UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d) of the |
Date of Report: November 12, 2013
(Date of earliest event reported)
Stillwater Mining Company
(Exact name of registrant as specified in its charter)
DE
(State or other jurisdiction
of incorporation)
001-13053
(Commission File Number)
81-0480654
(IRS Employer
Identification Number)
1321 Discovery Drive, Billings, Montana
(Address of principal executive offices)
59102
(Zip Code)
(406) 373-8700
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
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Item 2.02. Results of Operations and Financial Condition On November 12, 2013, Stillwater Mining Company issued a press release reporting the Company's third quarter 2013 results. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: November 12, 2013 |
STILLWATER MINING COMPANY
By: /s/ Brent R. Wadman |
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| Exhibit No. | Description |
| 99.1 | Press Release of Stillwater Mining Company dated November 12, 2013 |
BILLINGS, MT -- (Marketwired - November 12, 2013) - STILLWATER MINING COMPANY (NYSE: SWC) (TSX: SWC.U)
Stillwater Mining Company today reported a consolidated net loss attributable to common stockholders for the 2013 third quarter of $201.5 million, or $1.69 per diluted share. The third quarter result includes a $290.4 million (before-tax) impairment charge reducing the carrying value of the Altar mineral property in Argentina to its estimated fair value of $102.0 million. Consolidated net income attributable to common stockholders reported for the 2012 third quarter was $13.1 million, or $0.11 per diluted share. Total revenues for the 2013 third quarter were $280.0 million, an increase of 54.7% compared to revenues of $181.0 million for the third quarter of 2012. The increase in revenue was driven by higher average palladium prices during the third quarter of 2013 and by strong results from the PGM Recycling business segment.
The third-quarter impairment charge at Altar also resulted in a reduction in the deferred tax liability associated with the Altar property. Consequently, the net after-tax effect of the Altar impairment was a $226.5 million reduction in third-quarter 2013 income. Before reflecting the impairment, third-quarter 2013 after-tax consolidated net income attributable to common stockholders would have been $25.0 million.
For the first nine months of 2013, the Company reported a consolidated net loss attributable to common stockholders of $192.2 million, or $1.62 per diluted share, on revenues of $797.1 million, compared to net income of $38.2 million, or $0.33 per diluted share, on revenues of $596.9 million, for the same period in 2012.
The Company's Montana mines produced a total of 124,200 ounces of palladium and platinum during the third quarter of 2013 compared to production of 127,000 ounces in the third quarter of 2012. Production for the first nine months of 2013 was 382,800 ounces compared to 381,200 ounces in the first nine months of 2012. The fluctuation in ounces produced is driven primarily by the normal result of changes in mining conditions and the array of stopes available for mining in any period.
Revenue from the Mine Production segment for the third quarter of 2013 (including proceeds from the sale of by-products) totaled $123.2 million, a 15.0% increase from $107.1 million in the same period last year. Combined sales realizations increased during the third quarter of 2013 for mined palladium and platinum ounces, averaging $887 per ounce, a 10.5% increase from the $803 per ounce realized in the third quarter of 2012. The total quantity of mined palladium and platinum sold increased by 5.7% to 131,400 ounces in the third quarter of 2013, compared to the 124,300 ounces sold during the same period in 2012.
The Company processed recycling material containing 167,500 ounces of palladium, platinum and rhodium through its smelter and refinery during the third quarter of 2013. This represents an increase of 74.1% over the total of 96,200 ounces processed during the third quarter of 2012. During the first nine months of 2013, the Company processed a record 496,700 ounces of PGMs from recycled material, a 52.1% increase from approximately 326,600 ounces processed during the same period of 2012. The increased volumes were primarily attributable to the addition of several new suppliers of recycling material and the reprocessing of furnace brick from the Company's own smelting facility. The PGM Recycling segment ounces recovered from the reprocessed furnace brick were sold during the third quarter of 2013, generating approximately $16.4 million of incremental revenue in the third quarter of 2013.
Recycling sales volumes increased 104.6%, to 152,600 ounces in the third quarter of 2013, from 74,600 ounces in the third quarter of 2012. PGM Recycling revenues totaled $156.8 million for the 2013 third quarter, more than double the $74.0 million in the same period of 2012. The Company's combined average realized price for sales of recycled palladium, platinum and rhodium increased to $1,026 per ounce in the third quarter of 2013 from $985 per ounce in the third quarter of 2012.
Total recycled ounces processed in the third quarter of 2013 included approximately 4,200 PGM ounces from reprocessed furnace brick. During the second quarter of 2013, approximately 8,000 PGM ounces reprocessed from furnace brick were attributed to recycling.
The ounces processed during the second and third quarters of 2013 from furnace brick were recovered as saleable ounces during the third quarter. As a result, the ounces recovered from reprocessed furnace brick, which were allocated to the PGM Recycling segment were sold and the associated revenues were recognized in the third quarter of 2013.
During the third quarter of 2013, approximately 7,700 PGM ounces recovered from reprocessed furnace brick were allocated to the Mine Production segment. While these ounces are blended with mine concentrates and are difficult to track, the Company estimates that these recovered PGM ounces will generate approximately $7.1 million of incremental revenue, to be realized mainly in the third and fourth quarters of 2013.
