Stillwater Mining Company Reports First Quarter Earnings

Before you go, we thought you'd like these...
Before you go close icon

Stillwater Mining Company Reports First Quarter Earnings

BILLINGS, Mont.--(BUSINESS WIRE)-- STILLWATER MINING COMPANY (NYSE: SWC)(TSX: SWC.U)

  • Consolidated net income attributable to common stockholders of $14.6 million or $0.12 per diluted share
  • First quarter mine production of 127,100 PGM ounces ahead of plan
  • Recycling volume of 154,200 ounces sets Company quarterly record
  • Three Montana expansion projects continue to make significant progress

Stillwater Mining Company today reported consolidated net income attributable to common stockholders for the 2013 first quarter of $14.6 million, or $0.12 per diluted share. Total revenues for the first quarter were $250.6 million. Consolidated net income attributable to common stockholders reported for the 2012 first quarter was $5.9 million, or $0.05 per diluted share on revenues of $203.1 million.


Commenting on the Company's 2013 first quarter results, Frank McAllister, the Company's Chairman and Chief Executive Officer, stated, "The first quarter of 2013 has provided an excellent start to the year for Stillwater Mining. Production from our Montana mines exceeded plan with a run rate ahead of our 500,000 ounce annual guidance, recycling volumes for the quarter set a new Company record, total cash costs per ounce were lower than our guidance, and our teams continue to be on track at our three Montana growth projects. Overall, the Company's operations are better positioned than ever before in its 26 year operating history. In addition to operational strength, the Company is on firm financial footing, with liquidity sufficient to ensure we will be able to fund our PGM growth projects and should withstand any short-term volatility in PGM prices. Despite a drop in most metal prices during early April, the fundamentals for palladium remain robust. Demand for this precious metal continues to grow in the face of some severe supply constraints, and Stillwater is in an enviable position to benefit from these fundamentals."

The Company's mines produced a total of 127,100 ounces of palladium and platinum during the first quarter of 2013, a 5.2% increase from the 120,800 ounce production in the first quarter of 2012. The increase in ounces produced between 2012 and 2013 was driven by the selection of developed mining stopes available from period to period, typical variability in mining production, the normal result of changes in mining conditions.

First quarter 2013 revenues from sales of mined production (including by-products) totaled $128.3 million, up from $116.7 million in the same period last year. Combined sales realizations increased during the first quarter of 2013 for mined palladium and platinum ounces, averaging $926 per ounce, an increase from the $875 per ounce realized in the first quarter of 2012. This combined improvement in price and production, if sustained, would equate to a benefit of about $12 million to the Company's quarterly revenues. The total quantity of mined palladium and platinum sold increased to 130,400 ounces in the first quarter of 2013, compared to the 123,000 ounces sold during the same period in 2012.

Total cash costs per mined ounce (a non-GAAP measure defined below) averaged $523 in the first quarter of 2013, compared to total cash costs of $514 per ounce for the first quarter of 2012. The increase is primarily the result of the ever-expanding underground mining operations, general wage and other cost inflation and the priority given to the new-miner training programs. Based on results for the first quarter and projections for the remainder of the year, the Company is maintaining its full-year cash cost guidance of $560 per mined ounce.

The total recycled ounces of 154,200 for the first quarter of 2013 set a new quarterly record for the Company and were 15.5% more than the previous quarterly high of 133,500 ounces in the third quarter of 2011. It was up from the 107,300 ounces of palladium, platinum and rhodium (including tolled ounces) recycled during the first quarter of 2012. The increased volumes were primarily attributable to finding and adding new recycling suppliers. Recycling sales volumes increased 42%, to 116,900 ounces in the first quarter of 2013, from 82,400 ounces in the first quarter of 2012. Revenues from sales of purchased recycling materials totaled $122.3 million in the 2013 first quarter, up from $86.3 million in the same period last year. The Company's combined average realized price for sales of recycled palladium, platinum and rhodium increased to $1,043 per ounce in the first quarter of 2013 from $1,039 per ounce in the first quarter of 2012.

