Stillwater Mining Company Reports Second Quarter Earnings
BILLINGS, MT -- (Marketwire) -- 08/08/12 -- STILLWATER MINING COMPANY (NYSE: SWC) (TSX: SWC.U)
- Mined production of 133,400 ounces - 500,000 ounce guidance for 2012 reiterated
- Net income attributable to common stockholders of $18.2 million or $0.15 per diluted share
- Combined mined palladium and platinum sales realizations decrease to $850 per ounce
- Development projects advance in line with expectations
- Altar exploration update provided separately today
Stillwater Mining Company today reported consolidated net income attributable to common stockholders for the 2012 second quarter of $18.2 million, or $0.15 per diluted share. Total revenues for the second quarter were $212.8 million. This compares to 2011 second quarter net income of $42.7 million, or $0.39 per diluted share on revenues of $222.6 million. The second-quarter 2012 results reflect lower PGM prices and higher consolidated total cash costs than in last year's second quarter and include a $3.8 million foreign currency gain and exploration expenses of $2.0 million.
For the first six months of 2012, Stillwater reported net income attributable to common stockholders of $20.6 million, or $0.18 per diluted share, on revenues of $415.8 million, compared to net income of $78.9 million, or $0.73 per diluted share, on revenues of $392.7 million, for the same period in 2011.
The Company's mines produced a total of 133,400 ounces of palladium and platinum during the second quarter of 2012, a 6.5% decrease from the 142,700 ounce production in the second quarter of 2011 and a 10.4% increase from the 120,800 ounces produced during the first quarter of 2012. Production for the first six months was 254,200 ounces compared to 273,800 ounces in the first six months of 2011. Most of the variability in production is the result of normal changes in mining conditions and the array of stopes available for mining period to period. Based on production results for the first half of 2012 and projections for the remainder of the year, the Company is reiterating its full year guidance for mined production of 500,000 ounces.
Second quarter 2012 revenues from sales of mined production (including by-products) totaled $116.2 million, down from $139.7 million in the same period last year on lower PGM prices and volumes. Combined sales realizations decreased during the second quarter of 2012 for mined palladium and platinum ounces, averaging $850 per ounce, an 11.8% decrease from the $964 per ounce realized in the second quarter of 2011. The total quantity of mined palladium and platinum sold decreased to 128,100 ounces in the second quarter of 2012, compared to 136,600 ounces sold during the same period in 2011, a 6.2% decrease. Income in the second quarter of 2012 consisted of $26.3 million from mining operations and $3.7 million from recycling activities. For the second quarter of 2011, income from mining operations and recycling activities were $59.5 million and $3.4 million, respectively.
Total cash costs per mined ounce (a non-GAAP measure defined below) averaged $454 in the second quarter of 2012, compared to total cash costs of $384 per ounce for the second quarter of 2011. This increase in cash costs, which was forecast, is primarily a result of higher labor costs, reflecting an increase in contractual wage and benefit rates and hiring for the Company's new miner training program, as well as lower mine production. Based on current projections, the Company is maintaining its total cash costs guidance of $500 per mined ounce for the full year 2012.
The Company processed recycling material containing 123,100 ounces of palladium, platinum and rhodium through the smelter and refinery during the second quarter of 2012, down slightly from the 125,200 ounces recycled during the second quarter of 2011. Recycling sales volumes, however, increased to 92,900 ounces in the second quarter of 2012, compared to 61,300 ounces in the second quarter of 2011, reflecting a higher proportion of recycling ounces purchased rather than tolled during the quarter. Revenues from sales of purchased recycling materials totaled $95.7 million in the 2012 second quarter, up from $81.6 million in the same period last year. Tolling revenues declined to $0.9 million in this year's second quarter, compared to $1.3 million in the comparable quarter of 2011. The Company's recycling segment had net income for the second quarter of 2012 of $3.7 million (including financing income), compared to net income of $3.4 million reported for the second quarter of 2011. The Company's combined average realized price for sales of recycled platinum, palladium and rhodium declined to $1,030 per ounce in the second quarter of 2012 from $1,330 per ounce in the second quarter of 2011.
Commenting on these results, Francis R. McAllister, Stillwater's chairman and chief executive officer, stated, "Overall, I am very pleased with the Company's performance during the second quarter. Mine production and costs were in-line with our expectations, ore grades were good, development was on plan and our recycling business continued to perform well. We also made good progress on all of our development projects. Unfortunately, PGM prices continued to decline during the quarter. Our average combined sales realizations from mined production decreased to $850 per ounce during the second quarter, down from $875 per ounce realized during the first quarter this year and $964 per ounce averaged during the second quarter last year. At the end of the second quarter palladium was quoted in London at $578 per ounce and platinum at $1,428 per ounce, which would yield a market basket realization for Stillwater of about $771 per ounce. While several factors, including the strengthening of the U.S. dollar, have recently depressed the market prices for palladium and platinum (along with many other commodities), we continue to believe the supply and demand fundamentals for PGMs -- and particularly palladium -- remain attractive and that over time our business will benefit from these fundamentals. However, if these lower PGM prices continue in the near term, they will negatively impact our 2012 earnings, and will require adjustment to the rate of our project spending.
