SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
_________________
Date of Report: October 27, 2003
(Date of earliest event reported)
Stillwater Mining Company
(Exact Name of Registrant as Specified in Charter)
Delaware 0-7704 13-1681234
(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
536 East Pike Avenue, Columbus, Montana 59019
---------------------------------------------
(Address of Principal Executive Offices)
(406) 322-8700
(Registrant's telephone number,
including area code)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Press release issued on October 27, 2003 by Stillwater Mining Company.
Item 12. Results of Operation and Financial Condition.
On October 27, 2003, Stillwater Mining Company issued a press release
in connection with the filing of its Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2003. The press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
STILLWATER MINING COMPANY
Date: October 27, 2003 By: /s/ John R. Stark
------------------------------
Name: John R. Stark
Title: Vice President, Secretary
and General Counsel
EXHIBITS
99.1 Press release issued on October 27, 2003 by Stillwater Mining Company.
Exhibit 99.1
STILLWATER MINING REPORTS THIRD QUARTER RESULTS
COLUMBUS, MONTANA - STILLWATER MINING COMPANY (NYSE:SWC) reported a net loss of
$1.6 million for the third quarter of 2003 or $0.02 per share, on revenue of
$58.2 million compared to net income of $4.7 million, or $0.11 per share, on
revenue of $66.0 million for the third quarter of 2002. The 2003 third quarter
results reflect lower revenues due to the lower combined PGM prices received by
the Company. During the third quarter, the Company's 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 tax losses which will not be utilized as a result of
the ownership change with the issuance of shares to Norimet Limited in the
second quarter of 2003.
For the first nine months of 2003, the Company reported a net loss of $22.6
million, or $0.29 per share, on revenue of $179.8 million compared to net
income of $32.3 million, or $0.75 per share, on revenue of $217.0 million for
the nine months of 2002. Year-to-date results reflect lower revenues due to
lower combined PGM prices and the planned lower production levels. The results
for the nine months of 2003 were most significantly impacted by certain charges
related to the issuance of shares to Norimet Limited. These items were a $15.2
million, or $0.20 per share, non-cash charge for income tax relating to a
portion of the Company's tax losses which will not be utilized and $3.0 million
($2.0 million, or $0.03 per share, net of tax) of transaction related costs,
which were charged to income in the second quarter of 2003.
Announcing the Company's results, Stillwater Chairman and Chief Executive
Officer, Francis R. McAllister said, "While we are pleased that the third
quarter PGM production has increased compared to last years third quarter and
operating costs are improving, the Company's production level has remained
constant for each quarter during this year at approximately 146,000 ounces.
During the fourth quarter, based on our recent operating performance, the
Company expects PGM production of approximately 137,000 ounces assuming no
improvements in our productivity. Therefore, our 2003 annual production will be
approximately 6.7% below our forecast of 615,000 ounces, or 574,000 ounces. No
changes have been made to our previous guidance for total cash costs for the
year of $290 per ounce."
He continued, "Most of the shortfall in ounces can be attributed to the
Stillwater Mine, which has not achieved the planned productivity improvements
for the second half of the year. While we have seen improvement in the mine's
productivity in last month we felt it was necessary to issue some guidance for
production for the fourth quarter."
METALS MARKET
During the third quarter of 2003 palladium traded as high as $232 per ounce and
as low as $164 per ounce and the average market price was $189 per ounce in the
third quarter, while platinum traded as high as $714 per ounce and as low as
$665 per ounce and the average market price was $693 per ounce.
Palladium in the third quarter gained some price momentum as investment fund
activity drove the price higher and the price differential with platinum
increased as platinum set new highs. With platinum setting new highs,
speculation increased that the use and demand for palladium was increasing.
The combined average market price per ounce of palladium and platinum for the
third quarter of 2003 was $306 compared to $376 for the third quarter of 2002.
The combined average market price for the two metals for the first nine months
of 2003 was $309 per ounce compared to $394 per ounce for the same period in
2002.
Mr. McAllister said, "That a continuation of palladium prices at current levels
will lead to asset impairment writedowns and a reduction of ore reserves which
would be material. The timing of any such writedown or reduction in ore
reserves will need to be evaluated in light of palladium prices and other
matters."
The Company is reviewing several assumptions and tests, which must be applied
to asset impairment and ore reserve calculations. Mr. McAllister continued,
"While the magnitude of any reduction cannot be gauged with precision at this
time and depends on a number of factors, that, given the significant decrease
in palladium prices, the reduction is likely to significantly impact the
Company's ore reserve position and long-lived asset book values." Mr.
