Stillwater re-evaluates marathon PGM mine.

• Author: Ross, Ian

The construction of an open-pit base metals mine near the shores of Lake Superior could be three years away at the earliest, said the Montana mining company that is developing it.

"It is unlikely we will do anything on this in the very near term." Mick McMullen, president and CEO of Stillwater Mining Company, told industry analysts in a Jan. 21 conference call on its Marathon PGM (platinum group metals) project.

The Billings-based miner said Marathon is undergoing a strategic review as the company laid out a 2014 strategy that's focussed on investing in proven assets that make money for shareholders.

If Marathon meets certain financial hurdles. McMullen said the best case scenario is that construction could begin "within the next three years." subject to the issuance of permits.

Stillwater is simultaneously working through a feasibility study and an extensive federal-provincial environmental review of the project, 10 kilometres north of the town of Marathon.

With an 11.5-year mine life, the operation could potentially bring 400 construction jobs over an 18-24 month period followed by 350 mining jobs to a town of 4,000 that's still recovering from the closure of its pulp mill in 2009.

Although platinum prices are on a tear and Stillwater is flush with cash - (US) $464 million in the bank - the company is out to boost base metal production at its Montana mines and rein in spending on assets that don't generate a strong payback to shareholders.

"We're challenging all of our costs," said McMullen. "We're significantly reducing our costs that don't directly impact our production of profitable PGM ounces."

Stillwater is limiting spending at Marathon to between $5 million and $10 million this year once the feasibility study and permitting work is done.

McMullen said further capital will only be earmarked once the "project demonstrates suitable financial returns."

"We are ranking all of our develop-ment ... opportunities and each of those development opportunities must compete with each other for capital, and we will only commit capital if it generates a suitable return for shareholders."

Stillwater mines and refines platinum group metals at its core operations in south-central Montana.

Marathon is one of its more advanced projects in the pipeline having acquired it from Marathon PGM Corp. in 2010. Stillwater later brought in Japan's Mitsubishi as a 25 per cent partner.

McMullen told analysts the community of Marathon would like to see the mine...