Exhibit 99.1
Stillwater Mining Reports Second Quarter Results
COLUMBUS, Mont., Aug. 4 /PRNewswire-FirstCall/ -- STILLWATER MINING
COMPANY (NYSE: SWC) reported net income of $16.5 million for the second
quarter of 2004 or $0.18 per diluted share, on revenue of $84.2 million,
compared to a net loss of $19.3 million for the second quarter of 2003 or
$0.40 per diluted share, on revenue of $60.0 million. The 2004 second-quarter
results reflect higher revenues due to higher combined PGM prices and sales
from the palladium inventory received in the Norilsk Nickel transaction. The
2003 results included certain charges related to the issuance of shares to
Norimet Limited, the Company's largest stockholder, i.e., a $14.0 million, or
$0.29 per diluted share, non-cash charge to deferred income tax relating to
tax loss carryforwards, which no longer can be utilized, and $3 million ($1.8
million, or $0.04 per diluted share, after tax) of transaction costs charged
to income.
On July 10, 2004, subsequent to quarter-end, members of the union
representing workers at the Company's Stillwater Mine and Columbus, Montana
processing facilities voted to reject a tentative new three-year contract
negotiated between union and Company leaders resulting in an eight day strike.
On July 19, 2004 union members voted to ratify a modified new three-year
contract and returned to work on July 21, 2004. East Boulder Mine operations
were unaffected by the strike at the Stillwater Mine.
Second Quarter 2004 Highlights, Compared to Second Quarter 2003
* Net income of $16.5 million, compared to a second quarter 2003 net
loss of $19.3 million.
* An increase in the combined average realized price for mine PGM
production of 26% to $491 per ounce.
* Stillwater mine production up 4% at 109,000 ounces; Stillwater total
cash costs down 8%.
* East Boulder mine production and total cash costs essentially flat.
* Sales of palladium inventory reach 110,000-ounce quarterly sales rate
under new two-year contracts.
* Smelter re-brick project completed; Company reprocessing of stockpiled
mine production largely complete by the end of June and metal shipped
for final refining.
For the first six months of 2004, the Company reported net income of
$32.2 million, or $0.36 per diluted share, on revenue of $184.9 million
compared to a net loss of $21.0 million, or $0.46 per diluted share, on
revenue of $124.2 million for the first six months of 2003.
Announcing the Company's results, Stillwater Chairman and Chief Executive
Officer, Francis R. McAllister said, "The Company's financial results for the
second quarter of 2004 improved significantly compared to the same period in
2003, even with the successfully executed five-week smelter shutdown in
Columbus to rebrick and refurbish the smelter and refinery. Earnings for the
quarter were $16.5 million or $0.18 per share, compared to a loss of
$19.3 million or $0.40 per share in the same period of 2003. This improvement
is largely due to increased realized prices and additional sales volume of
PGMs during the 2004 second quarter as compared to the same period in 2003.
Beginning April 5, 2004, the Company shut down its smelter and refinery for
about five weeks for a routine smelter rebricking and other refurbishing.
This planned shutdown reduced second quarter earnings and cash flow, although
sales from the palladium inventory continued, partially offsetting the effect
of the outage. Production at both mines continued through the shutdown, and
the mine concentrates were stockpiled at the smelter and processed once the
facility came back up. The Company's processing of these stockpiles was
largely completed by the end of June and the metal shipped for final
refining."
He continued, "As we previously disclosed, the labor agreement covering
the Company's union employees at the Stillwater Mine and the Columbus
processing facilities, scheduled to expire at noon on July 1, 2004, was
extended until noon on July 12, 2004 to accommodate a vote of the union
membership on a new three-year contract negotiated between union and Company
leaders. On July 11, 2004, the union leadership notified the Company that
their membership had rejected the tentative agreement and that the union would
go on strike effective at noon on July 12. The strike lasted a total of eight
days. On July 19, 2004, the members of the union voted to approve a modified
three-year contract, which provides annual 3% wage increases, a one-time
ratification bonus, and stipulates that the Company will not discontinue its
401(k) contribution-matching program for the life of the contract. Employees
returned to work beginning on July 21, 2004."
"During the second quarter of 2004, the Company fixed platinum prices in
the forward market by entering into financially settled forward transactions
covering about 20% of our anticipated platinum mine production for the period
from July of 2004 through December of 2005. The Company believes, as reported
in the Company's 2003 annual report, that the spread between palladium and
platinum prices may narrow if consumers switch from using platinum to
palladium for existing and new applications, driven by the lower price of
palladium. The Company believes the price of platinum could weaken if this
switching occurs and has locked in the price on a portion of future sales.
The second quarter 2004 transactions fix the price for 40,500 ounces of
platinum sales from mine production for the next eighteen-months at an overall
average price of about $784 per ounce. The hedges are expected to modestly
reduce the overall volatility of the Company's earnings and cash flow," stated
McAllister.