McAllister noted, "That any writedowns of this nature result in non-cash
charges to operations and consequently will not affect our cash flows.
Furthermore, he emphasized; these adjustments will not impact our operations or
employees. Further discussion about the nature of these potential writedowns
and reduction in ore reserves is contained in the Company's Form 10-Q being
filed today with the SEC."
"There has been substantial interest in the 877,169 ounces of palladium
acquired in the Norilsk transaction and which we have in inventory. We are
still negotiating new long-term supply contracts with end users and none has
yet been sold or committed," said Mr. McAllister.
"During the quarter, our management team was strengthened with the addition of
Stephen Lang. Stephen joins Stillwater as Executive Vice President and Chief
Operating Officer with responsibility for the Company's operations. With 23
years of hardrock mining experience in both open pit and underground
operations, Stephen is a valuable addition to our team. He will be based at the
Company's headquarters in Columbus, Montana."
"Recently, we announced the signing of a long-term secondary metal sourcing
agreement with Power Mount Incorporated of Somerset, Kentucky. This agreement
will enable us to expand our recycling of secondary material, which is
consistent with Stillwater's business," he concluded.
OPERATING RESULTS
During the third quarter of 2003, the Company produced a total of 146,000
ounces of palladium and platinum compared to 139,000 ounces for the third
quarter of 2002. The increase was primarily due to a 14% increase in
production at the East Boulder Mine. Realized prices per ounce for the third
quarter 2003 were $353 for palladium, and $590 for platinum, compared to $431
and $517, respectively, in the third quarter of 2002. The Company's average
realized combined price per ounce of palladium and platinum for the third
quarter of 2003 was $405 or approximately 32% above the combined market price
per ounce of $306, and about 10% lower than the $449 combined price realized
for the same period in 2002.
Total cash costs on a consolidated basis for the third quarter of 2003 were
$284 per ounce compared to $304 per ounce for the same period in 2002. The $20
per ounce decrease is due to a $25 per ounce decrease in operating costs
primarily related to lower mining costs per ounce at the East Boulder Mine
which was partially offset by a $5 per ounce increase in royalties, property
taxes and insurance. Total consolidated production costs per ounce produced in
the third quarter of 2003 decreased $23, or 6%, to $354 from $377 as compared
to the same period of 2002. The decrease is due to the decrease in operating
costs and a decrease in depreciation and amortization costs of $3 per ounce.
For the first nine months of 2003, the Company produced 437,000 ounces of
palladium and platinum compared to 470,000 ounces for the nine months of 2002.
Realized prices per ounce for the first nine months of 2003 were $353 for
palladium, and $578 for platinum, compared to $443 and $506, respectively, for
the same period of 2002. The Company's realized combined price per ounce of
palladium and platinum was $402 per ounce for the first nine months of 2003 or
about 30% higher than the combined market price of $309 per ounce, and about
12% lower than the $457 per ounce combined price realized for the same period
in 2002.
Total consolidated cash costs per ounce for the first nine months of 2003 were
$282 compared to $279 for the same period of 2002. The higher cash costs are
attributable to a $1 per ounce increase in operating costs primarily related
to higher mining costs per ounce at the Stillwater Mine and an increase of $2
per ounce increase in property taxes. Total consolidated production costs per
ounce produced increased $10, or 3%, to $353 from $343 in the first nine
months of 2003 as compared to the same period of 2002. The increase is due to
the increase in operating costs and an increase in depreciation and
amortization costs of $7 per ounce, primarily related to a higher fixed asset
base and changes in reserve estimates used in calculating depreciation and
amortization which occurred in the first nine months of 2002.
STILLWATER MINE
At the Stillwater Mine, palladium and platinum production was 106,000 ounces
in the third quarter of 2003 compared to 104,000 ounces in the third quarter
of 2002. During the quarter, a total of 203,000 tons were milled with a
combined mill head grade of 0.57 ounce per ton compared to 210,000 tons with a
combined mill head grade of 0.55 ounce per ton in the third quarter of 2002.
Total mill recovery for the third quarter was 92% compared to 91% during the
same period last year. The mining rate during the third quarter averaged
approximately 1,915 tons of ore per day as the mine implements a long-range
operating plan, which changes the mine plan from a production-driven to a
cost-driven emphasis.
For the first nine months of 2003 the mine produced 322,000 ounces of
palladium and platinum compared to 380,000 ounces for the first nine months of
2002. The lower production was the result of a 13% planned decrease in mill
throughput combined with a 2% decrease in the average combined mill head grade
for the comparable period.
