Mont mining company fights takeover by ex-governor
BILLINGS, Mont. (AP) — The chief executive of a Montana mining company urged shareholders on Wednesday to reject a takeover by a group that includes former Gov. Brian Schweitzer.
Stillwater Mining CEO Frank McAllister said a takeover could hurt the company's growth at a time when it's well-positioned to profit from anticipated increases in platinum and palladium prices.
The comments came as the state's largest publicly traded mining company kicked off a six-week campaign to stall the takeover bid ahead of a May 2 annual shareholders meeting.
Schweitzer and the Clinton Group, a New York hedge fund, have criticized Stillwater's expansions into Argentina and Canada as uncertain prospects that already have cost the company hundreds of millions of dollars.
They blame McAllister and want to oust him and install new directors, including Schweitzer.
Clinton Group owns just over 1 percent of Stillwater Mining Co., and Schweitzer is a minor shareholder. But they hope to capitalize on investor concerns over the company's foreign expansions, after share prices dropped by about two-thirds since McAllister took over as CEO in 2001.
McAllister said in a Wednesday interview with The Associated Press that the dissident group does not understand the nature of mining. And he warned against a sale of the company's Argentina copper reserves any time soon as "value destructive" given current the market. He said the copper project was pursued as "insurance" to protect against low prices for palladium.
"Mining is a long-term proposition. You can't do this on a short-term basis," McAllister said, noting that the stock price has closely correlated with precious metals prices.
He said the company already is pursuing one of the primary goals outlined by Schweitzer and the Clinton Group — the expansion of mines in the Beartooth Mountains in south-central Montana.
In the past two years, McAllister said, the company's workforce increased more than 20 percent to 1,664 employees. It could increase even more as the expansions come on line, he said.
For 2013, about 87 percent of Stillwater's $172 million in capital spending will be focused on its Montana mines. By contrast, the company expects to spend only about $13 million on its Altar project in Argentina, McAllister said.
The deal to purchase the copper reserve was valued at about $450 million when it was announced in 2011. The company has said it could take $2.5 billion more to develop a mine.
"What we intend to do is flesh out exactly what's there, without detracting from our spending on our palladium project," McAllister said.
He declined to comment on Schweitzer's participation in the takeover.
The former governor, who left office in January, has said he intervened due to concern that a major Montana employer was at risk if Stillwater continued to operate under current leadership.
Schweitzer said Wednesday that nominees for the proposed replacement board of directors have extensive mining and international business experience.
"We know what we're talking about, and we believe, like most of the shareholders, that there's great value in managing the Stillwater mines in Montana to maximize profits with the resources that we have," he said.
The Democrat also has blasted McAllister's compensation, which topped $5 million each of the past two years.
In a letter sent to shareholders Wednesday, the company's board credited McAllister with reviving the company from "the verge of extinction" after palladium prices collapsed between 2001 and 2003.
Stillwater shares rose 43 cents, or more than 3.5 percent, to $12.61 Wednesday on the New York Stock Exchange.
The company last month reported $55 million in net income in 2012, down from $144 million in 2011. Revenues for the Billings-based company fell 12 percent, to $800 million, as prices for platinum and palladium dropped through much of last year.