Denver — Platinum producer
Revenue for the recent quarter was US$89.9 million, compared with US$42.1 million a year ago.
Before the accounting change, first-quarter income was US$13.4 million (34 per share), still significantly higher than a year ago.
The Stillwater mine, in southwestern Montana, produced 124,000 oz. combined platinum and palladium, up from 112,000 oz. in the first quarter of 2000. The increase reflects a 19% increase in mill throughput, though this was partially offset by a 6% drop in head grades. The company realized prices of US$704 per oz. for palladium and US$529 per oz. for platinum.
On the downside, cash operating costs increased to US$217 from US$196 per oz. between the two periods, while total production costs, including royalties and taxes, escalated to US$310 from US$271 per oz.
“During 2000, the company im plemented a number of aggressive programs to address the issue of inadequate mine development, mine infrastructure and mine planning,” says Stillwater Chairman Francis McAllister. “We are beginning to see the benefits of the programs in terms of increased production and lower costs.”
The company expects to see production top 500,000 oz. for the year.
During the first quarter, Stillwater amended long-term sales with two of its customers, committing an additional 10% of its palladium and platinum production through to and including 2010. However, the contracts place a ceiling on metal prices in 2001, limiting the company’s realized prices to US$447 per oz. for 36% of palladium sold and US$556 per oz. for 39% of platinum sold. The effect of the ceiling on first-quarter production amounted to US$185 per oz.
Meanwhile, Stillwater is advancing the East Boulder project toward initial production. The stand-alone operation, 13 miles west of the Stillwater mine, is expected to enter commercial production in 2002. Capital costs for the project have ballooned to US$370 million, compared with the original estimate of US$270 million. Part of the additional cost is related to slowdowns in driving two tunnel-boring machines toward the JM reef, which hosts the mineralization.
Stillwater drilled 155 diamond drill holes at East Boulder in an attempt to define reserves. Results indicate a high degree of continuity, resulting in 140 tons per ft. of footwall lateral, compared with 70 tons per ft. at the Stillwater mine. Despite the higher tonnages, the grade of the mineralization appears to be less than at the Stillwater mine (though these results are preliminary and could change as mining progresses). The undiluted grade of the mineralization is 0.63 oz. per ton over 6.8 ft., on par with previous estimates; this would result in millfeed grades of 0.51 oz. per ton, compared with a probable reserve average of 0.71 oz. per ton.
“At East Boulder, we are beginning to see the operating plan take shape,” McAllister explains. “The results of the drilling, along with the additional detailed engineering, have allowed us to estimate costs with greater certainty. Our ability to fund the revised cost is supported by excellent operating cash flows and a new credit agreement.”
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