Total cash cost per ounce for the third quarter of 2003 decreased by $15, or
6% to $260 from $275 for the same period in 2002 due to a $19 per ounce
decrease in operating costs offset by a $4 per ounce increase in royalties,
property taxes and insurance. Total production costs per ounce produced in the
third quarter 2003 decreased $22, or 7%, to $319 from $341 as compared to the
same period of 2002. The decrease is due to the decrease in operating costs
and a decrease in depreciation and amortization costs of $7 per ounce.
For the first nine months of 2003, total cash cost per ounce increased to $258
from $253 for the same period in 2002 due to lower production levels. Total
production costs per ounce produced increased $10, or 3%, to $318 from $308 in
the first nine months of 2003 as compared to the same period of 2002. The
increase is due to the lower production levels.
During the third quarter of 2003 capital expenditures at the mine were $12
million bringing year-to-date capital spending to $31.4 million.
EAST BOULDER MINE
During the third quarter of 2003, the East Boulder Mine produced 40,000 ounces
of palladium and platinum a 14% increase compared to the 35,000 ounces produced
in the third quarter of 2002. The mining rate averaged 1,180 tons of ore per
day for the quarter. A total of 109,000 tons of ore were milled with a mill
head grade of 0.42 ounce per ton in the third quarter of 2003 compared to
106,000 tons with a mill head grade of 0.39 ounce per ton for the comparable
quarter last year. Total mill recovery during the third quarter 2003 increased
to 88% from 84% a year ago.
For the first nine months of 2003 the mine produced 115,000 ounces of
palladium and platinum compared to 90,000 ounces for the first nine months of
2002. The increase in production is the result of ramping up production at the
facility.
Total cash costs per ounce in the third quarter of 2003 decreased $39, or 10%,
to $351 compared to $390 per ounce for the same period in 2002 due to the
higher production rates and lower operating costs due to cost reductions from
material management programs and reduction of secondary development through
engineering redesigns. Total production costs per ounce produced in the third
quarter 2003 decreased $35, or 7%, to $449 from $484 as compared to the same
period of 2002. The decrease is primarily due to the lower operating costs as
noted above.
For the first nine months of 2003, total cash costs per ounce decreased $39,
or 10%, to $350 from $389 for the same period in 2002 due to the higher
production levels, higher grades and a reduction in mine site general and
administrative costs. Total production costs per ounce produced decreased $43,
or 9%, to $448 from $491 in the first nine months of 2003 as compared to the
same period of 2002. The decrease is due to lower operating costs as noted
above and a decrease in depreciation and amortization costs of $4 per ounce.
Capital expenditures at the mine for third quarter were $2.8 million bringing
year-to-date capital spending to $9.6 million.
FINANCES
Revenues were $58.2 million for the third quarter of 2003 compared with $66.0
million for the third quarter of 2002, a 12% decrease, which is the result of
a 10% decrease in combined realized palladium and platinum prices and a 3%
decrease in the quantity of metal sold. For the first nine months of 2003
revenues were $179.8 million compared with $217.0 million for the first nine
months of 2002, a 17% decrease, which is the result of a 12% decrease in
combined realized palladium and platinum prices and a 7% decrease in the
quantity of metal sold.
Net cash provided by operations for the third quarter 2003, was $0.8 million
compared to $19.3 million for the comparable period of 2002. The decrease in
net cash provided by operations was primarily a result of a decrease in net
income of $6.3 million and an increase in net operating assets and liabilities
of $14.0 million.
For the first nine months ended September 30, 2003, net cash provided by
operations was $36.8 million compared to $46.1 million for the same period of
2002. The decrease in net cash provided by operations was primarily a result
of a decrease in net income of $54.9 million partially offset by a decrease in
net operating assets and liabilities of $25.8 million and an increase in
non-cash expenses of $19.8 million.
Capital expenditures totaled $14.8 million in the third quarter of 2003, which
includes $13.7 million incurred in connection with capitalized mine
development activities, compared to a total of $16.4 million, which included
$11.7 million incurred in connection with capitalized mine development
activities in the same period of 2002.
For the first nine months of 2003, capital expenditures totaled $41.0 million,
which includes $36.0 million incurred in connection with capitalized mine
development activities, compared to $39.6 million, which included $33.5
million incurred in connection with capitalized mine development activities in
the same period of 2002.
Currently, the Company has $128.8 million outstanding under its term B loan
facility bearing interest at 7.25%. Under its revolving credit facility, the
Company has $7.5 million outstanding as letters of credit bearing interest at
4.0%.