He continued, "As of August 3, 2004, the Company successfully completed
the refinancing of its bank credit facility. The Company's new credit
facility consists of a six-year term loan of $140 million plus a five-year
revolving credit line of $40 million. The new credit agreement includes
customary financial covenants; however, it does not include a production
covenant. With the completion of the refinancing, the Company expects to
incur a one-time charge in the third quarter of 2004 of approximately
$5.0 million, including a prepayment charge and the write-off of deferred
costs on the former bank credit facility. Additionally, a non-recurring
valuation adjustment of $2.1 million related to the buyout of the lease on one
of the tunnel boring machines at the East Boulder Mine, will also be recorded
in the third quarter of 2004."
"Lastly," McAllister added, "it is apparent that the expansion of
production at the Company's East Boulder Mine to a rate of 1,650 tons per day
will take longer than we projected. Availability of equipment and manpower
has been constrained by the booming commodity markets as gold and silver mines
have ramped up production. This has delayed needed development and
ventilation improvements. Instead of reaching this level of production by the
end of 2004, we now believe a 1,650-ton per day mining rate will take until
2006 to achieve. And instead of averaging 1,500 tons per day in 2004, the
average production rate this year is expected to be approximately 1,300 tons
per day."
OPERATING RESULTS
During the second quarter of 2004, the Company produced a total of
148,000 ounces of palladium and platinum, which included 114,000 ounces of
palladium and 34,000 ounces of platinum, compared to 145,000 ounces, which
included 112,000 ounces of palladium and 33,000 ounces of platinum, in the
second quarter of 2003. The growth is largely a result of a 4% increase in
ounces produced at the Stillwater Mine due to a slight improvement in ore
grade. Realized prices per ounce for mine production in the second quarter
2004 were $388 for palladium and $860 for platinum, compared to $341 and $565,
respectively, in the second quarter of 2003. Palladium realizations benefited
from the floor prices included in the Company's long-term sales contracts.
When platinum and palladium sales for the second quarter of 2004 are averaged
together, the Company's combined realized price per ounce for mine production
was $491, about 29% above the combined market price per ounce of $382 for the
same period, and 26% higher than the average combined realization for the
second quarter of 2003.
Total cash costs on a consolidated basis for the second quarter of 2004
decreased 6% to $264 per ounce compared to $281 per ounce for the same period
in 2003. The $17 per ounce reduction is mostly due to an increase in
by-product and secondary recycling credits as a result of higher sales volume
and higher commodity prices. Total consolidated production costs per ounce in
the second quarter of 2004 decreased 5% to $337 from $354 for the same period
of 2003. The decrease is due to higher by-product and secondary recycling
credits, as noted above.
During the first six months of 2004, the Company produced 295,000 ounces
of palladium and platinum, which included 228,000 ounces of palladium and
67,000 ounces of platinum, compared to 291,000 ounces, which included
224,000 ounces of palladium and 67,000 ounces of platinum, in the first
six months of 2003. Realized prices per ounce for mine production in the
first half of 2004 averaged $382 for palladium and $863 for platinum, compared
to $353 and $572, respectively, for the same period of 2003. Palladium
realizations benefited from the floor prices included in the Company's
long-term sales contracts and platinum realizations were partially constrained
by ceiling prices in the same contracts. When platinum and palladium sales
from mine production are averaged together for the six-month period, the
Company's combined realized price per ounce was $486, about 28% higher than
the combined market price of $380 per ounce for the same period, and 21%, or
$85 per ounce, higher than the 2003 first six months' combined realized price.
Total consolidated cash costs per ounce for the first half of 2004
decreased about 2% to $274 compared to $281 for the same period of 2003.
Again, the lower total cash costs are mostly attributable to higher by-product
and secondary recycling credits as a result of higher sales volume and higher
commodity prices. Total consolidated production costs per ounce produced
decreased $5, or 1%, to $347 in the first half of 2004 from $352 for the same
period of 2003. The decrease also is due to increased by-product and
secondary recycling credits.
STILLWATER MINE
At the Stillwater Mine, palladium and platinum production was
109,000 ounces in the second quarter of 2004 compared to 105,000 ounces in the
second quarter of 2003. During the quarter, a total of 197,000 tons were
milled with a combined mill head grade of 0.60 ounce per ton, compared to
200,000 tons with a combined mill head grade of 0.58 ounce per ton in the
second quarter of 2003. The mining rate during the second quarter of 2004 was
approximately 2,048 tons of ore per day, up slightly from 2,033 tons of ore
per day in the second quarter of 2003, as the mine ramped up toward its
objective of producing 2,050 tons of ore per day by the end of 2004.
For the first six months of 2004 the mine produced 214,000 ounces of
palladium and platinum, about the same as the amount produced during the first
six months of 2003.
Total cash costs per ounce for the second quarter of 2004 decreased to
$240 from $262 for the same period in 2003 due to increased off-shaft
production and higher by-product and secondary recycling credits. For the
same reasons, total consolidated production costs per ounce in the second
quarter 2004 decreased $20, or 6%, to $305 from $325 in the same period of
2003.
