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Stillwater Mining (NYSE:SWC)

Q4 2013 Earnings Call

March 03, 2014 12:00 pm ET

Executives

Michael J. McMullen - Chief Executive Officer, President, Director, Member of Health, Safety & Environment Committee and Member of Technical & Ore Reserve Committee

Analysts

John D. Bridges - JP Morgan Chase & Co, Research Division

David Gagliano - Barclays Capital, Research Division

Daniel McConvey

Sam Dubinsky - Wells Fargo Securities, LLC, Research Division

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Stillwater Mining Company Fourth Quarter 2013 Results Conference. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Stillwater President and CEO, Mr. Mick McMullen. Please go ahead, sir.

Michael J. McMullen

Thank you, very much, and thank you, everyone, for dialing in this morning and for waiting patiently while we managed to get everyone on the call. Today, I'm talking about fourth quarter 2013 earnings, and incorporated in that slide deck, we have our 2014 updated guidance as well. I'd like to refer everyone to the forward-looking statement in our presentation and we will let you read that at your leisure.

Our fourth quarter highlights. We had record total revenues in 2013 of $1.04 billion, which was a 29.9% increase from the previous year. And mine production was just under 4 -- 524,000 PGM ounces, which was up also from the 514,000 ounces the previous year. We had a record 616,000 ounces of recycled PGM processed for the full year, which was a 38.5% increase from the previous year. We took impairment charges on the Altar property in Argentina and the Marathon properties in Canada. And we have adjusted after-tax consolidated net income attributable to common shareholders of $49.5 million, excluding the impairments. We finished the year with a very strong liquidity position. Our cash plus short-term investments were $496 million.

If you move to the next slide, our fourth quarter results, I'll walk through the numbers for the fourth quarter, but you will see that we had a pretty strong end to the year. And our mine production was up 6.5% from the previous year same period, to 141,000 ounces. And total cash cost per mined, net of by-product credits, was $500 an ounce. Our corporate overheads were $7 million for the quarter, which was a 47% reduction from the same period in the previous year. Our capital expenditures went up slightly to $38 million. And overall, it was a very strong finish to the year for us.

Going over the page through our full year results. Again, as we've mentioned on the first slide, our mine production was up slightly. Our total cash costs also went up slightly, but again, came down during the fourth quarter. The trend during the year for both production and cost was very positive. Our corporate overheads during the year as a total went up slightly, and much of that related to prior -- or the first half of the year. Capital expenditures also went up slightly year-on-year. And again, overall, I would say that the year was a year of 2 halves. The second half of the year was at a very strong trend for us in terms of costs reduction and also production going up.

Moving on to the accounting items slide. As we've announced previously in the third quarter, we took a $290 million before-tax impairment charge at Altar. We reduced the Altar net book value to an estimated fair value of $102 million. In the fourth quarter, we've now taken a impairment charge of $171.4 million before tax against the Marathon project, and we reduced Marathon to a net book value of $57.2 million. The after-tax effects on net income of both these impairments on a 100% basis were reductions of $226.5 million and $123.6 million, respectively. Adjusted for those impairments, our after-tax consolidated net income attributable to common stockholders would have been approximately $49.5 million for the year. Cash flow, we had a circa $32 million cash flow gain from working capital benefits. We did experience towards the end of the year some very abnormal weather conditions, very cold, lots of snow, and that led to delayed recycle deliveries, which basically frees up working capital.

Over the page on our strategic initiatives progress update, we have stated very clearly and continue to remain focused on allocating capital based on projects with very strong payback. We focused on reducing expenses in areas that do not impact operational safety performance, and we're looking to control the holding costs of our exploration projects, while we retain optionality on their value.

So Marathon, the permitting process has been suspended while we optimize the feasibility study, in order to provide a better economic outcome for shareholders. This project does fit within our company's core strategy, which is to be focused on PGM mining in low risk jurisdictions. However, it does need to demonstrate adequate shareholder returns in order for us to justify the development fee.

