10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2005.

OR

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number 1-13053

STILLWATER MINING COMPANY

(Exact name of registrant as specified in its charter)

Delaware	81-0480654
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1321 Discovery Drive Billings, Montana	59102
(Address of principal executive offices)	(Zip Code)

(406) 373-8700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES o NO þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2): YES þ NO o

At August 2, 2005, the Company had outstanding 90,753,738 shares of common stock, par value $0.01 per share.

STILLWATER MINING COMPANY

FORM 10-Q

QUARTER ENDED JUNE 30, 2005

INDEX

PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Consolidated Financial Condition and
Results of Operations	16
Item 3. Quantitative and Qualitative Disclosure About Market Risk	39
Item 4. Controls and Procedures	41
PART II — OTHER INFORMATION	42
Item 1. Legal Proceedings	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3. Defaults Upon Senior Securities	42
Item 4. Submission of Matters to a Vote of Security Holders	43
Item 5. Other Information	43
Item 6. Exhibits	43
SIGNATURES	44
Contract
Certification - Chief Executive Officer
Certification - Vice President and Chief Financial Officer
Section 1350 Certification
Section 1350 Certification

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

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,
	2005			2004			2005			2004
Revenues:
Mine production	$	75,845		$	44,345		$	140,034		$	116,647
PGM Recycling		16,849			12,026			41,958			28,186
Sales of palladium received in the Norilsk Nickel transaction and other		32,716			27,836			70,821			40,067
Total revenues		125,410			84,207			252,813			184,900
Costs and expenses:
Cost of metals sold:
Mine production		53,231			19,504			95,546			66,799
PGM Recycling		15,857			10,775			39,321			26,144
Sales of palladium received in Norilsk Nickel transaction and other		30,382			18,572			65,627			26,424
Total cost of metals sold		99,470			48,851			200,494			119,367
Depreciation and amortization:
Mine production		19,895			14,910			40,741			29,907
PGM Recycling		14			12			27			23
Total depreciation and amortization		19,909			14,922			40,768			29,930
Total costs of revenues		119,379			63,773			241,262			149,297
General and administrative		4,948			3,926			9,888			7,649
Total costs and expenses		124,327			67,699			251,150			156,946
Operating income		1,083			16,508			1,663			27,954
Other income (expense)
Interest income		1,178			386			2,192			671
Interest expense		(2,876	)		(3,360	)		(5,678	)		(7,261	)
Income (loss) before income taxes and cumulative effect of change in accounting		(615	)		13,534			(1,823	)		21,364
Income tax provision (see Note 10)		—			—			(3	)		—
Income (loss) before cumulative effect of change in accounting		(615	)		13,534			(1,826	)		21,364
Cumulative effect of change in accounting					—			—			6,035
Net income (loss)	$	(615	)	$	13,534		$	(1,826	)	$	27,399
Other comprehensive income (loss)		(2,218	)		3,397			(1,957	)		2,914
Comprehensive income (loss)	$	(2,833	)	$	16,931		$	(3,783	)	$	30,313

See notes to consolidated financial statements

3

Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share amounts)

	Three months ended					Six months ended
(Continued)	June 30,					June 30,
	2005			2004		2005			2004
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Income (loss) before cumulative effect of change in accounting	$	(615	)	$	13,534	$	(1,826	)	$	21,364
Cumulative effect of change in accounting		—			—		—			6,035
Net income (loss)	$	(615	)	$	13,534	$	(1,826	)	$	27,399
Weighted average common shares outstanding
Basic		90,608			90,146		90,550			90,022
Diluted		90,608			90,541		90,550			90,293
Basic earnings (loss) per share
Income (loss) before cumulative effect of change in accounting	$	(0.01	)	$	0.15	$	(0.02	)	$	0.23
Cumulative effect of change in accounting		—			—		—			0.07
Net income (loss)	$	(0.01	)	$	0.15	$	(0.02	)	$	0.30
Diluted earnings (loss) per share
Income (loss) before cumulative effect of change in accounting	$	(0.01	)	$	0.15	$	(0.02	)	$	0.23
Cumulative effect of change in accounting		—			—		—			0.07
Net income (loss)	$	(0.01	)	$	0.15	$	(0.02	)	$	0.30

See notes to consolidated financial statements

4

Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)

				December 31,
	June 30, 2005			2004
ASSETS
Current assets
Cash and cash equivalents	$	141,316		$	96,052
Restricted cash		2,685			2,650
Investments		—			13,150
Inventories		116,924			159,942
Accounts receivable		23,005			18,186
Deferred income taxes		3,801			6,247
Other current assets		11,685			7,428
Total current assets		299,416			303,655
Property, plant and equipment, net		434,147			434,924
Other noncurrent assets		5,800			6,139
Total assets	$	739,363		$	744,718
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	14,537		$	15,029
Accrued payroll and benefits		15,700			13,395
Property, production and franchise taxes payable		5,863			9,183
Current portion of long-term debt and capital lease obligations		1,940			1,986
Portion of debt repayable upon liquidation of finished palladium in inventory		18,916			19,076
Fair value of derivative instruments		6,922			4,965
Other current liabilities		4,651			3,604
Total current liabilities		68,529			67,238
Long-term debt and capital lease obligations		135,303			143,028
Deferred income taxes		3,801			6,247
Other noncurrent liabilities		19,401			15,476
Total liabilities		227,034			231,989
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; 90,705,229 and 90,433,665 shares issued and outstanding		907			904
Paid-in capital		608,428			604,177
Accumulated deficit		(85,743	)		(83,918	)
Accumulated other comprehensive loss		(6,922	)		(4,965	)
Unearned compensation — restricted stock awards		(4,341	)		(3,469	)
Total stockholders’ equity		512,329			512,729
Total liabilities and stockholders’ equity	$	739,363		$	744,718

See notes to consolidated financial statements

5

Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

	Three months ended						Six months ended
	June 30,						June 30,
	2005			2004			2005			2004
Cash flows from operating activities
Net income (loss)	$	(615	)	$	13,534		$	(1,826	)	$	27,399
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		19,909			14,922			40,768			29,930
Cumulative effect of change in accounting		—			—			—			(6,035	)
Stock issued under employee benefit plans		1,191			1,038			2,318			2,096
Amortization of debt issuance costs		159			286			319			566
Share-based compensation		666			274			1,055			274
Changes in operating assets and liabilities:
Inventories		21,606			(11,112	)		43,018			882
Accounts receivable		(3,819	)		8,585			(4,819	)		(14,014	)
Accounts payable		9			1,504			(492	)		1,312
Other		(4,167	)		(4,448	)		(73	)		(2,727	)
Net cash provided by operating activities		34,939			24,583			80,268			39,683
Cash flows from investing activities
Capital expenditures		(22,755	)		(20,317	)		(40,222	)		(34,892	)
Purchases of investments		(6,440	)		(4,250	)		(22,671	)		(11,000	)
Proceeds from sale of investments		24,670			1,000			35,821			8,200
Net cash used in investing activities		(4,525	)		(23,567	)		(27,072	)		(37,692	)
Cash flows from financing activities
Payments on long-term debt and capital lease obligations		(7,488	)		(517	)		(7,941	)		(965	)
Issuance of common stock, net of stock issue costs		1			2,428			9			2,471
Net cash provided by (used in) financing activities		(7,487	)		1,911			(7,932	)		1,506
Cash and cash equivalents
Net increase		22,927			2,927			45,264			3,497
Balance at beginning of period		118,389			36,231			96,052			35,661
Balance at end of period	$	141,316		$	39,158		$	141,316		$	39,158

See notes to consolidated financial statements

6

Stillwater Mining Company
Notes to Consolidated Financial Statements
(Unaudited)

Note 1 — General

     In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Stillwater Mining Company (the “Company”) as of June 30, 2005, and the results of its operations and its cash flows for the three and six month periods ended June 30, 2005 and 2004. Certain prior-period amounts in the consolidated statements of cash flows related to cash equivalents and investments have been reclassified to conform with the current period’s presentation. The results of operations for the three and six month periods are not necessarily indicative of the results to be expected for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2004 Annual Report on Form 10-K.

Note 2 — Share-Based Payments

     Prior to 2005, the Company elected to account for stock options and other stock-based compensation awards using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, because stock options were granted at fair market value, no compensation expense had been recognized for stock options issued under the Company’s stock option plans. The Company had adopted the disclosure-only provisions of Statement of Financial Accounting Standard (SFAS) No. 123, Accounting for Stock-Based Compensation.

     Effective January 1, 2005, the Company elected early adoption of SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123 (R)). SFAS No. 123 (R) replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123 (R) requires that the cost resulting from all share-based payment transactions be recognized in the financial statements and determined on a fair-value-based measurement method. The fair values for stock options and other stock-based compensation awards issued to employees are estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:

Three months ended June 30,	2005			2004
Weighted average expected lives (years)		3.7			3.8
Average interest rate		3.8	%		2.4	%
Volatility		62	%		64	%
Dividend yield		—			—

     The Company has elected to use the modified version of prospective application allowable under the transition provisions of SFAS No. 123 (R). Using this modified transition method, compensation cost is recognized for (1) all awards granted, modified, cancelled, or repurchased after the date of adoption and (2) the unvested portion of previously granted awards for which the requisite service has not yet been rendered as of the date of adoption, based on the fair value of those awards on the grant-date. The compensation cost, including options and restricted stock, was approximately $0.6 million and $1.1 million for the three and six month periods ended June 30, 2005, respectively.

