Majority of SWC Progress Report was Great News and Exceeded Guidance
STILLWATER MINING COMPANY (NYSE: SWC) (TSX: SWC.U) reported today that its mined production of palladium and platinum for the fourth quarter 2012 was 132,500 ounces and for the year 2012 was 513,700 ounces, exceeding the Company's 2012 guidance of 500,000 ounces. Mined production for 2011 was 517,900 ounces. The Company also reported that mine production guidance for 2013 is again projected at 500,000 ounces.
While not yet finalized, 2012 total cash costs per mined ounce (a non-GAAP measure of extraction efficiency that is further defined in the Company's filings with the U.S. Securities and Exchange Commission) are expected to be at or slightly below 2012 guidance of $500. These will be above total cash costs per mined ounce of $420 for 2011.
Total cash costs for 2013 are expected to average about $560 per mined ounce, reflecting ongoing increases in infrastructure requirements at both of the Company's Montana mines as they continue to go deeper and expand outward, increases in contractual labor commitments, ongoing growth in the Company's workforce, training, safety and mine support efforts to enable the Company's Montana expansion projects, as well as general inflation. While the Company's PGM industry peers face similar cost pressures from deepening and receding face dynamics, Stillwater has fared better due to the stratigraphy of its ore reserve and a more stable operating environment. Furthermore, Stillwater has benefitted from palladium's improved price relationship to that of platinum. For the past 24 months, the palladium-to-platinum price relationship has averaged 42%, compared to 26% between 2003 and 2010. This improved price relationship has positioned Stillwater as one of the lowest cost primary PGM producers in the world. Given the positive outlook for demand in the auto industry and expected favorable supply-demand dynamics for palladium, the Company believes there is an opportunity for the palladium-to-platinum price relationship to tighten further.
On the recycling side, the Company's volumes increased in the fourth quarter 2012 to 118,600 ounces as PGM prices rebounded late in the year and new shippers emerged. Recycling volumes, which are price sensitive, had dipped during the middle part of 2012, but rebounded as PGM prices increased during the fourth quarter. Total recycling volumes for the year 2012 were 445,200 ounces of palladium, platinum and rhodium compared to 486,700 ounces for 2011.
Commenting on the 2012 results, Frank McAllister, the Company's chairman and CEO, stated, "These are dynamic times in the PGM industry. Our mines continue to perform very well, with stable production, well controlled, competitive cost structures and comparatively modest sustaining capital requirements, while other PGM producers face very significant production, labor and cost challenges. The dynamics of our industry are driven by continued strong growth in demand, particularly for palladium, in the face of ever increasing supply constraints globally. At this point, we find ourselves one of the few PGM producers projecting a long-term growth profile in PGMs, which we believe is built atop a foundation of stable, highly cost-competitive and long-lived existing operations. In particular, I am pleased to observe that the significant investment we have made in the development of our Montana operations these past several years has now progressed to the point where we can begin to quantify the level of future growth achievable at those operations.
It is also a far more geo-politically stable environment than South Africa, and along with PAL and Prophecy Platinum, SWC is the premier producer & recycler of PGMs in North America. This is proving to be very key as South Africa labor disputes, cost overruns, and shut downs make Stillwater look better each month.