Stillwater Mining Reports Record Quarterly Earnings for the First Quarter
BILLINGS, MT--(Marketwire - May 03, 2011) - STILLWATER MINING COMPANY (NYSE: SWC)
The Company mines palladium and platinum from two underground mines located in south-central Montana. The mines produced a total of 131,200 ounces of palladium and platinum during the first quarter of 2011, a 1.7% improvement over the 129,000 ounce production in the first quarter of 2010 and an 8.3% increase from the 121,100 ounces produced during the fourth quarter of 2010.
Production at the Company's Stillwater Mine increased to 98,600 ounces, an improvement of 2.4% over the 96,300 ounces produced in the first quarter of 2010 and an increase of 13.9% over the 86,600 produced in the fourth quarter of 2010. Production at the Company's East Boulder Mine was 32,600 ounces in the first quarter of 2011, compared to 32,700 ounces in the same quarter of 2010 and a decrease of 5.5% from the 34,500 ounces produced in the fourth quarter of 2010.
Combined sales realizations increased during the first quarter of 2011 for mined palladium and platinum ounces, averaging $994 per ounce, 54.3% above the $644 per ounce realized in the first quarter of 2010, reflecting higher market prices for palladium and platinum and the absence of contract ceiling prices on platinum in 2011. The total quantity of mined palladium and platinum sold decreased to 115,100 ounces in the first quarter of 2011, compared to 135,100 ounces sold during the same period in 2010, as a result of sales timing differences between the two quarters.
Mine production costs increased during the first quarter of 2011 compared to the first quarter of 2010. Total cash costs per mined ounce (a non-GAAP measure defined below) averaged $437 in the first quarter of 2011, compared to total cash costs of $364 per ounce for the first quarter of 2010, and total cash costs of $432 per ounce in the fourth quarter of 2010. The Company's full year 2011 guidance for total cash costs per ounce is about $430, up from the $397 averaged in the 2010 period. The increase in 2011 reflects a rising cost trend in 2010 plus an expectation of continuing general inflation for wages and materials, staffing growth, and the effect of higher average sales realizations on royalties and taxes during 2011. This is partially offset by the slightly higher mine production expected in 2011. The $437 per ounce reported for the 2011 first quarter is a little higher than guidance, in part because of higher royalties and taxes than planned. This results from higher PGM prices than originally projected and also from timing differences in by-product and recycling credits. At this point, the Company is maintaining its total cash costs guidance of $430 per mined ounce for the full period of 2011.
The Stillwater Mine's total cash costs averaged $430 per ounce in the first quarter of 2011, compared to the $339 per ounce achieved in the first quarter of 2010. The East Boulder Mine's total cash costs averaged $459 per ounce during the first quarter of 2011, compared to $439 per ounce during first quarter of 2010. These per ounce increases reflect higher overall operating expenses, including the effect on royalties and taxes of higher PGM prices and increases in maintenance costs.
The Company's smelting and refining complex in Columbus, Montana processes concentrates from the two mines and recycles spent catalyst material received from third parties. A portion of the recycling material is purchased for the Company's own account and the balance is toll processed on behalf of others. In total, the Company processed recycling material containing 115,600 ounces of palladium, platinum and rhodium through the smelter and refinery during the first quarter of 2011, down slightly from the 119,300 ounces recycled during the first quarter of 2010. The Company's recycling segment had net income for the first quarter of 2011 of $2.9 million (including financing income), flat with the net income of $2.9 million reported for the first quarter of 2010.
Reviewing the Company's performance, Francis R. McAllister, Stillwater's Chairman and CEO, commented, "Overall, I am pleased with our performance during first quarter. Palladium prices did trend down during the first quarter, likely as a result of the uncertainty surrounding the effect of rising oil prices and the Japanese earthquake and tsunami damage to the outlook for automobile production. However, I believe these factors will have a relatively short term impact on PGM demand and we will continue to experience the benefits of robust PGM, and specifically palladium, market dynamics over the intermediate to longer term.
"Our total mined PGM production of 131,200 ounces was very strong and higher than expected for the quarter. The first quarter results might suggest mine output is ahead of our annual production guidance of 500,000 combined palladium and platinum ounces. The higher production levels were the result of more tons mined than anticipated, improved ore grades in the lower off shaft area of the Stillwater Mine and resumption of production from the east side of the mine, as we have discussed recently. While I am pleased with this improvement, it is not yet clear to what extent the first quarter production rates will be sustainable in the second and third quarters. Consequently, at least for now, we are maintaining our 2011 guidance estimate of 500,000 PGM ounces.
