Exhibit 99.1
Stillwater Mining Reports Third Quarter Results
COLUMBUS, Mont., Nov. 1 /PRNewswire-FirstCall/ -- Stillwater Mining
Company (NYSE: SWC) reported net income of $4.4 million for the third quarter
of 2004 or $0.05 per diluted share, on revenue of $144.6 million, compared to
a net loss of $1.6 million for the third quarter of 2003 or $0.02 per diluted
share, on revenue of $66.6 million. The 2004 third-quarter results reflect
higher revenues than in the year-earlier quarter as a result of the sale in
the third quarter of 2004 of mine production stockpiled during the smelter re-
bricking in the second quarter 2004. Higher realized PGM prices, increased
sales of recycled catalysts, sales from the palladium inventory received in
the Norilsk Nickel transaction, and contractual sourcing and sale of platinum
and rhodium also contributed to the higher revenues in the 2004 third quarter.
Third quarter 2004 results also include the effect of 10 days lost
production from a strike at the Company's Stillwater Mine and its
Metallurgical Operations and $2.4 million of directly associated costs, a
charge of $5.2 million or $0.06 per diluted share, related to refinancing the
Company's bank credit facility, and a valuation adjustment of $2.1 million or
$0.02 per diluted share related to buying out the lease on a tunnel boring
machine at the East Boulder Mine. The 2003 third quarter results include a
non-cash charge for income tax of $1.2 million, or $0.01 per share, relating
to a portion of the Company's deferred tax losses that were no longer
available to the Company following the MMC Norilsk Nickel transaction in 2003.
Third Quarter 2004 Highlights, Compared to Third Quarter 2003
* Net income of $4.4 million, compared to a third quarter 2003 net loss
of $1.6 million.
* Combined average realized price for mine PGM production increased 18%
to $479 per ounce.
* Union members at the Stillwater Mine and Columbus Metallurgical
Operations ratified a new three-year labor agreement and returned to
work July 21, 2004 after a strike vote that halted production
July 11, 2004.
* Charges for refinancing the Company's credit agreement and buying out
an equipment lease, totaling $7.3 million.
* The Company expanded its hedging of future platinum mine production.
For the first nine months of 2004, the Company reported net income of
$36.6 million, or $0.41 per diluted share, on revenue of $329.5 million,
compared to a net loss of $22.6 million, or $0.37 per diluted share, on
revenue of $190.8 million for the first nine months of 2003. The 2004 year-
to-date results reflect the effect of 10 days lost production from a strike at
the Stillwater Mine and Columbus Metallurgical Operations and $2.4 million of
directly associated costs, $5.2 million, or $0.06 per diluted share, related
to the refinancing of the Company's bank credit facility, and a valuation
adjustment of $2.1 million or $0.02 per diluted share related to buying out
the lease on a tunnel boring machine at the East Boulder Mine. The 2003
results included certain charges related to the issuance of shares to Norilsk
Nickel, the Company's largest stockholder. These charges were a $15.2
million, or $0.25 per diluted share, non-cash charge to deferred income tax
relating to tax loss carry-forwards no longer available to the Company
following the Norilsk Nickel transaction, and $3.0 million ($2.0 million, or
$0.03 per diluted share, after tax) of transaction costs charged to income.
Announcing the Company's results, Stillwater Chairman and Chief Executive
Officer, Francis R. McAllister said, "The Company's results for the third
quarter were sharply affected by costs of the strike, refinancing the credit
facility and from buying out the lease on a tunnel boring machine. The
outcome is the Company has a new labor agreement, a new credit agreement and
has eliminated a costly lease agreement. Absent these costs, the Company
would have reported higher net income. We estimate the overall effect of the
strike at the Company's Stillwater Mine and Columbus Metallurgical Complex was
in the range of $10 to $11 million, or $0.11 to $0.12 per share, which when
combined with the refinancing and equipment-related charges reduced third-
quarter earnings by about $18 million, or $0.20 per share. Revenues for the
third quarter of 2004 benefited significantly, compared to the same period in
2003, from selling mine production stockpiled due to the smelter re-bricking
in the second quarter, as well as from higher realized PGM prices, increased
sales of recycled catalysts, sales out of the palladium inventory received in
the Norilsk Nickel transaction and contractual sourcing and sale of platinum
and rhodium."
He continued, "Our overall mine production in the quarter was down as
expected due to a 25% decrease in ounces produced at the Stillwater Mine
related primarily to 10 days lost production from the union strike in the
third quarter, but also due to a decrease in the average ore grade realized.
Production at the East Boulder operation was not affected by the strike and
was essentially flat during the quarter. Production at Stillwater has since
returned to a normal level and, while we expect our fourth quarter mine
production from both sites to improve, conversion of probable ore reserves to
proven at the Stillwater Mine during 2004 is below our historical experience
and will likely hold down production increases in the near-term that might
otherwise have been possible. This also may result in lowering proven
reserves at the Stillwater Mine at year-end 2004."
