Exhibit 99.1
STILLWATER MINING REPORTS THIRD QUARTER PROFIT
BILLINGS, Mont., Nov. 7 /PRNewswire-FirstCall/ -- STILLWATER MINING COMPANY
(NYSE: SWC) today reported third-quarter 2006 net earnings of $6.9 million, or
$0.07 per fully diluted share, on revenues of $180.8 million, benefiting from
continuing growth in the Company's precious metal recycling business, strong
realized prices on platinum-group metal (PGM) sales and good performance from
its mining operations. Earnings for the quarter increased sharply over the third
quarter of 2005, when the Company reported a net loss of $9.1 million, or $0.10
per share, on revenues of $119.7 million. Performance in last year's third
quarter was hindered by short-term production challenges at the Stillwater Mine.
For the nine months ending September 30, 2006, Stillwater reported net
income of $5.1 million, or $0.06 per fully diluted share, on revenue of $437.6
million. Again, this represents a strong improvement over the $10.9 million
loss, or $0.12 per share, on $373.8 million of revenue, reported for the same
period in 2005. The Company in 2006 has enjoyed a much stronger contribution
from its PGM recycling activities along with higher market prices for PGMs.
Stillwater mines platinum and palladium from two underground mines located
in the mountains of south-central Montana. The Company's PGM mine production
during the third quarter of 2006 totaled 151,300 ounces, up from 127,700 ounces
in the third quarter of last year. Similarly, for the first nine months of 2006,
mine production was 446,200 ounces, compared to 410,800 ounces in the same
period last year. The Company recently reaffirmed its forecast for full-year
2006 mine production of between 595,000 ounces and 625,000 ounces of PGMs.
Full-year production in 2005 was 553,500 PGM ounces.
In the third quarter of 2006, Stillwater processed a total of 90,000 PGM
recycling ounces through the smelter and refinery, more than doubling the 42,000
ounces of recycling materials processed during the third quarter of 2005.
Likewise, for the first nine months of 2006, Stillwater reprocessed about
239,000 ounces, up from 151,000 ounces in the same period in 2005. The Company
expects total recycling volumes for the full year 2006 to exceed 325,000 ounces,
compared to approximately 203,000 ounces in 2005
Commenting on the growth in recycling, Francis R. McAllister, Stillwater
Chairman and CEO, said, "In addition to our mining operations, the Company's
smelting and refining facility at Columbus, Montana processes PGM concentrates
produced at the mines. In recent years, as reported, Stillwater also has been
recycling increasing volumes of spent PGMs from automotive catalytic converters
and petroleum refiners. The volume of recycled material processed through the
Company's facility has grown over the past year."
McAllister added, "To date in 2006, the Company has enjoyed success in its
effort to reduce its total cash costs per PGM ounce produced. This reduction is
partially attributable to increased production and improvement in realized grade
from more selective mining methods, but was amplified in the third quarter by
strong by-product and recycling credits. (As discussed in the Company's 2005
Annual Report on Form 10-K, total cash cost per ounce of production is a
non-GAAP measure of extraction efficiency; this and similar measures are widely
reported within the mining industry.) "For the quarter, total cash costs per
ounce declined to $245 from $329 in last year's third quarter; similarly,
year-to-date 2006 total cash costs were $293 per ounce, down from $321 per ounce
for the first nine months of 2005. While this improvement is real, the Company
does not expect the third-quarter level of total cash costs to be sustainable at
current production rates, although total cash costs may likely come in lower
than the Company's earlier guidance of $300 to $315 per ounce for the full year
2006."
Commenting on the impact of the third-quarter wildfires, McAllister
observed, "As was widely reported earlier, during the month of September
wildfires in Montana led to brief precautionary closures at both the Company's
mines. The Stillwater Mine lost five shifts of production, and the East Boulder
Mine in total lost about fifteen shifts. Management estimates the total lost
production for 2006 due to the closures at between 7,000 and 10,000 PGM ounces.
Because mine production generally has been strong this year, this lost output
has not resulted in any change to the Company's production guidance for 2006,
but the loss is expected to reduce fourth quarter earnings modestly."
Regarding the mine transformation efforts McAllister reported,
"Operationally, this year's third quarter saw continuing progress on the
Company's program to strengthen the long-term competitiveness of its mining
properties. In conjunction with the Company's current expanded capital program,
several key infrastructure projects have now been completed or are close to
completion, including rail haulage in the lower levels of the Stillwater Mine, a
sand plant and distribution system in the upper west area at Stillwater, two new
ventilation raises and an expanded tailings facility at the East Boulder Mine.
The multiyear effort to improve the developed state and increase proven reserves
at both mines is now also well advanced, with over 33,800 feet of new primary
development and about 507,400 feet of definitional drilling accomplished during
the first nine months of 2006. Due to the complexity of the process, the Company
only updates its formal reserve estimates annually, but initial results suggest
that the Company's 2006 development program will likely result in another
increase to reported proven reserves. The Company's development objective is to
achieve and maintain proven reserves equal to about 40 months of production,
based on each mine's permitted maximum production level. While that objective
will not be reached during 2006, the Company is progressing steadily toward that
level of proven reserves."