     Pro forma information regarding net income (loss) and earnings (loss) per share is required by SFAS No. 123(R) for awards granted in prior periods and has been determined as if the Company had accounted for its stock options and other stock-based compensation awards under the fair value method of SFAS No. 123(R). Had the Company accounted for its stock options and other stock-based compensation awards under the fair value method in prior periods, the results would have been:

7

(in thousands except per share data)

	Three months			Six months
	ended June 30,			ended June 30,
	2004			2004
Net income (loss), as reported	$	13,534		$	27,399
Add: Stock-based employee compensation expense included in reported net income (loss), net of tax		274			274
Deduct: Stock-based employee compensation expense determined under fair value based method, net of tax		(445	)		(603	)
Pro forma net income (loss)	$	13,363		$	27,070
Earnings (loss) per share
Basic — as reported	$	0.15		$	0.30
Basic — pro forma	$	0.15		$	0.30
Diluted — as reported	$	0.15		$	0.30
Diluted — pro forma	$	0.15		$	0.30

Note 3 — Change in Amortization Method for Mine Development Assets

     Effective January 1, 2004, the Company changed its accounting method for amortizing capitalized mine development costs. These mine development costs include initial costs incurred to gain primary access to the ore reserves, plus ongoing development costs of footwall laterals and ramps driven parallel to the reef that are used to access and provide support for the mining stopes in the reef.

     Prior to 2004, the Company amortized all such capitalized development costs at its mines over all proven and probable reserves at each mine. Following the asset impairment write-down at the end of 2003, the Company revisited its assumptions and estimates for amortizing capitalized mine development costs. As a result, the Company determined it would change its method of accounting for development costs as follows:

• Unamortized costs of the shaft at the Stillwater Mine and the initial development at the East Boulder Mine will continue to be treated as life-of-mine infrastructure costs, to be amortized over total proven and probable reserves at each location; and

• All ongoing development costs of footwall laterals and ramps, including similar development costs incurred before 2004, are to be amortized over the ore reserves in the immediate and relevant vicinity of the development.

     The effect of this change in accounting method is included in the reported amounts for the comparative three and six month periods ended June 30, 2004. The six month period ended June 30, 2004, includes a cumulative effect benefit of approximately $6.0 million relating to this change in accounting method.

Note 4 — Comprehensive Income

     Comprehensive income consists of earnings items and other gains and losses affecting stockholders’ equity that are excluded from current net income. As of June 30, 2005 and 2004, such items consist of unrealized gains and losses on derivative financial instruments related to commodity price hedging activities.

     The Company had commodity instruments relating to fixed forward metal sales and financially settled forwards outstanding during the second quarter of 2005. The net unrealized loss on these instruments, $6.9 million at June 30, 2005, will be reflected in other comprehensive income until these instruments are settled. All commodity

8

instruments outstanding at June 30, 2005, are expected to be settled within the next twenty-three months (see Note 9).

     The Company’s interest rate swaps, which were accounted for as hedging instruments, matured on March 4, 2004 (see Note 9).

     The following summary sets forth the changes in accumulated other comprehensive loss in stockholders’ equity:

(in thousands)	Interest		Commodity
As of June 30, 2005	Rate Swaps		Instruments			Total
Balance at December 31, 2004	$	—	$	(4,965	)	$	(4,965	)
Reclassification to earnings		—		2,377			2,377
Change in value		—		(4,334	)		(4,334	)
Balance at June 30, 2005	$	—	$	(6,922	)	$	(6,922	)

(in thousands)	Interest			Commodity
As of June 30, 2004	Rate Swaps			Instruments			Total
Balance at December 31, 2003	$	(269	)	$	(551	)	$	(820	)
Reclassification to earnings		269			11			280
Change in value		—			2,634			2,634
Balance at June 30, 2004	$	—		$	2,094		$	2,094

Note 5 — Inventories

     Inventories consisted of the following:

(in thousands)	June 30,		December 31,
	2005		2004
Metals Inventory
Raw ore	$	1,303	$	672
Concentrate and in-process		21,353		20,512
Finished goods		34,188		42,777
Palladium inventory from Norilsk Nickel transaction		47,774		84,835
		104,618		148,796
Materials and supplies		12,306		11,146
	$	116,924	$	159,942

Note 6 — Long-Term Debt

Credit Agreement

     On August 3, 2004, the Company entered into a $180 million credit facility with a syndicate of financial institutions. The credit facility consists of a $140 million six-year term loan facility maturing July 30, 2010, bearing interest at a variable rate plus a margin (London Interbank Offer Rate (LIBOR) plus 325 basis points, or 6.375% at June 30, 2005) and a $40 million five-year revolving credit facility bearing interest, when drawn, at a variable rate plus a margin (LIBOR plus 225 basis points, or 5.375% at June 30, 2005) expiring July 31, 2009. The revolving credit facility includes a letter of credit facility; undrawn letters of credit issued under this facility currently carry an annual fee of 2.375%. The remaining unused portion of the revolving credit facility bears an annual commitment fee of 0.75%. Amortization of the term loan facility commenced in August 2004.

     As of June 30, 2005, the Company has $123.9 million outstanding under the term loan facility. During 2004, the Company obtained letters of credit in the amount of $7.5 million as surety for its long-term reclamation obligation at East Boulder Mine. During the second quarter of 2005, the Company obtained letters of credit in the amount of $6.6

9

million as collateral for surety bonds. These letters of credit reduce amounts available under the revolving credit facility to $25.9 million at June 30, 2005.

     The credit facility requires as prepayments 50% of the Company’s annual excess cash flow, plus any proceeds from asset sales and the issuance of debt or equity securities, subject to specified exceptions. Such prepayments are to be applied first against the term loan facility balance, and once that is reduced to zero, against any outstanding revolving credit facility balance. The Company’s term loan facility allows the Company to choose between LIBOR loans of various maturities plus a spread of 3.25% or alternate base rate loans plus a spread of 2.25%. The alternate base rate is a rate determined by the administrative agent under the terms of the credit facility, and has generally been equal to the prevailing bank prime loan rate, which was 6.0% at June 30, 2005. The alternate base rate applies only to that portion of the term loan facility in any period for which the Company has not elected to use LIBOR contracts. Substantially all the property and assets of the Company are pledged as security for the credit facility.

     In accordance with the terms of the credit facility, the Company is required to remit 25% of the net proceeds from sales of palladium received in the Norilsk Nickel transaction to prepay the Company’s term loan facility. As of June 30, 2005, $20.2 million of the Company’s long-term debt has been classified as a current liability, including approximately $18.9 million expected to be prepaid during the next twelve months out of the net proceeds from palladium sales under this arrangement. The Company’s credit facility contains a provision that defers each prepayment related to the sales of palladium received in the Norilsk Nickel transaction until the accumulated amount due reaches a specified level. The accumulated amount at June 30, 2005, of approximately $5.3 million is included on the Company’s consolidated balance sheet as a current liability in the portion of long-term debt repayable upon liquidation of finished palladium in inventory.

     The following is a schedule of required principal payments to be made in quarterly installments on the amounts outstanding under the term loan facility at June 30, 2005, without regard to any prepayments required to be offered from sales of palladium received in the Norilsk Nickel transaction or out of excess cash flow:

Year ended (in thousands)	Term facility
2005 (July -December)	$	626
2006		1,251
2007		1,251
2008		1,251
2009		1,252
2010		118,266
Total	$	123,897

Under the provisions of the credit facility, all unscheduled prepayments against the outstanding term loan balance (whether from sales of palladium received in the Norilsk Nickel transaction, out of excess cash flow, or voluntarily at Company discretion) are applied pro rata to reduce the amount of each future scheduled prepayment in the table above.

     The Company is in compliance with its covenants under the credit facility at June 30, 2005.

Note 7 — Earnings per Share

     Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with the provisions of SFAS No. 128, Earnings per Share, antidilutive securities are excluded in computing diluted earnings per share. No adjustments were made to reported net income in the computation of earnings per share.

     All stock options (1,605,623 options) and all restricted stock (584,420 shares) were antidilutive for the three months and six months ended June 30, 2005, because the Company reported a net loss for the respective periods and inclusion of any of these options and shares would have reduced the net loss per share.

10

     Outstanding options to purchase 1,402,915 shares of common stock were excluded from the computation of diluted earnings per share for the three-month period ended June 30, 2004, because the effect would have been antidilutive using the treasury stock method as the exercise price of the options was greater than the average market price of the common shares. The effect of outstanding stock options on diluted weighted average shares outstanding was an increase of 178,143 shares for the three-month period ended June 30, 2004. Similarly, outstanding options to purchase 1,470,460 shares of common stock were excluded from the computation of diluted earnings per share for the six-month period ended June 30, 2004, because the effect would have been antidilutive using the treasury stock method since the exercise price of the options was greater than the average market price of the common shares. The effect of outstanding stock options on diluted weighted average shares outstanding was an increase of 160,695 shares for the six-month period ended June 30, 2004.