"The Blitz and Graham Creek development projects, located adjacent to our existing Montana mines, are moving ahead on plan. The underground launch chamber for the Blitz tunnel-boring machine (TBM) has been completed, and the assembly of the TBM is nearing completion. We anticipate that the TBM will be commissioned by the end of this quarter and will start developing to the east of the existing Stillwater Mine infrastructure. A separate TBM already in operation at the Graham Creek project, within the East Boulder Mine, advanced an additional 1,200 feet during the second quarter, bringing the total to about 3,700 feet for this drive since it began last year. The project is on target to complete the planned 8,200 new feet of primary access during the second quarter of 2013.
"We are pleased with the continued progress at our Marathon PGM-copper project in Canada. We announced early last month that the Company, through our 75%-owned subsidiary, Stillwater Canada Inc., had submitted the Environmental Impact Statement (EIS) for the project to a Joint Federal and Provincial Review Panel. Over the next several months, this review panel will coordinate an assessment of the project with local communities, organizations and other potentially affected parties in the Marathon area. We are working closely with these groups as the review process moves forward. And we are delighted to have put in place the joint venture agreement with Mitsubishi early in the second quarter.
"In April of this year, we finished up our first drilling season at the Altar copper-gold project in Argentina. The assays from that drilling have now been completed, and concurrently with the release of our second quarter results today, we are issuing a separate exploration update on the Altar project that includes this season's drill results. I would like to thank all those involved with the exploration team, including the contractors, for their dedicated contributions to the program. This year's drilling season at Altar, which included over 27,000 meters of new core drilled, has allowed us to confirm, expand and further delineate the copper and gold mineralization at Altar East, evaluate the deep copper mineralization at Altar Central and better define the gold mineralization in the Quebrada de la Mina area. In order to fully define the limits of the Altar deposit, further drilling remains. In the meantime, metallurgical testing is being conducted on the new drill core which will ultimately result in an updated resource estimate. I would encourage you to review the Altar exploration update."
Concluding his remarks, Mr. McAllister added, "I express my appreciation personally to all of our employees for their hard work and many contributions to Stillwater's success and in particular for their dedication to safety, which is our most important priority. The Company's safety incident rate (including contractors on site), measured in terms of reportable incidents per 200,000 hours worked, averaged a rate of 2.2 during the first half of 2012, down from 3.3 for the first half of 2011. I commend each of our employees for this significant improvement."
Cash Flow and Liquidity
At June 30, 2012, the Company's available cash was $197.2 million, compared to $109.1 million at December 31, 2011. If highly liquid short-term investments are included with available cash, the Company's balance sheet liquidity totaled $255.1 million at June 30, 2012, an increase from $158.6 million at December 31, 2011. Of the Company's current cash balance, $49.7 million is dedicated to the Marathon PGM-copper project (and other related properties) and is unavailable for other corporate purposes. Net working capital -- comprised of total current assets (including available cash and short-term investments), less current liabilities -- decreased to $269.0 million at June 30, 2012, from $327.8 million at year end 2011. The June 30, 2012 balance includes $166.5 million reclassified as the current portion of long-term debt, reflecting convertible debentures that may be redeemed by their holders on March 15, 2013.
Net cash provided by operating activities (which includes changes in working capital) totaled $39.4 million in the second quarter of 2012, compared to $58.8 million of cash provided in the second quarter of 2011. Capital expenditures were $36.6 million in the second quarter of 2012, up from $23.1 million in the second quarter of 2011. Capital expenditures are expected to total about $135 million for the full year 2012.
In view of the decrease in commodity prices this year, and in particular in PGMs, the Company is monitoring its spending closely. The Company may have to make adjustments such as deferring or extending certain spending commitments. Although the Company currently has a comparatively strong cash position, a number of factors weigh against drawing down cash balances. In this regard, the Company is considering the refinancing of its convertible debentures but, if market conditions remain unattractive, the Company will be in a position to redeem the debt with cash on hand. Taking into account the cyclical nature of the Company's commodity business and the desire to prudently maintain sufficient liquidity through a downturn, it is likely that the Company would scale back or delay certain of its projects. With these factors in mind, together with the assumptions underlying the Company's plans, the Company believes its liquidity position is sufficient at this time.
Outstanding debt at June 30, 2012, was $203.1 million, up from $196.0 million at December 31, 2011. The Company's total debt includes the $166.5 million outstanding in the form of convertible debentures, $29.5 million of Exempt Facility Revenue Bonds due in 2020, a capital lease of $6.7 million and $0.4 million for a small installment land purchase.
Second Quarter Results - Details
For the second quarter of 2012, the Company's mine production was 133,400 PGM ounces. The Company's Stillwater Mine produced 98,100 ounces, a decrease of 9.9% from the 108,900 ounces produced in the second quarter of 2011 but an increase of 11.9% over the 87,700 produced in the first quarter of 2012. The production decrease from last year's second quarter at the Stillwater Mine was primarily attributable to lower tons mined as a result of the fluctuations in overall mining conditions, the mix of mining stopes and the availability of miners. Production at the Company's East Boulder Mine of 35,300 ounces in the second quarter of 2012 reflected a 4.4% increase over the 33,800 ounces produced in the same quarter of 2011 and an increase of 6.6% from the 33,100 ounces produced in the first quarter of 2012.