Further regarding mine transformation efforts: "The long-term shift toward
more selective mining methods, begun about a year ago, continues on plan. These
new methods are more manpower intensive, so the Company has initiated a miner
training program that will broaden the skills within the Company's existing
workforce and train new employees in these skills."
"On the marketing front, the Company has reported previously on the
impressive growth in demand for palladium jewelry, beginning about 30 months ago
primarily in China, but now becoming broader based. The Company announced
earlier this year the formation of an industry palladium trade organization, the
Palladium Alliance International, to promote palladium as a jewelry metal and to
provide expertise to the jewelry industry in working with palladium. These
efforts continue to generate a high level of interest among jewelers and the
general public in international jewelry markets, with palladium now becoming
more prevalent in jewelry store displays even in the United States." McAllister
concluded.
Cash Flow and Liquidity
The Company's cash and cash equivalents balance was $65.0 million at
September 30, 2006, up $29.0 million from the end of the second quarter but down
$15.2 million year-to-date. Including the Company's available-for-sale
investments in highly liquid federal agency notes and commercial paper, the
Company's total available liquidity at September 30, 2006, is $93.5 million, up
from $90.6 million at the end of the 2006 second quarter, but representing a
decline of about $42.5 million from the Company's equivalent available liquidity
of $135.9 million at the end of 2005. Most of the year-to-date drop in liquidity
is accounted for by a substantial investment in working capital requirements as
the recycling business has grown. Working capital constituting marketable
inventories or advances thereon in the Company's growing PGM recycling business
increased $56.8 million to $83.6 million at the end of the quarter from $26.8
million at the beginning of the year. The Company also has $25.9 million
available to it under undrawn revolving credit lines.
Although cash has been reduced by the growth in recycling working capital,
net cash provided from operating activities was $25.5 million in the third
quarter of 2006 and $34.8 million year-to-date. Capital expenditures were $22.4
million in the third quarter 2006 and $67.8 million through nine months. Capital
spending for 2006 will be under the planned $107 million level which includes
$65.5 million for ongoing mine development. Nevertheless, the Company's high
priority effort to improve the developed state of the mines is essentially on
track.
The Company also has paid down $10.3 million of its debt obligations during
2006, in accordance with the terms of its credit agreements. Outstanding debt at
September 30, 2006, was $131.1 million.
Third Quarter Results -- Details
The Company's third quarter 2006 mine production of 151,300 PGM ounces
included 109,200 ounces from the Stillwater Mine and 42,100 ounces from East
Boulder Mine. For the comparable quarter of 2005, Stillwater Mine produced
83,500 ounces and East Boulder 44,200 ounces. The slight decline in output at
East Boulder is attributable to lost production during the September 2006
wildfire shutdowns, when the mine lost a total of 15 shifts of production.
Sales from mine production totaled 149,600 ounces for the third quarter of
2006 at an overall average realization of $492 per ounce, up from 134,700 ounces
at $468 per ounce in the 2005 third quarter. The Company's average realization
in both periods benefited from above-market pricing provisions for palladium
sales under the Company's contracts with major automobile companies, offset in
part by losses on forward sales commitments for platinum. The Company's average
realization on palladium sales from mine production was $370 per ounce in the
2006 third quarter, compared to $355 per ounce in the same period last year. The
comparable average realization on platinum, net of the loss on forward sales,
was $877 per ounce in the third quarter of 2006 and $820 per ounce in the 2005
third quarter.
During the third quarter of 2006, the Company sold about 96,000 ounces of
PGMs from recycled materials. Tolled material in the quarter included
approximately another 16,000 ounces of PGMs processed on behalf of others. In
the third quarter of 2005, the Company processed and sold about 33,000 ounces of
purchased recycling material and toll processed about 25,000 ounces for others.
Revenues for the third quarter of 2006 totaled $180.8 million, up
significantly from $119.7 million in the third quarter of 2005. Proceeds from
sales of mined PGMs totaled $73.7 million in the 2006 third quarter, up from
$63.0 million in the same quarter last year, reflecting the benefit of the
higher ounces and higher average realizations in 2006. Recycling revenues also
grew appreciably, increasing to $104.2 million from $24.0 million in last year's
third quarter. The growth in recycling more than offset the reduction in revenue
from completion of the program to sell off the palladium inventory received in
the 2003 Norilsk Nickel transaction, which contributed $20.2 million to revenue
in the third quarter of 2005. This sales program concluded during the first
quarter of 2006. Resales of purchased metal generated $2.9 million and $12.5
million of revenue during the 2006 and 2005 third quarters, respectively.
Cost of metals sold (before depreciation and amortization expense) increased
to $146.4 million in the third quarter of 2006 from $101.9 million in the 2005
third quarter. Mining costs actually decreased slightly from period to period,
totaling $48.1 million in this year's third quarter compared with $48.4 million
in the last year's third quarter. Recycling costs, largely comprised of the cost
to purchase spent catalytic materials for processing, totaled $95.4 million in
the third quarter of 2006, up sharply from $22.6 million in the third quarter of
last year, driven by the much higher volumes processed and, to a lesser extent,
by higher prices paid for the PGM ounces contained in the recycled material. The
2005 third-quarter costs also included acquisition and handling costs of $18.6
million for 109,600 ounces of palladium sold from inventory and an additional
$12.4 million to acquire 11,000 ounces of PGMs for resale under various
commitments. Purchases of 9,000 ounces of palladium for resale added $2.9
million to third-quarter 2006 costs.
