-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LB2iwqwo8hddAJ7mKvwZxaO1+2DlzAnuFfgmyfxRoVg4ZzwsJsHrHkJGmdm4dq+G Kl5uBkfHysxzXpiO8zCkKQ== 0000891092-04-003863.txt : 20040804 0000891092-04-003863.hdr.sgml : 20040804 20040804084342 ACCESSION NUMBER: 0000891092-04-003863 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040804 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STILLWATER MINING CO /DE/ CENTRAL INDEX KEY: 0000931948 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] IRS NUMBER: 810480654 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13053 FILM NUMBER: 04950000 BUSINESS ADDRESS: STREET 1: 536 E PIKE STREET 2: 536 E PIKE CITY: COLUMBUS STATE: MT ZIP: 59019 BUSINESS PHONE: 4063228700 MAIL ADDRESS: STREET 1: PO BOX 1330 STREET 2: PO BOX 1330 CITY: COLUMBUS STATE: MT ZIP: 59019 8-K 1 e18711_8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------- Date of Report: August 4, 2004 (Date of earliest event reported) Stillwater Mining Company (Exact Name of Registrant as Specified in Charter) Delaware 0-7704 81-0480654 (State or Other (Commission File Number) (IRS Employer Jurisdiction of Identification No.) Incorporation) 536 East Pike Avenue, Columbus, Montana 59019 --------------------------------------------- (Address of Principal Executive Offices) (406) 322-8700 (Registrant's telephone number, including area code) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. 99.1 Press release issued on August 4, 2004 by Stillwater Mining Company. Item 12. Results of Operation and Financial Condition. On August 4, 2004, Stillwater Mining Company issued a press release for the quarterly period ended June 30, 2004. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. STILLWATER MINING COMPANY Date: August 4, 2004 By: /s/ John R. Stark ----------------------------- Name: John R. Stark Title: Vice President, Secretary and General Counsel EXHIBITS 99.1 Press release issued on August 4, 2004 by Stillwater Mining Company. EX-99.1 2 e18711ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Stillwater Mining Reports Second Quarter Results COLUMBUS, Mont., Aug. 4 /PRNewswire-FirstCall/ -- STILLWATER MINING COMPANY (NYSE: SWC) reported net income of $16.5 million for the second quarter of 2004 or $0.18 per diluted share, on revenue of $84.2 million, compared to a net loss of $19.3 million for the second quarter of 2003 or $0.40 per diluted share, on revenue of $60.0 million. The 2004 second-quarter results reflect higher revenues due to higher combined PGM prices and sales from the palladium inventory received in the Norilsk Nickel transaction. The 2003 results included certain charges related to the issuance of shares to Norimet Limited, the Company's largest stockholder, i.e., a $14.0 million, or $0.29 per diluted share, non-cash charge to deferred income tax relating to tax loss carryforwards, which no longer can be utilized, and $3 million ($1.8 million, or $0.04 per diluted share, after tax) of transaction costs charged to income. On July 10, 2004, subsequent to quarter-end, members of the union representing workers at the Company's Stillwater Mine and Columbus, Montana processing facilities voted to reject a tentative new three-year contract negotiated between union and Company leaders resulting in an eight day strike. On July 19, 2004 union members voted to ratify a modified new three-year contract and returned to work on July 21, 2004. East Boulder Mine operations were unaffected by the strike at the Stillwater Mine. Second Quarter 2004 Highlights, Compared to Second Quarter 2003 * Net income of $16.5 million, compared to a second quarter 2003 net loss of $19.3 million. * An increase in the combined average realized price for mine PGM production of 26% to $491 per ounce. * Stillwater mine production up 4% at 109,000 ounces; Stillwater total cash costs down 8%. * East Boulder mine production and total cash costs essentially flat. * Sales of palladium inventory reach 110,000-ounce quarterly sales rate under new two-year contracts. * Smelter re-brick project completed; Company reprocessing of stockpiled mine production largely complete by the end of June and metal shipped for final refining. For the first six months of 2004, the Company reported net income of $32.2 million, or $0.36 per diluted share, on revenue of $184.9 million compared to a net loss of $21.0 million, or $0.46 per diluted share, on revenue of $124.2 million for the first six months of 2003. Announcing the Company's results, Stillwater Chairman and Chief Executive Officer, Francis R. McAllister said, "The Company's financial results for the second quarter of 2004 improved significantly compared to the same period in 2003, even with the successfully executed five-week smelter shutdown in Columbus to rebrick and refurbish the smelter and refinery. Earnings for the quarter were $16.5 million or $0.18 per share, compared to a loss of $19.3 million or $0.40 per share in the same period of 2003. This improvement is largely due to increased realized prices and additional sales volume of PGMs during the 2004 second quarter as compared to the same period in 2003. Beginning April 5, 2004, the Company shut down its smelter and refinery for about five weeks for a routine smelter rebricking and other refurbishing. This planned shutdown reduced second quarter earnings and cash flow, although sales from the palladium inventory continued, partially offsetting the effect of the outage. Production at both mines continued through the shutdown, and the mine concentrates were stockpiled at the smelter and processed once the facility came back up. The Company's processing