Stillwater Mining Company

Stillwater Mining has staked a claim to one of the few significant sources of platinum and palladium outside South Africa and Russia. The company extracts, processes, and refines platinum group metals (PGMs) -- platinum, palladium, and associated minerals -- at mines and a smelter in Montana. PGMs are used in catalytic converters for automobiles, as well as in jewelry and other applications. Stillwater Mining also owns exploratory properties of PGM and copper in Canada and copper and gold in Argentina. It produces about 385,000 ounces of palladium and 115,000 ounces of platinum annually. By-products include copper, gold, nickel, and silver. The company has 20 million ounces of proved and probable PGM reserves.

Stillwater Mining is the only US producer of palladium, platinum, and associated metals (PGMs). The company operates the Stillwater and East boulder mines in Montana, as well as concentrating plants at both sites to upgrade ore to a concentrate. In addition, it operates a smelter, refinery, and laboratory in Columbus, Montana, to refine the concentrate to a PGM-rich filter cake. It also recycles spent catalyst material at the smelter and refinery to recover PGMs.

In addition to its producing mines, Stillwater holds the Blitz and Graham Creek development projects in Montana. It also owns a PGM-copper deposit in Ontario,

Canada, which is in the permitting process, as well as the Altar porphyry copper-gold deposit in Argentina.

Increased metal prices worldwide boosted Stillwater Mining Company's revenues in fiscal 2011 to $906 million, up 63% from the previous year. The combined average realized price for sales of its palladium and platinum was up 32% from the previous year, reaching $953 per ounce, compared with $721 per ounce averaged in 2010. Although the metals price fluctuated wildly during the year and trended lower in the last half, the PGM prices remained at profitable levels. The company's production also increased, totalling 517,900 ounces of palladium and platinum in 2011. On the strength of the company's sales, its net income in fiscal 2011 reached $144.3 million, up 187% from the previous year.

Stillwater acquired Peregrine Metals, which has significant copper- and gold-bearing properties in Argentina, in 2011 for about $490 million. Peregrine owns the Altar property in the San Juan region, which has estimated reserves of 7.4 billion pounds of copper and 1.5 million ounces of gold. The acquisition allows Stillwater to diversify its copper resources.

In 2012 Stillwater entered into an agreement with Mitsubishi in which the Japanese trading giant would invest about $95 million to acquire a 25% stake in the Marathon PGM project in Ontario. The project is expected to produce about 200,000 ounces of PGMs (mostly palladium) and 17,000 metric tons of copper per year for about 11 1/2 years. Mitsubishi also has the option to purchase up to 100% of the PGM production. The Marathon project is one of the few PGM plays in North America. The investment also offsets criticism of Stillwater for its $451 million purchase of Peregrine Metals.

The company acquired Marathon PGM Corp. from Benton Resources for $173.4 million in 2010. Marathon holds mining claims for platinum, gold, copper, and other metals in various locations in Ontario, Manitoba, and Newfoundland in Canada. Still in the permitting stage, the large PGM and copper deposit will not be in production for several years.

Russian mining giant Norilsk Nickel divested its 51% of Stillwater shares on the open market in 2010. The sale of Norilsk's stake doubled the public float of Stillwater's common stock, without diluting any existing shareholders.