"During the third quarter of 2004, the Company continued to hedge platinum
prices in the forward market by entering into financially settled forward
transactions. We continue to believe platinum prices could weaken going
forward as the wide market price differential between platinum and palladium
could drive future consumption toward palladium at the expense of platinum.
We now have locked in pricing on about half of our anticipated platinum mine
production for the period from October 2004 through September 2006. These
second and third quarter 2004 hedging transactions have fixed the price for a
total of 150,800 ounces of anticipated platinum sales from mine production
over the next twenty-four months at an overall average price of about $806 per
ounce. Subsequent to the end of the third quarter the Company has entered
into financially settled forward contracts covering an additional 9,000 ounces
of platinum for the period of February of 2006 through October of 2006 at an
overall average price of about $823 per ounce. These hedges are expected to
modestly reduce the overall volatility of the Company's earnings and cash
flow," stated McAllister.
"Lastly," McAllister added, "during the third quarter we met with Chinese
jewelry manufacturers and saw first hand the use of palladium as a pure
jewelry metal. Manufacturers in China are producing palladium rings,
bracelets, earrings and necklaces for a developing Chinese market. Chinese
jewelry consumption of palladium is estimated to be over 500,000 ounces so far
this year and could grow to twice that amount by year-end."
OPERATING RESULTS
During the third quarter of 2004, the Company produced a total of 121,000
ounces of palladium and platinum, which included 93,000 ounces of palladium
and 28,000 ounces of platinum, compared to 146,000 ounces, which included
113,000 ounces of palladium and 33,000 ounces of platinum, in the third
quarter of 2003. This was primarily due to a 25% decrease in ounces produced
at the Stillwater Mine related to 10 days lost mine production from the union
strike and a 5% decrease in average ore grade realized during the third
quarter of 2004. Realized prices per ounce for mine production in the third
quarter 2004 were $372 for palladium and $821 for platinum, compared to $353
and $590, respectively, in the third quarter of 2003. Palladium realizations
benefited from the floor prices included in the Company's long-term sales
contracts, while net realizations on a portion of the Company's platinum sales
were constrained by the financially settled forwards in the third quarter.
When platinum and palladium sales for the third quarter of 2004 are averaged
together, the Company's combined realized price per ounce for mine production
was $479, about 32% above the $363 per ounce combined market price for the
same period, and 18% higher than the average combined realization for the
third quarter of 2003.
Total cash costs on a consolidated basis for the third quarter of 2004
increased 25% to $354 per ounce compared to $284 per ounce for the same period
in 2003. Of the increase in total consolidated cash costs per ounce, $48 per
ounce was primarily related to 10 days lost production at the Stillwater Mine
from the union strike and a 5% decrease in the combined mill head grade at the
Stillwater Mine during the third quarter of 2004 and $22 per ounce from
increases in royalties and production taxes due to the higher PGM prices in
the third quarter of 2004 as compared to the same period of 2003. Total
consolidated production costs per ounce in the third quarter 2004 increased
$88, or 25%, to $442 per ounce from $354 per ounce in the same period of 2003.
The reasons for the increase parallel those for total cash costs.
During the first nine months of 2004, the Company's mines produced 416,000
ounces of palladium and platinum, which included 321,000 ounces of palladium
and 95,000 ounces of platinum, compared to 437,000 ounces, which included
337,000 ounces of palladium and 100,000 ounces of platinum, in the first nine
months of 2003. Realized prices per ounce for mine production in the first
nine months of 2004 averaged $377 for palladium and $844 for platinum,
compared to $353 and $578, respectively, for the same period of 2003.
Palladium realizations benefited from the floor prices included in the
Company's long-term sales contracts and a portion of platinum realizations
were constrained by ceiling prices in the same contracts. When platinum and
palladium sales from mine production are averaged together for the nine-month
period, the Company's combined realized price per ounce was $483, about 29%
higher than the $375 per ounce combined market price for the same period, and
20%, or $81 per ounce, higher than the 2003 first nine months' combined
realized price.
Total consolidated cash costs per ounce for the first nine months of 2004
increased by $15, or 5%, to $297 compared to $282 for the same period of 2003.
Of the increase in total consolidated cash costs per ounce $9 per ounce is due
to lower ounces produced as a result of 10 days lost production due to the
union strike at the Stillwater Mine and a decrease in mined ore grade at
Stillwater, $12 per ounce is due to higher consolidated royalties and
production taxes from increases in metal prices, offset by a decrease in
operating costs of $19 per ounce at the East Boulder Mine as a result of
higher production. Total consolidated production costs per ounce increased
$21, or 6%, to $374 per ounce from $353 in the first nine months of 2004 as
compared to the same period of 2003. The reasons for this increase parallel
those for the increase in total consolidated cash costs per ounce.