of these stockpiles was largely completed by the end of June and the metal shipped for final refining." He continued, "As we previously disclosed, the labor agreement covering the Company's union employees at the Stillwater Mine and the Columbus processing facilities, scheduled to expire at noon on July 1, 2004, was extended until noon on July 12, 2004 to accommodate a vote of the union membership on a new three-year contract negotiated between union and Company leaders. On July 11, 2004, the union leadership notified the Company that their membership had rejected the tentative agreement and that the union would go on strike effective at noon on July 12. The strike lasted a total of eight days. On July 19, 2004, the members of the union voted to approve a modified three-year contract, which provides annual 3% wage increases, a one-time ratification bonus, and stipulates that the Company will not discontinue its 401(k) contribution-matching program for the life of the contract. Employees returned to work beginning on July 21, 2004." "During the second quarter of 2004, the Company fixed platinum prices in the forward market by entering into financially settled forward transactions covering about 20% of our anticipated platinum mine production for the period from July of 2004 through December of 2005. The Company believes, as reported in the Company's 2003 annual report, that the spread between palladium and platinum prices may narrow if consumers switch from using platinum to palladium for existing and new applications, driven by the lower price of palladium. The Company believes the price of platinum could weaken if this switching occurs and has locked in the price on a portion of future sales. The second quarter 2004 transactions fix the price for 40,500 ounces of platinum sales from mine production for the next eighteen-months at an overall average price of about $784 per ounce. The hedges are expected to modestly reduce the overall volatility of the Company's earnings and cash flow," stated McAllister. He continued, "As of August 3, 2004, the Company successfully completed the refinancing of its bank credit facility. The Company's new credit facility consists of a six-year term loan of $140 million plus a five-year revolving credit line of $40 million. The new credit agreement includes customary financial covenants; however, it does not include a production covenant. With the completion of the refinancing, the Company expects to incur a one-time charge in the third quarter of 2004 of approximately $5.0 million, including a prepayment charge and the write-off of deferred costs on the former bank credit facility. Additionally, a non-recurring valuation adjustment of $2.1 million related to the buyout of the lease on one of the tunnel boring machines at the East Boulder Mine, will also be recorded in the third quarter of 2004." "Lastly," McAllister added, "it is apparent that the expansion of production at the Company's East Boulder Mine to a rate of 1,650 tons per day will take longer than we projected. Availability of equipment and manpower has been constrained by the booming commodity markets as gold and silver mines have ramped up production. This has delayed needed development and ventilation improvements. Instead of reaching this level of production by the end of 2004, we now believe a 1,650-ton per day mining rate will take until 2006 to achieve. And instead of averaging 1,500 tons per day in 2004, the average production rate this year is expected to be approximately 1,300 tons per day." OPERATING RESULTS During the second quarter of 2004, the Company produced a total of 148,000 ounces of palladium and platinum, which included 114,000 ounces of palladium and 34,000 ounces of platinum, compared to 145,000 ounces, which included 112,000 ounces of palladium and 33,000 ounces of platinum, in the second quarter of 2003. The growth is largely a result of a 4% increase in ounces produced at the Stillwater Mine due to a slight improvement in ore grade. Realized prices per ounce for mine production in the second quarter 2004 were $388 for palladium and $860 for platinum, compared to $341 and $565, respectively, in the second quarter of 2003. Palladium realizations benefited from the floor prices included in the Company's long-term sales contracts. When platinum and palladium sales for the second quarter of 2004 are averaged together, the Company's combined realized price per ounce for mine production was $491, about 29% above the combined market price per ounce of $382 for the same period, and 26% higher than the average combined realization for the second quarter of 2003. Total cash costs on a consolidated basis for the second quarter of 2004 decreased 6% to $264 per ounce compared to $281 per ounce for the same period in 2003. The $17 per ounce reduction is mostly due to an increase in by-product and secondary recycling credits as a result of higher sales volume and higher commodity prices. Total consolidated production costs per ounce in the second quarter of 2004 decreased 5% to $337 from $354 for the same period of 2003. The decrease is due to higher by-product and secondary recycling credits, as noted above. During the first six months of 2004, the Company produced 295,000 ounces of palladium and platinum, which included 228,000 ounces of palladium and 67,000 ounces of platinum, compared to 291,000 ounces, which included 224,000 ounces of palladium and 67,000 ounces of platinum, in the first six months of 2003. Realized prices per ounce for mine production in the first half of 2004 averaged $382 for palladium and $863 for platinum, compared