for the
opportunity to process secondary materials. To ensure proper accountability for the metal associated with this
processing, a sampling plant is being constructed at the Columbus, Montana metallurgical complex. The
Company has processed several small lots of secondary material on a trial basis and will be considering
increasing the processing level in the future.
Currently, Stillwater Mining is essentially unhedged for 1997 and will be realizing market prices for ounces sold.
Current market prices are significantly below those realized by the Company in the fourth quarter of 1996.
EAST BOULDER
As a result of the low platinum and palladium prices, the Company announced in the third quarter of 1996 that it
was deferring the East Boulder expansion project. At present, environmental baseline studies and construction
activities on the mine power line from the Boulder River to the proposed mine site are being completed.
Stillwater Mining Company is the only U.S. producer of platinum and palladium and the only significant primary
source of platinum group metals outside of South Africa. The Company is traded on the NASDAQ stock
market under the symbol PGMS.
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. 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.
PROVEN AND PROBABLE RESERVES*
December 31, 1996
Tons Oz/Ton Ounces
(000) (Pt + Pd) (000)
Stillwater Mine
Proven Mining Reserve 1,365 0.85 1,166
Probable Mining Reserve 14,254 0.80 11,336
Total Stillwater Mine 15,619 0.80 12,502
East Boulder Project
Probable Mining Reserve 11,510 0.79 9,112
Total Proven and Probable 27,129 0.80 21,614
* Based on $376 Platinum and $125 Palladium Prices
MINERAL RESOURCE INVENTORY**
December 31, 1996
Tons Oz/Ton Ounces
(000) (Pt + Pd) (000)
Stillwater Mine
Mineral Resource Inventory 17,290 0.81 13,971
East Boulder Project
Mineral Resource Inventory 14,235 0.80 11,394
Total Mineral Resource
Inventory 31,525 0.80 25,365
** Mineral Resource Inventory is material containing platinum group metals that has been indicated by drilling,
underground work and surface trenching. This material has been found to contain a sufficient amount of
platinum group metals to have economic potential that warrants further evaluation. While this material is not
currently or may never be classified as reserves, it is reported as a mineral resource only if the potential exists
for reclassification into the reserves category. This material has established geologic continuity, but cannot be
classified in the reserves category until final technical and economic factors have been determined.
STILLWATER MINING COMPANY
KEY FACTORS
Three Months Ended Twelve Months Ended
December 31, December 31,
1996 1995 1996 1995
Production (ounces)
Platinum (000) 18 14 59 51
Palladium (000) 59 45 196 169
Total Production 77 59 255 220
Tons Mined (000) 124 101 424 414
Tons Milled (000) 126 96 446 398
Average Mill Grade (opt) 0.74 0.74 0.67 0.67
Mill Recovery (%) 88 87 88 84
Cash Costs Per Ton Milled $103 $122 $105 $119
Depreciation & Amortization $24 $17 $20 $13
Total Costs Per Ton Milled $127 $139 $125 $132
Cash Costs Per Ounce $170 $195 $184 $215
Depreciation & Amortization $39 $26 $35 $25
Total Costs Per Ounce $209 $221 $219 $240
Sales (000)
Ounces of Platinum Sold 18 12 62 54
Ounces of Palladium Sold 61 39 214 180
Total Ounces Sold 79 51 276 234
Average Realized Prices
Platinum $401 $412 $410 $425
Palladium $136 $144 $144 $157
Combined Average
Realized Price $195 $207 $204 $219
STATEMENT OF OPERATIONS (in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
1996 1995 1996 1995
Revenues $15,390 $10,782 $56,214 $51,335
Costs and expenses
Cost of metals sold 13,917 8,326 50,175 45,864
Depreciation and amortization2,508 1,610 8,699 5,749
Administrative expenses 513 709 1,760 1,974
Write-down of asset 772 - 772 -
Total costs and expenses 17,710 10,645 61,406 53,587
Operating income (loss) (2,320) 137 (5,192) (2,252)
