BILLINGS, MT -- (Marketwire) -- 08/11/08 -- STILLWATER MINING COMPANY (NYSE: SWC) today
reported second quarter 2008 net income of $17.2 million, or $0.18 per
fully diluted share, on revenues of $218.8 million. This compares to a
second quarter 2007 loss of $2.5 million, or $0.03 per fully diluted share,
on revenues of $161.0 million.
Net income for the first six months of 2008 was $20.4 million, or $0.22 per
fully diluted share. This compares to the first six months of 2007, when
the Company reported a net loss of $3.6 million, or $0.04 per share. The
stronger 2008 results were mostly driven by significantly higher realized
prices for platinum group metals (PGMs), the Company's primary products.
Stillwater Mining Company mines palladium and platinum from two underground
mines located in the Beartooth Mountains of south-central Montana. The
Company's mines produced about 126,200 ounces of platinum and palladium
during the second quarter of 2008, a little below the 133,100 ounces
produced in the second quarter last year. Production at the Company's
Stillwater Mine increased slightly to 88,100 ounces, compared to 84,500
ounces in second quarter 2007, while East Boulder Mine production dropped
sharply to 38,100 ounces from 48,600 ounces in last year's second quarter.
The lower East Boulder production was largely attributable to a shortage of
manpower and appropriate skill sets associated with the challenges of
changing to more selective mining methods. The financial effect of the
lower second quarter 2008 production was more than offset by higher sales
realizations on the mined ounces -- the combined average realized price on
platinum and palladium sales was $740 per ounce in this year's second
quarter, up from $506 in the same period last year.
The Company's smelting and refining facilities in Columbus, Montana process
mined concentrates and recycle catalyst materials received from third
parties. The Company processed recycle material containing a total of
115,000 PGM ounces through the smelter and refinery during the second
quarter 2008, up 23.5% from the 93,100 ounces recycled during the same
period last year. Recycling activities contributed about $6.7 million to
the Company's operating margin (before corporate overhead and financing
charges) during the second quarter of 2008, compared to about $6.0 million
in the second quarter of 2007. The improved performance is primarily
attributable to higher realized prices for PGMs, partially offset by delays
inherent in the timing of the inventory flows.
Commenting on the Company's second quarter 2008 performance, Francis R.
McAllister, Stillwater Chairman and CEO, said; "Obviously, we are very
pleased with the Company's strong earnings thus far in 2008, and
particularly in the second quarter. Our reported earnings of $17.2 million
for the quarter were the highest since the second quarter of 2001, when the
palladium price was near a record-high level. As was the case in 2001, this
quarter's performance was driven almost entirely by very robust PGM prices,
which to a degree masked some ongoing operational challenges. We are
continuing to work on those challenges, however, and believe we are
gradually making progress.
"As was announced at the time, the membership of USW Local 11-0001, which
represents union employees at the East Boulder Mine, ratified a new
four-year labor agreement on July 8, 2008, without experiencing any labor
interruption. The new agreement provides for 4% annual wage increases for
the represented workforce and modifies some provisions of the bonus
structure at the mine.
"At June 30, 2008, the last of our outstanding forward sales commitments
covering a substantial portion of our mined platinum production finally
settled out. The Company entered into these forward sales commitments
several years ago in order to protect the Company against a decline in
platinum prices while we were spending heavily to re-establish the
developed state of the mines. As the price of platinum continued to rise,
though, they have cost us substantially over the past couple of years.
Losses on these forward hedging transactions reduced our sales revenues by
$5.8 million in the second quarter and $12.8 million in the first half of
2008. At present, we have no plans for any further hedging of our mine
production."
McAllister continued: "Mine production in this year's second quarter, at
126,200 ounces, was a little below last year's second quarter production.
With production in two successive quarters lower than planned, we now have
been forced to revisit our production guidance for the year. Previously we
provided 2008 production guidance in the range of 550,000 to 565,000
ounces. However, East Boulder Mine is continuing to struggle for ore
tonnage in the face of significant manpower constraints and some continuing
transitional issues related to the mining methods used there. Stillwater
Mine had a reasonably good second quarter, but has been challenged recently
with a mix of lower-grade stopes, some logistical problems underground,
and, like East Boulder, difficulty in adding miners with appropriate skill
sets. We are addressing these challenges aggressively, but we believe they
will take some time to work through. Consequently we now believe production
for full-year 2008 will be in a range between 515,000 and 525,000 ounces.
