Exhibit 99.1
STILLWATER MINING REPORTS 2006 PROFIT
BILLINGS, Mont., Feb. 23 /PRNewswire-FirstCall/ -- STILLWATER MINING COMPANY
(NYSE: SWC) today reported 2006 net earnings of $7.9 million, or $0.09 per fully
diluted share, on record full-year revenues of $613.1 million. Earnings for the
year benefited 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. The 2006 performance reflects
significant improvement over 2005, when the Company reported a net loss of $13.9
million, or $0.15 per fully diluted share, on revenues of $507.5 million.
For the fourth quarter of 2006, Stillwater Mining Company reported net
income of $2.8 million, or $0.03 per fully diluted share, on revenue of $175.5
million. Again, this represents a substantial improvement over the $2.9 million
loss, $0.03 per fully diluted share, on $133.7 million of revenue, reported for
the same period in 2005. The Company in 2006 has enjoyed growth in its PGM
recycling activities and higher market prices for PGMs.
Stillwater Mining Company mines palladium and platinum from two underground
mines located in the mountains of south-central Montana. The Company's PGM mine
production during 2006 totaled 601,000 ounces, up from 554,000 ounces in 2005.
The Company met its mine production guidance for full-year 2006 of between
595,000 ounces and 625,000 ounces of PGMs, despite several mine shutdowns during
the 2006 third quarter due to wildfires. The increase in mine output in 2006 was
an early benefit of the continuing effort to improve the developed state and
transform the mining methods at the Company's mines.
In 2006, Stillwater Mining Company recycled a total of 349,000 PGM ounces
through the smelter and refinery, up 68% from the 208,000 ounces recycled during
2005. Recycling activities contributed about $19.5 million to the Company's
gross operating margin (before corporate overhead and financing charges) in
2006, compared to about $5.2 million in 2005. The improved performance is about
equally attributable to higher PGM prices in 2006 and to growth in the volumes
of recycled material processed.
As previously reported, during the first quarter of 2006 the Company
completed its two-year program to sell the 877,169 ounces of palladium received
in connection with the 2003 Norilsk Nickel transaction. In 2005, sales of this
palladium, contributed $87.3 million to revenues and $12.8 million to sales
margins; in 2006, the corresponding sales added just $17.6 million to revenues
and $6.9 million to sales margins. Higher palladium prices in 2006 partially
offset the effect of the much lower volume of these sales in 2006.
Commenting on the Company's 2006 results, Francis R. McAllister, Stillwater
Chairman and CEO, said; "We are extremely gratified to see the Company's
improving financial performance as prices have strengthened and our various
change initiatives are beginning to bear fruit. These initiatives are
tremendously important to the long-term sustainability of our operations. While
we still have a considerable way to go, the efforts to transform our mining
operations, promote demand for our products more actively in the market, and
diversify our income sources, are already benefiting our performance. We believe
our earnings probably will remain volatile for some time yet, but as we continue
to bring mining costs down, foster new demand growth and broaden our base of
operations, we see the opportunity to stabilize performance and increase the
value of our assets.
McAllister added; "During 2006, the Company succeeded in reducing total cash
costs per PGM ounce produced(1). This cost reduction flowed in part from
increased production and higher realized ore grade as recent investments have
improved the developed state of the mines, but costs also benefited in 2006 from
strong by-product prices and growth in recycling credits. Total cash costs per
ounce averaged $295 in 2006, better than the 2006 guidance and well below the
$324 reported in 2005. The Company's earlier guidance for full year 2006
estimated that average total cash costs for the year would fall between $300 and
$315 per ounce."
Regarding the Company's mine transformation efforts, McAllister reported,
"Operationally, 2006 saw continuing progress in our efforts to strengthen the
long-term competitiveness of our mining properties. Within the Company's current
expanded capital program, several important infrastructure projects were
completed during 2006, including rail haulage in the lower levels of the
Stillwater Mine, a sand plant and distribution system in the upper west area at
Stillwater, and 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
46,000 feet of new primary development and about 664,000 feet of definitional
drilling completed during 2006. As a result of these development efforts, proven
reserves increased during 2006 to about 4.8 million tons from 4.1 million tons
of proven reserves at the end of 2005. 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. At year-end 2006 proven
reserves represented about 33 months of production at the maximum permitted
rate, up from about 28 months at the end of 2005 and about 22 months at the end
of 2004.
"We intend to continue our mine transformation efforts during 2007. Plans
for the coming year include, in addition to ongoing mine development, the
extension of a major decline and completion of a new ventilation raise at the
Stillwater Mine, and expansion of captive cut-and-fill stopes and other
selective mining methods at both mines. During 2007 and 2008, the metallurgical
processing facilities in Columbus will be upgraded, including the planned
addition of a second smelter furnace. In the coming year the Company will
continue the new miner training program it initiated during 2006; this program
is designed to broaden mining skills within the Company's existing workforce and
to train new employees in these skills. The Company also plans to initiate some
scheduling changes in order to utilize the existing workforce more effectively
and reduce dependence on contractors."
