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Stillwater Mining Company – SWC – Entered into an agreement with Mitsubishi Corporation

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Stillwater Mining Company (NYSE: SWC) announced today that it has entered into an agreement with Mitsubishi Corporation in which the Japanese global integrated business enterprise will acquire a 25% interest in Stillwater’s Marathon PGM and copper project for approximately US$81.25 million and meet the ventures first cash call of $13.6 million for a total cash payment by Mitsubishi of $94.6 million. Mitsubishi will be responsible for funding its 25% share of operating, capital and exploration expenditures on the Marathon properties and has agreed to cooperate and support efforts to secure project financing for Marathon. Mitsubishi also will have an option to purchase up to 100% of the PGM production under a related supply agreement.

This transaction represents a natural step forward in the development of Marathon. From a financial perspective, the US$81.25 million that Mitsubishi is paying for a 25% interest in Marathon demonstrates the potential value accreting to this project as it advances toward production. SWC’s total investment in these properties to date is about $159 million, suggesting a gain on the transaction of about $40 million, which will flow directly into equity under U.S. accounting rules governing proceeds from the sale of a minority interest.

Commenting on the Mitsubishi transaction, Frank McAllister, SWC’s chairman and CEO, observed, “This agreement brings a world-class partner to a first-class PGM asset. The Marathon Project ranks as one of the few PGM plays in North America, and Mitsubishi’s financial commitment highlights the significant potential value contained in this resource opportunity. This transaction brings to the project a strategic investment by an exceptional and globally integrated business partner and at the same time allows us to be prudent in balancing the cash requirements of our various growth projects.


“For a number of years we at Stillwater have recognized the critical need to grow and diversify the Company’s production, which at present is limited to our PGM operations along the J-M Reef in Montana. Consequently we were very pleased to acquire Marathon in 2010. We recognized early on that the development of Marathon likely would require raising new capital and/or bringing in a partner. In this regard we are delighted to have the support of Mitsubishi, with whom we have a long-standing commercial relationship and already consider them a key business partner. Mitsubishi’s participation adds greater certainty to Marathon in return for part ownership in the project — a project which is now expected to see Stillwater’s future PGM production increase 30% and add a portfolio diversifying component of copper. Mitsubishi’s relationship with project financing sources, particularly in Japan, should also greatly benefit the project economics.”

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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