"The Company's total cash costs per PGM ounce produced(1) averaged $394 in
the second quarter of 2008, quite a bit higher than the $320 per ounce in
last year's second quarter. More than half of this increase was
attributable to higher operating costs -- particularly for power and
contractor services -- and the remainder to lower mine production in the
second quarter of 2008 compared to last year's second quarter. Our initial
guidance for 2008 full-year total cash costs was between $355 and $375 per
ounce. In view of our reduced production forecast for 2008, along with
record high energy prices, we have revised our earlier guidance for 2008
total cash costs. We now believe total cash costs for 2008 will fall in
the range of $380 to $395 per ounce."
Regarding the Company's mine transformation efforts, McAllister reported,
"Operationally, progress continues on our mine transformation efforts.
Safety and environmental performance continued strong during the quarter;
we have implemented recommendations from a third-party safety audit
conducted during the first quarter that are intended to help drive our
incident rates toward zero. Construction is now under way on the second
smelter furnace in Columbus; it should be fully operational by the end of
2008 or early in 2009. As noted last quarter, we believe this furnace, once
in operation, will increase our processing capacity and provide a
strategically critical back-up facility during scheduled or unscheduled
furnace outages. Total production from selective mining methods at the
Stillwater Mine was at 86% of the new mill feed while East Boulder averaged
only 56%. At this time we do not expect any significant change in these
levels due to the tight labor markets we are currently seeing in the mining
industry. Along with these tight markets for seasoned miners we are
renewing our focus on how we can improve and accelerate our existing miner
training efforts."
Regarding the Company's other strategic initiatives, Mr. McAllister
commented, "Another of Stillwater's corporate objectives is to foster new
market demand for its primary products. The Company channels most of its
market development efforts for palladium through the Palladium Alliance
International, or 'PAI,' which it established in early 2006 as an industry
trade organization to promote palladium use, particularly in jewelry. The
Alliance's objectives include establishing palladium's jewelry market
presence as a specific elegant brand of precious metal, distinct from
platinum and white gold, and instituting a system of standards for use of
the palladium brand that will emphasize palladium's rarity and value. The
Alliance sponsors technical articles in jewelry trade publications
illustrating methods of fabricating palladium jewelry, maintains a website
with information on palladium suppliers and retailers
(www.luxurypalladium.com), organizes informational presentations at
industry trade shows and provides image advertising in critical jewelry
markets. During the first quarter of 2008, the PAI announced a commitment
to work jointly with the other members of the International Platinum Group
Metals Association to fund and direct a worldwide palladium marketing
effort.
"We also are working toward diversifying the Company's asset base. This is
a multi-faceted effort. We are continuing to grow the Company's recycling
operations, reducing our financial dependence solely on performance of the
Company's mines in each period. Adding the second smelter furnace is
intended to support this objective by accommodating the expansion of both
mining production and recycling volumes over the next several years, as
well as potentially creating opportunities to improve metal recoveries.
Also, as we announced previously, the Company has invested in two small
exploration companies that target PGMs and other precious metals. The
first of these, Pacific North West Capital Corp., is a Canadian exploration
company with a portfolio of several prospective PGM opportunities; the
Company currently is participating financially in an exploration effort at
Good News Bay in Alaska led by this company. The other company is Benton
Resource Corp., another Canadian exploration company with an attractive
resource position in the Goodchild project, a nickel-PGM target north of
Marathon, Ontario, Canada, as well as several other interesting holdings.
"As I have commented before, these investments in generative exploration
projects are inherently long-term and fairly speculative in nature, but are
intended to give us access to seasoned exploration teams and build a
portfolio of attractive opportunities for the future. We also actively
track various later-stage mineral development projects and operating
properties to identify those that might offer good investment value and
mesh with Stillwater's corporate expertise. We are proceeding deliberately
in these growth and diversification efforts."
"In summary," McAllister concluded, "although the 2008 financial results to
date are very gratifying, we still have a lot on our plate and remain
focused on adding value to Stillwater over the longer term."
Cash Flow and Liquidity
At June 30, 2008, the Company's available cash and cash equivalents
(excluding $26.6 million of restricted cash) totaled $100.8 million, down
$25.7 million from the beginning of the quarter but up $39.4 million from
December 31, 2007. If we include the Company's available-for-sale
investments the Company's total available cash and investments at June 30,
2008 was $102.8 million, down about $38.1 million from $140.9 million at
the end of this year's first quarter. The drop in cash and investments
during the second quarter is more than accounted for by increased
investment in working capital during the quarter associated with the
Company's recycling business. Working capital constituting marketable
inventories and related advances in the Company's growing PGM recycling
business increased to $172.8 million at the end of the second quarter of
2008 from $93.7 million at the end of the first quarter. Including these
highly liquid inventories, the Company's underlying liquidity was $275.6
million, as compared to $234.6 million at the end of the first quarter 2008
and $193.0 million at the end of the 2007.
