Montana’s Stillwater Mining — A Platinum-Coated Future

Shiny times ahead for American PGMs company


Stillwater Mining (NYSE:SWC) was incorporated in 1992, then a year later it took over south-central Montana properties from Chevron (NYSE:CVX) and Manville following a major discovery of platinum group metals, which include both platinum and palladium.

Since then, the company has gone on to expand its operations to Ontario, Canada and San Juan, Argentina. But for the most part, much of Stillwater’s production comes from Montana.

PGMs have diverse purposes, used in everything from dental applications to electrical components to medical devices. However, the main use for autocatalysts. So yes, when the auto industry went into a tailspin during the financial crisis, so did Stillwater.

But the company has rebounded — as for 2011, the company posted record numbers. Production of PGMs grew 6.8% to 517,900 ounces, and in all, net income came to $144.3 million.

Despite higher wages in the U.S., Stillwater has remained competitive. Since 2008, its cash costs have been on par with mines in South Africa. It helps that Stillwater runs a highly efficient system.

The future does look bright for the company and its 1,567 employees. For example, Stillwater believes that vehicle production will increase by about 60% by 2020. At the same time, the worldwide supplies for PGMs are under pressure. In fact, much of the excess inventory in Russia has been depleted, giving Stillwater a solid advantage in the 21st century.

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Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.

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