Palladium producer
The US11-per-share profit comes on revenue of US$66 million and compares with earnings of US$10 million, or US26 per share, in the corresponding period of 2001, when revenue totalled US$53 million.
Likewise, cash flow slumped to US$19 million from US$36 million between the two periods.
Stillwater sold 148,000 combined ounces of palladium and platinum at an average of US$449 per oz. — 40% more and 11% cheaper than a year earlier. The company did not produce enough metal to offset new expenses arising from the commercial startup of the East Boulder mine earlier this year.
“Due to our production pipeline, this financial impact will continue to a lesser degree into the fourth quarter,” says Chairman Francis McAllister. “Thereafter, we expect [platinum group metal] production and sales to reach a more normal balance.”
The company now operates two mines in Montana, East Boulder and Stillwater, which, combined, cranked out 108,000 oz. palladium and 31,000 oz. platinum in the recent quarter at a cost of US$270 per oz. (or US$377 when royalties, taxes and accounting charges are included).
The Stillwater mine, which sits on the eastern end of the J-M reef, contributed 80,000 oz. palladium and 24,000 oz. platinum — noticably less than a year earlier, reflecting lower head grades, labour unrest and inadequate infrastructure.
Just under 2,500 tons of ore were fed daily to the mill, which is slightly less than a year earlier and 500 tons below capacity. Run-of-mine ore averaged 0.51 oz. per ton, down 11%, and recovery rates came to 90%, down 1%.
Cash costs rang in at US$111 per ton milled, or US$243 per oz. produced, whereas the total production cost was US$156 per ton, or US$341 per oz.
Stillwater notes that normal production levels had been achieved before the period ended and that output is 10,000 oz. ahead of last year, when contributions from the first two quarters are included. The mine produced 380,000 oz. combined metals in the first nine months of the year.
At East Boulder, which sits on the western end of the reef, 108,000 tons were sent through the mill in the recent quarter to produce 27,000 oz. palladium and 8,000 oz. platinum. The average head grade came in at 0.38 oz., and the average recovery rate was 86%.
The cash operating cost averaged US$114 per ton milled, or US$348 per oz. After royalties, taxes and accounting charges, the cost came to US$158 per ton, or US$484 per oz.
Stillwater’s earnings in the first nine months topped US$32 million (US76 per share) on revenue of US$217 million, compared with year-earlier earnings of US$61 million ($1.57 per share) on revenue of US$218 million.
Stillwater has maintained a firm grip on corporate expenses, keeping general and administration costs below US$4 million, well in line with the previous quarter and 29% less than a year earlier.
Stillwater and its creditors have amended the company’s US$250-million lending agreement so that the miner needs to produce only 610,000 oz. over the current and following three quarters. In exchange, creditors will receive an extra US$1.2 million plus 0.5% more in annual interest.
Annual interest rates on the 5-year loan now range from 3% to 3.4% plus the London Inter-bank Offer Rate (LIBOR). Interest rates on the 7-year loan are 4.25% plus LIBOR. Also, the company must pay a commitment fee of 0.5% on any unused portion of its US$50-million revolving line of credit.
At Sept. 30, Stillwater had withdrawn nearly US$59 million from the 5-year term loan and just over US$130 million from the 7-year term loan. The loans are bearing interest at 4.6% and 5.6% apiece.
The company also arranged for US$7.5 million in credit. A 2.8% financing fee is accruing on the unused portion.
Stillwater began the current quarter with nearly US$62 million in working capital.
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