Stillwater Mining Company Reports Third Quarter 2016 Results


LITTLETON, Colo., Oct. 28, 2016 (GLOBE NEWSWIRE) -- Stillwater Mining Company (NYSE:SWC) today reported financial results for the quarter ended September 30, 2016.

Third Quarter 2016 Highlights:

  • Continued positive safety performance, with a reportable incidence rate decrease of 13.2% compared to the third quarter of 2015
  • PGM mined sales of 131,800 ounces, an increase of 12.4% from 117,300 ounces sold during the third quarter of 2015
  • Costs of metals sold of $498 per PGM mined ounce, down 15.3% from $588 per PGM mined ounce for the third quarter of 2015
  • PGM mined production of 138,800 ounces, an increase of 8.4% from 128,100 PGM mined ounces during the third quarter of 2015
  • All-in sustaining costs (AISC)* of $624 per PGM mined ounce produced, down 7.8% from $677 per PGM mined ounce for the third quarter of 2015
  • Processed 175,000 ounces of recycled palladium, platinum and rhodium; an increase of 8.7% over 161,000 ounces recycled during the third quarter of 2015 and a Company record
  • Cash and cash equivalents plus highly liquid investments of $439.4 million at quarter end, after funding a $22.4 million increase of recycling working capital and all capital deployed during the third quarter of 2016
  • Consolidated net income attributable to common stockholders of $12.6 million or $0.10 per diluted share, compared to a consolidated net loss attributable to common stockholders of $11.9 million or $0.10 per diluted share for the third quarter of 2015, reflecting cost reductions and an increase in sales price per PGM mined ounce to $764 from $693 realized for the third quarter of 2015

Commenting on the third quarter 2016 results, Mick McMullen, the Company’s President and Chief Executive Officer stated, “The third quarter 2016 results demonstrate that Stillwater Mining Company continues to deliver on operational plans and stated objectives. Our efforts to grow the recycling business have been successful as we processed 175,000 ounces of recycled PGMs during the third quarter of 2016, which was a Company record. Mined production and costs were in-line with our expectations. Based on our year-to-date results and future outlook, we remain confident in our ability to achieve the improved full-year guidance targets provided last quarter.

"In addition to the many operational improvements made throughout the organization, our safety performance has continued on a record pace. The safety incidence rate for the third quarter of 2016 decreased by 13.2% compared to the third quarter of 2015. Even more impressive, our safety incidence rate through the first nine months of 2016 is less than the record low rate achieved last year.

"The Company remains focused on Blitz, our primary growth project. The progress on the two critical path items to first production, the 56 East development heading and the 53 East decline is ahead of plan. In addition, considerable engineering work has been updated on the Blitz project. This new work has driven a substantial increase to the scope of the project with relatively minimal additional costs. As a result of the new work performed, the project now incorporates the lower Blitz area. We now anticipate that Blitz will add between 270,000 and 330,000 ounces of mine production annually when fully ramped up by 2021-2022. This is anticipated to be all incremental production for at least the first decade of the Blitz production phase. Costs for the project are expected to increase to approximately $250 million from the previous $205 million estimate, which we consider to be a small escalation given the much expanded scope of the project and the acceleration of the production profile. Additional capital will be required for expansion of the Stillwater Mine concentrator to treat the increased ore tonnage and the related work is currently underway.

Mr. McMullen concluded, “The third quarter provides another data point for the evaluation of the progress we are making at Stillwater. As the business continues to evolve, we have consistently reached our performance targets, while achieving record safety results. I believe we have successfully established a foundation of financial discipline and focus on continuous operational improvement that will allow our shareholders to benefit from the world-class mining and processing assets we possess along with robust PGM market fundamentals. I would like to thank our team for the hard work to achieve the success Stillwater has experienced to date and the continued efforts for future progress."

2016 Full-Year Guidance:

Following a review of the third quarter 2016 results and forecasts for the remainder of the year, guidance for the full-year 2016 is unchanged as detailed in the table below.

  Current 2016
Guidance
 
Sales of PGM Mined Ounces 545,000 - 555,000 
Total Costs of Metals Sold per PGM Mined Ounce(1) $495 - $520 
PGM Mined Production Ounces 535,000 - 545,000 
Total Cash Costs per PGM Mined Ounce (net of by-product and recycling credits)* $430 - $455 
All-In Sustaining Costs per PGM Mined Ounce Produced* $595 - $635 
General and Administrative (millions) $30 - $40 
Exploration (millions)(2) $8 - $11 
Sustaining Capital Expenditures (millions) $50 - $60 
Project Capital Expenditures (millions)(3) $40 - $45 
Total Capital Expenditures (millions)(3) $90 - $105 
(1) Total costs of metals sold from mine production divided by PGM mined ounces sold. 
(2) Exploration includes expenses for Marathon, Altar and Montana operations. 
(3) Excludes project capitalized interest and project capitalized depreciation. 
  

Third Quarter 2016 Results:

For the third quarter of 2016, the Company reported consolidated net income attributable to common stockholders of $12.6 million, or $0.10 per diluted share, compared to a consolidated net loss attributable to common stockholders of $11.9 million, or $0.10 per diluted share for the third quarter of 2015. The third quarter of 2016 was positively impacted by cost reductions, an increase in realized metal prices and higher mined sales volumes compared to the third quarter of 2015.

