Search Results for "South Africa"

Norilsk Nickel Sees Drop in Production in South Africa

Mining Weekly reported MMC Norilsk Nickel (LSE:MNOD) has announced significant nickel production increases in its Southern African operations during the second quarter of this year.

As quoted in the market news:

Tati Nickel’s second-quarter output of 2 805 t of nickel in concentrate was a 7% improvement over its production in the first quarter, which came to 2 632 t. Production for the first half of this year was 5 438 t, which was also a 7% rise over the figure for the first half of last year, which was 5 071 t. In a press release, Norilsk attributed this success “to stable performance of the enrichment plant and optimisation of reagent flows in the flotation process”.

Click here to read the full Mining Weekly report.


Uru Metals Discovers Nickel In South Africa

Mining Weekly reported Uru Metals’ (LSE:URU) Zebediela nickel project may become one of the largest nickel mines in the world.

As quoted in the market news:

A prefeasibilty study will be conducted during the next 18 to 24 months at the Zebediela joint venture (JV) project near the platinum mining town of Mokopane, in Limpopo. The study has the potential to increase Zebediela’s projected revenue from the recently completed preliminary economic assessment (PEA) by up to 25% before year-end, he reveals.

Click here to read the full Mining Weekly report.


Nickel Exploration In South Africa Takes Off

Mining Weekly reported nickel exploration and discovery in South Africa is causing a stir of excitement on the Bushveld complex.

As quoted in the market news:

The exploration joint venture (JV) that made the find in 18 months had to outlay only $4.2-million to hit a $1-billion-plus jackpot.

The Africa-focused Aim-quoted URU Metals says that it has a compliant preliminary economic assessment (PEA) from consultants led by the MSA group. The PEA shows the Zebediela project to have a potential of 56-million pounds of nickel a year for 25 years.

Click here to read the full Mining Weekly report.


Norilsk Plans to Increase Australian, South African Nickel Production

Bloomberg reported Norilsk Nickel (LSE:MNOD) wants to curb its dependence on Russia for nickel and is expanding its production in South Africa and Australia.

As quoted in the market news:

Norilsk intends to raise production at its South African Nkomati project by 58 percent this year from 5,815 metric tons last year, while output at Australia’s Lake Johnston mine may jump fivefold to 8,400 tons, Roman Panov, the head of Norilsk’s overseas operations, said today in a statement.

Click here to read the full Bloomberg report.


South African ARM Financial Year earnings down

On Monday, South African diversified miner African Rainbow Minerals (JNB:ARIM) reported a 26 percent drop in full-year headline earnings, hit by a strong rand and lower prices for iron ore and manganese.

The press release is quoted as saying:

ARM, which has interests in nickel, coal, iron ore, platinum, chrome and manganese, said headline earnings per share for the full year fell to 807 cents from 1,094 cents the previous period. During the year, ARM completed the expansion of its Khumani iron ore mine to 10 million tonnes per year, commissioned a 375,000 tonnes per month plant at the Nkomati nickel operations, and its Goedgevonden coal mine is ramping up to its name plate capacity of saleable 6.7 million tonnes per year.

Click here to access the entire press release


NWT Uranium Corp’s 34% Owned Niger Uranium Announces Joint Venture Agreement With Southern African Nickel Limited

NWT Uranium Corp. (TSXV:NWT) congratulated Niger Uranium Limited on its Joint Venture Agreement with SAN, the joint owner and current developer of a portfolio of large nickel projects in Southern Africa.

The press release is quoted as saying:

Niger Uranium believes that the Joint Venture’s nickel projects have potential to host large low-grade, economic, open-pittable sulphide-nickel mineralization, with the flagship target being the Burgersfort nickel project in the Mpumalanga province of South Africa.

Click here to access the entire press release

Click here to access NWT Uranium Corp. Corporate Site


Norilsk Announces Nickel Concentrate Output for 2011 from African Mines

Mining Weekly reported Norilsk Nickel (LSE:MNOD) says it mined 15 161 t of nickel in concentrate at its African operations last year.

As quoted in the market news:

Norilsk Nickel Africa comprises two operations. These are Tati Nickel, in Botswana, which is 85%-owned by the Russian group (the remaining 15% being held by the Botswana government) and Nkomati Nickel, in South Africa, which is a 50:50 joint venture with South Africa’s African Rainbow Minerals (ARM). Management control of Nkomati is vested in ARM.

Click here to read the full Mining Weekly report.


5 Top TSXV Stocks: Tango Mining Soars 75 Percent

The S&P/TSX Venture Composite Index (INDEXTSI:JX) dropped slightly last week by 0.54 percent to 833.11. 

Year-to-date, however, the index is still up 58.49 percent, or a jump of 307.45 points.

A number of companies on the TSXV saw strong weekly percentage gains as well, with some rising 75 percent over the five-day period.

The top five gainers for the week were:

  • Tango Mining (TSXV:TGV)
  • Fjordland Exploration (TSXV:FEX)
  • Rambler Metals and Mining (TSXV:RAB)
  • Foran Mining (TSXV:FOM)
  • Iberian Minerals (TSXV:IML)

Here’s a closer look at those companies:

Tango Mining

Coming in at the top of last week’s TSXV top 5 list is Tango Mining, whose shares rose 75 percent over a five-day period to $0.105.

Tango Mining has a portfolio in coal and diamond projects in South Africa. On August 13, the company announced it had received approval to acquire an additional interest in three private South African companies, in which Tango already owns a 51 percent interest.

Fjordland Exploration

Fjordland Exploration has historically focused on the discovery of gold and copper deposits in British Columbia, however it has turned its attention to nickel and cobalt deposits in Quebec and diamond bearing kimberlite targets in the Athabasca Basin.

Last week, shares of Fjordland Exploration rose 45 percent to close the week out at $0.145.

Rambler Metals and Mining

Third on last week’s top 5 TSXV stocks is Rambler Metlaes and Mining, whose shares gained 28.57 over a five-day period to $0.09.

The company has 100 percent ownership on the Ming Copper-Gold Mine in Newfoundland. On August 18, Rambler announced the implementation of a new 10 percent fixed compensation incentive stock option.

Foran Mining

Foran Mining’s shares saw a 34.88 percent increase last week to $0.29. According to its website, the company’s long-term strategy is to build and develop a base metal mining camp on its 100 percent owned McIlvenna Bay deposit.

Foran is currently focused on advancing its Hanson Lake VMS Camp in Saskatchewan.

Iberian Minerals

Closing out last week’s top 5 TSXV list is Iberian Minerals, who is focused on evaluating gold properties in the south western United States.

Last week, shares of the company rose 30.77 percent to $0.085.

Don’t forget to follow us @INN_Resource for real-time news updates!

Data for 5 Top TSXV Stocks articles is retrieved each Friday after market close using The Globe and Mail’s market data filter. Only companies with a market capitalization greater than $10 million prior to the week’s gains are included. Companies within the mining and precious metals sectors are considered.

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.

Top TSXV stocks in recent weeks:

5 Top TSXV Stocks: Almadex Minerals Rallies 95.26 Percent

5 Top TSXV Stocks: Galway Metals Soars 187.5 Percent

5 Top TSXV Stocks: Sarama Resources Jumps 120 Percent

5 Top TSXV Stocks: Cava Resources Leaps 160.87 Percent

5 Top TSXV Stocks: Jayden Resources Leads the Way

5 Top TSXV Stocks: Renaissance Oil Leaps by 71.43 Percent

5 Top TSXV Stocks: Renaissance Oil Surges 133.33 Percent

5 Top TSXV Stocks: Armor Minerals Rises 127.27 percent


Stillwater Mining Company Reports Second Quarter 2016 Results

LITTLETON, Colo., July 29, 2016 (GLOBE NEWSWIRE) — Stillwater Mining Company (NYSE:SWC) today reported financial results for the quarter ended June 30, 2016.

Second Quarter 2016 Highlights:

  • Notable safety performance improvement, with a reportable incidence rate decrease of 61.4% compared to the second quarter of 2015, resulting in the lowest quarterly rate on record (earliest statistics available from January 1, 2000)
  • Mined palladium and platinum sales of 150,900 ounces, an increase of 13.5% from 133,000 ounces sold during the second quarter of 2015
  • Costs of metals sold of $501 per PGM mined ounce, down 17.3% from $606 per PGM mined ounce for the second quarter of 2015
  • Mined palladium and platinum production of 137,100 ounces, an increase of 8.0% from 127,000 ounces mined during the second quarter of 2015
  • All-in sustaining costs (AISC)* of $594 per mined ounce of palladium and platinum, down 24.3% from $785 per PGM mined ounce for the second quarter of 2015 and the lowest since 2010
  • Cash and cash equivalents plus highly liquid investments of $442.2 million at quarter end, after funding a $20.5 million increase of recycling working capital and all capital during the second quarter of 2016
  • Processed 169,900 ounces of recycled palladium, platinum and rhodium, an increase of 12.1% over 151,600 ounces recycled during the second quarter of 2015 and is the second highest total on record
  • East Boulder Mine set several new records in the second quarter, including highest monthly tons milled (June), highest monthly ounces per employee (June) and the first half of 2016 was the highest number of ounces produced for any half-year period
  • Accelerated Blitz project on the 56 East development drive, with first production now expected in late 2017 or early 2018
  • Forecasting $155 million to $175 million capital expenditures for the Blitz project to first production
  • Consolidated net income attributable to common stockholders of $0.8 million or $0.01 per diluted share, reflecting the decrease sales price per mined ounce (palladium and platinum) of $665, a 21.0% decrease from $842 realized for the second quarter of 2015

Commenting on the second quarter results, Mick McMullen, the Company’s President and Chief Executive Officer stated, “We are pleased to report not only strong operational performance this quarter, but also a notable 61.4% year-over-year reduction in our total company reportable incident rate, reflecting our team’s diligence in prioritizing safety while delivering improvement across the organization.

