Stillwater Mining Reports Earnings for Third Quarter
BILLINGS, MT - Stillwater Mining Company reported net profit for the 2010 third quarter of $5.9 million on revenues of $142.9 million. This compares to third quarter of 2009 net income of $4.2 million on revenues of $112.0 million. Stronger realized PGM prices in the third quarter of 2010 more than offset lower sales volumes in the third quarter of 2010 as compared to the third quarter of 2009. For the first nine months of 2010, Stillwater Mining Company reported net income of $33.8 million on revenues of $411.2 million. In the first nine months of 2009, the Company reported a net loss of $2.9 million on revenues of $292.6 million. The first nine months of 2010 was characterized by higher PGM prices and stronger performance from the Company's recycling segment than in the same period last year.
Combined sales realizations increased during the third quarter of 2010 for mined palladium and platinum ounces, averaging $687 per ounce, well above the $574 per ounce realized in the third quarter of 2009. The total quantity of mined palladium and platinum sold decreased to 120,500 ounces in the third quarter of 2010, compared to 137,400 ounces sold during the same period in 2009, reflecting delayed timing of ounces sold in the third quarter of 2009 and lower average realized ore grades at the Stillwater Mine in the third quarter of 2010.
The Company mines palladium and platinum from two underground mines located in south-central Montana. The mines produced a total of 122,400 ounces of palladium and platinum during the third quarter of 2010, an 8.7% improvement over the 112,600 ounce production in the second quarter of 2010, still a 5.2% decrease from the 129,100 total ounces produced during the third quarter of 2009. In the third quarter of 2010 production at the Stillwater Mine increased to 89,600 ounces, an improvement over the 79,200 ounces produced in the second quarter of 2010, but remained below the 95,100 ounces produced in the third quarter of 2009. The second quarter of 2010 was affected by lower grade ore from the mix of stopes being mined, diversion of production resources for a time into safety compliance and maintenance activities, and increased ground support requirements that impeded mining in some key areas for several weeks. Production at the Company's East Boulder Mine was 32,800 ounces in the third quarter of 2010, compared to 34,000 ounces in the same quarter of 2009.
Ore tons mined at both locations were consistent with planned production aiding the third quarter of 2010 improvement although average realized ore grades continued lower, particularly at the Stillwater Mine, where grades in several lower off-shaft stopes are not yet back to plan levels. The production mix at the Stillwater Mine during the second and third quarters of 2010 tended to favor the upper west area of the mine, which is inherently lower grade than the off-shaft area. Following the steep cutbacks in capital spending during 2009, mine management has found it necessary to increase its level of development spending in order to preserve production flexibility when operational challenges arise. This necessitated diverting some production resources into mine development as the year progressed.
Mine production costs in the Company's existing mines generally increased during the third quarter of 2010 compared to the third quarter of 2009. In aggregate, total cash costs per ounce (a non-GAAP measure defined below) averaged $402 in the third quarter of 2010, compared to total cash costs of $357 per ounce for the same period in 2009. The Stillwater Mine's total cash costs averaged $374 per ounce in the third quarter of 2010, compared to the $344 per ounce achieved in the third quarter of 2009. The East Boulder Mine's total cash costs averaged $480 per ounce during the third quarter of 2010, compared to $391 per ounce during third quarter of 2009. These per ounce increases reflected modestly higher operating expenses, lower overall mine production and the effect on royalties and taxes of higher PGM prices. On September 7, 2010, the Company announced an agreement under which it would acquire the PGM-copper assets of Marathon PGM Corporation, a Canadian exploration company headquartered in Toronto. Closing of the transaction is contingent upon a favorable vote of the Marathon shareholders and securing various regulatory approvals in Canada. Marathon holds a number of PGM-copper assets that are of particular interest to the Company, including a well-defined resource known as the Marathon project located near the town of Marathon, Ontario, Canada at the northern extremity of Lake Superior. The feasibility study for this property contemplates producing about 200,000 ounces per year of palladium and platinum, along with about 39 million pounds per year of copper, from an open-pit operation expected to be in production by 2014. Cost of constructing the mine is estimated to be about $400 million, to be funded out of the Company's internally generated cash flow and supplemental external financing. The feasibility study anticipates an active mine life of approximately 12 years, although there may be resource potential to extend the mine life. The company's address is 1321 Discovery Dr.,Billings, MT 59102, (406) 373-8700, fax: (406) 373-8701, email: investor-relations@