Stillwater Mining Company (SWC, Financial) filed Quarterly Report for the period ended 2009-06-30.
Stillwater Mining Company is engaged in the exploration development mining and production of platinum palladium and associated metals from the Stillwater Complex in southern Montana which the company believes isthe only significant primary source of platinum and palladium outside theRepublic of South Africa. The Stillwater Complex includes an extensivemineralized zone containing platinum group metals known as the J-M ReefThe Stillwater Complex has been prospected for gold copper nickel and chromium. Stillwater Mining Company has a market cap of $626.1 million; its shares were traded at around $6.65 with and P/S ratio of 0.8.
Following the sharp decrease in PGM prices and restructuring of operations in the fourth quarter of 2008, the Companys operating objectives for 2009 as previously reported include mine production of 495,000 ounces at a total cash cost of $399 per ounce and capital expenditures of $39.0 million while maintaining a neutral to positive cash flow. The Company performed well against these objectives in the second quarter producing 137,700 ounces at a total cash cost of $331 per ounce with capital spending of $13.0 million. Capital expenditures during the 2009 second quarter included $2.7 million of final spending on the second electric furnace at the Columbus smelter and a $3.4 million prepayment for electric haul trucks at the Stillwater Mine.
For the second quarter of 2009, the Company recognized net income from its recycling operations of $1.7 million on revenues of $12.5 million, reflecting a combined average realization during the quarter of $643 per sold ounce. Total tons of recycling material fed to the furnace during the 2009 second quarter, including tolled material, averaged 9.7 tons per day. The lower volume was in response to more limited advances to suppliers and to the significant decline in PGM prices which has reduced the incentives in the market to collect recycled material. By way of comparison, for the second quarter of 2008 when PGM prices were much higher, the Company recorded recycling segment net income of $7.8 million on revenues of $108.2 million, at an average realization of $1,813 per sold ounce. Total recycling tons fed to the furnace in last years second quarter averaged 20.9 tons per day. Volumes of material available for recycling appear to be gradually recovering during 2009 but remain far below their year-earlier levels.
During the second quarter of 2009, PGM prices continued to improve from their second-half 2008 lows: afternoon postings on the London Metals Exchange for platinum and palladium were $1,186 and $249 per ounce, respectively, at June 30, 2009, up from $1,124 and $215 per ounce, respectively, at March 31, 2009, and up from $898 and $183 per ounce, respectively, at December 31, 2008. The Companys earnings have improved at these higher price levels, and the Companys available liquidity has remained fairly stable to this point.
Capital spending of $13.0 million in the 2009 second quarter included infrastructure and mine development investment of $4.8 million at the Stillwater Mine and $1.5 million at the East Boulder Mine. Total equipment spending during the quarter totaled $6.7 million, including $2.7 million toward completion of the second electric furnace and $3.4 million as a prepayment for electric haulage at the Stillwater Mine. Through the first six months of 2009, capital spending totaled $25.2 million. As noted already, total capital spending for 2009 is projected at about $39.0 million; spending to date appears to be in line with that guidance. Installation of the second electric furnace at the Columbus smelter, a major construction project that began in 2008, was completed and the furnace was placed into service during the second quarter of 2009.
The Company has set a mine production objective for 2009 of 495,000 PGM ounces, generally in the same range as 2008. Second quarter 2009 mine production of 137,700 ounces was a little ahead of this pace. Total cash costs per ounce (a non-GAAP measure of extraction efficiency) for 2009 are targeted at $399 in the 2009 plan, again in the same range as the $396 per ounce in 2008. For the second quarter of 2009, total cash costs per ounce were $331, significantly lower than target. Capital expenditures will decline sharply to about $39.0 million in 2009, down from about $82.3 million in 2008. Second quarter 2009 capital expenditures of $13.0 million were a little ahead of the targeted pace, but included one-time expenditures of $2.7 million for completing the second smelter furnace and $3.4 million in prepayments for electric haul trucks. At the Stillwater Mine, lower development activity in 2009 should still be sufficient to maintain the current developed state, but the mine will eliminate additional spending to expand the developed state that has been included for the past several years. At East Boulder Mine, development has been pared back further, providing only the additional development needed to support 2009 production. The Company recently has begun supplementing its 2009 development expenditures modestly at East Boulder in view of somewhat higher than planned PGM prices realized to date. Available cash balances declined slightly during the quarter, reflecting higher working capital requirements for recycling and an additional $2.5 million of restricted cash utilized in part to further collateralize final reclamation surety bonds.
Read the The complete ReportSWC is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc..
Stillwater Mining Company is engaged in the exploration development mining and production of platinum palladium and associated metals from the Stillwater Complex in southern Montana which the company believes isthe only significant primary source of platinum and palladium outside theRepublic of South Africa. The Stillwater Complex includes an extensivemineralized zone containing platinum group metals known as the J-M ReefThe Stillwater Complex has been prospected for gold copper nickel and chromium. Stillwater Mining Company has a market cap of $626.1 million; its shares were traded at around $6.65 with and P/S ratio of 0.8.