With regard to the other Company initiatives, Mr. McAllister commented, "In
early 2006, the Company announced 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. Promotional efforts during 2006 included representation at several
major jewelry shows, and specific marketing programs targeted at first-tier
cities in China. These efforts continue to generate an increasing level of
interest among jewelers and the general public, with palladium now being
included in jewelry store displays in many countries.
"The Company also continues its diversification efforts. During the fourth
quarter of 2006, the Company invested $1.9 million for about an 11% interest in
Pacific North West Capital Corp., a Canadian exploration company that
specializes in identifying and delineating potential PGM reserve targets. We
believe that pursuing exploration through Pacific North West Capital and its
seasoned exploration staff would be an effective element of the Company's
growing exploration program. We are continuously evaluating other strategic
opportunities with a view toward broadening our base of operations."
Cash Flow and Liquidity
The Company's cash and cash equivalents totaled $88.4 million at December
31, 2006, up $8.1 million from the end of 2005. Including the Company's
available-for-sale investments in highly liquid federal agency notes and
commercial paper, however, the Company's total available liquidity at year end
2006 was $123.9 million, down about $12 million from liquidity of $135.9 million
at the end of 2005. The year-on-year drop in liquidity is more than accounted
for by the substantial investment in working capital associated with the growth
of our recycling business. Working capital constituting marketable inventories
and related advances in the Company's growing PGM recycling business increased
to $70.9 million at the end of 2006 from $26.8 million at the end of 2005. Also
at the end of 2006, the Company had $22.5 million available to it under undrawn
revolving credit lines.
Net cash provided from operating activities totaled $97.0 million in 2006,
down sharply from $141.1 million in 2005, which had included about $87 million
of cash from sales of the palladium received in the Norilsk Nickel transaction,
compared to only about $18 million for comparable sales in 2006. If the cash
from the palladium sales were excluded, net cash from operations would have
increased to $79 million in 2006 from $54 million in 2005. Capital expenditures
were $97.8 million in 2006, lower than the planned $107 million spending level
for the year, but somewhat higher than the $92.1 million of capital spending in
2005. Despite the lower than planned level of spending in 2006, all critical
capital projects were on track or complete at year end.
The Company paid down $10.7 million of its debt obligations during 2006, in
accordance with the terms of its credit agreements. Outstanding debt at December
31, 2006, was $130.7 million.
Fourth Quarter Results -- Details
In the fourth quarter of 2006, the Company's mining operations produced
154,300 PGM ounces including 107,700 ounces from the Stillwater Mine and 46,600
ounces from East Boulder Mine. For the comparable quarter of 2005, Stillwater
Mine produced 93,600 ounces and East Boulder 49,200 ounces. The increase in
total output reflects overall improvements to the developed state of the mines;
the modest decrease at the East Boulder Mine is largely a resource allocation
issue as the mine moves from highly mechanized methods toward more captive
cut-and-fill mining.
Sales from mine production totaled 164,800 ounces in the fourth quarter of
2006 at an overall average realization of $499 per ounce, up from 130,800 ounces
at $468 per ounce in the fourth quarter of 2005. Although PGM market prices
generally were higher in the fourth quarter of 2006, 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 fourth quarter, compared to $361 per ounce in the same
period of 2005. The comparable average realization on platinum, net of the loss
on forward sales, was $933 per ounce in the fourth quarter of 2006 and $811 per
ounce in the 2005 fourth quarter.
During the fourth quarter of 2006, the Company processed about 104,000
ounces of PGMs from recycled catalytic materials. By comparison, in the fourth
quarter of 2005 the Company processed about 56,000 ounces of recycled material.
The Company processes both material it purchases from third parties and material
toll processed on behalf of others for a fee.
Revenues for the fourth quarter of 2006 totaled $175.5 million, up 31% from
$133.7 million in the fourth quarter of 2005. Proceeds from sales of mined PGMs
totaled $82.2 million in the 2006 fourth quarter, up from $61.2 million in the
same quarter of 2005, reflecting the benefit of the higher ounces and higher
average realizations in 2006. Recycling revenues also grew appreciably,
increasing to $91.5 million from $24.7 million in last year's fourth quarter.
The growth in recycling revenues 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 $26.0 million to revenue in
the fourth quarter of 2005. This sales program concluded during the first
quarter of 2006. Resales of purchased metal generated $1.9 million and $21.8
million in revenue during the 2006 and 2005 fourth quarters, respectively.
