Stillwater Mining Company Reports Third Quarter 2015 Results

LITTLETON, Colo., Oct. 30, 2015 (GLOBE NEWSWIRE) -- Stillwater Mining Company (NYSE:SWC) today reported financial results for the quarter ended September 30, 2015.

Third Quarter 2015 Highlights:

• All-in Sustaining Costs (AISC)* of $677 per mined ounce of palladium and platinum, down 19% from $837 per mined ounce for the third quarter of 2014
• Mined palladium and platinum production of 128,100 ounces, a 4% increase over 123,000 ounces mined during the third quarter of 2014
• Processed 161,000 ounces of recycled palladium, platinum and rhodium, an increase of 36.8% over 117,700 ounces recycled during the third quarter of 2014
• Consolidated net loss attributable to common stockholders of $11.9 million or $0.10 per diluted share, reflecting the decrease in average sales price per mined ounce (palladium and platinum) to $693, a 30% decrease from $983 realized for the third quarter of 2014 and a $4.0 million (before-tax) net loss on the repurchase of the 1.75% and 1.875% convertible debentures
• Repurchased $63.3 million of outstanding 1.75% and 1.875% convertible debentures for a total cash consideration of $61.0 million
• Cash and cash equivalents plus highly liquid investments of $460.3 million at quarter end

For the third quarter of 2015, the Company reported a consolidated net loss attributable to common stockholders of $11.9 million, or $0.10 per diluted share, compared to consolidated net income attributable to common stockholders of $18.1 million, or $0.14 per diluted share for the third quarter of 2014. The decrease was primarily due to significantly lower realized metal prices and lower sales volumes partially offset by lower costs. In addition, the Company recognized a non-cash net loss of $4.0 million (before-tax) related to the repurchase of a portion of its convertible debentures and reorganization costs of $1.7 million (before-tax) during the third quarter of 2015.

Commenting on the 2015 third quarter results, Mick McMullen, the Company's President and Chief Executive Officer stated, "The results for the quarter clearly demonstrate progress we have made in many areas of the business. Total mined production was on target, the recycling business continues to grow, we eliminated a meaningful portion of our outstanding convertible debt while maintaining an enviable cash balance and, most importantly, we reduced AISC to $677 per mined ounce for the quarter. Unfortunately, as we delivered on our initiatives, metal prices moved significantly lower. Our realized basket price of $693 per mined ounce for the third quarter was down from the $842 per ounce we received in the last quarter and was the lowest quarter in the last five years. We did see an inventory build of mined ounces, which meant that sales were 10,800 ounces lower than production for the quarter. We expect to see this metal sold in the fourth quarter of 2015.

"To weather these storms in the PGM markets we continue to focus on costs and make improvements to gain additional efficiencies throughout the operations. During the third quarter of 2015 we executed the previously announced reorganization strategy which involved a staff reduction and modifying our mine plan to focus on the most profitable areas within the Stillwater Mine while maximizing production from the East Boulder Mine. Through our planned workforce reduction and natural attrition, the employee count decreased by 159 during the third quarter of 2015 to a total of 1,442 employees at the end of the period. We are already experiencing improved efficiencies as a result of these changes.

"Following the roll-out of the strategic direction for the Company at the beginning of last year, we introduced a goal to achieve AISC in the low $700 per mined ounce range. I am pleased to report, based on recent performance, we are achieving that goal. The current platinum group metals (PGM) market demonstrates we must strengthen the business to ensure long-term sustainability. As part of that effort, today we are instituting a new target of AISC in the mid $600 per mined ounce range over the medium term. As we continue to decrease costs in conjunction with gains in operational efficiencies, Stillwater will be best positioned for all stakeholders in any market environment," concluded Mr. McMullen.

2015 Full-Year Guidance:

Guidance for the full-year 2015 remains unchanged from the guidance released on July 31, 2015, which is detailed below:

(1) All-in sustaining costs per mined ounce guidance for 2015 assumes the exclusion of approximately $20 per ounce recycling credit and approximately $11 per ounce for foreign activities.
(2) Exploration includes expenses for Marathon, Altar and Montana operations.
(3) Excludes project capitalized interest and capitalized depreciation.

Mine Production Comparison:

Revenues from the Company's Mine Production segment (including proceeds from the sale of by-products) totaled $86.4 million, in the third quarter of 2015, down from $137.1 million for the third quarter of 2014. The decrease in Mine Production revenues reflects both lower average realized prices and volumes sold during the third quarter of 2015. The 2015 combined average realized price for the sales of mined palladium and platinum decreased for the third quarter of 2015 to $693 per ounce, compared to $983 per ounce realized in the third quarter of 2014. The total quantity of mined palladium and platinum sold in the third quarter of 2015 was 117,300 ounces compared to 132,400 ounces sold in the third quarter of 2014.