to $353 and $572, respectively, for the same period of 2003. Palladium realizations benefited from the floor prices included in the Company's long-term sales contracts and platinum realizations were partially constrained by ceiling prices in the same contracts. When platinum and palladium sales from mine production are averaged together for the six-month period, the Company's combined realized price per ounce was $486, about 28% higher than the combined market price of $380 per ounce for the same period, and 21%, or $85 per ounce, higher than the 2003 first six months' combined realized price. Total consolidated cash costs per ounce for the first half of 2004 decreased about 2% to $274 compared to $281 for the same period of 2003. Again, the lower total cash costs are mostly attributable to higher by-product and secondary recycling credits as a result of higher sales volume and higher commodity prices. Total consolidated production costs per ounce produced decreased $5, or 1%, to $347 in the first half of 2004 from $352 for the same period of 2003. The decrease also is due to increased by-product and secondary recycling credits. STILLWATER MINE At the Stillwater Mine, palladium and platinum production was 109,000 ounces in the second quarter of 2004 compared to 105,000 ounces in the second quarter of 2003. During the quarter, a total of 197,000 tons were milled with a combined mill head grade of 0.60 ounce per ton, compared to 200,000 tons with a combined mill head grade of 0.58 ounce per ton in the second quarter of 2003. The mining rate during the second quarter of 2004 was approximately 2,048 tons of ore per day, up slightly from 2,033 tons of ore per day in the second quarter of 2003, as the mine ramped up toward its objective of producing 2,050 tons of ore per day by the end of 2004. For the first six months of 2004 the mine produced 214,000 ounces of palladium and platinum, about the same as the amount produced during the first six months of 2003. Total cash costs per ounce for the second quarter of 2004 decreased to $240 from $262 for the same period in 2003 due to increased off-shaft production and higher by-product and secondary recycling credits. For the same reasons, total consolidated production costs per ounce in the second quarter 2004 decreased $20, or 6%, to $305 from $325 in the same period of 2003. For the first six months of 2004, total cash costs per ounce were $258, similar to those during the same period in 2003. Total consolidated production costs per ounce increased 2%, to $323 in the first half of 2004 from $318 during the same period of 2003. The increase is due to slightly higher depreciation and amortization rates in 2004. During the second quarter of 2004 capital expenditures at the mine were $13.5 million, of which $12.4 million was for capitalized mine development. Year-to-date capital spending was $22.5 million of which $20.9 million was spent for capitalized mine development. EAST BOULDER MINE During the second quarter of 2004, the East Boulder Mine produced 39,000 ounces of palladium and platinum, about the same as in the second quarter of 2003. The mining rate averaged 1,298 tons of ore per day for the quarter, down from 1,321 tons of ore per day in the second quarter of 2003, mostly due to high absenteeism. The East Boulder mill processed a total of 116,000 tons with a mill head grade of 0.38 ounce per ton during the second quarter of 2004, compared to 120,000 tons with a mill head grade of 0.38 ounce per ton for the same quarter last year. For the first six months of 2004 the mine produced 81,000 ounces of palladium and platinum compared to 76,000 ounces for the first six months of 2003. The increase in production is the result of efforts to ramp up production at the facility. As previously disclosed, the Company is gradually increasing production at East Boulder to 1,650 tons of ore per day. While the Company had planned to achieve this daily rate by the end of 2004, several issues have been identified which will extend the ramp-up period into 2006. The issues have centered on recognition that the developed state of the mine must be further advanced in order to achieve and maintain the higher production level. The work on improving the developed state will include: * additional primary development to increase the number of ramp systems and working faces, * additional diamond drilling to more accurately identify changes in structure, * development of a ventilation raise to surface to support a larger amount of equipment while improving underground air quality related to diesel particulate matter. Ore production levels at East Boulder have increased slightly from about 1,250 tons of ore per day at the beginning of this year to just over 1,300 tons of ore per day at present. Total cash costs per ounce in the second quarter of 2004 increased slightly, to $333 compared to $330 per ounce for the same period in 2003 due to the lower production rate. Total consolidated production costs per ounce produced in the second quarters of 2004 and 2003 were $428 for both quarters. For the first six months of 2004, total cash costs per ounce decreased 9%, to $319 from $350 for the same period in 2003 due to the higher production levels and higher grades. Total consolidated production costs per ounce also decreased about 9%, to $409 in the first half of 2004 from $448 in the same period of 2003. The decrease is due to lower operating costs as noted above. During the second quarter of 2004, capital expenditures at the mine were $4.4 million, of which $4.0 million was incurred for capitalized mine development. Year-to-date