Cost of metals sold (before depreciation and amortization expense) increased
to $143.9 million in the 2006 fourth quarter from $110.1 million in the fourth
quarter of 2005. Mining costs included in cost of metals sold increased to $57.6
million in the 2006 fourth quarter from $44.8 million in the 2005 fourth
quarter. Recycling costs, largely comprised of the cost to purchase spent
catalytic materials for processing, totaled $85.2 million in the fourth quarter
of 2006, up sharply from $23.6 million in the fourth quarter of 2005, driven by
the much higher volumes processed and by higher prices paid for the PGM ounces
contained in the recycled material. The 2005 fourth-quarter costs also included
costs of $18.6 million for 109,700 ounces of palladium sold from inventory and
an additional $23.1 million to acquire 17,200 ounces of PGMs for resale under
various commitments. Purchases of 6,000 ounces of palladium for resale added
$1.1 million to fourth-quarter 2006 costs.
Depreciation and amortization expense increased to $22.4 million in the 2006
fourth quarter from $19.5 million in the same period of 2005. The increase is
attributable both to higher mine production and to slightly higher amortization
rates in 2006.
General and administrative ("G&A") costs increased to $6.2 million in the
fourth quarter of 2006 from $5.7 million in the 2005 fourth quarter. The 2006
cost includes expense for a palladium-marketing program, plus slightly higher
compensation and contractor expense during the quarter.
Net income of $2.8 million for the fourth quarter of 2006 included, by
business segment, $2.2 million from mining operations and $8.0 million from
recycling activities, less corporate costs including $6.2 million of G&A expense
and $1.7 million of unallocated net interest expense. The remaining $0.5 million
net benefit is from miscellaneous income and expense items, primarily asset
sales.
For the fourth quarter of 2005, the reported net loss of $2.9 million
included a loss on mining operations of $3.1 million and income from recycling
activities of $1.1 million, plus at the corporate level $6.1 million of income
related to sales from the palladium inventory received in the Norilsk Nickel
transaction. These earnings items were offset by $5.7 million of G&A expense and
a total of $1.3 million pertaining to unallocated interest expense. The overall
loss for the quarter stemmed mostly from weak production at both mines during
the 2005 fourth quarter.
Year End Results -- Details
For the full year 2006, Stillwater Mining Company produced 601,000 ounces of
PGMs from its mining operations, including 409,000 ounces from the Stillwater
Mine and 192,000 ounces from the East Boulder Mine. This was an improvement over
2005, when the Company's mines produced 554,000 ounces - 381,000 ounces at
Stillwater and 173,000 ounces at East Boulder. The increased production during
2006 largely reflects early benefits from the Company's efforts to improve the
developed state of the mines and transform the Company's mining methods.
Sales of platinum and palladium from mine production for 2006 totaled
604,000 ounces at an overall average realization of $484 per ounce, compared to
566,000 ounces sold during 2005 at a combined average realization of $467 per
ounce. Year 2006 total mine sales included 466,000 ounces of palladium at an
average realization, with the benefit of contract floor prices, of $370 per
ounce; for 2005, sales of mined palladium totaled 431,000 ounces at an average
realized price of $356 per ounce. Platinum sales from mined production in 2006
were 138,000 ounces at an average realization, net of hedging losses, of $868
per ounce, compared to 135,000 ounces at $821 per ounce in 2005.
Recycling activity grew substantially during 2006, with a total of 349,000
ounces of spent catalytic material processed, up from 208,000 ounces in 2005.
The Company processed both material it purchased from third parties and material
it toll processed on behalf of third parties for a fee.
Total revenues for 2006 totaled $613.1 million, an increase from $507.5
million of revenue in the previous year. Sales of mined PGM ounces contributed
$292.2 million to the 2006 revenue total above and $264.2 million to 2005
revenue. Recycling revenues expanded to $269.9 million in 2006 from $90.7
million in 2005, mirroring the significant growth in the volume of this business
as well as higher PGM prices. Revenues from sales of the palladium received in
the 2003 Norilsk Nickel transaction were $17.6 million in 2006, down sharply
from $87.3 million in 2005, as that sales program was completed in the first
quarter of 2006. Other sales, mostly of metal purchased to meet resale
obligations, contributed $33.4 million to 2006 revenue, also down from $65.3
million in 2005.
Cost of metals sold, excluding depreciation and amortization expense,
increased to $493.5 million for 2006 from $415.4 million in 2005. The cost of
mining operations, included in these numbers, increased 5.2% to $200.0 million
in 2006 from $190.2 million in 2005. Recycling cost of metals sold increased
sharply to $250.4 million from $85.5 million in 2005. 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 in 2006 from $74.5 million in 2005; again, the sales program for these
metals was completed during the first quarter of 2006. Costs of other
miscellaneous metals purchased for resale equaled $32.3 million in 2006, down
from $65.3 million in the prior year.
