Stillwater's shares fall on possible contract loss

DENVER - Stillwater Mining Co.'s shares fell Thursday after it said General Motors Corp. wants to opt out of its multimillion dollar agreement to buy palladium and rhodium for use in auto manufacturing.

The Columbus, Mont.-based mining company said in a regulatory filing Wednesday it will object to GM's petition in U.S. Bankruptcy Court.

"The company has been negotiating in good faith with GM for nearly nine months regarding the terms of this agreement and had already implemented two interim contract modifications at GM's request," Francis R. McAllister, chairman and CEO, said in a statement.

Stillwater, the nation's only producer of palladium and platinum, should be able to absorb the estimated $5 million to $10 million financial impact if the contract were severed.

A telephone message seeking comment from a GM spokesman was not returned immediately.

The company also forecast its second-quarter results will exceed market expectations.

Analysts surveyed by Thomson Reuters have forecast a loss of 9 cents per share for the second quarter.

The company has said it expects to produce 495,000 ounces in the palladium precious metals group for 2009 at a cash cost averaging $399 an ounce.

Shares of Stillwater fell 17 cents, or 3.3 percent, to $5.14 in morning trading.

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