At September 30, 2003, the Company had cash and cash equivalents of $51.8
million, and $17.5 million was available to the Company under its revolving
credit facility. The Company's working capital at September 30, 2003 was
$155.1 million, compared to $46.7 million at December 31, 2002. The ratio of
current assets to current liabilities was 2.5 at September 30, 2003, as
compared to 1.7 December 31, 2002.
OTHER MATTERS
On July 22, 2003, Norimet Limited commenced a cash tender offer to acquire up
to 4,350,000 common shares of Stillwater at $7.50 per share. Following the
completion of the tender offer on September 3, 2003, Norimet owns 49,813,222
shares or 55.5% of the Company's outstanding common stock.
On August 13, 2003, the Company announced the appointment of Stephen A. Lang,
47, as Executive Vice President and Chief Operating Officer with
responsibility for the Company's operations. He will be based at the Company's
headquarters in Columbus, Montana. Mr. Lang, with 23 years of hardrock mining
experience in both open pit and underground operations, comes to Stillwater
from Barrick Gold Corporation where he was Vice President and General Manager
of their flagship Goldstrike/Meikle operation. He has a Bachelor of Science in
Mining Engineering and a Master Degree in Mining Engineering from the
University of Missouri-Rolla and is a member of the executive board for Great
Basin College in Winnemucca, Nevada, a board member on the Humbolt River Basin
Water Authority, the Council of Alaska Producers, the Alaska Miners
Association and the Nevada Mining Association. Lang is a registered
Professional Engineer in New Mexico.
The Company announced on October 15, 2003 that it has entered into a long-term
secondary metal sourcing agreement with Power Mount Incorporated of Somerset,
Kentucky. Under the agreement Stillwater will purchase from Power Mount
secondary metals for recycling consisting primarily of spent catalytic
converter material, which contain platinum group metals. The materials will be
processed along with mine production in Company's state of the art smelting
and refining complex located conveniently next to Interstate Highway I-90 in
Columbus, Montana.
On October 23, 2003, the Company held its Annual Meeting of Stockholders. All
of the ten proposals were approved at the meeting, including re-electing the
following nine persons to the Company's board of directors: Craig L. Fuller,
Patrick M. James, Steven S. Lucas, Joseph P. Mazurek, Francis R. McAllister,
Sheryl K. Pressler, Donald W. Riegle, Todd D. Schafer and Jack E. Thompson.
Details of the votes cast in connection with each proposal are set forth in
Company's Form 10Q for the third quarter 2003, filed with the SEC.
Stockholders were asked to consider and vote on the following ten proposals:
1. To amend the Company's Restated Certificate of Incorporation (the
"charter") to increase the Company's authorized common stock from
100,000,000 shares to 200,000,000 shares;
2. To amend the charter to eliminate cumulative voting rights of
stockholders;
3. To amend the charter to eliminate the rights of stockholders to take
action by written consent;
4. To amend the charter to provide that the number of directors shall be
set forth in accordance with the Company's by-laws, provided that the
number shall be no less than seven and no more than ten;
5. To approve a restatement of the current charter to include the
amendments set forth in Proposals 1 through 4 in the event they are
approved by the stockholders and to make other amendments set forth in the
Proxy Statement;
6. To amend the Company's by-laws to provide that: (i) the nomination of
directors, (ii) the filling of vacancies in the Board, (iii) notice of
Board meetings, (iv) the Board quorum requirements, (v) the election of
officers and (vi) the appointment of Board committees shall be subject to
the provisions of the Stockholders Agreement by and among the Company,
Norimet and Norilsk Nickel, dated as of June 23, 2003;
7. To amend and restate the Company's by-laws to include the amendments set
forth in Proposal 6 in the event they are approved by the stockholders and
to make other amendments set forth in the Proxy Statement;
8. To elect nine directors to the Company's Board of Directors;
9. To amend and restate the Company's General Employee Stock Plan to
increase the number of shares of Common Stock authorized for issuance from
1,100,000 shares to 1,400,000 shares and change the governing law from
Colorado to Delaware; and
10. To ratify the appointment of KPMG LLP as the Company's independent
accountants.
The Company's Restated Certificate of Incorporation, Amended and Restated
By-Laws and Amended and Restated General Employee Stock Plan are attached as
Exhibits to the Company's Form 10Q for the third quarter 2003, filed with the
SEC.
__________________
Stillwater Mining Company will host its third quarter results conference call
at 12 noon EDT on October 27, 2003. The conference call dial-in number is
888-428-4480 (US) and 651-291-5254 (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 Management 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 701215,
through November 3, 2003.