Depreciation and amortization expense increased to $83.7 million in 2006
from $79.1 million in 2005. The increase reflects both higher 2006 production
volumes and slightly higher 2006 amortization rates as a result of assets placed
in service during 2006.
G&A costs increased significantly during 2006 to $27.7 million from $20.5
million in 2005. The $7.2 million increase is the result of market development
efforts ($3.6 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 of the full year 2006 was $7.9 million. Business segment
contributions to this result included $8.4 million from mining operations, $25.3
million from recycling (including financing charges), and, at the corporate
level, $6.9 million related to sales of the palladium received in the Norilsk
Nickel transaction, and $1.1 million in other miscellaneous income, offset in
part by $27.7 million of G&A expense and $6.1 million of unallocated interest
expense.
For the full year 2005, the Company incurred a net loss of $13.9 million.
The loss was driven largely by inconsistent mining performance, resulting in a
loss from mining operations of $5.1 million. A profit contribution of $6.3
million from recycling activities and a gain of $12.8 million related to sales
of the palladium received in the Norilsk Nickel transaction consequently were
not enough to offset corporate overhead expenses of $20.5 million, a $1.8
million year-end write-off of consignment inventory, and unallocated net
interest expense of $7.7 million.
Stillwater Mining Company will host its 2006 year-end results conference
call at 10:00 a.m. Eastern Standard Time on February 23, 2007. The conference
call dial-in numbers are 800-230-1092 (U.S.) and 612-332-0226 (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 863446,
through March 2, 2007, 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 2006 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.
(1) As discussed in more detail in the Company's 2006 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.
Ore Reserves, Key Factors Tables and Financial Statements follow.
Stillwater Mining Company
Statement of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues
Mine production $ 82,170 $ 61,177 $ 292,204 $ 264,206
PGM recycling 91,460 24,712 269,941 90,695
Sales of palladium
received in Norilsk
Nickel transaction -- 26,019 17,637 87,309
Other 1,916 21,768 33,366 65,252
Total revenues 175,546 133,676 613,148 507,462
Costs and expenses
Cost of metals sold
Mine production 57,646 44,788 199,982 190,171
PGM recycling 85,152 23,648 250,444 85,522
Sales of palladium
received in
Norilsk Nickel
transaction -- 18,801 10,785 74,542
Other 1,092 22,901 32,300 65,163
Total costs of metals sold 143,890 110,138 493,511 415,398
Depreciation and amortization
Mine production 22,342 19,516 83,583 79,032
PGM recycling 25 14 100 55
Total depreciation and amortization 22,367 19,530 83,683 79,087
Total costs of revenues 166,257 129,668 577,194 494,485
Exploration -- -- 332 --
Marketing 952 4 4,186 592
General and administrative 5,215 5,663 23,221 19,872
Loss on disposal of property, plant
and equipment 115 22 279 112
Restructuring credits, net -- -- -- (243)
Total costs and expenses 172,539 135,357 605,212 514,818
Operating income (loss) 3,007 (1,681) 7,936 (7,356)
Other income (expense)
Other (209) 13 94 11
Interest income 2,927 1,748 11,322 5,217
Interest expense (2,918) (3,015) (11,413) (11,733)
Income (loss) before
income tax provision 2,807 (2,935) 7,939 (13,861)
Income tax provision -- (10) (13)
Net income (loss) $ 2,807 $ (2,935) $ 7,929 $ (13,874)
Other comprehensive income (loss), net of tax 9,937 (1,300) 1,799 (12,437)
Comprehensive income (loss) $ 12,744 $ (4,235) $ 9,728 $ (26,311)
Weighted average common shares outstanding
Basic 91,457 90,926 91,260 90,702
Diluted 91,941 90,926 91,580 90,702
Basic earnings (loss)
per share
Net income (loss) $ 0.03 $ (0.03) $ 0.09 $ (0.15)
Diluted earnings (loss)
per share
Net income (loss) $ 0.03 $ (0.03) $ 0.09 $ (0.15)
Stillwater Mining Company
Balance Sheet
(Unaudited)
(in thousands, except share and per share data)
December 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 88,360 $ 80,260
Restricted cash 3,785 2,685
Investments, at fair market value 35,497 55,668
Inventories 106,895 86,634
Advances on inventory purchases 24,191 6,950
Accounts receivable 16,008 27,287
Deferred income taxes 5,063 5,313
Other current assets 4,540 4,114
Total current assets 284,339 268,911
Property, plant and equipment, net 460,328 445,199
Long-term investment 1,869 --
Other noncurrent assets 9,487 7,347