PGM Mine Production Comparison:

  Three Months Ended Nine Months Ended
  September 30, September 30,
(Produced ounces) 2016 2015 2016 2015
  Palladium 64,300 59,300 189,900  183,000 
  Platinum 19,700 17,700 58,100  54,500 
Stillwater Mine Total 84,000 77,000 248,000  237,500 
          
  Palladium 42,600 39,700 128,500  117,500 
  Platinum 12,200 11,400 36,700  33,400 
East Boulder Mine Total 54,800 51,100 165,200  150,900 
          
  Palladium 106,900 99,000 318,400  300,500 
  Platinum 31,900 29,100 94,800  87,900 
Total 138,800 128,100 413,200  388,400 
           

Mine production revenues (including proceeds from the sale of by-products) totaled $106.9 million in the third quarter of 2016, an increase from $86.4 million for the third quarter of 2015. The combined average realized price for the sales of mined palladium and platinum increased for the third quarter of 2016 to $764 per ounce, compared to $693 per ounce realized in the third quarter of 2015. The total quantity of mined palladium and platinum sold in the third quarter of 2016 was 131,800 ounces compared to 117,300 ounces sold in the third quarter of 2015.

Total costs of metals sold from PGM mined production decreased to $65.6 million in the third quarter of 2016 from $69.0 million in the third quarter of 2015.

Recycling Activity Comparison:

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2016 2015 2016 2015
Average tons of catalyst fed per day 25.1  22.7  24.8  21.9 
Tons processed 2,308  2,087  6,760  5,987 
  Tons tolled 546  794  2,241  2,420 
  Tons purchased 1,762  1,293  4,519  3,567 
PGM ounces fed 175,000  161,000  499,100  421,300 
PGM ounces sold 117,600  88,800  266,200  231,500 
PGM tolled ounces returned 49,900  73,700  196,500  150,300 
             

Total recycled PGM ounces fed to the smelter of 175,000 for the third quarter of 2016 was a Company record and an increase of 8.7% from the third quarter of 2015. The recycling business segment continued to experience a shift from tolled to purchased material in the third quarter of 2016.

PGM recycling revenues totaled $89.6 million for the 2016 third quarter, an increase from $82.0 million in the same period of 2015. The Company's combined average realized price for sales of recycled palladium, platinum and rhodium decreased to $742 per ounce in the third quarter of 2016 compared to $881 per ounce in the third quarter of 2015. Recycling sales volumes for the third quarter of 2016 increased to 117,600 ounces from 88,800 ounces sold in the third quarter of 2015. In conjunction, tolled ounces returned to customers decreased to 49,900 ounces for the third quarter of 2016 from 73,700 ounces in the third quarter of 2015.

PGM recycling costs of metals sold totaled $86.2 million in the third quarter of 2016, an increase from $78.9 million in the third quarter of 2015. A majority of the costs of metals sold from recycling in each period is attributable to the acquisition cost of purchasing recyclable materials for the Company's own account; therefore, the aggregate costs of metals sold from the PGM Recycling segment is driven by the volume and the value of the PGMs in the materials purchased by the Company.

General and administrative costs were $8.7 million in the third quarter of 2016, compared to $8.9 million incurred during the same period of 2015.

Costs of Metals Sold Per PGM Mined Ounce:

Costs of metals sold per PGM mined ounce totaled $498 for the third quarter of 2016, a decrease from $588 recorded for the third quarter of 2015. Cost improvement initiatives and reduced labor costs contributed to the lower costs of metals sold per PGM mined ounce result.

  Three Months Ended Nine Months Ended
  September 30, September 30,
Costs of Metals Sold Per PGM Mined Ounce          
Combined Montana Mining Operations 2016 2015 2016 2015
Costs of metals sold per PGM mined ounce $498  $588  $503  $593 
                 

All-In Sustaining Costs Per PGM Mined Ounce Produced:

AISC* per PGM mined ounce produced totaled $624 for the third quarter of 2016, a decrease from $677 recorded for the same period of 2015. Reductions in cash costs and sustaining capital contributed to the lower AISC result.

  Three Months Ended Nine Months Ended
  September 30, September 30,
All-In Sustaining Costs Per PGM Mined Ounce          
Combined Montana Mining Operations 2016 2015 2016 2015
Total combined cash costs per PGM mined ounce, net of by-product and recycling credits * $434  $465  $433  $511 
PGM Recycling income credit per mined ounce 28  25  21  19 
Corporate general and administrative costs (before Depreciation, Depletion and Amortization 58  66  57  67 
Capital outlay to sustain production at the Montana operating mines 104  121  98  145 
All-In Sustaining Costs per PGM mined ounce* $624  $677  $609  $742 
                 

Cash Costs Per PGM Mined Ounce:

Total combined cash costs per PGM mined ounce (net of by-product and recycling credits)* totaled $434 per ounce for the third quarter of 2016, a significant reduction from $465 per ounce for the third quarter of 2015.

The table below illustrates the effect of applying the by-product and PGM Recycling segment credits to the total cash costs per PGM mined ounce for the Montana mining operations.

  Three Months Ended Nine Months Ended
  September 30, September 30,

Combined Montana Mining Operations
 2016 2015 2016 2015
Total combined cash costs per PGM mined ounce, before by-product and recycling credits * $506  $529  $496  $578 
Less: By-product revenue credit per mined ounce 44  39  42  48 
Less: PGM Recycling income credit per mined ounce 28  25  21  19 
Total combined cash costs per PGM mined ounce, net of by-product and recycling credits * $434  $465  $433  $511 
 
*These are non-GAAP financial measures. For a full description and reconciliation of these and other non-GAAP financial measures to GAAP financial measures, see Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures and Reconciliation of Total Cash Costs Guidance and AISC Guidance below.
 