Net cash used in operating activities (which includes changes in working
capital) totaled $17.4 million in this year's second quarter, reflecting
the nearly $79.0 million of cash absorbed into recycling working capital
during the quarter. By comparison, $0.1 million of cash was provided by
operations in the second quarter of 2007. Capital expenditures were $20.8
million in the second quarter of 2008 and $41.6 million year to date.
Capital spending in the second quarter of 2007 totaled $18.8 million and
$40.4 million through the first six months of 2007. The Company has revised
downward its earlier full-year 2008 capital expenditure guidance of $110
million; it now appears that capital spending for the year is likely to be
about $100 million with the difference mostly being deferred into 2009.
Outstanding debt at June 30, 2008, was $211.1 million. The Company's total
debt includes $181.5 million outstanding in the form of debentures due in
2028, $29.4 million of Exempt Facility Revenue Bonds due in 2020 and $0.2
million of Special Industrial Education Impact Revenue Bonds due in 2009.
Second Quarter Results -- Details
For the second quarter of 2008, the Company's mine production was 126,200
PGM ounces including about 88,000 ounces from the Stillwater Mine and about
38,000 ounces from East Boulder Mine. For the comparable quarter of 2007,
the mines produced 133,100 ounces including nearly 84,500 ounces at the
Stillwater Mine and 48,600 ounces at East Boulder. The East Boulder
decrease was primarily caused by a shortage of miners at East Boulder with
the skills necessary for the transition to more selective mining methods.
Sales out of mine production totaled 140,300 ounces in the second quarter
of 2008 at an overall average realization of $740 per ounce, down from
148,100 ounces at $506 per ounce in the second quarter of 2007. The
increase in mine production revenues reflects higher average realized
prices in 2008, which more than offset the effect of lower sales volumes.
The Company's average realization on palladium sales from mine production
was $448 per ounce in the 2008 second quarter, compared to $386 per ounce
for the same period in 2007. The Company's average net realization on
platinum (after losses on forward sales and the effect of contractual
ceiling prices) was $1,687 per ounce in the second quarter of 2008 and $949
per ounce in the 2007 second quarter. Putting this in perspective, the
London Metals Exchange afternoon posted prices per ounce for palladium and
platinum were $468 and $2,062, respectively, on June 30, 2008, and $365 and
$1,273, respectively, on June 30, 2007.
During the second quarter of 2008, the Company processed about 115,000
ounces of PGMs from recycled catalytic materials. By comparison, in the
second quarter of 2007 the Company processed about 93,000 ounces of
recycled material. The Company processes material purchased from third
parties and toll material that is processed on behalf of others for a fee.
The Company delivered for sale a total of 59,300 ounces of platinum,
palladium and rhodium from recycled inventories during the second quarter
2008 at an overall average price of about $1,813 per ounce; for the second
quarter of 2007, the Company sold about 63,500 recycled ounces at an
average realization of $1,316 per ounce.
Revenues for the second quarter of 2008 were $218.8 million, up 35.9% from
$161.0 million received in the second quarter of 2007. Proceeds from sales
of mined PGMs totaled $103.7 million in the 2008 second quarter, up from
$74.9 million in the same quarter of 2007, reflecting the benefit of higher
average sales realizations in 2008. Recycling revenues increased to $108.2
million from $83.9 million in last year's second quarter. Resales of
purchased metal generated $6.9 million and $2.2 million in revenue during
the 2008 and 2007 second quarters, respectively.
Costs of metals sold (before depreciation and amortization expense)
increased to $170.3 million in the 2008 second quarter from $134.8 million
in the second quarter of 2007. Mining costs included in costs of metals
sold increased to $61.9 million in the 2008 second quarter from $54.7
million in the 2007 second quarter. Recycling costs, which primarily
reflect the cost of acquiring spent catalytic materials for processing,
totaled $101.5 million in the second quarter of 2008, up sharply from $77.9
million in the second quarter of 2007. Most of the increased cost is
attributable to the higher value of the contained metals in the material
purchased for recycling. Second quarter costs also included the purchase
for resale of 15,200 ounces of palladium at a cost of $6.9 million in 2008,
and 6,000 palladium ounces at a cost of $2.2 million in 2007.
Depreciation and amortization expense increased slightly to $21.8 million
in the 2008 second quarter from $21.7 million in the same period of 2007.
The increase is mostly attributable to slightly higher amortization rates
in 2008.