Saleable Ounces Recovered from Furnace Brick
Third Quarter 2013
----------------------------------------------------------------------------
Platinum Palladium Rhodium
PGM Recycling Segment 10,133 1,271 564
Mine Production Segment 1,848 5,691 117
---------- ---------- ----------
Total Ounces Recovered from Brick 11,981 6,962 681
========== ========== ==========
Total cash costs per mined ounce (a non-GAAP measure defined below) averaged $427 in the third quarter of 2013, compared to total cash costs of $496 per mined ounce for the third quarter of 2012, a decrease of 13.9%. The Company's measurement of total cash costs per mined ounce includes the benefit of credits for by-product sales and PGM Recycling segment earnings and as discussed above, during the third quarter of 2013, the Company's PGM Recycling segment received significant revenue allocated from the sale of PGM ounces recycled from furnace brick. These larger than normal PGM Recycling segment credits are the primary cause of the significant decrease in total cash costs per mined ounce in the third quarter of 2013. The table below illustrates the effect of applying these credits to the average cash costs per mined ounce for the combined Montana mining operations.
First First
Third Third Nine Nine
Cash Costs Per Mined Ounce - Combined Quarter Quarter Months Months
Montana Mining Operations 2013 2012 2013 2012
------- ------- ------- -------
Reported Total Cash Costs per Mined Ounce $ 427 $ 496 $ 495 $ 487
Add Back By-Product Revenue Credit 54 57 55 62
Add Back PGM Recycling Income Credit 165 16 83 22
------- ------- ------- -------
Total Cash Costs per Mined Ounce before
Credits $ 646 $ 569 $ 633 $ 571
======= ======= ======= =======
Guidance
Based on results for the first nine months and projections for the remainder of the year, the Company has reviewed its mined production, cash cost per mined ounce and capital expenditure guidance. As a result of this review, the Company has increased its previous 2013 production guidance of 500,000 ounces to a range of 505,000 to 515,000 ounces of mined palladium and platinum. The Company has reduced its full-year 2013 guidance for total cash costs from $560 to a range of $530 to $540 per mined ounce. In addition, the Company has concluded to reduce its most recent capital expenditure guidance for 2013 by approximately 13% to a range of $125 to $135 million from the previous range of $145 to $155 million.
Cash Flow and Liquidity
At September 30, 2013, the Company's available cash was $235.1 million, compared to $379.7 million at December 31, 2012. If highly liquid investments are included with available cash, the Company's balance sheet liquidity totaled $464.2 million at September 30, 2013, a decrease from $641.7 million at December 31, 2012. Most of this decrease was related to debt redemption during the first quarter of 2013. Of the Company's current cash balance, $28.6 million is dedicated to the Marathon project (and other related properties) and is unavailable for other corporate purposes. Net working capital -- comprised of total current assets (including available cash and investments), less current liabilities -- increased to $619.3 million at September 30, 2013, from $606.0 million at 2012 year end.
Net cash provided by operating activities (which includes changes in working capital) totaled $81.7 million for the first nine months of 2013, compared to $100.4 million of cash provided in the first nine months of 2012. The lower cash generation in the first nine months of 2013 largely reflected growth in recycling working capital attributable to the greater volumes being processed this year. Capital expenditures were $91.2 million in the first nine months of 2013 compared to $84.7 million in the first nine months of 2012. Of the capital expenditures for the first nine months of 2013, $81.9 million was attributable to ongoing investments in the Montana mines and processing facility. Year-to-date capital expenditures include $17.1 million attributable to the major developments underway on the J-M Reef in Montana.
Outstanding balance sheet debt at September 30, 2013 was $307.1 million, down from $461.1 million at December 31, 2012. In March 2013, the Company repaid $164.3 million of its 1.875% convertible debentures. The Company's debt balance currently includes $269.9 million of 1.75% convertible debentures and $2.2 million of 1.875% convertible debentures, $29.6 million of exempt facility revenue bonds, a capital lease of $5.1 million and $0.3 million of financing for a small installment land purchase.
Other Matters
Notwithstanding the accounting impairment charge recorded in the third quarter of 2013, the Company is reviewing alternatives to optimize its investment in the Altar project in Argentina. Some minimum level of annual expenditures will be required in order to maintain the Company's good standing and preserve its asset position at Altar. Future levels of exploration spending at Altar are discretionary and will be evaluated year by year.
The Company is engaged in preparing the final feasibility study and an updated economic assessment of the Marathon project. The feasibility study will include final project design, updated ore reserves, mining rates and costs, and overall project economics. A decision to proceed with project construction requires receipt of a positive Environmental Assessment finding by the joint review panel, receipt of other necessary permits and government approvals, a determination that the economics of the project are acceptable to each of the partners and receipt of firm financing commitments.
Third Quarter Results - Details
For the third quarter of 2013, the Company's Stillwater Mine produced 83,800 ounces of palladium and platinum, a decrease of 10.9% from the 94,100 ounces produced in the third quarter of 2012. Production at the Company's East Boulder Mine of 40,400 ounces in the third quarter of 2013 reflected an increase of 22.8% over the 32,900 ounces produced in the same quarter of 2012. The Stillwater Mine continued to experience variations in ore grade delivered to the mill during the 2013 third quarter, resulting in an overall reduction in the reported mill head grade. The loss of a muck pass at the Stillwater Mine earlier in the year has resulted in higher grade variability than planned and lower than forecasted ore grades. This issue is being addressed but has not been completely remedied to date. The current advanced developed state of the Montana mines is providing the operational flexibility to work through this issue without having to modify the Company's development and production goals.