“We delivered quarterly costs of metals sold of $501 per PGM mined ounce and AISC* within our new medium-term mid-to-high $500’s target range. Our momentum continued throughout the quarter, with June delivering the highest monthly ounces since April 2015, a significant decrease in costs of metals sold and the lowest AISC* since 2010. We exit the first half of the year on track to exceed several of the original targets set for 2016, and thus today are announcing new guidance for the full-year. Our progress in results and safety represents an important milestone for the Company. I am confident that we now have the culture in place to continue safely increasing production while maintaining cost discipline.

“The Company’s liquidity position remains strong, with cash and cash equivalents plus highly liquid investments of $442.2 million at the end of the second quarter. The increase in purchased material in the recycling business during the second quarter, coupled with increasing metal prices, drove a $20.5 million build in working capital in the PGM Recycling segment. This shift was a significant factor in the overall reduction in cash and equivalents of $10.2 million from the first quarter of 2016. We continue to make solid progress in growing the recycling business, processing 169,900 PGM ounces during the quarter and achieving the second best quarter on record. In addition, we continue to invest in our mines through sustaining capital activities at a development rate above the schedule under our current mine plan.

“Work on the Blitz project continues to progress. Advance rates in the construction of the 56 East development heading, a critical path item for first production, continue to improve. Our focus on accelerating the project timeline has enabled us to bring forward plans for first production, which we now anticipate to occur in late 2017 or early 2018. Project spend on Blitz up to first production is now expected to be in the range of $155 million to $175 million. We anticipate Blitz will provide growth in our production profile and the Company’s lowest cost mined ounces, given the grades shown by the drilling to date, as well as the logistical set up of the Blitz project.

“Even as realized PGM prices saw a significant decline over the prior year period, recent improvements are encouraging. During the first half of 2016, platinum reversed its previous downward trend to reach $999 per ounce at the mid-year mark, and palladium rose from a low of $470 per ounce in the first quarter to $589 per mined ounce at the mid-year mark. At July 28, 2016, platinum traded at $1,143 per ounce and palladium had strengthened to $702 per ounce.

Mr. McMullen concluded, “Overall, our solid second quarter performance and strong momentum in June reflect the diligent focus of our team in continuing to drive costs lower and elevate safety across the organization. The fundamentals of palladium, our primary product, remain strong, and we are confident that our disciplined approach to capital deployment and focus on operational efficiencies position Stillwater to benefit across all stages of the commodity cycle.”

2016 Full-Year Guidance:

Following a review of second quarter 2016 results and forecasts for the remainder of the year, guidance for the full-year 2016 has been updated and is detailed in the table below.

Current 2016 Guidance Previous 2016 Guidance
Sales of Mined Ounces (palladium and platinum) 545,000 – 555,000 n/a
Total Costs of Metals Sold per PGM Mined Ounce(1) $495 – $520 n/a
Mined Production (palladium and platinum ounces) 535,000 – 545,000 515,000 – 535,000
Total Cash Costs per PGM Mined Ounce (net of by-product and recycling credits)* $430 – $455 $445 – $485
All-In Sustaining Costs per PGM Mined Ounce* $595 – $635 $615 – $665
General and Administrative (millions) $30 – $40 $30 – $40
Exploration (millions)(2) $8 – $11 $8 – $11
Sustaining Capital Expenditures (millions) $50 – $60 $50 – $60
Project Capital Expenditures (millions)(3) $40 – $45 $40 – $45
Total Capital Expenditures (millions)(3) $90 – $105 $90 – $105
(1) Total costs of metals sold from mine production divided by PGM mined ounces sold.
(2) Exploration includes expenses for Marathon, Altar and Montana operations.
(3) Excludes project capitalized interest and project capitalized depreciation.


Second Quarter 2016 Results:

For the second quarter of 2016, the Company reported consolidated net income attributable to common stockholders of $0.8 million, or $0.01 per diluted share, compared to consolidated net loss attributable to common stockholders of $27.5 million, or $0.23 per diluted share for the second quarter of 2015. The second quarter was impacted by significantly lower realized metal prices, partially offset by a reduction in unit costs. The second quarter of 2015 included an impairment charge of $46.8 million (before-tax).

PGM Mine Production Comparison:

 

Three Months Ended Six Months Ended
June 30, June 30,
(Produced ounces) 2016 2015 2016 2015
  Palladium 63,600 59,200 125,600 123,700
  Platinum 19,500 17,600 38,400 36,800
Stillwater Mine Total 83,100 76,800 164,000 160,500
  Palladium 41,900 39,100 85,900 77,800
  Platinum 12,100 11,100 24,500 22,000
East Boulder Mine Total 54,000 50,200 110,400 99,800
  Palladium 105,500 98,300 211,500 201,500
  Platinum 31,600 28,700 62,900 58,800
Total 137,100 127,000 274,400 260,300

 

Mine Production revenues (including proceeds from the sale of by-products) totaled $106.4 million in the second quarter of 2016, down from $119.0 million for the second quarter of 2015. The combined average realized price for the sales of mined palladium and platinum decreased for the second quarter of 2016 to $665 per ounce, compared to $842 per ounce realized in the second quarter of 2015. The total quantity of mined palladium and platinum sold in the second quarter of 2016 was 150,900 ounces compared to 133,000 ounces sold in the second quarter of 2015.

Mine Production total costs of metals sold decreased to $75.6 million in the second quarter of 2016 from $80.6 million in the second quarter of 2015.

Recycling Activity Comparison:

 

Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Average tons of catalyst fed per day 26.4 26.9 24.6 21.5
Tons processed 2,404 2,452 4,452 3,900
  Tons tolled 693 1,255 1,695 1,626
  Tons purchased 1,711 1,197 2,757 2,274
PGM ounces fed 169,900 151,600 324,100 260,300
PGM ounces sold 85,300 68,100 148,700 142,700
PGM tolled ounces returned 70,700 37,400 146,600 77,600

Total recycled PGM ounces fed to the smelter were up 12.1% from the second quarter of 2015 to 169,900 ounces. The recycling business segment experienced a shift from tolled to purchased material in the second quarter of 2016.

PGM Recycling revenues totaled $59.2 million for the 2016 second quarter, a decrease from $66.3 million in the same period of 2015. The Company’s combined average realized price for sales of recycled palladium, platinum and rhodium was $666 per ounce in the second quarter of 2016 compared to $954 per ounce in the second quarter of 2015. Recycling sales volumes for the second quarter of 2016 increased to 85,300 ounces from 68,100 ounces sold in the second quarter of 2015. In conjunction, tolled ounces returned to customers increased to 70,700 ounces for the second quarter of 2016 from 37,400 ounces in the second quarter of 2015. Only the treatment charges for tolled material are included in recycling revenues, hence the decrease in recycling revenues.

PGM Recycling costs of metals sold totaled $56.5 million in the second quarter of 2016, down from the $64.4 million in the second quarter of 2015. A majority of the costs of metals sold from recycling in each period is attributable to the acquisition cost of purchasing recyclable materials for the Company’s own account; therefore, the aggregate costs of metals sold from the PGM Recycling segment is driven mostly by the volume and the value of the PGMs in the materials purchased by the Company.

General and administrative costs were $8.3 million in the second quarter of 2016, a 20.2% decrease from the $10.4 million incurred during the same period of 2015.

Costs of Metals Sold Per PGM Mined Ounce:

Costs of metals sold per PGM mined ounce totaled $501 for the second quarter of 2016, a decrease from $606 recorded for the second quarter of 2015. Cost improvement initiatives at both mines and reduced labor costs contributed to the lower costs of metals sold per mined ounce result.

Three Months Ended Six Months Ended
June 30, June 30,
Costs of Metals Sold Per PGM Mined Ounce
Combined Montana Mining Operations
2016 2015 2016 2015
Costs of metals sold per PGM mined ounce $ 501 $ 606 $ 506 $ 596


All-In Sustaining Costs Per PGM Mined Ounce:

AISC* per PGM mined ounce totaled $594 for the second quarter of 2016, a decrease from $785 recorded for the same period of 2015. Reductions in cash costs and sustaining capital contributed to the lower AISC result.

Three Months Ended Six Months Ended
June 30, June 30,
All-In Sustaining Costs Per PGM Mined Ounce
Combined Montana Mining Operations
2016 2015 2016 2015
Total combined cash costs per PGM mined ounce, net of by-product and recycling credits* $ 420 $ 530 $ 433 $ 533
  PGM Recycling income credit per mined ounce 22 16 17 16
  Corporate general and administrative costs (before DD&A) 56 77 56 68
  Capital outlay to sustain production at the Montana operating mines 96 162 98 156
All-In Sustaining Costs per PGM mined ounce* $ 594 $ 785 $ 604 $ 773


Cash Costs Per PGM Mined Ounce:

Total combined cash costs per PGM mined ounce (net of by-product and recycling credits)* totaled $420 per ounce for the second quarter of 2016, a significant reduction from $530 per ounce for the second quarter of 2015.

The table below illustrates the effect of applying the by-product and PGM Recycling segment credits to the total cash costs per PGM mined ounce for the Montana mining operations.

Three Months Ended Six Months Ended
June 30, June 30,

Combined Montana Mining Operations
2016 2015 2016 2015
Total combined cash costs per PGM mined ounce, before by-product and recycling credits* $ 487 $ 600 $ 491 $ 601
  Less: By-product revenue credit per mined ounce 45 54 41 52
  Less: PGM Recycling income credit per mined ounce 22 16 17 16
Total combined cash costs per PGM mined ounce, net of by-product and recycling credits* $ 420 $ 530 $ 433 $ 533

*These are non-GAAP financial measures. For a full description and reconciliation of these and other non-GAAP financial measures to GAAP financial measures, see Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures and Reconciliation of Total Cash Costs Guidance and AISC Guidance below.

Cash Flow and Liquidity:

At June 30, 2016, the Company’s cash and cash equivalents balance was $130.1 million, compared to $147.3 million at December 31, 2015. The Company’s cash and cash equivalents plus highly liquid investments totaled $442.2 million at June 30, 2016 (including $18.5 million of investments which have been reserved as collateral on letters of credit), compared to $463.8 million at December 31, 2015. Net working capital decreased to $519.2 million at June 30, 2016, compared to $523.0 million at December 31, 2015.

