Stillwater inks long-term sales contracts

Denver — Stillwater Mining (SWC-X) has renegotiated and extended its long-term sales contracts to take advantage of bullish prices in platinum and palladium markets.

The new arrangements establish higher prices on a portion of the company’s current contracts, while extending the terms through to 2010, with new “floors” and “ceilings.”

The floors have been lifted 40% to US$490 per oz. on palladium produced from 2001 through to 2003. From 2004 to 2010, 70% of the palladium produced from its operations in southwestern Montana will have an average price of US$400 per oz.

The original contracts, signed in September 1998, established a minimum price of US$225 per oz. on 90% of all the palladium produced, with a ceiling of US$400 per oz. on 30% of the metal.

Stillwater expects to phase-out these ceilings by 2004, replacing them with a new ceiling of US$975 per oz. on 20% of palladium produced from 2004 to 2010.

In platinum, the company established a minimum price of US$425 per oz. on 60% of that metal, along with a ceiling of US$850 per oz. on 12% of production from 2004 to 2010 — this, in addition to 1998 contracts that commit the company to sell 20% of production between US$325 and US$425 per oz. through 2003.

The new contract arrangements come after more than two years of elevated prices for platinum group metals brought on largely by restricted supply from Russia. Prior to 1998, Stillwater was caught in backwardization, selling the metals, under previous contracts, into the market below the prevailing prices.

Stillwater Chairman William Nettles called the implications of these contracts “enormous,” saying “the new floors will provide a good margin with excellent upside potential and a solid foundation for our long-term financing.”

Meanwhile, the average mining rate at the Stillwater operation has been raised to 2,100 tons per day. The work is part of the company’s recently announced 3-year operating plan to achieve mill throughput of 2,800 tons per day by 2003.

The company also completed a 125-hole program of definition drilling at the East Boulder project, 13 miles west of the Stillwater mine. Results are expected by the end of the first quarter of 2001.