Stillwater posts record earnings

Stillwater Mining (SWC-X) has posted record earnings on the strength of higher commodity prices and a late surge in productivity at its namesake platinum-palladium mine in southwestern Montana.

For the fourth quarter of 1999, the company earned US$13.4 million (or 35 per share), compared with US$5.6 million (15 per share) in the corresponding period of 1998. For all of 1999, it earned US$37.2 million (96 per share), compared with US$13.4 million (38 per share) in 1998.

Production was up 17% in the fourth quarter to 110,000 oz. platinum and palladium, compared with year-ago figures. Between 1998 and 1999, however, output fell to 409,000 from 444,000 oz.

Stillwater Chairman William Nettles conceded that 1999 was a challenging year, but added: “Good progress is being made to increase tons, lower costs and increase ounces.”

Stillwater mined 187,000 tons in the recent fourth quarter — up 8% from the corresponding period in 1998 and 23% higher than in the third quarter of 1999. Still, tonnage was down 5% for the year, to 688,000 tons.

Cash operating costs between the two fourth quarters rose to US$207 from US$155 per oz.; between 1998 and 1999, they increased to US$199 from US$151 per oz.

Rising commodity prices, especially in the fourth quarter, pushed 1999 revenue up 43%, to US$152.7 million. The average realized price of metal sold last year was US$375 per oz., compared with US$243 in 1998. Stillwater reports a combined price for palladium and platinum at a ratio of 3.2 oz. palladium per oz. of platinum.

The mine is expected to produce 525,000-575,000 oz. platinum-palladium in 2000, while cash costs decline to a projected US$155 from the current US$175 per oz. Targeted daily throughput is 3,000 tons.

Proven and probable reserves stand at 16.2 million oz. platinum-palladium in 23 million tons grading 0.71 oz. per ton. In addition, the mine hosts another 21.7 million tons of mineralized material grading 0.72 oz. per ton. These estimates are based on a price of US$225 per oz. palladium and US$350 per oz. platinum.

Meanwhile, 13 miles to the west, at Stillwater’s East Boulder project, tunnel-boring continues to advance the J-M reef. The first machine is expected to intersect the reef during the first quarter.

The tailings plant at East Boulder is now built, and mill construction is well under way. Construction costs for 2000 are pegged at US$200 million, while startup is scheduled for 2001.

The project hosts about 9.4 million oz. in 13.3 million tons at the same grade, plus an estimated 27.5 million oz. in 16.5 million tons.