capital spending is $8.5 million, of which $7.7 million was incurred for capitalized mine development. FINANCES Total revenues were $84.2 million for the second quarter of 2004 compared with $60.0 million for the second quarter of 2003. The $24.2 million increase was a result of higher realized PGM prices overall in 2004, as well as sales out of the 877,000 ounces of palladium inventory the Company received from Norilsk Nickel in connection with its stock purchase transaction in 2003 plus the benefit of secondary processing revenues under the Company's new recycling contract. The sale of 110,000 ounces of the palladium inventory contributed $27.8 million to revenue for the second quarter of 2004, while sales of 20,000 ounces from the secondary reprocessing provided $12.0 million of added revenue. Palladium sales from mine production were 70,000 ounces during the second quarter of 2004 compared to 117,000 ounces for the second quarter of 2003. Platinum sales from mine production were approximately 20,000 ounces during the second quarter of 2004, compared to approximately 34,000 for the same period of 2003. The decrease in sales of mine production is due to the shutdown of the smelter and refinery for a period of five weeks for routine smelter re-bricking and other refurbishing. Production from the mine operations continued during the shutdown period and concentrates were stockpiled at the smelter. Company processing of these stockpiles was largely completed by June 30, 2004 and the metal shipped for final refining, well ahead of the planned schedule. For the first half of 2004, revenues totaled $184.9 million, compared with $124.2 million for the first half of 2003. The 49% increase in revenues is primarily due to a 21% increase in the average combined realized palladium and platinum prices from sales of mine production, the sale of about 156,000 ounces of palladium inventory received in the Norilsk Nickel transaction, contributing $40.1 million, and the increase in sales of 47,000 ounces of secondary reprocessing materials, contributing $28.2 million. Altogether, the total quantity of PGMs sold increased 44% to approximately 443,000 ounces during the first half of 2004, compared with 307,000 for the same period of 2003. Palladium sales from mine production decreased to approximately 188,000 ounces during the first half of 2004 compared to 236,000 ounces for the first half of 2003. Platinum sales decreased to approximately 52,000 ounces during the first half of 2004, compared to approximately 68,000 for the same period of 2003. The decrease in sales of mine production is due to the five-week shutdown of the smelter and refinery for routine smelter re-bricking and other refurbishing in the first half of 2004. Production from mine operations continued during the shutdown period and concentrates were stockpiled at the smelter. The Company largely completed processing of these stockpiles by the end of June and the metal was shipped for final refining. Net cash provided by operations for the second quarter of 2004 was $24.6 million, compared to $12.7 million for the same period of 2003, an increase of $11.9 million. This $11.9 million increase in cash provided from operations was primarily due to a 110,000 ounce increase in sales of palladium inventory received in the Norilsk Nickel transaction partially offset by the effect of a 61,000 ounce smelter outage-driven decrease in total palladium and platinum ounces sold from mine production and changes in operating assets and liabilities. These changes in operating assets and liabilities are primarily related to an increase in inventory of $15.5 million attributable to finished goods inventory related to the re-bricking of the smelter furnace, offset in part by a decrease in metal sales receivables of $10.4 million due to higher metal prices, and inventory sales from palladium received from Norilsk Nickel. The operating capital increases will likely be largely reversed during the third quarter of 2004. For the six months ended June 30, 2004, net cash provided by operations was $39.7 million, compared to $36.0 million for the same period of 2003. The increase in cash provided by operations of $3.7 million was primarily due to a 156,000 ounce increase in sales of palladium inventory received in the Norilsk Nickel transaction, partially offset by the effect of a 64,000 ounce smelter outage-driven decrease in total palladium and platinum ounces sold from mine production, and changes in operating assets and liabilities. These changes in operating assets and liabilities are primarily related to an increase in metal sales receivables of $26.3 million, due to higher metal prices and inventory sales from palladium received from Norilsk Nickel and by increases in inventory of $11.9 million attributable to an increase in finished goods inventory related to the re-bricking of the smelter furnace. Capital expenditures totaled $20.3 million in the second quarter of 2004, which includes $16.4 million incurred in connection with capitalized mine development activities, compared to a total of $11.7 million, which included $10.2 million incurred in connection with capitalized mine development activities in the same period of 2003. For the first six months of 2004, capital expenditures totaled $34.9 million, of which $28.6 million was incurred in connection with capitalized mine development activities, compared to $26.2 million for the same period of 2003, which included $22.3 million incurred in connection with capitalized mine development activities. During the second quarter of 2004, the Company made $0.5 