At Altar, it does have significant latent value. This is one of the largest undeveloped corporate assets in the world. However, it is a non-core asset for us due to both the commodity and the location.

If you look at the graphs on the page here, we've updated the forecast spend on both these areas from 2013 to 2014 in the marketing, G&A, research and development and exploration, where we're estimating a certain 45% reduction in spend between 2013 to 2014. And on the projects, again, we're estimating about 60% reduction in spend 2014 versus 2013.

This brings me on to operational improvements. So our core focus is -- clearly is profitable PGM ounces in low risk jurisdictions. And our Montana operations, being the highest grade PGM mines in the world, clearly fit within that strategy. Our focus is on maximizing high-margin ounces, so we are measuring profitability against fully loaded costs, including SG&A, maintenance and capital expenditures. We're looking to improve worker productivity and align our resources to a more mining-focused workforce. We've got a strong focus on grade delivered to the mill and throughput, which is starting to show benefits.

And I'll draw your attention to the 2 tables on this slide. You can see for the Stillwater Mine, in January, we were 9% above budget per tons milled; February, we were 19% above budget. The mill grade at both -- at that operation was 10% above budget in January and 1% above budget in February.

And at East Boulder, we are significantly above budget in both tons and grade, and that trend is continuing to increase. So we've had a very strong end to the year last year, and that trend is continuing during the course of this year.

We see some potential to increase mill recovery rates through optimization and minor capital programs. And we have a quite low attrition rate at the mine with our workforce, which provides some opportunities to scale back our very successful recruiting programs and training, while we manage our total workforce.

So again, in January, we've now provided the initial strategy update for the shareholders. We provided some guidance and big picture guidance as to where we thought the company needed to go. We're now providing some detail on how we're achieving that and some of the results to date.

Going over the slide to our key performance indicators. So this is the first time we are reporting all-in sustaining cost. This is one of the key performance indicators that the company now uses to measure our performance. The fourth quarter for 2013, the all-in sustaining cost was trending in the right direction. You can see from the graph here, you can see that mine production went up, and our all-in sustaining cost came down, after a trend during the course of the year where it could have gone up each quarter. We believe that what we're doing is sustainable on a long-term basis. Of course, we will have variability up and down from quarter to quarter, but we believe that overall, the trend will be heading in the right direction. We have a disciplined approach to capital deployment, and our focus on operational efficiencies will drive sustainable all-in sustaining cost reductions. And given that we sell a basket of various PGMs, we've put there that, at the moment, our current basket prices is circa $900 an ounce. You can see from the table here that our all-in sustaining costs during the course of the year has been very good, and we've actually managed to drive our costs down quarter-on-quarter from the previous year.

This brings us to the look forward and the 2014 full year guidance. This table on Slide 10, we have provided some guidance in January, and we're now updating that guidance. I mean, in all instances, those metrics have improved. And we've also put on the table here our 2013 actual performance. So our production guidance for this year is now 520,000 to 535,000 ounces. Our total cash cost per mined, net of credits, is sort of in the range of $540 to $590 an ounce. And all-in sustaining cost is in the range of $805 to $855. You'll notice that there's been a substantial reduction in our guidance for corporate overhead, so $35 million to $45 million. And again, our capital expenditure, we continue to reduce from the previous guidance and still slightly above last year's actuals, $145 million to $155 million is our guidance for the spend for this year. And again, in terms of reporting, we're now splitting out sustaining capital expenditure versus project capital expenditures, so people can get a good feel for what our sustaining CapEx spend rate is going forward. You'll notice that of the $145 million to $155 million total CapEx, circa $100 million of that is sustaining capital and circa $50 million of that within a range is our project capital expenditure.