Total assets $ 756,023 $ 721,457
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 24,833 $ 14,407
Accrued payroll and benefits 20,348 17,801
Property, production and franchise
taxes payable 11,123 9,542
Current portion of long-term debt and
capital lease obligations 1,674 1,776
Portion of debt repayable upon liquidation
of finished palladium in inventory -- 7,324
Fair value of derivative instruments 15,145 13,284
Unearned revenue 5,479 69
Other current liabilities 6,988 4,884
Total current liabilities 85,590 69,087
Long-term debt and capital lease obligations 129,007 132,307
Fair value of derivative instruments 715 4,318
Deferred income taxes 5,063 5,313
Accrued workers compensation 10,254 5,854
Asset retirement obligation 8,550 7,328
Other noncurrent liabilities 4,288 3,706
Total liabilities $ 243,467 $ 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;
91,514,668 and 90,992,045 shares issued
and outstanding 915 910
Paid-in capital 617,107 607,828
Accumulated deficit (89,863) (97,792)
Accumulated other comprehensive loss (15,603) (17,402)
Total stockholders' equity 512,556 493,544
Total liabilities and stockholders'
equity $ 756,023 $ 721,457
Stillwater Mining Company
Statement of Cash Flows
(Unaudited)
(in thousands)
Three months ended Twelve months ended
December 31, December 31,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Cash flows from
operating activities
Net income (loss) $ 2,807 $ (2,935) $ 7,929 $ (13,874)
Adjustments to reconcile
net income (loss) to
net cash (used in)
provided by operating
activities
Depreciation and amortization 22,367 19,530 83,683 79,087
Lower of cost or market
inventory adjustment 1,325 1,039 2,519 2,466
Loss on disposal of property, plant and
equipment 115 21 279 112
Restructuring credits, net -- -- -- (243)
Cash paid on accrued restructuring costs -- 4 -- (334)
Stock issued under employee benefit plans 1,351 1,244 4,910 4,715
Amortization of debt issuance costs 201 157 783 624
Share based compensation 932 630 3,549 2,371
Changes in operating
assets and liabilities
Inventories 12,465 7,257 (24,440) 73,024
Advances on inventory purchases 821 (66) (17,241) (6,950)
Accounts receivable 5,206 (1,555) 11,279 (2,151)
Employee compensation and benefits 2,651 2,621 2,547 4,406
Accounts payable 8,053 (886) 10,426 (622)
Property, production
and franchise taxes
payable 2,017 2,988 1,581 359
Workers compensation 464 868 4,400 793
Asset retirement obligation 168 154 650 536
Restricted cash -- -- (1,100) (35)
Unearned revenue 2,718 (60) 5,410 (595)
Other (1,492) 29 (201) (2,555)
Net cash provided by
operating activities 62,169 31,040 96,963 141,134
Cash flows from investing
activities
Capital expenditures (30,048) (25,288) (97,802) (92,074)
Purchase of long-term investment (1,869) -- (1,869) --
Proceeds from disposal
of property, plant
and equipment 105 38 615 129
Purchases of
investments (34,319) (46,525) (106,287) (98,419)
Proceeds from
maturities of
investments 27,199 20,282 126,434 56,103
Net cash used in investing activities (38,932) (51,493) (78,909) (134,261)
Cash flows from
financing activities
Payments on long-term
debt and capital
lease obligations (448) (7,363) (10,726) (22,683)
Issuance of common
stock, net of stock
issue costs 18 16 825 40
Payments of debt issuance costs -- -- (579) (22)
Other 526 -- 526 --
Net cash provided by
(used in) financing
activities 96 (7,347) (9,954) (22,665)
Cash and cash equivalents
Net increase (decrease) 23,333 (27,800) 8,100 (15,792)
Balance at beginning
of period 65,027 108,060 80,260 96,052
Balance at end of period $ 88,360 $ 80,260 $ 88,360 $ 80,260
Stillwater Mining Company
Proven and Probable Ore Reserves*
December 31, 2006
Average
Grade Contained % Change % Change
Tons (Oz/Ton) Ounces in Tons in Ounces
(000's) Pd + Pt (000'S) from 2005 from 2005
------------ ------------ ------------ ------------ ------------
Stillwater Mine
Proven Reserves 2,775 0.66 1,818 12.90% 9.25%
Probable Reserves 15,539 0.63 9,749 -0.63% -0.64%
Total Stillwater Mine 18,314 0.63 11,567 1.20% 0.79%
East Boulder Mine
Proven Reserves 2,011 0.45 902 20.78% 14.47%
Probable Reserves 22,116 0.48 10,579 -- -10.48%
Total East Boulder
Mine 24,127 0.48 11,481 1.14% -8.92%
Total Proven
Reserves 4,786 0.57 2,721 16.08% 10.97%
Total Probable
Reserves 37,656 0.54 20,327 -- -6.02%
Total Proven and
Probable Reserves 42,442 0.54 23,048 1.17% -4.29%
* In calculating ore reserves at December 31, 2006, the Company has applied
the trailing 12-quarter combined average PGM market price of $409.57 which
consists of a palladium price of $250.39 and platinum price of $961.27.