Net cash provided by operating activities (which includes changes in working capital) totaled $16.9 million for the six months ended June 30, 2016, compared to $59.6 million for the same period in 2015. Cash capital expenditures were $38.4 million for the six months ended June 30, 2016, compared to $58.2 million in the same period in 2015.

Outstanding total balance sheet debt reported at June 30, 2016, was approximately $264.3 million, an increase from $255.8 million at December 31, 2015. The Company’s debt balance at June 30, 2016, included approximately $263.8 million of 1.75% convertible debentures (net of unamortized discount of approximately $68.0 million and $3.4 million of deferred debt issuance costs) and $0.5 million of 1.875% convertible debentures. The change in debt balance is a result of the accretion of the discount on the Company’s outstanding 1.75% convertible debentures.

2016 Second Quarter Results Webcast and Conference Call:

Stillwater Mining Company will conduct a conference call to discuss second quarter 2016 results at 12:00 noon Eastern Daylight Time on Friday, July 29, 2016.

Dial-In Numbers:  United States: (877) 407-8037
 International: (201) 689-8037

A simultaneous webcast of the conference call and related presentation materials will be accessible in the Investor Relations section of the Company’s website at: www.stillwatermining.com.

A telephone replay of the call will be available for one week following the event. The replay dial-in numbers are (877) 660-6853 (U.S.) and (201) 612-7415 (International), access code 13631286. The call transcript will be archived in the Investor Relations section of the Company’s website.

About Stillwater Mining Company

Stillwater Mining Company is the only U.S. miner of platinum group metals (PGMs) and the largest primary producer of PGMs outside of South Africa and the Russian Federation. PGMs are rare precious metals used in a wide variety of applications, including automobile catalysts, fuel cells, hydrogen purification, electronics, jewelry, dentistry, medicine and coinage. The Company is engaged in the development, extraction and processing of PGMs from a geological formation in south-central Montana recognized as the J-M Reef. The J-M Reef is the only known significant source of PGMs in the U.S. and the highest-grade PGM resource known in the world. The Company also recycles PGMs from spent catalytic converters and other industrial sources. The Company owns the Marathon PGM-copper deposit in Ontario, Canada, and the Altar porphyry copper-gold deposit located in the San Juan province of Argentina. The Company’s shares are traded on the New York Stock Exchange under the symbol SWC. Information about the Company can be found at its website: www.stillwatermining.com.

Cautionary Note Concerning Forward-Looking Statements

Some statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, and, therefore, involve uncertainties or risks that could cause actual results to differ materially from management’s expectations. These statements may contain words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “predicts,” “should,” “will,” “may” or similar expressions. Such statements also include, but are not limited to, comments regarding delivering improvement across the organization; exiting the first half of the year on track to exceed several targets originally set for 2016; having the culture in place to continue safely increasing production while maintaining cost discipline; solid progress in growing the recycling business; continuing to invest in the mines through sustaining capital activities at a development rate above the schedule under the current mine plan; advance rates of the 56 East development heading continuing to improve; now anticipating first production from the Blitz project in late 2017 or early 2018; expected spend on the Blitz project to first production of $155 to $175 million; anticipation that the Blitz project will provide production growth and the Company’s lowest cost mined ounces; diligent focus of our team in continuing to drive costs lower and elevate safety across the organization; confidence that our disciplined approach to capital deployment and focus on operational efficiencies position Stillwater to benefit across all stages of the commodity cycle; 2016 estimates for sales of mined ounces, total costs of metals sold per PGM mined ounce, mined production ounces, total cash costs per PGM mined ounce (net of credits), all-in sustaining costs per PGM mined ounce, exploration expense, general and administrative costs and capital expenditures; and the usefulness of non-GAAP financial measures. The forward-looking statements in this release are based on assumptions and analyses made by management in light of experience and perception of historical trends, current conditions, expected future developments, and other factors that are deemed appropriate. These statements are not guarantees of the Company’s future performance and are subject to risks, uncertainties and other important factors that could cause its actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Additional information regarding factors that could cause results to differ materially from management’s expectations is found in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 22, 2016. The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The forward-looking statements herein speak only as of the date of this release. The Company disclaims any obligation to update forward-looking statements.

 

Stillwater Mining Company
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share data) 2016 2015 2016 2015
REVENUES
Mine Production $ 106,395 $ 118,968 $ 192,197 $ 244,706
PGM Recycling 59,188 66,316 106,924 140,998
Other 100 100 200 200
Total revenues 165,683 185,384 299,321 385,904
COSTS AND EXPENSES
Costs of metals sold
Mine Production 75,589 80,631 143,032 160,672
PGM Recycling 56,490 64,441 102,534 137,146
Total costs of metals sold (excludes depletion, depreciation and amortization) 132,079 145,072 245,566 297,818
Depletion, depreciation and amortization
Mine Production 20,517 16,942 37,586 33,811
PGM Recycling 194 256 385 508
Total depletion, depreciation and amortization 20,711 17,198 37,971 34,319
Total costs of revenues 152,790 162,270 283,537 332,137
Exploration 1,587 760 4,435 1,840
General and administrative 8,311 10,396 16,608 18,741
Gain on sale of long-term investment (482 ) (482 )
(Gain) loss on long-term investments (2 ) 53
Impairment of non-producing mineral properties 46,772 46,772
(Gain) loss on disposal of property, plant and equipment (153 ) (154 ) 3
Total costs and expenses 162,053 220,196 303,944 399,546
OPERATING INCOME (LOSS) 3,630 (34,812 ) (4,623 ) (13,642 )
OTHER (EXPENSE) INCOME
Other 44 17 86 901
Interest income 960 724 1,670 1,426
Interest expense (4,067 ) (5,312 ) (8,249 ) (10,616 )
Net foreign currency transaction gain 2 745 1,194 137
INCOME (LOSS) BEFORE INCOME TAX BENEFIT (PROVISION) 569 (38,638 ) (9,922 ) (21,794 )
Income tax benefit (provision) 215 (380 ) 776 5,663
NET INCOME (LOSS) $ 784 $ (39,018 ) $ (9,146 ) $ (16,131 )
Net loss attributable to noncontrolling interest (11,542 ) (11,657 )
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 784 $ (27,476 ) $ (9,146 ) $ (4,474 )
Other comprehensive income, net of tax
Net unrealized gain on investments available-for-sale and deferred compensation 183 47 530 183
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 967 $ (27,429 ) $ (8,616 ) $ (4,291 )
Comprehensive loss attributable to noncontrolling interest (11,542 ) (11,657 )
TOTAL COMPREHENSIVE INCOME (LOSS) $ 967 $ (38,971 ) $ (8,616 ) $ (15,948 )
Weighted average shares of common stock outstanding
Basic 121,074 120,751 121,065 120,637
Diluted 121,380 120,751 121,065 120,637
Basic income (loss) per share attributable to common stockholders $ 0.01 $ (0.23 ) $ (0.08 ) $ (0.04 )
Diluted income (loss) per share attributable to common stockholders $ 0.01 $ (0.23 ) $ (0.08 ) $ (0.04 )


Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)

June 30, December 31,
(In thousands, except per share data) 2016 2015
ASSETS
Current assets
Cash and cash equivalents $ 130,115 $ 147,336
Investments, at fair value 312,037 316,429
Inventories 113,892 102,072
Trade receivables 890 800
Prepaid expenses 5,660 2,821
Other current assets 25,505 21,628
Total current assets 588,099 591,086
Mineral properties 112,480 112,480
Mine development, net 473,383 460,751
Property, plant and equipment, net 102,337 109,957
Other noncurrent assets 4,932 4,115
Total assets $ 1,281,231 $ 1,278,389
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 22,304 $ 18,205
Accrued compensation and benefits 28,195 30,046
Property, production and franchise taxes payable 13,617 13,907
Current portion of long-term debt and capital lease obligations 657
Income taxes payable 373
Other current liabilities 4,369 5,286
Total current liabilities 68,858 68,101
Long-term debt 264,301 255,099
Deferred income taxes 20,310 22,761
Accrued workers compensation 6,479 6,070
Asset retirement obligation 11,159 11,027
Other noncurrent liabilities 7,845 6,102
Total liabilities 378,952 369,160
EQUITY
Stockholders’ equity
Preferred stock, $0.01 par value, 1,000,000 shares authorized; none issued
Common stock, $0.01 par value, 200,000,000 shares authorized; 121,074,473 and 121,049,471 issued and outstanding at June 30, 2016 and December 31, 2015, respectively 1,211 1,210
Paid-in capital 1,100,949 1,099,283
Accumulated deficit (200,213 ) (191,067 )
Accumulated other comprehensive income (loss) 332 (197 )
Total equity 902,279 909,229
Total liabilities and equity $ 1,281,231 $ 1,278,389


Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)

Six Months Ended
June 30,
(In thousands) 2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9,146 ) $ (16,131 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion, depreciation and amortization 37,971 34,319
Gain on sale of long-term investment (482 )
Loss on long-term investments 53
Impairment of non-producing mineral properties 46,772
Amortization / accretion of investment premium / discount 1,218 975
(Gain) loss on disposal of property, plant and equipment (154 ) 3
Net foreign currency transaction gain (1,194 ) (137 )
Deferred income taxes (1,526 ) (12,592 )
Accretion of asset retirement obligation 421 387
Amortization of deferred debt issuance costs 437 610
Accretion of convertible debenture debt discount 8,765 9,127
Share based compensation and other benefits 1,741 6,913
Non-cash capitalized interest (2,728 ) (1,784 )
Changes in operating assets and liabilities:
Inventories (12,435 ) 630
Trade receivables (90 ) 48
Prepaid expenses (2,839 ) (3,285 )
Accounts payable 2,121 (117 )
Accrued compensation and benefits (1,850 ) (411 )
Property, production and franchise taxes payable 1,454 (6 )
Income taxes payable 373
Accrued workers compensation 409 (352 )
Other operating assets (4,605 ) (3,516 )
Other operating liabilities (1,007 ) (1,907 )
NET CASH PROVIDED BY OPERATING ACTIVITIES 16,854 59,599
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (38,426 ) (58,218 )
Proceeds from sale of long-term investment 851
Proceeds from disposal of property, plant and equipment 154
Purchases of investments (165,742 ) (184,660 )
Proceeds from maturities and sales of investments 169,745 126,849
NET CASH USED IN INVESTING ACTIVITIES (33,418 ) (116,029 )
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on debt and capital lease obligations (658 ) (1,097 )
Proceeds from issuance of common stock 1 49
NET CASH USED IN FINANCING ACTIVITIES (657 ) (1,048 )
CASH AND CASH EQUIVALENTS
Net decrease (17,221 ) (57,478 )
Balance at beginning of period 147,336 280,286
BALANCE AT END OF PERIOD $ 130,115 $ 222,808


