Stillwater Mining Reports 2006 Profit

BILLINGS, Mont., Feb. 23 /PRNewswire-FirstCall/ -- STILLWATER MINING COMPANY today reported 2006 net earnings of $7.9 million, or $0.09 per fully diluted share, on record full-year revenues of $613.1 million. Earnings for the year benefited from continuing growth in the Company's precious metal recycling business, strong realized prices on platinum-group metal (PGM) sales and good performance from its mining operations. The 2006 performance reflects significant improvement over 2005, when the Company reported a net loss of $13.9 million, or $0.15 per fully diluted share, on revenues of $507.5 million.

For the fourth quarter of 2006, Stillwater Mining Company reported net income of $2.8 million, or $0.03 per fully diluted share, on revenue of $175.5 million. Again, this represents a substantial improvement over the $2.9 million loss, $0.03 per fully diluted share, on $133.7 million of revenue, reported for the same period in 2005. The Company in 2006 has enjoyed growth in its PGM recycling activities and higher market prices for PGMs.

Stillwater Mining Company mines palladium and platinum from two underground mines located in the mountains of south-central Montana. The Company's PGM mine production during 2006 totaled 601,000 ounces, up from 554,000 ounces in 2005. The Company met its mine production guidance for full-year 2006 of between 595,000 ounces and 625,000 ounces of PGMs, despite several mine shutdowns during the 2006 third quarter due to wildfires. The increase in mine output in 2006 was an early benefit of the continuing effort to improve the developed state and transform the mining methods at the Company's mines.

In 2006, Stillwater Mining Company recycled a total of 349,000 PGM ounces through the smelter and refinery, up 68% from the 208,000 ounces recycled during 2005. Recycling activities contributed about $19.5 million to the Company's gross operating margin (before corporate overhead and financing charges) in 2006, compared to about $5.2 million in 2005. The improved performance is about equally attributable to higher PGM prices in 2006 and to growth in the volumes of recycled material processed.

As previously reported, during the first quarter of 2006 the Company completed its two-year program to sell the 877,169 ounces of palladium received in connection with the 2003 Norilsk Nickel transaction. In 2005, sales of this palladium, contributed $87.3 million to revenues and $12.8 million to sales margins; in 2006, the corresponding sales added just $17.6 million to revenues and $6.9 million to sales margins. Higher palladium prices in 2006 partially offset the effect of the much lower volume of these sales in 2006.

Commenting on the Company's 2006 results, Francis R. McAllister, Stillwater Chairman and CEO, said; "We are extremely gratified to see the Company's improving financial performance as prices have strengthened and our various change initiatives are beginning to bear fruit. These initiatives are tremendously important to the long-term sustainability of our operations. While we still have a considerable way to go, the efforts to transform our mining operations, promote demand for our products more actively in the market, and diversify our income sources, are already benefiting our performance. We believe our earnings probably will remain volatile for some time yet, but as we continue to bring mining costs down, foster new demand growth and broaden our base of operations, we see the opportunity to stabilize performance and increase the value of our assets.

McAllister added; "During 2006, the Company succeeded in reducing total cash costs per PGM ounce produced(1). This cost reduction flowed in part from increased production and higher realized ore grade as recent investments have improved the developed state of the mines, but costs also benefited in 2006 from strong by-product prices and growth in recycling credits. Total cash costs per ounce averaged $295 in 2006, better than the 2006 guidance and well below the $324 reported in 2005. The Company's earlier guidance for full year 2006 estimated that average total cash costs for the year would fall between $300 and $315 per ounce."

Regarding the Company's mine transformation efforts, McAllister reported, "Operationally, 2006 saw continuing progress in our efforts to strengthen the long-term competitiveness of our mining properties. Within the Company's current expanded capital program, several important infrastructure projects were completed during 2006, including rail haulage in the lower levels of the Stillwater Mine, a sand plant and distribution system in the upper west area at Stillwater, and two new ventilation raises and an expanded tailings facility at the East Boulder Mine. The multiyear effort to improve the developed state and increase proven reserves at both mines is now also well advanced, with over 46,000 feet of new primary development and about 664,000 feet of definitional drilling completed during 2006. As a result of these development efforts, proven reserves increased during 2006 to about 4.8 million tons from 4.1 million tons of proven reserves at the end of 2005. The Company's development objective is to achieve and maintain proven reserves equal to about 40 months of production, based on each mine's permitted maximum production level. At year-end 2006 proven reserves represented about 33 months of production at the maximum permitted rate, up from about 28 months at the end of 2005 and about 22 months at the end of 2004.

"We intend to continue our mine transformation efforts during 2007. Plans for the coming year include, in addition to ongoing mine development, the extension of a major decline and completion of a new ventilation raise at the Stillwater Mine, and expansion of captive cut-and-fill stopes and other selective mining methods at both mines. During 2007 and 2008, the metallurgical processing facilities in Columbus will be upgraded, including the planned addition of a second smelter furnace. In the coming year the Company will continue the new miner training program it initiated during 2006; this program is designed to broaden mining skills within the Company's existing workforce and to train new employees in these skills. The Company also plans to initiate some scheduling changes in order to utilize the existing workforce more effectively and reduce dependence on contractors."

With regard to the other Company initiatives, Mr. McAllister commented, "In early 2006, the Company announced the formation of an industry palladium trade organization, the Palladium Alliance International, to promote palladium as a jewelry metal and to provide expertise to the jewelry industry in working with palladium. Promotional efforts during 2006 included representation at several major jewelry shows, and specific marketing programs targeted at first-tier cities in China. These efforts continue to generate an increasing level of interest among jewelers and the general public, with palladium now being included in jewelry store displays in many countries.

