Stillwater Mining chief executive officer Frank McAllister said that his company’s third quarter results were solid, despite lower prices for platinum group metals (PGM) that reduced earnings for the company. Stillwater Mining saw net income fall to 11 cents per diluted share, or $13 million, in the third quarter, down from the third quarter of 2011’s net income of 37 cents per diluted share, or $40.7 million, the company said in an earnings statement.

Stillwater, the lone U.S. producer of platinum and palladium, said third-quarter mine production was 3.95 t (127,000 oz), and it reiterated its full-year guidance of 15.5 t (500,000 oz) of production, Kitco News reported.

McAllister said the labor unrest in South Africa’s mining sector has impacted Stillwater. “We conclude this year’s lost production from South African strikes at Impala, Lonmin and Implats, from two closed South African mines and from lower PGM production could reduce 2012 PGM production by up to an estimated 37.3 t (1.2 million oz) compared with 2011 production. If these estimates are correct, this would constitute a PGM production drop of 9 percent worldwide, 13 percent for South Africa,” McAllisted said.

“The South African labor issues are difficult and while appearing to near a resolution, it is unclear how soon production can return to more normal levels. South African production constitutes between 55 percent and 60 percent of worldwide PGM production, so one cannot overstate its importance.”

In addition to lower PGM prices, consolidated total cash costs rose versus a year ago. Cash costs for the third quarter of 2012 rose to $15.94/g ($496/oz) versus $14.11/g ($439/oz) last year at the same time. Even with the rise in cash costs, Stillwater is keeping its cost guidance at $16/g ($500/oz) mined for 2012.

The rise in cash costs came because of lower mine production and higher labor costs. Those costs reflect an increase in contractual wages and benefit rates, along with hiring for Stillwater’s new miner training program, implemented earlier this year. Hiring at the Montana facility rose to 1,629 employees at the end of the third quarter, versus 1,493 employees a year ago.

McAllister said Stillwater remains “confident” in the price outlook for metals, particularly palladium. He said of all the metals, he sees palladium having the most to gain, noting the metal is trading slightly under the long-range comparative value with platinum. Normally, he said palladium trades at a value of 40 percent to 45 percent of platinum and lately that’s been around 38.5 percent.

The flagship Stillwater mine produced 2.9 t (94,100 oz) in the third quarter, down 2.8 percent from last year and down 4.1 percent from the second quarter of 2012. The firm said the year-over-year reduction in output was a result of lower tons mines because of fluctuations in overall mining conditions, a mix of the mining stopes and emphasis on mine development and the availability of miners.

A new tunnel boring machine has been put into operation at the Blitz project in the eastern part of the Stillwater mine, which the firm plans to use to create a (23,000-ft) access drift. Additionally, the firm plans a parallel tunnel 600 feet above where the machine is located, using conventional methods. The Blitz project is expected to extend operations eastward at the mine and is expected to be complete by 2016 or 2017, with the total cost estimated at $197 million.

Output at Stillwater Mining’s East Boulder mine was 1 t (32,900 oz) in the third quarter, down slightly from the 1.03 t (33,200 oz) mined last year and the 1.1 t (35,300 oz) mined in the second quarter.