Cash Flow and Liquidity:

At September 30, 2016, the Company’s cash and cash equivalents balance was $113.0 million, compared to $147.3 million at December 31, 2015. The Company’s cash and cash equivalents plus highly liquid investments totaled $439.4 million at September 30, 2016 (including $18.5 million of investments which have been reserved as collateral on letters of credit), compared to $463.8 million at December 31, 2015. Net working capital increased to $532.9 million at September 30, 2016, compared to $523.0 million at December 31, 2015.

Net cash provided by operating activities (which includes changes in working capital) totaled $38.2 million for the nine months ended September 30, 2016, compared to $75.7 million for the same period in 2015. Cash capital expenditures were $62.0 million for the nine months ended September 30, 2016, compared to $83.4 million in the same period in 2015.

Outstanding total balance sheet debt reported at September 30, 2016, was approximately $269.1 million, an increase from $255.8 million at December 31, 2015. The Company’s debt balance at September 30, 2016, included approximately $268.6 million of 1.75% convertible debentures (net of unamortized discount of approximately $63.5 million and $3.2 million of deferred debt issuance costs) and $0.5 million of 1.875% convertible debentures. The change in debt balance is a result of the accretion of the discount on the Company's outstanding 1.75% convertible debentures.

2016 Third Quarter Results Webcast and Conference Call:

Stillwater Mining Company will conduct a conference call to discuss third quarter 2016 results at 12:00 noon Eastern Daylight Time on Friday, October 28, 2016.

Dial-In Numbers: United States: (877) 407-8037
 International:(201) 689-8037
   

A simultaneous webcast of the conference call and related presentation materials will be accessible in the Investor Relations section of the Company's website at: www.stillwatermining.com

A telephone replay of the call will be available for one week following the event. The replay dial-in numbers are (877) 660-6853 (U.S.) and (201) 612-7415 (International), access code 13631292. 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. miner of platinum group metals (PGMs) and the largest primary producer of PGMs outside of South Africa and the Russian Federation. PGMs are rare precious metals used in a wide variety of applications, including automobile catalysts, fuel cells, hydrogen purification, electronics, jewelry, dentistry, medicine and coinage. The Company is engaged in the development, extraction and processing of PGMs from a geological formation in south-central Montana recognized as the J-M Reef. The J-M Reef is the only known significant source of PGMs in the U.S. and the highest-grade PGM resource known in the world. The Company also recycles PGMs from spent catalytic converters and other industrial sources. The Company owns the Marathon PGM-copper deposit in Ontario, Canada, and the Altar porphyry copper-gold deposit located in the San Juan province of Argentina. The Company’s shares are traded on the New York Stock Exchange under the symbol "SWC". Information about the Company can be found at its website: www.stillwatermining.com

Cautionary Note Concerning Forward-Looking Statements 

Some statements contained in this press 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 from management's expectations. These statements may contain words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “predicts,” “should,” “will,” “may” or similar expressions. Such statements also include, but are not limited to, comments regarding continuing to deliver on operational plans and stated objectives; successful efforts to grow the recycling business; remaining confident in ability to achieve full-year guidance targets; increasing the scope of the Blitz project with relatively minimal additional costs; anticipation that the Blitz project with add between 270,000 and 330,000 ounces of mine production when fully ramped up by 2021-2022; anticipation that new production from Blitz will be incremental for at least the first decade of the Blitz production phase; costs for the Blitz project increasing to $250 million; additional capital required for the expansion of the Stillwater Mine concentrator; a foundation of financial discipline and operational improvement that will allow shareholders to benefit from the Company’s world-class mining and processing assets along with robust PGM market fundamentals; 2016 guidance for sales of mined ounces, total costs of metals sold per PGM mined ounce, PGM mined production ounces, total cash costs per PGM mined ounce (net of credits), all-in sustaining costs per PGM mined ounce, general and administrative costs, exploration expenditures and capital expenditures; and the usefulness of non-GAAP financial measures. The forward-looking statements in this release are based on assumptions and analyses made by management in light of experience and perception of historical trends, current conditions, expected future developments, and other factors that are deemed appropriate. 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 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 22, 2016. 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 forward-looking statements herein speak only as of the date of this release. The Company disclaims any obligation to update forward-looking statements.

Stillwater Mining Company
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except per share data) 2016 2015 2016 2015
REVENUES        
Mine Production $106,926  $86,359  $299,123  $331,065 
PGM Recycling 89,591  81,982  196,515  222,980 
Other 100  100  300  300 
Total revenues 196,617  168,441  495,938  554,345 
COSTS AND EXPENSES        
Costs of metals sold        
Mine Production 65,580  69,004  208,612  229,676 
PGM Recycling 86,178  78,928  188,712  216,074 
Total costs of metals sold (excludes depletion, depreciation and amortization) 151,758  147,932  397,324  445,750 
Depletion, depreciation and amortization        
Mine Production 17,587  15,132  55,173  48,943 
PGM Recycling 184  230  569  738 
Total depletion, depreciation and amortization 17,771  15,362  55,742  49,681 
Total costs of revenues 169,529  163,294  453,066  495,431 
Exploration 499  827  4,934  2,667 
Reorganization   1,658    1,658 
General and administrative 8,692  8,911  25,300  27,652 
Gain on sale of long-term investments (196)   (678)  
Impairment of non-producing mineral properties       46,772 
Loss on long-term investments   151    204 
Loss (gain) on disposal of property, plant and equipment 82  (219) (72) (216)
Total costs and expenses 178,606  174,622  482,550  574,168 
OPERATING INCOME (LOSS) 18,011  (6,181) 13,388  (19,823)
OTHER INCOME (EXPENSE)        
Other 9  17  95  918 
Loss on extinguishment of debt, net   (4,010)   (4,010)
Interest income 1,213  766  2,883  2,192 
Interest expense, net of capitalized interest (3,958) (5,097) (12,207) (15,713)
Foreign currency transaction gain, net 466  12  1,660  149 
INCOME (LOSS) BEFORE INCOME TAX (PROVISION) BENEFIT 15,741  (14,493) 5,819  (36,287)
Income tax (provision) benefit (3,142) 2,464  (2,367) 8,127 
NET INCOME (LOSS) $12,599  $(12,029) $3,452  $(28,160)
Net loss attributable to noncontrolling interest   (151)   (11,808)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $12,599  $(11,878) $3,452  $(16,352)
Other comprehensive income, net of tax        
Net unrealized (loss) gain on investments available-for-sale and deferred compensation (193) (34) 337  149 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $12,406  $(11,912) $3,789  $(16,203)
Comprehensive loss attributable to noncontrolling interest   (151)   (11,808)
TOTAL COMPREHENSIVE INCOME (LOSS) $12,406  $(12,063) $3,789  $(28,011)
Weighted average shares of common stock outstanding        
Basic 121,077  120,960  121,069  120,746 
Diluted 121,634  120,960  121,438  120,746 
Basic income (loss) per share attributable to common stockholders $0.10  $(0.10) $0.03  $(0.14)
Diluted income (loss) per share attributable to common stockholders $0.10  $(0.10) $0.03  $(0.14)
                 

Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)

  September 30, December 31,
(In thousands, except per share data) 2016 2015
ASSETS    
Current assets    
Cash and cash equivalents $112,967  $147,336 
Investments, at fair value 326,445  316,429 
Inventories 140,781  102,072 
Trade receivables 1,404  800 
Prepaid expenses 4,626  2,821 
Other current assets 21,240  21,628 
Total current assets 607,463  591,086 
Mineral properties 112,480  112,480 
Mine development, net 480,266  460,751 
Property, plant and equipment, net 103,223  109,957 
Other noncurrent assets 4,478  4,115 
Total assets $1,307,910  $1,278,389 
LIABILITIES AND EQUITY    
Current liabilities    
Accounts payable $24,202  $18,205 
Accrued compensation and benefits 30,431  30,046 
Property, production and franchise taxes payable 12,406  13,907 
Current portion of long-term debt and capital lease obligations   657 
Income taxes payable 647   
Other current liabilities 6,910  5,286 
Total current liabilities 74,596  68,101 
Long-term debt 269,059  255,099 
Deferred income taxes 19,390  22,761 
Accrued workers compensation 6,420  6,070 
Asset retirement obligation 11,376  11,027 
Other noncurrent liabilities 11,351  6,102 
Total liabilities 392,192  369,160 
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; 121,078,216 and 121,049,471 issued and outstanding at September 30, 2016 and December 31, 2015, respectively 1,211  1,210 
Paid-in capital 1,101,982  1,099,283 
Accumulated deficit (187,615) (191,067)
Accumulated other comprehensive income (loss) 140  (197)
Total equity 915,718  909,229 
Total liabilities and equity $1,307,910  $1,278,389 
         

Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)

  Nine Months Ended
  September 30,
(In thousands) 2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income (loss) $3,452  $(28,160)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depletion, depreciation and amortization 55,742  49,681 
Gain on sale of long-term investment (678)  
Loss on long-term investments   204 
Loss on extinguishment of debt, net   4,010 
Impairment of non-producing mineral properties   46,772 
Amortization / accretion of investment premium / discount 1,772  1,688 
Gain on disposal of property, plant and equipment (72) (216)
Foreign currency transaction gain, net (1,660) (149)
Deferred income taxes (2,103) (12,192)
Accretion of asset retirement obligation 637  589 
Amortization of deferred debt issuance costs 662  1,665 
Accretion of convertible debenture debt discount 13,297  12,985 
Share based compensation and other benefits 2,744  9,489 
Non-cash capitalized interest (4,334) (2,809)
Changes in operating assets and liabilities:    
Inventories (39,067) 2,280 
Trade receivables (604) 554 
Prepaid expenses (1,805) (1,674)
Accounts payable 3,048  413 
Accrued compensation and benefits 385  (62)
Property, production and franchise taxes payable 1,195  170 
Income taxes payable 648   
Accrued workers compensation 350  32 
Other operating assets 351  (7,607)
Other operating liabilities 4,196  (1,982)
NET CASH PROVIDED BY OPERATING ACTIVITIES 38,156  75,681 
CASH FLOWS FROM INVESTING ACTIVITIES    
Capital expenditures (61,980) (83,386)
Proceeds from sale of long-term investment 1,099   
Proceeds from disposal of property, plant and equipment 162  387 
Purchases of investments (234,269) (230,392)
Proceeds from maturities and sales of investments 223,095  153,902 
NET CASH USED IN INVESTING ACTIVITIES (71,893) (159,489)
CASH FLOWS FROM FINANCING ACTIVITIES    
Payments on debt and capital lease obligations (658) (62,582)
Proceeds from issuance of common stock 26  60 
NET CASH USED IN FINANCING ACTIVITIES (632) (62,522)
CASH AND CASH EQUIVALENTS    
Net decrease (34,369) (146,330)
Balance at beginning of period 147,336  280,286 
BALANCE AT END OF PERIOD $112,967  $133,956 
         

Stillwater Mining Company 
Key Operating Factors 
(Unaudited)