Commenting further on the first quarter, Mr. McAllister added, "Our teams continue to make significant strides on our Montana development projects. The 8,200-foot tunnel boring machine (TBM) drive associated with the Graham Creek project at the East Boulder Mine is nearly complete, with total advance of nearly 8,000 feet at the end of the first quarter. Construction on one of the two ventilation raises to the surface planned for this project has started and first production from Graham Creek is expected in late 2014. At the Stillwater Mine, construction on the Far West project, located in the lower west area, commenced during the first quarter with work beginning on the extension of the 3500 West rail level, which will be the primary haulage level for this area. And at the Blitz project, on the eastern side of the Stillwater Mine, the new TBM has now advanced 1,300 feet and the conventional drift above it has driven about 1,800 feet of ramp and infrastructure development to date. We are very pleased with the progress on these projects, which are expected to provide sustainability and future growth for our operations. Our capital expenditure guidance for this year remains at $172.8 million, with almost 87% of that amount focused on the existing Montana operations and these key growth projects.

"At our Marathon PGM-copper development in Canada, early indications from the ongoing engineering work suggests the project remains economically viable, at current metal prices, and even with the expected adjustments to grade that we have discussed previously. We expect to complete the engineering design as well as an updated economic assessment during the second half of this year. In addition, the Company is in the process of responding to information requests following the submission of an Environmental Impact Statement (EIS) to the Canadian authorities. These responses are expected to be submitted by the end of this year's second quarter.

"The 2013 drilling season at the Altar project in Argentina is now complete, one month ahead of schedule. We significantly scaled back spending at Altar, with total exploration expenses and administrative costs of $6.7 million for the first quarter, down approximately 44% compared to $12.0 million in the first quarter last year. This year's drill program included 20 drill holes (16 new drill holes and 4 extensions) totaling 11,100 meters, compared to the 70 drill holes totaling 27,280 meters completed during the 2012 drilling season. Overall drilling results have been favorable. These holes were designed to test for horizontal and vertical extensions to the known mineralized area at Altar."

Mr. McAllister concluded, "The J-M Reef is a unique, world-class resource, but our most important asset is our people. Underground mining requires highly developed skills and continuous attention to detail. I would like to thank our teams for their ever-continuing efforts to improve mining safety and efficiency. For the first quarter, the Company's overall safety incidence rate, which is calculated as the number of reportable injuries per 200,000 hours worked, was 3.3, higher than the exceptionally low 1.5 rate for the first quarter last year. By historical standards, the 2013 first quarter incidence rate of 3.3 would be good safety performance, but we continue to focus on improving our safety culture through our on-going commitment to the CORESafety philosophy."

Cash Flow and Liquidity

At March 31, 2013, the Company's available cash was $203.1 million, compared to $379.7 million at December 31, 2012. If highly liquid short-term investments are included with available cash, the Company's balance sheet liquidity totaled $462.1 million at March 31, 2013, a decrease from $641.7 million at December 31, 2012. Most of this decrease was related to debt redemption during the first quarter. Of the Company's current cash balance, $38.9 million is dedicated to the Marathon project (and other related properties) and is unavailable for other corporate purposes. Net working capital - comprised of total current assets (including available cash and short-term investments), less current liabilities - increased to $619.3 million at March 31, 2013, from $606.0 million at year end 2012.

Net cash provided by operating activities (which includes changes in working capital) totaled $15.5 million in the first quarter of 2013, compared to $15.1 million of cash provided in the first quarter of 2012. However, cash provided from operations included working capital requirements of $21.1 million in the first quarter of 2013, which included significant growth in recycling inventories; in the first quarter of 2012, working capital requirements totaled $6.1 million. Capital expenditures were $29.4 million in the first quarter of 2013, up from $22.7 million in the first quarter of 2012. Of the capital expenditures for the quarter, $3.1 million was attributable to the major development projects underway on the J-M Reef in Montana. The capital spending budget for 2013 is $172.8 million, up from $116.6 million of capital spending during 2012.

Outstanding debt at March 31, 2013 was $300.2 million, down from $461.1 million at December 31, 2012. On March 15, 2013, the Company repaid $164.3 million of its 1.875% convertible debentures. The Company's current debt balance includes $264.3 million outstanding in the form of convertible debentures, $29.6 million of exempt facility revenue bonds due in 2020, a capital lease of $6.0 million and $0.3 million for a small installment land purchase.