"The Company continues to make progress in the assessment phase of the recently announced Blitz and Graham Creek development projects, located adjacent to our existing mines. Depending on the quality of the resource, these projects provide an avenue for future extension or expansion of the Company's production. Some assumptions and estimates have been adjusted as we have completed further scoping on these projects. In particular, we have implemented changes to our approach on the Blitz project increasing its cost and scope but shortening initial project development time from 5 years to an estimated 3.5 years, while at the same time accelerating the required development and providing the necessary infrastructure to begin production. Although the Blitz project will share some facilities with the Stillwater Mine, it will be operated independently of the Stillwater operation. The cost is now authorized to be $180.0 million over about six years, compared with the previous spending projection of $68.0 million, which should be sufficient to carry the Blitz project into full production. Although this increase in total cost for the Blitz project is substantial, the effect on 2011 capital expenditures will be negligible, and we are not revising our earlier guidance of $120.0 million for 2011 capital spending at this time. I am particularly excited about these projects as they may represent a new platform for expanding the Company's production from the J-M Reef.
"The recycling business was strong during the first quarter, and we saw significant increases in recycling revenues compared to first quarter last year and fourth quarter of 2010. Recycling volumes fed to the furnace were down slightly early in the quarter but strengthened as the quarter progressed. As planned, during the first quarter of 2011 we commissioned our new state-of-the-art assay laboratory which utilizes an automated x-ray facility that provides very accurate results with much faster turnaround times than conventional fire assay methods.
"We continue to make progress with the Marathon PGM-Copper project. We have now assembled a strong management team for this operation headed by Stan Emms, a successful mining industry veteran. In addition, we recently announced a voluntary harmonization agreement with the Ontario Ministry of Environment to have the Marathon PGM-Copper project be subject to the Ontario Environmental Assessment Act (EAA). In the Province of Ontario, activities associated with mine development, are subject to the provincial EAA, while private mining development projects that trigger the Federal Environmental Assessment Act are reviewed by the federal government. Stillwater requested that a joint federal/provincial review panel be established in order to better coordinate all federal and provincial assessment activities related to the Marathon project. We are hopeful that through this voluntary harmonization agreement, the coordinated review will help to facilitate the approval process. In addition, this effort fits well with Stillwater's corporate culture of transparency and its proactive approach to environmentally and socially responsible development.
"I would also like to add that I am extremely pleased with the performance of our operations teams for many reasons but specifically for their emphasis on safety. Safety is a paramount focus for Stillwater. We truly believe that when we make safety our first priority, effective and efficient production will follow. Our teams continued to demonstrate this focus during the 2011 first quarter. The Company's safety incident rate (including contractors on site), measured in terms of reportable incidents per 200,000 hours worked, averaged a rate of 2.8 during first quarter of 2011. Even though we target an incident rate of zero, this is a very good result."
-- Net income of $36.2 million or $0.34 per diluted share -- nearly triple
first quarter 2010 earnings
-- Mined PGM production increased to 131,200 ounces
-- Continued strong prices for palladium and platinum
Stillwater Mining Company today reported record net income for the 2011 first quarter of $36.2 million, or $0.34 per diluted share, on revenues of $170.1 million. This compares to first quarter of 2010 net income of $13.4 million, or $0.14 per diluted share, on revenues of $133.5 million. The Company mines palladium and platinum from two underground mines located in south-central Montana. The mines produced a total of 131,200 ounces of palladium and platinum during the first quarter of 2011, a 1.7% improvement over the 129,000 ounce production in the first quarter of 2010 and an 8.3% increase from the 121,100 ounces produced during the fourth quarter of 2010.
Production at the Company's Stillwater Mine increased to 98,600 ounces, an improvement of 2.4% over the 96,300 ounces produced in the first quarter of 2010 and an increase of 13.9% over the 86,600 produced in the fourth quarter of 2010. Production at the Company's East Boulder Mine was 32,600 ounces in the first quarter of 2011, compared to 32,700 ounces in the same quarter of 2010 and a decrease of 5.5% from the 34,500 ounces produced in the fourth quarter of 2010.
Combined sales realizations increased during the first quarter of 2011 for mined palladium and platinum ounces, averaging $994 per ounce, 54.3% above the $644 per ounce realized in the first quarter of 2010, reflecting higher market prices for palladium and platinum and the absence of contract ceiling prices on platinum in 2011. The total quantity of mined palladium and platinum sold decreased to 115,100 ounces in the first quarter of 2011, compared to 135,100 ounces sold during the same period in 2010, as a result of sales timing differences between the two quarters.
Mine production costs increased during the first quarter of 2011 compared to the first quarter of 2010. Total cash costs per mined ounce (a non-GAAP measure defined below) averaged $437 in the first quarter of 2011, compared to total cash costs of $364 per ounce for the first quarter of 2010, and total cash costs of $432 per ounce in the fourth quarter of 2010. The Company's full year 2011 guidance for total cash costs per ounce is about $430, up from the $397 averaged in the 2010 period. The increase in 2011 reflects a rising cost trend in 2010 plus an expectation of continuing general inflation for wages and materials, staffing growth, and the effect of higher average sales realizations on royalties and taxes during 2011. This is partially offset by the slightly higher mine production expected in 2011. The $437 per ounce reported for the 2011 first quarter is a little higher than guidance, in part because of higher royalties and taxes than planned. This results from higher PGM prices than originally projected and also from timing differences in by-product and recycling credits. At this point, the Company is maintaining its total cash costs guidance of $430 per mined ounce for the full period of 2011.