"The Company also continues its diversification efforts. During the fourth quarter of 2006, the Company invested $1.9 million for about an 11% interest in Pacific North West Capital Corp., a Canadian exploration company that specializes in identifying and delineating potential PGM reserve targets. We believe that pursuing exploration through Pacific North West Capital and its seasoned exploration staff would be an effective element of the Company's growing exploration program. We are continuously evaluating other strategic opportunities with a view toward broadening our base of operations."

Cash Flow and Liquidity

The Company's cash and cash equivalents totaled $88.4 million at December 31, 2006, up $8.1 million from the end of 2005. Including the Company's available-for-sale investments in highly liquid federal agency notes and commercial paper, however, the Company's total available liquidity at year end 2006 was $123.9 million, down about $12 million from liquidity of $135.9 million at the end of 2005. The year-on-year drop in liquidity is more than accounted for by the substantial investment in working capital associated with the growth of our recycling business. Working capital constituting marketable inventories and related advances in the Company's growing PGM recycling business increased to $70.9 million at the end of 2006 from $26.8 million at the end of 2005. Also at the end of 2006, the Company had $22.5 million available to it under undrawn revolving credit lines.

Net cash provided from operating activities totaled $97.0 million in 2006, down sharply from $141.1 million in 2005, which had included about $87 million of cash from sales of the palladium received in the Norilsk Nickel transaction, compared to only about $18 million for comparable sales in 2006. If the cash from the palladium sales were excluded, net cash from operations would have increased to $79 million in 2006 from $54 million in 2005. Capital expenditures were $97.8 million in 2006, lower than the planned $107 million spending level for the year, but somewhat higher than the $92.1 million of capital spending in 2005. Despite the lower than planned level of spending in 2006, all critical capital projects were on track or complete at year end.

The Company paid down $10.7 million of its debt obligations during 2006, in accordance with the terms of its credit agreements. Outstanding debt at December 31, 2006, was $130.7 million.

Fourth Quarter Results -- Details

In the fourth quarter of 2006, the Company's mining operations produced 154,300 PGM ounces including 107,700 ounces from the Stillwater Mine and 46,600 ounces from East Boulder Mine. For the comparable quarter of 2005, Stillwater Mine produced 93,600 ounces and East Boulder 49,200 ounces. The increase in total output reflects overall improvements to the developed state of the mines; the modest decrease at the East Boulder Mine is largely a resource allocation issue as the mine moves from highly mechanized methods toward more captive cut-and-fill mining.

Sales from mine production totaled 164,800 ounces in the fourth quarter of 2006 at an overall average realization of $499 per ounce, up from 130,800 ounces at $468 per ounce in the fourth quarter of 2005. Although PGM market prices generally were higher in the fourth quarter of 2006, the Company's average realization in both periods benefited from above-market pricing provisions for palladium sales under the Company's contracts with major automobile companies, offset in part by losses on forward sales commitments for platinum. The Company's average realization on palladium sales from mine production was $370 per ounce in the 2006 fourth quarter, compared to $361 per ounce in the same period of 2005. The comparable average realization on platinum, net of the loss on forward sales, was $933 per ounce in the fourth quarter of 2006 and $811 per ounce in the 2005 fourth quarter.

During the fourth quarter of 2006, the Company processed about 104,000 ounces of PGMs from recycled catalytic materials. By comparison, in the fourth quarter of 2005 the Company processed about 56,000 ounces of recycled material. The Company processes both material it purchases from third parties and material toll processed on behalf of others for a fee.

Revenues for the fourth quarter of 2006 totaled $175.5 million, up 31% from $133.7 million in the fourth quarter of 2005. Proceeds from sales of mined PGMs totaled $82.2 million in the 2006 fourth quarter, up from $61.2 million in the same quarter of 2005, reflecting the benefit of the higher ounces and higher average realizations in 2006. Recycling revenues also grew appreciably, increasing to $91.5 million from $24.7 million in last year's fourth quarter. The growth in recycling revenues more than offset the reduction in revenue from completion of the program to sell off the palladium inventory received in the 2003 Norilsk Nickel transaction, which contributed $26.0 million to revenue in the fourth quarter of 2005. This sales program concluded during the first quarter of 2006. Resales of purchased metal generated $1.9 million and $21.8 million in revenue during the 2006 and 2005 fourth quarters, respectively.

Cost of metals sold (before depreciation and amortization expense) increased to $143.9 million in the 2006 fourth quarter from $110.1 million in the fourth quarter of 2005. Mining costs included in cost of metals sold increased to $57.6 million in the 2006 fourth quarter from $44.8 million in the 2005 fourth quarter. Recycling costs, largely comprised of the cost to purchase spent catalytic materials for processing, totaled $85.2 million in the fourth quarter of 2006, up sharply from $23.6 million in the fourth quarter of 2005, driven by the much higher volumes processed and by higher prices paid for the PGM ounces contained in the recycled material. The 2005 fourth-quarter costs also included costs of $18.6 million for 109,700 ounces of palladium sold from inventory and an additional $23.1 million to acquire 17,200 ounces of PGMs for resale under various commitments. Purchases of 6,000 ounces of palladium for resale added $1.1 million to fourth-quarter 2006 costs.