Stillwater Mining Company
Key Operating Factors
(Unaudited)

Three Months  Ended Six Months Ended
June 30, June 30,
(In thousands, except where noted) 2016 2015 2016 2015
OPERATING AND COST DATA FOR PGM MINE PRODUCTION
Consolidated:
Ounces produced
Palladium 105.5 98.3 211.5 201.5
Platinum 31.6 28.7 62.9 58.8
Total 137.1 127.0 274.4 260.3
Tons milled 328.0 299.4 641.1 607.2
Mill head grade (ounce per ton) 0.45 0.45 0.46 0.45
Sub-grade tons milled (1) 22.7 27.0 42.7 55.0
Sub-grade tons mill head grade (ounce per ton) 0.14 0.16 0.16 0.16
Total tons milled(1) 350.7 326.4 683.8 662.2
Combined mill head grade (ounce per ton) 0.43 0.42 0.44 0.43
Total mill recovery (%) 92 92 92 92
Total mine concentrate shipped (tons) (3) 8,190 7,566 16,062 16,021
Platinum grade in concentrate (ounce per ton) (3) 4.19 4.02 4.20 3.87
Palladium grade in concentrate (ounce per ton) (3) 13.39 13.43 13.60 12.98
Costs of metals sold per PGM mined ounce $ 501 $ 606 $ 506 $ 596
Total combined cash costs per ounce – net of credits (Non-GAAP) (2) $ 420 $ 530 $ 433 $ 533
Total combined cash costs per ore ton milled – net of credits (Non-GAAP) (2) $ 164 $ 206 $ 174 $ 210
Stillwater Mine:
Ounces produced
Palladium 63.6 59.2 125.6 123.7
Platinum 19.5 17.6 38.4 36.8
Total 83.1 76.8 164.0 160.5
Tons milled 180.1 167.7 341.9 339.9
Mill head grade (ounce per ton) 0.49 0.48 0.51 0.49
Sub-grade tons milled (1) 8.4 17.4 16.8 35.0
Sub-grade tons mill head grade (ounce per ton) 0.21 0.20 0.24 0.19
Total tons milled (1) 188.5 185.1 358.7 374.9
Combined mill head grade (ounce per ton) 0.47 0.45 0.49 0.47
Total mill recovery (%) 93 92 93 93
Total mine concentrate shipped (tons) (3) 4,397 4,054 8,452 8,704
Platinum grade in concentrate (ounce per ton) (3) 5.04 4.74 5.05 4.58
Palladium grade in concentrate (ounce per ton) (3) 15.34 15.34 15.60 14.88
Costs of metals sold per PGM mined ounce $ 478 $ 590 $ 483 $ 578
Total cash costs per PGM mined ounce – net of credits (Non-GAAP) (2) $ 405 $ 547 $ 425 $ 539
Total cash costs per ore ton milled – net of credits (Non-GAAP) (2) $ 178 $ 227 $ 194 $ 230


Stillwater Mining Company

Key Operating Factors (Continued)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except where noted) 2016 2015 2016 2015
OPERATING AND COST DATA FOR PGM MINE PRODUCTION (Continued)
East Boulder Mine:
Ounces produced
Palladium 41.9 39.1 85.9 77.8
Platinum 12.1 11.1 24.5 22.0
Total 54.0 50.2 110.4 99.8
Tons milled 147.9 131.7 299.2 267.3
Mill head grade (ounce per ton) 0.40 0.41 0.40 0.41
Sub-grade tons milled (1) 14.3 9.6 25.9 20.0
Sub-grade tons mill head grade (ounce per ton) 0.10 0.09 0.10 0.10
Total tons milled (1) 162.2 141.3 325.1 287.3
Combined mill head grade (ounce per ton) 0.37 0.39 0.38 0.38
Total mill recovery (%) 90 91 91 91
Total mine concentrate shipped (tons) (3) 3,793 3,512 7,610 7,317
Platinum grade in concentrate (ounce per ton) (3) 3.21 3.18 3.25 3.03
Palladium grade in concentrate (ounce per ton) (3) 11.14 11.21 11.37 10.72
Costs of metals sold per PGM mined ounce $ 538 $ 634 $ 542 $ 629
Total cash costs per PGM mined ounce – net of credits (Non-GAAP) (2) $ 444 $ 504 $ 445 $ 525
Total cash costs per ore ton milled – net of credits (Non-GAAP) (2) $ 148 $ 179 $ 151 $ 183
(1)  Sub-grade tons milled includes reef waste material only. Reef waste material is PGM-bearing mined material below the cutoff grade for proven and probable reserves but with sufficient economic value to justify processing it through the concentrator along with the mined ore. Total tons milled includes ore tons and sub-grade tons only. See “Proven and Probable Ore Reserves – Discussion” in the Company’s 2015 Annual Report on Form 10-K for further information.
(2)  Total cash costs include total operating costs plus royalties, insurance and taxes other than income taxes. Total cash costs per PGM mined ounce, net of credits is a non-GAAP financial measure that management uses to monitor and evaluate the efficiency of its mining operations. This measure of cost is not defined under U.S. Generally Accepted Accounting Principles (GAAP). Please see Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures and the accompanying discussion for additional detail.
(3)  The concentrate tonnage and grade values are inclusive of periodic re-processing of smelter slag and internal furnace brick PGM bearing materials.


Stillwater Mining Company
Key Operating Factors (Continued)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except for average prices) 2016 2015 2016 2015
SALES AND PRICE DATA
Ounces sold
PGM Mine Production:
Palladium (oz.) 116.9 103.1 221.5 210.4
Platinum (oz.) 34.0 29.9 61.3 59.2
Total 150.9 133.0 282.8 269.6
PGM Recycling: (1)
Palladium (oz.) 54.3 39.8 91.2 83.7
Platinum (oz.) 25.5 23.2 46.9 48.5
Rhodium (oz.) 5.5 5.1 10.5 10.5
Total 85.3 68.1 148.6 142.7
By-products from Mine Production: (2)
Rhodium (oz.) 1.1 1.0 1.6 1.9
Gold (oz.) 2.8 2.9 5.5 5.4
Silver (oz.) 1.6 1.9 3.0 3.3
Copper (lb.) 311.0 262.9 568.0 523.1
Nickel (lb.) 406.7 390.7 797.1 788.5
Average realized price per ounce (3)
PGM Mine Production:
Palladium ($/oz.) $ 566 $ 760 $ 549 $ 772
Platinum ($/oz.) $ 1,005 $ 1,128 $ 967 $ 1,159
Combined ($/oz.)(4) $ 665 $ 842 $ 640 $ 857
PGM Recycling: (1)
Palladium ($/oz.) $ 543 $ 787 $ 556 $ 792
Platinum ($/oz.) $ 931 $ 1,194 $ 922 $ 1,223
Rhodium ($/oz.) $ 658 $ 1,156 $ 687 $ 1,189
Combined ($/oz.)(4) $ 666 $ 954 $ 681 $ 968
By-products from Mine Production: (2)
Rhodium ($/oz.) $ 676 $ 1,053 $ 680 $ 1,107
Gold ($/oz.) $ 1,264 $ 1,186 $ 1,229 $ 1,203
Silver ($/oz.) $ 17 $ 16 $ 16 $ 17
Copper ($/lb.) $ 1.93 $ 2.57 $ 1.92 $ 2.52
Nickel ($/lb.) $ 3.08 $ 4.53 $ 2.92 $ 4.75
Average market price per ounce (3)
Palladium ($/oz.) $ 568 $ 758 $ 546 $ 772
Platinum ($/oz.) $ 1,003 $ 1,125 $ 960 $ 1,159
Combined ($/oz.)(4) $ 666 $ 841 $ 636 $ 857
(1)  Ounces sold and average realized price per ounce from PGM Recycling relate to ounces produced from processing of spent catalyst from catalytic converters and other industrial sources.
(2)  By-product metals sold reflect net values of realized prices (discounted due to product form) per unit sold.
(3)  The Company’s average realized price represents revenues, hedging gains and losses realized on commodity instruments and agreement discounts, divided by ounces sold. The average market price represents the average London market for the actual months of the period.
(4)  The Company reports a combined average realized and market price of palladium and platinum at the same ratio as ounces that are produced from the base metal refinery.


RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

The Company utilizes certain non-GAAP financial measures as indicators in assessing the performance of its mining and processing operations during any period. Because of the processing time required to complete the extraction of finished PGM products, there are typically lags of one to three months between ore production and sale of the finished product. Sales in any period include some portion of material mined and processed from prior periods as the revenue recognition process is completed. Consequently, while costs of revenues (a GAAP financial measure included in the Company’s Consolidated Statements of Comprehensive Income (Loss)) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP financial measures to assess the costs associated with its producing and processing activities in a particular period and to compare those costs between periods.

While the Company believes that these non-GAAP financial measures may also be of value to outside readers, both as general indicators of the Company’s mining efficiency from period to period and as insight into how the Company internally measures its operating performance, these non-GAAP financial measures are not standardized across the mining industry and in most cases will not be directly comparable to similar measures that may be provided by other companies. These non-GAAP financial measures are only useful as indicators of relative operational performance in any period, and because they do not take into account the inventory timing differences that are included in costs of revenues, they cannot meaningfully be used to develop measures of earnings or profitability. A reconciliation of these measures to costs of revenues, the most directly comparable GAAP financial measure, for each period shown is provided as part of the following tables, and a description of each non-GAAP financial measure is provided below.