General and administrative ("G&A") costs, including marketing and
exploration expenses, increased to $10.4 million in the second quarter of
2008 from $7.4 million in the same period of 2007. The timing of annual
marketing expenditures accounted for most of this increase.
Reported net income of $17.2 million for the second quarter of 2008
included, by business segment, net income of $19.9 million from mining
operations and $8.7 million from recycling activities, less corporate costs
including $10.4 million of G&A expense and $0.8 million of unallocated net
interest expense.
For the second quarter of 2007, the reported net loss of $2.5 million
included a loss from mining operations of $1.4 million, and income from
recycling activities of $7.8 million. These earnings items were offset by
$7.4 million of G&A expense and $1.5 million pertaining to unallocated
interest expense.
First Six Months' Results -- Details
In the first half of 2008, the Company's mining operations produced 255,200
PGM ounces including 173,400 ounces from the Stillwater Mine and 81,800
ounces from East Boulder Mine.
For the comparable period in 2007, total mine production of 277,200 ounces
included Stillwater Mine production of 182,500 ounces and East Boulder
production of 94,700 ounces. The decrease in East Boulder Mine production
was a result of staffing shortages and transitional issues associated with
adopting new mining methods in the mine.
Sales of palladium and platinum from mine production totaled 270,200 ounces
in the first six months of 2008 at an overall average realization of $685
per ounce, down from 291,100 ounces at $506 per ounce in the same period of
2007. The Company's average realization on palladium sales from mine
production was $431 per ounce in the 2008 first half, compared to $382 per
ounce for the same period in 2007. The comparable average realization on
platinum, net of losses on forward sales and contractual ceiling prices on
14% of mine production, was $1,547 per ounce for the first six months of
2008 and $931 per ounce in the 2007 first half.
During the first half of 2008, the Company processed about 193,000 ounces
of PGMs from recycled catalytic materials, including both purchased
catalyst and toll material processed on behalf of others for a fee. By
comparison, in the first six months of 2007 the Company processed about
180,000 ounces of recycled material. Of the purchased catalyst processed,
the Company sold a total of 120,200 ounces of platinum, palladium and
rhodium during the second quarter 2008 at an overall average price of about
$1,605 per ounce; for the second quarter of 2007, the Company sold about
121,800 recycled ounces at an average realization of $1,257 per ounce.
Revenues for the first six months of 2008 totaled $391.9 million, up 27.5%
from $307.4 million in the first six months of 2007. Proceeds from sales of
mined PGMs totaled $185.0 million in the 2008 first half, up from $147.3
million in the same period of 2007, mostly the result of higher average
sales realizations in 2008. Recycling revenues grew to $194.6 million from
$153.9 million in last year's first half. The increase in mine production
revenues reflects higher average realized prices in 2008, which more than
offset the effect of lower sales volumes. Resales of purchased metal
generated $12.2 million and $6.2 million in revenue during the 2008 and
2007 periods, respectively.
Costs of metals sold (before depreciation and amortization expense)
increased to $310.3 million in the 2008 first six months from $253.3
million in the first half of 2007. Mining costs included in costs of metals
sold increased to $114.6 million in the 2008 first half from $103.0 million
in the 2007 period. Recycling costs, largely comprised of the cost to
purchase spent catalytic materials for processing, totaled $183.6 million
in the first half of 2008, up from $144.0 million in the first six months
of 2007. Most of the increase is attributable to the higher cost per ton
to acquire recycling material as the value of the contained metals has
increased. The 2008 first half costs also included $12.2 million for
27,400 ounces of palladium for resale; first half 2007 costs included about
$6.2 million for the purchase of 18,000 ounces of palladium for resale.
Depreciation and amortization expense was nearly flat at $42.5 million in
the 2008 first half compared to $42.1 million in the same period of 2007.
The slight increase is attributable to higher amortization rates in 2008,
partially offset by lower sales volumes in 2008.
General and administrative costs (G&A), including marketing and exploration
expenses, totaled $18.1 million for the first six months of 2008 and $16.2
million in the 2007 first half. The increase resulted from increased
professional fees and compensation costs, including amortization of
deferred stock awards granted during the first six months of 2008. The
Company has continued its marketing program in 2008, spending $3.7 million
for marketing purposes in the first six months of 2008 compared to $3.2
million for the comparable period in 2007.
The Company's reported net income of $20.4 million for the first six months
of 2008 included, by business segment, $27.9 million of income from mining
operations and $14.6 million of income from recycling activities, less
corporate costs including $18.1 million of G&A expense and $3.9 million of
unallocated net interest expense.
