Stillwater Mining Reports Profit For Third Quarter

 

COLUMBUS, MT - Stillwater Mining reported net profit for the 2009 third quarter of $4.4 million in revenues of $112.0 million. This compares to third quarter 2008 net income of $0.1 million on revenues of $254.2 million. Although the 2009 third quarter reflects sharply lower PGM prices and much lower recycling volumes processed than last year's third quarter, the significant improvements in costs of production have contributed significantly towards the profitability.

Operations at both of the Company's mines were restructured in late 2008 in response to the worldwide financial crisis and falling PGM prices in order to reduce costs and improve productivity. Reflecting the Company's restructuring efforts, production of palladium and platinum at the Company's Stillwater Mine increased to 95,100 ounces in the third quarter of 2009 at a total cash cost of $344 per ounce, compared to 83,800 ounces in the same quarter of 2008 at a total cash cost of $331 per ounce. Stillwater Mine's higher production benefited from a restructuring plan that redeployed miners from the East Boulder Mine, with offsetting reductions in support manpower which overall held the total workforce there essentially flat. East Boulder Mine production in this year's third quarter decreased by about 6% to 34,000 ounces at a total cash cost of $391 per ounce from 36,200 ounces at a total cash cost of $392 per ounce in last year's third quarter.

The lower East Boulder Mine output reflects a roughly 50% manpower reduction, as well as a more cost-driven focus centered around optimizing the site workforce within consolidated mining areas and at the same time adjusting support manpower to a level appropriate for these optimized mining areas. As a result, productivity has improved at both operations in 2009. With regard to sales, the average combined sales realization on mined palladium and platinum ounces, including the effect of contractual floor and ceiling prices, declined to $574 per ounce in this year's third quarter from $652 per ounce in the same period last year, driven by the decline in PGM market prices between the two periods.

Commenting on the Company's performance, Francis R. McAllister, Stillwater Chairman and CEO, noted, "I am very pleased to report that the Company is making significant strides forward in redesigning its operations and improving mining efficiency. While the Company's financial performance certainly has been aided by the recovery in prices for palladium and platinum during 2009, we also have seen the benefit of improving productivity and declining production costs. This restructuring of the way we operate is an urgent priority, particularly in view of the expiration of our supply agreement with Ford at the end of next year. In the past, the floor prices in the automotive contracts have protected us during periods of low PGM prices. The expiration of the floor prices will require us to be more resilient in responding to any downward pricing cycles. While there is still progress to be made in this area, I am particularly encouraged by the broad support within our Company for these efforts and by the successes demonstrated to date.

The Company's smelting and refining complex in Columbus, Montana processes concentrates from the Company's mines as well as recycled catalyst materials purchased from or processed on behalf of third parties. Including both purchased and tolled material, the Company processed recycling material containing a total of 60,800 ounces of platinum, palladium and rhodium through the smelter during the third quarter 2009, slightly less than half the 126,100 ounces fed into the smelter during the same period last year. Recycling activities contributed $1.7 million to the Company's operating margin (before corporate overhead and financing charges) during the third quarter of 2009, compared to $17.8 million in the third quarter of 2008. Volumes of material available for recycling have dropped off sharply with the decline in PGM prices, reflecting the market's reduced incentive to recycle at lower prices, as well as the steep losses incurred by many collectors in the industry as the value of their inventories declined. Further, with new car sales sharply lower, existing vehicles are being driven longer reducing the number being recycled. Volumes available for recycling have strengthened somewhat during 2009 from their earlier lows, but remain far below the robust levels seen during 2008.

The company’s address is 536 East Pike Avenue, P.O. Box 1330, Columbus, MT 59019, (406) 322-8700, fax: (406) 322-8701, email: [email protected].