Revenues for the second quarter of 2012 were $212.8 million, a decrease of 4.4% from the $222.6 million recorded in the second quarter of 2011. Proceeds from sales of mined PGMs and by-products totaled $116.2 million in the second quarter of 2012, a 16.8% decrease from the $139.7 million in the same quarter of 2011, reflecting the decrease in both ounces sold and PGM prices during the quarter. Recycling revenues increased by 16.5% to $96.6 million from $82.9 million in the second quarter of 2011 as a result of an increased proportion of purchased ounces as compared to toll material processed. Sales from mine production totaled 128,100 ounces in the second quarter of 2012 at an overall average realization of $850 per ounce, as compared to 136,600 ounces at $964 per ounce in the second quarter of 2011. Sales ounces were less than production in the quarter due to normal timing differences in inventory flows. The Company's average net realization on palladium sales from mine production was $643 per ounce in the second quarter of 2012, compared to $752 per ounce for the same period in 2011. The Company's average net realization on platinum was $1,502 per ounce in the second quarter of 2012 and $1,769 per ounce in the second quarter of 2011. Focusing on end of quarter prices, the London Bullion Market Association afternoon posted prices per ounce for palladium and platinum were $578 and $1,428, respectively, on June 29, 2012, and $761 and $1,722, respectively, on June 30, 2011.
Consolidated cash costs per mined ounce (a non-GAAP measure defined below) averaged $454 in the second quarter of 2012, an increase compared to total cash costs of $384 per ounce for the second quarter of 2011 but well below the $514 per ounce reported for the first quarter of 2012. The Stillwater Mine's total cash costs averaged $426 per ounce in the second quarter of 2012, compared to the $367 per ounce reported in the second quarter of 2011. The East Boulder Mine's total cash costs averaged $529 per ounce during the second quarter of 2012, compared to $442 per ounce during second quarter of 2011. The most significant driver of cash cost per mined ounce growth since the second quarter of last year at both mines was an increase in staffing levels, along with higher wage and benefit rates. The increase in staffing levels was primarily attributable to hiring for the new miner training program and to accommodate increasing travel distances as the mine expands.
Costs of metals sold (before depreciation and amortization expense) increased to $168.1 million in the second quarter of 2012 from $144.6 million in the second quarter of 2011. Mining costs included in costs of metals sold increased to $75.0 million in the 2012 second quarter from $65.1 million in the 2011 second quarter, the result of higher wage and benefit costs as well as some inflationary bias in materials costs. Recycling costs, which primarily reflect the cost of acquiring spent catalytic materials for processing, totaled $93.1 million in the second quarter of 2012, higher than the $79.6 million reported in the second quarter of 2011. The increase was due to a higher proportion of recycled material purchased outright by the Company during the second quarter of 2012 compared to the same period last year.
Depreciation and amortization expense decreased to $14.9 million in the second quarter of 2012 from $15.7 million in the same period of 2011. The decrease is attributable to a lower depreciable base in our fixed asset accounts in 2012, as many assets were fully depreciated during 2010 and 2011.
General and administrative ("G&A") costs increased to $10.1 million in the second quarter of 2012, a slight increase over the $9.9 million incurred during the same period of 2011. Exploration expenses totaled $2.0 million for the second quarter of 2012, of which almost all was attributable to the Altar copper-gold project. Exploration expenses incurred during the second quarter of 2011 were negligible. Marketing expenses increased to $3.7 million in the 2012 second quarter compared to $2.8 million in the same quarter of 2011. The Company continues its focus on developing markets for its primary product -- palladium. Research and development costs decreased to $0.1 million in this year's second quarter from $0.6 million in the same quarter of 2011.
Reported net income attributable to common stockholders for the second quarter of 2012 of $18.2 million included, by business segment, net income of $26.3 million from mining operations, net income of $3.7 million from recycling activities (including financing income), net income of $1.4 million related to the Altar copper-gold project (including a foreign currency gain of $3.8 million), $1.2 million of costs associated with the Marathon properties, and corporate costs of $12.5 million. In addition, the Company reported a $0.2 million income tax benefit and a $0.4 million net loss attributable to noncontrolling interest for the second quarter of 2012. The net income attributable to common stockholders of $42.7 million recorded for the second quarter 2011 included, by business segment, $59.5 million of income from mining operations and $3.4 million income from recycling activities (including financing income), $0.8 million of costs associated with the Marathon properties and corporate costs of $13.7 million. For the second quarter of 2011, the Company reported a $5.7 million income tax provision.
First Six Months' Results - Details
During the first six months of 2012, the Company's mining operations produced 254,200 ounces of palladium and platinum, including 185,800 ounces from the Stillwater Mine and 68,400 ounces from the East Boulder Mine. For the comparable period in 2011, total mine production of 273,800 ounces included Stillwater Mine production of 207,500 ounces and East Boulder production of 66,300. The decrease in ounces produced at the Stillwater Mine for the first half of 2012 was primarily the result of fewer tons mined.
Sales of palladium and platinum from mine production totaled 251,100 ounces in the first six months of 2012 at an overall average realization of $862 per ounce. The first six months of 2011 saw sales of mine production totaling 251,700 ounces at $978 per ounce. The Company's average realization to date in 2012 on palladium sales from mine production was $657 per ounce, compared to $767 per ounce in the 2011's first half. The comparable average realization on platinum from mine production was $1,547 per ounce for the first six months of 2012 and $1,775 per ounce in the 2011 first half.
