-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DJ22MuJU218jHx/RJ+af+D8GBOkvN6o5CIZUQEZy0RgG+517tlBIVSdHwF+h/wvd 1HtSI3rrNVf234BkMfZhIQ== 0000950172-03-000588.txt : 20030221 0000950172-03-000588.hdr.sgml : 20030221 20030221162542 ACCESSION NUMBER: 0000950172-03-000588 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20030221 EFFECTIVENESS DATE: 20030221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STILLWATER MINING CO /DE/ CENTRAL INDEX KEY: 0000931948 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] IRS NUMBER: 810480654 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13053 FILM NUMBER: 03576248 BUSINESS ADDRESS: STREET 1: 1200 SEVENTEETH STREET STREET 2: SUITE 900 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3039782525 MAIL ADDRESS: STREET 1: 1200 SEVEENTH STREET STREET 2: SUITE 900 CITY: DENVER STATE: CO ZIP: 80202 DEFA14A 1 s404712.txt SCHEDULE 14A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [x] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [X ] Soliciting Material Pursuant toss.240.14a-12 Stillwater Mining Company ------------------------------------------------------- (Name of Registrant as Specified In Its Charter) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: Common Stock, par value $0.01 per share ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ [ ] Fee paid previously with preliminary materials: [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ As filed with the Commission on February 21, 2003. Stillwater Mining Company intends to make slide presentations from time to time, substantially in the form set forth herein. STILLWATER MINING COMPANY A PGM BUSINESS THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Some statements contained in this report 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. Such statements include comments regarding expansion plans, costs, grade, production and recovery rates, permitting, financing needs, the terms of future credit facilities and capital expenditures, increases in processing capacity, cost reduction measures, safety, timing for engineering studies, and environmental permitting and compliance, litigation and the palladium and platinum market. Additional information regarding factors which could cause results to differ materially is found in the section entitled "Risk Factors" above. The company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to put undue reliance on forward-looking statements. The company disclaims any obligation to update forward-looking statements. Stillwater Mining Company (the "Company") and certain persons may be deemed to be participants in the solicitation of proxies relating to the proposed transaction among the Company, MMC Norilsk Nickel and Norimet Limited (the "Transaction"). The participants in such solicitation may include the Company's executive officers and directors, none of whom own in excess of 1% of the Company's common stock. Further information regarding persons who may be deemed participants is available in the Company's amended preliminary proxy statement filed with the Securities and Exchange Commission on January 31, 2003. This presentation is not a proxy statement. On January 31, 2003, the Company filed an amended preliminary proxy statement in connection with the solicitation of proxies relating to the proposed Transaction. Stockholders of the Company will receive a definitive proxy statement and a proxy card in connection with the solicitation. STOCKHOLDERS OF THE COMPANY ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. The proxy statement and other relevant documents may also be obtained, free of charge, on the Securities and Exchange Commission's website (http://www.sec.gov) or by request by contacting the Company's proxy solicitors, MacKenzie Partners, Inc. at 105 Madison Avenue, New York, New York 10016, Tel. 1-800-322-2885 or (212) 929-5500. STILLWATER MINING COMPANY AND NORILSK NICKEL TRANSACTION SUMMARY Form - MMC Norilsk Nickel will acquire 51.0% of Stillwater in the form of 45,463,222 newly issued shares Consideration - Total of $341 million, or $7.50 per share - $100,000,540 cash - Approximately 876,270 oz of palladium, valued at $241 million