Depreciation and amortization expense increased to $22.4 million in the 2006 fourth quarter from $19.5 million in the same period of 2005. The increase is attributable both to higher mine production and to slightly higher amortization rates in 2006.

General and administrative ("G&A") costs increased to $6.2 million in the fourth quarter of 2006 from $5.7 million in the 2005 fourth quarter. The 2006 cost includes expense for a palladium-marketing program, plus slightly higher compensation and contractor expense during the quarter.

Net income of $2.8 million for the fourth quarter of 2006 included, by business segment, $2.2 million from mining operations and $8.0 million from recycling activities, less corporate costs including $6.2 million of G&A expense and $1.7 million of unallocated net interest expense. The remaining $0.5 million net benefit is from miscellaneous income and expense items, primarily asset sales.

For the fourth quarter of 2005, the reported net loss of $2.9 million included a loss on mining operations of $3.1 million and income from recycling activities of $1.1 million, plus at the corporate level $6.1 million of income related to sales from the palladium inventory received in the Norilsk Nickel transaction. These earnings items were offset by $5.7 million of G&A expense and a total of $1.3 million pertaining to unallocated interest expense. The overall loss for the quarter stemmed mostly from weak production at both mines during the 2005 fourth quarter.

Year End Results -- Details

For the full year 2006, Stillwater Mining Company produced 601,000 ounces of PGMs from its mining operations, including 409,000 ounces from the Stillwater Mine and 192,000 ounces from the East Boulder Mine. This was an improvement over 2005, when the Company's mines produced 554,000 ounces - 381,000 ounces at Stillwater and 173,000 ounces at East Boulder. The increased production during 2006 largely reflects early benefits from the Company's efforts to improve the developed state of the mines and transform the Company's mining methods.

Sales of platinum and palladium from mine production for 2006 totaled 604,000 ounces at an overall average realization of $484 per ounce, compared to 566,000 ounces sold during 2005 at a combined average realization of $467 per ounce. Year 2006 total mine sales included 466,000 ounces of palladium at an average realization, with the benefit of contract floor prices, of $370 per ounce; for 2005, sales of mined palladium totaled 431,000 ounces at an average realized price of $356 per ounce. Platinum sales from mined production in 2006 were 138,000 ounces at an average realization, net of hedging losses, of $868 per ounce, compared to 135,000 ounces at $821 per ounce in 2005.

Recycling activity grew substantially during 2006, with a total of 349,000 ounces of spent catalytic material processed, up from 208,000 ounces in 2005. The Company processed both material it purchased from third parties and material it toll processed on behalf of third parties for a fee.

Total revenues for 2006 totaled $613.1 million, an increase from $507.5 million of revenue in the previous year. Sales of mined PGM ounces contributed $292.2 million to the 2006 revenue total above and $264.2 million to 2005 revenue. Recycling revenues expanded to $269.9 million in 2006 from $90.7 million in 2005, mirroring the significant growth in the volume of this business as well as higher PGM prices. Revenues from sales of the palladium received in the 2003 Norilsk Nickel transaction were $17.6 million in 2006, down sharply from $87.3 million in 2005, as that sales program was completed in the first quarter of 2006. Other sales, mostly of metal purchased to meet resale obligations, contributed $33.4 million to 2006 revenue, also down from $65.3 million in 2005.

Cost of metals sold, excluding depreciation and amortization expense, increased to $493.5 million for 2006 from $415.4 million in 2005. The cost of mining operations, included in these numbers, increased 5.2% to $200.0 million in 2006 from $190.2 million in 2005. Recycling cost of metals sold increased sharply to $250.4 million from $85.5 million in 2005. Most of the cost of recycling represents cost to purchase the spent catalyst material itself, while the actual processing is a relatively small portion of the total cost. The cause of the increase in recycling cost between 2006 and 2005 is split about evenly between volume growth and rising per-ton acquisition costs as the value of the contained PGMs in the catalytic material has risen. Costs associated with sales of the palladium received in the Norilsk Nickel transaction declined to $10.8 million in 2006 from $74.5 million in 2005; again, the sales program for these metals was completed during the first quarter of 2006. Costs of other miscellaneous metals purchased for resale equaled $32.3 million in 2006, down from $65.3 million in the prior year.

Depreciation and amortization expense increased to $83.7 million in 2006 from $79.1 million in 2005. The increase reflects both higher 2006 production volumes and slightly higher 2006 amortization rates as a result of assets placed in service during 2006.

G&A costs increased significantly during 2006 to $27.7 million from $20.5 million in 2005. The $7.2 million increase is the result of market development efforts ($3.6 million) and a small exploration program ($0.3 million) introduced during 2006, together with expanded use of contractors in corporate services and increased compensation costs.

Net income for of the full year 2006 was $7.9 million. Business segment contributions to this result included $8.4 million from mining operations, $25.3 million from recycling (including financing charges), and, at the corporate level, $6.9 million related to sales of the palladium received in the Norilsk Nickel transaction, and $1.1 million in other miscellaneous income, offset in part by $27.7 million of G&A expense and $6.1 million of unallocated interest expense.

For the full year 2005, the Company incurred a net loss of $13.9 million. The loss was driven largely by inconsistent mining performance, resulting in a loss from mining operations of $5.1 million. A profit contribution of $6.3 million from recycling activities and a gain of $12.8 million related to sales of the palladium received in the Norilsk Nickel transaction consequently were not enough to offset corporate overhead expenses of $20.5 million, a $1.8 million year-end write-off of consignment inventory, and unallocated net interest expense of $7.7 million.