_________________________
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 Company can be
found at its Web site: www.stillwatermining.com.
_________________________
This press release contains forward-looking information, which involves
expressions of management's current expectations. All forward-looking
information is subject to various risks and uncertainties that may be
beyond the Company's control and may cause results to differ materially
from management's current expectations. Information concerning factors that
could cause actual results to differ materially from management's current
expectations are set forth in the section entitled "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002
and may be discussed in subsequent filings with the SEC.
Stillwater Mining Company
Key Factors
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
OPERATING AND COST DATA
Consolidated:
Ounces produced (000)
Palladium 113 108 337 363
Platinum 33 31 100 107
------------- ------------- ------------- -------------
Total 146 139 437 470
============= ============= ============= =============
Tons milled (000) 289 303 879 976
Mill head grade (ounce per ton) 0.55 0.51 0.54 0.54
Sub-grade tons milled (000) (1) 23 13 64 23
Sub-grade mill head grade (ounce per ton) 0.17 0.13 0.19 0.19
Total tons milled (000) (1) 312 316 943 999
Combined mill head grade (ounce per ton) 0.52 0.49 0.52 0.53
Total mill recovery (%) 91 89 91 89
Total operating costs per ounce $ 245 $ 270 $ 249 $ 248
Total cash costs per ounce (2),(3) $ 284 $ 304 $ 282 $ 279
Total production costs per ounce (2),(3) $ 354 $ 377 $ 353 $ 343
Total operating costs per ton milled $ 115 $ 119 $ 115 $ 117
Total cash costs per ton milled (2),(3) $ 133 $ 134 $ 131 $ 131
Total production costs per ton milled (2),(3) $ 166 $ 166 $ 163 $ 161
Stillwater Mine:
- ----------------
Ounces produced (000)
Palladium 82 80 247 293
Platinum 24 24 75 87
------------- ------------- ------------- -------------
Total 106 104 322 380
============= ============= ============= =============
Tons milled (000) 180 197 545 693
Mill head grade (ounce per ton) 0.63 0.58 0.63 0.60
Sub-grade tons milled (000) (1) 23 13 64 23
Sub-grade mill head grade (ounce per ton) 0.17 0.13 0.19 0.19
Total tons milled (000) (1) 203 210 609 716
Combined mill head grade (ounce per ton) 0.57 0.55 0.58 0.59
Total mill recovery (%) 92 91 91 91
Total operating costs per ounce $ 224 $ 243 $ 228 $ 225
Total cash costs per ounce (2),(3) $ 260 $ 275 $ 258 $ 253
Total production costs per ounce (2),(3) $ 319 $ 341 $ 318 $ 308
Total operating costs per ton milled $ 117 $ 120 $ 121 $ 119
Total cash costs per ton milled (2),(3) $ 136 $ 136 $ 136 $ 134
Total production costs per ton milled (2),(3) $ 167 $ 169 $ 168 $ 163
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
OPERATING AND COST DATA
(Continued)
East Boulder Mine:
- -----------------
Ounces produced (000)
Palladium 31 27 90 70
Platinum 9 8 25 20
------------- ------------- ------------- -------------
Total 40 35 115 90
============= ============= ============= =============
Tons milled (000) 109 106 334 283
Mill head grade (ounce per ton) 0.42 0.39 0.39 0.37
Sub-grade tons milled (000) (1) - - - -
Sub-grade mill head grade (ounce per ton) - - - -
Total tons milled (000) (1) 109 106 334 283
Combined mill head grade (ounce per ton) 0.42 0.39 0.39 0.37
Total mill recovery (%) 88 84 89 86
Total operating costs per ounce $ 302 $ 348 $ 306 $ 348
Total cash costs per ounce (2),(3) $ 351 $ 390 $ 350 $ 389
Total production costs per ounce (2),(3) $ 449 $ 484 $ 448 $ 491
Total operating costs per ton milled $ 110 $ 116 $ 106 $ 110
Total cash costs per ton milled (2),(3) $ 128 $ 129 $ 120 $ 123
Total production costs per ton milled (2),(3) $ 163 $ 160 $ 154 $ 155
(1) Sub-grade tons milled includes reef waste material only. Total tons milled includes ore tons
and sub-grade tons only. Prior period amounts have been adjusted to conform to the current
year presentation.
(2) Total cash costs include costs of mining, processing and administrative expenses at the mine
site (including mine site overhead, taxes other than income taxes, royalties and credits for
metals produced other than palladium and platinum.) 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-U.S. Generally Accepted Accounting
Principles (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, as
well as provide a meaningful basis to compare our results with those of other mining companies
and other mining operating properties. See table "Reconciliation of Non-GAAP measures to cost
of sales."
