"Specifically, our plans include miner training programs at the two Montana mines which involve hiring on the order of 50 new miners each year who are not expected to reach their full productive potential as miners for three to five years. These new miners, once fully trained, are intended to step into future mining roles as employees retire or otherwise leave the Company, and also represent the investment in manpower necessary to support the production growth we are envisioning from our Montana operations over the next several years. In our view, making this investment now will pay for itself many times over as we realize value on our advancing growth projects. With regard to manpower, the total number of Montana employees has increased to 1,632 at the end of 2012, up from 1,522 at the end of 2011, reflecting hiring of additional qualified miners, miner trainees and mine support personnel.
"Regarding the growth in costs each year is to be expected at underground mines. Each year, mining continually gets deeper and travel ways extend further, increasing the time and resources needed to transport people and materials to and from the mining faces. Our mine planning models suggest that this effect alone can increase costs by as much as 5% to 6% per year. In this regard, one early advantage of the Blitz project as it comes into production is that its initial mining areas should be located much closer to the mine portals."
Commenting on the Company's downstream processing facilities, Mr. McAllister added, "At the smelter in Columbus, Montana we now have two electric furnaces in operation. After we commissioned our new No. 2 smelting furnace in May of 2009, we stripped the brick out of the old No. 1 furnace in anticipation of refurbishing it to become a slag cleaning circuit. During 2011, we rebricked the old furnace and completed the necessary engineering to allow us to transfer slag directly from our primary No. 2 furnace into the slag cleaning bath in the No. 1 furnace. Initial construction of the slag cleaning circuit was completed in late 2012, although we have made a few minor modifications subsequently. Later this year, we intend to temporarily shut down the No. 2 furnace for rebricking, operating the refurbished No. 1 furnace as primary until furnace No. 2 is ready to restart. We estimate this refurbishing will probably take four to five weeks. An additional benefit of operating a second furnace is we don't have to stockpile concentrates and recycle materials while the furnace is being refurbished.
"Finally, we would like to acknowledge and welcome Mr. George Bee as a new director recently appointed to our Company's board. George brings with him an extensive breadth of worldwide mining and management experience. We are very pleased to have him join the Board, and we look forward to the benefit of his perspective on our Company's activities."
Production during the fourth quarter of 2012 totaled 132,500 ounces of palladium and platinum, an increase of 16.2% from the 114,000 ounces produced in the fourth quarter of 2011 and a 4.3% increase from the 127,000 ounces produced during the third quarter of 2012.
2012 Mine Production by Quarter:
First Second Third Fourth Year(Produced ounces) Quarter Quarter Quarter Quarter 2012 ------- ------- ------- ------- -------Stillwater Mine 87,700 98,100 94,100 97,500 377,400 Palladium 67,600 75,300 72,000 75,200 290,100 Platinum 20,100 22,800 22,100 22,300 87,300East Boulder 33,100 35,300 32,900 35,000 136,300 Palladium 25,800 27,500 25,500 27,100 105,900 Platinum 7,300 7,800 7,400 7,900 30,400Company Total 120,800 133,400 127,000 132,500 513,700 Palladium 93,400 102,800 97,500 102,300 396,000 Platinum 27,400 30,600 29,500 30,200 117,700