Coming over the page, I just like to remind people of our world-class mineral assets we have here in Montana. We have 2 mines and mills on the J-M Reef. It's the world's highest grade PGM deposit. But at this point, only around 9 miles of that 28-mile strike length has been developed. We are updating our proven and probable reserves today. They now sit at 22 million ounces of P&P, 78% of which are palladium, 22% are platinum, both are metal. And exploration beyond their reserve areas suggests that there may be an additional 102 million tons of undeveloped mineralized material controlled by us at an average in-place grade of approximately 0.4 ounce -- 0.48 ounces per ton.

I will note or draw people's attention to the forward-looking statement at the front here, that under the SEC Guide 7 rules, they do not recognize mineralized material, but we believe that we have a substantial mineralized inventory here in this project. So again, despite producing over 0.5 million ounces last year, we've added to our P&P positions slightly, we have a very strong developed state of the mine, and we think that this company is sitting on top of some world-class PGM assets.

Coming on to our capital projects. If you'll remember, there's circa $50 million worth of project capital to be spent within the company this year. I'll provide some color on what that money is being spent on. There's approximately $1 million this year to be spent on the Graham Creek project. This is an 8,800-foot TBM drive and 2 new vent raises; it's essentially complete now. And if you look at the little graphic on the bottom, this opens up by a substantial new strike length of the East Boulder Mine. It provides rail haulage, which reduces travel time for manpower, supplies and ore. It also substantially improves our ventilation system out there, and this sets up the East Boulder Mine for a very good future, we feel.

The Blitz project is our main capital project. It's a $19 million budget for this year. And again, if you look at the graphic on the bottom, this opens up a substantial strike length at the Stillwater Mine, approximately 8 miles. And we've completed around about 1 mile of TBM advance so far. We believe that this area will have lower cost production in the future because, again, you're on rail haulage, and it's in close proximity to the mill.

At the Stillwater Mine as well, we're expanding the Hertzler tailings storage facility. That's budgeted at $9.6 million for this year, with a further $6 million next year. We're incurring those costs now. That provides us capacity out to the year 2030. So again, this is a true capital project.

Similarly at East Boulder, we're spending $4.6 million this year on tailing storage and water management facilities. And again, that takes us out to 2022 for tailings storage capacity.

So these projects, the money that we're spending this year and partly next year, these set the mines up for a very long life.

Also at our recycled smelter business, we are spending a bit of money this year in upgrading for some facilities and some new facilities, which will allow us to treat some different products. There's about a $7.2 million capital spend in 2014 for that.

So in summary, the fourth quarter last year was a strong underlying quarter operationally. The full year last year, we saw record recycling results, and mine production was ahead of plan. We are making early progress on our strategic initiatives. We closed the year with a very strong liquidity position. Our all-in sustaining costs are moving in the right direction. We believe there's further work to do. We're seeing encouraging production trends from last year continuing into early 2014, and we think that there's more room to improve those.

Our focus areas for this year really are operational efficiencies; driving down our all-in sustaining costs on a sustainable basis; we will continue to reduce corporate overheads; we will deliver our development projects in Montana, which over time will reduce their costs; we are looking to expand our recycling business; and we're controlling our costs on Altar and Marathon, while we look to optimize value from those projects.

So that completes the formal presentation for today, and I guess we'd like to open up the floor for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And we will begin with the line of John Bridges from JPMorgan.

John D. Bridges - JP Morgan Chase & Co, Research Division

Just wondered, we saw a big pickup in production from East Boulder, and I presume it is related to the better ventilation from the first vent shaft. Is it reasonable to assume that we're going to have sequential ones there before the Graham's Creek expansion proper is completed?

Michael J. McMullen

At this stage, we're looking to see our production out of Graham Creek coming on in Q3 of this year. And I think that one of the reasons that the performance out of, particularly, East Boulder has been very good is that it has a very good developed state, which has allowed the guys a lot of operational flexibility. The developed state of that mine is currently sitting around about 70 months of reserves, and there is potential to continue to expand on that production, particularly, as Graham Creek comes on in Q3. So I would say that there's been a lot of things that have been done over the last year to 18 months of that mine that have really set the platform for future growth. And if it would assess any one thing, it's a combination of many things.

