Stillwater weathers charge

Montana-based platinum producer Stillwater Mining (SWC-N) finished 2001 off with net income of US$65.8 million despite a fourth-quarter, US$11-million restructuring charge.

The income, which translates into US$1.68 per share compares with year-ago earnings of US$61.5 million (US$1.57 per share). Revenue between the two periods climbed to US$277.4 million from US$225.2 million.

During the final three months of 2001, the company, North America’s largest producer of platinum and palladium, earned US$4.9 million (12 per share) on revenue of US$59.3 million, compared with income of US$23.5 million (60 per share) on US$78.7 million in the corresponding period of 2000.

The company’s namesake mine in southwestern Montana produced a record 134,000 oz. of combined platinum and palladium during the recent quarter — up 10% from a year earlier, thanks in large to a 17% increase in tons milled. Total cash costs climbed to US$267 per oz. from US$264 per oz. Higher cash cost are attributed to additional manpower levels and an increase in stope mining activities, offset by lower royalties and taxes.

The fourth quarter production numbers do not include 13,000 oz. recovered from construction and development activities at the East Boulder project near Big Timber, Mont.

For the full year, the company pumped out a record 504,000 oz. of palladium and platinum, not including 22,000 oz. from East Boulder, up 17% from 2000. The increased is again thanks to 21% more tons milled. Total cash costs were unchanged at US$264 per oz.

The company realized and average of US$461 per oz. for its palladium and US$452 per oz. for platinum during the recent quarter, both better than the average market prices, but off the year-ago pace. For the year, the average realized prices came in at US$570 per oz. of palladium and US$498 per oz. of platinum, both lower than the average market price, but slightly better than the previous year’s realized prices.

Looking forward, the company expects production from the Stillwater mine during 2002 to improve to 590,000 oz. Under the revised operating plan, expansion to the previously planned 3,000 ton per day mining rate has been deferred and the mine will keep running at about 2,500 tons of ore per day.

Stillwater also expects to pour about 150,000 oz. from the East Boulder Mine, which is slated to reach its initial mining rate of 1,000 tons per day by the beginning of the third quarter.

During 2001, Stillwater completed 19,520 metres of development and 156,770 metres of total diamond drilling at its namesake mine. As a result proven and probable reserves increased 2% to total 21.6 million tonnes grading 23.3 grams per tonne, for 16 million contained oz. of palladium and platinum at a ratio of 3.3 to 1.

At the end of 2001, East Boulder’s proven and probable reserves stood at 23.9 million tonnes running 18.2 gram or 11.6 million contained oz. at a ratio of 3.7 to 1. Overall East Boulder’s reserve grade dropped compared to 2000, but the number of contained oz. increased as a result of greater continuity.

In mid-December, Stillwater announced that its president and chief operating officer, Harry Smith would step down in early January.

Late in the year, the company renegotiated its US$250-million credit facility, from which it has already drawn down US$200 million. Under the new agreement, US$65 million of the US$250 million will continue as a 5-year loan, whereas US$135 million will be in the form of a 7-year loan. The last US$50 million will be a 5-year revolving credit facility.

The company ran into financial troubles earlier in 2001 when expansions at its Stillwater and East Boulder platinum group metals operations in Montana coincided with tumbling prices for platinum and palladium.

In early February, the Company announced it had raised $60 million via a private placement of 4.3 million shares to a number of funds at US$14 per share. A portion of the proceeds went to pay down US$25 million of the revolving credit facility.

At Dec. 31, Stillwater had US$14.9 in cash and cash equivalents.