General and administrative ("G&A") costs increased significantly to $8.3
million in the third quarter of 2006 from $4.8 million in the 2005 third
quarter. The third quarter of 2006 includes $2.3 million of expense to implement
a palladium-marketing program, plus support costs for upgrading the Company's
accounting systems and slightly higher compensation and contractor expense
during the quarter.
Net income of $6.9 million for the third quarter of 2006 included, by
business segment, $5.6 million from mining operations and $10.7 million from
recycling activities, less corporate costs including $8.3 million of G&A expense
and $1.4 million of unallocated net interest expense. As noted last quarter, a
portion of the strong third-quarter earnings from recycling can be attributed to
second-quarter activities that, due to delays in inventory flows, could not be
recognized in income until the third quarter.
For the third quarter of 2005, the reported net loss of $9.1 million
included a loss on mining operations of $5.7 million and net income from
recycling activities of $1.8 million, plus at the corporate level $1.8 million
of income related to sales from the palladium inventory received in the Norilsk
Nickel transaction, less $4.8 million of G&A expense and a total of $2.3 million
of unallocated interest expense and other miscellaneous costs. The overall loss
stemmed mostly from short-term operating issues at the Stillwater Mine that
limited production there during last year's third quarter.
Nine Months' Results -- Details
During the first nine months of 2006, Stillwater Mining Company produced
446,200 ounces of PGMs from its mining operations, including 301,700 ounces from
the Stillwater Mine and 144,600 ounces from the East Boulder Mine. During the
same period last year, the Company's mines produced 410,700 ounces - 287,500
ounces at Stillwater and 123,300 ounces at East Boulder. The increased
production during 2006 reflects early benefits from efforts to improve the
developed state of the mines.
Year-to-date sales of mine production for the first nine months of 2006
totaled 439,000 ounces at an overall average realization of $478 per ounce,
compared to 435,000 ounces sold during the comparable nine months of 2005 at a
combined average realization of $467 per ounce. Nine-month 2006 total sales
include 338,600 ounces of palladium at an average realization, with the benefit
of contract floor prices, of $370 per ounce; for the corresponding period of
2005, sales of mined palladium totaled 331,600 ounces at an average realized
price of $355 per ounce. Platinum sales from mined production for the first nine
months of 2006 were 100,400 ounces at $845 per ounce, compared to 103,500 ounces
at $824 per ounce in the first nine months of 2005.
Recycling activity during the first nine months of 2006 has increased
steadily, totaling 168,200 ounces sold, up from 94,000 ounces in the comparable
period of last year. Toll processing activity on behalf of third parties has
accounted for another 60,400 ounces during 2006, down slightly from the 67,000
ounces tolled in the first nine months of 2005.
Revenues for the first three quarters of 2006 totaled $437.6 million, an
increase from $373.8 million of revenue in the same time frame last year. Sales
of mined PGM ounces contributed $210.0 million to the 2006 revenue total above
and $203.0 million to the 2005 nine-month revenue total. Recycling revenues
expanded to $178.5 million in the first nine months of this year from $66.0
million in the same period last year, mirroring the significant growth in the
volume of this business. Revenues from sales of the palladium received in the
2003 Norilsk Nickel transaction dropped to $17.6 million year to date in 2006
from $61.3 million through the first nine months of 2005, as that sales program
was completed in the first quarter of 2006. Other sales, mostly of metal
purchased for resale, have contributed $31.5 million year-to-date in 2006
compared to $43.5 million in the corresponding 2005 period.
Cost of metals sold, excluding depreciation and amortization expense,
increased to $349.6 million for the first nine months of 2006 from $305.0
million in the corresponding period of 2005. The cost of mining operations,
included in these numbers, declined slightly to $142.3 million year-to-date in
2006 from $145.3 million in the first three quarters of 2005. Again reflecting
the substantial growth during 2006 of the volumes of recycled material processed
by Stillwater, recycling cost of metals sold increased sharply to $165.3 million
from $61.9 million in the first nine months of last year. As already noted, most
of the cost of recycling represents cost to purchase the spent catalyst material
itself, while the actual processing is a relatively small portion of the total
cost. The cause of the increase in recycling cost between 2006 and 2005 is split
about evenly between volume growth and rising per-ton acquisition costs as the
value of the contained PGMs in the catalytic material has risen. Costs
associated with sales of the palladium received in the Norilsk Nickel
transaction declined to $10.8 million year-to-date in 2006 from $55.7 million
for the first nine months of 2005; again, the sales program for these metals was
completed during the first quarter of 2006. Costs of other miscellaneous metals
purchased for resale has decreased to $31.2 million in this year's first nine
months from $42.1 million for the same period last year.
G&A costs have increased significantly during 2006 to $21.6 million from
$14.8 million in last year's first nine months. The $6.8 million increase is
mostly the result of market development efforts ($3.2 million) and a small
exploration program ($0.3 million) introduced during 2006, together with
expanded use of contractors in corporate services and increased compensation
costs.
