TORONTO (miningweekly.com) – US platinum-group-metals producer Stillwater Mining is looking at “a number of things” for continued growth of the company, CEO Frank McAllister told analysts on Tuesday.

Stillwater, which produces palladium and platinum from two mines in the Beartooth mountains in Montana, bought Canada's Marathon PGM Corp for around $118-million in cash and shares last year.

“Yes, we are looking at a number of other things,” McAllister said on a conference call.

“Obviously we would first look at PGMs, first look at North America, to the extent that we can grow the company that way.”

But the firm is also familiar with copper, nickel and gold mining, he commented.

Stillwater, which unlike South African miners produces more palladium than platinum, announced a $16,5-million profit for the fourth quarter, compared with a $5,8-million net loss a year earlier, as strongly higher metals prices more than offset the effects of lower production in 2010.

The company realised an average price per ounce of palladium and platinum of $844 in the fourth quarter, compared with $579/oz a year earlier.

The price of palladium more than doubled in 2010, and platinum prices also rose in what McAllister described on Tuesday as “a gangbuster year”.

Palladium, which is used in emissions-reducing autocatalysts, as well as in jewellery, is trading at a level not seen for some ten years, but the market situation is very different compared with the last time prices rose steeply, which was followed by a precipitous fall in early 2001, he argued.

“The circumstances are fundamentally different today than they were a decade ago,” McAllister said.

“Rather than purely unbridled speculation, the basic principles of supply and demand appear to be the operating dynamic.”

Growing automotive demand in emerging economies will spur PGM consumption, while the stockpiles held by the Russian government are rumoured to be nearing depletion, he said.

Further, higher-priced platinum remains the only real alternative to palladium in catalytic converters, and is no longer a more efficient option than palladium, McAllister said.

“The substitution ratio between palladium and platinum for some time has been one-for-one in gasoline engine catalytic converters."

Diesel-engine catalytic converters now allow up to 50% of the catalytic requirement to be filled using palladium, also on a one-for-one basis with platinum, he said.

McAllister said that he expects to see the gap between the prices for platinum and palladium narrow further over the next year or two. 

Palladium traded at around $800/oz on Tuesday afternoon, while platinum was at $1 785/oz.

Stillwater shares fell 8% over the day, to $22,54 apiece by 16:02 in New York.

MARATHON

McAllister said he expects production from the Marathon PGM project in Ontario is still between three and four years away, because of the permitting requirements for the operation.

The project cost is estimated at between $400-million and $450-million, although the company will have firmer numbers after it completes a detailed engineering study over the next 18 months or so.

According to a feasibility study on the project, Marathon could produce an average of 200 000 oz/y of palladium and platinum, along with about 370-million pounds a year of copper, for 12 years.

The company is also looking at ways to increase production and extend the mine life at its existing mines.

Norilsk Nickel, the biggest producer of palladium and nickel, was Stillwater's biggest shareholder until it sold all of its 51% holding in December.

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