For the first half of 2007, the reported net loss of $3.6 million included
earnings from mining operations of $2.4 million, income from recycling
activities of $13.2 million. These earnings items were more than offset by
$16.2 million of G&A expense and $3.0 million of unallocated interest
expense.
Stillwater Mining Company will host its 2008 second quarter results
conference call at 12:00 noon Eastern Daylight Time on Tuesday, August 12,
2008. The conference call dial-in numbers are 800-762-6568 (U.S.) and
480-248-5088 (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 956361,
through August 19, 2008, 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 2007 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 Companys 2007 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.
Financial Statements and Key Factors Tables follow.
Stillwater Mining Company
Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues
Mine production $ 103,743 $ 74,893 $ 185,032 $ 147,264
PGM recycling 108,214 83,914 194,630 153,902
Other 6,874 2,156 12,215 6,247
--------- --------- --------- ---------
Total revenues 218,831 160,963 391,877 307,413
Costs and expenses
Costs of metals sold
Mine production 61,915 54,718 114,554 103,029
PGM recycling 101,491 77,871 183,574 144,046
Other 6,882 2,184 12,185 6,205
--------- --------- --------- ---------
Total costs of metals
sold 170,288 134,773 310,313 253,280
Depreciation and amortization
Mine production 21,747 21,628 42,394 42,020
PGM recycling 48 28 96 52
--------- --------- --------- ---------
Total depreciation and
amortization 21,795 21,656 42,490 42,072
--------- --------- --------- ---------
Total costs of revenues 192,083 156,429 352,803 295,352
Exploration 500 1 500 62
Marketing 2,404 1,112 3,735 3,213
General and administrative 7,483 6,289 13,825 12,963
(Gain)/loss on disposal of
property, plant and
equipment 154 (95) 152 (210)
--------- --------- --------- ---------
Total costs and
expenses 202,624 163,736 371,015 311,380
Operating income (loss) 16,207 (2,773) 20,862 (3,967)
Other income (expense)
Other 92 (16) 145 (18)
Interest income 2,924 3,023 6,011 5,986
Interest expense (1,728) (2,750) (6,258) (5,576)
--------- --------- --------- ---------
Income (loss) before income tax
provision 17,495 (2,516) 20,760 (3,575)
Income tax provision (322) - (375) -
--------- --------- --------- ---------
Net income (loss) $ 17,173 $ (2,516) $ 20,385 $ (3,575)
--------- --------- --------- ---------
Other comprehensive income, net
of tax 5,904 5,446 5,992 271
--------- --------- --------- ---------
Comprehensive income (loss) $ 23,077 $ 2,930 $ 26,377 $ (3,304)
========= ========= ========= =========
Weighted average common shares
outstanding
Basic 92,926 91,927 92,740 91,759
Diluted 100,952 91,927 93,166 91,759
Basic earnings (loss) per share
--------- --------- --------- ---------
Net income (loss) $ 0.18 $ (0.03) $ 0.22 $ (0.04)
========= ========= ========= =========
Diluted earnings (loss) per
share
--------- --------- --------- ---------
Net income (loss) $ 0.18 $ (0.03) $ 0.22 $ (0.04)
========= ========= ========= =========
See accompanying notes to the financial statements
Stillwater Mining Company
Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
June 30, December 31,
2008 2007
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 100,761 $ 61,436
Restricted cash 26,580 5,885
Investments, at fair market value 1,990 27,603
Inventories 182,763 118,663
Advances on inventory purchases 53,798 28,396
Trades receivables 15,397 12,144
Deferred income taxes 7,474 4,597
Other current assets 7,216 6,092
------------ ------------
Total current assets $ 395,979 $ 264,816
============ ============
Property, plant and equipment (net of
$339,883 and $301,212 accumulated
depreciation and amortization) 465,777 465,054
Long-term investments 3,903 3,556
Other noncurrent assets 10,858 8,981
------------ ------------
Total assets $ 876,517 $ 742,407
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 23,959 $ 17,937
Accrued payroll and benefits 24,032 20,944
Property, production and franchise taxes
payable 11,544 10,528
Current portion of long-term debt 195 1,209
Fair value of derivative instruments - 6,424
Unearned income 847 788