Costs of metals sold (before depletion, depreciation and amortization expense) increased to $220.8 million in the third quarter of 2013 from $142.0 million in the third quarter of 2012. Mine Production costs included in costs of metals sold increased to $83.9 million in the 2013 third quarter from $69.9 million in the 2012 third quarter. PGM Recycling costs, which primarily reflect the cost of acquiring spent catalytic materials for processing, totaled $136.8 million in the third quarter of 2013, significantly more than the $72.1 million reported in the third quarter of 2012. The increase was due to higher volumes sold and the associated higher total market value of the materials acquired for processing.
General and administrative costs were $9.3 million in the third quarter of 2013, down from the $9.9 million incurred during the same period of 2012. The decrease was due to lower share-based compensation costs following vesting associated with the second quarter's technical change in control, offset in part by an increase in legal and consulting costs. Exploration expenses were $2.1 million in the third quarter of 2013 compared to $1.7 million, in the same period of 2012. The majority of the increase was due to exploration efforts on property holdings adjacent to the Marathon project in Canada. Marketing expenses declined to $0.2 million in the 2013 third quarter compared to $1.9 million in the same quarter of 2012, reflecting the curtailment of palladium marketing efforts in 2013.
Interest expense reported for the third quarter of 2013 and 2012 was $5.6 million and $1.5 million, respectively. This increase is principally the result of the interest expense related to the 1.75% convertible debentures, including the accretion of the debt discount that is charged to earnings over the expected life of the convertible debentures and offset by capitalized interest recognized as a cost of the Company's ongoing projects. The non-cash accretion of the debt discount and non-cash capitalized interest in the third quarter of 2013 were $4.0 million and $0.5 million, respectively.
During the third quarter of 2013, the Company recorded a net foreign currency transaction gain of $6.2 million, primarily related to the deferred tax liability recorded in association with the acquisition of Peregrine Metals Ltd. The net foreign currency transaction gain recorded for the third quarter of 2012 was $6.4 million.
First Nine Months' Results - Details
For the first nine months of 2013, the Company's Stillwater Mine produced 267,400 ounces, a decrease of 4.5% from the 279,900 ounces produced in the first nine months of 2012. Production at the Company's East Boulder Mine of 115,400 ounces in the first nine months of 2013 reflected a 13.9% increase from the 101,300 ounces produced in the same period of 2012.
Costs of metals sold (before depletion, depreciation and amortization expense) increased to $639.9 million in the first nine months of 2013 from $468.3 million in the first nine months of 2012. Mine Production costs included in costs of metals sold increased to $237.0 million in the first nine months of 2013 from $218.9 million in the same period of 2012. PGM Recycling costs, which primarily reflect the cost of acquiring spent catalytic materials for processing, totaled $402.9 million in the first nine months of 2013, more than the $249.4 million reported in the first nine months of 2012. The increase was due to higher volumes sold and the related higher total cost to acquire materials for processing.
General and administrative costs were $35.8 million in the first nine months of 2013, up from the $32.5 million incurred during the same period of 2012. The Company recognized $10.2 million in total exploration expenses related to its mineral properties in both Canada and South America in the first nine months of 2013 and $13.8 million in the first nine months of 2012. Marketing expenses declined to $4.2 million in the first nine months of 2013 compared to $7.9 million in the same time period of 2012, reflecting the curtailment of palladium marketing in the second half of 2013. As a result of the recent proxy contest and the change in control provisions in the Company's employee and director equity incentive plans, the Company recognized costs of $4.3 million and $9.1 million, (non-cash charge) respectively, for the nine-month period ended September 30, 2013. These costs were incurred during the first and second quarters of the year.
Interest expense reported for the first nine months of 2013 and 2012 was $17.6 million and $4.4 million, respectively. This increase is principally the result of the interest expense related to the 1.75% convertible debentures, including the accretion of the debt discount that is charged to earnings over the expected life of the convertible debentures and offset by capitalized interest recognized as a cost of the Company's ongoing projects. The non-cash accretion of the debt discount and the non-cash capitalized interest in the first nine months of 2013 were $11.7 million and $1.9 million, respectively.
During the first nine months of 2013, the Company recorded a net foreign currency transaction gain of $15.7 million, primarily related to the deferred tax liability recorded in association with the acquisition of Peregrine Metals Ltd. The foreign currency transaction gain recorded for the first nine months of 2012 was $13.0 million. Approximately $17.4 million and $12.7 million of the 2013 and 2012 net gain, respectively, related to the remeasurement into U.S. dollars of the deferred taxes recorded in association with the acquisition of Peregrine Metals Ltd. The gain reflects the result of the high inflation rate in Argentina as the obligation is remeasured from pesos into U.S. dollars.
Third Quarter Results Webcast and Conference Call
Stillwater Mining Company will conduct a conference call to discuss third quarter results at approximately 12:00 p.m. Eastern Standard Time on Wednesday, November 13, 2013.
