Stillwater today confirmed that its was aware of Norilsk Nickel's desire to quit its stake. Stillwater representatives added that the company had had "several discussions concerning these alternatives with Norilsk Nickel and its representatives".
Whilst NorNickel acquired Stillwater cheaply, and saved it from certain death in 2003, the American miner's stock price has never done better than half its peak in 2000. Factor in dilution and inflation, and it's been far from a big win for NorNickel which had been apparently looking to use Stillwater as a vehicle for listing in the US.
Norilsk said in Wednesday's filing that it controls 51.3 percent of Stillwater's stock, or almost 50 million shares. The company bought into Stillwater in 2003 with $100 million in cash and a large quantity of palladium.
There has been talk of a sale before. When precious metal prices were collapsing in 2008, the Moscow Times reported that Norilsk Nickel was open to selling its stake in Stillwater. At that time, it owned 55 percent of the company, and Norilsk's investment was said to be worth about $230 million. The value of Norilsk's share has grown to almost $750 million since metals prices rebounded and the company's stock rose.
Reuters got an important tidbit out - Stillwater's losing a hedging benefit:
Stillwater was negotiating a new supply agreement with Ford Motor Co which would be without a guaranteed floor price.
The current PGM supply contract, due to expire at the end of the year, includes minimum prices for the metals, which benefits Stillwater because it guarantees a certain revenue.
Ford, among other buyers, was a big reason for Stillwater's stock price gains to 2000. But the vehicle makers have become more circumspect after getting scalped by hedge funds who gamed platinum and palladium supplies at the turn of the century.
Nevertheless, Stillwater's problems lie in the very poor decision making and engineering for the East Boulder expansion. A decade later and the cancer continues...