STILLWATER MINE
At the Stillwater Mine, palladium and platinum production was 80,000
ounces in the third quarter of 2004, compared to 106,000 ounces in the third
quarter of 2003. During the quarter, a total of 161,000 tons were milled with
a combined mill head grade of 0.54 ounce per ton, compared to 203,000 tons
with a combined mill head grade of 0.57 ounce per ton in the third quarter of
2003. The mine's PGM production was lower as a result of a 5% decrease in ore
grade and lost production from the union strike early in the quarter.
For the first nine months of 2004, the mine produced 293,000 ounces of
palladium and platinum, compared to 322,000 ounces during the first nine
months of 2003. The decrease parallels the decrease noted above for the third
quarter.
Total cash costs per ounce for the third quarter of 2004 increased to $341
from $260 for the same period in 2003 due to 10 days reduced production as a
result of the union strike and the decrease in average ore grade and higher
royalties and property taxes due to the higher PGM prices in 2004 as compared
to 2003. For the same reasons, total production costs per ounce in the third
quarter 2004 increased 34%, to $428 from $319 in the same period of 2003.
For the first nine months of 2004, total cash costs per ounce were $280,
up from $258 for the same period in 2003 due to lower production levels as a
result of the union strike and higher royalties and production taxes due to
the higher PGM prices in 2004 as compared to 2003. Total production costs per
ounce increased 10%, to $351 in the first nine months of 2004 from $318 during
the same period of 2003. These increases are due to the increases noted above
for total cash costs and higher depreciation and amortization rates in 2004.
During the third quarter of 2004 capital expenditures at the mine were
$12.2 million, of which $11.4 million was for capitalized mine development,
compared to the $12.0 million total and $11.3 million in development spending
for the same period in 2003. Year-to-date capital spending was $34.7 million
of which $32.3 million was spent for capitalized mine development, compared to
$31.4 million and $29.1 million, respectively for the first nine months in
2003.
EAST BOULDER MINE
During the third quarter of 2004, the East Boulder Mine produced 41,000
ounces of palladium and platinum, about the same as in the third quarter of
2003. The mining rate averaged approximately 1,335 tons of ore per day for
the quarter, up from approximately 1,300 tons of ore per day in the second
quarter of 2004. The East Boulder mill processed a total of 126,000 tons with
an average mill head grade of 0.38 ounce per ton during the third quarter of
2004, compared to 109,000 tons with a mill head grade of 0.42 ounce per ton
for the same quarter last year.
For the first nine months of 2004 the mine produced 123,000 ounces of
palladium and platinum compared to 115,000 ounces for the first nine months of
2003. The increase in production is the result of ongoing efforts to ramp up
production at the facility.
Total cash costs per ounce in the third quarter of 2004 increased by $27,
or 8%, to $378 compared to $351 per ounce for the same period in 2003 due to a
$14 per ounce increase in operating costs, resulting in part from lower
realized ore grades for the period, and a $13 per ounce increase in royalties,
insurance and production taxes resulting from higher realized prices for
metals in 2004. Total production costs per ounce produced in the third
quarter of 2004 were $470 up from $449 in the third quarter of 2003. This
increase paralleled the increase in total cash costs as noted above, offset by
a $6 per ounce decrease in depreciation and amortization costs.
For the first nine months of 2004, total cash costs per ounce decreased
3%, to $339 from $350 for the same period in 2003 due to the higher production
levels. Total production costs per ounce decreased 4%, to $430 in the first
nine months of 2004 from $448 in the same period of 2003. The decrease is
primarily the result of increased production.
During the third quarter of 2004, capital expenditures at the mine were
$8.9 million, of which $5.2 million was incurred for capitalized mine
development, compared to capital expenditures of $2.8 million, of which $2.4
million was for capitalized mine development, for the same period in 2003.
Year-to-date capital spending is $17.4 million, of which $12.9 million was
incurred for capitalized mine development, compared to capital of $9.6
million, of which $6.9 million was for development, in the first nine months
of 2003.
FINANCES
Total revenues were $144.6 million for the third quarter of 2004, compared
with $66.6 million for the third quarter of 2003. The $77.9 million increase
in revenues resulted from the processing and sale of mine production which had
been stockpiled during the second quarter of 2004 because of the smelter re-
bricking, as well as from higher realized PGM prices overall in 2004, sales
out of the 877,000-ounce palladium inventory the Company received from Norilsk
Nickel in connection with its stock purchase transaction in 2003 plus the
benefit of expanded secondary processing revenues under the Company's
recycling contract and contractual sourcing and sale of platinum and rhodium.