Highlight of Business Operations:
For the second quarter of 2009, the Company has reported net income of $4.2 million, or $0.04 per share, compared to a profit of $16.3 million, or $0.18 per share, in the second quarter 2008. Most of the difference is attributable to lower metal prices in 2009 the combined average realization per mined ounce sold for platinum and palladium was $530 in the second quarter of 2009, compared to $740 (net of hedging losses) in the second quarter of 2008. Mine production of platinum and palladium totaled 137,700 ounces in the 2009 second quarter, as compared to 126,200 ounces in the same period of 2008, reflecting performance improvement at Stillwater Mine offset in part by the scaling back of operations at the East Boulder Mine. In the current pricing environment for PGMs, the Company is managing toward maintaining neutral or slightly positive cash flow. The Companys total available cash and short-term investments at June 30, 2009, was $175.4 million, down from $181.8 at March 31, 2009, and $180.8 million at the end of 2008. Net working capital (including cash and investments) increased slightly during the quarter to $235.9 million, up from $227.5 million at the end of first quarter 2009, and $230.4 million at year end 2008.Following the sharp decrease in PGM prices and restructuring of operations in the fourth quarter of 2008, the Companys operating objectives for 2009 as previously reported include mine production of 495,000 ounces at a total cash cost of $399 per ounce and capital expenditures of $39.0 million while maintaining a neutral to positive cash flow. The Company performed well against these objectives in the second quarter producing 137,700 ounces at a total cash cost of $331 per ounce with capital spending of $13.0 million. Capital expenditures during the 2009 second quarter included $2.7 million of final spending on the second electric furnace at the Columbus smelter and a $3.4 million prepayment for electric haul trucks at the Stillwater Mine.
For the second quarter of 2009, the Company recognized net income from its recycling operations of $1.7 million on revenues of $12.5 million, reflecting a combined average realization during the quarter of $643 per sold ounce. Total tons of recycling material fed to the furnace during the 2009 second quarter, including tolled material, averaged 9.7 tons per day. The lower volume was in response to more limited advances to suppliers and to the significant decline in PGM prices which has reduced the incentives in the market to collect recycled material. By way of comparison, for the second quarter of 2008 when PGM prices were much higher, the Company recorded recycling segment net income of $7.8 million on revenues of $108.2 million, at an average realization of $1,813 per sold ounce. Total recycling tons fed to the furnace in last years second quarter averaged 20.9 tons per day. Volumes of material available for recycling appear to be gradually recovering during 2009 but remain far below their year-earlier levels.
During the second quarter of 2009, PGM prices continued to improve from their second-half 2008 lows: afternoon postings on the London Metals Exchange for platinum and palladium were $1,186 and $249 per ounce, respectively, at June 30, 2009, up from $1,124 and $215 per ounce, respectively, at March 31, 2009, and up from $898 and $183 per ounce, respectively, at December 31, 2008. The Companys earnings have improved at these higher price levels, and the Companys available liquidity has remained fairly stable to this point.
Capital spending of $13.0 million in the 2009 second quarter included infrastructure and mine development investment of $4.8 million at the Stillwater Mine and $1.5 million at the East Boulder Mine. Total equipment spending during the quarter totaled $6.7 million, including $2.7 million toward completion of the second electric furnace and $3.4 million as a prepayment for electric haulage at the Stillwater Mine. Through the first six months of 2009, capital spending totaled $25.2 million. As noted already, total capital spending for 2009 is projected at about $39.0 million; spending to date appears to be in line with that guidance. Installation of the second electric furnace at the Columbus smelter, a major construction project that began in 2008, was completed and the furnace was placed into service during the second quarter of 2009.
The Company has set a mine production objective for 2009 of 495,000 PGM ounces, generally in the same range as 2008. Second quarter 2009 mine production of 137,700 ounces was a little ahead of this pace. Total cash costs per ounce (a non-GAAP measure of extraction efficiency) for 2009 are targeted at $399 in the 2009 plan, again in the same range as the $396 per ounce in 2008. For the second quarter of 2009, total cash costs per ounce were $331, significantly lower than target. Capital expenditures will decline sharply to about $39.0 million in 2009, down from about $82.3 million in 2008. Second quarter 2009 capital expenditures of $13.0 million were a little ahead of the targeted pace, but included one-time expenditures of $2.7 million for completing the second smelter furnace and $3.4 million in prepayments for electric haul trucks. At the Stillwater Mine, lower development activity in 2009 should still be sufficient to maintain the current developed state, but the mine will eliminate additional spending to expand the developed state that has been included for the past several years. At East Boulder Mine, development has been pared back further, providing only the additional development needed to support 2009 production. The Company recently has begun supplementing its 2009 development expenditures modestly at East Boulder in view of somewhat higher than planned PGM prices realized to date. Available cash balances declined slightly during the quarter, reflecting higher working capital requirements for recycling and an additional $2.5 million of restricted cash utilized in part to further collateralize final reclamation surety bonds.
Read the The complete ReportSWC is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc..