Other current liabilities 20,669 11,144
------------ ------------
Total current liabilities 81,246 68,974
Long-term debt 210,933 126,841
Deferred income taxes 7,474 4,597
Accrued workers compensation 9,166 9,982
Asset retirement obligation 10,939 10,506
Other noncurrent liabilities 4,663 4,103
------------ ------------
Total liabilities $ 324,421 $ 225,003
------------ ------------
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; 93,032,522 and
92,405,111 shares issued and outstanding 930 924
Paid-in capital 634,934 626,625
Accumulated deficit (83,735) (104,120)
Accumulated other comprehensive loss (33) (6,025)
------------ ------------
Total stockholders' equity 552,096 517,404
------------ ------------
Total liabilities and stockholders'
equity $ 876,517 $ 742,407
============ ============
See accompanying notes to the financial statements
Stillwater Mining Company
Statements of Cash Flows
(Unaudited)
(in thousands)
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Cash flows from operating
activities
Net income (loss) $ 17,173 $ (2,516) $ 20,385 $ (3,575)
Adjustments to reconcile net
income (loss) to net cash
(used in) provided by
operating activities:
Depreciation and amortization 21,795 21,656 42,490 42,072
Lower of cost or market
inventory adjustment - 1,430 - 1,430
(Gain)/loss on disposal of
property, plant and
equipment 154 (95) 152 (210)
Asset retirement obligation 219 182 433 360
Stock issued under employee
benefit plans 1,538 1,484 2,941 2,930
Amortization of debt issuance
costs 263 206 2,686 410
Share based compensation 1,355 1,345 2,381 2,513
Changes in operating assets and
liabilities:
Inventories (61,846) (15,688) (66,218) (20,658)
Advances on inventory
purchases (14,908) (7,014) (25,402) (6,301)
Trade receivables 1,397 (1,615) (3,253) 3,754
Employee compensation and
benefits 1,467 631 3,091 327
Accounts payable 7,604 (1,096) 6,022 (9,633)
Property, production and
franchise taxes payable 353 136 1,576 546
Workers compensation (342) (199) (816) 554
Unearned income 105 4,081 59 2,159
Restricted cash - (600) - (600)
Other 6,239 (2,214) 9,103 (803)
--------- --------- --------- ---------
Net cash (used in) provided by
operating activities (17,434) 114 (4,370) 15,275
--------- --------- --------- ---------
Cash flows from investing
activities
Capital expenditures (20,778) (18,812) (41,603) (40,408)
Purchases of long-term
investments - (668) (347) (668)
Proceeds from disposal of
property, plant and
equipment 197 126 215 328
Purchases of investments (1,887) (25,148) (11,392) (48,140)
Proceeds from maturities of
investments 14,350 27,181 36,521 44,178
--------- --------- --------- ---------
Net cash used in investing
activities (8,118) (17,321) (16,606) (44,710)
--------- --------- --------- ---------
Cash flows from financing
activities
Payments on long-term debt
and capital lease
obligations (86) (1,081) (98,422) (1,964)
Payments for debt issuance
costs (77) - (5,072) -
Proceeds from issuance of
convertible debentures - - 181,500 -
Restricted cash - - (20,695) -
Issuance of common stock 23 219 2,990 239
--------- --------- --------- ---------
Net cash (used in) provided by
financing activities (140) (862) 60,301 (1,725)
--------- --------- --------- ---------
Cash and cash equivalents
Net (decrease) increase (25,692) (18,069) 39,325 (31,160)
Balance at beginning of
period 126,453 75,269 61,436 88,360
--------- --------- --------- ---------
Balance at end of period $ 100,761 $ 57,200 $ 100,761 $ 57,200
========= ========= ========= =========
See accompanying notes to the financial statements
Stillwater Mining Company
Key Factors
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
OPERATING AND COST DATA FOR MINE
PRODUCTION
Consolidated:
Ounces produced (000)
Palladium 97 102 197 213
Platinum 29 31 58 64
--------- --------- --------- ---------
Total 126 133 255 277
========= ========= ========= =========
Tons milled (000) 257 309 523 614
Mill head grade (ounce per ton) 0.51 0.48 0.51 0.49
Sub-grade tons milled (000) (1) 46 16 84 37
Sub-grade tons mill head grade
(ounce per ton) 0.17 0.12 0.16 0.12
Total tons milled (000) (1) 303 325 607 651
Combined mill head grade (ounce per
ton) 0.46 0.46 0.47 0.47
Total mill recovery (%) 91 90 91 91
Total operating costs per ounce