Total Consolidated Costs of Revenues: For the Company as a whole, this measure is equal to total costs of revenues, as reported in the Company’s Consolidated Statements of Comprehensive Income (Loss). For the Stillwater Mine, the East Boulder Mine, and PGM Recycling, the Company segregates the expenses within total costs of revenues that are directly associated with each of these activities and then allocates the remaining facility costs included in total cost of revenues in proportion to the monthly volumes from each activity. The resulting total costs of revenues measures for the Stillwater Mine, the East Boulder Mine and PGM Recycling and Other are equal in the aggregate, to total consolidated costs of revenues as reported in the Company’s Consolidated Statements of Comprehensive Income (Loss).

Total Cash Costs (Non-GAAP): These non-GAAP financial measures are calculated as total costs of revenues adjusted to exclude costs of metals sold from PGM Recycling, depletion and depreciation and amortization for Mine Production and PGM Recycling (including in inventory), asset retirement costs, and timing differences resulting from changes in product inventories to arrive at Total Cash Costs before by-product and recycling credits. From this calculation, the Company deducts by-product and recycling income credits to arrive at Total Cash Costs, net of by-product and recycling credits. Total Cash Costs is a measure of extraction efficiency. The Company uses this measure as a comparative indication of the cash costs related to production and processing in its mining operations in any period.

When divided by the total recoverable PGM ounces from production in the respective period, Total Cash Costs per PGM Mined Ounce (Non-GAAP), measured for each mine or combined, provides an indication of the level of cash costs incurred per PGM mined ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product mined in any period. Because ultimately extracting PGM material is the objective of mining, the cash cost per PGM mined ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company’s mines. Consequently, Total Cash Costs per PGM Mined Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Cash Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.

When divided by the total tons milled in the respective period, Total Cash Costs per Ore Ton Milled, measured for each mine or combined, provides an indication of the level of cash costs incurred per ore ton milled in that period. Because of variability of ore grade in the Company’s mining operations, mine production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first weighed as they are fed into the mill, mill feed is the first point at which mine production tons are measured precisely. Consequently, Total Cash Costs per Ore Ton Milled is a general measure of production efficiency, and is affected both by the level of Total Cash Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.

With respect to 2016 guidance regarding Total Cash Costs per PGM Mined Ounce (net of by-product and recycling credits) and AISC per PGM Mined Ounce, the Company cannot provide a quantitative reconciliation to the most directly comparable GAAP measure without unreasonable effort. However, the Company would expect to calculate these non-GAAP measures in the same manner they were calculated in the reconciliations included in this press release.

 

Stillwater Mining Company
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per ounce and per ton data) 2016 2015 2016 2015
Consolidated:
Costs of metals sold – Mine Production $ 75,589 $ 80,631 $ 143,032 $ 160,672
Change in mined inventories (palladium and platinum) (8,899 ) (4,397 ) (8,220 ) (4,005 )
Total combined cash costs, before by-product and recycling credits  (Non-GAAP) $ 66,690 $ 76,234 $ 134,812 $ 156,667
By-product revenue credit (6,147 ) (6,914 ) (11,262 ) (13,659 )
PGM Recycling income credit (2,957 ) (2,036 ) (4,734 ) (4,163 )
Total combined cash costs, net of by-product and recycling credits  (Non-GAAP) $ 57,586 $ 67,284 $ 118,816 $ 138,845
PGM mined ounces sold 150.9 133.0 282.8 269.6
Costs of metals sold per PGM mined ounce $ 501 $ 606 $ 506 $ 596
PGM mined ounces produced 137.1 127.0 274.4 260.3
Total combined cash costs per PGM mined ounce, before by-product and recycling credits  (Non-GAAP) $ 487 $ 600 $ 491 $ 601
By-product credit per mined ounce (45 ) (54 ) (41 ) (52 )
Recycling income credit per mined ounce (22 ) (16 ) (17 ) (16 )
Total combined cash costs PGM per mined ounce, net of by-product and recycling credits  (Non-GAAP) $ 420 $ 530 $ 433 $ 533
Ore tons milled 350.8 326.4 683.8 662.3
Total combined cash costs per ore ton milled, before by-product and recycling credits (Non-GAAP) $ 190 $ 233 $ 197 $ 237
By-product credit per ore ton milled (18 ) (21 ) (16 ) (21 )
Recycling income credit per ore ton milled (8 ) (6 ) (7 ) (6 )
Total combined cash costs per ore ton milled, net of by-product and recycling credits (Non-GAAP) $ 164 $ 206 $ 174 $ 210


Stillwater Mining Company

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per ounce and per ton data) 2016 2015 2016 2015
Stillwater Mine:
Costs of metals sold – Mine Production $ 44,474 $ 49,502 $ 84,059 $ 99,763
Change in mined inventories (palladium and platinum) (5,768 ) (2,571 ) (5,666 ) (3,298 )
Total cash costs, before by-product and recycling credits (Non-GAAP) $ 38,706 $ 46,931 $ 78,393 $ 96,465
By-product revenue credit (3,314 ) (3,727 ) (5,888 ) (7,532 )
PGM Recycling income credit (1,784 ) (1,205 ) (2,818 ) (2,540 )
Total cash costs, net of by-product and recycling credits (Non-GAAP) $ 33,608 $ 41,999 $ 69,687 $ 86,393
PGM mined ounces sold 93.1 83.9 173.1 172.7
Costs of metals sold per PGM mined ounce $ 478 $ 590 $ 483 $ 578
PGM mined ounces produced 83.1 76.8 164.0 160.5
Total cash costs per PGM mined ounce, before by-product and recycling credits  (Non-GAAP) $ 466 $ 612 $ 478 $ 602
By-product credit per mined ounce (40 ) (49 ) (36 ) (47 )
Recycling income credit per mined ounce (21 ) (16 ) (17 ) (16 )
Total cash costs per PGM mined ounce, net of by-product and recycling credits  (Non-GAAP) $ 405 $ 547 $ 425 $ 539
Ore tons milled 188.5 185.1 358.7 374.9
Total cash costs per ore ton milled, before by-product and recycling credits (Non-GAAP) $ 205 $ 254 $ 218 $ 257
By-product credit per ore ton milled (18 ) (20 ) (16 ) (20 )
Recycling income credit per ore ton milled (9 ) (7 ) (8 ) (7 )
Total cash costs per ore ton milled, net of by-product and recycling credits (Non-GAAP) $ 178 $ 227 $ 194 $ 230


Stillwater Mining Company

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per ounce and per ton data) 2016 2015 2016 2015
East Boulder Mine:
Costs of metals sold – Mine Production $ 31,115 $ 31,129 $ 58,973 $ 60,909
Change in mined inventories (palladium and platinum) (3,131 ) (1,826 ) (2,554 ) (707 )
Total cash costs, before by-product and recycling credits  (Non-GAAP) $ 27,984 $ 29,303 $ 56,419 $ 60,202
By-product revenue credit (2,833 ) (3,187 ) (5,374 ) (6,127 )
PGM Recycling income credit (1,173 ) (831 ) (1,916 ) (1,623 )
Total cash costs, net of by-product and recycling credits  (Non-GAAP) $ 23,978 $ 25,285 $ 49,129 $ 52,452
PGM mined ounces sold 57.8 49.1 108.9 96.9
Costs of metals sold per PGM mined ounce $ 538 $ 634 $ 542 $ 629
PGM mined ounces produced 54.0 50.2 110.4 99.8
Total cash costs per PGM mined ounce, before by-product and recycling credits  (Non-GAAP) $ 518 $ 584 $ 511 $ 602
By-product credit per mined ounce (52 ) (63 ) (49 ) (61 )
Recycling income credit per mined ounce (22 ) (17 ) (17 ) (16 )
Total cash cost, per PGM mined ounce, net of by-product and recycling credits  (Non-GAAP) $ 444 $ 504 $ 445 $ 525
Ore tons milled 162.2 141.4 325.1 287.3
Total cash costs per ore ton milled, before by-product and recycling credits (Non-GAAP) $ 172 $ 208 $ 174 $ 210
By-product credit per ore ton milled (17 ) (23 ) (17 ) (21 )
Recycling income credit per ore ton milled (7 ) (6 ) (6 ) (6 )
Total cash costs per ore ton milled, net of by-product and recycling credits (Non-GAAP) $ 148 $ 179 $ 151 $ 183


Stillwater Mining Company

All-In Sustaining Costs (a Non-GAAP Financial Measure)
(Unaudited)

All-In Sustaining Costs (Non-GAAP): This non-GAAP financial measure is used as an indicator from period to period of the level of total cash required by the Company to maintain and operate the existing mines, including corporate administrative costs and replacement capital. The measure is calculated beginning with total combined cash costs, net of credits (another non-GAAP financial measure, described above), and adding to it the recycling income credit, domestic corporate general and administrative costs (excluding any depreciation and general and administrative costs of foreign subsidiaries) and that portion of total capital expenditures associated with sustaining the current level of mining operations. Capital expenditures, however, for Blitz, Graham Creek (prior to 2015) and certain other one-time projects are not included in the calculation.

When divided by the total recoverable PGM mined ounces produced in the respective period, All-In Sustaining Costs per PGM Mined Ounce (Non-GAAP) provides an indication of the level of total cash required to maintain and operate the mines per PGM ounce produced in the period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because the objective of PGM mining activity is to extract PGM material, the all-in cash costs per PGM  mined ounce to produce PGM material, administer the business and sustain the operating capacity of the mines is a useful measure for comparing overall extraction efficiency between periods. This measure is affected by the total level of spending in the period and by the grade and volume of mined ore produced.