For the first six months of 2004, total cash costs per ounce were $258,
similar to those during the same period in 2003. Total consolidated
production costs per ounce increased 2%, to $323 in the first half of 2004
from $318 during the same period of 2003. The increase is due to slightly
higher depreciation and amortization rates in 2004.
During the second quarter of 2004 capital expenditures at the mine were
$13.5 million, of which $12.4 million was for capitalized mine development.
Year-to-date capital spending was $22.5 million of which $20.9 million was
spent for capitalized mine development.
EAST BOULDER MINE
During the second quarter of 2004, the East Boulder Mine produced
39,000 ounces of palladium and platinum, about the same as in the second
quarter of 2003. The mining rate averaged 1,298 tons of ore per day for the
quarter, down from 1,321 tons of ore per day in the second quarter of 2003,
mostly due to high absenteeism. The East Boulder mill processed a total of
116,000 tons with a mill head grade of 0.38 ounce per ton during the second
quarter of 2004, compared to 120,000 tons with a mill head grade of 0.38 ounce
per ton for the same quarter last year.
For the first six months of 2004 the mine produced 81,000 ounces of
palladium and platinum compared to 76,000 ounces for the first six months of
2003. The increase in production is the result of efforts to ramp up
production at the facility.
As previously disclosed, the Company is gradually increasing production at
East Boulder to 1,650 tons of ore per day. While the Company had planned to
achieve this daily rate by the end of 2004, several issues have been
identified which will extend the ramp-up period into 2006. The issues have
centered on recognition that the developed state of the mine must be further
advanced in order to achieve and maintain the higher production level. The
work on improving the developed state will include:
* additional primary development to increase the number of ramp systems
and working faces,
* additional diamond drilling to more accurately identify changes in
structure,
* development of a ventilation raise to surface to support a larger
amount of equipment while improving underground air quality related to
diesel particulate matter.
Ore production levels at East Boulder have increased slightly from about
1,250 tons of ore per day at the beginning of this year to just over
1,300 tons of ore per day at present.
Total cash costs per ounce in the second quarter of 2004 increased
slightly, to $333 compared to $330 per ounce for the same period in 2003 due
to the lower production rate. Total consolidated production costs per ounce
produced in the second quarters of 2004 and 2003 were $428 for both quarters.
For the first six months of 2004, total cash costs per ounce decreased 9%,
to $319 from $350 for the same period in 2003 due to the higher production
levels and higher grades. Total consolidated production costs per ounce also
decreased about 9%, to $409 in the first half of 2004 from $448 in the same
period of 2003. The decrease is due to lower operating costs as noted above.
During the second quarter of 2004, capital expenditures at the mine were
$4.4 million, of which $4.0 million was incurred for capitalized mine
development. Year-to-date capital spending is $8.5 million, of which
$7.7 million was incurred for capitalized mine development.
FINANCES
Total revenues were $84.2 million for the second quarter of 2004 compared
with $60.0 million for the second quarter of 2003. The $24.2 million increase
was a result of higher realized PGM prices overall in 2004, as well as sales
out of the 877,000 ounces of palladium inventory the Company received from
Norilsk Nickel in connection with its stock purchase transaction in 2003 plus
the benefit of secondary processing revenues under the Company's new recycling
contract. The sale of 110,000 ounces of the palladium inventory contributed
$27.8 million to revenue for the second quarter of 2004, while sales of
20,000 ounces from the secondary reprocessing provided $12.0 million of added
revenue.
Palladium sales from mine production were 70,000 ounces during the second
quarter of 2004 compared to 117,000 ounces for the second quarter of 2003.
Platinum sales from mine production were approximately 20,000 ounces during
the second quarter of 2004, compared to approximately 34,000 for the same
period of 2003. The decrease in sales of mine production is due to the
shutdown of the smelter and refinery for a period of five weeks for routine
smelter re-bricking and other refurbishing. Production from the mine
operations continued during the shutdown period and concentrates were
stockpiled at the smelter. Company processing of these stockpiles was largely
completed by June 30, 2004 and the metal shipped for final refining, well
ahead of the planned schedule.
For the first half of 2004, revenues totaled $184.9 million, compared with
$124.2 million for the first half of 2003. The 49% increase in revenues is
primarily due to a 21% increase in the average combined realized palladium and
platinum prices from sales of mine production, the sale of about
156,000 ounces of palladium inventory received in the Norilsk Nickel
transaction, contributing $40.1 million, and the increase in sales of
47,000 ounces of secondary reprocessing materials, contributing $28.2 million.
Altogether, the total quantity of PGMs sold increased 44% to approximately
443,000 ounces during the first half of 2004, compared with 307,000 for the
same period of 2003. Palladium sales from mine production decreased to
approximately 188,000 ounces during the first half of 2004 compared to
236,000 ounces for the first half of 2003. Platinum sales decreased to
approximately 52,000 ounces during the first half of 2004, compared to
approximately 68,000 for the same period of 2003. The decrease in sales of
mine production is due to the five-week shutdown of the smelter and refinery
for routine smelter re-bricking and other refurbishing in the first half of
2004. Production from mine operations continued during the shutdown period
and concentrates were stockpiled at the smelter. The Company largely
completed processing of these stockpiles by the end of June and the metal was
shipped for final refining.
