Stillwater boosts its reserves and production

Montana-based Stillwater Mining (PGMS-N) reported a modest loss in 1996 but saw increases in production, head grade and reserves.

The only producer of platinum and palladium in the U.S. lost US$2.8 million (or 13 cents per share) in 1996 on revenue of US$56.2 million, compared with 1995 net income of US$68,000 on revenue of US$51.3 million. Nearly half the loss came in the fourth quarter.

If the effect of a recent accounting change made by Stillwater is considered, the company’s 1996 net income stands at US$11.1 million (54 cents per share) Stillwater produced 59,000 oz. platinum and 196,000 oz. palladium in 1996 at its Stillwater mine near Billings, Mont., compared with 18,000 oz. and 59,000 oz., respectively, in 1995. From the third quarter to the fourth, the mill head grade increased by 21%.

Cash costs at Stillwater were US$103 per oz. in 1996 — a 12% reduction from the previous year.

High metal prices helped Stillwater’s bottom line in 1996. However, current market prices are significantly lower, and Stillwater reports that it is “essentially unhedged.”

As a result of low platinum and palladium prices in recent months, the company has deferred development of the East Boulder expansion project, situated 13 miles west of Stillwater.

During 1996, proven and probable reserves at Stillwater were boosted by 19%, to 27.1 million tons grading 0.8 oz. combined platinum and palladium per ton.

The underground crusher at Stillwater will be commissioned in the second quarter, after which time ore will be hoisted to the surface through the mine’s new shaft. As a result, Stillwater expects to be able to operate at 2,000 tons per day in the second half of the year, which will lower its cash costs.