Stillwater Mining Company
Key Factors
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATING AND COST DATA
FOR MINE PRODUCTION
Consolidated:
Ounces produced (000)
Palladium 119 110 463 428
Platinum 35 33 138 126
Total 154 143 601 554
Tons milled (000) 332 316 1,289 1,206
Mill head grade
(ounce per ton) 0.51 0.49 0.51 0.50
Sub-grade tons milled (000)(1) 15 22 62 80
Sub-grade tons mill head grade (ounce
per ton) 0.14 0.14 0.13 0.15
Total tons milled (000)(1) 347 338 1,351 1,286
Combined mill head grade (ounce per ton) 0.49 0.47 0.49 0.48
Total mill recovery (%) 91 92 91 91
Total operating costs (000)(Non-GAAP) (2) $ 37,153 $ 41,689 $ 144,144 $ 154,139
Total cash costs (000)(Non-GAAP) (2) $ 46,287 $ 47,294 $ 177,045 $ 179,308
Total production costs (000)(Non-GAAP) (2) $ 67,432 $ 68,568 $ 259,619 $ 261,112
Total operating costs per ounce
(Non-GAAP) (3) $ 241 $ 292 $ 240 $ 278
Total cash costs per ounce (Non-GAAP) (3) $ 300 $ 331 $ 295 $ 324
Total production costs per ounce
(Non-GAAP) (3) $ 437 $ 480 $ 432 $ 472
Total operating costs per ton milled
(Non-GAAP) (3) $ 107 $ 123 $ 107 $ 120
Total cash costs per ton milled
(Non-GAAP) (3) $ 133 $ 140 $ 131 $ 139
Total production costs per ton milled
(Non-GAAP) (3) $ 194 $ 203 $ 192 $ 203
Stillwater Mine:
Ounces produced (000)
Palladium 83 72 314 293
Platinum 25 22 95 88
Total 108 94 409 381
Tons milled (000) 196 175 739 710
Mill head grade (ounce
per ton) 0.59 0.56 0.60 0.57
Sub-grade tons milled (000) (1) 15 22 62 80
Sub-grade tons mill head
grade (ounce per ton) 0.14 0.14 0.13 0.15
Total tons milled (000) (1) 211 197 801 790
Combined mill head grade
(ounce per ton) 0.56 0.51 0.56 0.53
Total mill recovery (%) 92 93 92 92
Total operating costs (000) (Non-GAAP) (2) $ 23,621 $ 27,216 $ 93,230 $ 102,931
Total cash costs (000) (Non-GAAP) (2) $ 29,376 $ 30,703 $ 114,726 $ 119,681
Total production costs (000) (Non-GAAP) (2) $ 42,263 $ 44,541 $ 163,823 $ 172,938
Total operating costs per ounce
(Non-GAAP) (3) $ 219 $ 291 $ 228 $ 270
Total cash costs per ounce (Non-GAAP) (3) $ 272 $ 328 $ 280 $ 314
Total production costs per ounce
(Non-GAAP) (3) $ 392 $ 476 $ 400 $ 454
Total operating costs per ton milled
(Non-GAAP) (3) $ 112 $ 138 $ 116 $ 130
Total cash costs per ton milled
(Non-GAAP) (3) $ 139 $ 156 $ 143 $ 151
Total production costs per ton milled
(Non-GAAP) (3) $ 201 $ 226 $ 205 $ 219
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATING AND COST DATA
FOR MINE PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced (000)
Palladium 36 38 149 135
Platinum 10 11 43 38
Total 46 49 192 173
Tons milled (000) 137 141 550 496
Mill head grade
(ounce per ton) 0.39 0.40 0.39 0.40
Sub-grade tons milled (000) (1) -- -- -- --
Sub-grade tons mill
head grade (ounce per ton) -- -- -- --
Total tons milled (000) (1) 137 141 550 496
Combined mill head grade (ounce per ton) 0.39 0.40 0.39 0.40
Total mill recovery (%) 89 89 89 89
Total operating costs (000) (Non-GAAP) (2) $ 13,532 $ 14,473 $ 50,914 $ 51,208
Total cash costs (000) (Non-GAAP) (2) $ 16,911 $ 16,591 $ 62,319 $ 59,627
Total production costs (000) (Non-GAAP) (2) $ 25,169 $ 24,028 $ 95,796 $ 88,120
Total operating costs per ounce (Non-GAAP)(3) $ 290 $ 294 $ 266 $ 297
Total cash costs per ounce(Non-GAAP)(3) $ 363 $ 337 $ 326 $ 346
Total production costs per ounce(Non-GAAP(3) $ 540 $ 488 $ 501 $ 511
Total operating costs per ton milled
(Non-GAAP) (3) $ 99 $ 103 $ 93 $ 103
Total cash costs per ton milled (Non-GAAP)(3) $ 124 $ 118 $ 113 $ 120
Total production costs per ton milled
(Non-GAAP)(3) $ 184 $ 171 $ 174 $ 178
(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
Three months ended Twelve months ended
December 31, December 31,
(Unaudited) ---------------------------- ----------------------------
(in thousands, where noted) 2006 2005 2006 2005
- --------------------------------------------- ------------ ------------ ------------ ------------
SALES AND PRICE DATA
Ounces sold (000)
Mine production:
Palladium (oz.) 127 100 466 431
Platinum (oz.) 38 31 138 135
Total 165 131 604 566
Other PGM activities: (6)
Palladium (oz.) 40 130 196 502
Platinum (oz.) 40 20 130 81
Rhodium (oz.) 7 9 28 38
Total 87 159 354 621
By-products from
mining: (7)
Rhodium (oz.) 1 1 4 3
Gold (oz.) 3 3 11 11
Silver (oz.) 2 2 6 6
Copper (lb.) 44 173 892 911
Nickel (lb.) 370 297 1,585 1,307
Average realized price
per ounce (5)
Mine production:
Palladium ($/oz.) $ 370 $ 361 $ 370 $ 356
Platinum ($/oz.) $ 933 $ 811 $ 868 $ 821
Combined (5) $ 499 $ 468 $ 484 $ 467
Other PGM activities:(6)