John D. Bridges - JP Morgan Chase & Co, Research Division

Okay. Well, what tonnage should we expect in Q3 and Q4 then?

Michael J. McMullen

Of this year?

John D. Bridges - JP Morgan Chase & Co, Research Division

Yes, as it ramps up.

Michael J. McMullen

Well, I think we're not providing specific guidance on tonnage out of any particular operation. I think if you look at our production guidance, we're not forecasting a huge jump in production. I think that's appropriate at this stage until we get a bit more development in the Graham Creek. And at that point, we can revisit our guidance.

John D. Bridges - JP Morgan Chase & Co, Research Division

Okay. And just as a follow-up, you mentioned benchmarking. It's something which, I think, has been looked at a few times at Stillwater in the past. Have you done anything formally there that you can put numbers to or is this something that's on your to-do list for this year?

Michael J. McMullen

No, we have done some initial benchmarking against some of the other PGM mines around the world. And that indicates that look, we do have some ability to improve productivity here on a worker -- ton per worker basis. And we are currently working through that exercise as to making that a reality.

Operator

[Operator Instructions] And we'll go to the line of David Gagliano with Barclays.

David Gagliano - Barclays Capital, Research Division

I have a few questions. First one, on the 2014 guidance, Slide 10, for example, I was wondering if you could give us a little more detail -- just to bridge the year-over-year increase in the cash cost expectations, which I know isn't new. It's actually lower than what we expected previously. But still, if you just look at '14 versus '13, volumes are actually up in '14, but cash costs are up about 12%. Can you give us sort of the main buckets behind that increase? That's my first question.

Michael J. McMullen

Sure. I think, 2013, we did have a one-off sort of fairly large impact of the re-brick ounces, which drove our cash costs down a bit in a one-off fashion. So we wanted to have the benefit of that during this year. I think also that the guidance is based on the assumption that we probably will have some escalation of costs, which is building to our budget. I think that it's still early days. I'm quite hopeful that we will do better than this guidance. But again, until I've actually got a firm plan of how we'll realize that, I think we need to stick with our guidance rules. So there's a combination of 2 things that: one, of re-brick ounces in 2013 did push our cash costs down a bit; and also the assumption that in '14, we will see some cost escalation for labor and supplies, which may not come to pass.

David Gagliano - Barclays Capital, Research Division

Okay. Makes sense. And then regarding the increase in 2014 expectations over the last month or so, can you clarify, was that mainly driven by the higher grades so far this year? And if so, what part of the mine are these higher grades coming from and what gives you the confidence that that's sustainable moving forward?

Michael J. McMullen

It was driven by 2 things, which was basically the ton and grade performance we've seen out of the mines today. You can see on one of the slides there, we've had a pretty strong start to the year. And that has been driven by a couple of things. If you recall in Q3, at the Stillwater Mine, we did see the grade dropped off a bit, and that was a variety of effect, but it's probably mainly due to extra dilution in the ore body. We've subsequently changed their mining practices, and -- with a bit more focus on grade control and how we mine the stuff. And so we've seen that the grade has actually been above budget for the last few months, and that used to be a sustainable trend. We had a couple of stoping areas where, probably in all honesty, the grade was probably a bit lower to what it needs to be to be making a decent return, so we focused our mining activities in a slightly different area of the mine. But I would say the main impact on the improved performance has been a bit of grade control practices in the mine, but we got some external help on that to get us back to where we needed to be. In terms of the other area on throughput, the tons milled going through the Stillwater mill has jumped up quite significantly over the -- really, the past months. But again, that's been an internal project, where we identified that, that mill wasn't running at full capacity that it could be. And for very few dollars, again, we had some -- an internal project group come together and, actually, has significantly improved the mill throughput there. They are probably the 2 main things that we've seen going forward. They're all sustainable on a long-term basis. We don't see these sort of things that we're just dragging out of the cover that are one-off items. These are the things that we're going to continue to build on going forward.