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except where noted) 2016 2015 2016 2015
OPERATING AND COST DATA FOR PGM MINE PRODUCTION        
Consolidated:        
Ounces produced        
Palladium  106.9   99.0   318.4   300.5 
Platinum  31.9   29.1   94.8   87.9 
Total  138.8   128.1   413.2   388.4 
Tons milled  321.9   299.5   963.0   906.9 
Mill head grade (ounce per ton)  0.46   0.45   0.46   0.45 
Sub-grade tons milled (1)  23.9   33.6   66.6   88.5 
Sub-grade tons mill head grade (ounce per ton) 0.15  0.14  0.15  0.15 
Total tons milled(1)  345.8   333.1   1,029.6   995.4 
Combined mill head grade (ounce per ton) 0.44  0.42  0.44  0.43 
Total mill recovery (%) 92  92  92  92 
Total mine concentrate shipped (tons) (3) 8,107  7,716  24,169  23,738 
Platinum grade in concentrate (ounce per ton) (3) 4.19  3.93  4.19  3.89 
Palladium grade in concentrate (ounce per ton) (3) 13.61  13.18  13.60  13.05 
Costs of metals sold per PGM mined ounce $498  $588  $503  $593 
Total combined cash costs per ounce - net of credits (Non-GAAP) (2) $434  $465  $433  $511 
Total combined cash costs per ore ton milled - net of credits (Non-GAAP) (2) $174  $179  $174  $199 
Stillwater Mine:        
Ounces produced        
Palladium  64.3   59.3   189.9   183.0 
Platinum  19.7   17.7   58.1   54.5 
Total  84.0   77.0   248.0   237.5 
Tons milled  165.1   159.8   507.0   499.7 
Mill head grade (ounce per ton) 0.54  0.50  0.52  0.49 
Sub-grade tons milled (1) 9.2  22.1  26.0  57.1 
Sub-grade tons mill head grade (ounce per ton) 0.22  0.16  0.23  0.18 
Total tons milled (1) 174.3  181.9  533.0  556.8 
Combined mill head grade (ounce per ton) 0.52  0.46  0.50  0.46 
Total mill recovery (%) 93  92  93  93 
Total mine concentrate shipped (tons) (3) 4,323  3,858  12,775  12,563 
Platinum grade in concentrate (ounce per ton) (3) 5.03  4.91  5.04  4.68 
Palladium grade in concentrate (ounce per ton) (3) 15.59  16.00  15.60  15.23 
Costs of metals sold per PGM mined ounce $468  $559  $478  $572 
Total cash costs per PGM mined ounce - net of credits (Non-GAAP) (2) $434  $441  $428  $507 
Total cash costs per ore ton milled - net of credits (Non-GAAP) (2) $209  $187  $199  $216 
                 

Stillwater Mining Company
Key Operating Factors (Continued)
(Unaudited)

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except where noted) 2016 2015 2016 2015
OPERATING AND COST DATA FOR PGM MINE PRODUCTION (Continued)        
East Boulder Mine:        
Ounces produced        
Palladium 42.6  39.7  128.5  117.5 
Platinum 12.2  11.4  36.7  33.4 
Total 54.8  51.1  165.2  150.9 
Tons milled 156.8  139.7  456.0  407.2 
Mill head grade (ounce per ton) 0.38  0.40  0.39  0.40 
Sub-grade tons milled (1) 14.7  11.5  40.7  31.4 
Sub-grade tons mill head grade (ounce per ton) 0.10  0.10  0.10  0.10 
Total tons milled (1) 171.5  151.2  496.7  438.6 
Combined mill head grade (ounce per ton) 0.36  0.38  0.37  0.38 
Total mill recovery (%) 90  91  90  91 
Total mine concentrate shipped (tons) (3) 3,784  3,858  11,394  11,175 
Platinum grade in concentrate (ounce per ton) (3) 3.23  2.96  3.24  3.01 
Palladium grade in concentrate (ounce per ton) (3) 11.35  10.36  11.36  10.59 
Costs of metals sold per PGM mined ounce $544  $635  $542  $630 
Total cash costs per PGM mined ounce - net of credits (Non-GAAP) (2) $433  $500  $441  $517 
Total cash costs per ore ton milled - net of credits (Non-GAAP) (2) $138  $169  $147  $178 


(1) Sub-grade tons milled includes reef waste material only. Reef waste material is PGM-bearing mined material below the cutoff grade for proven and probable reserves but with sufficient economic value to justify processing it through the concentrator along with the mined ore. Total tons milled includes ore tons and sub-grade tons only. See “Proven and Probable Ore Reserves – Discussion” in the Company’s 2015 Annual Report on Form 10-K for further information.
(2) Total cash costs include total operating costs plus royalties, insurance and taxes other than income taxes. Total cash costs per PGM mined ounce, net of credits is a non-GAAP financial measure that management uses to monitor and evaluate the efficiency of its mining operations. This measure of cost is not defined under U.S. Generally Accepted Accounting Principles (GAAP). Please see Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures and the accompanying discussion for additional detail.
(3) The concentrate tonnage and grade values are inclusive of periodic re-processing of smelter slag and internal furnace brick PGM bearing materials.
 

Stillwater Mining Company
Key Operating Factors (Continued)
(Unaudited)

