SMC reports third quarter $11.9 million net loss
For the second consecutive quarter, the Stillwater Mining Company saw a net loss in the millions.
An $11.9 million third quarter loss was announced last Friday during a conference call and attributed mainly to what was referred to by SMC CEO Mick McMullen “significantly lower” metal prices as well as lower sales volumes.
Included in that total was $5.7 million from reorganization costs and the repurchase of convertible debentures. The workforce reduction was announced at the close of the second quarter and resulted in 159 fewer employees through the reduction plan and natural attrition. That puts the current SMC workforce at 1,442, marking a 15 percent reduction.
Approximately $1.7 million of third quarter losses were essentially severance packages, said Mike Beckstead, SMC investor relations. The downsizing of the workforce has been ongoing since December 2013 and in the end is expected to bring annual labor savings between $10 million and $12 million.
United Steel Workers International Union Local 11-0001 members are currently working on the company’s “last and best” contract offer after rejecting three others throughout the summer. The union has filed an Unfair Labor Practice complaint in federal court.
The Positives
The third quarter did bring some good news.
The recycling business growth continued, reaching a 37 percent increase of recycled palladium, platinum and rhodium processed at the Metallurgical Complex and Recycling Center (also known as the smelter) in Columbus.
There was an average of 22.7 tons of material processed per day during the third quarter, compared to 18.7 tons per day the previous year.
Also up was the combined mined production of palladium and platinum, coming in at 128,100 ounces compared to 123,000 ounces in the third quarter of 2014. However, the average price per ounce was $693, compared to $983 dollars last year.
Other notable numbers between 2015 third quarter and 2014 third quarter were as follows:
•Recycling PGM ounces processed (combined palladium, platinum and rhodium): 161,000 versus 117,000
•All-In sustaining costs (per mined ounce): $677 versus $837
•General and administrative costs (per mined ounce): $8.9 million versus $10.1 million
•Capital expenditures(excludes project capitalized interest/depreciation): $24.2 million versus $33.3 million
Blitz and Benbow Projects Progressing
The Blitz Project continues on track, with the Tunnel Boring Machine (TBM) having progressed 8,900 feet and the parallel conventional drive currently at 13,200 feet of frame and infrastructure development. Surface construction has begun for the Benbow Portal project. Both projects access the JM Reef, which is the world’s highest grade PGM deposit.
There are more than 22 million “proven and probable” ore reserves with only 11 miles of a 28-mile strike developed to this point. Exploration suggests a possible 100 million tons of undeveloped material.
Surviving
McMullen said that due to the volatile PGM market, SMC says it must continue to cut costs where it can and operate more efficiently in order to stay in a position to capitalize on the tremendous reserves of ore at the Montana mines.
“To weather these storms in the PGM markets we continue to focus on costs and make improvements to gain additional efficiencies throughout the operations,” said McMullen during the teleconference.