based on November 19, 2002 London PM fix price ($275/oz) Conditions - SEC and Stillwater shareholder approval - Bank waiver of change of control covenants - Anti-trust approval (Hart-Scott-Rodino Act) - Exon-Florio clearance - Russian Central Bank approval PGM Agreement - Intent to enter into PGM agreement, SWC buys up to 1m oz of PD for resale in North America Corporate Governance - Board of Directors - 9 members, majority to be independent Other - Norilsk Nickel will make tender offer at $7.50 per share for up to 10% of pre-closing outstanding shares if SWC trades below $7.50 per share during 15 trading days after closing CORPORATE GOVERNANCE Board of Directors - - Board of Directors size - 9 members - - Board composition - 3 existing Stillwater independent Directors - Stillwater CEO - Chairman of the Board - 5 Norilsk Nickel nominees, 2 of which will be independent - - Majority of directors will be independent as per NYSE listing rules Committees - - Board will have the following committees, comprised of independent directors - Audit committee - Nominating committee - Compensation committee Management - - Current management team to be retained STRATEGY - - Partner with a strong, knowledgeable entity in the PGM markets - Norilsk Nickel meets goal - Norilsk produces: - >40% of world palladium - >15% of world platinum - >30% world PGM production - Financially strong - - Immediate cash infusion - - Increase reliability and supply certainty in the palladium market - - Insure minority shareholders protected BENEFITS TO STAKEHOLDERS - - Remain a public company - - Improve capital structure - - Reduce debt - - Reduce costs - - Grow operations - - Market palladium with new marketing contracts - - Improve profitability TIMETABLE Closing likely first half of 2003 - - Amend credit agreement - - Preliminary proxy filed - - Likely 2nd Q 2003 - Stillwater shareholder vote - - FTC approval - - Expiration of Hart-Scott-Rodino antitrust waiting period - - Mail tender offer 30 days after closing FINANCIAL CAPACITY - - Total $195 million outstanding under Credit Facility - - Revolving credit line of $50 million - $17.5 million available after waivers or amendments - Second $25 million upon meeting certain operating and financial parameters - - Cash on hand $126 million - - 876,000 oz. Palladium with a market value of $241 million (Nov. 19, 2002) SUMMARY CAPITALIZATION $ millions 12/31/02 Proposed Deal Working Capital $46.7 $328.7 Credit Facility 194.4 144.4 Capital Lease Obligations 3.0 3.0 Other long-term debt 30.4 30.4 ------ -------- Total Debt 227.8 177.8 Shareholders' Equity 559.2 891.2 ------ -------- Total Capitalization $787.0 $1,069.0 LOCATION [graphic] OPERATIONS [graphic] PGM PRODUCTION Year 1999 2000 2001 2002 2003 Stillwater Mine 409 430 504 492 450 East Boulder Mine 22 125 165 CONSOLIDATED COSTS 2001 2002 Costs per Ton ---- ---- - ------------- Cash Operating Cost $129 $115 Royalties, Taxes 17 14 ---- ---- Total Cash Costs 146 129 Depreciation and Amortization 26 28 ---- ---- Total Production Cost $172 $157 Costs per Ounce Cash Operating Cost $233 $255 Royalties, Taxes 31 32 ---- ---- Total Cash Costs 264 287 Depreciation and Amortization 47 64 ---- ---- Total Production Cost $311 $351 2002 PERFORMANCE - - Record PGM production - 617,000 oz. - 476,000 oz palladium - 141,000 oz platinum - - East Boulder Mine commenced commercial operations - - Record 1,377,000 tons milled - Stillwater Mine 2,440 tons/day - East Boulder 1,000 tons/day - - Maintained proven and probable ore reserves - 25.3 m oz (41.9 m tons @ 0.6 oz/t) - - Improved Safety Record 35% - - Total Cash Costs $287 per once - - Total Production Costs $351 per ounce FINANCIAL REVIEW [graphic] REVENUES ($ millions) Year 1998 1999 2000 2001 2002 Revenues 107 151 225 277 275.6 POSITIVE INCOME ($ millions) Year 1998 1999 2000 2001 2002 Net Income 13 37 62 65.8 31.7 Combined Pd Pt average market price $/oz 304 362 649 586 384 Combined Realized Pd Pt price $/oz 243 375 541 554 454 FINANCIAL PERFORMANCE Year 1998 1999 2000 2001 2002 EBITDA ($ millions) 35 64 105 108 96 Combined Pd Pt average market price $/oz 304 362 649 586 384 Combined Realized Pd Pt price $/oz 243 375 541 554 