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except for average prices) 2016 2015 2016 2015
SALES AND PRICE DATA        
Ounces sold        
PGM Mine Production:        
Palladium (oz.) 103.6 91.7 325.2 302.1
Platinum (oz.) 28.2 25.6 89.5 84.9
Total 131.8 117.3 414.7 387.0
PGM Recycling: (1)        
Palladium (oz.) 69.2 53.2 160.4 136.9
Platinum (oz.) 40.6 29.6 87.5 78.1
Rhodium (oz.) 7.8 6.0 18.3 16.5
Total 117.6 88.8 266.2 231.5
By-products from Mine Production: (2)        
Rhodium (oz.) 0.9 0.8 2.5 2.7
Gold (oz.) 2.6 2.5 8.1 7.9
Silver (oz.) 2.0 1.7 5.0 5.0
Copper (lb.) 262.3 221.0 830.3 744.1
Nickel (lb.) 387.8 342.0 1,184.9 1,130.5
Average realized price per ounce (3)        
PGM Mine Production:        
Palladium ($/oz.) $679  $611  $591  $723 
Platinum ($/oz.) $1,076  $987  $1,001  $1,107 
Combined ($/oz.) (5) $764  $693  $679  $807 
PGM Recycling: (1)        
Palladium ($/oz.) $587  $737  $569  $771 
Platinum ($/oz.) $1,019  $1,111  $967  $1,181 
Rhodium ($/oz.) $671  $1,027  $680  $1,130 
Combined ($/oz.) (5) $742  $881  $708  $935 
By-products from Mine Production: (2)        
Rhodium ($/oz.) $648  $808  $669  $1,020 
Gold ($/oz.) $1,328  $1,136  $1,261  $1,181 
Silver ($/oz.) $19  $15  $17  $16 
Copper ($/lb.) $1.95  $2.20  $1.93  $2.42 
Nickel ($/lb.) $3.86  $2.92  $3.23  $4.20 
Average market price per ounce (4)        
Palladium ($/oz.) $677  $617  $591  $719 
Platinum ($/oz.) $1,085  $987  $1,003  $1,100 
Combined ($/oz.) (5) $764  $698  $679  $802 


(1) Ounces sold and average realized price per ounce from PGM Recycling relate to ounces produced from processing of spent catalyst from catalytic converters and other industrial sources.
(2) By-product metals sold reflect net values of realized prices (discounted due to product form) per unit sold.
(3) The Company’s average realized price represents revenues, hedging gains and losses realized on commodity instruments and agreement discounts, divided by ounces sold.
(4) The average market price represents the average London market for the actual months of the period.
(5) The Company reports a combined average realized and market price of palladium and platinum at the same ratio as ounces that are produced from the base metal refinery.
 

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

The Company utilizes certain non-GAAP financial 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. Costs of metals sold - Mine Production, the Company's most directly comparable GAAP financial measure, in any period includes some portion of material mined and processed from prior periods as the process is completed. Consequently, while costs of metals sold - Mine Production (a GAAP measure included in the Company’s Consolidated Statements of Comprehensive Income (Loss)) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP financial 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 financial 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 financial 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 financial 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 metals sold - Mine Production, they cannot meaningfully be used to develop measures of earnings or profitability. A reconciliation of these measures to costs of metals sold - Mine Production, the most directly comparable GAAP financial measure, for each period shown is provided as part of the following tables, and a description of each non-GAAP financial measure is provided below.

Costs of Metals Sold - Mine Production: For the Company as a whole, this measure is equal to total costs of metals sold - Mine Production, as reported in the Company's Consolidated Statements of Comprehensive Income (Loss). For the Stillwater Mine and the East Boulder Mine, the Company segregates the expenses within total costs of metals sold - Mine Production 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 metals sold - Mine Production measures for the Stillwater Mine, and the East Boulder Mine are equal, in the aggregate, to total consolidated costs of metals sold - Mine Production as reported in the Company’s Consolidated Statements of Comprehensive Income (Loss).

When divided by the total PGM mined ounces sold in the respective period, Costs of metals sold - Mine Production, measured for each mine or combined, provides an indication of the level of combined cash costs incurred per PGM mined ounce sold in that period. Consequently, Total Combined Cash Costs per PGM mined ounce sold (Non-GAAP) is a general measure of operating efficiency, and is affected both by the level of Total Combined Cash Costs (Non-GAAP) and by the total of PGM mined ounces sold.

Total Combined Cash Costs (Non-GAAP): This non-GAAP financial measure is calculated as total costs of metals sold - Mine Production adjusted for the change in mined inventories to calculate Total Combined Cash Costs before by-product and recycling income credits, (Non-GAAP). From this calculation, the Company deducts by-product and recycling income credits to arrive at Total Combined Cash Costs, net of by-product and recycling income credits. Total Combined Cash Costs is a measure of extraction efficiency. The Company uses this measure as a comparative indication of the cash costs related to production and processing in its mining operations in any period. When divided by PGM ounces produced in the respective period, Total Combined Cash Costs, net of by-products and recycling income credits (Non-GAAP), measured for each mine or combined, provides an indication of the level of combined cash costs incurred per PGM ounce produced in that period.

When divided by the total ore tons milled in the respective period, Total Combined Cash Costs per PGM mined ounce, net of by-product and recycling income credits (Non-GAAP), measured for each mine or combined, provides an indication of the level of combined 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 Combined Cash Costs per Ore Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Combined Cash Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.

With respect to 2016 guidance regarding Total Cash Costs per PGM Mined Ounce (net of by-product and recycling credits) and AISC per PGM Mined Ounce, the Company cannot provide a quantitative reconciliation to the most directly comparable GAAP measure without unreasonable effort. However, the Company would expect to calculate these non-GAAP measures in the same manner they were calculated in the reconciliations included in this press release.