Dial-In Numbers:
United States: (800) 611-1148
International: (612) 332-0342
The conference call will be simultaneously webcast through the Company's website at www.stillwatermining.com in the Investor Relations section.
A telephone replay of the call will be available for one week following the event. The replay dial-in numbers are (800) 475-6701 (U.S.) and (320) 365-3844 (International), access code 306549. In addition, the call transcript will be archived in the Investor Relations section of the Company's website.
About Stillwater Mining Company
Stillwater Mining Company is the only U.S. producer of palladium and platinum and is the largest primary producer of platinum group metals outside of South Africa and the Russian Federation. The Company's shares are traded on the New York Stock Exchange under the symbol SWC and on the Toronto Stock Exchange under the symbol SWC.U. Information on Stillwater Mining Company can be found at its website: www.stillwatermining.com.
Some statements contained in this news release 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. These statements may contain words such as "desires," "believes," "anticipates," "plans," "expects," "intends," "estimates" or similar expressions. Such statements also include, but are not limited to, comments regarding expansion plans, costs, grade, production and recovery rates; permitting; financing needs and the terms of future credit facilities; exchange rates; capital expenditures; increases in processing capacity; cost reduction measures; safety; timing for engineering studies; environmental permitting and compliance; litigating; labor matters; and the palladium, platinum, copper and gold market. These statements are not guarantees of the Company's future performance and are subject to risks, uncertainties and other important factors that could cause its actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Additional information regarding factors that could cause results to differ materially from management's expectations is found in the section entitled "Risk Factors" in the Company's 2012 Annual Report on Form 10-K, in its quarterly Form 10-Q filings, and in corresponding filings with Canadian securities regulatory authorities.
The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The Company disclaims any obligation to update forward-looking statements.
Stillwater Mining Company
Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2013 2012 2013 2012
---------- ---------- ---------- ----------
REVENUES
Mine Production $ 123,193 $ 107,057 $ 364,249 $ 339,951
PGM Recycling 156,814 73,987 432,897 256,919
---------- ---------- ---------- ----------
Total revenues 280,007 181,044 797,146 596,870
COSTS AND EXPENSES
Costs of metals sold
Mine Production 83,913 69,910 237,042 218,935
PGM Recycling 136,843 72,096 402,859 249,360
---------- ---------- ---------- ----------
Total costs of metals
sold 220,756 142,006 639,901 468,295
Depletion, depreciation
and amortization
Mine Production 15,057 13,843 43,824 42,848
PGM Recycling 285 264 804 793
---------- ---------- ---------- ----------
Total depletion,
depreciation and
amortization 15,342 14,107 44,628 43,641
---------- ---------- ---------- ----------
Total costs of
revenues 236,098 156,113 684,529 511,936
Marketing 207 1,886 4,197 7,874
Exploration 2,143 1,668 10,247 13,785
Research and development 104 82 192 864
Proxy contest expense -- -- 4,307 --
Accelerated equity based
compensation expense -- -- 9,063 --
General and administrative 9,316 9,882 35,846 32,477
Loss on long-term
investments 112 1,697 1,766 1,697
Impairment of non-
producing mineral
property 290,417 -- 290,417 --
Abandonment of non-
producing property -- -- -- 2,835
Loss on disposal of
property, plant and
equipment 66 71 106 363
---------- ---------- ---------- ----------
Total costs and
expenses 538,463 171,399 1,040,670 571,831
OPERATING (LOSS) INCOME (258,456) 9,645 (243,524) 25,039
OTHER INCOME (EXPENSE)
Other 8 82 1,170 667
Interest income 1,102 271 3,516 1,706
Interest expense (5,556) (1,493) (17,646) (4,361)
Foreign currency
transaction gain, net 6,220 6,407 15,679 12,981
---------- ---------- ---------- ----------
(LOSS) INCOME BEFORE INCOME
TAX BENEFIT (PROVISION) (256,682) 14,912 (240,805) 36,032
Income tax benefit
(provision) 54,698 (2,109) 47,468 1,508
---------- ---------- ---------- ----------
NET (LOSS) INCOME $ (201,984) $ 12,803 $ (193,337) $ 37,540
---------- ---------- ---------- ----------
Net loss attributable to
noncontrolling interest (489) (273) (1,117) (631)
---------- ---------- ---------- ----------
NET (LOSS) INCOME
ATTRIBUTABLE TO COMMON
STOCKHOLDERS $ (201,495) $ 13,076 $ (192,220) $ 38,171
---------- ---------- ---------- ----------
Other comprehensive income,
net of tax
Net unrealized gains on
securities available-for-
sale 219 421 288 620
---------- ---------- ---------- ----------
COMPREHENSIVE (LOSS) INCOME
ATTRIBUTABLE TO COMMON