Stillwater Mining Company will host its 2006 year-end results conference call at 10:00 a.m. Eastern Standard Time on February 23, 2007. The conference call dial-in numbers are 800-230-1092 (U.S.) and 612-332-0226 (International). The conference call will simultaneously be webcast on the Internet via the Company's website at http://www.stillwatermining.com/. To access the conference call on the Company's website, go to the Investor Relations section under Presentations and click on the link to the conference call. A replay of the conference call will be available on the Company's website or by a telephone replay, numbers (800) 475-6701 (U.S.) and (320) 365-3844 (International), access code 863446, through March 2, 2007, ending at 11:59 p.m. Eastern Time.

Stillwater Mining Company is the only U.S. producer of palladium and platinum and is the largest primary producer of platinum group metals outside of South Africa and the Russian Federation. The Company's shares are traded on the New York Stock Exchange under the symbol SWC. Information on Stillwater Mining can be found at its Website: http://www.stillwatermining.com/.

Some statements contained in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, therefore, involve uncertainties or risks that could cause actual results to differ materially. These statements may contain words such as "believes," "anticipates," "plans," "expects," "intends," "estimates" or similar expressions. These statements are not guarantees of the Company's future performance and are subject to risks, uncertainties and other important factors that could cause our actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Such statements include, but are not limited to, comments regarding expansion plans, costs, grade, production and recovery rates, permitting, financing needs, the terms of future credit facilities and capital expenditures, increases in processing capacity, cost reduction measures, safety, timing for engineering studies, and environmental permitting and compliance, litigation, labor matters and the palladium and platinum market. Additional information regarding factors, which could cause results to differ materially from management's expectations, is found in the section entitled "Risk Factors" in the Company's 2006 Annual Report on Form 10-K. The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The Company disclaims any obligation to update forward-looking statements.