Net cash provided by operations for the second quarter of 2004 was
$24.6 million, compared to $12.7 million for the same period of 2003, an
increase of $11.9 million. This $11.9 million increase in cash provided from
operations was primarily due to a 110,000 ounce increase in sales of palladium
inventory received in the Norilsk Nickel transaction partially offset by the
effect of a 61,000 ounce smelter outage-driven decrease in total palladium and
platinum ounces sold from mine production and changes in operating assets and
liabilities. These changes in operating assets and liabilities are primarily
related to an increase in inventory of $15.5 million attributable to finished
goods inventory related to the re-bricking of the smelter furnace, offset in
part by a decrease in metal sales receivables of $10.4 million due to higher
metal prices, and inventory sales from palladium received from Norilsk Nickel.
The operating capital increases will likely be largely reversed during the
third quarter of 2004.
For the six months ended June 30, 2004, net cash provided by operations
was $39.7 million, compared to $36.0 million for the same period of 2003.
The increase in cash provided by operations of $3.7 million was primarily due
to a 156,000 ounce increase in sales of palladium inventory received in the
Norilsk Nickel transaction, partially offset by the effect of a 64,000 ounce
smelter outage-driven decrease in total palladium and platinum ounces sold
from mine production, and changes in operating assets and liabilities. These
changes in operating assets and liabilities are primarily related to an
increase in metal sales receivables of $26.3 million, due to higher metal
prices and inventory sales from palladium received from Norilsk Nickel and by
increases in inventory of $11.9 million attributable to an increase in
finished goods inventory related to the re-bricking of the smelter furnace.
Capital expenditures totaled $20.3 million in the second quarter of 2004,
which includes $16.4 million incurred in connection with capitalized mine
development activities, compared to a total of $11.7 million, which included
$10.2 million incurred in connection with capitalized mine development
activities in the same period of 2003.
For the first six months of 2004, capital expenditures totaled
$34.9 million, of which $28.6 million was incurred in connection with
capitalized mine development activities, compared to $26.2 million for the
same period of 2003, which included $22.3 million incurred in connection with
capitalized mine development activities.
During the second quarter of 2004, the Company made $0.5 million in
principal payments on the Company's debt and, as provided in the Company's
credit agreement, offered $14.7 million of cash proceeds from sales of
palladium received from Norilsk Nickel as a prepayment against the Term B
credit facility. The banks declined this prepayment offer and so, according
to the terms of the credit agreement, the net amount available under the
Company's revolving credit facility was reduced from $16.3 million to
$1.6 million. As of June 30, 2004, the Company had made $1.0 million in
principal payments on the Company's debt and had $127.8 million outstanding
under its term loan facilities and $7.5 million outstanding as letters of
credit under the revolving credit facility.
During the first and second quarters of 2004, as a result of lower
production from its mine operations, the Company did not meet the production
covenant under the credit facility then in place, which covenant was based on
a trailing four-quarter average. Recognizing the lower projected rate of
production early in the year, the bank syndicate had granted a waiver of this
covenant effective for the first and second quarters of 2004. The Company was
in material compliance with all other provisions of the credit facility as of
June 30, 2004.
At June 30, 2004, cash and cash equivalents were $53.8 million and
$1.6 million was available to the Company under the revolving credit facility.
The Company's net working capital at June 30, 2004 was $218.3 million,
compared to $154.7 million at December 31, 2003. This increase reflected the
higher accounts receivable balance, and a reduction in the current portion of
long-term debt, resulting from the Company's new sales agreements for the
palladium inventory received from the Norilsk Nickel transaction. This
inventory will be sold over a period of two years and not, as reflected at
year-end, all in the current year. As a result, under its former credit
agreement, the Company was required to offer a portion of the cash proceeds
from the sale of the inventory as prepayments of its outstanding loan balance.
The ratio of current assets to current liabilities was 4.2 at June 30, 2004,
as compared to 2.4 at December 31, 2003.
METALS MARKET
During the second quarter of 2004, palladium averaged $256 per ounce,
trading as high as $333 per ounce following Umicore's announcement of new
technology using palladium in diesel catalytic converters, and as low as
$216 per ounce, while platinum traded as high as $936 per ounce and as low as
$767 per ounce and averaged $832 per ounce. Umicore announced in early April
it had developed technology using palladium in diesel catalytic converters
where previously only platinum could be used.
The palladium price followed that of platinum downward during the latter
part of the quarter in anticipation of higher interest rates as the U.S.
dollar strengthened. While investment funds were active in palladium and
there was steady industrial demand, the price of palladium softened by the end
of the second quarter to fix at $217 per ounce at the end of June. With the
platinum price falling below $780 per ounce in June, it stimulated buying of
physical metal from Chinese jewelry manufacturers. Despite these purchases,
funds and investors were avoiding the metal due to the U.S. dollar strength
and rising U.S. interest rates leading platinum to end the quarter at $793 per
ounce. During June, the rhodium market was buoyant and industrial and
speculative buying spurred it to rally to $970 per ounce.