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
SALES AND PRICE DATA
Ounces sold (000)
Palladium 112 117 348 368
Platinum 32 31 99 110
------------- ------------- ------------- -------------
Total 144 148 447 478
============= ============= ============= =============
Average realized price per ounce (4)
Palladium $ 353 $ 431 $ 353 $ 443
Platinum $ 590 $ 517 $ 578 $ 506
Combined (5) $ 405 $ 449 $ 402 $ 457
Average market price per ounce (4)
Palladium $ 189 $ 325 $ 201 $ 355
Platinum $ 693 $ 542 $ 667 $ 523
Combined (5) $ 306 $ 376 $ 309 $ 394
(4) The company's average realized price represents revenues which include the impact of contract
floor and ceiling prices and hedging gains and losses realized on commodity instruments and
exclude contract discounts, divided by ounces sold. The average market price represents the
average London PM Fix for the actual months of the period.
(5) Stillwater Mining reports a combined average realized and market price of palladium and
platinum at the same ratio as ounces that are produced from the refinery.
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Reconciliation of Non-GAAP measures to cost of sales
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, as well as provide a meaningful basis to compare our results with those
of other mining companies and other mining operating properties.
Three months ended Nine months ended
(in thousands, except cost per ounce and cost per ton data) September 30, September 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Consolidated:
Total operating costs $ 35,825 $ 37,468 $ 108,614 $ 116,591
Total cash costs $ 41,564 $ 42,212 $ 123,218 $ 131,130
Total production costs $ 51,777 $ 52,415 $ 154,041 $ 161,178
Divided by total ounces 146 139 437 470
Divided by total tons milled 312 316 943 999
Total operating cost per ounce $ 245 $ 270 $ 249 $ 248
Total cash cost per ounce $ 284 $ 304 $ 282 $ 279
Total production cost per ounce $ 354 $ 377 $ 353 $ 343
Total operating cost per ton milled $ 115 $ 119 $ 115 $ 117
Total cash cost per ton milled $ 133 $ 134 $ 131 $ 131
Total production cost per ton milled $ 166 $ 166 $ 163 $ 161
Reconciliation to cost of sales:
Total operating costs $ 35,825 $ 37,468 $ 108,614 $ 116,591
Royalties, taxes and other 5,739 4,744 14,604 14,539
------------- ------------- ------------- -------------
Total cash costs $ 41,564 $ 42,212 $ 123,218 $ 131,130
Asset retirement costs 87 125 254 394
Depreciation and Amortization 10,126 10,078 30,569 29,654
------------- ------------- ------------- -------------
Total production costs $ 51,777 $ 52,415 $ 154,041 $ 161,178
Change in product inventory (995) 27 9,831 (1,474)
(Gain) or loss on sale of assets and other costs 70 - 106 (22)
------------- ------------- ------------- -------------
Total cost of sales $ 50,852 $ 52,442 $ 163,978 $ 159,682
============= ============= ============= =============
Stillwater Mine:
- ----------------
Total operating costs $ 23,849 $ 25,208 $ 73,417 $ 85,396
Total cash costs $ 27,656 $ 28,469 $ 82,969 $ 96,253
Total production costs $ 33,968 $ 35,327 $ 102,447 $ 117,143
Divided by total ounces 106 104 322 380
Divided by total tons milled 203 210 609 716
Total operating cost per ounce $ 224 $ 243 $ 228 $ 225
Total cash cost per ounce $ 260 $ 275 $ 258 $ 253
Total production cost per ounce $ 319 $ 341 $ 318 $ 308
Total operating cost per ton milled $ 117 $ 120 $ 121 $ 119
Total cash cost per ton milled $ 136 $ 136 $ 136 $ 134
Total production cost per ton milled $ 167 $ 169 $ 168 $ 163
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Nine months ended
(in thousands, except cost per ounce and cost per ton data) September 30, September 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Reconciliation to cost of sales:
Total operating costs $ 23,849 $ 25,208 $ 73,417 $ 85,396
Royalties, taxes and other 3,807 3,261 9,552 10,857
------------- ------------- ------------- -------------
Total cash costs $ 27,656 $ 28,469 $ 82,969 $ 96,253
Asset retirement costs 71 73 208 251
Depreciation and Amortization 6,241 6,785 19,270 20,639
------------- ------------- ------------- -------------
Total production costs $ 33,968 $ 35,327 $ 102,447 $ 117,143
Change in product inventory (100) 782 8,719 3,560
(Gain) or loss on sale of assets and other costs 59 - 95 (22)
------------- ------------- ------------- -------------
Total cost of sales $ 33,927 $ 36,109 $ 111,261 $ 120,681
============= ============= ============= =============