(1) As discussed in more detail in the Company's 2006 Annual Report on Form 10-K, total cash cost per ounce of production is a non-GAAP measure of extraction efficiency; this and similar measures are widely reported within the mining industry. Ore Reserves, Key Factors Tables and Financial Statements follow. Stillwater Mining Company Statement of Operations and Comprehensive Income (Loss) (Unaudited) (in thousands, except per share data) Three months ended Twelve months ended December 31, December 31, 2006 2005 2006 2005 Revenues Mine production $82,170 $61,177 $292,204 $264,206 PGM recycling 91,460 24,712 269,941 90,695 Sales of palladium received in Norilsk Nickel transaction -- 26,019 17,637 87,309 Other 1,916 21,768 33,366 65,252 Total revenues 175,546 133,676 613,148 507,462 Costs and expenses Cost of metals sold Mine production 57,646 44,788 199,982 190,171 PGM recycling 85,152 23,648 250,444 85,522 Sales of palladium received in Norilsk Nickel transaction -- 18,801 10,785 74,542 Other 1,092 22,901 32,300 65,163 Total costs of metals sold 143,890 110,138 493,511 415,398 Depreciation and amortization Mine production 22,342 19,516 83,583 79,032 PGM recycling 25 14 100 55 Total depreciation and amortization 22,367 19,530 83,683 79,087 Total costs of revenues 166,257 129,668 577,194 494,485 Exploration -- -- 332 -- Marketing 952 4 4,186 592 General and administrative 5,215 5,663 23,221 19,872 Loss on disposal of property, plant and equipment 115 22 279 112 Restructuring credits, net -- -- -- (243) Total costs and expenses 172,539 135,357 605,212 514,818 Operating income (loss) 3,007 (1,681) 7,936 (7,356) Other income (expense) Other (209) 13 94 11 Interest income 2,927 1,748 11,322 5,217 Interest expense (2,918) (3,015) (11,413) (11,733) Income (loss) before income tax provision 2,807 (2,935) 7,939 (13,861) Income tax provision -- (10) (13) Net income (loss) $2,807 $(2,935) $7,929 $(13,874) Other comprehensive income (loss), net of tax 9,937 (1,300) 1,799 (12,437) Comprehensive income (loss) $12,744 $(4,235) $9,728 $(26,311) Weighted average common shares outstanding Basic 91,457 90,926 91,260 90,702 Diluted 91,941 90,926 91,580 90,702 Basic earnings (loss) per share Net income (loss) $0.03 $(0.03) $0.09 $(0.15) Diluted earnings (loss) per share Net income (loss) $0.03 $(0.03) $0.09 $(0.15) Stillwater Mining Company Balance Sheet (Unaudited) (in thousands, except share and per share data) December 31, December 31, 2006 2005 ASSETS Current assets Cash and cash equivalents $88,360 $80,260 Restricted cash 3,785 2,685 Investments, at fair market value 35,497 55,668 Inventories 106,895 86,634 Advances on inventory purchases 24,191 6,950 Accounts receivable 16,008 27,287 Deferred income taxes 5,063 5,313 Other current assets 4,540 4,114 Total current assets 284,339 268,911 Property, plant and equipment, net 460,328 445,199 Long-term investment 1,869 -- Other noncurrent assets 9,487 7,347 Total assets $756,023 $721,457 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $24,833 $14,407 Accrued payroll and benefits 20,348 17,801 Property, production and franchise taxes payable 11,123 9,542 Current portion of long-term debt and capital lease obligations 1,674 1,776 Portion of debt repayable upon liquidation of finished palladium in inventory -- 7,324 Fair value of derivative instruments 15,145 13,284 Unearned revenue 5,479 69 Other current liabilities 6,988 4,884 Total current liabilities 85,590 69,087 Long-term debt and capital lease obligations 129,007 132,307 Fair value of derivative instruments 715 4,318 Deferred income taxes 5,063 5,313 Accrued workers compensation 10,254 5,854 Asset retirement obligation 8,550 7,328 Other noncurrent liabilities 4,288 3,706 Total liabilities $243,467 $227,913 Stockholders' equity Preferred stock, $0.01 par value, 1,000,000 shares authorized; none issued -- -- Common stock, $0.01 par value, 200,000,000 shares authorized; 91,514,668 and 90,992,045 shares issued and outstanding 915 910 Paid-in capital 617,107 607,828 Accumulated deficit (89,863) (97,792) Accumulated other comprehensive loss (15,603) (17,402) Total stockholders' equity 512,556 493,544 Total liabilities and stockholders' equity $756,023 $721,457 Stillwater Mining Company Statement of Cash Flows (Unaudited) (in thousands) Three months ended Twelve months ended December 31, December 31, 2006 2005 2006 2005 Cash flows from operating activities Net income (loss) $2,807 $(2,935) $7,929 $(13,874) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities Depreciation and amortization 22,367 19,530 83,683 79,087 Lower of cost or market inventory adjustment 1,325 1,039 2,519 2,466 Loss on disposal of property, plant and equipment 115 21 279 112 Restructuring credits, net -- -- -- (243) Cash paid on accrued restructuring costs -- 4 -- (334) Stock issued under employee benefit plans 1,351 1,244 4,910 4,715 Amortization of debt issuance costs 201 157 783 624 Share based compensation 932 630 3,549 2,371 Changes in operating assets and liabilities Inventories 12,465 7,257 (24,440) 73,024 Advances on inventory purchases 821 (66) (17,241) (6,950) Accounts receivable 5,206 (1,555) 11,279 (2,151) Employee compensation and benefits 2,651 2,621 2,547 4,406 Accounts payable 8,053 (886) 10,426 (622) Property, production and franchise taxes payable 2,017 2,988 1,581 359 Workers compensation 464 868 4,400 793 Asset retirement obligation 168 154 650 536 Restricted cash -- -- (1,100) (35) Unearned revenue 2,718 (60) 5,410 (595) Other (1,492) 29 (201) (2,555) Net cash provided by operating activities 62,169 31,040 96,963 141,134 Cash flows from investing activities Capital expenditures (30,048) (25,288) (97,802) (92,074) Purchase of long-term investment (1,869) -- (1,869) -- Proceeds from disposal of property, plant and equipment 105 38 615 129 Purchases of investments (34,319) (46,525) (106,287) (98,419) Proceeds from maturities of investments 27,199 20,282 126,434 56,103 Net cash used in investing activities (38,932) (51,493) (78,909) (134,261) Cash flows from financing activities Payments on long-term debt and capital lease obligations (448) (7,363) (10,726) (22,683) Issuance of common stock, net of stock issue costs 18 16 825 40 Payments of debt issuance costs -- -- (579) (22) Other 526 -- 526 -- Net cash provided by (used in) financing activities 96 (7,347) (9,954) (22,665) Cash and cash equivalents Net increase (decrease) 23,333 (27,800) 8,100 (15,792) Balance at beginning of period 65,027 108,060 80,260 96,052 Balance at end of period $88,360 $80,260 $88,360 $80,260 Stillwater Mining Company Proven and Probable Ore Reserves* December 31, 2006 Average Tons Grade Contained % Change % Change (000's) (Oz/Ton) Ounces in Tons in Ounces Pd + Pt (000'S) from 2005 from 2005 Stillwater Mine Proven Reserves 2,775 0.66 1,818 12.90% 9.25% Probable Reserves 15,539 0.63 9,749 -0.63% -0.64% Total Stillwater Mine 18,314 0.63 11,567 1.20% 0.79% East Boulder Mine Proven Reserves 2,011 0.45 902 20.78% 14.47% Probable Reserves 22,116 0.48 10,579 -- -10.48% Total East Boulder Mine 24,127 0.48 11,481 1.14% -8.92% Total Proven Reserves 4,786 0.57 2,721 16.08% 10.97% Total Probable Reserves 37,656 0.54 20,327 -- -6.02% Total Proven and Probable Reserves 42,442 0.54 23,048 1.17% -4.29% * In calculating ore reserves at December 31, 2006, the Company has applied the trailing 12-quarter combined average PGM market price of $409.57 which consists of a palladium price of $250.39 and platinum price of $961.27. Stillwater Mining Company Key Factors Three months ended Twelve months ended (Unaudited) December 31, December 31, 2006 2005 2006 2005 OPERATING AND COST DATA FOR MINE PRODUCTION Consolidated: Ounces produced (000) Palladium 119 110 463 428 Platinum 35 