David Gagliano - Barclays Capital, Research Division

Okay, that's very helpful. I just have a couple more quick ones. Next one, when should we expect that Q4 inventory build to reverse, is it all in Q1 or spread over the next few quarters or how should we be thinking about that?

Michael J. McMullen

Probably spread out over a couple of quarters. I would think -- I will have to say that if you're looking out my window here, the cold snowy weather hasn't really gone away. And so I think really you're probably looking over a couple of quarters for that to unwind.

David Gagliano - Barclays Capital, Research Division

Okay, no problem. And then the last question, you mentioned, I think, in your prepared remarks and also in the press release about options that you're exploring to optimize value for Altar and Marathon. I was wondering if you could just tell us what those options are at this point.

Michael J. McMullen

Sure. Well, look, I think -- let me deal with Marathon first. So as I've said several times now, our core business is profitable PGM mining in low risk jurisdictions. So Marathon does speak within that strategy. We need to get it to a point where it provides an adequate return for shareholders to take that thing forward. So the reality is there's probably somewhere between 6 and 12 months’ worth of optimization work to be done on that, which will include probably some drilling to identify additional mineralization, I think. So we're not actively looking at some sort of process with that asset. We think that if we can get the economics to where it needs to be, then that does make sense for us. Also on the other hand, the commodity and probably the size of the asset doesn't really fit our core business. We're in no great rush to do something on that asset. I think that our holding costs of circa $3 million a year, some of that money is being spent on economic studies to really define the value as best as we can. And we will look at different options, which could be anywhere from a range of an outright sale to a joint venture to a spin out, separate listing of the thing. But there's no great rush to do anything. I think it's in the shareholders' best interest for us to -- if it costs us $3 million a year to sit on the thing and optimize it, we do believe that this thing has significant value. We do believe, at some point, we can realize some reasonable value out of this thing.

Operator

And next, we'll go to the line of Daniel McConvey with Rossport Investments.

Daniel McConvey

David asked my questions, but it made us stop a little bit, the -- on the reduction of the -- sorry, the increase in the grade you've gotten and the increase in the tons. You were saying that you were in an area where it didn't -- basically, you didn't make a cutoff, and then you focused on another area. And so if that is going to continue and there's enough of it -- and this is a question -- there's enough of it in this area that it can offset the areas that you are leaving behind?

Michael J. McMullen

Sure. And let me clarify that point. I would say the impact of that has been -- it has been there but very small. The main impact in terms of how -- what we've done on the grade has been better grade control by far and away the better area -- the bigger impact. So again, we have 22 million ounces of P&P here. We are not sure of ounces tomorrow. One of the areas that I'm asking my management teams to focus on is to ensure that, on an all-in basis, if we stope a mine makes a suitable margin for us. And so again, this is where we're looking at some -- each stoping area that we mine, the stope itself may make a lot of money. But if all the services and support, and the development needed to get to it mean you're not making money, then we're going to be looking at how we do the business differently.

Daniel McConvey

Okay. What's impressive here, though, is that you're focusing on what the grade is, but you've also increased the tonnage versus the budget, which is probably around 6 months old. So even going away from those areas, you've been able to be above budget and tons.

Michael J. McMullen

Sure. And this -- the management style that I have is I like to challenge each area of the business, so the mining is one area, the processing is another area, the smelter is another area, to see where the bottlenecks in the production line are. And then as we solve or fix each bottleneck, then we move the bottleneck to another part of the business, and then we now challenge them to deliver more. And so the key thing of getting more mill throughput at the Stillwater Mine, that had been the bottleneck. It's now no longer the bottleneck, and now we'll be challenging the mines to deliver more tons to fill the mill.

Operator

[Operator Instructions] We'll go to the line of Sam Dubinsky with Wells Fargo.

Sam Dubinsky - Wells Fargo Securities, LLC, Research Division

I have a few quick ones. You have about $500 million of cash on your balance sheet, I believe. How much cash do you think you need to run your business? And is there a chance we see things like stock buybacks or special dividends?