The sale of 110,000 ounces of the palladium inventory contributed $23.4
million to revenue for the third quarter of 2004, sales of 36,000 ounces of
PGMs from recycling of catalysts provided $23.8 million to revenue and
contractual sourcing and sale of platinum and rhodium contributed $9.3 million
to revenue.
Palladium sales from mine production totaled 140,000 ounces during the
third quarter of 2004, compared to 112,000 ounces for the third quarter of
2003. Platinum sales from mine production were 44,000 ounces during the third
quarter of 2004, compared to 32,000 for the same period of 2003. These large
increases are due to sales in the 2004 third quarter of processed PGM's
stockpiled due to the smelter re-brick during the second quarter.
For the first nine months of 2004, revenues totaled $329.5 million,
compared with $190.8 million for the first nine months of 2003. This 73%
increase in revenues is primarily due to a 20% increase in the average
combined realized palladium and platinum prices from sales of mine production,
the sale of approximately 266,000 ounces of palladium inventory received in
the Norilsk Nickel transaction, contributing $63.5 million, the increase in
sales to 82,000 ounces of secondary reprocessing materials, contributing $52.0
million and the contractual sourcing and sale of platinum and rhodium,
generating $9.3 million.
Altogether, the total volume of PGMs sold increased 69% to approximately
782,000 ounces during the first nine months of 2004, compared with 462,000 for
the same period of 2003. Palladium sales from mine production decreased to
approximately 329,000 ounces during the first nine months of 2004 compared to
348,000 ounces for the first nine months of 2003. Platinum sales from mine
production also decreased to approximately 96,000 ounces during the first nine
months of 2004, compared to approximately 99,000 for the same period of 2003.
The decrease in sales of mine production is due to the union strike and a
lower realized ore grade during the third quarter of 2004. As already noted,
this decrease in mined ounces sold was more than offset in total by sales out
of the palladium inventory received in the Norilsk Nickel transaction, growth
in the Company's recycling activities and by contractual sourcing and sale of
platinum and rhodium.
Net cash provided by operations for the third quarter of 2004 was $60.5
million, compared to $0.8 million for the same period of 2003. This $59.7
million increase in cash provided from operations was primarily driven by the
110,000 ounce increase in sales of palladium inventory received in the Norilsk
Nickel transaction, the increase in mine production sales and changes in
operating capital which resulted in a source of cash of $38.2 million in the
quarter compared to a use of cash of $10.9 million for the same period last
year. The change in working capital is primarily related to a decrease in
inventory of $36.1 million attributed to the sale of palladium received in the
Norilsk Nickel transaction and the processing and sale during the third
quarter sale of inventory that was stockpiled during the smelter re-bricking.
For the nine months ended September 30, 2004, net cash provided by
operations was $100.3 million, compared to $36.8 million for the same period
of 2003. The $63.5 million increase in cash provided by operations was
primarily due to a 266,000 ounce increase in sales from the palladium
inventory received in the Norilsk Nickel transaction and to changes in
operating assets and liabilities, which resulted in a source of cash of $21.8
million in the first nine months compared to $10.4 million for same period
last year. The change in working capital is primarily related to a $35.0
million decrease in inventory levels attributed to the sale of a portion of
the palladium inventory received from Norilsk Nickel, offset by an increase in
metal sales receivables of $14.7 million on these palladium sales.
Capital expenditures totaled $20.9 million in the third quarter of 2004,
which includes $16.6 million incurred in connection with capitalized mine
development activities, compared to a total of $14.8 million, which included
$13.7 million incurred in connection with capitalized mine development
activities in the same period of 2003.
For the first nine months of 2004, capital expenditures totaled $55.8
million, of which $45.3 million was incurred in connection with capitalized
mine development activities, compared to $41.0 million for the same period of
2003, which included $36.0 million incurred in connection with capitalized
mine development activities.
As announced previously, on August 3, 2004, the Company entered into a new
$180 million credit facility with a syndicate of financial institutions,
replacing the Company's previous $250 million bank facility. The new credit
facility provides for a $140 million six-year term loan facility and a $40
million five-year revolving line of credit. Amortization of the term loan
facility commenced on August 31, 2004.
As of September 30, 2004, the Company has $139.7 million outstanding under
the new term facility bearing interest at a variable rate plus a margin (LIBOR
plus 325 basis points, or 5.13% at September 30, 2004). During 2004, the
Company obtained a letter of credit in the amount of $7.5 million as surety
for its long-term reclamation obligation at East Boulder Mine, which reduces
amounts available under the revolving credit facility to $32.5 million at
September 30, 2004. The letter of credit carries an annual fee of 3.13%. The
remaining amount available of the revolving credit facility bears an annual
commitment fee of 0.75%
At September 30, 2004, cash and cash equivalents were $101.7 million. The
Company's net working capital at September 30, 2004 was $246.0 million,
compared to $154.7 million at December 31, 2003. The increase in operating
capital resulted primarily from an increase in the Company's cash balance and
the reclassification of part of the current portion of long-term debt as a
long-term obligation. The ratio of current assets to current liabilities was
5.4 at September 30, 2004, as compared to 2.4 at December 31, 2003.
