More ounces and a higher sales price enabled platinum producer
At its namesake mine in southwestern Montana, the company cranked out 111,000 oz. platinum and palladium at a cash cost of US$155 per oz. in the fourth quarter, compared with 105,000 oz. at $168 per oz. in the corresponding period of 1997.
For the year, the mine produced 444,000 oz. at US$151 per oz., compared with 355,000 oz. at $174 per oz. in 1997.
Stillwater sold the metals at an average price of US$278 per oz. in the fourth quarter, compared with US$193 per oz. in the year-ago period.
For the past year, it realized US$243 per oz., compared with US$203 per oz. in 1997.
Unfavorable forward sales kept the company from realizing market prices for most of its palladium during 1997 and much of 1998. The company sold forward at a time when prices were low, denying benefit from later higher prices.
In September 1998, Stillwater signed a long-term sales contract, allowing it to benefit from future price increases by setting a minimum price for palladium.
As a result, revenues jumped 41% in the last quarter of 1998, to US$30.5 million. For the year, revenues climbed to US$106.7 million, 39% over 1997.
Higher revenues translated into higher income, as Stillwater posted a net income of US$5.6 million (or 17 cents per share), compared with a net loss of US$844,000 (3 cents per share) for the corresponding period in 1997.
For the year, the company reported net earnings of US$13.4 million (43 cents per share), compared with a net loss of US$5.4 million (18 cents per share) in 1997.
Through expansion of the Stillwater mine, the company achieved throughput of more than 2,000 tons per day, and remains on track to reach 3,000 tons per day during the coming year. In November, it received approval to lift tonnage restrictions and allow for construction of a long-term tailings facility.
The company spent US$37.5 million in the fourth quarter and US$78.3 in all of 1998 on expanding the Stillwater mine and constructing the East Boulder project.
The company plans to spend US$270 million to construct a second mine at East Boulder, 13 miles west of Stillwater. In May of last year, it began construction of an 18,000-ft. tunnel into the platinum-bearing J-M reef at East Boulder. The tunnel-boring machine has proceeded 6,600 ft. and is expected to be completed by early 2000. During the first quarter, a second tunnel-boring machine will begin on a parallel access to the J-M reef.
East Boulder should come on-stream in 2001 with throughput of 2000 tons per day, and should produce 450,000 oz. platinum and palladium at cash costs comparable to those at the Stillwater mine. Total production for the company is expected to reach 1.2 million oz.
In the meantime, Stillwater expects to produce 525,000 oz. platinum and palladium in 1999, rising to 725,000 oz. in 2000.
Proven and probable reserves at of the end of 1998 stood at 37.1 million tons grading 0.71 oz. platinum and palladium per ton, equivalent to 27.3 million oz. The company has another 38.1 million tons of mineralized material grading 0.72 oz. per ton. It lowered the cutoff grade to 0.3 oz. per ton from 0.4 oz. per ton, owing to higher realized prices and lower operating costs.
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