UPDATE: 'There Was Some Noise In Our Results In The Second Quarter' – Stillwater CEO


Thursday August 8, 2013 1:54 PM

(Kitco News) - Stillwater Mining Co.'s (TSX: SWC.U)( SWC ) second-quarter net loss of $5.3 million, or 4 cents per share, was due to "unusual expenses during the second quarter," according to the company's interim chief executive officer.

Terry Ackerman, interim CEO of Stillwater, said in an afternoon conference call that a few one-time charges were responsible for the company's loss in the quarter.

"There was some noise in our results in the second quarter. We had significant unplanned expenses, including a one-time non-cash charge of $9.1 million for accelerated vesting of essentially all outstanding incentive shares and stocked options," Ackerman said. "This accelerated vesting was a result of a change in control provisions and our equities incentive plans that were triggered during the quarter.

"We also recognized additional expenses of $1.5 million during the quarter for legal and advisory services related to the recent proxy contest," Ackerman said. "Also unique to the quarter were one-time compensation expenses associated with the retirement of our former CEO. These costs are included in the general and administrative lines in our financials.

"If these unusual expenses were excluded, our results for the second quarter of 2013 were respectable," he added.

The company posted a slight decline in output of platinum group metals, producing 131,500 PGM ounces in the second quarter, lower than the 133,000 produced in last year's second quarter. Production for the first half of 2013 totaled 259,000 PGM ounces, compared to 254,000 in the first half of 2012.

"These changes in production from period to period are primarily in result of normal variations in mining conditions in stopes available to mine at any point in time," Ackerman said.

Stillwater reiterated its guidance of 500,000 PGM ounces in 2013.

The company experienced grade challenges at its Stillwater mine with delivering ore grades to the mill.

"Normal grade challenges we experienced during the quarter (were) compounded by several infrastructure issues, including the loss of a key mud pass," Ackerman said. "With the loss of this pass, an adjacent pass was used for both ore and waste for part of the quarter, which is not optimal for operations which created logistical challenges and dilution. Our teams are working diligently to resolve this issue."

Ackerman said that if the issue is solved quickly, production at the mine could exceed company expectations.

The company also pointed to an increase in PGM recycling, recording a quarterly recycling volume record of 175,000 ounces. PGM recycling revenues for the second quarter of 2013 were $153.7 million, and increase of almost 60% from the same quarter last year, the company said.

Stillwater's averaged realized price for PGMs came in lower, compared to the first quarter of 2013.

"Our average combined realized price for mined palladium and platinum sales during the quarter was $865 per ounce, up slightly from the second quarter last year, but down from the $926 per ounce we realized in the first quarter," Ackerman said. "Despite the dip in market prices, PGMs, in particular palladium, have continued to benefit from strong automotive demand in North America and China, offset in part by the lack of recovery in the European auto markets."

Despite lower palladium and platinum prices in the second quarter, Ackerman noted the decline wasn't as bad as gold, with industrial applications playing a large part in prices.

"The supply and demand fundamentals for our primary product, palladium, continue to be very strong," said Ackerman. "We did experience a dip in PGM prices during the second quarter as market prices for palladium and platinum broadly tracked the downward turn in the price of gold ; however, the negative impact on palladium and platinum prices was not as severe as for gold, reflecting the dual character of our PGMs as precious metals with significant industrial application."

For the latest mining news, updates and commentary, or to contact me regarding a story or feedback, please follow my Twitter account @alex_letourneau

Read the latest news in gold and precious metals markets at Kitco News.

By Alex Létourneau of Kitco News aletourneau@kitco.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Commodities

Referenced Stocks: SWC



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