Net income for the first nine months of 2006 was $5.1 million. Business
segment contributions to this result included $6.3 million from mining
operations, $17.4 million from recycling, and, at the corporate level, $6.9
million related to sales of the palladium received in the Norilsk Nickel
transaction, $0.4 million in other income and expenses offset in part by $21.6
million of G&A expense and $4.3 million of unallocated interest expense.
For the first nine months of 2005, the Company incurred a net loss of $10.9
million. The loss was driven largely by inconsistent mining performance,
resulting in a loss from mining operations of $2.0 million. A profit of $4.9
million from recycling activities and a gain of $5.5 million related to sales of
the palladium received in the Norilsk Nickel transaction consequently were not
enough to offset G&A expenses of $14.8 million and unallocated net interest
expense of $6.1 million.
Stillwater Mining Company will host its third quarter results conference
call at 12:00 noon Eastern Standard Time on November 7, 2006. The conference
call dial-in numbers are 800-288-8968 (U.S.) and 612-332-0107 (International).
The conference call will simultaneously be webcast on the Internet via the
Company's website at www.stillwatermining.com. To access the conference call on
the Company's website, 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 website or by a telephone replay, numbers
(800) 475-6701 (U.S.) and (320) 365-3844 (International), access code 838859,
through November 15, 2006, ending at 11:59 p.m. Eastern Time.
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 and the Russian Federation. 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 Website: 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 2005 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.
Key Factors Tables and Financial Statements follow.
Stillwater Mining Company
Key Factors
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
OPERATING AND COST DATA FOR MINE
PRODUCTION
Consolidated:
Ounces produced (000)
Palladium 117 99 345 317
Platinum 34 29 101 94
Total 151 128 446 411
Tons milled (000) 308 281 957 889
Mill head grade (ounce per ton) 0.54 0.49 0.51 0.50
Sub-grade tons milled (000) (1) 17 22 46 59
Sub-grade tons mill head grade
(ounce per ton) 0.13 0.15 0.13 0.16
Total tons milled (000) (1) 325 303 1,003 948
Combined mill head grade (ounce per
ton) 0.51 0.47 0.49 0.48
Total mill recovery (%) 90 91 91 91
Total operating costs (000)
(Non-GAAP) (2) $ 28,445 $ 35,635 $ 106,991 $ 112,450
Total cash costs (000)
(Non-GAAP) (2) $ 37,049 $ 42,016 $ 130,758 $ 132,015
Total production costs (000)
(Non-GAAP) (2) $ 57,052 $ 61,520 $ 192,187 $ 192,490
Total operating costs per ounce
(Non-GAAP) (3) $ 188 $ 279 $ 240 $ 274
Total cash costs per ounce (Non-
GAAP) (3) $ 245 $ 329 $ 293 $ 321
Total production costs per ounce
(Non-GAAP) (3) $ 377 $ 482 $ 431 $ 469
Total operating costs per ton milled
(Non-GAAP) (3) $ 87 $ 118 $ 107 $ 119
Total cash costs per ton milled
(Non-GAAP) (3) $ 114 $ 139 $ 130 $ 139
Total production costs per ton
milled (Non-GAAP) (3) $ 175 $ 203 $ 192 $ 203
Stillwater Mine:
Ounces produced (000)
Palladium 84 64 232 221
Platinum 25 19 69 67
Total 109 83 301 288
Tons milled (000) 188 160 544 534
Mill head grade (ounce per ton) 0.63 0.55 0.60 0.57
Sub-grade tons milled (000) (1) 17 22 46 59
Sub-grade tons mill head grade
(ounce per ton) 0.13 0.15 0.13 0.16
Total tons milled (000) (1) 205 182 590 593
Combined mill head grade (ounce
per ton) 0.58 0.50 0.60 0.53
Total mill recovery (%) 91 92 92 92
Total operating costs (000) (Non-
GAAP) (2) $ 19,587 $ 22,871 $ 69,609 $ 75,715
Total cash costs (000) (Non-
GAAP) (2) $ 25,514 $ 27,107 $ 85,349 $ 88,978
Total production costs (000) (Non-
GAAP) (2) $ 37,988 $ 39,230 $ 121,560 $ 128,397
Total operating costs per ounce
(Non-GAAP) (3) $ 179 $ 274 $ 231 $ 263
Total cash costs per ounce (Non-
GAAP) (3) $ 234 $ 325 $ 283 $ 310
Total production costs per ounce
(Non-GAAP) (3) $ 348 $ 470 $ 403 $ 447
Total operating costs per ton milled
(Non-GAAP) (3) $ 96 $ 126 $ 118 $ 128
Total cash costs per ton milled
(Non-GAAP) (3) $ 124 $ 149 $ 145 $ 150
Total production costs per ton
milled (Non-GAAP) (3) $ 185 $ 215 $ 206 $ 217
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
OPERATING AND COST DATA FOR MINE
PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced (000)
Palladium 33 35 113 96
Platinum 9 10 32 27
Total 42 45 145 123
Tons milled (000) 120 121 413 355
Mill head grade (ounce per ton) 0.39 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) 120 121 413 355
Combined mill head grade (ounce
per ton) 0.39 0.42 0.39 0.39
Total mill recovery (%) 89 89 89 89
Total operating costs (000)
(Non-GAAP) (2) $ 8,858 $ 12,765 $ 37,382 $ 36,735
Total cash costs (000)
(Non-GAAP) (2) $ 11,535 $ 14,910 $ 45,409 $ 43,036
Total production costs (000)
(Non-GAAP) (2) $ 19,064 $ 22,290 $ 70,627 $ 64,093
Total operating costs per ounce
(Non-GAAP) (3) $ 211 $ 289 $ 259 $ 298
Total cash costs per ounce
(Non-GAAP) (3) $ 274 $ 337 $ 314 $ 349
Total production costs per ounce
(Non-GAAP) (3) $ 453 $ 504 $ 489 $ 520
Total operating costs per ton milled
(Non-GAAP) (3) $ 74 $ 106 $ 90 $ 103
Total cash costs per ton milled
(Non-GAAP) (3) $ 96 $ 124 $ 110 $ 121
Total production costs per ton milled
(Non-GAAP) (3) $ 158 $ 185 $ 171 $ 180
(1) Sub-grade tons milled includes reef waste material only. Total tons
milled includes ore tons and sub-grade tons only.