Michael J. McMullen

I'll answer the second bit first, if it's okay. Yes, look, I made a very clear statement that my goal is to be able to return some to shareholders in some form or another in the not-too-distant future. So it's still too early for me to be able to give a firm timing of that and what form it may take, but clearly, a dividend or a special dividend or a buyback would clearly be options we can pursue. I think also that I tend to look at our liquidity position on a net liquidity basis, which is cash and liquid investments net less debt. And so we obviously do have some debt on the balance sheet, it's long-term debt and can't be called, but we'd still do have some debt. I think it's probably a little early for me to start returning funding to shareholders immediately until we've actually got into the business plan and see what we can do -- what we can drive the business to. But certainly, those options are all on the table for us.

Sam Dubinsky - Wells Fargo Securities, LLC, Research Division

Okay, great. And then sorry if I missed this, but what do you think a good steady-state figure for PGM production will be several years from now based on K's CapEx investments?

Michael J. McMullen

Well, we haven't actually given a long-term guidance, and I think the best I can do is to stick to our 2014 guidance, which is in that sort of 520,000 to 535,000 ounce range. Historically, the company has provided some guidance, which indicated that production would go up to the sort of circa 600,000 ounce range. And that may well be the case, however, the way that I'm driving the business now is that we want to be increasing cash flow story as opposed to an increasing production story. Now, it may well be that our production may go up. However, again, the way we look at mining now is that we are challenging the management teams to ensure that every ounce we mine is a profitable ounce. That process is not yet complete, but clearly, projects like Graham Creek and Blitz, between the 2 of them will open up, I think, an enormous strike length of the J-M Reef, and we will have opportunities for increasing production in the future. But I think it's a little bit early in my tenure to give sort of firm production numbers out over the next 4 or 5 years.

Sam Dubinsky - Wells Fargo Securities, LLC, Research Division

Okay, great. And just my last question, could you just talk a little bit about the demand environment? It seems like global supply is pretty tight, yet that had not translated into better pricing. Is it just a currency issue with the South African dollar (sic) [rand] or is there inventory in the channel? Or just what are your thoughts on a high level on pricing and global supply/demand?

Michael J. McMullen

I would say that the palladium market is far tighter than the platinum market. Despite strikes in South Africa, it does appear to be ample platinum available to buy. We have seen a difference in the way the Middle East priced in terms of discounts versus premiums. And we continue to see palladium as being quite tight over the short to medium term. And again, we think we're in a pretty good space there. I will note that we are -- we have made some changes to the way we sell our metal, and that has been leading to superior pricing terms for us.

Operator

And we'll now go to the line of Andy Schopick [ph], private investor.

Unknown Attendee

A couple of my questions were really just touched upon. I really wanted to ask you what you think the impact on the market is going to be from any continued labor strike in South Africa, as well as touching upon the Russian palladium stocking situation. Based on what I think I remember is that Johnson Matthey had forecast a palladium deficit of over 700,000 ounces for 2013. I don't know where things ended up, but any commentary about what that supply deficit might look like in the current year?

Michael J. McMullen

Sure. Well, look, I'd like to preface this by saying that, as a mining company, we're not in the business of providing metal price forecasts. And the only thing I can guarantee is that of all the forecasts, none will be exactly right. Having said that, we do see palladium is very tight in the marketplace. We do see very good demand on the palladium side, particularly. And declining production from palladium globally. The Russian stockpiles, depending on who you believe, but we believe are, if not exhausted, it's certainly much reduced. And that more than likely, we're in a period of sustained deficits within the marketplace. That would tell you from the macro view that more than likely, palladium prices are likely to rise. And in fact, if you look at premier [ph] laboring analyst forecasts, they're forecasting anywhere from modest to quite significant palladium price rises. We don't plan out -- I certainly don't plan our business based on hopeful -- hoping that prices are going to go up. We plan for the here and now. And so our business is very much angled at being profitable in the current pricing environment. But I would certainly say that the outlook for palladium in particular looks very strong. The outlook for platinum also appears to be strong. I would also say that my experience has been that the South African rand is more than likely going to depreciate, probably just enough for the South African miners to keep sort of treading water, I suspect.