Total costs of metals sold (excludes depletion, depreciation and amortization) decreased 25.0% to $147.9 million in the third quarter of 2015 from $197.3 million in the third quarter of 2014. Mine Production costs included in total costs of metals sold decreased to $69.0 million in the 2015 third quarter from $85.2 million in the 2014 third quarter.

Recycling Activity Comparison:

Recycling material processed during the third quarter of 2015 contained 161,000 ounces of palladium, platinum and rhodium, an increase of 36.8% from the total of 117,700 ounces processed during the third quarter of 2014. The proportion of ounces processed on a toll basis has increased compared to purchased ounces as a result of a shift in customer mix that began during the first quarter of 2015.

PGM Recycling revenues totaled $82.0 million for the 2015 third quarter, a decrease from $109.5 million in the same period of 2014. This decrease was driven by the shift from purchased to tolled ounces processed. The Company's combined average realized price for sales of recycled palladium, platinum and rhodium was $881 per ounce in the third quarter of 2015 compared to $1,068 per ounce in the third quarter of 2014. Recycling sales volumes for the third quarter of 2015 decreased to 88,800 ounces from 101,400 ounces sold in the third quarter of 2014. In conjunction, tolled ounces returned increased to 73,700 ounces for the third quarter of 2015 from 22,900 ounces in the third quarter of 2014.

PGM Recycling costs of metals sold totaled $78.9 million in the third quarter of 2015, down from the $106.8 million reported in the third quarter of 2014. This decrease was primarily due to the shift from purchased to tolling ounces processed during the quarter, as overall contained ounces volume increased. Net income, before income taxes, from the recycling segment totaled $3.3 million for the third quarter of 2015 compared to $3.1 million for the same quarter of 2014. Earnings in the recycling segment typically lag corresponding volume processed by approximately two to three months.

General and administrative costs were $8.9 million in the third quarter of 2015, a decrease from $10.1 million incurred during the same period of 2014.

All-In Sustaining Costs Per Mined Ounce:

All-in Sustaining Costs per Mined Ounce (AISC)* totaled $677 for the third quarter of 2015, a decrease from $837 recorded for the same period of 2014. 

Cash Costs Per Mined Ounce:

Combined Total Cash Costs per Mined Ounce (net of by-product and recycling credits)* averaged $465 per ounce for the third quarter of 2015, compared to $554 per ounce for the third quarter of 2014. The table below illustrates the effect of by-product and recycling credits on the total cash costs per mined ounce, net of credits, for the combined Montana mining operations.

Labor Matters:

The labor contract with employees represented by the USW International Union Local 11-0001 at the Stillwater Mine and Columbus processing facilities expired on June 12, 2015. On July 30, 2015, the Company notified the union that negotiations had reached an impasse and that it would implement its last, best and final offer. This is the same agreement previously recommended by the USW International Local 11-001 and rejected by the represented employees. The Company implemented the new agreement on September 1, 2015.

Cash Flow and Liquidity:

At September 30, 2015, the Company's cash and cash equivalents balance was $134.0 million, compared to $280.3 million at December 31, 2014. The Company's cash and cash equivalents plus highly liquid investments totaled $460.3 million at September 30, 2015, compared to $531.5 million at December 31, 2014. A significant driver of the decrease in cash was the Company's repurchase of a portion of its outstanding convertible debentures for $61.0 million during the third quarter of 2015. Net working capital decreased to $553.1 million at September 30, 2015, compared to $619.4 million at the end of 2014.

Net cash provided by operating activities (which includes changes in working capital) totaled $75.7 million for the nine months ended September 30, 2015, compared to $131.7 million of cash provided by operating activities for the same period in 2014. Cash capital expenditures were $83.4 million for the nine months ended September 30, 2015, compared to $87.0 million in the same period in 2014.

Outstanding total balance sheet debt reported at September 30, 2015, was approximately $255.9 million, a decrease from $296.2 million at December 31, 2014. The Company's reported debt balance at September 30, 2015, included approximately $254.2 million of 1.75% convertible debentures (net of unamortized discount of approximately $81.0 million), $0.5 million of 1.875% convertible debentures and approximately $1.2 million for a capital lease and financing for a small installment land purchase. The change in debt balance is a result of the Company's repurchase of a portion of its convertible debentures during the third quarter, partially offset by the accretion of the discount on the Company's outstanding 1.75% convertible debentures.