The combined average market price per ounce of palladium and platinum for
the second quarter of 2004, based on the Company's actual sales of mine
production ounces, was $382 compared to $276 for the second quarter of 2003.
The combined average market price for the two metals for the first six months
of 2004 was $380 per ounce compared to $306 per ounce for the same period in
2003.
OTHER MATTERS
On August 3, 2004, the Company completed the refinancing of its credit
facility. The new credit facility consists of a $140 million six-year term
loan maturing July 31, 2010, and bearing interest at a variable rate plus a
margin (LIBOR plus 325 basis points, or about 4.75% at August 3, 2004) and a
$40 million five-year revolving credit facility expiring July 31, 2009 and
initially bearing interest at LIBOR plus 300 basis points, or about 4.50%.
Proceeds of the new credit facility will be used to pay off the previous debt
facility and for general corporate purposes. The revolving credit facility
includes a letter of credit facility that has been partially utilized to
secure a $7.5 million letter of credit in support of certain of the Company's
reclamation obligations. The letter of credit carries an annual fee of 3.00%.
The revolving credit facility requires an annual commitment fee of 0.75% on
the remaining unutilized amount. The new credit facility contains customary
financial and other covenants; however, it does not include a minimum
production covenant. The new credit facility provides that the Company offer
25% of the proceeds received from the sale of palladium inventory received
from the Norilsk Nickel transaction as prepayments against the credit
facility. The new credit facility also provides that 50% of the Company's
annual excess cash flow will be offered for prepayment against the credit
facility.
As was disclosed previously, the federal district court in Montana had set
a hearing date of July 22, 2004 on the motion to dismiss the outstanding
stockholder litigation against the Company, which commenced in 2002. The
hearing on the motion to dismiss has been continued to late-August 2004.
Stillwater Mining Company will host its second quarter results conference
call at 12 noon Eastern Time on August 4, 2004. The conference call dial-in
number is 800-553-0288 (US) and 612-332-0228 (International). The conference
call will be simultaneously Web cast on the Internet via the Company's Web
site at www.stillwatermining.com. To access the conference call on the
Company's Web site go to the Investor Relations Section under Presentations
and click on the link to the conference call. A replay of the conference call
will be available on the Company's Web site or by a telephone replay, dial-in
number 800-475-6701 (US) and 320-365-3844 (International), access code 738990,
through August 11, 2004.
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. The Company's shares are traded on the New York Stock
Exchange under the symbol SWC. Information on Stillwater Mining can be found
at its Web site: 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 "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 our actual performance or achievements to differ
materially from those expressed or implied by these forward-looking
statements. Such statements include, but are not limited to, comments
regarding expansion plans, costs, grade, production and recovery rates,
permitting, financing needs, the terms of future credit facilities and capital
expenditures, increases in processing capacity, cost reduction measures,
safety, timing for engineering studies, and environmental permitting and
compliance, litigation, labor matters and the palladium and platinum market.
Additional information regarding factors, which could cause results to differ
materially from management's expectations, is found in the section entitled
"Risk Factors" in the Company's 2003 Annual Report on Form 10-K. 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
Key Factors
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
OPERATING AND COST DATA
FOR MINE PRODUCTION
Consolidated:
Ounces produced (000)
Palladium 114 112 228 224
Platinum 34 33 67 67
Total 148 145 295 291
Tons milled (000) 302 301 616 591
Mill head grade (ounce
per ton) 0.53 0.52 0.52 0.54
Sub-grade tons
milled (000) (1) 11 19 26 40
Sub-grade tons mill
head grade (ounce per ton) 0.28 0.18 0.24 0.21
Total tons milled (000) (1) 313 320 642 631
Combined mill head grade
(ounce per ton) 0.52 0.50 0.51 0.52
Total mill recovery (%) 91 91 91 91
Total operating costs
per ounce (2) $230 $248 $235 $251
Total cash costs
per ounce (2), (3) $264 $281 $274 $281
Total production costs
per ounce (2), (3) $337 $354 $347 $352
Total operating costs
per ton milled (2) $108 $112 $108 $116
Total cash costs per
ton milled (2), (3) $124 $127 $126 $130
Total production costs
per ton milled (2), (3) $159 $160 $159 $162
Stillwater Mine:
Ounces produced (000)
Palladium 84 81 165 165
Platinum 25 24 49 50
Total 109 105 214 215
Tons milled (000) 186 181 381 366
Mill head grade (ounce
per ton) 0.62 0.62 0.60 0.63
Sub-grade tons
milled (000) (1) 11 19 26 40
Sub-grade tons mill
head grade (ounce per ton) 0.28 0.18 0.24 0.21
Total tons milled (000) (1) 197 200 407 406
Combined mill head grade
(ounce per ton) 0.60 0.58 0.57 0.59
Total mill recovery (%) 92 92 92 91
Total operating costs
per ounce (2) $209 $233 $221 $230
Total cash costs
per ounce (2), (3) $240 $262 $258 $257
Total production costs
per ounce (2), (3) $305 $325 $323 $318
Total operating costs
per ton milled (2) $115 $122 $116 $122
Total cash costs per
ton milled (2), (3) $132 $138 $135 $136
Total production costs
per ton milled (2), (3) $168 $171 $170 $169
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
OPERATING AND COST DATA
FOR MINE PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced (000)
Palladium 30 31 63 59
Platinum 9 9 18 17
Total 39 40 81 76
Tons milled (000) 116 120 235 225
Mill head grade
(ounce per ton) 0.38 0.38 0.39 0.38
Sub-grade tons
milled (000) (1) -- -- -- --
Sub-grade tons mill
head grade (ounce per ton) -- -- -- --
Total tons milled (000) (1) 116 120 235 225
Combined mill head grade
(ounce per ton) 0.38 0.38 0.39 0.38
Total mill recovery (%) 88 88 89 89
Total operating costs
per ounce (2) $289 $290 $271 $308
Total cash costs per
ounce (2), (3) $333 $330 $319 $350
Total production costs
per ounce (2), (3) $428 $428 $409 $448
Total operating costs
per ton milled (2) $96 $96 $94 $103
Total cash costs per
ton milled (2), (3) $111 $109 $110 $117
Total production costs
per ton milled (2), (3) $143 $141 $142 $150
(1) Sub-grade tons milled includes reef waste material only. Total tons
milled includes ore tons and sub-grade tons only.