     On May 3, 2005, 10,904 shares of restricted stock were granted to the non-management directors serving on the Company’s Board of Directors. These shares of restricted stock will vest on November 2, 2005. On May 3, 2005, 225,346 shares of restricted stock were granted to members of management. These shares of restricted stock are scheduled to vest on May 2, 2008. On April 29, 2004, the Company granted 6,816 shares of restricted stock to non-management directors; these shares vested on October 29, 2004. On May 7, 2004, the Company granted 348,170 shares of restricted stock to certain members of management; these shares will vest on May 7, 2007. The effect of outstanding restricted stock on diluted weighted average shares outstanding was an increase of 215,151 shares for the three-month period ended June 30, 2004. The effect of outstanding restricted stock on diluted weighted average shares outstanding was an increase of 107,576 shares for the six-month period ended June 30, 2004. There is no effect for 2005 because the Company reported a net loss for the second quarter and first six months of 2005 and inclusion of any of these shares would have reduced the net loss per share.

Note 8 — Long-Term Sales Contracts

Mine Production:

     The Company has entered into three long-term sales contracts with its customers that contain guaranteed floor and ceiling prices for metals delivered, expiring in 2006, 2007 and 2010. Under these long-term contracts, the Company has committed 80% to 100% of its mined palladium production and 70% to 80% of its mined platinum production annually through 2010. Metal sales are priced at a small volume discount to market, subject to floor and ceiling prices. The Company’s remaining production is not committed under these contracts.

     The following table summarizes the floor and ceiling price structures for the three Platinum Group Metals (“PGM”) long-term sales contracts related to mine production. The first two columns for each commodity represent the percent of total mine production that is subject to floor prices and the weighted average floor price per ounce. The second two columns for each commodity represent the percent of total mine production that is subject to ceiling prices and the weighted average ceiling price per ounce.

	PALLADIUM										PLATINUM
	Subject to					Subject to					Subject to					Subject to
	Floor Prices					Ceiling Prices					Floor Prices					Ceiling Prices
	% of Mine			Avg. Floor		% of Mine			Avg. Ceiling		% of Mine			Avg. Floor		% of Mine			Avg. Ceiling
Year	Production			Price		Production			Price		Production			Price		Production			Price
2005		100	%	$	355		31	%	$	702		80	%	$	425		16	%	$	856
2006		100	%	$	339		29	%	$	729		80	%	$	425		16	%	$	856
2007		100	%	$	345		17	%	$	975		70	%	$	425		14	%	$	850
2008		80	%	$	385		20	%	$	975		70	%	$	425		14	%	$	850
2009		80	%	$	380		20	%	$	975		70	%	$	425		14	%	$	850
2010		80	%	$	375		20	%	$	975		70	%	$	425		14	%	$	850

Palladium acquired in connection with the Norilsk Nickel transaction and other activities:

     The Company entered into three sales agreements during the first quarter of 2004 to sell the palladium received in the transaction with Norilsk Nickel. Under these agreements, the Company is selling approximately 36,500 ounces

11

of palladium per month at a slight volume discount to market prices. At this sales rate, the palladium received in the Norilsk Nickel transaction will all have been sold by the end of the first quarter of 2006. Under one of these sales agreements, the Company also sells 3,250 ounces of platinum and 1,900 ounces of rhodium per month at a slight volume discount to market price. At its discretion, the Company may elect to purchase metal in the open market to meet these sales commitments rather than supplying the metal from inventory. During the three months and six months ending June 30, 2005, the Company supplied approximately 8,000 and 21,000 ounces, respectively, of these commitments through open market purchases of platinum and rhodium.

Note 9 — Financial Instruments

     The Company from time to time uses various derivative financial instruments to manage the Company’s exposure to interest rates and market prices associated with changes in palladium, platinum and rhodium commodity prices. Because the Company hedges only with instruments that have a high correlation with the value of the underlying exposures, changes in the fair value of each derivative are expected to be offset by changes in the value of the corresponding hedged transaction.

Commodity Derivatives

     The Company enters into fixed forwards and financially settled forwards that are accounted for as cash-flow hedges to hedge the price risk in its PGM recycling activity and mine production. In the fixed forward transactions, metals contained in the spent catalytic materials are normally sold forward at the time the material is received for processing and subsequently are delivered against the fixed forward contracts when the finished ounces are recovered. Financially settled forwards may be used as a mechanism to hedge against fluctuations in metal prices associated with future mine production. Under financially settled forwards, at each settlement date the Company receives the difference between the forward price and the market price if the market price is below the forward price, and the Company pays the difference between the forward price and the market price if the market price is above the forward price. The Company’s financially settled forwards are settled in cash at maturity.

     As of June 30, 2005, the Company was party to financially settled forward agreements covering approximately 61% of its anticipated platinum sales from mine production from July 2005 through May 2007. These transactions are designed to hedge a total of 162,300 ounces of platinum sales from mine production for the next twenty-three months at an overall average price of approximately $830 per ounce. The unrealized loss on financially settled forwards on mine production due to changes in metals prices at June 30, 2005, was approximately $6.4 million.

     As of June 30, 2005, the Company was party to fixed forward agreements, which settle at various periods through October 2005 on metals to be recovered through the Company’s PGM recycling activities. The unrealized loss on these instruments due to changes in metal prices at June 30, 2005, was $0.5 million. The Company has credit agreements with its major trading partners that provide for margin deposits in the event that forward prices for metals exceed the Company’s hedge contract prices by a predetermined margin limit. The Company had no margin deposits outstanding or required at June 30, 2005.

     Until these forward contracts mature, any net change in the value of the hedging instrument due to changes in metal prices is reflected in stockholders’ equity in accumulated other comprehensive income. A net unrealized loss of $6.9 million on these hedging instruments, existing at June 30, 2005, is reflected in accumulated other comprehensive income (See Note 4). When these instruments are settled, any remaining gain or loss on the cash flow hedges will be offset by losses or gains on the future metal sales and will be recognized at that time in operating income. All commodity instruments outstanding at June 30, 2005, are expected to be settled within the next twenty-three months.

     A summary of the Company’s derivative financial instruments as of June 30, 2005, is as follows:

12

Mine Production:
Financially Settled Forwards

	Platinum		Average
	Ounces		Price		Index
Third Quarter 2005		23,200	$	810	Monthly London PM Average
Fourth Quarter 2005		23,200	$	801	Monthly London PM Average
First Quarter 2006		24,400	$	818	Monthly London PM Average
Second Quarter 2006		25,500	$	823	Monthly London PM Average
Third Quarter 2006		21,000	$	823	Monthly London PM Average
Fourth Quarter 2006		21,000	$	862	Monthly London PM Average
First Quarter 2007		16,000	$	870	Monthly London PM Average
Second Quarter 2007		8,000	$	876	Monthly London PM Average

PGM Recycling: Fixed Forwards

	Platinum		Average		Palladium		Average		Rhodium		Average
	Ounces		Price		Ounces		Price		Ounces		Price
Third Quarter 2005		17,192	$	877		3,801	$	185		1,780	$	1,911
Fourth Quarter 2005		3,286	$	889		—		—		—		—

Interest Rate Derivatives

     The Company entered into two identical interest rate swap agreements fixing the interest rate on $100.0 million of the Company’s debt, which were effective March 4, 2002, and matured on March 4, 2004. These interest rate swap agreements were accounted for as a cash flow hedge. During six months ended June 30, 2004, a hedging loss of $0.3 million was recognized in interest expense. The Company had no interest rate derivatives outstanding at June 30, 2005, or June 30, 2004.

Note 10 — Income Taxes

     The Company computes income taxes using the asset and liability approach as defined in SFAS No. 109, Accounting for Income Taxes, which results in the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of those assets and liabilities, as well as operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse. At June 30, 2005, the Company has net operating loss carryforwards (NOL’s), which expire in 2009 through 2024. The Company has reviewed its net deferred tax assets and has provided a valuation allowance to reflect the estimated amount of net deferred tax assets which the Company considers more likely than not will not be realized. Except for statutory minimum payments required under certain state tax laws, the Company has not recognized any income tax provision or benefit for the three- and six-month periods ended June 30, 2005, and 2004, as any changes in the net deferred tax assets and liabilities have been offset by a corresponding change in the valuation allowance.

Note 11 — Segment Information

     The Company operates two reportable business segments: Mine Production and PGM Recycling. These segments are managed separately based on fundamental differences in their operations. The Mine Production segment consists of two business components: the Stillwater Mine and the East Boulder Mine. The Mine Production segment is engaged in the development, extraction, processing and refining of PGMs. The Company sells PGMs from mine production under long-term sales contracts, through derivative financial instruments and in open PGM markets. The Stillwater Mine and East Boulder Mine have been aggregated, as both have similar products, processes, customers, distribution methods and economic characteristics. The PGM Recycling segment is engaged in the recycling of spent catalytic materials to recover the PGMs contained in those materials. The Company allocates the costs of the Smelter and Refinery to both the Mine Production segment and to the PGM Recycling segment for internal and segment reporting purposes because the Company’s smelting and refining facilities support the PGM extraction activities of both business segments.

