In its fourth quarter earnings report, Stillwater Mining Co. reported 2011 net income of $144.3 million compared to $50.4 million in 2010. Revenues for 2011 totaled $906 million, up from $555.9 million for 2010. The 2011 earnings benefitted from strong selling prices for palladium and platinum, and from improved mining productivity.
“2011 was a very important year for Stillwater,” said Frank McAllister, chairman and CEO, Stillwater Mining. “The company benefitted financially from strong PGM [platinum group metal] prices through most of the year, enabling us to make progress in strengthening the developed state of our mines after the challenges of 2008 and 2009. Of particular importance to Stillwater is the continuing convergence of the market price of palladium toward the price of platinum. In 2008, the market price of palladium, our principal product, averaged just 22% of the price of platinum; today that price is in the range of 40% to 45% of the platinum price.”
Stillwater’s operating mines also both exhibited strong mine production results during 2011, McAllister explained. “Efficient execution within our existing mining operations continues as a key focus, and our teams performed very well during 2011,” McAllister said. The company’s total cash cost amounted $420/oz for the full year.
During 2011, Stillwater mined 517,900 oz of palladium and platinum, including 398,900 oz of palladium and 119,000 oz of platinum. Following strong production results during the first half of the year, the company chose to reallocate some of its mining resources from production into mine development during the second half to maintain the developed state of the mines. Coupled with certain fourth quarter operational issues, the result was lower PGM production during the second half of the year. By comparison, total mined production for 2010 totaled 485,100 oz, including 374,100 oz of palladium and 111,000 oz of platinum, with 351,700 total ounces from the Stillwater mine and 133,400 ounces from the East Boulder mine. Total mine output in 2010 was impaired by lower than planned ore grades realized in the off-shaft portion of the Stillwater mine.
At the company’s Graham Creek project, situated to the west of the East Boulder mine, recent diamond drilling results have demonstrated mineable PGM ore grades following development of the first 1,200 ft of tunnel-boring machine (TBM) drift earlier in 2011. The TBM has now resumed operation, with an additional 7,000 ft of development planned to be driven and evaluated over the coming years. The company expects to take delivery of a refurbished TBM for the Blitz project, situated to the east of the Stillwater mine, in the first half of 2012 and anticipates placing it into operation by year-end. The Blitz project is designed ultimately to extend underground access by approximately 20,000 feet on each of two levels to a point about 26,000 feet east of the Stillwater mine shaft.
Stillwater said its mining operations seem to function most efficiently at a current production rate of approximately 500,000 combined ounces of palladium and platinum per year. Mine plans once again have been structured to achieve that level of production in 2012. The company expects costs to increase to $500/oz for 2012, due to inflation of supply costs, a 5% wage rate increase in 2012 plus adjustments to incentive programs, expanded and enhanced miner training, increased manpower for maintenance and support, receding faces and increased travel distances underground.