454 FINANCIAL CAPACITY - - Credit Facility amendments and waivers in 2002 - Amended in September for lower annual production - Waivers in December for production shortfall - - At December 31, 2002 - Cash on hand - $25.9 million - Drawn from Credit Facility - $194.4 million - - Working with lead banks - Amendments or waivers of covenants - Operating plan - Norilsk transaction - Access to undrawn credit - $17.5 million CAPITAL SPENDING ($ millions) Year 2000 2001 2002 2003* Stillwater Mine 88 73 38 42 East Boulder Mine 97 105 19 13 Other Capital 13 19 0.1 1 * Projected SALES CONTRACT OVERVIEW - - 3 primary customers - GM, Ford, Mitsubishi
Palladium Platinum % Production Average Price % Production Average Price Floor 2003 95% $357 100% $401 2004-2006 100% $371-$399 80% $425 2007-2010 80% $400-$375 70% $425 Ceiling 2003 28% $400 33% $554 2004-2006 39%-16% $644-$981 16% $856 2007-2010 20% $975 14% $850
SALES CONTRACTS (in $ per ounce) 2003 2004 2005 2006 2007 2008 2009 2010 Price Assumption $350 $350 $350 $350 $350 $350 $350 $350 Realized Price $413 $442 $430 $417 $435 $426 $423 $420 Floor $367 $384 $372 $359 $406 $395 $391 $387]
2003 OPERATING PLAN COST DRIVEN - - PGM production flat - 615,000 oz. - - Operations - Stillwater Mine 2,250 tons/day - down 8% - East Boulder Mine 1,250 tons/day - up 25% - - Ultimate ramp up to 1,650 tons/day at East Boulder - - Focus on production costs - - Increase productivity - - Reduce capital expenditures CONSOLIDATED COSTS 2003E Costs per Ton ----- - ------------- Cash Operating Cost $128 Royalties, Taxes 17 ---- Total Cash Costs 145 Depreciation and Amortization 35 ---- Total Production Cost $180 Costs per Ounce - --------------- Cash Operating Cost $256 Royalties, Taxes 34 ---- Total Cash Costs 290 Depreciation and Amortization 70 ---- Total Production Cost $360 PGM MARKET [graphic] PLATINUM AND PALLADIUM PRICES Jan 2001 to Mid-Feb 2002 (month end prices, $ per ounce) Platinum Palladium January 2001 604 1050 February 2001 610 839 March 2001 563 738 April 2001 594 682 May 2001 607 645 June 2001 558 602 July 2001 476 457 August 2001 446 453 September 2001 429 360 October 2001 423.55 320 November 2001 442.82 347 December 2001 480.72 440 January 2002 455 370 February 2002 493 377 PGM USAGE [graphic] PGM USAGE [graphic] PGM USAGE - - Automotive Catalysts - - Jewelry - - Electronics - - Dental applications - - Fuel Cells PALLADIUM MINE SUPPLY & DEMAND [graph] PALLADIUM - PRESENT AND FUTURE - - Current price weakness - Shifting to platinum - Thrifting - Auto industry de-stocking - Visible inventories - Norilsk-Stillwater transaction - - Supply fundamentals - Supply to demand deficit of the 90's - Expansions - Inventory wild card - - Demand fundamentals - Repair of market fundamentals - Shifting to palladium - Tighter emission standards - Fuel cell technology - Safe hydrogen storage medium PLATINUM SUPPLY & DEMAND [graphic] PLATINUM - PRESENT AND FUTURE - - Fundamentals remain strong - - Demand exceeding production - - Growth from jewelry, catalysts, fuel cells and industrial STILLWATER MINING COMPANY [graphic] STILLWATER MINE CASH COSTS PER OUNCE 2001 2002 2003E ---- ---- ----- Costs per Ounce Cash Operating Cost $233 $235 $241 Royalties, Taxes 31 28 29 ---- ---- ---- Total Cash Costs 264 263 270 Depreciation and Amortization 47 55 61 ---- ---- ---- Total Production Cost $311 $318 $331 EAST BOULDER MINE CASH COSTS PER OUNCE 2002 2003E ---- ----- Costs per Ounce Cash Operating Cost $335 $300 Royalties, Taxes 46 45 ---- ---- Total Cash Costs 381 345 Depreciation and Amortization 97 94 ---- ---- Total Production Cost $478 $439 STILLWATER MINE CASH COSTS PER TON 2001 2002 2003E ---- ---- ----- Costs per Ton Milled Cash Operating Cost $129 $117 $140 Royalties, Taxes 17 14 17 ---- ----- ----- Total Cash Costs 146 131 157 Depreciation and Amortization 26 27 35 ---- ---- ----- Total Production Cost $172 $158 $192 EAST BOULDER MINE CASH COSTS PER TON 2002 2003E ---- ----- Costs per Ton Milled Cash Operating Cost $108 $107 Royalties, Taxes 15 17 ---- ---- Total Cash Costs 123 124 Depreciation and Amortization 31 34 ---- ---- Total Production Cost $154 $158 - -------------------- -----END PRIVACY-ENHANCED MESSAGE-----