STOCKHOLDERS $ (201,276) $ 13,497 $ (191,932) $ 38,791
---------- ---------- ---------- ----------
Comprehensive loss
attributable to
noncontrolling interest (489) (273) (1,117) (631)
---------- ---------- ---------- ----------
TOTAL COMPREHENSIVE (LOSS)
INCOME $ (201,765) $ 13,224 $ (193,049) $ 38,160
========== ========== ========== ==========
Weighted average common
shares outstanding
Basic 119,153 116,377 118,347 115,918
Diluted 119,153 117,145 118,347 116,847
Basic (loss) earnings per
share attributable to
common stockholders $ (1.69) $ 0.11 $ (1.62) $ 0.33
Diluted (loss) earnings per
share attributable to
common stockholders $ (1.69) $ 0.11 $ (1.62) $ 0.33
========== ========== ========== ==========
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share data)
September 30, December 31,
2013 2012
-------------- --------------
ASSETS
Current assets
Cash and cash equivalents $ 235,055 $ 379,680
Investments, at fair market value 229,174 261,983
Inventories 181,888 153,208
Trade receivables 18,739 9,953
Deferred income taxes 21,304 21,304
Prepaids 6,340 4,967
Other current assets 23,475 21,767
-------------- --------------
Total current assets 715,975 852,862
Mineral properties 285,942 576,359
Mine development, net 373,357 322,866
Property, plant and equipment, net 121,105 122,677
Deferred debt issuance costs 8,315 9,609
Other noncurrent assets 6,795 6,390
-------------- --------------
Total assets $ 1,511,489 $ 1,890,763
============== ==============
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 32,226 $ 28,623
Accrued compensation and benefits 32,340 31,369
Property, production and franchise taxes
payable 12,057 13,722
Current portion of long-term debt and
capital lease obligations 2,009 168,432
Income taxes payable 9,454 --
Other current liabilities 8,549 4,702
-------------- --------------
Total current liabilities 96,635 246,848
Long-term debt and capital lease obligations 305,105 292,685
Deferred income taxes 130,911 199,802
Accrued workers compensation 5,851 5,815
Asset retirement obligation 8,477 7,965
Other noncurrent liabilities 9,023 5,068
-------------- --------------
Total liabilities 556,002 758,183
-------------- --------------
EQUITY
Stockholders' equity
Preferred stock, $0.01 par value, 1,000,000
shares authorized; none issued -- --
Common stock, $0.01 par value, 200,000,000
shares authorized; 119,246,710 and
116,951,081 shares issued and outstanding 1,192 1,170
Paid-in capital 1,074,913 1,058,978
Accumulated (deficit) earnings (171,451) 20,770
Accumulated other comprehensive income
(loss) 189 (99)
-------------- --------------
Total stockholders' equity 904,843 1,080,819
-------------- --------------
Noncontrolling interest 50,644 51,761
-------------- --------------
Total equity 955,487 1,132,580
-------------- --------------
Total liabilities and equity $ 1,511,489 $ 1,890,763
============== ==============
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
----------------------
2013 2012
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (193,337) $ 37,540
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depletion, depreciation and amortization 44,628 43,641
Loss on disposal of property, plant and equipment 106 363
Impairment of non-producing mineral property 290,417 --
Abandonment of non-producing property -- 2,835
Loss on long-term investments 1,766 1,697
Deferred taxes (64,098) (4,913)
Foreign currency transaction gain, net (15,679) (12,981)
Accretion of asset retirement obligation 512 470
Amortization of debt issuance costs 1,294 944
Accretion of convertible debenture debt discount 11,722 --
Accelerated equity based compensation expense 9,063 --
Share based compensation and other benefits 13,673 12,899
Non-cash capitalized interest (1,918) --
Changes in operating assets and liabilities:
Inventories (28,961) 6,221
Trade receivables (8,786) (3,727)
Prepaids (1,373) (1,870)
Accrued compensation and benefits 989 2,258
Accounts payable 2,270 (1,270)
Property, production and franchise taxes payable 1,330 1,041
Income taxes payable 12,809 (1,235)
Workers compensation 36 490
Restricted cash -- 15,825
Other 5,238 206
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 81,701 100,434
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (91,187) (84,688)
Proceeds from disposal of property, plant and
equipment 126 39
Purchases of investments (116,769) (68,286)
Proceeds from maturities of investments 147,103 42,003
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (60,727) (110,932)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of noncontrolling interest, net
of transaction costs -- 93,821
Issuance of long-term debt -- 7,176
Payments on debt and capital lease obligations (165,714) (946)
Payments for debt issuance costs -- (219)
Issuance of common stock 115 44
---------- ----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (165,599) 99,876
---------- ----------
CASH AND CASH EQUIVALENTS