million in principal payments on the Company's debt and, as provided in the Company's credit agreement, offered $14.7 million of cash proceeds from sales of palladium received from Norilsk Nickel as a prepayment against the Term B credit facility. The banks declined this prepayment offer and so, according to the terms of the credit agreement, the net amount available under the Company's revolving credit facility was reduced from $16.3 million to $1.6 million. As of June 30, 2004, the Company had made $1.0 million in principal payments on the Company's debt and had $127.8 million outstanding under its term loan facilities and $7.5 million outstanding as letters of credit under the revolving credit facility. During the first and second quarters of 2004, as a result of lower production from its mine operations, the Company did not meet the production covenant under the credit facility then in place, which covenant was based on a trailing four-quarter average. Recognizing the lower projected rate of production early in the year, the bank syndicate had granted a waiver of this covenant effective for the first and second quarters of 2004. The Company was in material compliance with all other provisions of the credit facility as of June 30, 2004. At June 30, 2004, cash and cash equivalents were $53.8 million and $1.6 million was available to the Company under the revolving credit facility. The Company's net working capital at June 30, 2004 was $218.3 million, compared to $154.7 million at December 31, 2003. This increase reflected the higher accounts receivable balance, and a reduction in the current portion of long-term debt, resulting from the Company's new sales agreements for the palladium inventory received from the Norilsk Nickel transaction. This inventory will be sold over a period of two years and not, as reflected at year-end, all in the current year. As a result, under its former credit agreement, the Company was required to offer a portion of the cash proceeds from the sale of the inventory as prepayments of its outstanding loan balance. The ratio of current assets to current liabilities was 4.2 at June 30, 2004, as compared to 2.4 at December 31, 2003. METALS MARKET During the second quarter of 2004, palladium averaged $256 per ounce, trading as high as $333 per ounce following Umicore's announcement of new technology using palladium in diesel catalytic converters, and as low as $216 per ounce, while platinum traded as high as $936 per ounce and as low as $767 per ounce and averaged $832 per ounce. Umicore announced in early April it had developed technology using palladium in diesel catalytic converters where previously only platinum could be used. The palladium price followed that of platinum downward during the latter part of the quarter in anticipation of higher interest rates as the U.S. dollar strengthened. While investment funds were active in palladium and there was steady industrial demand, the price of palladium softened by the end of the second quarter to fix at $217 per ounce at the end of June. With the platinum price falling below $780 per ounce in June, it stimulated buying of physical metal from Chinese jewelry manufacturers. Despite these purchases, funds and investors were avoiding the metal due to the U.S. dollar strength and rising U.S. interest rates leading platinum to end the quarter at $793 per ounce. During June, the rhodium market was buoyant and industrial and speculative buying spurred it to rally to $970 per ounce. The combined average market price per ounce of palladium and platinum for the second quarter of 2004, based on the Company's actual sales of mine production ounces, was $382 compared to $276 for the second quarter of 2003. The combined average market price for the two metals for the first six months of 2004 was $380 per ounce compared to $306 per ounce for the same period in 2003. OTHER MATTERS On August 3, 2004, the Company completed the refinancing of its credit facility. The new credit facility consists of a $140 million six-year term loan maturing July 31, 2010, and bearing interest at a variable rate plus a margin (LIBOR plus 325 basis points, or about 4.75% at August 3, 2004) and a $40 million five-year revolving credit facility expiring July 31, 2009 and initially bearing interest at LIBOR plus 300 basis points, or about 4.50%. Proceeds of the new credit facility will be used to pay off the previous debt facility and for general corporate purposes. The revolving credit facility includes a letter of credit facility that has been partially utilized to secure a $7.5 million letter of credit in support of certain of the Company's reclamation obligations. The letter of credit carries an annual fee of 3.00%. The revolving credit facility requires an annual commitment fee of 0.75% on the remaining unutilized amount. The new credit facility contains customary financial and other covenants; however, it does not include a minimum production covenant. The new credit facility provides that the Company offer 25% of the proceeds received from the sale of palladium inventory received from the Norilsk Nickel transaction as prepayments against the credit facility. The new credit facility also provides that 50% of the Company's annual excess cash flow will be offered for prepayment against the credit facility. As was disclosed previously, the federal district court in Montana had set a hearing date of July 22, 2004 on the motion to dismiss the outstanding stockholder litigation against the Company, which commenced in 2002. The hearing on the motion to dismiss has been continued to late-August 2004. Stillwater Mining Company will host its second quarter results conference call at 12 noon Eastern Time on August 4, 2004. The conference call dial-in number is 800-553-0288 (US) and 612-332-0228 (International). The conference call will be simultaneously Web cast on the Internet via the Company's Web site at www.stillwatermining.com. To access the conference call on the Company's Web site 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 Web site or by a telephone replay, dial-in number 800-475-6701 (US) and 320-365-3844 (International), access code 738990, through August 11, 2004. 