The Stillwater Mine's total cash costs averaged $430 per ounce in the first quarter of 2011, compared to the $339 per ounce achieved in the first quarter of 2010. The East Boulder Mine's total cash costs averaged $459 per ounce during the first quarter of 2011, compared to $439 per ounce during first quarter of 2010. These per ounce increases reflect higher overall operating expenses, including the effect on royalties and taxes of higher PGM prices and increases in maintenance costs.
The Company's smelting and refining complex in Columbus, Montana processes concentrates from the two mines and recycles spent catalyst material received from third parties. A portion of the recycling material is purchased for the Company's own account and the balance is toll processed on behalf of others. In total, the Company processed recycling material containing 115,600 ounces of palladium, platinum and rhodium through the smelter and refinery during the first quarter of 2011, down slightly from the 119,300 ounces recycled during the first quarter of 2010. The Company's recycling segment had net income for the first quarter of 2011 of $2.9 million (including financing income), flat with the net income of $2.9 million reported for the first quarter of 2010.
Reviewing the Company's performance, Francis R. McAllister, Stillwater's Chairman and CEO, commented, "Overall, I am pleased with our performance during first quarter. Palladium prices did trend down during the first quarter, likely as a result of the uncertainty surrounding the effect of rising oil prices and the Japanese earthquake and tsunami damage to the outlook for automobile production. However, I believe these factors will have a relatively short term impact on PGM demand and we will continue to experience the benefits of robust PGM, and specifically palladium, market dynamics over the intermediate to longer term.
"Our total mined PGM production of 131,200 ounces was very strong and higher than expected for the quarter. The first quarter results might suggest mine output is ahead of our annual production guidance of 500,000 combined palladium and platinum ounces. The higher production levels were the result of more tons mined than anticipated, improved ore grades in the lower off shaft area of the Stillwater Mine and resumption of production from the east side of the mine, as we have discussed recently. While I am pleased with this improvement, it is not yet clear to what extent the first quarter production rates will be sustainable in the second and third quarters. Consequently, at least for now, we are maintaining our 2011 guidance estimate of 500,000 PGM ounces.
"The Company continues to make progress in the assessment phase of the recently announced Blitz and Graham Creek development projects, located adjacent to our existing mines. Depending on the quality of the resource, these projects provide an avenue for future extension or expansion of the Company's production. Some assumptions and estimates have been adjusted as we have completed further scoping on these projects. In particular, we have implemented changes to our approach on the Blitz project increasing its cost and scope but shortening initial project development time from 5 years to an estimated 3.5 years, while at the same time accelerating the required development and providing the necessary infrastructure to begin production. Although the Blitz project will share some facilities with the Stillwater Mine, it will be operated independently of the Stillwater operation. The cost is now authorized to be $180.0 million over about six years, compared with the previous spending projection of $68.0 million, which should be sufficient to carry the Blitz project into full production. Although this increase in total cost for the Blitz project is substantial, the effect on 2011 capital expenditures will be negligible, and we are not revising our earlier guidance of $120.0 million for 2011 capital spending at this time. I am particularly excited about these projects as they may represent a new platform for expanding the Company's production from the J-M Reef.
"The recycling business was strong during the first quarter, and we saw significant increases in recycling revenues compared to first quarter last year and fourth quarter of 2010. Recycling volumes fed to the furnace were down slightly early in the quarter but strengthened as the quarter progressed. As planned, during the first quarter of 2011 we commissioned our new state-of-the-art assay laboratory which utilizes an automated x-ray facility that provides very accurate results with much faster turnaround times than conventional fire assay methods.
"We continue to make progress with the Marathon PGM-Copper project. We have now assembled a strong management team for this operation headed by Stan Emms, a successful mining industry veteran. In addition, we recently announced a voluntary harmonization agreement with the Ontario Ministry of Environment to have the Marathon PGM-Copper project be subject to the Ontario Environmental Assessment Act (EAA). In the Province of Ontario, activities associated with mine development, are subject to the provincial EAA, while private mining development projects that trigger the Federal Environmental Assessment Act are reviewed by the federal government. Stillwater requested that a joint federal/provincial review panel be established in order to better coordinate all federal and provincial assessment activities related to the Marathon project. We are hopeful that through this voluntary harmonization agreement, the coordinated review will help to facilitate the approval process. In addition, this effort fits well with Stillwater's corporate culture of transparency and its proactive approach to environmentally and socially responsible development.
"I would also like to add that I am extremely pleased with the performance of our operations teams for many reasons but specifically for their emphasis on safety. Safety is a paramount focus for Stillwater. We truly believe that when we make safety our first priority, effective and efficient production will follow. Our teams continued to demonstrate this focus during the 2011 first quarter. The Company's safety incident rate (including contractors on site), measured in terms of reportable incidents per 200,000 hours worked, averaged a rate of 2.8 during first quarter of 2011. Even though we target an incident rate of zero, this is a very good result."
No comments:
Post a Comment