Net (decrease) increase (144,625) 89,378
Balance at beginning of period 379,680 109,097
---------- ----------
BALANCE AT END OF PERIOD $ 235,055 $ 198,475
========== ==========
Stillwater Mining Company
Key Operating Factors
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
--------------- ---------------
(In thousands, except where noted) 2013 2012 2013 2012
------- ------- ------- -------
OPERATING AND COST DATA FOR MINE PRODUCTION
Consolidated:
Ounces produced
Palladium 96 98 296 294
Platinum 28 29 87 87
------- ------- ------- -------
Total 124 127 383 381
======= ======= ======= =======
Tons milled 301 262 902 801
Mill head grade (ounce per ton) 0.45 0.52 0.46 0.51
Sub-grade tons milled (1) 15 19 56 49
Sub-grade tons mill head grade (ounce per
ton) 0.16 0.18 0.17 0.17
Total tons milled (1) 316 281 958 850
Combined mill head grade (ounce per ton) 0.43 0.50 0.44 0.49
Total mill recovery (%) 91 92 92 92
Total operating costs per ounce (Non-GAAP)
(2) $ 339 $ 417 $ 407 $ 406
Total cash costs per ounce (Non-GAAP) (2) $ 427 $ 496 $ 495 $ 487
Total production costs per ounce (Non-GAAP)
(2) $ 546 $ 608 $ 610 $ 600
Total operating costs per ton milled (Non-
GAAP) (2) $ 133 $ 189 $ 163 $ 182
Total cash costs per ton milled (Non-GAAP)
(2) $ 168 $ 225 $ 198 $ 219
Total production costs per ton milled (Non-
GAAP) (2) $ 214 $ 276 $ 244 $ 269
Stillwater Mine:
Ounces produced
Palladium 65 72 206 215
Platinum 19 22 61 65
------- ------- ------- -------
Total 84 94 267 280
======= ======= ======= =======
Tons milled 188 156 579 496
Mill head grade (ounce per ton) 0.48 0.64 0.49 0.61
Sub-grade tons milled (1) 7 10 29 27
Sub-grade tons mill head grade (ounce per
ton) 0.25 0.24 0.23 0.22
Total tons milled (1) 195 166 608 523
Combined mill head grade (ounce per ton) 0.47 0.62 0.48 0.59
Total mill recovery (%) 91 92 92 92
Total operating costs per ounce (Non-GAAP)
(2) $ 351 $ 395 $ 405 $ 382
Total cash costs per ounce (Non-GAAP) (2) $ 434 $ 469 $ 490 $ 457
Total production costs per ounce (Non-GAAP)
(2) $ 569 $ 582 $ 616 $ 574
Total operating costs per ton milled (Non-
GAAP) (2) $ 151 $ 224 $ 178 $ 204
Total cash costs per ton milled (Non-GAAP)
(2) $ 187 $ 266 $ 215 $ 244
Total production costs per ton milled (Non-
GAAP) (2) $ 245 $ 330 $ 271 $ 307
Stillwater Mining Company
Key Operating Factors (continued)
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
--------------- ---------------
(In thousands, except where noted) 2013 2012 2013 2012
------- ------- ------- -------
OPERATING AND COST DATA FOR MINE PRODUCTION
East Boulder Mine:
Ounces produced
Palladium 31 26 90 79
Platinum 9 7 26 22
------- ------- ------- -------
Total 40 33 116 101
======= ======= ======= =======
Tons milled 113 106 323 305
Mill head grade (ounce per ton) 0.40 0.34 0.39 0.36
Sub-grade tons milled (1) 8 9 27 22
Sub-grade tons mill head grade (ounce per
ton) 0.10 0.10 0.10 0.11
Total tons milled (1) 121 115 350 327
Combined mill head grade (ounce per ton) 0.37 0.32 0.37 0.35
Total mill recovery (%) 90 90 90 90
Total operating costs per ounce (Non-GAAP)
(2) $ 314 $ 480 $ 412 $ 472
Total cash costs per ounce (Non-GAAP) (2) $ 412 $ 574 $ 507 $ 570
Total production costs per ounce (Non-GAAP)
(2) $ 499 $ 684 $ 595 $ 674
Total operating costs per ton milled (Non-
GAAP) (2) $ 104 $ 138 $ 136 $ 147
Total cash costs per ton milled (Non-GAAP)
(2) $ 137 $ 165 $ 167 $ 177
Total production costs per ton milled (Non-
GAAP) (2) $ 166 $ 197 $ 196 $ 209
(1) Sub-grade tons milled includes reef waste material only. Total tons
milled includes ore tons and sub-grade tons only. See "Proven and
Probable Ore Reserves - Discussion" in the Company's 2012 Annual
Report on Form 10-K for further information.
(2) Total operating costs include costs of mining, processing and
administrative expenses at the mine site (including mine site overhead
and credits for metals produced other than palladium and platinum from
mine production). Total cash costs include total operating costs plus
royalties, insurance and taxes other than income taxes. Total
production costs include total cash costs plus asset retirement costs
and depreciation and amortization. Income taxes, corporate general and
administrative expenses, asset impairment write-downs, gain or loss on
disposal of property, plant and equipment, restructuring costs and
interest income and expense are not included in total operating costs,
total cash costs or total production costs. Operating costs per ton,
operating costs per ounce, cash costs per ton, cash costs per ounce,
production costs per ton and production costs per ounce are non-GAAP
measurements that management uses to monitor and evaluate the
efficiency of its mining operations. These measures of cost are not
defined under U.S. Generally Accepted Accounting Principles (GAAP).
Please see "Reconciliation of Non-GAAP Measures to Costs of Revenues"
and the accompanying discussion for additional detail.