(Non-GAAP) (2) $ 300 $ 260 $ 307 $ 252
Total cash costs per ounce
(Non-GAAP) (2) $ 394 $ 320 $ 390 $ 314
Total production costs per ounce
(Non-GAAP) (2) $ 557 $ 476 $ 549 $ 466
Total operating costs per ton
milled (Non-GAAP) (2) $ 125 $ 106 $ 129 $ 107
Total cash costs per ton milled
(Non-GAAP) (2) $ 164 $ 131 $ 164 $ 134
Total production costs per ton
milled (Non-GAAP) (2) $ 232 $ 195 $ 231 $ 198
Stillwater Mine:
Ounces produced (000)
Palladium 68 64 134 140
Platinum 20 20 40 43
--------- --------- --------- ---------
Total 88 84 174 183
========= ========= ========= =========
Tons milled (000) 168 158 326 336
Mill head grade (ounce per ton) 0.55 0.58 0.56 0.58
Sub-grade tons milled (000) (1) 25 16 45 37
Sub-grade tons mill head grade
(ounce per ton) 0.16 0.12 0.15 0.12
Total tons milled (000) (1) 193 174 371 373
Combined mill head grade (ounce per
ton) 0.50 0.54 0.51 0.54
Total mill recovery (%) 91 91 92 92
Total operating costs per ounce
(Non-GAAP) (2) $ 267 $ 229 $ 281 $ 228
Total cash costs per ounce
(Non-GAAP) (2) $ 357 $ 291 $ 361 $ 291
Total production costs per ounce
(Non-GAAP) (2) $ 492 $ 425 $ 494 $ 421
Total operating costs per ton
milled (Non-GAAP) (2) $ 122 $ 111 $ 132 $ 111
Total cash costs per ton milled
(Non-GAAP) (2) $ 163 $ 141 $ 169 $ 142
Total production costs per ton
milled (Non-GAAP) (2) $ 224 $ 205 $ 231 $ 206
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
OPERATING AND COST DATA FOR MINE
PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced (000)
Palladium 29 38 63 73
Platinum 9 11 18 21
--------- --------- --------- ---------
Total 38 49 81 94
========= ========= ========= =========
Tons milled (000) 89 151 197 278
Mill head grade (ounce per ton) 0.44 0.37 0.43 0.38
Sub-grade tons milled (000) (1) 21 - 40 -
Sub-grade tons mill head grade
(ounce per ton) 0.19 - 0.18 -
Total tons milled (000) (1) 110 151 237 278
Combined mill head grade (ounce per
ton) 0.39 0.37 0.39 0.38
Total mill recovery (%) 90 89 90 89
Total operating costs per ounce
(Non-GAAP) (2) $ 377 $ 313 $ 361 $ 298
Total cash costs per ounce
(Non-GAAP) (2) $ 482 $ 371 $ 450 $ 359
Total production costs per ounce
(Non-GAAP) (2) $ 709 $ 566 $ 666 $ 552
Total operating costs per ton
milled (Non-GAAP) (2) $ 131 $ 101 $ 125 $ 101
Total cash costs per ton milled
(Non-GAAP) (2) $ 167 $ 120 $ 155 $ 122
Total production costs per ton
milled (Non-GAAP) (2) $ 246 $ 183 $ 230 $ 188
Stillwater Mining Company
Key Factors (continued)
(Unaudited)
Three months ended Six months ended
(in thousands, where noted) June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
SALES AND PRICE DATA
Ounces sold (000)
Mine production:
Palladium (oz.) 107 116 209 225
Platinum (oz.) 33 32 61 66
--------- --------- --------- ---------
Total 140 148 270 291
Other PGM activities: (5)
Palladium (oz.) 41 32 79 69
Platinum (oz.) 28 31 58 59
Rhodium (oz.) 6 6 10 12
--------- --------- --------- ---------
Total 75 69 147 140
--------- --------- --------- ---------
By-products from mining: (6)
Rhodium (oz.) 1 1 2 2
Gold (oz.) 3 3 5 6
Silver (oz.) 3 2 5 4
Copper (lb.) 213 85 514 468
Nickel (lb.) 241 261 522 567
Average realized price per ounce
(3)
Mine production:
Palladium ($/oz.) $ 448 $ 386 $ 431 $ 382
Platinum ($/oz.) $ 1,687 $ 949 $ 1,547 $ 931
Combined ($/oz.) (4) $ 740 $ 506 $ 685 $ 506
Other PGM activities: (5)
Palladium ($/oz.) $ 444 $ 355 $ 426 $ 345
Platinum ($/oz.) $ 1,771 $ 1,225 $ 1,602 $ 1,189
Rhodium ($/oz.) $ 8,298 $ 5,923 $ 7,486 $ 5,497
By-products from mining: (6)
Rhodium ($/oz.) $ 9,599 $ 6,160 $ 8,919 $ 6,039
Gold ($/oz.) $ 898 $ 655 $ 919 $ 661
Silver ($/oz.) $ 17 $ 13 $ 17 $ 13
Copper ($/lb.) $ 3.67 $ 3.39 $ 3.38 $ 2.89
Nickel ($/lb.) $ 11.76 $ 22.74 $ 12.09 $ 19.98
Average market price per ounce (4)
Palladium ($/oz.) $ 444 $ 368 $ 443 $ 355
Platinum ($/oz.) $ 2,026 $ 1,289 $ 1,947 $ 1,238
Combined ($/oz.) (4) $ 816 $ 564 $ 785 $ 555
(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 and
interest income and expense are not included in total operating costs,
total cash costs or total production costs. 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. 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"
and the accompanying discussion for additional detail.