33 138 126 Total 154 143 601 554 Tons milled (000) 332 316 1,289 1,206 Mill head grade (ounce per ton) 0.51 0.49 0.51 0.50 Sub-grade tons milled (000)(1) 15 22 62 80 Sub-grade tons mill head grade (ounce per ton) 0.14 0.14 0.13 0.15 Total tons milled (000)(1) 347 338 1,351 1,286 Combined mill head grade (ounce per ton) 0.49 0.47 0.49 0.48 Total mill recovery (%) 91 92 91 91 Total operating costs (000)(Non-GAAP) (2) $37,153 $41,689 $144,144 $154,139 Total cash costs (000)(Non-GAAP) (2) $46,287 $47,294 $177,045 $179,308 Total production costs (000)(Non-GAAP) (2) $67,432 $68,568 $259,619 $261,112 Total operating costs per ounce (Non-GAAP) (3) $241 $292 $240 $278 Total cash costs per ounce (Non-GAAP) (3) $300 $331 $295 $324 Total production costs per ounce (Non-GAAP) (3) $437 $480 $432 $472 Total operating costs per ton milled (Non-GAAP) (3) $107 $123 $107 $120 Total cash costs per ton milled (Non-GAAP) (3) $133 $140 $131 $139 Total production costs per ton milled (Non-GAAP) (3) $194 $203 $192 $203 Stillwater Mine: Ounces produced (000) Palladium 83 72 314 293 Platinum 25 22 95 88 Total 108 94 409 381 Tons milled (000) 196 175 739 710 Mill head grade (ounce per ton) 0.59 0.56 0.60 0.57 Sub-grade tons milled (000) (1) 15 22 62 80 Sub-grade tons mill head grade (ounce per ton) 0.14 0.14 0.13 0.15 Total tons milled (000) (1) 211 197 801 790 Combined mill head grade (ounce per ton) 0.56 0.51 0.56 0.53 Total mill recovery (%) 92 93 92 92 Total operating costs (000) (Non-GAAP) (2) $23,621 $27,216 $93,230 $102,931 Total cash costs (000) (Non-GAAP) (2) $29,376 $30,703 $114,726 $119,681 Total production costs (000) (Non-GAAP) (2) $42,263 $44,541 $163,823 $172,938 Total operating costs per ounce (Non-GAAP) (3) $219 $291 $228 $270 Total cash costs per ounce (Non-GAAP) (3) $272 $328 $280 $314 Total production costs per ounce (Non-GAAP) (3) $392 $476 $400 $454 Total operating costs per ton milled (Non-GAAP) (3) $112 $138 $116 $130 Total cash costs per ton milled (Non-GAAP) (3) $139 $156 $143 $151 Total production costs per ton milled (Non-GAAP) (3) $201 $226 $205 $219 Stillwater Mining Company Key Factors (continued) (Unaudited) Three months ended Twelve months ended December 31, December 31, 2006 2005 2006 2005 OPERATING AND COST DATA FOR MINE PRODUCTION (Continued) East Boulder Mine: Ounces produced (000) Palladium 36 38 149 135 Platinum 10 11 43 38 Total 46 49 192 173 Tons milled (000) 137 141 550 496 Mill head grade (ounce per ton) 0.39 0.40 0.39 0.40 Sub-grade tons milled (000) (1) -- -- -- -- Sub-grade tons mill head grade (ounce per ton) -- -- -- -- Total tons milled (000) (1) 137 141 550 496 Combined mill head grade (ounce per ton) 0.39 0.40 0.39 0.40 Total mill recovery (%) 89 89 89 89 Total operating costs (000) (Non-GAAP) (2) $13,532 $14,473 $50,914 $51,208 Total cash costs (000) (Non-GAAP) (2) $16,911 $16,591 $62,319 $59,627 Total production costs (000) (Non-GAAP) (2) $25,169 $24,028 $95,796 $88,120 Total operating costs per ounce (Non-GAAP)(3) $290 $294 $266 $297 Total cash costs per ounce(Non-GAAP)(3) $363 $337 $326 $346 Total production costs per ounce(Non-GAAP(3) $540 $488 $501 $511 Total operating costs per ton milled (Non-GAAP) (3) $99 $103 $93 $103 Total cash costs per ton milled (Non-GAAP)(3) $124 $118 $113 $120 Total production costs per ton milled (Non-GAAP)(3) $184 $171 $174 $178 (1) Sub-grade tons milled includes reef waste material only. Total tons milled includes ore tons and sub-grade tons only. (2) Total operating costs include costs of mining, processing and administrative expenses at the mine site (including mine site overhead and credits for metals produced other than palladium and platinum from mine production). Total cash costs include total operating costs plus royalties, insurance and taxes other than income taxes. Total production costs include total cash costs plus asset retirement costs and depreciation and amortization. Income taxes, corporate general and administrative expenses, asset impairment writedowns, gain or loss on disposal of property, plant and equipment, restructuring costs, Norilsk Nickel transaction expenses and interest income and expense are not included in total operating costs, total cash costs or total production costs. These measures of cost are not defined under U.S. Generally Accepted Accounting Principles (GAAP). Please see ''Reconciliation of Non-GAAP Measures to Costs of Revenues" for additional detail. (3) Operating costs per ton, operating costs per ounce, cash costs per ton, cash costs per ounce, production costs per ton and production costs per ounce are non-GAAP measurements that management uses to monitor and evaluate the efficiency of its mining operations. Please see "Reconciliation of Non-GAAP Measures to Costs of Revenues" and the accompanying discussion. Stillwater Mining Company (Unaudited) Three Months ended Twelve months ended December 31, December 31, (in thousands, where noted) 2006 2005 2006 2005 SALES AND PRICE DATA Ounces sold (000) Mine production: Palladium (oz.) 127 100 466 431 Platinum (oz.) 38 31 138 135 Total 165 131 604 566 Other PGM activities: (6) Palladium (oz.) 40 130 196 502 Platinum (oz.) 40 20 130 81 Rhodium (oz.) 7 9 28 38 Total 87 159 354 621 By-products from mining: (7) Rhodium (oz.) 1 1 4 3 Gold (oz.) 3 3 11 11 Silver (oz.) 2 2 6 6 Copper (lb.) 44 173 892 911 Nickel (lb.) 370 297 1,585 1,307 Average realized price per ounce (5) Mine production: Palladium ($/oz.) $370 $361 $370 $356 Platinum ($/oz.) $933 $811 $868 $821 Combined (5) $499 $468 $484 $467 Other PGM activities:(6) Palladium $324 $234 $306 $199 Platinum $1,158 $910 $1,122 $876 Rhodium $4,738 $2,637 $4,111 $1,861 By-products from mining:(7) Rhodium ($/oz.) $4,953 $3,015 $4,516 $2,155 Gold ($/oz.) $621 $493 $603 $444 Silver ($/oz.) $13 $8 $12 $7 Copper ($/lb.) $2.48 $1.88 $2.91 $1.55 Nickel ($/lb.) $14.71 $2.16 $10.04 $5.96 Average market price per ounce (5) Palladium $321 $239 $320 $201 Platinum $1,130 $957 $1,143 $897 Combined (5) $506 $409 $508 $366 (1) Sub-grade tons milled includes reef waste material only. Total tons milled includes ore tons and sub-grade tons only. Amounts for 2002 have been adjusted to conform to current year presentation. (2) Total cash costs include period costs of mining, processing and administration at the mine site (including mine site overhead and credits for metals produced other than palladium and platinum from mine production). Norilsk Nickel transaction expenses and interest income and expense are not included in total cash costs. (3) Total cash cost per ton, represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement that management uses to monitor and evaluate the efficiency of its mining operations. See table "Reconciliation of Non-GAAP measures to costs of revenues" and accompanying discussion. (4) The Company's average realized price represents revenues, which include the effect of contract floor and ceiling prices, hedging gains and losses realized on commodity instruments and contract discounts, divided by ounces sold. The average market price represents the average London PM Fix for the actual months of the period. (5) The Company reports a combined average realized and market price of palladium and platinum at the same ratio as ounces that are produced from the refinery. (6) Ounces sold and average realized price per ounce from other PGM activities primarily relate to ounces produced from processing of catalyst materials and palladium received in the Norilsk Nickel transaction. (7) By-product metals sold reflect contained metal. Realized prices reflect net values (discounted due to product form and transportation and marketing charges) per unit received. Reconciliation of Non-GAAP measures to costs of revenues