Stillwater Mining Company
Key Operating Factors (continued)
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
--------------- ---------------
(In thousands, except for average prices) 2013 2012 2013 2012
------- ------- ------- -------
SALES AND PRICE DATA
Ounces sold
Mine Production:
Palladium (oz.) 101 97 300 290
Platinum (oz.) 30 27 84 85
------- ------- ------- -------
Total 131 124 384 375
------- ------- ------- -------
PGM Recycling: (1)
Palladium (oz.) 83 42 230 145
Platinum (oz.) 57 27 149 86
Rhodium (oz.) 12 6 33 19
------- ------- ------- -------
Total 152 75 412 250
------- ------- ------- -------
By-products from Mine Production: (2)
Rhodium (oz.) 1 1 3 3
Gold (oz.) 2 2 7 7
Silver (oz.) 1 1 5 4
Copper (lb.) 171 219 645 568
Nickel (lb.) 353 295 1,040 836
Average realized price per ounce(3)
Mine Production:
Palladium ($/oz.) $ 722 $ 605 $ 721 $ 640
Platinum ($/oz.) $ 1,447 $ 1,513 $ 1,509 $ 1,536
Combined ($/oz.)(4) $ 887 $ 803 $ 893 $ 843
PGM Recycling: (1)
Palladium ($/oz.) $ 716 $ 620 $ 709 $ 651
Platinum ($/oz.) $ 1,459 $ 1,491 $ 1,548 $ 1,545
Rhodium ($/oz.) $ 1,097 $ 1,327 $ 1,127 $ 1,449
Combined ($/oz.)(4) $ 1,026 $ 985 $ 1,046 $ 1,020
By-products from Mine Production: (2)
Rhodium ($/oz.) $ 975 $ 1,124 $ 1,086 $ 1,310
Gold ($/oz.) $ 1,346 $ 1,692 $ 1,431 $ 1,659
Silver ($/oz.) $ 21 $ 32 $ 24 $ 31
Copper ($/lb.) $ 3.05 $ 3.34 $ 3.16 $ 3.42
Nickel ($/lb.) $ 5.11 $ 6.16 $ 5.55 $ 6.77
Average market price per ounce(3)
Palladium ($/oz.) $ 722 $ 611 $ 725 $ 641
Platinum ($/oz.) $ 1,449 $ 1,496 $ 1,515 $ 1,535
Combined ($/oz.)(4) $ 887 $ 804 $ 897 $ 843
(1) Ounces sold and average realized price per ounce from PGM Recycling
relate to ounces produced from processing of catalyst materials.
(2) By-product metals sold reflect contained metal produced from mined ore
alongside the Company's primary production of palladium and platinum.
Realized prices reflect net values (discounted due to product form and
transportation and marketing charges) per unit received.
(3) The Company's average realized price represents revenues, which
include the effect of hedging gains and losses realized on commodity
instruments and agreement discounts, divided by ounces sold. The
average market price represents the average London Bullion Market
Association afternoon postings for the actual months of the period.
(4) The Company calculates the combined average realized and a combined
average market price of palladium and platinum using the same ratio as
the rate of ounces of each respective metal that are produced from the
base metal refinery.
Reconciliation of Non-GAAP Measures to Costs of Revenues
The Company utilizes certain non-GAAP measures as indicators in assessing the performance of its mining and processing operations during any period. Because of the processing time required to complete the extraction of finished PGM products, there are typically lags of one to three months between ore production and sale of the finished product. Sales in any period include some portion of material mined and processed from prior periods as the revenue recognition process is completed. Consequently, while costs of revenues (a GAAP measure included in the Company's Consolidated Statements of Comprehensive (Loss) Income) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP measures to assess the costs associated with its producing and processing activities in a particular period and to compare those costs between periods.
While the Company believes that these non-GAAP measures may also be of value to outside readers, both as general indicators of the Company's mining efficiency from period to period and as insight into how the Company internally measures its operating performance, these non-GAAP measures are not standardized across the mining industry and in most cases will not be directly comparable to similar measures that may be provided by other companies. These non-GAAP measures are only useful as indicators of relative operational performance in any period, and because they do not take into account the inventory timing differences that are included in costs of revenues, they cannot meaningfully be used to develop measures of earnings or profitability. A reconciliation of these measures to costs of revenues for each period shown is provided as part of the following tables, and a description of each non-GAAP measure is provided below.
Total Costs of Revenues: For the Company as a whole, this measure is equal to total costs of revenues, as reported in the Company's Consolidated Statements of Comprehensive (Loss) Income. For the Stillwater Mine, the East Boulder Mine, and other PGM activities, the Company segregates the expenses within total costs of revenues that are directly associated with each of these activities and then allocates the remaining facility costs included in total cost of revenues in proportion to the monthly volumes from each activity. The resulting total costs of revenues measures for Stillwater Mine, East Boulder Mine and other PGM activities are equal in total to total costs of revenues as reported in the Company's Consolidated Statements of Comprehensive (Loss) Income.
Total Production Costs (Non-GAAP): Calculated as total costs of revenues (for each mine or combined) adjusted to exclude gains or losses on asset dispositions, costs and profit from recycling activities, revenues from the sale of mined by-products and timing differences resulting from changes in product inventories. This non-GAAP measure provides a comparative measure of the total costs incurred in association with production and processing activities in a period, and may be compared to prior periods or between the Company's mines.
When divided by the total tons milled in the respective period, Total Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides an indication of the cost per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first actually weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Production Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Production Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the respective period, Total Production Cost per Ounce (Non-GAAP) -- measured for each mine or combined -- provides an indication of the cost per ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because extracting PGM material is ultimately the objective of mining, the cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Production Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Production Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.