East Boulder Mine:
- ------------------
Total operating costs $ 11,976 $ 12,260 $ 35,197 $ 31,195
Total cash costs $ 13,908 $ 13,743 $ 40,249 $ 34,877
Total production costs $ 17,809 $ 17,088 $ 51,594 $ 44,035
Divided by total ounces 40 35 115 90
Divided by total tons milled 109 106 334 283
Total operating cost per ounce $ 302 $ 348 $ 306 $ 348
Total cash cost per ounce $ 351 $ 390 $ 350 $ 389
Total production cost per ounce $ 449 $ 484 $ 448 $ 491
Total operating cost per ton milled $ 110 $ 116 $ 106 $ 110
Total cash cost per ton milled $ 128 $ 129 $ 120 $ 123
Total production cost per ton milled $ 163 $ 160 $ 154 $ 155
Reconciliation to cost of sales:
Total operating costs $ 11,976 $ 12,260 $ 35,197 $ 31,195
Royalties, taxes and other 1,932 1,483 5,052 3,682
------------- ------------- ------------- -------------
Total cash costs $ 13,908 $ 13,743 $ 40,249 $ 34,877
Asset retirement costs 16 52 46 143
Depreciation and Amortization 3,885 3,293 11,299 9,015
------------- ------------- ------------- -------------
Total production costs $ 17,809 $ 17,088 $ 51,594 $ 44,035
Change in product inventory (895) (755) 1,112 (5,034)
(Gain) or loss on sale of assets and other costs 11 - 11 -
------------- ------------- ------------- -------------
Total cost of sales $ 16,925 $ 16,333 $ 52,717 $ 39,001
============= ============= ============= =============
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
September 30, December 31,
2003 2002
--------------------- -------------------
ASSETS
Current assets
Cash and cash equivalents $ 51,811 $ 25,913
Restricted cash equivalents 2,650 2,250
Inventories 190,052 52,058
Accounts receivable 5,457 18,647
Deferred income taxes 2,623 5,779
Other current assets 8,381 7,828
--------------------- -------------------
Total current assets 260,974 112,475
Property, plant and equipment, net 805,933 794,019
Other noncurrent assets 6,414 7,720
--------------------- -------------------
Total assets $ 1,073,321 $ 914,214
===================== ===================
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 9,871 $ 14,310
Accrued payroll and benefits 7,435 10,071
Property, production and franchise taxes payable 7,520 10,998
Current portion of long-term debt and capital lease
Obligations 1,926 21,461
Long-term debt secured by finished goods inventory 74,106 -
Accrued restructuring costs 1,649 1,926
Other current liabilities 3,388 7,017
--------------------- -------------------
Total current liabilities 105,895 65,783
Long-term debt and capital lease obligations 86,011 198,866
Deferred income taxes 89,144 80,615
Other noncurrent liabilities 13,522 9,736
--------------------- -------------------
Total liabilities 294,572 355,000
--------------------- -------------------
Commitments and Contingencies
Stockholders' equity
Preferred stock, $0.01 par value, 1,000,000 shares
authorized; none issued - -
Common stock, $0.01 par value, 100,000,000 shares
authorized; 89,736,441 and 43,587,107 shares
issued and outstanding 897 436
Paid-in capital 591,655 351,605
Retained earnings 186,860 209,504
Accumulated other comprehensive loss (663) (1,405)
Unearned compensation - restricted stock awards - (926)
--------------------- -------------------
Total stockholders' equity 778,749 559,214
--------------------- -------------------
Total liabilities and stockholders' equity $ 1,073,321 $ 914,214
===================== ===================
Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Revenues $ 58,221 $ 65,970 $ 179,751 $ 216,954
Costs and expenses
Cost of metals sold 40,726 42,364 133,409 130,028
Depreciation and amortization 10,126 10,078 30,569 29,654
------------- ------------- ------------- -------------
Total cost of sales 50,852 52,442 163,978 159,682
General and administrative expenses 3,331 3,853 10,198 10,578
Norilsk Nickel transaction related expenses - - 3,043 -
Restructuring costs (reversal) - - - (5,938)
------------- ------------- ------------- -------------
Total costs and expenses 54,183 56,295 177,219 164,322
Operating income 4,038 9,675 2,532 52,632
Other income (expense)
Interest income 136 263 315 744
Interest expense (4,021) (4,050) (13,616) (12,578)
------------- ------------- ------------- -------------
Income (loss) before income taxes and cumulative effect
of accounting change 153 5,888 (10,769) 40,798
Income tax benefit (provision) (590) (1,229) 3,702 (8,514)
Reduction of deferred tax asset for net operating loss