(2) Total operating costs include costs of mining, processing and
administrative expenses at the mine site (including mine site overhead and
credits for metals produced other than palladium and platinum from mine
production). Total cash costs include total operating costs plus royalties,
insurance and taxes other than income taxes. Total production costs include
total cash costs plus asset retirement costs and depreciation and amortization.
Income taxes, corporate general and administrative expenses, asset impairment
writedowns, gain or loss on disposal of property, plant and equipment,
restructuring costs, Norilsk Nickel transaction expenses and interest income and
expense are not included in total operating costs, total cash costs or total
production costs. These measures of cost are not defined under U.S. Generally
Accepted Accounting Principles (GAAP). Please see "Reconciliation of Non-GAAP
Measures to Costs of Revenues" for additional detail.
(3) Operating costs per ton, operating costs per ounce, cash costs per ton,
cash costs per ounce, production costs per ton and production costs per ounce
are non-GAAP measurements that management uses to monitor and evaluate the
efficiency of its mining operations. Please see "Reconciliation of Non- GAAP
Measures to Costs of Revenues" and the accompanying discussion.
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
SALES AND PRICE DATA
Ounces sold (000)
Mine Production:
Palladium 114 102 339 332
Platinum 36 33 100 103
Total 150 135 439 435
Other PGM activities (5)
Palladium
Norilsk Nickel transaction -- 110 63 329
Recycling and other 49 14 94 43
Platinum
Recycling and other 49 22 90 61
Rhodium
Recycling and other 7 7 20 29
Total 105 153 267 462
Total ounces sold 255 288 706 897
Average realized price per ounce (4)
Mine Production:
Palladium $ 370 $ 355 $ 370 $ 355
Platinum $ 877 $ 820 $ 845 $ 824
Combined $ 492 $ 468 $ 478 $ 467
Other PGM activities
Palladium $ 332 $ 184 $ 302 $ 187
Platinum $ 1,180 $ 878 $ 1,106 $ 864
Rhodium $ 4,852 $ 1,924 $ 3,892 $ 1,624
Average market price per ounce (4)
Palladium $ 324 $ 187 $ 320 $ 189
Platinum $ 1,216 $ 896 $ 1,147 $ 877
Combined $ 528 $ 358 $ 504 $ 353
(4) The Company's average realized price represents revenues, including the
effect of contractual floor and ceiling prices, hedging gains and losses
realized on commodity instruments, and 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 quotation
for rhodium prices for the actual months of the period.
(5) Prior period amounts have been adjusted to conform to the current period
presentation.
Reconciliation of Non-GAAP Measures to Costs of Revenues
The Company utilizes certain non-GAAP measures as indicators in assessing
the performance of its mining and processing operations during any period.
Because of the processing time required to complete the extraction of finished
PGM products, there are typically lags of one to three months between ore
production and sale of the finished product. Sales in any period include some
portion of material mined and processed from prior periods as the revenue
recognition process is completed. Consequently, while costs of revenues (a GAAP
measure included in the Company's Statement of Operations and Comprehensive
Income (Loss)) appropriately reflects the expense associated with the materials
sold in any period, the Company has developed certain non-GAAP measures to
assess the costs associated with its producing and processing activities in a
particular period and to compare those costs between periods.
While the Company believes that these non-GAAP measures may also be of value
to outside readers, both as general indicators of the Company's mining
efficiency from period to period and as insight into how the Company internally
measures its operating performance, these non-GAAP measures are not standardized
across the mining industry and in most cases will not be directly comparable to
similar measures that may be provided by other companies. These non-GAAP
measures are only useful as indicators of relative operational performance in
any period, and because they do not take into account the inventory timing
differences that are included in costs of revenues, they cannot meaningfully be
used to develop measures of earnings or profitability. A reconciliation of these
measures to costs of revenues for each period shown is provided as part of the
following tables, and a description of each non-GAAP measure is provided below.