METALS MARKET
During the third quarter of 2004, palladium averaged $216 per ounce,
trading as high as $227, and as low as $205 per ounce, while platinum averaged
$835 per ounce and traded as high as $885 per ounce and as low as $776 per
ounce.
The palladium price traded at close to $220 per ounce for most of the
summer, until aggressive selling in early September by investors and
speculators drove the price down to a low of $205 per ounce. Platinum rose
above $800 per ounce in July as speculators and investors bought on the
weakness of the U.S. dollar. The price continued upward in August to peak at
$885 per ounce. A combination of factors including the anticipation, and
subsequent occurrence, of a strike by mine workers in South Africa and buying
by investment funds drove the platinum and palladium prices up at the end of
the quarter with palladium breaking back over $230 per ounce in early October
2004. During August 2004, speculators fueled the rhodium market and with
tight supply the price hit a high of $1,525 per ounce before easing back to
the $1,300 per ounce level.
The combined average market price per ounce of palladium and platinum for
the third quarter of 2004, based on the Company's actual sales of mine
production ounces, was $363 compared to $306 for the third quarter of 2003.
The combined average market price for the two metals for the first nine months
of 2004 was $375 per ounce compared to $309 per ounce for the same period in
2003.
Stillwater Mining Company will host its third quarter results conference
call at 12 noon Eastern Time on November 1, 2004. The conference call dial-in
number is 800-553-5260 (US) and 612-332-0634 (International). The conference
call will be simultaneously Web cast on the Internet via the Company's Web
site at http://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 750711,
through November 8, 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: http://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 Nine months ended
September 30, September 30,
2004 2003 2004 2003
OPERATING AND COST
DATA FOR MINE PRODUCTION
Consolidated:
Ounces produced (000)
Palladium 93 113 321 337
Platinum 28 33 95 100
Total 121 146 416 437
Tons milled (000) 271 289 887 879
Mill head grade
(ounce per ton) 0.49 0.55 0.51 0.54
Sub-grade tons
milled (000) (1) 16 23 42 64
Sub-grade tons mill
head grade (ounce per ton) 0.18 0.17 0.22 0.19
Total tons milled (000) (1) 287 312 929 943
Combined mill head
grade (ounce per ton) 0.47 0.52 0.50 0.52
Total mill recovery (%) 90 91 91 91
Total operating costs
per ounce (2) $ 293 $ 245 $ 252 $ 249
Total cash costs
per ounce (2), (3) $ 354 $ 284 $ 297 $ 282
Total production
costs per ounce (2), (3) $ 442 $ 354 $ 374 $ 353
Total operating costs
per ton milled (2) $ 123 $ 115 $ 113 $ 115
Total cash costs
per ton milled (2), (3) $ 149 $ 133 $ 133 $ 131
Total production costs
per ton milled (2), (3) $ 186 $ 166 $ 168 $ 163
Stillwater Mine:
Ounces produced (000)
Palladium 61 82 225 247
Platinum 19 24 68 75
Total 80 106 293 322
Tons milled (000) 145 180 526 545
Mill head grade (ounce per ton) 0.58 0.63 0.59 0.63
Sub-grade tons milled (000) (1) 16 23 42 64
Sub-grade tons mill
head grade (ounce per ton) 0.18 0.17 0.22 0.19
Total tons milled (000) (1) 161 203 568 609
Combined mill head
grade (ounce per ton) 0.54 0.57 0.57 0.58
Total mill recovery (%) 92 92 92 91
Total operating
costs per ounce (2) $ 281 $ 224 $ 237 $ 228
Total cash costs
per ounce (2), (3) $ 341 $ 260 $ 280 $ 258
Total production
costs per ounce (2), (3) $ 428 $ 319 $ 351 $ 318
Total operating
costs per ton milled (2) $ 138 $ 117 $ 123 $ 121
Total cash costs
per ton milled (2), (3) $ 168 $ 136 $ 145 $ 136
Total production costs
per ton milled (2), (3) $ 211 $ 167 $ 181 $ 168
East Boulder Mine:
Ounces produced (000)
Palladium 32 31 96 90
Platinum 9 9 27 25
Total 41 40 123 115
Tons milled (000) 126 109 361 334
Mill head grade
(ounce per ton) 0.38 0.42 0.39 0.39
Sub-grade tons
milled (000) (1) -- -- -- --
Sub-grade tons mill
head grade (ounce per ton) -- -- -- --
Total tons milled (000) (1) 126 109 361 334
Combined mill head
grade (ounce per ton) 0.38 0.42 0.39 0.39
Total mill recovery (%) 87 88 88 89
Total operating
costs per ounce (2) $317 $302 $287 $306
Total cash costs
per ounce (2), (3) $378 $351 $339 $350
Total production
costs per ounce (2), (3) $470 $449 $430 $448
Total operating costs
per ton milled (2) $104 $110 $98 $106
Total cash costs
per ton milled (2), (3) $125 $128 $115 $120
Total production costs
per ton milled (2), (3) $155 $163 $146 $154
(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 milled and cash cost per ounce represent Non-GAAP
measurements that management regularly uses to monitor and evaluate
the performance of its mining operations and of the Company as a
whole. Management believes that cash costs per ounce and cash costs
per ton milled provide an indication of efficiency and productivity
at each location and on a consolidated basis, as well as a
meaningful basis for comparing results between the Company's mining
operating properties. Operating costs per ounce and per ton milled
provide a measure similar to cash cost per ounce and per ton milled,
but exclude royalties and taxes (i.e. non-operating costs that tend
to increase with rising PGM prices). Finally, production costs per
ounce and per ton milled are a measure of total costs associated
with each mill ton or ounce produced in any period, including
depreciation, depletion and amortization costs. The Company
believes each of these cost measures provides management and
investors with a useful indication of the Company's operating
performance.