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except $/oz.) 2016 2015 2016 2015
All-In Sustaining Costs
Costs of metals sold – Mine Production $ 75,589 $ 80,631 $ 143,032 $ 160,672
Change in mined inventories (palladium and platinum) (8,899 ) (4,397 ) (8,220 ) (4,005 )
Total combined cash costs, before by-product and recycling credits  (Non-GAAP) $ 66,690 $ 76,234 $ 134,812 $ 156,667
By-product revenue credit (6,147 ) (6,914 ) (11,262 ) (13,659 )
PGM Recycling income credit (2,957 ) (2,036 ) (4,734 ) (4,163 )
Total combined cash costs, net of by-product and recycling credits  (Non-GAAP) $ 57,586 $ 67,284 $ 118,816 $ 138,845
PGM Recycling income credit 2,957 2,036 4,734 4,163
$ 60,543 $ 69,320 $ 123,550 $ 143,008
Consolidated corporate general and administrative costs $ 8,311 $ 10,396 $ 16,608 $ 18,741
Corporate depreciation included in consolidated corporate general and administrative costs (99 ) (120 ) (210 ) (252 )
General and administrative costs – foreign subsidiaries (578 ) (452 ) (1,022 ) (869 )
Total general and administrative costs $ 7,634 $ 9,824 $ 15,376 $ 17,620
Total capitalized costs $ 25,367 $ 32,803 $ 46,633 $ 61,178
Capital associated with expansion (12,136 ) (12,223 ) (19,940 ) (20,344 )
Total Capital incurred to sustain existing operations $ 13,231 $ 20,580 $ 26,693 $ 40,834
All-In Sustaining Costs  (Non-GAAP) $ 81,408 $ 99,724 $ 165,619 $ 201,462
PGM mined ounces sold 150.9 133.0 282.8 269.6
PGM mined ounces produced 137.1 127.0 274.4 260.3
Costs of metals sold per PGM mined ounce $ 501 $ 606 $ 506 $ 596
All-In Sustaining Costs per PGM Mined Ounce (Non-GAAP) $ 594 $ 785 $ 604 $ 774

For a full description and reconciliation of this non-GAAP financial measure to a GAAP financial measure, see Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures section.


Stillwater Mining Company
Reconciliation of Total Cash Costs Guidance and AISC Guidance
(Non-GAAP Financial Measures)
(Unaudited)

A reconciliation of the 2016 Total Cash Costs Guidance and the 2016 AISC Guidance is provided below. The estimates in the table below are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Please refer to: Cautionary Note Concerning Forward-Looking Statements, for additional information.

Reconciliation Revised Guidance Range
Costs of metals sold – Mined Production (000’s) $ 279,125
PGM mined ounces sold 550,000 545,000 555,000
Costs of metals sold per PGM mined ounce $ 508 $ 495 $ 520
Costs of metals sold – Mined Production (000’s) $ 279,063
Inventory change (000’s) (10,000 )
Total combined cash costs, before by-product credits and recycling credits (000’s) $ 269,063
PGM mined ounces 540,000 535,000 545,000
Total combined cash costs per PGM mined ounce, before by-product credits and recycling credits $ 498
By-product revenue credit (000’s) $ 24,000
PGM Recycling income credit (000’s) 11,000
Total cash costs, net of by-product and recycling credits (000’s) $ 234,063
Total cash costs per PGM mined ounce, net of by-product and recycling credits $ 433 $ 430 $ 455
Total cash costs, net of by-product and recycling credits (000’s) $ 234,063
PGM Recycling income credit (000’s) 11,000
General and administrative (000’s) 35,000 30,000 40,000
Sustaining capital expenditures (000’s) 55,000 50,000 60,000
All-in sustaining costs (000’s) $ 335,063
All-in sustaining costs per PGM mined ounce $ 620 $ 595 $ 635


Stillwater Mining Company
Underlying Earnings (Loss)
(Non-GAAP Financial Measure)
(Unaudited)

Underlying Earnings (Loss) (Non-GAAP): This non-GAAP financial measure is considered by the Company to be reflective of the actual income / loss position. This non-GAAP financial measure provides to investors and analysts the ability to understand the results of the continuing operations of the Company relating to the production, processing and sale of PGMs, by excluding certain items that have a disproportionate impact on the results for the reported periods. The measure is calculated beginning with Net income (loss) attributable to common stockholders and adding back impairment charges, one-time event charges and charges infrequent to the Company’s continuing operations and the income tax effect of such adjustment. Net loss attributable to noncontrolling interest has been adjusted for the noncontrolling interest’s ownership percentage of any applicable impairment charges to which the noncontrolling interest has an ownership. The Company’s determination of the components of Underlying earnings (loss) are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts.

Net income (loss) attributable to common stockholders is reconciled to Adjusted net income (loss) attributable to common stockholders and Underlying earnings (loss) as follows:

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2016 2015 2016 2015
Net income (loss) attributable to common stockholders $ 784 $ (27,476 ) $ (9,146 ) $ (4,474 )
  Impairment of property, plant and equipment and non-producing mineral properties (46,772 ) (46,772 )
  Income tax effect of adjustment 997 997
Adjusted net income (loss) attributable to common stockholders $ 784 $ 18,299 $ (9,146 ) $ 41,301
  Impairment loss attributable to noncontrolling interest (11,444 ) (11,444 )
Underlying earnings (loss) $ 784 $ 6,855 $ (9,146 ) $ 29,857
CONTACT: INVESTOR CONTACT:
Mike Beckstead
(720) 502-7671
investor-relations@stillwatermining.com


Mine-Building Enters New Phase With Start of Permanent Sinking Work on First Shaft at Ivanhoe Mines’ Platreef PGM, Nickel, Copper and Gold Project

MOKOPANE, SOUTH AFRICA–(Marketwired – July 14, 2016) - Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX:IVN), and Lars-Eric Johansson, Chief Executive Officer, announced today that permanent sinking work has begun on Shaft 1 at the Platreef platinum-group metals, nickel, copper and gold mine in South Africa.

Shaft 1, which will have an internal diameter of 7.25 metres, will provide initial access for early underground development at the Flatreef Deposit and will be utilized to fast-track production during the first phase of the project.

Following the successful commissioning and licensing of the required equipment, the permanent sinking phase started at a planned, initial rate of 1.8 metres per day. This is planned to double the current depth of Shaft 1 from 54 metres to 107 metres below surface – the point at which the main sinking phase will begin. Ivanhoe expects that the subsequent main sinking phase will advance at an average rate of 2.7 metres a day until it reaches the planned, final depth at 1,025 metres below surface in 2018.

“This is an important milestone in the building of a major, new underground mine at Platreef and we are extremely proud of our employees and contractors for the safe and efficient job they have done in transitioning Shaft 1 from the pre-sinking phase to the permanent-sinking phase,” said Mr. Friedland.

Photo 1 is available at the following address: http://media3.marketwire.com/docs/Platreef_Shaft1.pdf

The Shaft sinking contract, held by Aveng Mining, of South Africa, will include the development of two main stations at below-surface depths of 450 metres and 750 metres. Shaft 1 is expected to reach the Flatreef Deposit, at a depth of 777 metres, during the third quarter of 2017.

The selected mining areas proposed in Platreef’s current pre-feasibility study mine plan occur at depths ranging from approximately 700 metres to 1,200 metres below the surface.

The Platreef Project is a Tier One discovery by Ivanhoe Mines’ geologists on the Northern Limb of South Africa’s Bushveld Igneous Complex, the world’s premier platinum producing region.

Ivanhoe Mines owns 64% of the Platreef Project through its subsidiary, Ivanplats, and is directing all mine development work. The South African beneficiaries of the approved broad-based, black economic empowerment structure have a 26% stake in the Platreef Project and the remaining 10% is owned by a Japanese consortium of ITOCHU Corporation; ITC Platinum Development Ltd., an ITOCHU affiliate; Japan Oil, Gas and Metals National Corporation; and JGC Corporation.

Shaft 1, including initial lateral underground development work, will be funded from dedicated funds remaining in Ivanhoe’s treasury from the US$280-million received in 2011 for the sale of an 8% interest in the Platreef Project to the ITOCHU-led Japanese consortium.

Early works for the 10-metre-diameter Shaft 2, the main production shaft with the capacity to hoist six million tonnes per year, are planned to begin next year. The headgear design has been completed by South Africa-based Murray & Roberts Cementation.

Photo 2 is available at the following address: http://media3.marketwire.com/docs/Bottom_Shaft1.pdf

New lines to supply electrical power from South Africa’s national grid

Work now is complete on the internal electricity substation, which will have a capacity of five-million volt-amperes. Construction is underway of the power transmission lines from the main lines of Eskom, the South African public electricity utility, which will be used for shaft sinking. Back-up generators also have been installed to ensure continuous sinking operations in the event of power interruptions.

The new power transmission lines also will provide electric power to an adjacent community near the Platreef Project, which currently has no supply of electricity.

Other on-site work includes the construction of the permanent road intersection leading to the Platreef Project from the N11 national highway, which will assist with management of safe access to the mine.

Feasibility study update

Ivanplats plans to develop the Platreef Mine in three phases: an initial annual rate of four million tonnes per annum (Mtpa) to establish an operating platform to support future expansions; followed by a doubling of production to eight Mtpa; and then a third expansion phase to a steady-state 12 Mtpa. At a projected production rate of 12 Mtpa, Platreef would be among the largest platinum-group metals mines in the world.

Good progress is being made in advancing the feasibility study for Platreef’s first-phase production scenario toward completion. The study, which began in August 2015, is being managed by principal consultant DRA Global, with specialized sub-consultants including Stantec Consulting, Murray & Roberts Cementation, SRK, Golder Associates and Digby Wells Environmental.

Ivanplats completed a pre-feasibility study (PFS) in January 2015 that covered the first phase of development that includes construction of a state-of-the-art underground mine, concentrator and other associated infrastructure to support initial concentrate production.

The development scenarios describe a staged approach structured to provide opportunities to expand the operation based on demand, smelting and refining capacity and capital availability. As the first phase of development is placed into production, there is expected to be an opportunity to modify and optimize the subsequent phases, allowing for changes to the timing of capacity expansions to suit market conditions.

The planned mining methods will use highly productive mechanization, including long-hole stoping and drift-and-fill mining. The mined-out areas within the deposit will be backfilled with a paste mixture that utilizes tailings from the process plant and cement. The ore will be hauled from the stopes to a series of ore passes that will connect to a main haulage level connected to Shaft 2, where it will be hoisted to the surface for processing.