Total Costs of Revenues: For the Company as a whole, this measure is equal
to total costs of revenues, as reported in the Statement of Operations and
Comprehensive Income (Loss). For the Stillwater Mine, East Boulder Mine, and
other PGM activities, the Company segregates the expenses within total costs of
revenues that are directly associated with each of these activities and then
allocates the remaining facility costs included in total cost of revenues in
proportion to the monthly volumes from each activity. The resulting total costs
of revenues measures for Stillwater Mine, East Boulder Mine and other PGM
activities are equal in total to total costs of revenues as reported in the
Company's Statement of Operations and Comprehensive Income (Loss).
Total Production Costs (Non-GAAP): Calculated as total costs of revenues
(for each mine or combined) adjusted to exclude gains or losses on asset
dispositions, costs and profit from recycling activities, and timing differences
resulting from changes in product inventories. This non-GAAP measure provides a
comparative measure of the total costs incurred in association with production
and processing activities in a period, and may be compared to prior periods or
between the Company's mines.
When divided by the total tons milled in the respective period, Total
Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined
- -- provides an indication of the cost per ton milled in that period. Because of
variability of ore grade in the Company's mining operations, production
efficiency underground is frequently measured against ore tons produced rather
than contained PGM ounces. Because ore tons are first actually weighed as they
are fed into the mill, mill feed is the first point at which production tons are
measured precisely. Consequently, Total Production Cost per Ton Milled
(Non-GAAP) is a general measure of production efficiency, and is affected both
by the level of Total Production Costs (Non- GAAP) and by the volume of tons
produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Production Cost per Ounce (Non-GAAP) -- measured for
each mine or combined -- provides an indication of the cost per ounce produced
in that period. Recoverable PGM ounces from production are an indication of the
amount of PGM product extracted through mining in any period. Because extracting
PGM material is ultimately the objective of mining, the cost per ounce of
extracting and processing PGM ounces in a period is a useful measure for
comparing extraction efficiency between periods and between the Company's mines.
Consequently, Total Production Cost per Ounce (Non-GAAP) in any period is a
general measure of extraction efficiency, and is affected by the level of Total
Production Costs (Non-GAAP), by the grade of the ore produced and by the volume
of ore produced in the period.
Total Cash Costs (Non-GAAP): This non-GAAP measure is calculated by
excluding the depreciation and amortization and asset retirement costs from
Total Production Costs (Non-GAAP) for each mine or combined. The Company uses
this measure as a comparative indication of the cash costs related to production
and processing in any period.
When divided by the total tons milled in the respective period, Total Cash
Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides
an indication of the level of cash costs incurred per ton milled in that period.
Because of variability of ore grade in the Company's mining operations,
production efficiency underground is frequently measured against ore tons
produced rather than contained PGM ounces. Because ore tons are first weighed as
they are fed into the mill, mill feed is the first point at which production
tons are measured precisely. Consequently, Total Cash Cost per Ton Milled
(Non-GAAP) is a general measure of production efficiency, and is affected both
by the level of Total Cash Costs (Non-GAAP) and by the volume of tons produced
and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Cash Cost per Ounce (Non-GAAP) -- measured for each
mine or combined -- provides an indication of the level of cash costs incurred
per PGM ounce produced in that period. Recoverable PGM ounces from production
are an indication of the amount of PGM product extracted through mining in any
period. Because ultimately extracting PGM material is the objective of mining,
the cost per ounce of extracting and processing PGM ounces in a period is a
useful measure for comparing extraction efficiency between periods and between
the Company's mines. Consequently, Total Cash Cost per Ounce (Non-GAAP) in any
period is a general measure of extraction efficiency, and is affected by the
level of Total Cash Costs (Non-GAAP), by the grade of the ore produced and by
the volume of ore produced in the period.
Total Operating Costs (Non-GAAP): This non-GAAP measure is derived from
Total Cash Costs (Non-GAAP) for each mine or combined by excluding royalty, tax
and insurance expenses from Total Cash Costs (Non-GAAP). Royalties, taxes and
insurance costs are contractual or governmental obligations outside of the
control of the Company's mining operations, and in the case of royalties and
most taxes, are driven more by the level of sales realizations rather than by
operating efficiency. Consequently, Total Operating Costs (Non-GAAP) is a useful
indicator of the level of production and processing costs incurred in a period
that are under the control of mining operations.
When divided by the total tons milled in the respective period, Total
Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined
- -- provides an indication of the level of controllable cash costs incurred per
ton milled in that period. Because of variability of ore grade in the Company's
mining operations, production efficiency underground is frequently measured
against ore tons produced rather than contained PGM ounces. Because ore tons are
first actually weighed as they are fed into the mill, mill feed is the first
point at which production tons are measured precisely. Consequently, Total
Operating Cost per Ton Milled (Non-GAAP) is a general measure of production
efficiency, and is affected both by the level of Total Operating Costs
(Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Operating Cost per Ounce (Non-GAAP) -- measured for
each mine or combined -- provides an indication of the level of controllable
cash costs incurred per PGM ounce produced in that period. Recoverable PGM
ounces from production are an indication of the amount of PGM product extracted
through mining in any period. Because ultimately extracting PGM material is the
objective of mining, the cost per ounce of extracting and processing PGM ounces
in a period is a useful measure for comparing extraction efficiency between
periods and between the Company's mines. Consequently, Total Operating Cost per
Ounce (Non-GAAP) in any period is a general measure of extraction efficiency,
and is affected by the level of Total Operating Costs (Non-GAAP), by the grade
of the ore produced and by the volume of ore produced in the period.