* 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 Costs of Revenues to Non-GAAP Financial Measures below.

2015 Third Quarter Results Webcast and Conference Call:

Stillwater Mining Company will conduct a conference call to discuss third quarter 2015 results at 12:00 noon Eastern Daylight Time on Friday, October 30, 2015.

A simultaneous webcast and presentation to accompany the conference call will be available through 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 13616776. 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. 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 known 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 sales of metal in the fourth quarter of 2015, continuing to focus on costs and making improvements to gain efficiencies; experiencing improved efficiencies from reorganization strategy involving workforce reduction and modifying the mine plan to focus on the most profitable areas within the Stillwater Mine while maximizing production from the East Boulder Mine; implementing a new AISC target over the medium term; decreasing costs in conjunction with gains in operational efficiencies to best position Stillwater for all stakeholders in any market environment; estimated 2015 production, cash costs per mined ounce, AISC, general and administrative costs, exploration expense, 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. 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 (Loss) Income 
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Stillwater Mining Company
Consolidated Balance Sheets
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Stillwater Mining Company
Consolidated Statements of Cash Flows
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Stillwater Mining Company
Key Operating Factors
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Stillwater Mining Company
Key Operating Factors (Continued)
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^{(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 2014 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 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 Costs of Revenues 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)

^{(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 contained metal. 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, hedging gains and losses realized on commodity instruments and agreement discounts, divided by ounces sold. The average market price represents the average London market for the actual months of the period.
(4) 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.
(5) Ounces sold and average realized price per ounce from Other relate to ounces acquired periodically in the open market and simultaneously resold to third parties.}

Reconciliation of Costs of Revenues 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. 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 financial 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 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 revenues, they cannot meaningfully be used to develop measures of earnings or profitability. A reconciliation of these measures to costs of revenues, 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.

Total Consolidated 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 PGM Recycling and Other, 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 the Stillwater Mine, the East Boulder Mine and PGM Recycling and Other are equal in the aggregate, to total consolidated costs of revenues as reported in the Company's Consolidated Statements of Comprehensive (Loss) Income.

Total Cash Costs (Non-GAAP): This non-GAAP financial measure is calculated as total costs of revenues adjusted to exclude costs of metals sold from PGM Recycling and Other, depletion and depreciation and amortization for Mine Production and PGM Recycling and Other, asset retirement costs, and timing differences resulting from changes in product inventories to arrive at Total Cash Costs before by-product and recycling credits. From this calculation, the Company deducts by-product and recycling income credits to arrive at Total Cash Costs, net of by-product and recycling credits. Total 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 the total tons milled in the respective period, Total Cash Costs 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, mine 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 mine production tons are measured precisely. Consequently, Total Cash Costs 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 Costs 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 ultimately 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 Costs 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.

With respect to 2015 guidance regarding Total Cash Costs per Mined ounce (net of by-product and recycling credits) and All-in Sustaining Costs per 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 this press release.

Stillwater Mining Company
Reconciliation of Costs of Revenues to Non-GAAP Financial Measures
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Stillwater Mining Company
Reconciliation of Costs of Revenues to Non-GAAP Financial Measures (Continued)
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Stillwater Mining Company
Reconciliation of Costs of Revenues to Non-GAAP Financial Measures (Continued)
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^{(1) PGM Recycling and Other include PGM recycling and metal acquired periodically in the open market and simultaneously resold to third parties.}

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 total cash costs, net of by-product and recycling credits (another non-GAAP financial measure, described above), and adding to it the recycling income credit, domestic corporate overhead and marketing costs (excluding any depreciation, research and development, and reorganization costs included in corporate overhead costs) and that portion of total capital expenditures associated with sustaining the current level of mining operations (capital expenditures for Blitz, Graham Creek and certain other one-time projects are not included in the calculation).

When divided by the total recoverable PGM ounces in the respective period, All-In Sustaining Costs per Mined Ounce (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 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 ore produced.

^{(1) Consolidated Corporate General & Administrative Costs includes Marketing and Research and Development (R&D) costs. The Marketing and R&D costs in prior years were separate line items on the Company's Consolidated Statements of Comprehensive (Loss) Income.}

^{Prior year numbers have been restated to conform to current year presentation.}

CONTACT: INVESTOR CONTACT:
         
         Mike Beckstead
         (720) 502-7671
         investor-relations@stillwatermining.com