(2) Total cash costs for this purpose include costs of mining,
processing and administrative expenses at the mine site (including
mine site overhead, taxes other than income taxes, royalties,
by-product credits from production and credits for secondary
materials). For the purposes of reporting cash cost per ounce
statistics for the company's mine operations, costs related to the
secondary recycling of autocatalysts, offset by sales proceeds
included in the company's revenue, are reflected as an allocated
credit to operating costs. Total production costs include total
cash costs plus depreciation and amortization. Income taxes,
corporate general and administrative expenses and interest income
and expense are not included in either total cash costs or total
production costs.
(3) "Cash cost per ton" and "cash cost per ounce" represent Non-GAAP
measurements that management uses to monitor and evaluate the
performance of its mining operations. Management believes cash
costs per ounce and per ton provide an indicator of profitability
and efficiency at each location and on a consolidated basis, and
also may provide a benchmark for comparing our performance with that
of other mining companies and other mine operating properties. See
table "Reconciliation of Non-GAAP measures to cost of revenues."
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
SALES AND PRICE DATA
Ounces sold (000)
Mine Production:
Palladium 70 117 88 236
Platinum 20 34 52 68
Total 90 151 240 304
Other PGM activities:
Palladium 118 -- 171 2
Platinum 10 1 27 1
Rhodium 2 -- 5 --
Total 130 1 203 3
Total ounces sold 220 152 443 307
Average realized price
per ounce (4)
Mine Production:
Palladium $388 $341 $382 $353
Platinum $860 $565 $863 $572
Combined (5) $491 $391 $486 $401
Other PGM activities:
Palladium $256 $234 $256 $259
Platinum $833 $642 $783 $605
Rhodium $796 $577 $785 $649
Average market price
per ounce (4)
Palladium $256 $170 $249 $208
Platinum $832 $646 $850 $654
Combined (5) $382 $276 $380 $306
(4) The company's average realized price represents revenues (include
the effect of contractual floor and ceiling prices) and hedging
gains and losses realized on commodity instruments, but excluding
contract discounts, all divided by total ounces sold. The average
market price represents the average London PM Fix for palladium,
platinum and combined prices and Johnson Matthey for rhodium prices
for the actual months of the period.
(5) Stillwater reports a combined average realized and market price of
palladium and platinum based on actual sales of mine production
ounces. Prior period amounts have been adjusted to conform with the
current year presentation.
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Reconciliation of Non-GAAP measures to cost of revenues
"Cash cost per ton" and "cash cost per ounce" represent Non-GAAP
measurements that management uses to monitor and evaluate the
performance of its mining operations. Management believes cash costs
per ounce and per ton provide an indicator of profitability and
efficiency at each location and on a consolidated basis, and may provide
a benchmark for company performance with that of other mining companies
and other mine operating properties.