     The All Other group primarily consists of total assets, revenues and costs associated with the palladium received

13

in the Norilsk Nickel transaction, along with assets and costs of other corporate and support functions.

     The Company evaluates performance and allocates resources based on income or loss before income taxes and the cumulative effect of accounting changes.

14

     The following financial information relates to the Company’s segments:

(in thousands)	Mine		PGM		All
Three months ended June 30, 2005	Production		Recycling		Other			Total
Revenues	$	75,845	$	16,849	$	32,716		$	125,410
Depreciation and amortization	$	19,895	$	14	$	—		$	19,909
Interest income	$	—	$	224	$	954		$	1,178
Interest expense	$	—	$	—	$	2,876		$	2,876
Income (loss) before income taxes and cumulative effect of change in accounting	$	2,718	$	1,203	$	(4,536	)	$	(615	)
Capital expenditures	$	22,546	$	37	$	172		$	22,755
Total assets	$	476,747	$	20,817	$	241,799		$	739,363

(in thousands)	Mine		PGM		All
Three months ended June 30, 2004	Production		Recycling		Other		Total
Revenues	$	44,345	$	12,026	$	27,836	$	84,207
Depreciation and amortization	$	14,910	$	12	$	—	$	14,922
Interest income	$	—	$	274	$	112	$	386
Interest expense	$	—	$	—	$	3,360	$	3,360
Income before income taxes and cumulative effect of change in accounting	$	9,931	$	1,513	$	2,090	$	13,534
Capital expenditures	$	20,094	$	25	$	198	$	20,317
Total assets	$	481,986	$	18,889	$	220,603	$	721,478

(in thousands)	Mine		PGM		All
Six months ended June 30, 2005	Production		Recycling		Other			Total
Revenues	$	140,034	$	41,958	$	70,821		$	252,813
Depreciation and amortization	$	40,741	$	27	$	—		$	40,768
Interest income	$	—	$	493	$	1,699		$	2,192
Interest expense	$	—	$	—	$	5,678		$	5,678
Income (loss) before income taxes and cumulative effect of change in accounting	$	3,744	$	3,103	$	(8,673	)	$	(1,826	)
Capital expenditures	$	39,996	$	29	$	197		$	40,222
Total assets	$	476,747	$	20,817	$	241,799		$	739,363

(in thousands)	Mine		PGM		All
Six months ended June 30, 2004	Production		Recycling		Other			Total
Revenues	$	116,647	$	28,186	$	40,067		$	184,900
Depreciation and amortization	$	29,907	$	23	$	—		$	29,930
Interest income	$	—	$	459	$	212		$	671
Interest expense	$	—	$	—	$	7,261		$	7,261
Income (loss) before income taxes and cumulative effect of change in accounting	$	19,941	$	2,478	$	(1,055	)	$	21,364
Capital expenditures	$	34,665	$	25	$	202		$	34,892
Total assets	$	481,986	$	18,889	$	220,603		$	721,478

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Item 2. Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations

     The following commentary provides management’s perspective and analysis regarding the financial and operating performance of Stillwater Mining Company (the “Company”) for the three and six month periods ended June 30, 2005. It consists of the following subsections:

• “Overview” — a brief summary of the primary financial position, the primary factors affecting the Company’s results.

• “Key Factors” — indicators of profitability and efficiency at the Company’s various operations individually and, where relevant, on a consolidated basis.

• “Results of Operations” — a discussion and analysis of the specific operating and financial results for the three and six months ended June 30, 2005, as compared to the same periods in 2004.

• “Liquidity and Capital Resources” — a discussion of the Company’s cash flow and liquidity, investing and financing activities, and significant contractual obligations.

• “Critical Accounting Policies” — a review of accounting policies the Company considers critical because they involve assumptions that could have a material effect on the Company’s reported assets, liabilities, income or cash flow and that require difficult, subjective or complex judgments by management.

     These items should be read in conjunction with the consolidated financial statements and accompanying notes thereto included in this quarterly report and in the Company’s 2004 Annual Report on Form 10-K.

Overview

     Stillwater Mining Company mines, processes, refines and markets palladium, platinum and minor amounts of other metals from the J-M Reef, an extensive trend of Platinum Group Metal (PGM) mineralization located in Stillwater and Sweet Grass Counties in south central Montana. The Company operates two mines: Stillwater and East Boulder, within the J-M Reef, each with substantial underground operations and a surface mill and concentrator. Concentrates produced at the two mines are shipped to the Company’s smelter and base metals refinery at Columbus, Montana, where they are further processed into a PGM filter cake that is sent to third-party refiners for final processing. Substantially all finished platinum and palladium produced from mining is sold under contracts with three major automotive manufacturers for use in automotive catalytic converters. The Company also recycles spent catalyst material to recover PGMs through its processing facilities in Columbus, Montana.

     Two factors heavily influence the Company’s profitability: the volatility of PGM prices and the Company’s cost structure. Metal prices are dictated by market forces and so are beyond the direct control of the Company, although market effects can be mitigated through long-term sales agreements and at times through hedging activities. Although Stillwater is the only primary producer of PGMs in the United States, several international mining companies either produce PGMs as a byproduct of other refining or enjoy ores with a substantially higher proportion of the historically higher-priced platinum over palladium. The Company does not enjoy these advantages and has a higher cost structure than many of its competitors. The level of ore production generally affects the Company’s unit costs, and is driven by the consistency and quality of the ore mined, by the mining method used, and by overall operating efficiency. The Company spends substantial amounts of development capital each year in the mines to sustain ongoing production. In view of these challenges, minimizing unit operating costs in a safe and efficient manner continues to be the principal operating focus of the Company.

     In 1998, the Company entered into three long-term sales contracts with automobile manufacturers that commit most of the mines’ platinum and palladium production through 2010. While two of these contracts will expire before 2010, the terms of the third contract provide for it to absorb the share of production made available by the expiring agreements. These contracts all have floor prices (see Note 8 to the Company’s consolidated financial statements)

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that, in the recent low price environment for palladium, have been of significant benefit in allowing the Company to continue operating profitably. Unless these contracts are extended or modified, as to which there can be no assurance, all three contracts will have expired by the end of 2010. At that time, the Company could be fully exposed to market prices and the absence of these contracts after 2010 could materially affect the Company’s operating results.

     In February 2004, the Company entered into three sales agreements to sell the 877,169 ounces of finished palladium that it received in June 2003 as partial payment for a purchase of Company shares by Norilsk Nickel. These palladium sales are taking place ratably over a two-year period that will conclude in the first quarter of 2006. As of June 30, 2005, the Company had sold in total approximately 595,000 of the ounces received from Norilsk Nickel. During the three- and six-month periods ended June 30, 2005, the Company recognized $32.7 million and $70.8 million, respectively, in revenues from the sale of approximately 110,000 and 219,000 ounces, respectively, of this palladium and from other related sales activity.

     The Company reported a net loss of $0.6 million, or $0.01 per diluted share for the second quarter of 2005, compared to net income of $13.5 million, or $0.15 per diluted share for the second quarter of 2004. The second-quarter 2005 net loss reflects higher non-cash depreciation and amortization expense primarily due to capital development placed in service during 2005 and the amortization of the those assets over a shorter period due to the Company’s change in accounting for the amortization of capital mine development costs (see Note 3 to the Company’s consolidated financial statements). The Company generated positive cash flow during the second quarter of 2005 and had cash and cash equivalents of $141.3 million at June 30, 2005.

     The Company reported a net loss of $1.8 million, or $0.02 per diluted share in the first six months of 2005, compared to net income of $27.4 million, or $0.30 per diluted share in the first six months 2004. The year-to-date 2005 net loss reflects higher non-cash depreciation and amortization expense primarily due to capital development placed in service during 2005 and the amortization of the those assets over a shorter period due to the Company’s change in accounting for the amortization of capital mine development costs (see Note 3 to the Company’s consolidated financial statements). Results for the six-month period ended June 30, 2004, include the benefit of approximately $6.0 million related to the cumulative effect of this accounting change. The Company generated positive cash flow during the first six months of 2005 and had cash and cash equivalents of $141.3 million at June 30, 2005, up from $96.1 million at year end 2004. If highly liquid short-term investments available for sale at December 31, 2004, are included, the Company’s liquidity increased by $32.1 million during the first six months of 2005 to $141.3 million of liquidity at June 30, 2005, from $109.2 million as of December 31, 2004.

     The Company’s primary activities during 2005 and 2004 consist of mine production, recycling of PGM catalysts, and the sale of palladium received in the 2003 Norilsk Nickel transaction.

Mine Production

     The Company’s production of palladium and platinum is driven by ore tons mined, grade of the ore and metallurgical recovery. The Company reports net mine production as ounces contained in the mill concentrate, adjusted for processing losses expected to be incurred in smelting and refining. The Company considers an ounce of metal “produced” at the time it is shipped from the mine site. Depreciation and amortization costs are inventoried at each stage of production.