Palladium $ 324 $ 234 $ 306 $ 199
Platinum $ 1,158 $ 910 $ 1,122 $ 876
Rhodium $ 4,738 $ 2,637 $ 4,111 $ 1,861
By-products from
mining:(7)
Rhodium ($/oz.) $ 4,953 $ 3,015 $ 4,516 $ 2,155
Gold ($/oz.) $ 621 $ 493 $ 603 $ 444
Silver ($/oz.) $ 13 $ 8 $ 12 $ 7
Copper ($/lb.) $ 2.48 $ 1.88 $ 2.91 $ 1.55
Nickel ($/lb.) $ 14.71 $ 2.16 $ 10.04 $ 5.96
Average market price
per ounce (5)
Palladium $ 321 $ 239 $ 320 $ 201
Platinum $ 1,130 $ 957 $ 1,143 $ 897
Combined (5) $ 506 $ 409 $ 508 $ 366
(1) Sub-grade tons milled includes reef waste material only. Total tons milled
includes ore tons and sub-grade tons only. Amounts for 2002 have been
adjusted to conform to current year presentation.
(2) Total cash costs include period costs of mining, processing and
administration at the mine site (including mine site overhead and credits
for metals produced other than palladium and platinum from mine
production). Norilsk Nickel transaction expenses and interest income and
expense are not included in total cash costs.
(3) Total cash cost per ton, represents a non-U.S. Generally Accepted
Accounting Principles (GAAP) measurement that management uses to monitor
and evaluate the efficiency of its mining operations. See table
"Reconciliation of Non-GAAP measures to costs of revenues" and accompanying
discussion.
(4) The Company's average realized price represents revenues, which include the
effect of contract floor and ceiling prices, hedging gains and losses
realized on commodity instruments and contract discounts, divided by ounces
sold. The average market price represents the average London PM Fix for the
actual months of the period.
(5) The Company reports a combined average realized and market price of
palladium and platinum at the same ratio as ounces that are produced from
the refinery.
(6) Ounces sold and average realized price per ounce from other PGM activities
primarily relate to ounces produced from processing of catalyst materials
and palladium received in the Norilsk Nickel transaction.
(7) By-product metals sold reflect contained metal. Realized prices reflect net
values (discounted due to product form and transportation and marketing
charges) per unit received.
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 from 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 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 on a consolidated basis, this
measure is equal to consolidated 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 costs of revenues that are directly associated with each of these
activities and then allocates the remaining facility costs included in
consolidated costs 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 consolidated
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 consolidated) adjusted to exclude gains or losses on asset
dispositions, costs and profit from secondary recycling, and changes in product
inventories. This non-GAAP measure provides an indication of the total costs
incurred in association with production and processing in a period, before
taking into account the timing differences resulting from inventory changes and
before any effect of asset dispositions or secondary recycling activities. The
Company uses it as a comparative measure of the level of total production and
processing activities in a period, and may be compared to prior periods or
between the Company's mines. As noted above, because this measure does not take
into account the inventory timing differences that are included in costs of
revenues, it cannot be used to develop meaningful measures of earnings or
profitability.
When divided by the total tons milled in the respective period, Total
Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or
consolidated -- 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. And 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 consolidated -- 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 (for each
mine or consolidated) as total costs of revenues adjusted to exclude gains or
losses on asset dispositions, costs and profit from recycling activities,
depreciation and amortization and asset retirement costs and changes in product
inventories. The Company uses this measure as a comparative indication of the
cash costs related to production and processing in any period. As noted above,
because this measure does not take into account the inventory timing differences
that are included in costs of revenues, it cannot be used to develop meaningful
measures of earnings or profitability.