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
OPERATING AND COST
DATA RECONCILIATION
(in thousands except cost
per ton and cost per
ounce data)
Consolidated:
Total operating costs $33,811 $35,845 $69,413 $72,825
Total cash costs $38,936 $40,539 $81,060 $81,689
Total production costs $49,662 $51,105 $102,365 $102,336
Total ounces 148 145 295 291
Total tons milled 313 320 642 631
Total operating costs
per ounce $230 $248 $235 $251
Total cash cost per ounce $264 $281 $274 $281
Total production cost
per ounce $337 $354 $347 $352
Total operating cost
per ton milled $108 $112 $108 $116
Total cash cost per ton
milled $124 $127 $126 $130
Total production cost per
ton milled $159 $160 $159 $162
Reconciliation to cost
of revenues:
Gross operating costs $35,318 $35,841 $71,880 $73,235
Less: secondary recycling
credit (1,507) 4 (2,467) (410)
Total operating costs $33,811 $35,845 $69,413 $72,825
Royalties, taxes and other 5,125 4,694 11,647 8,864
Total cash costs $38,936 $40,539 $81,060 $81,689
Asset retirement costs 92 84 82 168
Depreciation and
amortization 10,634 10,482 21,123 20,479
Total production costs $49,662 $51,105 $102,365 $102,336
Change in product recycling (1,127) 5,598 7,513 10,826
Costs of secondary
recycling 10,775 1,087 26,143 2,190
Add: secondary recycling
credit 1,507 (4) 2,467 410
(Gain) or loss on sale of
assets and other costs -- 6 (75) (1)
Total cost of revenues $60,817 $57,792 $138,413 $115,761
Stillwater Mine:
Total operating costs $22,644 $24,363 $47,319 $49,596
Total cash costs $26,066 $27,466 $55,127 $55,341
Total production costs $33,097 $34,116 $69,040 $68,543
Total ounces 109 105 214 215
Total tons milled 197 200 407 406
Total operating costs
per ounce $209 $233 $221 $230
Total cash cost per ounce $240 $262 $258 $257
Total production cost
per ounce $305 $325 $323 $318
Total operating cost
per ton milled $115 $122 $116 $122
Total cash cost per ton
milled $132 $138 $135 $136
Total production cost
per ton milled $168 $171 $170 $169
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
OPERATING AND COST
DATA RECONCILIATION
(CONTINUED)
(in thousands except cost
per ton and cost
per ounce data)
Reconciliation to cost
of revenues:
Gross Operating costs $23,752 $24,362 $49,109 $49,914
Less: secondary
recycling credit (1,108) 1 (1,790) (318)
Total operating costs $22,644 $24,363 $47,319 $49,596
Royalties, taxes and other 3,422 3,103 7,808 5,745
Total cash costs $26,066 $27,466 $55,127 $55,341
Asset retirement costs 76 69 149 137
Depreciation and
amortization 6,955 6,581 13,764 13,065
Total production costs $33,097 $34,116 $69,040 $68,543
Change in product inventory (11,136) 4,128 (10,949) 8,819
(Gain) or loss on sale of
assets and other costs 1 6 (1) --
Total cost of revenues $21,962 $38,250 $58,090 $77,362
East Boulder Mine
Total operating costs $11,167 $11,482 $22,094 $23,229
Total cash costs $12,870 $13,073 $25,933 $26,348
Total production costs $16,565 $16,989 $33,325 $33,793
Total ounces 39 40 81 76
Total tons milled 116 120 235 225
Total operating costs
per ounce $289 $290 $271 $308
Total cash cost per ounce $333 $330 $319 $350
Total production cost
per ounce $428 $428 $409 $448
Total operating cost
per ton milled $96 $96 $94 $103
Total cash cost per ton milled $111 $109 $110 $117
Total production cost
per ton milled $143 $141 $142 $150
Reconciliation to cost
of revenues:
Gross Operating costs $11,566 $11,479 $22,771 $23,321
Less: secondary recycling
credit (399) 3 (677) (92)
Total operating costs $11,167 $11,482 $22,094 $23,229
Royalties, taxes and other 1,703 1,591 3,839 3,119
Total cash costs $12,870 $13,073 $25,933 $26,348
Asset retirement costs 16 15 33 31
Depreciation and
amortization 3,679 3,901 7,359 7,414
Total production costs $16,565 $16,989 $33,325 $33,793
Change in product inventory (8,563) 1,470 (7,962) 2,007
(Gain) or loss on sale of
assets and other costs (1) -- (74) --
Total cost of revenues $8,001 $18,459 $25,289 $35,800
Other PGM activities
Reconciliation to cost
of revenues:
Change in product inventory $18,572 $-- $26,424 $--
Costs of secondary recycling 10,775 1,087 26,143 2,190
Add: secondary
recycling credit 1,507 (4) 2,467 409
Total cost of revenues $30,854 $1,083 $55,034 $2,599
Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
Revenues $84,207 $60,011 $184,900 $124,165
Costs and expenses
Cost of metals sold 50,183 47,310 117,290 95,282
Depreciation and
amortization 10,634 10,482 21,123 20,479
Total costs of revenues 60,817 57,792 138,413 115,761
General and administrative 3,925 3,235 7,649 6,867
Norilsk Nickel transaction
related expenses -- 3,043 -- 3,043
Total costs and expenses 64,742 64,070 146,062 125,671
Operating Income (Loss) 19,465 (4,059) 38,838 (1,506)
Other income (expense)
Interest income 386 68 671 179
Interest expense (3,360) (4,684) (7,261) (9,595)
Income (loss) before income
taxes and cumulative effect