Stillwater Mining Company
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited)

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except per ounce and per ton data) 2016 2015 2016 2015
Consolidated:        
         
Costs of metals sold - Mine Production $65,580  $69,004  $208,612  $229,676 
Change in mined inventories (palladium and platinum) 4,652  (1,256) (3,568) (5,261)
Total combined cash costs, before by-product and recycling credits  (Non-GAAP) $70,232  $67,748  $205,044  $224,415 
By-product revenue credit (6,116) (5,004) (17,378) (18,663)
PGM Recycling income credit (3,876) (3,261) (8,611) (7,424)
Total combined cash costs, net of by-product and recycling credits  (Non-GAAP) $60,240  $59,483  $179,055  $198,328 
                 
PGM mined ounces sold  131.8   117.3   414.7   387.0 
Costs of metals sold per PGM mined ounce $498  $588  $503  $593 
         
PGM mined ounces produced 138.8  128.1  413.2  388.4 
         
Total combined cash costs per PGM mined ounce, before by-product and recycling credits  (Non-GAAP) $506  $529  $496  $578 
By-product credit per mined ounce (44) (39) (42) (48)
Recycling income credit per mined ounce (28) (25) (21) (19)
Total combined cash costs PGM per mined ounce, net of by-product and recycling credits  (Non-GAAP) $434  $465  $433  $511 
         
Ore tons milled 345.8  333.1  1,029.6  995.4 
         
Total combined cash costs per ore ton milled, before by-product and recycling credits (Non-GAAP) $203  $204  $199  $225 
By-product credit per ore ton milled (18) (15) (17) (19)
Recycling income credit per ore ton milled (11) (10) (8) (7)
Total combined cash costs per ore ton milled, net of by-product and recycling credits (Non-GAAP) $174  $179  $174  $199 
                 

Stillwater Mining Company
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)
(Unaudited)

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except per ounce and per ton data) 2016 2015 2016 2015
Stillwater Mine:        
         
Costs of metals sold - Mine Production $37,943  $40,290  $122,002  $140,053 
Change in mined inventories (palladium and platinum) 4,057  (1,770) (1,608) (5,068)
Total cash costs, before by-product and recycling credits (Non-GAAP) $42,000  $38,520  $120,394  $134,985 
By-product revenue credit (3,166) (2,599) (9,054) (10,131)
PGM Recycling income credit (2,342) (1,939) (5,160) (4,479)
Total cash costs, net of by-product and recycling credits (Non-GAAP) $36,492  $33,982  $106,180  $120,375 
                 
PGM mined ounces sold  81.1   72.1   255.0   244.8 
Costs of metals sold per PGM mined ounce $468  $559  $478  $572 
                 
PGM mined ounces produced  84.0   77.0   248.0   237.5 
                 
Total cash costs per PGM mined ounce, before by-product and recycling credits  (Non-GAAP) $500  $500  $486  $569 
By-product credit per mined ounce (38) (34) (37) (43)
Recycling income credit per mined ounce (28) (25) (21) (19)
Total cash costs per PGM mined ounce, net of by-product and recycling credits  (Non-GAAP) $434  $441  $428  $507 
                 
Ore tons milled  174.3   181.9   533.0   556.8 
                 
Total cash costs per ore ton milled, before by-product and recycling credits (Non-GAAP) $240  $212  $226  $242 
By-product credit per ore ton milled (18) (14) (17) (18)
Recycling income credit per ore ton milled (13) (11) (10) (8)
Total cash costs per ore ton milled, net of by-product and recycling credits (Non-GAAP) $209  $187  $199  $216 
                 

Stillwater Mining Company
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)
(Unaudited)

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except per ounce and per ton data) 2016 2015 2016 2015
East Boulder Mine:        
         
Costs of metals sold - Mine Production $27,637  $28,714  $86,610  $89,623 
Change in mined inventories (palladium and platinum) 595  514  (1,960) (193)
Total cash costs, before by-product and recycling credits  (Non-GAAP) $28,232  $29,228  $84,650  $89,430 
By-product revenue credit (2,950) (2,405) (8,324) (8,532)
PGM Recycling income credit (1,534) (1,322) (3,451) (2,945)
Total cash costs, net of by-product and recycling credits  (Non-GAAP) $23,748  $25,501  $72,875  $77,953 
                 
PGM mined ounces sold  50.8   45.2   159.7   142.2 
Costs of metals sold per PGM mined ounce $544  $635  $542  $630 
                 
PGM mined ounces produced  54.8   51.1   165.2   150.9 
                 
Total cash costs per PGM mined ounce, before by-product and recycling credits  (Non-GAAP) $515  $573  $512  $594 
By-product credit per mined ounce (54) (47) (50) (57)
Recycling income credit per mined ounce (28) (26) (21) (20)
Total cash cost, per PGM mined ounce, net of by-product and recycling credits  (Non-GAAP) $433  $500  $441  $517 
                 
Ore tons milled  171.5   151.2   496.7   438.6 
                 
Total cash costs per ore ton milled, before by-product and recycling credits (Non-GAAP) $164  $194  $171  $204 
By-product credit per ore ton milled (17) (16) (17) (19)
Recycling income credit per ore ton milled (9) (9) (7) (7)
Total cash costs per ore ton milled, net of by-product and recycling credits (Non-GAAP) $138  $169  $147  $178 
                 

Stillwater Mining Company
All-In Sustaining Costs (a Non-GAAP Financial Measure)
(Unaudited)

All-In Sustaining Costs (Non-GAAP): This non-GAAP financial measure is used as an indicator from period to period of the level of total cash required by the Company to maintain and operate the existing mines, including corporate administrative costs and replacement capital. The measure is calculated beginning with Costs of metal sold - Mine Production, the Company's most directly comparable GAAP financial measure and adding to it the change in mined inventories, and adjusting for the by-product and recycling income credits, domestic corporate general and administrative costs (excluding any depreciation and general and administrative costs of foreign subsidiaries) and that portion of total capital expenditures associated with sustaining the current level of mining operations. Capital expenditures, however, for Blitz and certain other one-time projects are not included in the calculation.