Photo 3 is available at the following address: http://media3.marketwire.com/docs/Platreef_mine_site.pdf

Safety Achievements

The Platreef Project reached a total of 5,903,038 million hours in terms of the Mines Health and Safety Act and the Occupational Health and Safety Act by the end of June 2016. A total of 1,266,480 Lost Time Injury-Free (LTI) hours worked have been achieved since the previous LTI in October 2015. The Platreef Project continues to strive toward its workplace objective of an environment that causes zero harm to any employees, contractors, sub-contractors and consultants.

Photo 4 is available at the following address: http://media3.marketwire.com/docs/Ivanplat_Staff_Aveng_Employees.pdf

Qualified person

The scientific and technical information in this news release has been reviewed and approved by Stephen Torr, P.Geo., Ivanhoe Mines’ Vice President, Project Geology and Evaluation, a Qualified Person under the terms of National Instrument 43-101 (NI 43-101). Mr. Torr has verified the technical data disclosed in this news release.

Information on sample preparation, analyses and security is contained in the Platreef Project NI 43-101 Technical Report dated January 8, 2015, filed on SEDAR at www.sedar.com and on the Ivanhoe Mines website at www.ivanhoemines.com.

About Ivanhoe Mines

Ivanhoe Mines is advancing and developing its three principal projects:

  • The Kamoa Copper Discovery in a previously unknown extension of the Central African Copperbelt in the Democratic Republic of the Congo (DRC).
  • The Platreef Discovery of platinum, palladium, nickel, copper, gold and rhodium on the Northern Limb of the Bushveld Complex in South Africa.
  • The historic, high-grade Kipushi zinc-copper mine, also on the Copperbelt in the DRC.

Statements in this news release that are forward-looking statements or information are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in the company’s periodic filings with Canadian securities regulators. When used in this news release, the words such as “could,” “plan,” “estimate,” “expect,” “intend,” “may,” “potential,” “should” and similar expressions, are forward-looking statements. Information provided in this document is necessarily summarized and may not contain all available material information.

The forward-looking information and statements in this news release include, but is not limited to, (i) statements regarding Shaft 1 providing initial access for early underground development at the Flatreef Deposit and that Shaft 1 will be utilized to fast-track production during the first phase of the project; (ii) statements regarding the sinking of Shaft 1, including at a daily rate of approximately 1.8 metres per day and 2.7 metres per day; statements regarding Shaft 1 reaching the Flatreef Deposit, at a depth of 777 metres, during the third quarter of 2017, and reaching the planned, final depth at 1,025 metres below surface in 2018; statements regarding the expectation that Shaft 1, including some initial, lateral, underground development work, is to be fully funded from dedicated funds remaining in Ivanhoe’s treasury from the US$280-million received in 2011; statements regarding the expectation that early works for Shaft 2 are to begin next year; statements regarding the company’s plans to develop the Platreef Mine in three phases: an initial annual rate of four million tonnes per annum (Mtpa) to establish an operating platform to support future expansions; followed by a doubling of production to eight Mtpa; and then a third expansion phase to a steady-state 12 Mtpa; and statements regarding the planned underground mining methods. Readers are cautioned that actual results may vary from those presented.

All such forward-looking information and statements are based on certain assumptions and analyses made by Ivanhoe Mines’ management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believe are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements including, but not limited to, unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; the failure of parties to contracts to perform as agreed; social or labour unrest; changes in commodity prices; unexpected failure or inadequacy of infrastructure, industrial accidents or machinery failure (including of shaft sinking equipment), or delays in the development of infrastructure, and the failure of exploration programs or other studies to deliver anticipated results or results that would justify and support continued studies, development or operations. Other important factors that could cause actual results to differ from these forward-looking statements also include those described under the heading “Risk Factors” in the company’s most recently filed MD&A as well as in the most recent Annual Information Form filed by Ivanhoe Mines. Readers are cautioned not to place undue reliance on forward-looking information or statements. The factors and assumptions used to develop the forward-looking information and statements, and the risks that could cause the actual results to differ materially are presented in the Platreef 2016 Resource Technical Report dated June 24, 2016, available on SEDAR at www.sedar.com and on the Ivanhoe Mines website at www.ivanhoemines.com.

Although the forward-looking statements contained in this news release are based upon what management of the company believes are reasonable assumptions, the company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this news release.

Investors
Bill Trenaman
+1.604.331.9834Media
North America:
Bob Williamson
+1.604.512.4856

South Africa:
Jeremy Michaels
+27.11.088.4300
www.ivanhoemines.com


Ivanhoe Reports an Increase in Indicated Mineral Resources of 58 percent

Ivanhoe Mines (TSX:IVN) has reported a substantial increase in Indicated and Inferred Mineral Resources at its Platreef Project in South Africa’s Bushveld Complex. The updated estimate is for Mineral Resources amenable to underground mining methods within Platreef’s Flatreef Deposit. It is the first update of the overall resource estimate to be issued in more than three years.

As quoted in the press release:

Highlights of the Platreef Project’s updated Mineral Resource estimate include:

  • An increase of 58% in the Indicated Mineral Resources tonnage to 346 million tonnes, at a grade of 3.77 grams per tonne (g/t) platinum, palladium, rhodium plus gold (3PE+Au), 0.32% nickel and 0.16% copper, at a cut-off grade of 2.0 g/t 3PE+Au.
  • An increase of 21% in the Inferred Mineral Resources tonnage to 506 million tonnes, at a grade of 3.24 g/t 3PE+Au, 0.31% nickel and 0.16% copper, at a cut-off grade of 2.0 g/t 3PE+Au.
  • An increase of 45% in the contained metal in Indicated Mineral Resources, at a cut-off grade of 2.0 g/t 3PE+Au, totaling 41.95 million ounces of 3PE+Au, plus a 47% increase in nickel to 2.44 billion pounds and a 50% increase in copper to 1.23 billion pounds.
  • Contained metal in Inferred Mineral Resources, at a cut-off grade of 2.0 g/t 3PE+Au, has increased by 11% to total 52.77 million ounces of 3PE+Au, nickel has increased by 13% to total 3.44 billion pounds and copper has increased by 18% to 1.78 billion pounds.
  • An average thickness of 19 metres in the area of the TCU-T2 mineralized zone where Indicated Mineral Resources are estimated and an average thickness of 13 metres for the area where Inferred Mineral Resources are estimated, using the 2.0 g/t 3PE+Au cut-off.

Click here for the full press release.


Anglo American Reports Q4 Production Results

Anglo American plc (LSE:AAL) released its production report for the fourth quarter of 2015, as well as 2015 as a whole, commenting that for the full year it saw declines in nickel, diamond, iron ore, copper and thermal coal.

The company’s production of platinum and metallurgical coal increased for the year.

Highlights for Q4 2015 include:

  • Q4 2015 production increased by 3% (on a copper equivalent basis) compared to both Q4 2014 and Q3 2015. The 2015 full year production increased by 5% (on a copper equivalent basis)(7).
  • Iron ore production from Kumba decreased by 12% to 10.9 million tonnes as Sishen is being transitioned to a lower cost pit configuration.
  • Minas-Rio produced 3.3 million tonnes (wet basis) of iron ore, a more than fourfold increase compared to 0.7 million tonnes in Q4 2014, reflecting the ongoing ramp up of the operation.
  • Export metallurgical coal production increased by 11% to 5.5 million tonnes due to strong operational performances at both Grasstree and Moranbah.
  • Export thermal coal production decreased by 21% to 7.7 million tonnes due to the impact of strikes in South Africa and weather related production issues at Cerrejón.
  • Copper production from the retained operations (excluding the AA Norte assets that were sold effective 1 September 2015) increased by 23% to 181,400 tonnes due to higher grades, throughput and metal recoveries. Overall copper production increased by 4%.
  • Nickel production increased by 57% to 10,500 tonnes following the successful completion of the planned Barro Alto furnace rebuilds.
  • Niobium production increased by 23% to 1,600 tonnes with the continuing ramp up of the Boa Vista Fresh Rock (BVFR) plant. Fertiliser production increased by 6%.
  • Platinum production (expressed as metal in concentrate)(5) was broadly flat at 598,000 ounces with operational improvements at own operations, offset by a reduction in purchase of concentrate ounces from third parties.
  • Diamond production decreased by 16% to 7.1 million carats, reflecting the decision to reduce production in response to trading conditions.

Click here to read the full Anglo American plc (LSE:AAL) press release.


NUM Signs Three-year Wage Deal at Nkomati Nickel Mine

Mining Weekly reported that South Africa’s National Union of Mineworkers (NUM) has signed a three-year wage deal for the Nkomati nickel mine. Nkomati is owned by African Rainbow Minerals Ltd. (JSE:ARI) and Russia’s Norilsk Nickel (MCX:GMKN).

As quoted in the market news:

The deal followed a three-day strike which started on Sunday evening. The agreement is effective from the 1st of July.

The agreement would see workers receiving increases of 8.5% in the first year, up to 9% in the second year and up to 10% in the third year, according to their category. Workers would also receive a housing allocation of R2 930 in the first year, rising to R3,512 in the third year and a medical award that started at R1 953 and rises to R2 342. There is also a long service award that would see workers with 10 years of service receive R4 000, while those with 25 years of service would receive R12 000.

Click here to read the full Mining Weekly report.


What’s Next for BHP Billiton’s Nickel West?

What's Next for BHP Billiton's Nickel West?

In a move that some believe was inevitable, BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) announced last Wednesday that it has abandoned plans to sell its Western Australian Nickel West business. Instead it will keep it in its portfolio as a non-core asset. 

Nickel West, which includes the Mt. Keith, Cliffs and Leinster mines, has been in limbo since May of this year, when BHP put it under review. At the time, the company said that it was considering “all options” for the asset’s long-term future, “including the potential sale of all or parts of the business.”

As time passed, it became clear that a sale was the preferred option for BHP. In August, the miner revealed plans to focus on the ”four pillars” of iron ore, copper, coal and petroleum by spinning off its aluminum and manganese businesses, along with its Australian metallurgical coal assets and South African thermal coal operations. Individual assets like the Colombia-based Cerro Matoso nickel project and Cannington zinc-lead-silver mine were also earmarked for the new company.