Reconciliation of Non-GAAP Measures to Costs of Revenues
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
(in thousands) 2006 2005 2006 2005
- ----------------------------------- ---------- ---------- ---------- ----------
Consolidated:
Reconciliation to consolidated
costs of revenues:
Total operating costs (Non-GAAP) $ 28,445 $ 35,635 $ 106,991 $ 112,450
Royalties, taxes and other 8,604 6,381 23,767 19,565
Total cash costs (Non-GAAP) $ 37,049 $ 42,016 $ 130,758 $ 132,015
Asset retirement costs 164 151 483 381
Depreciation and amortization 19,979 20,239 61,240 59,516
Depreciation and amortization
(in inventory) (140) (886) (294) 578
Total production costs (Non-GAAP) $ 57,052 $ 61,520 $ 192,187 $ 192,490
Change in product inventories 3,281 36,259 35,963 105,231
Costs of recycling activities 95,356 22,552 165,292 61,872
Recycling activities -
depreciation 24 14 74 41
Add: Profit from recycling
activities 10,710 1,785 17,420 4,888
Total consolidated costs of
revenues $ 166,423 $ 122,130 $ 410,936 $ 364,522
Stillwater Mine:
Reconciliation to costs of
revenues:
Total operating costs (Non-GAAP) $ 19,587 $ 22,871 $ 69,609 $ 75,715
Royalties, taxes and other 5,927 4,236 15,740 13,263
Total cash costs (Non-GAAP) $ 25,514 $ 27,107 $ 85,349 $ 88,978
Asset retirement costs 119 109 349 258
Depreciation and amortization 12,385 13,613 36,572 39,899
Depreciation and amortization (in
inventory) (30) (1,599) (710) (738)
Total production costs (Non-GAAP) $ 37,988 $ 39,230 $ 121,560 $ 128,397
Change in product inventories (138) 7,414 (4,624) 11,367
Add: Profit from recycling
activities 7,665 1,147 12,041 3,391
Total costs of revenues $ 45,515 $ 47,791 $ 128,977 $ 143,155
East Boulder Mine:
Reconciliation to costs of
revenues:
Total operating costs (Non-GAAP) $ 8,858 $ 12,765 $ 37,382 $ 36,735
Royalties, taxes and other 2,677 2,145 8,027 6,301
Total cash costs (Non-GAAP) $ 11,535 $ 14,910 $ 45,409 $ 43,036
Asset retirement costs 45 42 134 123
Depreciation and amortization 7,594 6,626 24,668 19,617
Depreciation and amortization (in
inventory) (110) 712 416 1,317
Total production costs (Non-GAAP) $ 19,064 $ 22,290 $ 70,627 $ 64,093
Change in product inventories 490 (1,410) (1,406) (2,017)
Add: Profit from recycling
activities 3,045 638 5,379 1,497
Total costs of revenues $ 22,599 $ 21,518 $ 74,600 $ 63,573
Other PGM activities: (1)
Reconciliation to costs of
revenues:
Change in product inventories $ 2,929 $ 30,255 $ 41,993 $ 95,882
Recycling activities -
depreciation 24 14 74 41
Costs of recycling activities 95,356 22,552 165,292 61,872
Total costs of revenues $ 98,309 $ 52,821 $ 207,359 $ 157,795
(1) Other PGM activities include recycling and sales of palladium received in
the Norilsk Nickel transaction and other.