During the first half of 2012, the Company processed about 230,400 ounces of PGMs from recycled catalytic materials, including both purchased catalysts and toll materials processed on behalf of others for a fee. By comparison, in the first six months of 2011, the Company processed about 240,800 ounces of recycled material. Of the purchased catalysts processed, the Company sold a total of 175,300 ounces of platinum, palladium and rhodium during the first half of 2012 at an overall average price of about $1,034 per ounce; for the first half of 2011, the Company sold about 104,000 recycled ounces at an average realization of $1,234 per ounce.
Revenues for the first six months of 2012 totaled $415.8 million, up 5.9% from $392.7 million in the first six months of 2011. Recycling revenues increased to $182.9 million in the first half of 2012 up from $131.0 million in last year's first half, accounting for all the growth in total revenue. Proceeds from sales of mined PGMs totaled $232.9 million in the 2012 first half, down from $261.7 million in the same period of 2011.
Costs of metals sold (before depreciation and amortization expense) increased to $326.3 million in the 2012 first six months of 2012 from $250.1 million in the first half of 2011. Mining costs included in costs of metals sold increased to $149.0 million in the 2012 first half from $125.3 million in the 2011 period. Recycling costs, largely comprised of the cost to purchase spent catalytic materials for processing, totaled $177.3 million in the first half of 2012, up from $124.7 million in the first six months of 2011. The increase in costs was primarily due to a higher proportion of recycled material purchased outright by the Company during the second quarter of 2012, compared to the same period last year.
Depreciation and amortization expense decreased slightly to $29.5 million in the first half of 2012 compared to $31.7 million in the same period of 2011.
General and administrative ("G&A") costs increased to $22.6 million in the first half of 2012 an increase over the $16.3 million for the same period of 2011. This increase was primarily attributable to one-time software licensing fees, higher legal and advisory services and growth in project administrative costs. Exploration expenses totaled $12.1 million for the six-months ending June 30, 2012, of which almost all was attributable to the Altar copper-gold project. Marketing expenses increased to $6.0 million in the first half of 2012 compared to $3.7 million in the same time period of 2011.
The Company's reported net income attributable to common stockholders of $20.6 million for the first six months of 2012 included, by business segment, $54.6 million of income from mining operations, net income of $6.0 million from recycling activities (including financing income), costs of $4.9 million associated with the Marathon properties, costs of $7.5 million related to the Altar copper-gold project (net of a foreign currency gain of $6.7 million), and corporate costs of $26.9 million. For the first half of 2012, the Company reported a $1.0 million income tax provision and a net loss of $0.4 million attributable to noncontrolling interest. The net income attributable to common stockholders of $78.9 million recorded for the first six months of 2011 included, by business segment, $105.4 million of income from mining operations and $6.3 million income from recycling activities (including financing income), $1.0 million of costs associated with the Marathon properties and corporate costs of a $22.0 million. The Company reported a $9.8 million income tax provision for the first six months of 2011.
Second Quarter Results Webcast and Conference Call
Stillwater Mining Company will release its second quarter 2012 earnings results before the United States financial markets open on Wednesday, August 8, 2012. The Company will conduct a conference call to discuss results the same day at approximately 12:00 p.m. Eastern Daylight Time.
Dial-In Numbers:
United States: (800) 230-1059
International: (612) 288-0329
The conference call will be simultaneously webcast through the Company's website at www.stillwatermining.com in the Investor Relations section.
A telephone replay of the call will be available for one week following the event. The replay dial-in numbers are (800) 475-6701 (U.S.) and (320) 365-3844 (International), access code 254899. In addition, the call transcript will be archived in the Investor Relations section of the Company's website.
About Stillwater Mining Company
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 and on the Toronto Stock Exchange under the symbol SWC.U. 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 "desires," "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 its actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Additional information regarding factors that could cause results to differ materially from management's expectations is found in the section entitled "Risk Factors" in the Company's 2011 Annual Report on Form 10-K, in its quarterly Form 10-Q filings, and in corresponding filings with Canadian securities regulatory authorities. The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The Company disclaims any obligation to update forward-looking statements.
Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
Revenues
Mine production $116,190 $139,733 $232,894 $261,713
PGM recycling 96,585 82,872 182,932 130,953
-------- -------- -------- --------
Total revenues 212,775 222,605 415,826 392,666
Costs and expenses
Costs of metals sold
Mine production 74,996 65,094 149,025 125,344
PGM recycling 93,149 79,552 177,264 124,706
-------- -------- -------- --------
Total costs of metals sold 168,145 144,646 326,289 250,050
Depletion, depreciation and
amortization
Mine production 14,601 15,395 29,005 31,196
PGM recycling 261 265 529 527
-------- -------- -------- --------
Total depletion, depreciation
and amortization 14,862 15,660 29,534 31,723
-------- -------- -------- --------
Total costs of revenues 183,007 160,306 355,823 281,773
Exploration 2,000 75 12,117 75
Marketing 3,650 2,800 5,988 3,653
Research and development 77 621 782 1,080
General and administrative 10,117 9,893 22,595 16,255
Abandonment of non-producing
property - - 2,835 -
Loss/(Gain) on disposal of
property, plant and equipment 297 (207) 292 (226)
-------- -------- -------- --------
Total costs and expenses 199,148 173,488 400,432 302,610
Operating income 13,627 49,117 15,394 90,056
Other income/(expense)
Other 577 4 585 12
Interest income 790 951 1,435 1,733
Interest expense (1,153) (1,637) (2,868) (3,272)
Foreign currency transaction gain 3,778 - 6,709 182
-------- -------- -------- --------
Income before income tax provision 17,619 48,435 21,255 88,711
Income tax benefit/(provision) 210 (5,737) (987) (9,821)
-------- -------- -------- --------
Net income $ 17,829 $ 42,698 $ 20,268 $ 78,890
-------- -------- -------- --------
Net loss attributable to
noncontrolling interest (371) - (371) -
-------- -------- -------- --------
Net income attributable to common
stockholders $ 18,200 $ 42,698 $ 20,639 $ 78,890
-------- -------- -------- --------
Other comprehensive income/(loss),
net of tax
Net unrealized (losses)/gains on
securities available for sale (109) 86 199 (104)
-------- -------- -------- --------
Comprehensive income attributable to
common stockholders $ 18,091 $ 42,784 $ 20,838 $ 78,786
======== ======== ======== ========
Weighted average common shares
outstanding
Basic 115,819 103,037 115,686 102,688
Diluted 123,855 111,123 116,671 110,924
Basic earnings per share
attributable to common stockholders $ 0.16 $ 0.41 $ 0.18 $ 0.77
Diluted earnings per share
attributable to common stockholders $ 0.15 $ 0.39 $ 0.18 $ 0.73
======== ======== ======== ========
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
June 30, December 31,
2012 2011
------------ ------------
ASSETS
Cash and cash equivalents $ 197,157 $ 109,097
Investments, at fair market value 57,953 49,533
Inventories 121,578 131,856
Trade receivables 8,568 6,188
Deferred income taxes 109,629 96,036
Other current assets 12,473 9,433
------------ ------------
Total current assets 507,358 402,143
Mineral properties 597,187 596,686
Property, plant and equipment, net of $465,847
and $436,612 of accumulated depletion,
depreciation and amortization 394,923 367,727
Restricted cash 24,995 25,070
Other noncurrent assets 11,444 11,915
------------ ------------
Total assets $ 1,535,907 $ 1,403,541
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 24,582 $ 26,880
Accrued compensation and benefits 28,846 27,573
Property, production and franchise taxes payable 14,853 14,071
Current portion of long-term debt and capital
lease obligations 168,228 -
Income taxes payable - 1,235
Other current liabilities 1,811 4,576
------------ ------------
Total current liabilities 238,320 74,335
Long-term debt 34,849 196,046
Deferred income taxes 277,085 270,101
Accrued workers compensation 6,558 6,056
Asset retirement obligation 7,641 7,331
Other noncurrent liabilities 5,318 5,704
------------ ------------
Total liabilities 569,771 559,573
------------ ------------
Equity
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; 115,907,989 and 115,375,604
shares issued and outstanding 1,159 1,154
Paid-in capital 927,356 878,050
Accumulated deficit (13,636) (34,275)
Accumulated other comprehensive loss (762) (961)
------------ ------------
Total stockholders' equity 914,117 843,968
------------ ------------
Noncontrolling interest 52,019 -
------------ ------------
Total equity 966,136 843,968
------------ ------------
Total liabilities and stockholders' equity $ 1,535,907 $ 1,403,541
============ ============
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended Six Months Ended
(in thousands) June 30, June 30,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
Cash flows from operating activities
Net income $ 17,829 $ 42,698 $ 20,268 $ 78,890
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion, depreciation and
amortization 14,862 15,660 29,534 31,723
Loss/(Gain) on disposal of
property, plant and equipment 297 (207) 292 (226)
Abandonment of non-producing
property - - 2,835 -
Accretion of asset retirement
obligation 157 145 310 286
Amortization of debt issuance
costs 315 246 629 491
Share based compensation and other
benefits 4,115 2,689 7,887 5,789
Changes in operating assets and
liabilities:
Inventories 11,486 (15,505) 9,920 (55,569)
Trade receivables 802 81 (2,380) (393)