Other income (expense)
Interest income 575 525 2,138 2,795
Interest expense,
net of capitalized
interest (398) (220) (1,461) (431)
177 305 677 2,364
Income (loss) before income
taxes and cumulative
effect of accounting change(2,143) 442 (4,515) 112
Income tax benefit (provision) 825 (170) 1,736 (44)
Income (loss) before cumulative effect of
accounting change (1,318) 272 (2,779) 68
Cumulative effect of accounting
change, net of income
tax provision of $8,677 - - 13,861 -
Net income (loss) $(1,318) $272 $11,082 $68
Earnings (loss) per common
share outstanding
Income (loss) before cumulative
effect of accounting change$(0.06) $0.01 $(0.13) -
Cumulative effect of
accounting change - - 0.67 -
Net income (loss)
per common share $(0.06) $0.01 $0.54 $-
Weighted average common and
common equivalent
shares outstanding 20,473 20,527 20,551 20,501
STATEMENT OF CASH FLOWS (in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
1996 1995 1996 1995
Cash flows from operating activities
Net income (loss) $(1,318) $272 $11,082 $68
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 2,508 1,610 8,699 5,749
Deferred income taxes (825) (383) (1,736) (257)
Cumulative effect of
accounting change - - (13,861) -
Loss (gain) on disposition
of fixed assets 16 (15) 222 186
Write-down of asset 772 - 772 -
Other 685 (502) (10) (33)
Changes in operating assets and liabilities:
Decrease (increase)
in inventories 1,073 (2,587) 4,928 223
Decrease (increase) in other
current assets 544 1,296 (55) (344)
(Decrease) increase
in current liabilities 2,831 884 4,241 (314)
(Decrease) increase in noncurrent
liabilities 112 (154) (182) 731
Net cash provided by
operating activities 6,398 421 14,464 6,009
Cash flows from investing activities
Capital expenditures, including
capitalized interest (15,852) (15,191) (58,413) (46,133)
Purchase of short-term
investments (932) (40,732) (48,290) (189,183)
Proceeds from sale and maturity
of short-term investments 24,040 47,296 55,163 165,250
Proceeds from sale of assets (51) 130 118 433
Net cash provided by (used in)
investing activities 7,205 (8,497) (51,422) (69,633)
Cash flows from financing activities
Issuance of common stock 101 56 414 56
Exercise of stock warrants - 2 - 2
Redemption of common stock (134) (101) (134) (101)
Proceeds from capital leases
and debt issue 1,310 7,460 55,164 7,460
Payments on long-term debt
and capital leases (342) (73) (853) (73)
Debt issue costs - - (1,958) -
Net cash provided by
financing activities 935 7,344 52,633 7,344
Cash and cash equivalents
Net increase (decrease) 14,538 (732) 15,675 (56,280)
Balance at beginning of period1,851 1,446 714 56,994
Balance at end of period $16,389 $714 $16,389 $714
BALANCE SHEET
(in thousands)
As of December 31,
1996 1995
ASSETS
Current Assets
Cash and cash equivalents $16,389 $714
Short-term investments 17,060 23,933
Inventories 13,522 18,450
Other current assets 1,292 1,237
Deferred income taxes 798 640
Total current assets 49,061 44,974
Property, equipment and
mine development, net 187,802 115,784
Other noncurrent assets 3,047 1,417
Total assets $239,910 $162,175
LIABILITIES and STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt
and capital lease obligations $1,463 $460
Accounts payable 5,039 4,751
Accrued payroll and benefits 2,289 1,909
Taxes payable other than income taxes 3,120 2,272
Other accrued liabilities 3,922 862
Amounts payable to affiliates - 116
Total current liabilities 15,833 10,370
Long-term liabilities
Long-term debt and capital lease obligations 62,563 8,713
Other noncurrent liabilities 2,528 2,346
Deferred income taxes 15,320 8,441
Total liabilities 96,244 29,870
Stockholders' Equity
Preferred stock - -
Common stock 201 201
Paid-in capital 138,093 137,814
Accumulated earnings (deficit) 5,372 (5,710)
Total stockholders' equity 143,666 132,305
Total liabilities and stockholders' equity $239,910 $162,175
SOURCE Stillwater Mining Company |