When divided by the total tons milled in the respective period, Total Cash
Cost per Ton Milled (Non-GAAP) -- measured for each mine or consolidated --
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. And 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 consolidated- - 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 consolidated 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. As noted above, because this
measure does not take into account the inventory timing differences that are
included in costs of revenues, it cannot be used to develop meaningful measures
of earnings or profitability.
When divided by the total tons milled in the respective period, Total
Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or
consolidated -- 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. And 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 consolidated -- 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.
Stillwater Mining Company
Reconciliation of Non-GAAP Measures to Costs of Revenues
Three months ended Twelve months ended
(Unaudited) December 31, December 31,
(in thousands, except per ounce and per ---------------------------- ----------------------------
ton costs) 2006 2005 2006 2005
- --------------------------------------------- ------------ ------------ ------------ ------------
Consolidated:
Reconciliation to consolidated
costs of revenues:
Total operating costs
(Non-GAAP) $ 37,153 $ 41,689 $ 144,144 $ 154,139
Royalties, taxes and other 9,134 5,605 32,901 25,169
Total cash costs (Non-GAAP) $ 46,287 $ 47,294 $ 177,045 $ 179,308
Asset retirement costs 168 154 650 535
Depreciation and amortization 22,342 19,516 83,583 79,032
Depreciation and
amortization (in inventory) (1,365) 1,604 (1,659) 2,182
Total production costs
(Non-GAAP) $ 67,432 $ 68,568 $ 259,619 $ 261,057
Change in product inventories 5,679 35,986 41,642 141,512
Costs of recycling activities 85,152 23,648 250,444 85,522
Recycling activities - depreciation 25 14 100 55
Add: Profit from recycling activities 7,969 1,453 25,389 6,339
Loss or (gain) on sale of assets 115 21 279 112
Total consolidated costs of revenues $ 166,372 $ 129,690 $ 577,473 $ 494,597
Stillwater Mine:
Reconciliation to costs of revenues:
Total operating costs
(Non-GAAP) $ 23,621 $ 27,216 $ 93,230 $ 102,931
Royalties, taxes and other 5,755 3,487 21,496 16,750
Total cash costs (Non-GAAP) $ 29,376 $ 30,703 $ 114,726 $ 119,681
Asset retirement costs 121 112 470 370
Depreciation and amortization 13,599 12,426 49,620 52,295
Depreciation and
amortization (in inventory) (833) 1,300 (993) 592
Total production costs
(Non-GAAP) $ 42,263 $ 44,541 $ 163,823 $ 172,938
Change in product
inventories (2,742) (3,981) 1,882 6,773
Add: Profit from recycling activities 5,571 954 17,612 4,344
Loss or (gain) on sale of assets 7 21 187 81
Total costs of revenues $ 45,099 $ 41,535 $ 183,504 $ 184,136
East Boulder Mine:
Reconciliation to costs of revenues:
Total operating costs
(Non-GAAP) $ 13,532 $ 14,473 $ 50,914 $ 51,208
Royalties, taxes and other 3,379 2,118 11,405 8,419
Total cash costs (Non-GAAP) $ 16,911 $ 16,591 $ 62,319 $ 59,627
Asset retirement costs 47 43 180 165
Depreciation and
amortization 8,744 7,090 33,963 26,737
Depreciation and
amortization (in inventory) (532) 304 (666) 1,591
Total production costs
(Non-GAAP) $ 25,170 $ 24,028 $ 95,796 $ 88,120
Change in product inventories (1,846) (1,735) (439) (4,967)
Add: Profit from recycling activities 2,398 498 7,777 1,995
Loss or (gain) on sale of assets 92 -- 40 --
Total costs of revenues $ 25,814 $ 22,791 $ 103,174 $ 85,148
Other PGM activities: (1)
Reconciliation to costs of
revenues:
Change in product
inventories $ 10,267 $ 41,702 $ 40,199 $ 139,705
Recycling activities
- depreciation 25 14 100 55
Costs of recycling activities 85,152 23,648 250,444 85,522
Loss or (gain) on sale
of assets 16 -- 52 31
Total costs of revenues $ 95,460 $ 65,364 $ 290,795 $ 225,313
(1) The East Boulder Mine commenced commercial production activities at the
beginning of 2002.
(2) Other PGM activities include recycling and sales of palladium received in
the Norilsk Nickel transaction and other.
SOURCE Stillwater Mining Company
-0- 02/23/2007
/CONTACT: Dawn McCurtain of Stillwater Mining Company, +1-406-373-8787/
/Web site: http://www.stillwatermining.com /
(SWC)