(3) The Companys 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.
(4) 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 base metal refinery.
(5) Ounces sold and average realized price per ounce from other PGM
activities relate to ounces produced from processing of catalyst
materials, ounces purchased in the open market for resale.
(6) 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.
Reconciliation of Non-GAAP Measures to Costs of Revenues
Three months ended Six months ended
June 30, June 30,
(in thousands) 2008 2007 2008 2007
--------- --------- --------- ---------
Consolidated:
Reconciliation to consolidated
costs of revenues:
Total operating costs
(Non-GAAP) $ 37,909 $ 34,597 $ 78,382 $ 69,807
Royalties, taxes and other 11,861 8,022 21,059 17,305
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 49,770 $ 42,619 $ 99,441 $ 87,112
Asset retirement costs 219 182 433 360
Depreciation and amortization 21,747 21,628 42,394 42,020
Depreciation and amortization
(in inventory) (1,392) (1,031) (2,118) (371)
--------- --------- --------- ---------
Total production costs
(Non-GAAP) $ 70,344 $ 63,398 $ 140,150 $ 129,121
Change in product inventories 11,526 7,317 14,398 8,969
Costs of recycling activities 101,491 77,871 183,574 144,046
Recycling activities -
depreciation 48 28 96 52
Add: Profit from recycling
activities 8,674 7,815 14,585 13,164
--------- --------- --------- ---------
Total consolidated costs of
revenues $ 192,083 $ 156,429 $ 352,803 $ 295,352
========= ========= ========= =========
Stillwater Mine:
Reconciliation to costs of
revenues:
Total operating costs
(Non-GAAP) $ 23,571 $ 19,383 $ 48,821 $ 41,620
Royalties, taxes and other 7,861 5,230 13,829 11,449
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 31,432 $ 24,613 $ 62,650 $ 53,069
Asset retirement costs 160 127 316 250
Depreciation and amortization 12,404 12,400 23,799 24,563
Depreciation and amortization
(in inventory) (667) (1,255) (1,134) (1,076)
--------- --------- --------- ---------
Total production costs
(Non-GAAP) $ 43,329 $ 35,885 $ 85,631 $ 76,806
Change in product inventories 3,162 3,465 4,200 3,380
Add: Profit from recycling
activities 5,960 4,944 9,853 8,573
--------- --------- --------- ---------
Total costs of revenues $ 52,451 $ 44,294 $ 99,684 $ 88,759
========= ========= ========= =========
East Boulder Mine:
Reconciliation to costs of
revenues:
Total operating costs
(Non-GAAP) $ 14,338 $ 15,214 $ 29,561 $ 28,187
Royalties, taxes and other 4,000 2,792 7,230 5,856
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 18,338 $ 18,006 $ 36,791 $ 34,043
Asset retirement costs 59 55 117 109
Depreciation and amortization 9,343 9,228 18,595 17,457
Depreciation and amortization
(in inventory) (725) 225 (984) 706
--------- --------- --------- ---------
Total production costs
(Non-GAAP) $ 27,015 $ 27,514 $ 54,519 $ 52,315
Change in product inventories 1,482 1,668 (1,987) (616)
Add: Profit from recycling
activities 2,714 2,870 4,732 4,591
--------- --------- --------- ---------
Total costs of revenues $ 31,211 $ 32,052 $ 57,264 $ 56,290
========= ========= ========= =========
Other PGM activities: (1)
Reconciliation to costs of
revenues:
Change in product inventories $ 6,882 $ 2,184 $ 12,185 $ 6,205
Recycling activities -
depreciation 48 28 96 52
Costs of recycling activities 101,491 77,871 183,574 144,046
--------- --------- --------- ---------
Total costs of revenues $ 108,421 $ 80,083 $ 195,855 $ 150,303
========= ========= ========= =========
(1) Other PGM activities include recycling and other.
CONTACT:
Dawn E. McCurtain
406-373-8787