carryforwards resulting from ownership change (1,191) - (15,170) -
------------- ------------- ------------- -------------
Total income tax provision (1,781) (1,229) (11,468) (8,514)
------------- ------------- ------------- -------------
Income (loss) before cumulative effect of accounting change (1,628) 4,659 (22,237) 32,284
Cumulative effect of change in accounting for asset
retirement obligations, net of $264 income tax benefit - - (408) -
------------- ------------- ------------- -------------
Net income (loss) (1,628) 4,659 (22,645) 32,284
------------- ------------- ------------- -------------
Other comprehensive income (loss), net of tax 390 (2,215) 742 (6,092)
------------- ------------- ------------- -------------
Comprehensive income (loss) $ (1,238) $ 2,444 $ (21,903) $ 26,192
============= ============= ============= =============
Basic earnings (loss) per share
Income (loss) before cumulative effect of accounting change $ (0.02) 0.11 $ (0.28) $ 0.76
Cumulative effect of accounting change - - (0.01) -
------------- ------------- ------------- -------------
Net income (loss) $ (0.02) $ 0.11 $ (0.29) $ 0.76
============= ============= ============= =============
Diluted earnings (loss) per share
Income (loss) before cumulative effect of accounting change $ (0.02) $ 0.11 $ (0.28) $ 0.75
Cumulative effect of accounting change - - (0.01) -
------------- ------------- ------------- -------------
Net income (loss) $ (0.02) $ 0.11 $ (0.29) $ 0.75
============= ============= ============= =============
Weighted average common shares outstanding
Basic 89,662 43,306 77,265 42,712
Diluted 89,662 43,365 77,265 42,851
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
Three months ended Nine months ended
September 30, September 30,
----------------------------- ------------------------------
2003 2002 2003 2002
------------ ------------- ------------- -------------
Cash flows from operating activities
Net income (loss) (1,628) $ 4,659 $ (22,645) $ 32,284
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,126 10,078 30,569 29,654
Deferred income taxes 2,034 529 11,685 4,478
Cumulative effect of change in accounting for
asset retirement obligations - - 672 -
Reversal of restructuring costs - - - (5,938)
Cash paid on accrued restructuring costs (60) (469) (277) (2,970)
Stock issued under employee benefit plans 924 998 2,786 2,548
Amortization of debt issuance costs 273 256 2,789 759
Amortization of restricted stock compensation - 116 670 543
Changes in operating assets and liabilities:
Inventories (478) (317) 10,219 (3,554)
Accounts receivable 902 3,840 13,190 (1,758)
Accounts payable (9,075) 2,572 (4,439) (7,650)
Other (2,266) (3,010) (8,460) (2,332)
------------ ------------- ------------- -------------
Net cash provided by operating activities 752 19,252 36,759 46,064
------------ ------------- ------------- -------------
Cash flows used in investing activities
Capital expenditures (14,780) (16,409) (40,975) (39,607)
Proceeds from sale/leaseback transactions - - - 1,282
------------ ------------- ------------- -------------
Net cash used in investing activities (14,780) (16,409) (40,975) (38,325)
------------ ------------- ------------- -------------
Cash flows from financing activities
Issuance of common stock related to Norilsk Nickel
transaction, net of issue costs(1) - - 90,284 -
Issuance of common stock, net of issue costs 64 16 64 56,047
Payments on long-term debt and capital lease obligations (492) (2,345) (58,628) (36,474)
Payments for debt issuance costs - - (1,606) -
------------ ------------- ------------- -------------
Net cash provided (used) by financing activities (428) (2,329) 30,114 19,573
------------ ------------- ------------- -------------
Cash and cash equivalents
Net increase (decrease) (14,456) 514 25,898 27,312
Balance at beginning of period 66,267 41,709 25,913 14,911
------------ ------------- ------------- -------------
Balance at end of period 51,811 $ 42,223 $ 51,811 $ 42,223
============ ============= ============= =============
(1) Non-cash financing activities
Fair value of common stock issued (net of issue costs) - $ - $ 238,497 $ -
Inventory received in connection with the
Norilsk Nickel transaction - - (148,213) -
------------ ------------- ------------- -------------
Net cash received in Norilsk Nickel transaction - $ - $ 90,284 $ -
============ ============= ============= =============
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