The Company utilizes certain non-GAAP measures as indicators in assessing the performance of its mining and processing operations during any period. Because of the processing time required to complete the extraction of finished PGM products, there are typically lags from one to three months between ore production and sale of the finished product. Sales in any period include some portion of material mined and processed from prior periods as the revenue recognition process is completed. Consequently, while costs of revenues (a GAAP measure included in the Company's Statement of Operations and Comprehensive Income/(Loss)) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP measures to assess the costs associated with its producing and processing activities in a particular period and to compare those costs between periods.

While the Company believes that these non-GAAP measures may also be of value to outside readers, both as general indicators of the Company's mining efficiency from period to period and as insight into how the Company internally measures its operating performance, these non-GAAP measures are not standardized across the mining industry and in most cases will not be directly comparable to similar measures that may be provided by other companies. These non-GAAP measures are only useful as indicators of relative operational performance in any period, and because they do not take into account the inventory timing differences that are included in costs of revenues, they cannot meaningfully be used to develop measures of profitability. A reconciliation of these measures to costs of revenues for each period shown is provided as part of the following tables, and a description of each non-GAAP measure is provided below.

Total Costs of Revenues: For the Company on a consolidated basis, this measure is equal to consolidated costs of revenues, as reported in the Statement of Operations and Comprehensive Income/(Loss). For the Stillwater Mine, East Boulder Mine, and other PGM activities, the Company segregates the expenses within costs of revenues that are directly associated with each of these activities and then allocates the remaining facility costs included in consolidated costs of revenues in proportion to the monthly volumes from each activity. The resulting total costs of revenues measures for Stillwater Mine, East Boulder Mine and other PGM activities are equal in total to consolidated costs of revenues as reported in the Company's Statement of Operations and Comprehensive Income/(Loss).

Total Production Costs (Non-GAAP): Calculated as total costs of revenues (for each mine or consolidated) adjusted to exclude gains or losses on asset dispositions, costs and profit from secondary recycling, and changes in product inventories. This non-GAAP measure provides an indication of the total costs incurred in association with production and processing in a period, before taking into account the timing differences resulting from inventory changes and before any effect of asset dispositions or secondary recycling activities. The Company uses it as a comparative measure of the level of total production and processing activities in a period, and may be compared to prior periods or between the Company's mines. As noted above, because this measure does not take into account the inventory timing differences that are included in costs of revenues, it cannot be used to develop meaningful measures of earnings or profitability.

When divided by the total tons milled in the respective period, Total Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or consolidated -- provides an indication of the cost per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. And because ore tons are first actually weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Production Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Production Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.

When divided by the total recoverable PGM ounces from production in the respective period, Total Production Cost per Ounce (Non-GAAP) -- measured for each mine or consolidated -- provides an indication of the cost per ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because extracting PGM material is ultimately the objective of mining, the cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Production Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Production Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.