     Ore production at the Stillwater Mine averaged 1,951 and 2,067 tons of ore per day during the second quarter and the first six months of 2005, respectively, a 2% decrease and 4% increase over the 1,995 tons of ore per day averaged during 2004, reflecting a focus in 2005 on improving the developed state of the Stillwater Mine rather than on expanded production.

     The Company continues its efforts to increase production at the East Boulder Mine. The increased rate of production at the East Boulder Mine was originally planned for early 2005. The mine is being further developed in order to achieve a higher production level through the following initiatives:

• additional primary development to increase the number of ramp systems and working faces;

• additional diamond drilling associated with increased primary development; and

• development of two new ventilation raises to surface to support a larger amount of equipment while

17

improving underground air quality related to diesel particulate matter (DPM).

     The development of the new ventilation raises has progressed more slowly than planned, most likely delaying achievement of 1,650 tons per day of ore production at East Boulder. In the meantime, the Company is utilizing the delay to expand its drill definition program and to implement more selective mining methods at East Boulder. The rate of ore production at the East Boulder Mine averaged 1,273 and 1,294 tons of ore per day during the second quarter and the first six months of 2005, respectively, a decrease of 4% and 2% from the 1,326 tons of ore per day averaged during 2004. In 2005, some of the productive capacity of the mine has been diverted into mine development efforts that are expected to improve productivity and reduce unit costs over the longer term.

     The grade of the Company’s ore reserves, measured in combined platinum and palladium ounces per ton, is a composite average of samples in all ore reserve areas. As is common in underground mines, the grade of ore mined and the recovery rate realized varies from area to area. In particular, mill head grade varies significantly between the Stillwater and East Boulder mines, as well as within different areas of each mine. For the three month and six month periods ended June 30, 2005, the average mill head grade for all tons processed from the Stillwater Mine was 0.53 and 0.54 PGM ounces per ton of ore, respectively, a 12% and 5% decrease, respectively, from the same periods in 2004. For the three month and six month periods ended June 30, 2005, the average mill head grade for all tons processed from the East Boulder Mine was 0.38 PGM ounces per ton of ore in each period, a 0% and 3% decrease, respectively, from the grade for the same periods in 2004.

     During the three- and six-month periods ended June 30, 2005, the Company’s mining operations produced a total of 138,581 and 283,081 ounces of PGMs, respectively, slightly ahead of the 2005 plan in each period. The Company expects total mine production of between 550,000 and 570,000 PGM ounces for 2005, approximately the same production level as in 2004.

     As a result of the need to improve the developed state of the mines, the Company has increased development spending in 2005 at both mines. For the second quarter of 2005, primary development totaled 10,509 feet at the Stillwater Mine and 4,525 feet at the East Boulder Mine. These numbers represent 30% and 46% increases from the average quarterly feet of advance in 2004, respectively. Management believes this investment in mine development during 2005 will result in more efficient and productive mining operations over the longer term. Capital spending requirements are expected to decline in future years following completion of the expanded 2005-2006 development program.

     The Company shut down its smelting and refining facilities in Columbus, Montana for approximately five weeks during the second quarter of 2004 for rebricking of the smelter furnace and other refurbishment. Production at the mines was not interrupted during the shutdown, but mill concentrates were stockpiled until the Columbus facilities came back on line. As a result, final processing of a substantial portion of second-quarter 2004 mine output was delayed until the third and fourth quarters of 2004, affecting second-quarter 2004 financial and operating results.

     A new three-year labor agreement covering represented employees at the Company’s East Boulder facility has been ratified by the union membership. The new agreement took effect on July 10, 2005, extends until July 1, 2008, and provides for 3% wage increases in each year of the agreement. The corresponding labor agreement covering the Company’s represented employees at the Stillwater Mine and the Columbus metal processing facilities expired on June 30, 2004. In July of 2004, following a ten-day labor action, a new three-year contract was ratified. That agreement also provides for 3% annual wage increases and is scheduled to expire on July 1, 2007.

     On January 1, 2006, new federal regulations will take effect, tightening diesel particulate matter (DPM) exposure limits from the current maximum permissible level of 308 µg/m3 of elemental carbon to a new limit of 160 µg/m3 of total carbon. Appropriate measurement methods and emission control technologies do not yet exist that will ensure compliance in our mining environment with these new regulations. The Company is aggressively exploring existing technologies to reduce DPM exposures to the lowest levels currently achievable and is actively working with MSHA, NIOSH and various other companies in the mining industry to share best practices and consider compliance alternatives. However, the Company does not expect to be in compliance with the new standard at January 1, 2006. While the federal agencies charged with enforcing the tighter limits are aware of these industry concerns, there can be no assurance that after January 1, 2006, the Company will not be held in violation of the new standard and be subject to the penalties prescribed by regulation.

PGM Recycling

     PGMs contained in spent catalytic converter materials are recycled and processed by the Company through its metallurgical complex. A sampling facility for the recycled materials is used to crush and sample spent catalysts prior to their being blended for smelting in the electric furnace. The spent catalytic material is sourced by third parties, primarily from automobile repair shops and automobile yards that disassemble old cars for the recycling of their parts.

     The Company has been processing small spot shipments of spent catalysts since 1997. In October 2003, the

18

Company entered into a metal sourcing agreement with a major supplier under which the Company contractually purchases spent catalytic materials for recycling. The Company amended this agreement in June 2005 to increase the volume of material available for recycling. While the commercial terms of this agreement are confidential, in the event of a change in business circumstances, the Company can terminate the agreement upon ninety days’ notice. In addition to volumes under this supply agreement, the Company from time to time accepts certain other shipments of catalytic material for processing, both for its own account and on a tolling basis.

     PGM recycling allows the Company to utilize surplus capacity in its processing and refining facilities. The Company’s recycling activity has expanded significantly since 2003. During the three- and six-month periods ended June 30, 2005, the Company processed spent catalytic materials at a rate of about 9.6 and 9.5 tons per day, respectively. Revenues from PGM recycling were $16.8 million and $42.0 million for the three- and six-month periods ended June 30, 2005, respectively, compared to $12.0 million and $28.2 million in the corresponding periods of 2004.

Ore Reserves

     The Company updates its proven and probable ore reserves annually, following the guidelines for ore reserve determination contained in the SEC’s Industry Guide No. 7. Ore reserves are modeled from a long-term mine plan and are based on the twelve-quarter rolling average market price for each final product, adjusted for specific contractual arrangements and other externalities. Ore may be classified as proven or probable and reported as reserves in the Company’s financial statements and other public filings only if extraction and sale results in positive cumulative, undiscounted cash flow.

     In the Company’s 2004 Annual Report on Form 10-K, the Company included a chart illustrating the sensitivity of the Company’s proven and probable reserves to the combined long-term average price for palladium and platinum. As shown in the chart, at a combined long-term average price below approximately $342 per ounce, the ore reserves begin to be constrained by economics and a reduction in reported ore reserves may become necessary. At December 31, 2004, the twelve-quarter trailing average price for palladium and platinum that is used in the Company’s reserve determinations was $357 per ounce. As of June 30, 2005, the Company’s combined twelve-quarter rolling average price had declined to about $349 per ounce, still above the threshold for economic constraint but reflecting a downward drift in palladium prices during the first half of the year. If combined PGM prices were to continue to decline and the 2004 economic model remains unchanged, the Company believes that an economic adjustment to ore reserves might be required as early as the end of 2005.

     At December 31, 2003, when the Company last incurred a reserve writedown, it also triggered an impairment analysis under SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, that resulted in a substantial valuation adjustment to the Company’s assets. The Company is unable to predict at this time whether or not any economic adjustment to ore reserves at December 31, 2005, would result in an additional adjustment to the carrying value of the Company’s assets.

Other Matters

     As of June 30, 2005, the Company has secured platinum prices in the forward market by entering into financially settled forward transactions covering approximately 61% of the Company’s anticipated platinum mine production for delivery during the period from July 2005 through May 2007. The Company believes that the current wide spread between palladium and platinum prices may narrow if consumers, driven by unusually high platinum prices, switch from using platinum to palladium for existing and new applications. The Company notes that the price of platinum could weaken if this switching occurs and so has entered into derivative contracts on a portion of future sales. At June 30, 2005, the Company has open financially settled forward contracts covering a total of 162,300 ounces of platinum at an overall average price of about $830 per ounce. The hedges are expected to modestly reduce the overall future volatility of the Company’s earnings and cash flow. Under these hedging arrangements, in return for protection against downward movements in the platinum price, the Company gives up the benefit of increases in the platinum price on the hedged ounces. The Company realized losses on financially settled forward sales of its mined platinum during the three and six months ended June 30, 2005 of $1.3 million and $2.4 million, respectively.

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     Effective May 3, 2005, the Company’s Board of Directors implemented the Stillwater Mining Company Non-Employee Directors’ Deferral Plan, which allows non-employee members of the Board of Directors to defer all or any portion of their director compensation, in accordance with the provisions of Section 409A of the Internal Revenue Code and associated Treasury regulations. The plan permits the deferral of cash or stock compensation and provides a 20% match for any cash compensation deferred into the Company’s common shares. At June 30, 2005, six members of the Board of Directors have elected to defer a portion of their compensation under the plan.