Accrued compensation and benefits 377 3,051 1,234 4,341
Accounts payable (7,029) 1,450 (2,336) 4,644
Property, production and franchise
taxes payable (22) 1,273 396 2,944
Income taxes payable (268) 5,737 (3,115) 9,821
Workers compensation 502 (78) 502 (554)
Restricted cash - - 75 3,000
Other (4,051) 1,571 (10,683) 7,496
-------- -------- -------- --------
Net cash provided by operating
activities 39,372 58,811 55,368 92,683
-------- -------- -------- --------
Cash flows from investing activities
Capital expenditures (36,593) (23,110) (59,313) (46,295)
Purchase of long-term investment - - - (616)
Proceeds from disposal of
property, plant and equipment 20 207 28 228
Purchases of investments (26,637) (32,801) (31,887) (98,096)
Proceeds from maturities of
investments 19,088 58,575 23,549 137,017
-------- -------- -------- --------
Net cash (used in) provided by
investing activities (44,122) 2,871 (67,623) (7,762)
-------- -------- -------- --------
Cash flows from financing activities
Proceeds from sale of
noncontrolling interest, net of
transaction costs 94,669 - 93,821 -
Issuance of long-term debt 7,176 - 7,176 -
Payments on long term debt and
capital lease obligations (495) - (495) -
Payments for debt issuance costs - - (219) -
Issuance of common stock 3 7 32 725
-------- -------- -------- --------
Net cash provided by financing
activities 101,353 7 100,315 725
-------- -------- -------- --------
Cash and cash equivalents
Net increase 96,603 61,689 88,060 85,646
Balance at beginning of period 100,554 43,320 109,097 19,363
-------- -------- -------- --------
Balance at end of period $197,157 $105,009 $197,157 $105,009
======== ======== ======== ========
Stillwater Mining Company
Key Operating Factors
(Unaudited)
Three Months Six Months
Ended Ended
(in thousands, except where noted) June 30, June 30,
------------- -------------
2012 2011 2012 2011
------ ------ ------ ------
OPERATING AND COST DATA FOR MINE PRODUCTION
Consolidated:
Ounces produced
Palladium 102 110 196 211
Platinum 31 33 58 63
------ ------ ------ ------
Total 133 143 254 274
====== ====== ====== ======
Tons milled 269 297 539 590
Mill head grade (ounce per ton) 0.54 0.52 0.51 0.50
Sub-grade tons milled (1) 18 18 30 40
Sub-grade tons mill head grade (ounce per ton) 0.16 0.18 0.16 0.18
Total tons milled (1) 287 315 569 630
Combined mill head grade (ounce per ton) 0.51 0.50 0.49 0.48
Total mill recovery (%) 92 92 91 92
Total operating costs per ounce (Non-GAAP) (2) $ 374 $ 298 $ 400 $ 317
Total cash costs per ounce (Non-GAAP) (2) $ 454 $ 384 $ 482 $ 410
Total production costs per ounce (Non-GAAP) (2) $ 562 $ 488 $ 596 $ 521
Total operating costs per ton milled (Non-GAAP)
(2) $ 174 $ 135 $ 179 $ 138
Total cash costs per ton milled (Non-GAAP) (2) $ 211 $ 174 $ 216 $ 178
Total production costs per ton milled (Non-GAAP)
(2) $ 261 $ 221 $ 266 $ 226
Stillwater Mine:
Ounces produced
Palladium 75 84 143 160
Platinum 23 25 43 48
------ ------ ------ ------
Total 98 109 186 208
====== ====== ====== ======
Tons milled 168 195 340 389
Mill head grade (ounce per ton) 0.63 0.59 0.59 0.57
Sub-grade tons milled (1) 10 15 17 32
Sub-grade tons mill head grade (ounce per ton) 0.20 0.19 0.21 0.20
Total tons milled (1) 178 210 357 421
Combined mill head grade (ounce per ton) 0.61 0.56 0.57 0.54
Total mill recovery (%) 92 93 92 92
Total operating costs per ounce (Non-GAAP) (2) $ 352 $ 284 $ 375 $ 310
Total cash costs per ounce (Non-GAAP) (2) $ 426 $ 367 $ 451 $ 397
Total production costs per ounce (Non-GAAP) (2) $ 538 $ 476 $ 569 $ 514
Total operating costs per ton milled (Non-GAAP)
(2) $ 195 $ 148 $ 195 $ 153
Total cash costs per ton milled (Non-GAAP) (2) $ 235 $ 190 $ 234 $ 196
Total production costs per ton milled (Non-GAAP)
(2) $ 297 $ 247 $ 296 $ 253
Stillwater Mining Company
Key Operating Factors (continued)
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
------------- -------------
2012 2011 2012 2011
------ ------ ------ ------
OPERATING AND COST DATA FOR MINE PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced
Palladium 27 26 53 51
Platinum 8 8 15 15
------ ------ ------ ------
Total 35 34 68 66
====== ====== ====== ======
Tons milled 101 102 199 201
Mill head grade (ounce per ton) 0.38 0.37 0.38 0.37
Sub-grade tons milled (1) 9 3 13 8
Sub-grade tons mill head grade (ounce per ton) 0.11 0.11 0.11 0.11
Total tons milled (1) 110 105 212 209
Combined mill head grade (ounce per ton) 0.36 0.36 0.36 0.36
Total mill recovery (%) 91 90 90 89
Total operating costs per ounce (Non-GAAP) (2) $ 434 $ 340 $ 468 $ 339
Total cash costs per ounce (Non-GAAP) (2) $ 529 $ 442 $ 569 $ 450
Total production costs per ounce (Non-GAAP) (2) $ 628 $ 528 $ 670 $ 542
Total operating costs per ton milled (Non-GAAP)
(2) $ 140 $ 108 $ 151 $ 107
Total cash costs per ton milled (Non-GAAP) (2) $ 171 $ 141 $ 184 $ 143
Total production costs per ton milled (Non-GAAP)
(2) $ 203 $ 168 $ 216 $ 172
(1) Sub-grade tons milled includes reef waste material only. Total tons
milled includes ore tons and sub-grade tons only. See "Proven and
Probable Ore Reserves - Discussion" in the Company's 2011 Annual Report
on Form 10-K for further information.
(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 write-downs, 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.