Operator

[Operator Instructions] We'll now go to the line of John Bridges with JPMorgan.

John D. Bridges - JP Morgan Chase & Co, Research Division

Just a quick follow-up. What work did you do at the mill at Stillwater to tip off the market [ph]?

Michael J. McMullen

Well, I'm not a metallurgist, although I have designed a few mills, I think that it was really just looking at the blend of all feed that we had to optimize that. It was looking at a few -- just a few operational issues and how we manage it. And the mill throughput has been up quite consistently, and I don't think that anything we've done has been a sort of short-term one-off gain. I believe that what we've done has really got it back to where it sort of used to be. So we haven't done any capital projects to sort of take it above where it used to be, it's really just by getting it back to where it used to run.

John D. Bridges - JP Morgan Chase & Co, Research Division

Okay. I was thinking that there should have been spare capacity there anyway.

Michael J. McMullen

Well, yes, you're right. But we weren't utilizing it, and we now are.

John D. Bridges - JP Morgan Chase & Co, Research Division

Right. Okay. And then you spoke about the developed state. What do you think the right developed state is of the mine -- of the 2 mines? Do you think there's too much cushion there or what?

Michael J. McMullen

Well, this is a philosophical discussion we're having internally at this point in time; so it's not appropriate for me to sort of say that it's too much or too little because we haven't arrived in a landing on that. I will say that of all the mines that I've worked at and visited as a consultant, having a 70-month and a 55-month developed state for the East Boulder and Stillwater Mine is a very, very healthy position. And that allows a substantial amount of operational flexibility. And, effectively, is cash in the bank first that we can use as a buffer in the event of a sudden sharp drop in PGM prices. We have the ability to cut back on development and harvest ounces that, effectively, we have this money in the bank now. So all I can say at this point is that we do have a very, very healthy developed state, and East Boulder is probably a bit over and above where even the internal target is -- the internal target is about a 60-month developed state, and East Boulder is at around about 70-months, so we have the ability to cut back slightly there if we want to.

John D. Bridges - JP Morgan Chase & Co, Research Division

Has there been a bit of a cutback already? Just thinking you've been increasing your tons, but you've been having some better productivity numbers as well. So have you been eating into that developed state, or are the miners working more efficiently and, thus, keeping your developed state where it sits?

Michael J. McMullen

No. In fact, the East Boulder developed state has continued to increase. And the performance out of that mine has been stellar, actually. And then the Stillwater Mine has been -- as I say, we had some issues in Q3 last year. But I can say that from November through to now, the performance out of that Stillwater Mine has also tracked well above budget. And I think that we just had a bit of a patch that we went through in Q3 that was a little difficult, and we're now well through that, and we're sitting at 55-months developed state of that mine. Our goal, and we are achieving this, is to take that back to 60-months.

Operator

And at this time, we've exhausted all questions in queue. Please continue.

Michael J. McMullen

Okay. Well, look, I'd like to thank everybody for taking the time to dial in and for taking the time to have some questions with me. I'd like to thank all of our staff and management. It's been a very good Q4 for us, and as I said, the start of the year has been very encouraging. And I'd like to keep people posted on our progress, and I look forward to talking to everyone on the next call. Thank you.

Operator

Ladies and gentlemen, this conference will be available for replay after 12:00 noon Mountain Standard Time today through March 10 at midnight. You may access the AT&T TeleConference Replay System at any time by dialing 1 (800) 475-6701 and entering the access code 319541. International participants may dial 1 (320) 365-3844. That does conclude our conference for today. Thank you for your participation and for using AT&T Executive TeleConference. You may now disconnect. Speakers, you may remain on the line.

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Source: Stillwater Mining Management Discusses Q4 2013 Results - Earnings Call Transcript

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