of accounting change 16,491 (8,675) 32,248 (10,922)
Income tax benefit -- 3,393 -- 4,292
Reduction of net operating
loss deferred tax asset
resulting from ownership
change -- (13,979) -- (13,979)
Total income tax provision -- (10,586) -- (9,687)
Income (loss) before
cumulative effect of
accounting change 16,491 (19,261) 32,248 (20,609)
Cumulative effect of change
in accounting for asset
retirement obligations, net
of $264 income tax benefit -- -- -- (408)
Net income (loss) $16,491 $(19,261) $32,248 $(21,017)
Other comprehensive income,
net of tax 3,397 321 2,914 352
Comprehensive income (loss) $19,888 $(18,940) $35,162 $(20,665)
Basic earnings (loss)
per share
Income (loss) before
cumulative effect of
accounting change $0.18 $(0.40) $0.36 $(0.45)
Cumulative effect of
accounting change -- -- -- (0.01)
Net income (loss) $0.18 $(0.40) $0.36 $(0.46)
Diluted earnings (loss)
per share
Income (loss) before
cumulative effect of
accounting change $0.18 $(0.40) $0.36 $(0.45)
Cumulative effect of
accounting change -- -- -- (0.01)
Net income (loss) $0.18 $(0.40) $0.36 $(0.46)
Weighted average common
shares outstanding
Basic 90,146 47,921 90,022 45,799
Diluted 90,541 47,921 90,293 45,799
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and
per share amounts)
June 30, December 31,
2004 2003
ASSETS
Current assets
Cash and cash equivalents $53,808 $47,511
Restricted cash equivalents 2,650 2,650
Inventories 203,679 202,485
Accounts receivable 17,791 3,777
Deferred income taxes 4,578 4,313
Other current assets 5,030 4,270
Total current assets 287,536 265,006
Property, plant and equipment,
net 433,207 419,528
Other noncurrent assets 5,583 6,054
Total assets $726,326 $690,588
LIABILITIES and STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable $11,093 $9,781
Accrued payroll and benefits 9,103 10,654
Property, production and
franchise taxes payable 8,505 8,504
Current portion of long-term
debt and capital lease
obligations 1,940 1,935
Long-term debt secured by
finished goods 37,011 74,106
Other current liabilities 1,613 5,290
Total current liabilities 69,265 110,270
Long-term debt and capital
lease obligations 121,583 85,445
Deferred income taxes 4,578 4,313
Other noncurrent liabilities 11,600 11,263
Total liabilities 207,026 211,291
Commitments and Contingencies
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;
90,239,460 and 89,849,239 shares
issued and outstanding 902 899
Paid-in capital 602,078 592,974
Accumulated deficit (81,508) (113,756)
Accumulated other comprehensive
gain (loss) 2,094 (820)
Unearned compensation --
restricted stock awards (4,266) --
Total stockholders' equity 519,300 479,297
Total liabilities and
stockholders' equity $726,326 $690,588
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
Cash flows from
operating activities
Net income (loss) $16,491 $(19,261) $32,248 $(21,017)
Adjustments to reconcile
net income to net cash
used by operating
activities:
Depreciation and
amortization 10,634 10,482 21,123 20,479
Deferred income taxes -- 10,795 -- 9,652
Cumulative effect of
change in accounting for
asset retirement
obligations -- -- -- 672
Stock issued under
employee benefit plans 1,038 831 2,096 1,862
Amortization of debt
issuance costs 286 2,158 566 2,516
Amortization of restricted
stock compensation 274 652 274 670
Changes in operating assets
and liabilities:
Inventories (9,780) 5,706 (1,194) 10,696
Accounts receivable 8,585 (1,807) (14,014) 12,288
Accounts payable 1,504 8,370 1,312 4,636
Other (4,449) (5,195) (2,728) (6,446)
Net cash provided by
operating activities 24,583 12,731 39,683 36,008
Cash flows from
investing activities
Capital expenditures (20,317) (11,662) (34,892) (26,196)
Net cash used in
investing activities (20,317) (11,662) (34,892) (26,196)
Cash flows from
financing activities
Payments on long-term
debt and capital lease
obligations (517) (52,783) (965) (58,136)
Issuance of common stock,
related to Norilsk Nickel
transaction (1) -- 90,817 -- 90,284
Issuance of common stock,
net of stock issue costs 2,428 2,471
Payment for debt issuance
costs -- (152) -- (1,606)
Net cash provided by
financing activities 1,911 37,882 1,506 30,542
Cash and cash equivalents
Net increase 6,177 38,951 6,297 40,354
Balance at beginning
of period 47,631 27,316 47,511 25,913
Balance at end of period $53,808 $66,267 $53,808 $66,267
(1) Non-cash Financing
activities:
Fair value of issuance of
common stock (net of
issue costs) $ -- $239,030 $-- $238,497
Inventory received in
connection with the
Norilsk Nickel transaction -- (148,213) -- (148,213)
Net cash received in
Norilsk Nickel transaction $-- $90,817 $-- $90,284
SOURCE Stillwater Mining Company
-0- 08/04/2004
/CONTACT: John W. Pearson of Stillwater Mining Company , +1-406-322-8742/
/Web site: http://www.stillwatermining.com /
(SWC)
CO: Stillwater Mining Company
ST: Montana
IN: MNG
SU: ERN CCA MAV