Stillwater sinks deep into the red

Vancouver Some US$15.8 million in acquisition charges drove Stillwater Mining (SWC-N) deep into the red during the second quarter of 2003.

The big charge, US$14 million for unutilized tax losses and US$1.8 million in expenses, came in connection with Norilsk Nickel’s purchase of a 51% stake in the company. In June, Norilsk, the World’s largest palladium producer, paid US$100 million in cash and 877,000 oz of palladium for 45.5 million Stillwater shares.

Overall, Stillwater reported a loss of US$19.3 million, or US$0.40 a share, on revenue of US$58.9 million in the three months ended June 30. This is a mark shortfall from earnings of US$11.1 million, or US$0.26 a share, on revenue of US$75 tallied in the second quarter of 2002.

In the second quarter, the company produced 145,000 oz fo combined palladium and platinum, down from the 165,000 oz crnaked out in the second quarter of 2002. The shortfall is the result of 22% lower output at the Stillwater mine. The East Boulder operation added 40,000 oz, a 29% increase from 2002 levels.

The company realized prices of US$341 per oz for palladium, and US$565 per oz for platinum in the quarter, compared to US$442 and US$511, respectively, in the corresponding period of 2002.

Total cash costs on a consolidated basis for the second quarter of 2003 tallied US$281 per oz, compared to US$270 per oz in 2002. Driving the increase is a US$9 per oz rise in operating costs primarily related to lower production and higher mining costs at the Stillwater mine, along with a US$2 per oz increase in royalties and taxes.

Both the East Boulder and Stillwater operations lie in Montana.