Stillwater Mining Company
Key Operating Factors (continued)
(Unaudited)
Three Months Six Months
Ended Ended
(in thousands, except for average prices) June 30, June 30,
2012 2011 2012 2011
------- ------- ------- -------
SALES AND PRICE DATA
Ounces sold
Mine production:
Palladium (oz.) 97 108 193 199
Platinum (oz.) 31 29 58 53
------- ------- ------- -------
Total 128 137 251 252
------- ------- ------- -------
PGM recycling: (1)
Palladium (oz.) 57 31 103 57
Platinum (oz.) 30 26 60 40
Rhodium (oz.) 6 4 13 7
------- ------- ------- -------
Total 93 61 176 104
------- ------- ------- -------
By-products from mining: (2)
Rhodium (oz.) 1 - 2 -
Gold (oz.) 2 2 5 4
Silver (oz.) 2 1 3 3
Copper (lb.) 175 219 349 394
Nickel (lb.) 252 331 541 671
Average realized price per ounce (3)
Mine production:
Palladium ($/oz.) $ 643 $ 752 $ 657 $ 767
Platinum ($/oz.) $ 1,502 $ 1,769 $ 1,547 $ 1,775
Combined ($/oz) (4) $ 850 $ 964 $ 862 $ 978
PGM recycling: (1)
Palladium ($/oz.) $ 680 $ 785 $ 664 $ 724
Platinum ($/oz.) $ 1,610 $ 1,787 $ 1,569 $ 1,756
Rhodium ($/oz) $ 1,413 $ 2,381 $ 1,500 $ 2,336
Combined ($/oz) (4) $ 1,030 $ 1,330 $ 1,034 $ 1,234
By-products from mining: (2)
Rhodium ($/oz.) $ 1,295 $ 1,981 $ 1,378 $ 1,981
Gold ($/oz.) $ 1,594 $ 1,508 $ 1,644 $ 1,444
Silver ($/oz.) $ 29 $ 39 $ 31 $ 35
Copper ($/lb.) $ 3.35 $ 3.97 $ 3.48 $ 4.06
Nickel ($/lb.) $ 6.52 $ 10.00 $ 7.11 $ 10.28
Average market price per ounce (3)
Palladium ($/oz.) $ 628 $ 759 $ 656 $ 775
Platinum ($/oz.) $ 1,499 $ 1,781 $ 1,555 $ 1,787
Combined ($/oz) (4) $ 838 $ 972 $ 863 $ 987
(1) Ounces sold and average realized price per ounce from PGM recycling
relate to ounces produced from processing of catalyst materials.
(2) 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.
(3) The Company's average realized price represents revenues, which include
the effect of hedging gains and losses realized on commodity instruments
and agreement discounts, divided by ounces sold. The average market
price represents the average London Bullion Market Association afternoon
postings for the actual months of the period.
(4) The Company reports a combined average realized and a combined average
market price of palladium and platinum at the same ratio as ounces that
are produced from the base metal refinery.
Reconciliation of Non-GAAP Measures to Costs of Revenues
The Company utilizes certain non-GAAP measures as indicators in assessing the performance of its mining and processing operations during any period. Because of the processing time required to complete the extraction of finished PGM products, there are typically lags of one to three months between ore production and sale of the finished product. Sales in any period include some portion of material mined and processed from prior periods as the revenue recognition process is completed. Consequently, while costs of revenues (a GAAP measure included in the Company's Consolidated Statement of Operations and Comprehensive Income) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP measures to assess the costs associated with its producing and processing activities in a particular period and to compare those costs between periods.
While the Company believes that these non-GAAP measures may also be of value to outside readers, both as general indicators of the Company's mining efficiency from period to period and as insight into how the Company internally measures its operating performance, these non-GAAP measures are not standardized across the mining industry and in most cases will not be directly comparable to similar measures that may be provided by other companies. These non-GAAP measures are only useful as indicators of relative operational performance in any period, and because they do not take into account the inventory timing differences that are included in costs of revenues, they cannot meaningfully be used to develop measures of earnings or profitability. A reconciliation of these measures to costs of revenues for each period shown is provided as part of the following tables, and a description of each non-GAAP measure is provided below.
Total Costs of Revenues: For the Company as a whole, this measure is equal to total costs of revenues, as reported in the Consolidated Statement of Operations and Comprehensive Income. For the Stillwater Mine, the East Boulder Mine, and other PGM activities, the Company segregates the expenses within total costs of revenues that are directly associated with each of these activities and then allocates the remaining facility costs included in total cost of revenues in proportion to the monthly volumes from each activity. The resulting total costs of revenues measures for Stillwater Mine, East Boulder Mine and other PGM activities are equal in total to total costs of revenues as reported in the Company's Consolidated Statement of Operations and Comprehensive Income.
Total Production Costs (Non-GAAP): Calculated as total costs of revenues (for each mine or combined) adjusted to exclude gains or losses on asset dispositions, costs and profit from recycling activities, revenues from the sale of mined by-products and timing differences resulting from changes in product inventories. This non-GAAP measure provides a comparative measure of the total costs incurred in association with production and processing activities in a period, and may be compared to prior periods or between the Company's mines.