Nickel West, however, was set aside in hopes that it would be sold separately. So what went wrong?

Interest wasn’t the problem. According The Globe and Mail, Glencore (LSE:GLEN) and China’s Jinchuan Group were potential buyers, and indeed the Financial Times quotes Ivan Glasenberg, CEO of the former, as saying, “Nickel West is out in the market and you know us, we kick tyres and look at anything which is available.”

Instead it seems that price may have been at least part of the issue. The West Australian states that BHP originally placed a value of $500 to $800 million on Nickel West, but would have sold it for as little as $300 million if the buyer had agreed to take on clean-up costs for the sites, which analysts have pegged at AU$1 billion. However, industry sources have said that “no final bids received over the past fortnight came close” to what the mining giant was looking for.

For its part, BHP has said only that the sale of the business was not “achieved on an acceptable basis,” adding that it “will only pursue options that maximise value for shareholders.”

Unfortunately, some market watchers believe the opportunity to achieve maximum shareholder value through the sale of Nickel West has passed. Speaking to the Financial Times, Morningstar analyst Mark Taylor noted, “[t]he time to sell these mining assets was during the boom. It is difficult to attract a good price when commodity prices are softening.”

And indeed, nickel hasn’t been having the best time lately. As The Globe and Mail notes, while the metal was up 50 percent since the start of the year when BHP first announced its review of Nickel West, it’s now down 26 percent from this year’s peak. Some analysts even believe a surplus is in store for the base metal.

None of that sounds like good news for Nickel West, but perhaps the most damning piece of news to come to light these past few days is that BHP executives have reportedly told those working at the business that it will “cease to exist by the end of the decade.”

Specifically, states another article from The West Australian, sources have said that “Nickel West staff were told there [will] be no significant new capital injections and BHP expect[s] the unit [will] cease to exist by 2019″ — that’s the year Nickel West’s major offtake and supply contracts expire. BHP hasn’t confirmed that rumor, but a spokesperson did tell the news outlet that due to “intense internal competition,” the asset is only likely to receive the sustaining capital it needs to keep “deliver[ing] safe and efficient production.”

Though of course making assumptions is rarely a smart move in the resource sector, at the moment it’s looking like Nickel West’s days may be numbered. Nickel market participants would do well to keep their eyes peeled for further statements from BHP.

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Related reading: 

BHP to Say Goodbye to Businesses Worth US$16 Billion in Spin Off

After All the Bans, a Surplus on the Way for Nickel?


Norilsk to Sell Australian Nickel Assets

Reuters reported that Russia’s Norilsk Nickel (MCX:GMKN) will sell its Australian nickel assets, Avalon and Cawse, to Wingstar Investments Pty Ltd., an investment firm. The deal, which is subject to regulatory approval, is expected to close in the second half of 2014.

As quoted in the market news:

Norilsk, partially owned by Russian tycoon Vladimir Potanin and aluminium giant Rusal, decided last year to focus on core domestic operations, selling off assets in Australia, South Africa and Botswana.

Norilsk declined to disclose the value of the deal with Australia-focused Wingstar Investments. Production at Avalon and Cawse was suspended in 2003 and 2008, respectively.

Click here to read the full Reuters report.


Ivanplats’ Flatreef Discovery Shows Substantial Nickel Deposits

Ivanplats’ (TSX:IVP) CEO, Robert Friedland, announced today that an intensive drilling program at its Flatreef Discovery project in South Africa showed results for indicated and inferred resources with substantial amounts of nickel deposits.

As quoted in the press release:

Flatreef is distinguished from other Bushveld projects by its tremendous size, the remarkable thickness of the polymetallic mineralized reef and its potential for significant by-product credits of nickel and copper,” Mr. Friedland said.

Click here to read the full Ivanplats (TSX:IVP) press release.


Norislk Nickel Considers Nickel, Copper, Platinum Licenses

Reuters reported Norilsk Nickel (LSE:MNOD) it is considering deals and the acquisition of copper, nickel and platinum licenses to strengthen its hold in Africa.

As quoted in the market news:

Norilsk’s low-cost Arctic operations account for the bulk of its production. Analysts have said it could benefit from troubles battering peers in platinum producing South Africa, hobbled by violent strikes that have lifted the price of the precious metal.

Click here to read the full Reuters report.


Inside the Russian Nickel Mining Industry

Inside the Russian Nickel Mining IndustryRussia was the leading nickel producer in 2011, according to the US Geological Survey. In all, the country’s mines pumped out 280,000 metric tons (MT) of the metal, up from 269,000 in 2010. That put it well ahead of the Philippines and Indonesia, which were tied at 230,000 MT each in 2011.

Russia is also home to the world’s fourth-largest nickel reserves, which total about 6 million MT.

Roughly 85 percent of the country’s production, or 237,000 MT, comes from Norilsk Nickel (MCX:GMKN), the world’s leading producer of nickel and palladium.

Norilsk remains the cornerstone of Russian nickel mining

The company traces its roots back to the earliest years of the Soviet Union and to some of the most inhospitable territory on Earth. Russians had known that there was nickel in the Taimyr Peninsula on the Arctic Ocean since the 1600s. But it was not until the 1920s that the country took a serious look at exploiting the resource.

Norilsk was officially born in June 1935, when the Council of the Peoples’ Commissars passed a resolution to form the “Norilsk Combine.” The government then turned construction work over to the Soviet security services, which used political prisoners to build the facility. By the time it went into production in 1939, it boasted a small metallurgical works, a workshop for repairing gear and a temporary power station. It shipped its output — including nickel and copper — out via a new railway to a port at Dudinka on the Yenisey River.

By 1953, Norilsk was well on its way to dominating Russia’s nickel market, accounting for 35 percent of the country’s total output, as well as 12 percent of its copper and 90 percent of its platinum group metals.

Norilsk Nickel was privatized, but its ownership is still highly concentrated

Under market reforms brought in by the Gorbachev government in 1989, Norilsk was combined with the Olenegorsk mechanical works and two other nickel companies, and renamed RAO Norilsk Nickel.

President Boris Yeltsin’s government then privatized Norilsk in 1994, after the breakup of the Soviet Union. As part of that transformation, the government sold a controlling stake in the company to Uneximbank, which was controlled by two wealthy Russians with close ties to the Yeltsin administration: Vladimir Potanin and Mikhail Prokhorov. (Potanin currently ranks fourth on Forbes’ list of wealthiest Russians; Prokhorov, who recently ran in the country’s presidential elections, sits in seventh spot.) After the deal went through, Prokhorov became chairman of Norilsk’s board of directors.

In 2005, Prokhorov spun off Norilsk’s gold mining assets into a separate company, Polyus Gold, which is now Russia’s largest gold producer.

Right now, three shareholders, including Potanin, hold 74 percent of Norilsk’s shares (Prokhorov sold his 25 percent interest in 2008.) Polyus, too, remains firmly under the control of its founding shareholders, with Prokhorov and Suleiman Kerimov — who currently ranks 19th on Forbes’ list of wealthiest Russians — holding 78 percent.

Norilsk Nickel goes far beyond Russia

Nickel accounted for 50 percent of Norilsk’s revenue in 2011, followed by copper (25 percent), palladium (15 percent), platinum (9 percent) and gold (1 percent). In all, it produced 295,000 MT of nickel during the year. That’s down slightly from 297,000 MT in 2010, but up sharply from 283,000 MT in 2009.

The company operates through five divisions:

  • The Polar Division, which includes Norilsk Nickel’s original assets on the Taimyr Peninsula, consists of six underground mines and one open-pit operation. This division produced 124,000 MT of nickel in 2011;
  • Kola MMC, which includes three underground mines and one-open pit operation in the Murmansk region. Its 2011 nickel production was 113,000 MT;
  • Norilsk Nickel Finland, which consists of the Harjavalta facility, Finland’s only nickel-refining plant, with a capacity of 60,000 MT;
  • Norilsk Nickel Africa, which includes the company’s 85 percent stake in Tati Nickel in Botswana (that country’s government holds the other 15 percent). Norilsk acquired this stake when it took over LionOre Mining International in 2007.
    Tati has two mines in Botswana, one of which was shut down in 2002 because its deposit was exhausted (although Norilsk is investigating the possibility of further mining at the site). In all, Tati produced 7,000 MT of nickel last year. Norilsk also owns 50 percent of the Nkomati joint venture in South Africa, which produced 5,000 MT of nickel in 2011;
  • Norilsk Nickel Australia also came over as part of the LionOre acquisition. It consists of four mines, all of which Norilsk shut down in 2008 and 2009 due to low nickel prices. However, it has recently restarted one of these projects, the Maggie Hays mine, located 540 kilometers from Perth. Norilsk expects the project to produce 8,400 MT of nickel in 2012.

The company releases its financial results in annual and six-month (January through June) intervals. It recently said that it expects to report net income of $1.5 billion in the first half of 2012 on revenue of $6 billion. That’s down from $1.8 billion in profit on $7.3 billion of revenue in the first six months of 2012, largely due to a sharp decline in nickel prices.

Russian law puts heavy restrictions on foreign investment

One reason for Norilsk’s dominance is the sharp restrictions placed on foreign investment in the country’s mining sector. For example, Russia classifies nickel as a metal of “federal significance.” That makes it much harder for foreign companies to mine deposits, and introduces significant political risk because the government can refuse or terminate a permit held by a firm with 10 percent or more direct or indirect foreign investment at any time.

However, there have been calls for reform of the country’s restrictive mining laws in hopes of speeding up resource development. And there are signs the government is listening: last month, it announced a draft bill that will sharply increase the size of gold deposits that foreign-owned firms are allowed to mine without having to seek the Russian government’s permission from 50 MT to 250 MT.

“The fact that no government approval would be required should give more comfort to exploration companies to start exploring again,” Lou Naumovski, head of gold miner Kinross Gold’s (TSX:K,NYSE:KGC) Moscow office, told Reuters.

“The other important measure is the suggestion that a discoverer of a strategic [gold] deposit could proceed to mine development without the threat that the government could withdraw the licence with only modest compensation,” he added.

 

Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.