Total Cash Costs (Non-GAAP): This non-GAAP measure is calculated by excluding the depreciation and amortization and asset retirement costs from Total Production Costs (Non-GAAP) for each mine or combined. The Company uses this measure as a comparative indication of the cash costs related to production and processing in any period.
When divided by the total tons milled in the respective period, Total Cash Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of cash costs incurred per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Cash Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Cash Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the respective period, Total Cash Cost per Ounce (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because extracting PGM material is the objective of mining, the cash cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Cash Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Cash Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.
Total Operating Costs (Non-GAAP): This non-GAAP measure is derived from Total Cash Costs (Non-GAAP) for each mine or combined by excluding royalty, tax and insurance expenses from Total Cash Costs (Non-GAAP). Royalties, taxes and insurance costs are contractual or governmental obligations outside of the control of the Company's mining operations, and in the case of royalties and most taxes, are driven more by the level of sales realizations rather than by operating efficiency. Consequently, Total Operating Costs (Non-GAAP) is a useful indicator of the level of production and processing costs incurred in a period that are under the control of mining operations.
When divided by the total tons milled in the respective period, Total Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of controllable cash costs incurred per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first actually weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Operating Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Operating Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the respective period, Total Operating Cost per Ounce (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of controllable cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because ultimately extracting PGM material is the objective of mining, the cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Operating Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Operating Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.
Stillwater Mining Company
Reconciliation of Non-GAAP Measures to Costs of Revenues
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
(In thousands) 2013 2012 2013 2012
--------- --------- --------- ---------
Consolidated:
Reconciliation to consolidated
costs of revenues:
Total operating costs (Non-GAAP) $ 42,106 $ 52,943 $ 155,734 $ 154,686
Royalties, taxes and other 10,981 10,108 33,755 31,023
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 53,087 $ 63,051 $ 189,489 $ 185,709
Asset retirement costs 174 160 512 471
Depletion, depreciation and
amortization 15,057 13,843 43,824 42,848
Depletion, depreciation and
amortization (in inventory) (410) 217 (282) (141)
--------- --------- --------- ---------
Total production costs (Non-
GAAP) $ 67,908 $ 77,271 $ 233,543 $ 228,887
Change in product inventories 3,857 (2,764) (5,653) 973
Cost of PGM Recycling 136,843 72,096 402,859 249,360
PGM Recycling - depreciation 285 264 804 793
Add: Profit from by-products 6,652 7,212 21,103 23,563
Add: Profit from PGM Recycling 20,553 2,034 31,873 8,360
--------- --------- --------- ---------
Total consolidated costs of
revenues $ 236,098 $ 156,113 $ 684,529 $ 511,936
========= ========= ========= =========
Stillwater Mine:
Reconciliation to costs of
revenues:
Total operating costs (Non-GAAP) $ 29,400 $ 37,147 $ 108,209 $ 106,839
Royalties, taxes and other 7,014 7,025 22,702 21,079
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 36,414 $ 44,172 $ 130,911 $ 127,918
Asset retirement costs 161 148 474 436
Depletion, depreciation and
amortization 11,539 10,439 33,666 32,676
Depletion, depreciation and
amortization (in inventory) (407) 31 (215) (453)
--------- --------- --------- ---------
Total production costs (Non-
GAAP) $ 47,707 $ 54,790 $ 164,836 $ 160,577
Change in product inventories 3,261 (2,206) (2,953) 1,088
Add: Profit from by-products 3,886 4,692 12,634 15,294
Add: Profit from PGM Recycling 13,934 1,504 21,975 6,119
--------- --------- --------- ---------
Total costs of revenues $ 68,788 $ 58,780 $ 196,492 $ 183,078
========= ========= ========= =========
East Boulder Mine:
Reconciliation to costs of
revenues:
Total operating costs (Non-GAAP) $ 12,706 $ 15,796 $ 47,525 $ 47,848
Royalties, taxes and other 3,967 3,083 11,053 9,943
--------- --------- --------- ---------
Total cash costs (Non-GAAP) $ 16,673 $ 18,879 $ 58,578 $ 57,791
Asset retirement costs 13 12 38 35
Depletion, depreciation and
amortization 3,518 3,404 10,158 10,173
Depletion, depreciation and
amortization (in inventory) (3) 186 (67) 311
--------- --------- --------- ---------
Total production costs (Non-
GAAP) $ 20,201 $ 22,481 $ 68,707 $ 68,310
Change in product inventories 596 (558) (2,700) (115)
Add: Profit from by-products 2,766 2,520 8,469 8,269
Add: Profit from PGM Recycling 6,619 530 9,898 2,241
--------- --------- --------- ---------
Total costs of revenues $ 30,182 $ 24,973 $ 84,374 $ 78,705
========= ========= ========= =========
PGM Recycling:
Reconciliation to costs of
revenues:
PGM Recycling - depreciation $ 285 $ 264 $ 804 $ 793
Cost of PGM Recycling 136,843 72,096 402,859 249,360
--------- --------- --------- ---------
Total costs of revenues $ 137,128 $ 72,360 $ 403,663 $ 250,153
========= ========= ========= =========
INVESTOR CONTACT: Mike Beckstead (406) 373-8971