When divided by the total tons milled in the respective period, Total Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides an indication of the cost per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first actually weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Production Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Production Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the respective period, Total Production Cost per Ounce (Non-GAAP) -- measured for each mine or combined -- provides an indication of the cost per ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because extracting PGM material is ultimately the objective of mining, the cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Production Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Production Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.
Total Cash Costs (Non-GAAP): This non-GAAP measure is calculated by excluding the depreciation and amortization and asset retirement costs from Total Production Costs (Non-GAAP) for each mine or combined. The Company uses this measure as a comparative indication of the cash costs related to production and processing in any period.
When divided by the total tons milled in the respective period, Total Cash Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of cash costs incurred per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Cash Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Cash Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the respective period, Total Cash Cost per Ounce (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because ultimately extracting PGM material is the objective of mining, the cash cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Cash Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Cash Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.
Total Operating Costs (Non-GAAP): This non-GAAP measure is derived from Total Cash Costs (Non-GAAP) for each mine or combined by excluding royalty, tax and insurance expenses from Total Cash Costs (Non-GAAP). Royalties, taxes and insurance costs are contractual or governmental obligations outside of the control of the Company's mining operations, and in the case of royalties and most taxes, are driven more by the level of sales realizations rather than by operating efficiency. Consequently, Total Operating Costs (Non-GAAP) is a useful indicator of the level of production and processing costs incurred in a period that are under the control of mining operations.
When divided by the total tons milled in the respective period, Total Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of controllable cash costs incurred per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first actually weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Operating Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Operating Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the respective period, Total Operating Cost per Ounce (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of controllable cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because ultimately extracting PGM material is the objective of mining, the cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Operating Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Operating Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.
Reconciliation of Non-GAAP Measures
to Costs of Revenues
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2012 2011 2012 2011
-------- -------- -------- --------
Consolidated:
Reconciliation to consolidated costs
of revenues:
Total operating costs (Non-GAAP) $ 49,915 $ 42,454 $101,743 $ 86,754
Royalties, taxes and other 10,612 12,380 20,915 25,428
-------- -------- -------- --------
Total cash costs (Non-GAAP) $ 60,527 $ 54,834 $122,658 $112,182
Asset retirement costs 157 144 311 285
Depletion, depreciation and
amortization 14,601 15,395 29,005 31,196
Depletion, depreciation and
amortization (in inventory) (294) (773) (358) (1,090)
-------- -------- -------- --------
Total production costs (Non-GAAP) $ 74,991 $ 69,600 $151,616 $142,573
Change in product inventories 3,554 (716) 3,737 (8,211)
Cost of PGM recycling 93,149 79,552 177,264 124,706
PGM recycling - depreciation 261 265 529 527
Add: Profit from by-products 7,229 8,005 16,351 15,539
Add: Profit from PGM recycling 3,823 3,600 6,326 6,639
-------- -------- -------- --------
Total consolidated costs of revenues $183,007 $160,306 $355,823 $281,773
======== ======== ======== ========
Stillwater Mine:
Reconciliation to costs of revenues:
Total operating costs (Non-GAAP) $ 34,566 $ 30,967 $ 69,692 $ 64,277
Royalties, taxes and other 7,230 8,963 14,054 18,035
-------- -------- -------- --------
Total cash costs (Non-GAAP) $ 41,796 $ 39,930 $ 83,746 $ 82,312
Asset retirement costs 145 133 288 264
Depletion, depreciation and
amortization 11,067 12,169 22,237 24,156
Depletion, depreciation and
amortization (in inventory) (228) (443) (484) (124)
-------- -------- -------- --------
Total production costs (Non-GAAP) $ 52,780 $ 51,789 $105,787 $106,608
Change in product inventories 2,040 (590) 3,294 (7,210)
Add: Profit from by-products 4,636 5,244 10,602 9,884
Add: Profit from PGM recycling 2,803 2,732 4,615 5,020
-------- -------- -------- --------
Total costs of revenues $ 62,259 $ 59,175 $124,298 $114,302
======== ======== ======== ========
East Boulder Mine:
Reconciliation to costs of revenues:
Total operating costs (Non-GAAP) $ 15,349 $ 11,487 $ 32,052 $ 22,477
Royalties, taxes and other 3,382 3,417 6,860 7,393
-------- -------- -------- --------
Total cash costs (Non-GAAP) $ 18,731 $ 14,904 $ 38,912 $ 29,870
Asset retirement costs 12 11 23 21
Depletion, depreciation and
amortization 3,534 3,226 6,769 7,040
Depletion, depreciation and
amortization (in inventory) (66) (330) 125 (966)
-------- -------- -------- --------
Total production costs (Non-GAAP) $ 22,211 $ 17,811 $ 45,829 $ 35,965
Change in product inventories 1,514 (126) 443 (1,001)
Add: Profit from by-products 2,593 2,761 5,749 5,655
Add: Profit from PGM recycling 1,020 868 1,711 1,619
-------- -------- -------- --------
Total costs of revenues $ 27,338 $ 21,314 $ 53,732 $ 42,238
======== ======== ======== ========
PGM Recycling
Reconciliation to costs of revenues:
PGM recycling - depreciation 261 265 529 527
Cost of PGM recycling 93,149 79,552 177,264 124,706
-------- -------- -------- --------
Total costs of revenues $ 93,410 $ 79,817 $177,793 $125,233
======== ======== ======== ========