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. 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 Web site: 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 2003 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. Stillwater Mining Company Key Factors (Unaudited) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 OPERATING AND COST DATA FOR MINE PRODUCTION Consolidated: Ounces produced (000) Palladium 114 112 228 224 Platinum 34 33 67 67 Total 148 145 295 291 Tons milled (000) 302 301 616 591 Mill head grade (ounce per ton) 0.53 0.52 0.52 0.54 Sub-grade tons milled (000) (1) 11 19 26 40 Sub-grade tons mill head grade (ounce per ton) 0.28 0.18 0.24 0.21 Total tons milled (000) (1) 313 320 642 631 Combined mill head grade (ounce per ton) 0.52 0.50 0.51 0.52 Total mill recovery (%) 91 91 91 91 Total operating costs per ounce (2) $230 $248 $235 $251 Total cash costs per ounce (2), (3) $264 $281 $274 $281 Total production costs per ounce (2), (3) $337 $354 $347 $352 Total operating costs per ton milled (2) $108 $112 $108 $116 Total cash costs per ton milled (2), (3) $124 $127 $126 $130 Total production costs per ton milled (2), (3) $159 $160 $159 $162 Stillwater Mine: Ounces produced (000) Palladium 84 81 165 165 Platinum 25 24 49 50 Total 109 105 214 215 Tons milled (000) 186 181 381 366 Mill head grade (ounce per ton) 0.62 0.62 0.60 0.63 Sub-grade tons milled (000) (1) 11 19 26 40 Sub-grade tons mill head grade (ounce per ton) 0.28 0.18 0.24 0.21 Total tons milled (000) (1) 197 200 407 406 Combined mill head grade (ounce per ton) 0.60 0.58 0.57 0.59 Total mill recovery (%) 92 92 92 91 Total operating costs per ounce (2) $209 $233 $221 $230 Total cash costs per ounce (2), (3) $240 $262 $258 $257 Total production costs per ounce (2), (3) $305 $325 $323 $318 Total operating costs per ton milled (2) $115 $122 $116 $122 Total cash costs per ton milled (2), (3) $132 $138 $135 $136 Total production costs per ton milled (2), (3) $168 $171 $170 $169 Stillwater Mining Company Key Factors (continued) (Unaudited) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 OPERATING AND COST DATA FOR MINE PRODUCTION (Continued) East Boulder Mine: Ounces produced (000) Palladium 30 31 63 59 Platinum 9 9 18 17 Total 39 40 81 76 Tons milled (000) 116 120 235 225 Mill head grade (ounce per ton) 0.38 0.38 0.39 0.38 Sub-grade tons milled (000) (1) -- -- -- -- Sub-grade tons mill head grade (ounce per ton) -- -- -- -- Total tons milled (000) (1) 116 120 235 225 Combined mill head grade (ounce per ton) 0.38 0.38 0.39 0.38 Total mill recovery (%) 88 88 89 89 Total operating costs per ounce (2) $289 $290 $271 $308 Total cash costs per ounce (2), (3) $333 $330 $319 $350 Total production costs per ounce (2), (3) $428 $428 $409 $448 Total operating costs per ton milled (2) $96 $96 $94 $103 Total cash costs per ton milled (2), (3) $111 $109 $110 $117 Total production costs per ton milled (2), (3) $143 $141 $142 $150 (1) Sub-grade tons milled includes reef waste material only. Total tons milled includes ore tons and sub-grade tons only. (2) Total cash costs for this purpose include costs of mining, processing and administrative expenses at the mine site (including mine site overhead, taxes other than income taxes, royalties, by-product credits from production and credits for secondary materials). For the purposes of reporting cash cost per ounce statistics for the company's mine operations, costs related to the secondary recycling of autocatalysts, offset by sales proceeds included in the company's revenue, are reflected as an allocated credit to operating costs. Total production costs include total cash costs plus depreciation and amortization. Income taxes, corporate general and administrative expenses and interest income and expense are not included in either total cash costs or total production costs. (3) "Cash cost per ton" and "cash cost per ounce" represent Non-GAAP measurements that management uses to monitor and evaluate the performance of its mining operations. Management believes cash costs per ounce and per ton provide an indicator of profitability and efficiency at each location and on a consolidated basis, and also may provide a benchmark for comparing our performance with that of other mining companies and other mine operating properties. See table "Reconciliation of Non-GAAP measures to cost of revenues." Stillwater Mining Company Key Factors (continued) (Unaudited) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 SALES AND PRICE DATA Ounces sold (000) Mine Production: Palladium 70 117 88 236 Platinum 20 34 52 68 Total 90 151 240 304 Other PGM activities: Palladium 118 -- 171 2 Platinum 10 1 27 1 Rhodium 2 -- 5 -- Total 130 1 203 3 Total ounces sold 220 152 443 307 Average realized price per ounce (4) Mine Production: Palladium $388 $341 $382 $353 Platinum $860 $565 $863 $572 Combined (5) $491 $391 $486 $401 Other PGM activities: Palladium $256 $234 $256 $259 Platinum $833 $642 $783 $605 Rhodium $796 $577 $785 $649 Average market price per ounce (4) Palladium $256 $170 $249 $208 Platinum $832 $646 $850 $654 Combined (5) $382 $276 $380 $306 (4) The company's average realized price represents revenues (include the effect of contractual floor and ceiling prices) and hedging gains and losses realized on commodity instruments, but excluding contract discounts, all divided by total ounces sold. The average market price represents the average London PM Fix for palladium, platinum and combined prices and Johnson Matthey for rhodium prices for the actual months of the period. (5) Stillwater reports a combined average realized and market price of palladium and platinum based on actual sales of mine production ounces. Prior period amounts have been adjusted to conform with the current year presentation. Stillwater Mining Company Key Factors (continued) (Unaudited) Reconciliation of Non-GAAP measures to cost of revenues "Cash cost per ton" and "cash cost per ounce" represent Non-GAAP measurements that management uses to monitor and evaluate the performance of its mining operations. Management believes cash costs per ounce and per ton provide an indicator of profitability and efficiency at each location and on a consolidated basis, and may provide a benchmark for company performance with that of other mining companies and other mine operating properties. Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 OPERATING AND COST DATA RECONCILIATION (in thousands except cost per ton and cost per ounce data) Consolidated: Total operating costs $33,811 $35,845 $69,413 $72,825 Total cash costs $38,936 $40,539 $81,060 $81,689 Total production costs $49,662 $51,105 $102,365 $102,336 Total ounces 148 145 295 291 Total tons milled 313 320 642 631 Total operating costs per ounce $230 $248 $235 $251 Total cash cost per ounce $264 $281 $274 $281 Total production cost per ounce $337 $354 $347 $352 Total operating cost per ton milled $108 $112 $108 $116 Total cash cost per ton milled $124 $127 $126 $130 Total production cost per ton milled $159 $160 $159 $162 Reconciliation to cost of revenues: Gross operating costs $35,318 $35,841 $71,880 $73,235 Less: secondary recycling credit (1,507) 4 (2,467) (410) Total operating costs $33,811 $35,845 $69,413 $72,825 Royalties, taxes and other 5,125 4,694 11,647 8,864 Total cash costs $38,936 $40,539 $81,060 $81,689 Asset retirement costs 92 84 82 168 Depreciation and amortization 10,634 10,482 21,123 20,479 Total production costs $49,662 $51,105 $102,365 $102,336 Change in product recycling (1,127) 5,598 7,513 10,826 Costs of secondary recycling 10,775 1,087 26,143 2,190 Add: secondary recycling credit 1,507 (4) 2,467 410 (Gain) or loss on sale of assets and other costs -- 6 (75) (1) Total cost of revenues $60,817 $57,792 $138,413 $115,761 Stillwater Mine: Total operating costs $22,644 $24,363 $47,319 $49,596 Total cash costs $26,066 $27,466 $55,127 $55,341 Total production costs $33,097 $34,116 $69,040 $68,543 Total ounces 109 105 214 215 Total tons milled 197 200 407 406 Total operating costs per ounce $209 $233 $221 $230 Total cash cost per ounce $240 $262 $258 $257 Total production cost per ounce $305 $325 $323 $318 Total operating cost per ton milled $115 $122 $116 $122 Total cash cost per ton milled $132 $138 $135 $136 Total production cost per ton milled $168 $171 $170 $169 Stillwater Mining Company Key Factors (continued) (Unaudited) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 OPERATING AND COST DATA RECONCILIATION (CONTINUED) (in thousands except cost per ton and cost per ounce data) Reconciliation to cost of revenues: Gross Operating costs $23,752 $24,362 $49,109 $49,914 Less: secondary recycling credit (1,108) 1 (1,790) (318) Total operating costs $22,644 $24,363 $47,319 $49,596 Royalties, taxes and other 3,422 3,103 7,808 5,745 Total cash costs $26,066 $27,466 $55,127 $55,341 Asset retirement costs 76 69 149 137 Depreciation and amortization 6,955 6,581 13,764 13,065 Total production costs $33,097 $34,116 $69,040 $68,543 Change in product inventory (11,136) 4,128 (10,949) 8,819 (Gain) or loss on sale of assets and other costs 1 6 (1) -- Total cost of revenues $21,962 $38,250 $58,090 $77,362 East Boulder Mine Total operating costs $11,167 $11,482 $22,094 $23,229 Total cash costs $12,870 $13,073 $25,933 $26,348 Total production costs $16,565 $16,989 $33,325 $33,793 Total ounces 39 40 81 76 Total tons milled 116 120 235 225 Total operating costs per ounce $289 $290 $271 $308 Total cash cost per ounce $333 $330 $319 $350 Total production cost per ounce $428 $428 $409 $448 Total operating cost per ton milled $96 $96 $94 $103 Total cash cost per ton milled $111 $109 $110 $117 Total production cost per ton milled $143 $141 $142 $150 Reconciliation to cost of revenues: Gross Operating costs $11,566 $11,479 $22,771 $23,321 Less: secondary recycling credit (399) 3 (677) (92) Total operating costs $11,167 $11,482 $22,094 $23,229 Royalties, taxes and other 1,703 1,591 3,839 3,119 Total cash costs $12,870 $13,073 $25,933 $26,348 Asset retirement costs 16 15 33 31 Depreciation and amortization 3,679 3,901 7,359 7,414 Total production costs $16,565 $16,989 $33,325 $33,793 Change in product inventory (8,563) 1,470 (7,962) 2,007 (Gain) or loss on sale of assets and other costs (1) -- (74) -- Total cost of revenues $8,001 $18,459 $25,289 $35,800 Other PGM activities Reconciliation to cost of revenues: Change in product inventory $18,572 $-- $26,424 $-- Costs of secondary recycling 10,775 1,087 26,143 2,190 Add: secondary recycling credit 1,507 (4) 2,467 409 Total cost of revenues $30,854 $1,083 $55,034 $2,599 Stillwater Mining Company Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (in thousands, except per share amounts) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 Revenues $84,207 $60,011 $184,900 $124,165 Costs and expenses Cost of metals sold 50,183 47,310 117,290 95,282 Depreciation and amortization 10,634 10,482 21,123 20,479 Total costs of revenues 60,817 57,792 138,413 115,761 General and administrative 3,925 3,235 7,649 6,867 Norilsk Nickel transaction related expenses -- 3,043 -- 3,043 Total costs and expenses 64,742 64,070 146,062 125,671 Operating Income (Loss) 19,465 (4,059) 38,838 (1,506) Other income (expense) Interest income 386 68 671 179 Interest expense (3,360) (4,684) (7,261) (9,595) Income (loss) before income taxes and cumulative effect of accounting change 16,491 (8,675) 32,248 (10,922) Income tax benefit -- 3,393 -- 4,292 Reduction of net operating loss deferred tax asset resulting from ownership change -- (13,979) -- (13,979) Total income tax provision -- (10,586) -- (9,687) Income (loss) before cumulative effect of accounting change 16,491 (19,261) 32,248 (20,609) Cumulative effect of change in accounting for asset retirement obligations, net of $264 income tax benefit -- -- -- (408) Net income (loss) $16,491 $(19,261) $32,248 $(21,017) Other comprehensive income, net of tax 3,397 321 2,914 352 Comprehensive income (loss) $19,888 $(18,940) $35,162 $(20,665) Basic earnings (loss) per share Income (loss) before cumulative effect of accounting change $0.18 $(0.40) $0.36 $(0.45) Cumulative effect of accounting change -- -- -- (0.01) Net income (loss) $0.18 $(0.40) $0.36 $(0.46) Diluted earnings (loss) per share Income (loss) before cumulative effect of accounting change $0.18 $(0.40) $0.36 $(0.45) Cumulative effect of accounting change -- -- -- (0.01) Net income (loss) $0.18 $(0.40) $0.36 $(0.46) Weighted average common shares outstanding Basic 90,146 47,921 90,022 45,799 Diluted 90,541 47,921 90,293 45,799 Stillwater Mining Company Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share amounts) June 30, December 31, 2004 2003 ASSETS Current assets Cash and cash equivalents $53,808 $47,511 Restricted cash equivalents 2,650 2,650 Inventories 203,679 202,485 Accounts receivable 17,791 3,777 Deferred income taxes 4,578 4,313 Other current assets 5,030 4,270 Total current assets 287,536 265,006 Property, plant and equipment, net 433,207 419,528 Other noncurrent assets 5,583 6,054 Total assets $726,326 $690,588 LIABILITIES and STOCKHOLDERS' EQUITY Current liabilities Accounts payable $11,093 $9,781 Accrued payroll and benefits 9,103 10,654 Property, production and franchise taxes payable 8,505 8,504 Current portion of long-term debt and capital lease obligations 1,940 1,935 Long-term debt secured by finished goods 37,011 74,106 Other current liabilities 1,613 5,290 Total current liabilities 69,265 110,270 Long-term debt and capital lease obligations 121,583 85,445 Deferred income taxes 4,578 4,313 Other noncurrent liabilities 11,600 11,263 Total liabilities 207,026 211,291 Commitments and Contingencies 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; 90,239,460 and 89,849,239 shares issued and outstanding 902 899 Paid-in capital 602,078 592,974 Accumulated deficit (81,508) (113,756) Accumulated other comprehensive gain (loss) 2,094 (820) Unearned compensation -- restricted stock awards (4,266) -- Total stockholders' equity 519,300 479,297 Total liabilities and stockholders' equity $726,326 $690,588 Stillwater Mining Company Consolidated Statements of Cash Flows (Unaudited) (in thousands) Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 Cash flows from operating activities Net income (loss) $16,491 $(19,261) $32,248 $(21,017) Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 10,634 10,482 21,123 20,479 Deferred income taxes -- 10,795 -- 9,652 Cumulative effect of change in accounting for asset retirement obligations -- -- -- 672 Stock issued under employee benefit plans 1,038 831 2,096 1,862 Amortization of debt issuance costs 286 2,158 566 2,516 Amortization of restricted stock compensation 274 652 274 670 Changes in operating assets and liabilities: Inventories (9,780) 5,706 (1,194) 10,696 Accounts receivable 8,585 (1,807) (14,014) 12,288 Accounts payable 1,504 8,370 1,312 4,636 Other (4,449) (5,195) (2,728) (6,446) Net cash provided by operating activities 24,583 12,731 39,683 36,008 Cash flows from investing activities Capital expenditures (20,317) (11,662) (34,892) (26,196) Net cash used in investing activities (20,317) (11,662) (34,892) (26,196) Cash flows from financing activities Payments on long-term debt and capital lease obligations (517) (52,783) (965) (58,136) Issuance of common stock, related to Norilsk Nickel transaction (1) -- 90,817 -- 90,284 Issuance of common stock, net of stock issue costs 2,428 2,471 Payment for debt issuance costs -- (152) -- (1,606) Net cash provided by financing activities 1,911 37,882 1,506 30,542 Cash and cash equivalents Net increase 6,177 38,951 6,297 40,354 Balance at beginning of period 47,631 27,316 47,511 25,913 Balance at end of period $53,808 $66,267 $53,808 $66,267 (1) Non-cash Financing activities: Fair value of issuance of common stock (net of issue costs) $ -- $239,030 $-- $238,497 Inventory received in connection with the Norilsk Nickel transaction -- (148,213) -- (148,213) Net cash received in Norilsk Nickel transaction $-- $90,817 $-- $90,284 SOURCE Stillwater Mining Company -0- 08/04/2004 /CONTACT: John W. Pearson of Stillwater Mining Company , +1-406-322-8742/ /Web site: http://www.stillwatermining.com / (SWC) CO: Stillwater Mining Company ST: Montana IN: MNG SU: ERN CCA MAV -----END PRIVACY-ENHANCED MESSAGE-----