First Quarter Results - Details

For the first quarter of 2013, the Company's Stillwater Mine produced 92,600 ounces, an increase of 5.6% from the 87,700 ounces produced in the first quarter of 2012. Production at the Company's East Boulder Mine of 34,500 ounces in the first quarter of 2013 reflected an increase from the 33,100 ounces produced in the same quarter of 2012.

Costs of metals sold (before depletion, depreciation and amortization expense) increased to $192.6 million in the first quarter of 2013 from $158.1 million in the first quarter of 2012. Mining costs included in costs of metals sold increased slightly to $75.7 million in the 2013 first quarter from $74.0 million in the 2012 first quarter. Recycling costs, which primarily reflect the cost of acquiring spent catalytic materials for processing, totaled $116.9 million in the first quarter of 2013, more than the $84.1 million reported in the first quarter of 2012. The increase was due to higher volumes sold and the related higher market value of the materials acquired for processing.

General and administrative ("G&A") costs were $15.2 million in the first quarter of 2013, up from the $12.5 million incurred during the same period of 2012, due in part to higher legal and advisory fees. Exploration expenses decreased to $6.0 million for the first quarter of 2013, of which almost all was attributable to the Altar copper-gold project. Exploration expenses incurred during the first quarter of 2012 were $10.1 million. Marketing expenses declined to $1.7 million in the 2013 first quarter compared to $2.3 million in the same quarter of 2012.

Interest expense reported for the first quarters of 2013 and 2012 was $6.7 million and $1.7 million, respectively. This increase is principally the result of non-cash accretion of the debt discount related to the new 1.75% convertible debentures that is charged to earnings over the expected life of the convertible debentures. The amount of these non-cash charges to earnings in the first quarter of 2013 was $3.8 million.

During the first quarter of 2013, the Company recorded a foreign currency transaction gain of $4.2 million, primarily related to the deferred tax liability recorded in association with the acquisition of Peregrine Metals Ltd. The foreign currency transaction gain recorded for the first quarter of 2012 was $2.9 million.

Reported consolidated net income attributable to common stockholders for the first quarter of 2013 included, by business segment (before income taxes), income of $37.5 million from mining operations, income of $6.0 million from recycling activities (including financing income), $0.9 million of costs associated with the Marathon properties, $1.2 million of costs related to the Altar copper-gold project, and corporate costs of $22.4 million. For the first quarter of 2013, the Company reported a $4.9 million income tax provision. For the first quarter of 2012, the consolidated net income attributable to common stockholders included, by business segment (before income taxes), $28.3 million of income from mining operations, $2.4 million income from recycling activities (including financing income), $9.0 million of costs related to the Altar copper-gold project, $3.6 million of costs associated with the Marathon properties and corporate costs of $14.4 million. For the first quarter of 2012, the Company reported a $2.3 million income tax benefit.

About Stillwater Mining Company

Stillwater Mining Company is the only U.S. producer of palladium and platinum and is the largest primary producer of platinum group metals outside of South Africa and the Russian Federation. The Company's shares are traded on the New York Stock Exchange under the symbol SWC and on the Toronto Stock Exchange under the symbol SWC.U. Information on Stillwater Mining can be found at its website: www.stillwatermining.com.

Some statements contained in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, therefore, involve uncertainties or risks that could cause actual results to differ materially. These statements may contain words such as "desires," "believes," "anticipates," "plans," "expects," "intends," "estimates" or similar expressions. Such statements also include, but are not limited to, comments regarding expansion plans, costs, grade, production and recovery rates; permitting; financing needs and the terms of future credit facilities; exchange rates; capital expenditures; increases in processing capacity; cost reduction measures; safety; timing for engineering studies; environmental permitting and compliance; litigating; labor matters; and the palladium, platinum, copper and gold market. These statements are not guarantees of the Company's future performance and are subject to risks, uncertainties and other important factors that could cause its actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Additional information regarding factors that could cause results to differ materially from management's expectations is found in the section entitled "Risk Factors" in the Company's 2012 Annual Report on Form 10-K, in its quarterly Form 10-Q filings, and in corresponding filings with Canadian securities regulatory authorities.

The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The Company disclaims any obligation to update forward-looking statements.

