SMC posts $9.9M first quarter loss

The Stillwater Mining Company posted a $9.9 million first quarter loss.
But officials said the news is not all bad, pointing to higher production and processing numbers and lower All-In Sustaining Costs (AISC).

The Positives
In the production department, the first quarter of 2016 saw an increase of 3 percent over the first quarter of 2015, with 137,300 ounces mined at the Nye and the East Boulder sites.
At the smelter, 154,200 ounces of recycled palladium, platinum and rhodium were processed, marking an increase of 41.9 percent over the first quarter of 2015.
And the AISC of $613 per mined ounce of palladium and platinum compared to $763 per mined ounce for the first quarter of 2015.
The AISC in particular was “a very good start to the year” and was slightly better than the lower end of the current annual guidance range, SMC President/CEO Mick McMullen said in a press release.
McMullen also noted the recycling volumes were ahead of plan and more progress can be made toward that end.
“While the progress made to reduce costs has been notable, we believe that there are additional opportunities to further improve productivity and our team is working diligently to make added sustainable improvements,” said McMullen.

Nye Versus East Boulder
Production at the Stillwater Mine site in Nye site dipped slightly during the first quarter, but increased at the East Boulder site, resulting in an overall increase.

Produced ounces 2016 2015
Palladium 62,000 64,500
Platinum 18,900 19,200
Stillwater Total 80,900 83,700

Palladium 44,000 38,700
Platinum 12,400 10,900
East Boulder Total 56,400 49,600

Palladium 106,000 103,200
Platinum 31,300 30,100
Total 137,300 133,300

“As we have continued to make operational and cost improvements, the PGM price environment was challenging during the first two months of the quarter. Our average sales price for mined palladium and platinum totaled $531 and $919 per ounce respectively for the quarter, resulting in an average basket price of $612 per mined ounce,” McMullen said in the press release. “Fortunately, prices for both palladium and platinum increased throughout the quarter and have continued to increase subsequent to quarter end. We continue to believe the market fundamentals for palladium, our primary product, remain robust. Regardless of the near term fluctuations in PGM prices, our approach remains the same. We will continue our disciplined approach to capital deployment and focus on improving operational efficiencies. I believe this approach and our unique assets have positioned Stillwater in an industry-leading position for the benefit of our shareholders.”

The Blitz Project
The Nye site’s Blitz Project continues to be the company’s priority, with SMC looking at how to speed the project up more efficiently.
“We have spent considerable time working on plans to accelerate this development. This effort is starting to deliver results, with advance rates increasing by 45 percent in the first quarter of 2016 compared to the 2015 average,” McMullen said in the press release. “Drilling of the J-M Reef from the underground development is being prioritized and results continue to be consistent with or slightly more favorable than typical off-shaft mineralization.”

2015 Year End
Last year ended with an $11.9 million loss, with underlying earnings attributable to common stockholders at $26.1 million (after-tax) after adjusting for the Marathon impairment charge, net loss on repurchase of convertible debentures and reorganization charges, according to a year end report.
The company also ended 2015 with the best safety result in its history, with an 8.5 percent lower reportable incidence rate.
The AISC of $709 per mined ounce of palladium and platinum was down 9.6 percent from 2014, while mined palladium and platinum of 520,800 ounces was up slightly. Ounces of processed recycled palladium, platinum and rhodium were up 17.4 percent from 2014, according to the year end report.

McMullen’s Contract Renewed
In late March the SMC board announced that McMullen’s contract be extended until Dec. 31, 2018. McMullen was elected to the board of directors on May 2, 2013, and was appointed president/ CEO of the company on Dec. 3, 2013.