Stillwater Mining Company is engaged in the exploration development mining and production of platinum palladium and associated metals from the Stillwater Complex in southern Montana which the company believes isthe only significant primary source of platinum and palladium outside theRepublic of South Africa. The Stillwater Complex includes an extensivemineralized zone containing platinum group metals known as the J-M ReefThe Stillwater Complex has been prospected for gold copper nickel and chromium. Stillwater Mining Company has a market cap of $660.7 million; its shares were traded at around $6.99 with and P/S ratio of 0.7. Highlight of Business Operations: The Companys profitability is significantly driven by the prices realized for its palladium and platinum production, as well as by the operating performance of the mines and the economic benefit that stems from its recycling operations and from sales of by-product metals. During the second and third quarters of 2009, the Companys average realized price for platinum strengthened significantly from its low in the fourth quarter of 2008, when sales realizations for mined platinum averaged $929 per ounce. Mined palladium realizations were governed by contractual floor prices during the same period and so averaged $368 per ounce. In the 2009 third quarter, the Companys sales realizations on mined platinum averaged $1,174 per ounce, while sales of mined palladium averaged $360 per ounce. In comparison, market prices quoted during the third quarter of 2009 averaged $1,230 per ounce for platinum and $272 per ounce for palladium, highlighting the effect on the Companys sales realizations of the floor and ceiling prices in its automotive supply agreements.
For the third quarter of 2009, the Company has reported net income of $4.4 million, or $0.05 per share, compared to net income of $0.1 million, or less than $0.01per share, in the third quarter 2008. Earnings improved despite sharply lower PGM prices compared to the year-earlier quarter the combined average realization per mined ounce sold for platinum and palladium was $574 in the third quarter of 2009, down 12% compared to $652 in the third quarter of 2008. However, the third quarter of 2008 included $6.4 million in write-downs of product inventories and long-term investments, driven mostly by the decline in realizable prices for PGMs and in prices for equities. Mine production of platinum and palladium totaled 129,100 ounces in the 2009 third quarter, as compared to 120,000 ounces in the same period of 2008, reflecting performance improvement at the Stillwater Mine offset in part by some scaling back of operations at the East Boulder Mine. Net working capital (including cash and investments) increased slightly during the quarter to $258.0 million, up from $235.9 million at the end of second quarter 2009, and $230.4 million at year end 2008.
The Companys stated operating objectives for 2009 as previously reported include achieving mine production of 495,000 ounces at a total cash cost of $399 per ounce and capital expenditures of $39.0 million while maintaining a stable liquidity balance (cash plus short-term investments) in the range of $180 million. The Company performed well against these objectives during the 2009 third quarter, producing 129,100 platinum and palladium ounces at a total cash cost of $357 per ounce with capital spending of $7.1 million. Year to date, the Company has produced 391,600 PGM ounces, or 79% of the full-year objective, at a total cash cost of $363 per ounce, with total capital expenditures of $32.3 million. Capital expenditures to date during 2009 have included $6.3 million of spending to complete construction of a second electric furnace at the Columbus smelter and $5.6 million for a new system of electric truck haulage in the deeper portions of the Stillwater Mine. The Companys total available cash and short-term investments at September 30, 2009, was $200.1 million, up from $175.4 at June 30, 2009, and $180.8 million at the end of 2008. The Company has now updated its earlier full-year 2009 mine production guidance from 495,000 PGM ounces previously to 515,000 PGM ounces. With combined total cash costs for the third quarter at $357 per ounce and year-to-date total cash costs at $363 per ounce, the Company has also improved its 2009 guidance for average combined total cash costs to $375 per ounce from $399 per ounce earlier.
For the third quarter of 2009, the Company recognized net income from its recycling operations of $1.9 million on revenues of $26.2 million, reflecting a combined average realization during the quarter of about $686 per sold ounce. Total tons of recycling material fed to the furnace during the 2009 third quarter, including tolled material, averaged 9.6 tons per day. By way of comparison, for the third quarter of 2008 when PGM prices were much higher, the Company recorded recycling segment net income of $19.9 million on revenues of $169.8 million, at an average realization of $2,008 per sold ounce. Total recycling tons fed to the furnace in last years third quarter averaged 22.3 tons per day. The lower volume in 2009 has been in response to more limited advances to suppliers and to the significant decline in PGM prices which has reduced the incentives in the market to collect recycled material. Volumes of material available for recycling appear to be gradually recovering during 2009 but remain well below plan and substantially below the levels experienced in prior years.
corporate overhead, offset by by-product sales proceeds and recycling profits, averaged $462 per ounce. The Companys combined average realized price for platinum and palladium, as noted earlier, was $574 per ounce in the third quarter of 2009. While the margin therefore appears healthy, to some extent it is dependent upon the effect of floor and ceiling prices in the automotive contracts and constrained capital spending. Because the remaining automotive PGM supply agreement with Ford will expire at the end of 2010, in gauging longer-term performance it is useful to exclude the effect of the floors and ceilings on the Companys realizations. If all third-quarter sales of mined material had been priced at market, the average realization would have declined to $525 per ounce still a positive margin, but substantially less robust than with the automotive contracts. Looked at slightly differently, if platinum and palladium prices remained in approximately the same ratio as in the third quarter, a cash breakeven level for prices would be about $250 per ounce for palladium and $1,200 per ounce for platinum.
Capital spending of $7.1 million in the 2009 third quarter included infrastructure and mine development investment of $5.1 million at the Stillwater Mine and $1.2 million at the East Boulder Mine. Total equipment spending during the quarter totaled $0.8 million, of which $0.6 million was in the processing facilities in
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