When divided by the total recoverable PGM mined ounces produced in the respective period, All-In Sustaining Costs per PGM Mined Ounce Produced (Non-GAAP) provides an indication of the level of total cash required to maintain and operate the mines per PGM ounce produced in the period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because the objective of PGM mining activity is to extract PGM material, the all-in cash costs per PGM mined ounce to produce PGM material, administer the business and sustain the operating capacity of the mines is a useful measure for comparing overall extraction efficiency between periods. This measure is affected by the total level of spending in the period and by the grade and volume of mined ore produced.

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands, except $/oz.) 2016 2015 2016 2015
All-In Sustaining Costs        
Costs of metals sold - Mine Production $65,580  $69,004  $208,612  $229,676 
Change in mined inventories (palladium and platinum) 4,652  (1,256) (3,568) (5,261)
Total combined cash costs, before by-product and recycling credits  (Non-GAAP) $70,232  $67,748  $205,044  $224,415 
By-product revenue credit (6,116) (5,004) (17,378) (18,663)
PGM Recycling income credit (3,876) (3,261) (8,611) (7,424)
Total combined cash costs, net of by-product and recycling credits  (Non-GAAP) $60,240  $59,483  $179,055  $198,328 
PGM Recycling income credit 3,876  3,261  8,611  7,424 
Total combined cash costs, net of by-product credit  (Non-GAAP) $64,116  $62,744  $187,666  $205,752 
         
Consolidated corporate general and administrative costs $8,692  $8,911  $25,300  $27,652 
Corporate depreciation included in consolidated corporate general and administrative costs (93) (125) (303) (377)
General and administrative costs - foreign subsidiaries (585) (375) (1,607) (1,244)
Total general and administrative costs $8,014  $8,411  $23,390  $26,031 
         
Total capitalized costs $26,730  $27,142  $72,495  $88,319 
Capital associated with expansion (12,198) (11,610) (31,909) (31,953)
Total Capital incurred to sustain existing operations $14,532  $15,532  $40,586  $56,366 
         
All-In Sustaining Costs  (Non-GAAP) $86,662  $86,687  $251,642  $288,149 
                 
PGM mined ounces sold  131.8   117.3   414.7   387.0 
PGM mined ounces produced 138.8  128.1  413.2  388.4 
         
Costs of metals sold per PGM mined ounce $498  $588  $503  $593 
All-In Sustaining Costs per PGM Mined Ounce Produced  (Non-GAAP) $624  $677  $609  $742 
                 

Stillwater Mining Company
Reconciliation of Total Cash Costs Guidance and AISC Guidance
(Non-GAAP Financial Measures)
(Unaudited)

A reconciliation of the 2016 Total Cash Costs Guidance and the 2016 AISC Guidance is provided below. The estimates in the table below are considered "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, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Please refer to: Cautionary Note Concerning Forward-Looking Statements, for additional information.

  Reconciliation Guidance Range
Costs of metals sold - Mined Production (000's) $ 279,125   
PGM mined ounces sold 550,000  545,000 555,000 
Costs of metals sold per PGM mined ounce $508  $495 $520 
      
Costs of metals sold - Mined Production (000's) $279,063    
Inventory change (000's) (10,000)   
Total combined cash costs, before by-product credits and recycling credits (000's) $269,063    
PGM mined ounces 540,000  535,000 545,000 
Total combined cash costs per PGM mined ounce, before by-product credits and recycling credits $498    
      
By-product revenue credit (000's) $24,000    
PGM Recycling income credit (000's) 11,000    
Total cash costs, net of by-product and recycling credits (000's) $234,063    
      
Total cash costs per PGM mined ounce, net of by-product and recycling credits $433  $430 $455 
      
Total cash costs, net of by-product and recycling credits (000's) $234,063    
PGM Recycling income credit (000's) 11,000    
General and administrative (000's) 35,000  30,000 40,000 
Sustaining capital expenditures (000's) 55,000  50,000 60,000 
All-in sustaining costs (000's) $335,063    
All-in sustaining costs per PGM mined ounce produced $620  $595 $635 
            

Stillwater Mining Company
Underlying Earnings (Loss)
(Non-GAAP Financial Measure)
(Unaudited)

Underlying Earnings (Loss) (Non-GAAP): This non-GAAP financial measure is considered by the Company to be reflective of the actual income / loss position. This non-GAAP financial measure provides to investors and analysts the ability to understand the results of the continuing operations of the Company relating to the production, processing and sale of PGMs, by excluding certain items that have a disproportionate impact on the results for the reported periods. The measure is calculated beginning with Net income (loss) attributable to common stockholders and adding back impairment charges, one-time event charges and charges infrequent to the Company's continuing operations and the income tax effect of such adjustments. Net loss attributable to noncontrolling interest has been adjusted for the noncontrolling interest's ownership percentage of any applicable impairment charges to which the noncontrolling interest has an ownership. The Company's determination of the components of Underlying earnings (loss) are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts.

Net income (loss) attributable to common stockholders is reconciled to Adjusted net income (loss) attributable to common stockholders and Underlying earnings (loss) as follows:

  Three Months Ended Nine Months Ended
  September 30, September 30,
(In thousands)  2016    2015    2016    2015  
Net income (loss) attributable to common stockholders $12,599  $(11,878) $3,452  $(16,352)
Impairment of property, plant and equipment and non-producing mineral properties       46,772 
Income tax effect of adjustment       (997)
Reorganization, net of tax   1,078    1,078 
Loss on extinguishment of debt, net of tax   2,606    2,606 
Adjusted net income (loss) attributable to common stockholders  (Non-GAAP) $12,599  $(8,194) $3,452  $33,107 
Impairment loss attributable to noncontrolling interest   151    11,808 
Underlying earnings (loss)  (Non-GAAP) $12,599  $(8,043) $3,452  $44,915 


 


            

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