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Stillwater Mining Company
Key Factors
(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2005		2004		2005		2004
OPERATING AND COST DATA FOR MINE PRODUCTION
Consolidated:
Ounces produced (000)
Palladium		107		114		218		228
Platinum		32		34		65		67
Total		139		148		283		295
Tons milled (000)		296		302		609		616
Mill head grade (ounce per ton)		0.50		0.53		0.50		0.52
Sub-grade tons milled (000) (1)		24		11		37		26
Sub-grade tons mill head grade (ounce per ton)		0.16		0.28		0.17		0.24
Total tons milled (000) (1)		320		313		646		642
Combined mill head grade (ounce per ton)		0.48		0.52		0.49		0.51
Total mill recovery (%)		91		91		91		91
Total operating costs (000) (Non-GAAP) (2)	$	38,022	$	33,805	$	76,814	$	69,401
Total cash costs (000) (Non-GAAP) (2)	$	44,561	$	38,930	$	89,998	$	81,048
Total production costs (000) (Non-GAAP) (2)	$	64,604	$	53,933	$	130,969	$	111,137
Total operating costs per ounce (Non-GAAP) (3)	$	274	$	230	$	271	$	235
Total cash costs per ounce (Non-GAAP) (3)	$	322	$	264	$	318	$	274
Total production costs per ounce (Non-GAAP) (3)	$	466	$	366	$	463	$	376
Total operating costs per ton milled (Non-GAAP) (3)	$	119	$	108	$	119	$	108
Total cash costs per ton milled (Non-GAAP) (3)	$	139	$	124	$	139	$	126
Total production costs per ton milled (Non-GAAP) (3)	$	202	$	172	$	203	$	173
Stillwater Mine:
Ounces produced (000)
Palladium		76		84		156		165
Platinum		23		25		48		49
Total		99		109		204		214
Tons milled (000)		178		186		374		381
Mill head grade (ounce per ton)		0.59		0.62		0.58		0.60
Sub-grade tons milled (000) (1)		24		11		37		26
Sub-grade tons mill head grade (ounce per ton)		0.16		0.28		0.17		0.24
Total tons milled (000) (1)		202		197		411		407
Combined mill head grade (ounce per ton)		0.53		0.60		0.54		0.57
Total mill recovery (%)		92		92		92		92
Total operating costs (000) (Non-GAAP) (2)	$	26,073	$	22,639	$	52,844	$	47,310
Total cash costs (000) (Non-GAAP) (2)	$	30,591	$	26,061	$	61,871	$	55,118
Total production costs (000) (Non-GAAP) (2)	$	43,794	$	35,212	$	89,166	$	73,466
Total operating costs per ounce (Non-GAAP) (3)	$	264	$	209	$	259	$	221
Total cash costs per ounce (Non-GAAP) (3)	$	309	$	240	$	303	$	258
Total production costs per ounce (Non-GAAP) (3)	$	443	$	324	$	437	$	343
Total operating costs per ton milled (Non-GAAP) (3)	$	129	$	115	$	129	$	116
Total cash costs per ton milled (Non-GAAP) (3)	$	152	$	132	$	151	$	135
Total production costs per ton milled (Non-GAAP) (3)	$	217	$	178	$	217	$	180

21

Stillwater Mining Company
Key Factors (continued)
(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2005		2004		2005		2004
OPERATING AND COST DATA FOR MINE PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced (000)
Palladium		31		30		62		63
Platinum		9		9		17		18
Total		40		39		79		81
Tons milled (000)		118		116		235		235
Mill head grade (ounce per ton)		0.38		0.38		0.38		0.39
Sub-grade tons milled (000) (1)		—		—		—		—
Sub-grade tons mill head grade (ounce per ton)		—		—		—		—
Total tons milled (000) (1)		118		116		235		235
Combined mill head grade (ounce per ton)		0.38		0.38		0.38		0.39
Total mill recovery (%)		89		88		89		89
Total operating costs (000) (Non-GAAP) (2)	$	11,949	$	11,166	$	23,970	$	22,091
Total cash costs (000) (Non-GAAP) (2)	$	13,970	$	12,869	$	28,127	$	25,930
Total production costs (000) (Non-GAAP) (2)	$	20,810	$	18,721	$	41,803	$	37,671
Total operating costs per ounce (Non-GAAP) (3)	$	301	$	289	$	303	$	271
Total cash costs per ounce (Non-GAAP) (3)	$	352	$	333	$	356	$	318
Total production costs per ounce (Non-GAAP) (3)	$	524	$	484	$	529	$	463
Total operating costs per ton milled (Non-GAAP) (3)	$	101	$	96	$	102	$	94
Total cash costs per ton milled (Non-GAAP) (3)	$	119	$	111	$	120	$	110
Total production costs per ton milled (Non-GAAP) (3)	$	177	$	162	$	178	$	160

(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, 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 Cost of Revenues” below 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 Cost of Revenues” below and the accompanying discussion.

22

Stillwater Mining Company
Key Factors (continued)
(Unaudited)

	Three months ended				Six months ended
	June 30,				July 30,
	2005		2004		2005		2004
SALES AND PRICE DATA
Ounces sold (000)
Mine Production:
Palladium		121		70		229		188
Platinum		40		20		71		52
Total		161		90		300		240
Other PGM activities:
Palladium		121		118		241		171
Platinum		14		10		39		27
Rhodium		9		2		22		5
Total		144		130		302		203
Total ounces sold		305		220		602		443
Average realized price per ounce (4)
Mine Production:
Palladium	$	355	$	386	$	355	$	380
Platinum	$	832	$	859	$	827	$	861
Combined	$	472	$	490	$	466	$	485
Other PGM activities:
Palladium	$	189	$	253	$	188	$	254
Platinum	$	865	$	833	$	857	$	783
Rhodium	$	1,588	$	796	$	1,523	$	785
Average market price per ounce (4)
Palladium	$	192	$	256	$	190	$	249
Platinum	$	871	$	832	$	867	$	850
Combined	$	359	$	382	$	350	$	380

(4) The Company’s average realized price represents revenues, including the effect of contractual floor and ceiling prices, hedging gains and losses realized on commodity instruments, and contract discounts, all divided by total ounces sold. Prior period amounts have been adjusted to conform to the current period presentation. The average market price represents the average monthly London PM Fix for palladium, platinum and combined prices and Johnson Matthey quotation for rhodium prices for the actual months of the period.

23

Reconciliation of Non-GAAP Measures to Cost 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 of 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 cost of revenues (a GAAP measure included in the Company’s Consolidated 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 cost of revenues, they cannot meaningfully be used to develop measures of earnings or profitability. A reconciliation of these measures to cost 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 Cost of Revenues: For the Company on a consolidated basis, this measure is equal to consolidated cost of revenues, as reported in the Consolidated Statement of Operations and Comprehensive Income (Loss). For the Stillwater Mine, East Boulder Mine, and other PGM activities, the Company segregates the expenses within cost of revenues that are directly associated with each of these activities and then allocates the remaining facility costs included in consolidated cost of revenues in proportion to the monthly volumes from each activity. The resulting total cost of revenues measures for Stillwater Mine, East Boulder Mine and other PGM activities are equal in total to consolidated cost of revenues as reported in the Company’s Consolidated Statement of Operations and Comprehensive Income (Loss).

     Total Production Costs (Non-GAAP): Calculated as total cost of revenues (for each mine or consolidated) adjusted to exclude gains or losses on asset dispositions, costs and profit from PGM recycling activities, and timing differences resulting from changes in product inventories. This non-GAAP measure provides a comparative measure of the total costs incurred in association with production and processing activities in a period, and may be compared to prior periods or between the Company’s mines.

     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 by excluding the depreciation and

24

amortization and asset retirement costs from Total Production Costs (Non-GAAP) for each mine or consolidated. The Company uses this measure as a comparative indication of the cash costs related to production and processing in any period.

     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.

     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.

