Stillwater Mining Co. (NYSE:SWC)
This article is an update of my preceding article about Stillwater on November 2,2015.
TB1 - Full year 2015 and Q4'15 production results, on November 2, 2015. ( 4 last consecutive quarters).
K oz (2013)
East Boulder mine
K oz processed *
|Average price per Oz (Pt,Pd)||770||673||693||842||871|
* These numbers are including the Rhodium, which represents about 7% of the total processed. Ratio for the mix Palladium, Platinum is 3.41:1.
Cash on Hand:
At December 31, 2015, the Company's cash, cash equivalents and highly liquid investments balance was $463.8 million (including $18.5 million of investments which have been reserved as collateral on letters of credit).
TB2 - Financial snapshot:
|Year 2015||Q4 2015||Q3 2015||Q2 2015||Q1 2015||Year 2014|
Revenues from mine production
PGM revenues recycle
in $ million
Total revenues (including other revenues)
Total costs on revenues
Impairment of property
Total mined Platinum/Palladium
Total processed Pl/Pd/Rd
All-in Sustaining cost per mined
Cash and cash equivalent (+ highly liquid investments)
Long-term debt/capital lease obligation in
Shares Outstanding - Basic
in $ million
Stillwater mining released its 4Q'15 and full year results yesterday. Revenues for the 4Q'15 were $171.99 million, up 2% quarter over quarter with a net profit per share of 0.04. It was another good quarter despite dwindling PGM prices. The company has still a very strong cash position of $463.8 million. The street was quite pleased with the results and the PPS rallied yesterday.
On the production front, it has been a very good year. The mining segment performed well and the recycled is now an important part of the company revenues -- for the last two years, revenues from recycling are about 43% of the total revenues. One real negative has been the PGM prices, down to $673/ Oz in 4Q'15.
Good cash position of $463.8 million, and the company has no net debt, which is a perfect financial advantage for a long-term investor's perspective.
The two acquisitions which were a costly mistake from the preceding management -- Altar in Argentina and Marathon in Canada -- have been now fully impaired and placed in pause mode, which is another good safety element. SWC impaired marathon in 2015, for an amount of $46.8 million.
Furthermore, SWC is working hard to reduce its AISC on a by-product basis. Q4'15 was the lowest AISC result ever reported by the company at $613/ Oz and AISC for 2015 was $709/ Oz.
Finally, the two mines are situated in the USA and the labor contract has been ratified recently on both locations. M. Michael McMullen, CEO, said the following in the conference call:
I think importantly as well, we managed to get a labor contract ratified at the East Boulder Mine towards the end of last year and early in this year we also got the Stillwater Mine and Columbus processing facilities contract ratified, which is good to have that behind us now.
Total capEx for 2015 was $107 million down from $119 million in 2014. Some investors may question the company about this reduction because it may slow the business on a long-term basis, and M. Michael McMullen said:
But I want to make it clear that the sustaining CapEx spend that we're having at the moment is the amount that's required to sustain the business on a long-term basis. We're not cut backing the sustaining CapEx to a level that doesn't maintain our developed stage.
The recycling business continues at a fairly strong pace, despite a "weak market backdrop" due to "very low scrap steel prices which reduced the overall volume in that marketplace".
On a final note, I was again pleased to hear that the Blitz project is on schedule with first production by mid-2018:
We expect first production from this in 2018, approximately mid-2018. It will take several years to ramp this up to full production. When it's at full production, it will produce in the order of 150,000 to 200,000 ounces of PGM a year and it's predominantly a growth project.
Stillwater Mining is the perfect long-term investment, in my opinion. Good management, good cash flow and cash on hand and no net debt, located in the USA. The Blitz project is well underway and will add a significant production by 2018.
I believe anything under $9-$10 is a good opportunity, and I recommend to buy SWC despite a strong recovery recently. My target is again $17 by 2018.
Disclosure: I am/we are long SWC.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.