 
Stillwater Mining Company
Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands, except per share data)
 
Three Months Ended March 31,
2013 2012
REVENUES
Mine production$128,314$116,704
PGM recycling122,334 86,347 
Total revenues250,648203,051
COSTS AND EXPENSES
Costs of metals sold
Mine production75,75374,029
PGM recycling116,862 84,115 
Total costs of metals sold192,615158,144
Depletion, depreciation and amortization
Mine production15,02514,404
PGM recycling258 268 
Total depletion, depreciation and amortization15,283 14,672 
Total costs of revenues207,898172,816
Marketing1,7272,338
Exploration5,95110,117
Research and development63705
General and administrative15,18712,478
Loss on long-term investments562
Abandonment of non-producing property2,835
(Gain)/Loss on disposal of property, plant and equipment36 (5)
Total costs and expenses231,424201,284
OPERATING INCOME19,2241,767
OTHER INCOME (EXPENSE)
Other1,1458
Interest income1,200645
Interest expense(6,652)(1,715)
Foreign currency transaction gain, net4,237 2,931 
INCOME BEFORE INCOME TAX (PROVISION) BENEFIT19,1543,636
Income tax (provision) benefit(4,850)2,304 
NET INCOME$14,304 $5,940 
Net loss attributable to noncontrolling interest(279) 
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$14,583 $5,940 
Other comprehensive income, net of tax
Net unrealized gains on securities available-for-sale74 308 
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$14,657 $6,248 
Comprehensive loss attributable to noncontrolling interest(279) 
TOTAL COMPREHENSIVE INCOME$14,378 $6,248 
 
Weighted average common shares outstanding
Basic117,433115,552
Diluted159,695116,580
Basic earnings per share attributable to common stockholders$0.12$0.05
Diluted earnings per share attributable to common stockholders$0.12 $0.05 
 
  
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share data)
 
March 31,December 31,
20132012
ASSETS
Current assets
Cash and cash equivalents$203,093$379,680
Investments, at fair market value259,014261,983
Inventories186,471153,208
Trade receivables14,3039,953
Deferred income taxes21,30421,304
Other current assets24,993 26,734 
Total current assets709,178852,862
Mineral properties and mine development, net of $335,837 and $325,977 of accumulated depletion and amortization914,416899,225
Property, plant and equipment, net of $175,536 and $169,933 of accumulated depreciation120,086122,677
Deferred debt issuance costs9,0529,609
Other noncurrent assets5,733 6,390 
Total assets$1,758,465 $1,890,763 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$37,548$28,623
Accrued compensation and benefits30,59731,369
Property, production and franchise taxes payable12,48713,722
Current portion of long-term debt and capital lease obligations1,957168,432
Income taxes payable669
Other current liabilities6,641 4,702 
Total current liabilities89,899246,848
Long-term debt and capital lease obligations298,194292,685
Deferred income taxes196,863199,802
Accrued workers compensation6,1995,815
Asset retirement obligation8,1327,965
Other noncurrent liabilities7,927 5,068 
Total liabilities607,214 758,183 
EQUITY
Stockholders' equity
Preferred stock, $0.01 par value, 1,000,000 shares authorized; none issued
Common stock, $0.01 par value, 200,000,000 shares authorized; 118,002,829 and 116,951,081 shares issued and outstanding1,1801,170
Paid-in capital1,063,2611,058,978
Accumulated earnings35,35320,770
Accumulated other comprehensive loss(25)(99)
Total stockholders' equity1,099,769 1,080,819 
Noncontrolling interest51,482 51,761 
Total equity1,151,251 1,132,580 
Total liabilities and equity$1,758,465 $1,890,763 
 
 
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
Three Months Ended March 31,
2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$14,304$5,940
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation and amortization15,28314,672
(Gain)/Loss on disposal of property, plant and equipment36(5)
Loss on long-term investments562
Deferred taxes1,830(3,501)
Foreign currency transaction gain, net(4,237)(2,931)
Abandonment of non-producing property2,835
Accretion of asset retirement obligation167153
Amortization of debt issuance costs557314
Accretion of convertible debenture debt discount3,8329
Share based compensation and other benefits4,2463,772
Changes in operating assets and liabilities:
Inventories(34,017)(1,566)
Trade receivables(4,350)(3,182)
Accrued compensation and benefits(780)857
Accounts payable11,5673
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Gift Finder Promo
More to Explore
Mon, Dec 05
Set Your Location
City, State, or Zip