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
SALES AND PRICE DATA
Ounces sold (000)
Mine Production:
Palladium 140 112 329 348
Platinum 44 32 96 99
Total 184 144 425 447
Other PGM activities:
Palladium 121 1 292 2
Platinum 24 11 51 13
Rhodium 10 -- 14 --
Total 155 12 357 15
Total ounces sold 339 156 782 462
Average realized price
per ounce (4)
Mine Production:
Palladium $372 $353 $377 $353
Platinum $821 $590 $844 $578
Combined (5) $479 $405 $483 $402
Other PGM activities:
Palladium $219 $173 $241 $228
Platinum $839 $662 $809 $655
Rhodium $1,013 $479 $944 $556
Average market price
per ounce (4)
Palladium $216 $189 $237 $201
Platinum $835 $693 $845 $667
Combined (5) $363 $306 $375 $309
(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 monthly 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
Total cash cost per ton milled and per ounce represent Non-GAAP
measurements that management regularly uses to monitor and evaluate the
performance of its mining operations. Management believes that total
cash costs per ounce and per ton milled provide an indication of
efficiency and productivity at each location and on a consolidated basis,
as well as a meaningful basis for comparing results between the company's
mining properties. Total operating costs per ounce and per ton milled
provide a measure similar to total cash cost per ounce and per ton
milled, but exclude royalties and taxes -- i.e., non-operating costs that
tend to increase with rising PGM prices. Total production costs per
ounce and per ton milled are a measure of total costs associated with
each mill ton or ounce produced in any period, including depreciation,
depletion and amortization costs. The company believes each of these
cost measures provides management and investors with useful indicators of
the company's operating performance.
Three months ended Nine months ended
September 30, September 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 $35,367 $35,842 $104,781 $108,667
Total cash costs $42,712 $41,582 $123,772 $123,271
Total production costs $53,377 $51,732 $155,716 $153,897
Total ounces 121 146 416 437
Total tons milled 287 312 929 943
Total operating
costs per ounce $293 $245 $252 $249
Total cash cost per ounce $354 $284 $297 $282
Total production
cost per ounce $442 $354 $374 $353
Total operating cost
per ton milled $123 $115 $113 $115
Total cash cost per ton milled $149 $133 $133 $131
Total production
cost per ton milled $186 $166 $168 $163
Reconciliation to
cost of revenues:
Gross operating costs $37,451 $36,031 $109,331 $109,266
Less: secondary
recycling credit (2,084) (189) (4,550) (599)
Total operating costs $35,367 $35,842 $104,781 $108,667
Royalties, taxes and other 7,345 5,740 18,991 14,604
Total cash costs $42,712 $41,582 $123,772 $123,271
Asset retirement costs 94 87 277 254
Depreciation and amortization 10,571 10,063 31,667 30,372
Total production costs $53,377 $51,732 $155,716 $153,897
Change in product inventory 46,622 5,732 54,135 16,558
Costs of secondary recycling 22,062 1,489 48,206 3,679
Secondary recycling
depreciation -- 18 28 54
Add: secondary
recycling credit 2,084 189 4,550 599
Loss or (gain) on sale of
assets and other costs -- 69 (2) 107
Total cost of revenues $124,145 $59,229 $262,633 $174,894
Stillwater Mine:
Total operating costs $22,251 $23,862 $69,571 $73,458
Total cash costs $27,052 $27,669 $82,179 $83,010
Total production costs $33,905 $33,934 $102,926 $102,340
Total ounces 80 106 293 322
Total tons milled 161 203 568 609
Total operating
costs per ounce $281 $224 $237 $228
Total cash cost per ounce $341 $260 $280 $258
Total production
cost per ounce $428 $319 $351 $318
Total operating cost
per ton milled $138 $117 $123 $121
Total cash cost
per ton milled $168 $136 $145 $136
Total production
cost per ton milled $211 $167 $181 $168
Reconciliation to
cost of revenues:
Gross Operating costs $23,614 $23,999 $72,723 $73,913
Less: secondary
recycling credit (1,363) (137) (3,152) (455)
Total operating costs $22,251 $23,862 $69,571 $73,458
Royalties, taxes and other 4,801 3,807 12,608 9,552