25

Reconciliation of Non-GAAP Measures to Cost of Revenues

	Three months ended						Six months ended
	June 30,						June 30,
(in thousands,)	2005			2004			2005			2004
Consolidated:
Reconciliation to consolidated cost of revenues:
Total operating costs (Non-GAAP)	$	38,022		$	33,805		$	76,814		$	69,401
Royalties, taxes and other		6,539			5,125			13,184			11,647
Total cash costs (Non-GAAP)	$	44,561		$	38,930		$	89,998		$	81,048
Asset retirement costs		148			93			230			182
Depreciation and amortization		19,895			14,910			40,741			29,907
Total production costs (Non-GAAP)	$	64,604		$	53,933		$	130,969		$	111,137
Change in product inventory		37,720			(2,460	)		67,830			9,589
Costs of PGM recycling		15,857			10,775			39,321			26,144
PGM recycling depreciation		14			12			27			23
Add: Profit from PGM recycling		1,203			1,513			3,103			2,478
(Gain) or loss on sale of assets and other costs		(19	)		—			12			(74	)
Total consolidated cost of revenues	$	119,379		$	63,773		$	241,262		$	149,297
Stillwater Mine:
Reconciliation to cost of revenues:
Total operating costs (Non-GAAP)	$	26,073		$	22,639		$	52,844		$	47,310
Royalties, taxes and other		4,518			3,422			9,027			7,808
Total cash costs (Non-GAAP)	$	30,591		$	26,061		$	61,871		$	55,118
Asset retirement costs		107			76			149			149
Depreciation and amortization		13,096			9,075			27,146			18,199
Total production costs (Non-GAAP)	$	43,794		$	35,212		$	89,166		$	73,466
Change in product inventory		8,210			(11,439	)		3,048			(9,302	)
Add: Profit from PGM recycling		861			1,112			2,243			1,798
(Gain) or loss on sale of assets and other costs		(19	)		—			(10	)		(2	)
Total cost of revenues	$	52,846		$	24,885		$	94,447		$	65,960
East Boulder Mine:
Reconciliation to cost of revenues:
Total operating costs (Non-GAAP)	$	11,949		$	11,166		$	23,970		$	22,091
Royalties, taxes and other		2,021			1,703			4,157			3,839
Total cash costs (Non-GAAP)	$	13,970		$	12,869		$	28,127		$	25,930
Asset retirement costs		41			17			81			33
Depreciation and amortization		6,799			5,835			13,595			11,708
Total production costs (Non-GAAP)	$	20,810		$	18,721		$	41,803		$	37,671
Change in product inventory		(872	)		(9,593	)		(844	)		(7,533	)
Add: Profit from PGM recycling		342			401			859			680
(Gain) or loss on sale of assets and other costs		—			—			22			(72	)
Total cost of revenues	$	20,280		$	9,529		$	41,840		$	30,746
Other PGM activities:
Reconciliation to cost of revenues:
Change in product inventory	$	30,382		$	18,572		$	65,627		$	26,424
PGM recycling depreciation		14			12			27			23
Costs of PGM recycling		15,857			10,775			39,321			26,144
Total cost of revenues	$	46,253		$	29,359		$	104,975		$	52,591

26

Results of Operations

     The Company reported a net loss of $0.6 million for the second quarter of 2005 compared to net income of $13.5 million for the second quarter of 2004, a $14.1 million decrease. The decrease in net income is primarily due to an increase in depreciation and amortization expense in 2005, as compared to 2004, of approximately $5.0 million as a result of additional capital placed in service during 2005. The remainder of the decrease in net income resulted from lower average realized prices and higher costs for raw materials in 2005.

     The Company reported a net loss of $1.8 million for the first six months of 2005 compared to net income of $27.4 million for the same period in 2004, a $29.2 million decrease. The decrease in net income is primarily due to an increase in depreciation and amortization expense in 2005, as compared to 2004, of approximately $10.8 million resulting from additional capital placed in service during 2005, and the approximately $6.0 million cumulative benefit of a change in accounting method recorded in 2004. The remainder of the decrease in net income resulted from lower mine production ounces sold, lower average realized prices and higher costs for raw materials in 2005.

     Three-month period ended June 30, 2005, compared to the three-month period ended June 30, 2004

     Revenues. Revenues were $125.4 million for the second quarter of 2005 compared to $84.2 million for the same period of 2004. The following discussion covers key factors contributing to the increase in revenues:

27

	Revenues, PGM ounces sold and PGM prices
	Three months ended
	June 30,
								Percentage
(in thousands)	2005		2004		Increase			Change
Revenues	$	125,410	$	84,207	$	41,203			49	%
Mine Production Ounces Sold:
Palladium		121		70		51			73	%
Platinum		40		20		20			100	%
Total		161		90		71			79	%
Other PGM Activities Ounces Sold:
Palladium		121		118		3			3	%
Platinum		14		10		4			40	%
Rhodium		9		2		7			350	%
Total		144		130		14			11	%
Total Ounces Sold		305		220		85			39	%
Average realized price per ounce
Mine Production:
Palladium	$	355	$	386	$	(31	)		(8	%)
Platinum	$	832	$	859	$	(27	)		(3	%)
Combined	$	472	$	490	$	(18	)		(4	%)
Other PGM Activities:
Palladium	$	189	$	253	$	(64	)		(25	%)
Platinum	$	865	$	833	$	32			4	%
Rhodium	$	1,588	$	796	$	792			99	%
Average market price per ounce
Palladium	$	192	$	256	$	(64	)		(25	%)
Platinum	$	871	$	832	$	39			5	%
Combined	$	359	$	382	$	(23	)		(6	%)

     Revenues from mine production were $75.8 million in the second quarter of 2005, compared to $44.3 million for the same period in 2004, a 71% increase. The increase in mine production revenues was due to an increase in the quantity of metals sold — 161,000 ounces in the second quarter of 2005 compared to 90,000 ounces in the same period of 2004. During the second quarter of 2004, the Company’s smelting and refining facilities were shut down for about a month for smelter rebricking and other refurbishment. This 2005 increase in ounces sold was offset by a decrease in combined average realized PGM price per ounce of $472 in the second quarter of 2005, compared to $490 in the same period of 2004, a 4% decrease.

     Revenues from PGM recycling were $16.8 million in the second quarter of 2005, compared to $12.0 million for the same period in 2004. This increase in revenues from PGM recycling was primarily due to an increase in the quantity of recycled PGMs sold of 26,000 ounces in the second quarter of 2005, compared to 20,000 ounces in the same period of 2004, again reflecting the smelter shutdown for rebricking during the second quarter of 2004. The processing of spent catalytic materials generally ramped up during 2004. The increase in revenue is also due to higher prices for platinum and rhodium in the second quarter of 2005 as compared to the same period of 2004.

     During the first quarter of 2004, the Company entered into three sales agreements providing for the Company to sell the palladium ounces received in the Norilsk Nickel transaction. Under these agreements, the Company is selling approximately 36,500 ounces of this palladium per month, at a slight volume discount to market prices. Revenues

28

from sales of palladium received in the Norilsk Nickel transaction and other sales activities were $32.7 million for the second quarter of 2005, compared to $27.8 million for the same period of 2004. Sales of approximately 110,000 ounces of palladium received in the Norilsk Nickel transaction in each of the respective periods generated $20.7 million in revenues during the second quarter of 2005, at an average realized palladium price of approximately $189 per ounce, and $27.8 million in revenues during the second quarter of 2004, at an average realized palladium price of $253 per ounce. Under one of the sales agreements, the Company also has agreed to sell 3,250 ounces of platinum and 1,900 ounces of rhodium per month, either purchased on the open market or produced from the Company’s mining operations. The Company recognized revenue (included above) of $12.0 million on approximately 2,000 ounces of platinum and 10,000 ounces of rhodium that were purchased in the open market and re-sold under this sales agreement for the three months ended June 30, 2005; no comparable sales revenues from purchased metal were recorded during the second quarter of 2004.

     The Company has approximately 282,750 ounces of palladium received in the Norilsk Nickel transaction remaining in inventory at June 30, 2005.

     Cost of metals sold. Cost of metals sold was $99.5 million for the second quarter of 2005, compared to $48.9 million for the same period of 2004, a 104% increase; the difference is driven primarily by production costs incurred and inventoried during the second quarter 2004 shutdown of the Company’s smelter and refinery for rebricking and other refurbishment.

     The cost of metals sold from mine production was $53.2 million for the second quarter of 2005, compared to $19.5 million for the same period of 2004, a 173% increase. This increase reflects the 39% increase in ounces sold between the two quarters, again, as a result of the smelter rebricking in the second quarter of 2004.

     Total consolidated cash costs per ounce produced, a non-GAAP measure, in the second quarter of 2005 increased $58 or 22% to $322 per ounce from $264 per ounce in the same period of 2004. The increase is primarily due to the postponement of processing costs as a result of the smelter rebricking in the second quarter of 2004, as well as period-on-period increased labor costs associated with the new union contract at the Stillwater Mine, increased employee benefit and health care costs and increased material costs associated with higher prices for certain key raw materials in 2005.

     The cost of metals sold from PGM recycling activities was $15.9 million in the second quarter of 2005, compared to $10.8 million in the second quarter of 2004. The increase was primarily due to the shutdown for refurbishment of the Company’s processing facilities during the second quarter of 2004, along with the cost of acquiring and processing the increased ounces generated from the Company’s long-term sourcing agreement for spent catalytic materials.

     The cost of metals sold from sales of palladium received in the Norilsk Nickel transaction and other sales activities was $30.4 million in the second quarter of 2005, compared to $18.6 million for the same period of 2004. The total cost of palladium sold from just those ounces received in the Norilsk Nickel transaction was $18.6 million in both the second quarter of 2005 and the second quarter of 2004, all at an average cost of $169 per ounce sold. As discussed under “Revenues” above, the Company entered into a sales agreement in 2004 that requires it to purchase rhodium and, at times, platinum from third parties in order to fulfill delivery commitments. The cost of metals purchased and subsequently resold to fulfill these contractual requirements, excluding sales of palladium received in the Norilsk Nickel transaction, was $11.8 million in the second quarter of 2005; no comparable resales of purchased metal were recorded during the second quarter of 2004.

