Stillwater to test mine potential of East Boulder

Colorado-based Stillwater Mining (SWC-X) plans to drive an 18,500-ft.

tunnel to provide exploration access to the J-M reef at its East Boulder project, 13 miles west of its namesake mine near Nye, Mont.

The company says the project has the potential to equal the size and production of the newly expanded Stillwater mine.

Stillwater is the only producer of platinum and palladium in the U.S., and the only primary source of platinum group metals outside South Africa. The operation is expected to produce 450,000 to 500,000 oz. of platinum and palladium in 1998 at a cash cost in the range of US$140 to $160 per oz.

Stillwater expects to take possession of a tunnel-borer early next year. The tunnel will measure 15 ft. in diameter and take about 18 months to complete.

Capital costs to complete the tunnel are estimated at US$20 million. During this period, the company will complete a final feasibility study and cost estimate for the East Boulder project.

Once this is in hand, and the grade and continuity of the reef have been confirmed, operators will decide whether or not to proceed with mine development. The preliminary study, completed in 1992, estimated that capital costs to develop the second mine would be US$250 milion (including US$50 million for contingencies).

Meanwhile, Stillwater is studying alternatives to expanding the existing mine, including deepening the existing shaft or developing it laterally or both. Based on a previous study by the consulting firm H.A. Simons, expansion could boost output at Stillwater by about 300,000 oz. over a period of several years, starting in 1999. As this is an incremental expansion to the existing mine, the company believes it can be accomplished without increasing cash production costs.

The Stillwater expansion would require modifications to the concentrator, smelter and base metals refinery. The initial projection for capital outlay is about US$75 million, including US$25 million for a long-term tailings project.

Stillwater notes, however, that further expansions will be possible only if the operating permit is modified. The existing permit limits daily production to 2,000 tons, and an application for an amendment has been filed.

Stillwater Mining reported a net loss of US$4.5 million for the first nine months of this year, compared with earnings of USS$12.4 million in the corresponding period of 1996.

In the recent third quarter, the company enjoyed its strongest operating performance ever. Production of platinum group metals increased to 93,000 oz. (a rise of 52% over the corresponding period last year), and 147,000 tons were mined (a 28% increase). Cash costs per ounce of metal produced fell to US$169 from US$196 per oz. (a 14% drop), while the average mill grade improved to 0.72 oz. per ton of metal (an 18% rise).

Despite the improved performance, the company reported a net loss of US$1.7 million on revenue of US$17 million for the 1997 third quarter, compared with a loss of US$812,000 on US$16.5 million a year earlier.