Stillwater Mining Company
Statement of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Revenues
Mine production $ 73,660 $ 62,996 $ 210,034 $ 203,030
PGM recycling 104,228 24,025 178,481 65,983
Sales of palladium received in
the Norilsk Nickel transaction -- 20,175 17,637 61,291
Other 2,929 12,517 31,450 43,483
Total revenues 180,817 119,713 437,602 373,787
Costs and expenses
Cost of metals sold
Mine production 48,135 48,356 142,337 145,292
PGM recycling 95,356 22,552 165,292 61,872
Sales of palladium received in
Norilsk Nickel transaction -- 18,569 10,785 55,742
Other 2,929 12,400 31,208 42,059
Total costs of metals sold 146,420 101,877 349,622 304,965
Depreciation and amortization
Mine production 19,979 20,239 61,240 59,516
PGM recycling 24 14 74 41
Total depreciation and
amortization 20,003 20,253 61,314 59,557
Total costs of revenues 166,423 122,130 410,936 364,522
Exploration -- -- 332 --
Marketing 2,345 75 3,235 427
General and administrative 5,948 4,739 18,006 14,331
Total costs and expenses 174,716 126,944 432,509 379,280
Operating income (loss) 6,101 (7,231) 5,093 (5,493)
Other income (expense)
Other income 300 -- 303 --
Interest income 3,345 1,275 8,396 3,468
Interest expense (2,954) (3,041) (8,496) (8,719)
Gain/(loss) on disposal of
property, plant and equipment 70 (107) (164) (182)
Income (loss) before income tax
provision 6,862 (9,104) 5,132 (10,926)
Income tax provision -- (10) (10) (13)
Net income (loss) $ 6,862 $ (9,114) $ 5,122 $ (10,939)
Other comprehensive income (loss),
net of tax 21,454 (9,180) (8,138) (11,137)
Comprehensive income (loss) $ 28,316 $ (18,294) $ (3,016) $ (22,076)
Weighted average common shares
outstanding
Basic 91,310 90,775 91,194 90,626
Diluted 92,233 90,775 92,030 90,626
Basic earnings (loss) per share
Net income (loss) $ 0.08 $ (0.10) $ 0.06 $ (0.12)
Diluted earnings (loss) per share
Net income (loss) $ 0.07 $ (0.10) $ 0.06 $ (0.12)
Stillwater Mining Company
Balance Sheet
(Unaudited)
(in thousands, except share and per share data)
September 30, December 31,
2006 2005
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 65,027 $ 80,260
Restricted cash 3,785 2,685
Investments, at fair market value 28,430 55,668
Inventories 122,050 86,634
Advances on inventory purchases 25,012 6,950
Accounts receivable 21,214 27,287
Deferred income taxes 2,402 5,313
Other current assets 5,862 4,114
Total current assets $ 273,782 $ 268,911
Property, plant and equipment (net of
$199,058 and $141,396 accumulated
depreciation and amortization) 451,014 445,199
Other noncurrent assets 10,090 7,347
Total assets $ 734,886 $ 721,457
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 16,780 $ 14,407
Accrued payroll and benefits 17,697 17,801
Property, production and franchise
taxes payable 9,106 9,542
Current portion of long-term debt and
capital lease obligations 1,664 1,776
Portion of debt repayable upon
liquidation of finished palladium
in inventory -- 7,324
Fair value of derivative instruments 21,358 13,284
Other current liabilities 10,660 4,953
Total current liabilities $ 77,265 $ 69,087
Long-term debt and capital lease
obligations 129,465 132,307
Fair value of derivative instruments 4,472 4,318
Deferred income taxes 2,402 5,313
Accrued workers compensation 9,790 5,854
Asset retirement obligation 7,810 7,328
Other noncurrent liabilities 6,171 3,706
Total liabilities $ 237,375 $ 227,913
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;
91,386,217 and 90,992,045 shares
issued and outstanding 914 910
Paid-in capital 614,807 607,828
Accumulated deficit (92,670) (97,792)
Accumulated other comprehensive loss (25,540) (17,402)
Total stockholders' equity $ 497,511 $ 493,544
Total liabilities and stockholders' equity $ 734,886 $ 721,457
Stillwater Mining Company
Statement of Cash Flows
(Unaudited)
(in thousands)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Cash flows from operating activities
Net income (loss) $ 6,862 $ (9,114) $ 5,122 $ (10,939)
Adjustments to reconcile net income
(loss) to net cash (used in)
provided by operating activities
Depreciation and amortization 20,003 20,253 61,314 59,557
Lower of cost or market inventory
adjustment 54 1,427 1,194 1,427
(Gain)/loss on disposal of
property, plant and equipment (70) 107 164 182
Stock issued under employee
benefit plans 1,306 1,152 3,560 3,470
Amortization of debt issuance costs 199 140 582 459
Share based compensation 1,090 663 2,616 1,718
Changes in operating assets and
liabilities
Inventories 6,747 21,285 (36,904) 65,767
Advances on inventory purchases (344) (2,862) (18,062) (7,016)
Accounts receivable (8,720) (2,727) 6,073 (7,546)
Accounts payable 595 756 2,373 264
Workers' compensation 310 -- 3,936 720
Restricted cash (1,100) -- (1,100) (35)
Other (1,388) (1,165) 3,926 2,159
Net cash provided by operating
activities 25,544 29,915 34,794 110,187
Cash flows from investing activities
Capital expenditures (22,398) (26,565) (67,754) (66,787)
Proceeds from disposal of property,
plant and equipment 247 -- 510 --
Purchases of investments (3,947) (29,223) (71,968) (51,894)
Proceeds from maturities of
investments 29,985 -- 99,235 35,821
Net cash provided by (used in)
investing activities 3,887 (55,788) (39,977) (82,860)
Cash flows from financing activities
Payments on long-term debt and
capital lease obligations (363) (7,375) (10,278) (15,320)
Payments for debt issuance costs -- (22) (579) (22)
Issuance of common stock, net of
stock issue costs 2 14 807 23
Net cash (used in) financing activities (361) (7,383) (10,050) (15,319)
Cash and cash equivalents
Net increase (decrease) 29,070 (33,256) (15,233) 12,008
Balance at beginning of period 35,957 141,316 80,260 96,052
Balance at end of period $ 65,027 $ 108,060 $ 65,027 $ 108,060
SOURCE Stillwater Mining Company
-0- 11/07/2006
/CONTACT: Dawn McCurtain of Stillwater Mining Company, +1-406-373-8742/
/Web site: http://www.stillwatermining.com /
(SWC)