Total Cash Costs (Non-GAAP): This non-GAAP measure is calculated (for each mine or consolidated) as total costs of revenues adjusted to exclude gains or losses on asset dispositions, costs and profit from recycling activities, depreciation and amortization and asset retirement costs and changes in product inventories. The Company uses this measure as a comparative indication of the cash costs related to production and processing in any period. As noted above, because this measure does not take into account the inventory timing differences that are included in costs of revenues, it cannot be used to develop meaningful measures of earnings or profitability.

When divided by the total tons milled in the respective period, Total Cash Cost per Ton Milled (Non-GAAP) -- measured for each mine or consolidated -- provides an indication of the level of cash costs incurred per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. And because ore tons are first weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Cash Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Cash Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.

When divided by the total recoverable PGM ounces from production in the respective period, Total Cash Cost per Ounce (Non-GAAP) -- measured for each mine or consolidated- - provides an indication of the level of cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because ultimately extracting PGM material is the objective of mining, the cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Cash Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Cash Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.

Total Operating Costs (Non-GAAP): This non-GAAP measure is derived from Total Cash Costs (Non-GAAP) for each mine or consolidated by excluding royalty, tax and insurance expenses from Total Cash Costs (Non-GAAP). Royalties, taxes and insurance costs are contractual or governmental obligations outside of the control of the Company's mining operations, and in the case of royalties and most taxes, are driven more by the level of sales realizations rather than by operating efficiency. Consequently, Total Operating Costs (Non-GAAP) is a useful indicator of the level of production and processing costs incurred in a period that are under the control of mining operations. As noted above, because this measure does not take into account the inventory timing differences that are included in costs of revenues, it cannot be used to develop meaningful measures of earnings or profitability.

When divided by the total tons milled in the respective period, Total Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or consolidated -- provides an indication of the level of controllable cash costs incurred per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. And because ore tons are first actually weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Operating Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Operating Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.

When divided by the total recoverable PGM ounces from production in the respective period, Total Operating Cost per Ounce (Non-GAAP) -- measured for each mine or consolidated -- provides an indication of the level of controllable cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because ultimately extracting PGM material is the objective of mining, the cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Operating Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Operating Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.

Stillwater Mining Company Reconciliation of Non-GAAP Measures to Costs of Revenues (unaudited)(in thousands, Three months ended Twelve months ended except per ounce and per December 31, December 31, ton costs) 2006 2005 2006 2005 Consolidated: Reconciliation to consolidated costs of revenues: Total operating costs (Non-GAAP) $37,153 $41,689 $144,144 $154,139 Royalties, taxes and other 9,134 5,605 32,901 25,169 Total cash costs (Non-GAAP) $46,287 $47,294 $177,045 $179,308 Asset retirement costs 168 154 650 535 Depreciation and amortization 22,342 19,516 83,583 79,032 Depreciation and amortization (in inventory) (1,365) 1,604 (1,659) 2,182 Total production costs (Non-GAAP) $67,432 $68,568 $259,619 $261,057 Change in product inventories 5,679 35,986 41,642 141,512 Costs of recycling activities 85,152 23,648 250,444 85,522 Recycling activities - depreciation 25 14 100 55 Add: Profit from recycling activities 7,969 1,453 25,389 6,339 Loss or (gain) on sale of assets 115 21 279 112 Total consolidated costs of revenues $166,372 $129,690 $577,473 $494,597 Stillwater Mine: Reconciliation to costs of revenues: Total operating costs (Non-GAAP) $23,621 $27,216 $93,230 $102,931 Royalties, taxes and other 5,755 3,487 21,496 16,750 Total cash costs (Non-GAAP) $29,376 $30,703 $114,726 $119,681 Asset retirement costs 121 112 470 370 Depreciation and amortization 13,599 12,426 49,620 52,295 Depreciation and amortization (in inventory) (833) 1,300 (993) 592 Total production costs (Non-GAAP) $42,263 $44,541 $163,823 $172,938 Change in product inventories (2,742) (3,981) 1,882 6,773 Add: Profit from recycling activities 5,571 954 17,612 4,344 Loss or (gain) on sale of assets 7 21 187 81 Total costs of revenues $45,099 $41,535 $183,504 $184,136 East Boulder Mine: Reconciliation to costs of revenues: Total operating costs (Non-GAAP) $13,532 $14,473 $50,914 $51,208 Royalties, taxes and other 3,379 2,118 11,405 8,419 Total cash costs (Non-GAAP) $16,911 $16,591 $62,319 $59,627 Asset retirement costs 47 43 180 165 Depreciation and amortization 8,744 7,090 33,963 26,737 Depreciation and amortization (in inventory) (532) 304 (666) 1,591 Total production costs (Non-GAAP) $25,170 $24,028 $95,796 $88,120 Change in product inventories (1,846) (1,735) (439) (4,967) Add: Profit from recycling activities 2,398 498 7,777 1,995 Loss or (gain) on sale of assets 92 -- 40 -- Total costs of revenues $25,814 $22,791 $103,174 $85,148 Other PGM activities: (1) Reconciliation to costs of revenues: Change in product inventories $10,267 $41,702 $40,199 $139,705 Recycling activities - depreciation 25 14 100 55 Costs of recycling activities 85,152 23,648 250,444 85,522 Loss or (gain) on sale of assets 16 -- 52 31 Total costs of revenues $95,460 $65,364 $290,795 $225,313 (1) The East Boulder Mine commenced commercial production activities at the beginning of 2002. (2) Other PGM activities include recycling and sales of palladium received in the Norilsk Nickel transaction and other.