Total cash costs $27,052 $27,669 $82,179 $83,010
Asset retirement costs 77 71 227 208
Depreciation and amortization 6,776 6,194 20,520 19,122
Total production costs $33,905 $33,934 $102,926 $102,340
Change in product inventory 10,487 (100) (462) 8,719
Add: secondary
recycling credit 1,363 137 3,152 455
Loss or (gain) on sale of
assets and other costs -- 52 (2) 80
Total cost of revenues $45,755 $34,023 $105,614 $111,594
East Boulder Mine
Total operating costs $13,116 $11,980 $35,210 $35,209
Total cash costs $15,660 $13,913 $41,593 $40,261
Total production costs $19,472 $17,798 $52,790 $51,557
Total ounces 41 40 123 115
Total tons milled 126 109 361 334
Total operating
costs per ounce $317 $302 $287 $306
Total cash cost per ounce $378 $351 $339 $350
Total production cost per ounce $470 $449 $430 $448
Total operating cost
per ton milled $104 $110 $98 $106
Total cash cost per ton milled $125 $128 $115 $120
Total production cost
per ton milled $155 $163 $146 $154
Reconciliation to
cost of revenues:
Gross Operating costs $13,837 $12,032 $36,608 $35,353
Less: secondary
recycling credit (721) (52) (1,398) (144)
Total operating costs $13,116 $11,980 $35,210 $35,209
Royalties, taxes and other 2,544 1,933 6,383 5,052
Total cash costs $15,660 $13,913 $41,593 $40,261
Asset retirement costs 17 16 50 46
Depreciation and amortization 3,795 3,869 11,147 11,250
Total production costs $19,472 $17,798 $52,790 $51,557
Change in product inventory 7,821 (895) (141) 1,112
Add: secondary
recycling credit 721 52 1,398 144
Loss or (gain) on sale
of assets and other costs -- 17 -- 27
Total cost of revenues $28,014 $16,972 $54,047 $52,840
Other PGM activities
Reconciliation to
cost of revenues:
Change in product inventory $28,314 $6,727 $54,738 $6,727
Secondary recycling
depreciation $-- $18 $28 $54
Costs of secondary recycling 22,062 1,489 48,206 3,679
Total cost of revenues $50,376 $8,234 $102,972 $10,460
Stillwater Mining Company
Consolidated Statements of
Operations and Comprehensive (Loss) Income
(Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
Revenues:
Mine production 88,034 58,398 204,681 179,928
Secondary processing 23,824 1,696 52,010 4,331
Sales of palladium
received in Norilsk
Nickel transaction
and other 32,707 6,550 72,774 6,550
Total revenue 144,565 66,644 329,465 190,809
Costs and expenses:
Cost of metals sold:
Mine production 63,199 40,932 127,995 134,062
Secondary processing 22,062 1,489 48,206 3,679
Sales of palladium
received in Norilsk
Nickel transaction
and other 28,313 6,727 54,737 6,727
Total costs of
metals sold 113,574 49,148 230,938 144,468
Depreciation and
amortization:
Mine production 10,571 10,063 31,667 30,372
Secondary processing -- 18 28 54
Total depreciation
and amortization 10,571 10,081 31,695 30,426
Total costs
of revenues 124,145 59,229 262,633 174,894
General and administrative 6,674 3,377 14,322 10,340
Loss on disposal of property,
plant and equipment 1,991 -- 1,916 --
Norilsk Nickel transaction
related expenses -- -- -- 3,043
Total costs and expenses 132,810 62,606 278,871 188,277
Operating Income 11,755 4,038 50,594 2,532
Other income (expense)
Interest income 489 136 1,159 315
Interest expense (7,876) (4,021) (15,137) (13,616)
Income (loss) before income
taxes and cumulative effect
of accounting change 4,368 153 36,616 (10,769)
Income tax (provision) benefit (3) (590) (3) 3,702
Reduction of net operating
loss deferred tax asset
resulting from ownership
change -- (1,191) -- (15,170)
Total income tax provision (3) (1,781) (3) (11,468)
Income (loss) before cumulative
effect of accounting change 4,365 (1,628) 36,613 (22,237)
Cumulative effect of change
in accounting for asset
retirement obligations,
net of $264 income tax benefit -- -- -- (408)
Net income (loss) $4,365 $(1,628) $36,613 $(22,645)
Other comprehensive (loss)
income, net of tax (5,103) 390 (2,189) 742
Comprehensive (loss) income $(738) $(1,238) $34,424 $(21,903)
Basic earnings (loss)
per share
Income (loss) before
cumulative effect of
accounting change $0.05 $(0.02) $0.41 $(0.36)
Cumulative effect
of accounting change -- -- -- (0.01)
