Stillwater Mining struggling

BILLINGS — One of Montana’s highest paying employers, Stillwater Mining Co., ended last year with half the net income of the previous year, pushing the company closer to the financial edge.

Jan Falstad writes for The Billings Gazette

In its annual report for 2002, Stillwater Mining said its net income was nearly $32 million last year, down from about $66 million in 2001.

The company fears bankruptcy if its proposed sale to a Russian company, Norilsk Nickel, doesn’t go through. The Russians are the only interested buyers out of 20 companies that have looked at the platinum and palladium mines near Nye and on the East Boulder.

While it waits for the deal to be final ized, Stillwater also is sweating its stock price, which has fallen from $35.90 a share on Jan. 2, 2001, to $2.50 Monday.

In its annual report, Stillwater said the value of the Norilsk sale has fallen with the prices of the precious metals.

When the deal was first proposed Nov. 20, Norilsk offered Stillwater $100 million in cash. Norilsk also offered 877,000 ounces of Russian palladium that at the time was worth $241 million. That made the total sale worth $341 million.

Since then, palladium prices have fall en substantially, cutting the value of the Russian palladium to $189 million as of March 24.

Stillwater also has received notice of possible delisting from the New York Stock Exchange. The NYSE sent Stillwater a letter Feb. 26 warning of delisting if it doesn’t keep its stock price above $1 and meet its credit obligations.

The mine has since renegotiated its credit agreement with a banking consor tium, the seventh time the company has asked for easier payment terms. The agreement allows Stillwater to produce less ore, about 565,000 ounces per year.

The credit amendment also allows cash-strapped Stillwater to borrow another $17.5 million.

According to the annual report, Stillwater’s revenues last year were nearly $276 million, down slightly from $277 million in 2001.

Production of palladium and platinum last year was 617,000 ounces, up sub stantially from 504,000 ounces in 2001.

The problem was that the price of pal ladium fell from a high of $1,090 and ounce in January 2001 to $216 an ounce on March 24 and below $200 since then.

The company said it had nearly $26 million cash on hand as of Dec. 31, 2002.

Among other hurdles, the Norilsk deal must win approval by two federal agen cies and the shareholders. If the Russian deal is not completed by Jan. 2, 2004, Stillwater will be in violation of its cred it agreement.

After three miners were killed in 2001, the company reported substantial improvements in its safety record. Stillwater said its 2002 safety record has improved to historic lows.

— Jan Falstad writes for The Billings Gazette.

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