Net income (loss) $0.05 $(0.02) $0.41 $(0.37)
Diluted earnings (loss)
per share
Income (loss) before
cumulative effect of
accounting change $0.05 $(0.02) $0.41 $(0.36)
Cumulative effect of
accounting change -- -- -- (0.01)
Net income (loss) $0.05 $(0.02) $0.41 $(0.37)
Weighted average common
shares outstanding
Basic 90,288 89,662 90,111 60,399
Diluted 90,714 89,662 90,372 60,399
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
September 30, December 31,
2004 2003
ASSETS
Current assets
Cash and cash equivalents $101,690 $47,511
Restricted cash equivalents 2,650 2,650
Inventories 167,530 202,485
Accounts receivable 18,521 3,777
Deferred income taxes 3,770 4,313
Other current assets 7,503 4,270
Total current assets 301,664 265,006
Property, plant and equipment, net 441,374 419,528
Other noncurrent assets 6,320 6,054
Total assets $749,358 $690,588
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $12,508 $9,781
Accrued payroll and benefits 10,838 10,654
Property, production and
franchise taxes payable 8,063 8,504
Current portion of long-term debt
and capital lease obligations 1,990 1,935
Portion of debt repayable upon liquidation
of finished palladium in inventory 15,421 74,106
Other current liabilities 6,796 5,290
Total current liabilities 55,616 110,270
Long-term debt and capital lease obligations 154,888 85,445
Deferred income taxes 3,770 4,313
Other noncurrent liabilities 15,088 11,263
Total liabilities 229,362 211,291
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;
90,339,770 and 89,849,239 shares
issued and outstanding 903 899
Paid-in capital 603,099 592,974
Accumulated deficit (77,143) (113,756)
Accumulated other comprehensive loss (3,009) (820)
Unearned compensation -
restricted stock awards (3,854) --
Total stockholders' equity 519,996 479,297
Total liabilities and
stockholders' equity $749,358 $690,588
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
Cash flows from operating
activities
Net income (loss) $4,365 $(1,628) $36,613 $(22,645)
Adjustments to reconcile
net income to net cash used
by Operating activities:
Depreciation and
amortization 10,571 10,081 31,695 30,426
Deferred income taxes -- 2,034 -- 11,685
Cumulative effect of
change in accounting
for asset retirement
obligations -- -- -- 672
Stock issued under employee
benefit plans 755 924 2,842 2,786
Amortization and write-off
of debt issuance costs 4,258 273 4,700 2,789
Amortization of restricted
stock compensation 412 -- 686 670
Loss on disposal of property,
plant and equipment 1,991 -- 1,916 --
Changes in operating assets
and liabilities:
Inventories 36,149 (478) 34,955 10,219
Accounts receivable (730) 902 (14,744) 13,190
Accounts payable 1,415 (9,075) 2,727 (4,439)
Other 1,332 (2,281) (1,118) (8,594)
Net cash provided by
operating activities 60,518 752 100,272 36,759
Cash flows from investing
activities
Capital expenditures (20,905) (14,780) (55,797) (40,975)
Net cash used in investing
activities (20,905) (14,780) (55,797) (40,975)
Cash flows from financing
activities
Proceeds from long-term
financing, net 140,000 -- 140,000 --
Payments on long-term
debt and capital lease
obligations (128,241) (492) (129,205) (58,628)
Issuance of common stock,
related to Norilsk Nickel
transaction (1) -- -- -- 100,000
Stock Issuance Cost,
related to Norilsk Nickel
transaction -- -- -- (9,716)
Issuance of common stock,
net of stock issue costs 267 64 2,747 64
Payment for debt
issuance costs 757 -- (3,838) (1,606)
Net cash provided by
financing activities 12,783 (428) 9,704 30,114
Cash and cash equivalents
Net increase (decrease) 47,882 (14,456) 54,179 25,898
Balance at beginning
of period 53,808 66,267 47,511 25,913
Balance at end of period $101,690 $51,811 $101,690 $51,811
Non-cash Financing
activities:
(1) Fair value of issuance
of common stock $-- $-- $-- $248,213
Inventory received in
connection with the
Norilsk Nickel transaction -- -- -- (148,213)
Issuance of common stock,
related to Norilsk Nickel
transaction $-- $-- $-- $100,000
SOURCE Stillwater Mining Company
-0- 11/01/2004
/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