     Production. During the second quarter of 2005, the Company’s mining operations produced approximately 139,000 ounces of PGMs, including approximately 107,000 and 32,000 ounces of palladium and platinum, respectively. This compares with approximately 148,000 ounces of PGMs produced during the second quarter of 2004, including approximately 114,000 and 34,000 ounces of palladium and platinum, respectively, a 6% quarter-on-quarter decrease in total PGM production. The overall production decrease is primarily due to the allocation of production resources in 2005 toward further improving the developed state of the mines.

     The Stillwater Mine produced approximately 99,000 ounces of PGMs in the second quarter of 2005, compared with approximately 109,000 ounces of PGMs for the same period of 2004, a 9% decrease. The East Boulder Mine

29

produced approximately 40,000 ounces of PGMs in the second quarter of 2005, compared with approximately 39,000 ounces of PGMs for the same period of 2004, a 3% increase.

     Depreciation and amortization. Depreciation and amortization expense was $19.9 million for the second quarter of 2005, compared to $14.9 million for the same period of 2004, a 33% increase. The increase was primarily due to the additional depletion for capital development placed into service during 2005.

     Other expenses. General and administrative expenses in the second quarter of 2005 were $4.9 million, compared to $3.9 million during the same period of 2004. The increase is primarily due to increased professional fees associated with Sarbanes-Oxley compliance and other regulatory requirements, and to higher compensation costs.

     Interest expense of $2.9 million in the second quarter of 2005 decreased approximately $0.5 million from $3.4 million in the same period of 2004, reflecting substantially higher market rates of interest in 2005.

     Other comprehensive income. For the second quarter of 2005, other comprehensive income includes a change in the fair value of derivatives of $3.5 million offset by a reclassification to earnings of $1.3 million, for commodity hedging instruments. For the same period of 2004, other comprehensive income included a change in value of $3.4 million for commodity instruments.

     Six-month period ended June 30, 2005, compared to the six-month period ended June 30, 2004

     Revenues. Revenues were $252.8 million for the first six months of 2005 compared to $184.9 million for the same period of 2004. The following discussion covers key factors contributing to the increase in revenues:

30

	Revenues, PGM ounces sold and PGM prices
	Six months ended
	June 30,
								Percentage
(in thousands)	2005		2004		Increase			Change
Revenues	$	252,813	$	184,900	$	67,913			37	%
Mine Production Ounces Sold:
Palladium		229		188		41			22	%
Platinum		71		52		19			37	%
Total		300		240		60			25	%
Other PGM Activities Ounces Sold:
Palladium		241		171		70			41	%
Platinum		39		27		12			44	%
Rhodium		22		5		17			340	%
Total		302		203		99			49	%
Total Ounces Sold		602		443		159			36	%
Average realized price per ounce
Mine Production:
Palladium	$	355	$	380	$	(25	)		(7	%)
Platinum	$	827	$	861	$	(34	)		(4	%)
Combined	$	466	$	485	$	(19	)		(4	%)
Other PGM Activities:
Palladium	$	188	$	254	$	(66	)		(26	%)
Platinum	$	857	$	783	$	74			9	%
Rhodium	$	1,523	$	785	$	738			94	%
Average market price per ounce
Palladium	$	190	$	249	$	(59	)		(24	%)
Platinum	$	867	$	850	$	17			2	%
Combined	$	350	$	380	$	(30	)		(8	%)

     Revenues from mine production were $140.0 million in the first six months of 2005, compared to $116.6 million for the same period in 2004, a 20% increase. The increase in mine production revenues was due to an increase in the quantity of metals sold - 300,000 ounces in the first six months of 2005 compared to 240,000 ounces in the same period of 2004. Lower 2004 sales were attributable to production that was stockpiled for processing during the shutdown of the Company’s processing facilities for refurbishment during the second quarter of 2004. The resulting 2005 sales increase was partially offset by a decrease in the Company’s combined average realized PGM price per ounce of $466 for the first six months of 2005, compared to $485 for the same period of 2004, a 4% decrease.

     Revenues from PGM recycling were $42 million for the first six months of 2005, compared to $28.2 million for the same period in 2004. This increase in revenues from PGM recycling was primarily due to an increase in the quantity of recycled PGMs sold of 61,000 ounces in the first six months of 2005, compared to 47,000 ounces in the same period of 2004. Lower revenues in 2004, again, reflected the shutdown of the smelter and refinery for rebricking and other refurbishment during the second quarter of 2004. Recycling revenue also benefited modestly from higher prices for platinum and rhodium in the first six months of 2005 as compared to the same period of 2004.

     During the first quarter of 2004, the Company entered into three sales agreements providing for the Company to sell the 877,169 palladium ounces received in the Norilsk Nickel transaction ratably over a two-year period. Under

31

these agreements, the Company is selling approximately 36,500 ounces of palladium per month, at a slight volume discount to market prices. Revenues from sales of palladium received in the Norilsk Nickel transaction and other sales activities were $70.8 million for the first six months of 2005, compared to $40.1 million for the same period of 2004. Sales of approximately 219,000 ounces of palladium received in the Norilsk Nickel transaction generated $41.1 million in revenues during the first six months of 2005, compared to $40.1 million in revenues on approximately 156,000 ounces of palladium sold during the same period of 2004. The average realized price on these palladium sales was approximately $188 per ounce for the first six months of 2005, compared to $257 per ounce for the same period in 2004. Under one of the sales agreements, the Company also has agreed to sell 3,250 ounces of platinum and 1,900 ounces of rhodium per month, either purchased on the open market or produced from the Company’s mining operations. The Company recognized revenue of $29.7 million (included above) on approximately 5,000 ounces of platinum and 16,000 ounces of rhodium that were purchased in the open market and re-sold during the first six months of 2005; no comparable resales of purchased metal were recorded during the first six months of 2004.

     Cost of metals sold. Cost of metals sold was $200.5 million for the first six months of 2005, compared to $119.4 million for the same period of 2004, a 68% increase. Lower production costs for 2004 arose primarily from production costs incurred and inventoried during the second quarter 2004 shutdown of the Company’s smelter and refinery for rebricking and other refurbishment.

     The cost of metals sold from mine production was $95.5 million for the first six months of 2005, compared to $66.8 million for the same period of 2004, a 43% increase. The increase was primarily due to the 36% increase in ounces sold in the first six months of 2005, again reflecting the impact of the second-quarter 2004 smelter rebricking.

     Total consolidated cash costs per ounce produced, a non-GAAP measure, in the first six months of 2005 increased $44 or 16% to $318 per ounce from $274 per ounce in the same period of 2004. The increase is primarily due to the postponement of processing costs as a result of the smelter rebricking in the second quarter of 2004, along with 2005 increased labor costs associated with the new union contract at the Stillwater Mine, increased employee benefit and health care costs and increased material costs associated with higher prices for certain basic raw materials.

     The cost of metals sold from PGM recycling activities was $39.3 million in the first six months of 2005, compared to $26.1 million in the same period of 2004. The increase was primarily due to the shutdown for refurbishment of the Company’s processing facilities during the second quarter of 2004, along with the cost of acquiring and processing the increased ounces generated from the Company’s long-term sourcing agreement for spent catalytic materials.

     The cost of metals sold from sales of palladium received in the Norilsk Nickel transaction and other sales activities was $65.6 million in the first six months of 2005, compared to $26.4 million for the same period of 2004. The total cost of sales for palladium ounces received in the Norilsk Nickel transaction was $37.2 million in the first six months of 2005 (on about 219,000 ounces sold), compared to $26.4 million in the same period of 2004 (on about 156,000 ounces sold), both at an average cost of $169 per ounce. As discussed under “Revenues” above, the Company entered into a sales agreement early in 2004 that requires it to purchase rhodium and, at times, platinum from third parties in order to fulfill delivery commitments. The cost of metals purchased and resold, excluding sales of the palladium received in the Norilsk Nickel transaction, was $28.4 million for the first six months of 2005. There were no comparable resales of purchased metal recorded for the first six months of 2004.

     Production. During the first six months of 2005, the Company’s mining operations produced approximately 283,000 ounces of PGMs, including approximately 218,000 and 65,000 ounces of palladium and platinum, respectively. This compares with approximately 295,000 ounces of PGMs in the first six months of 2004, including approximately 228,000 and 67,000 ounces of palladium and platinum, respectively, a 4% period-on-period decrease in total PGM production. The overall production decrease is primarily due to the allocation of production resources in 2005 toward further improving the developed state of the mines.

     The Stillwater Mine produced approximately 204,000 ounces of PGMs in the first six months of 2005, compared with approximately 214,000 ounces of PGMs in the same period of 2004, a 5% decrease. The East Boulder Mine produced approximately 79,000 ounces of PGMs in the first six months of 2005, compared with approximately 81,000 ounces of PGMs for the same period of 2004, a 2% decrease.

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     Depreciation and amortization. Depreciation and amortization was $40.8 million for the first six months of 2005, compared to $29.9 million for the same period of 2004, a 36% increase. The increase was primarily due to the additional depletion expense for capital development placed into service during 2005.

     Other expenses. General and administrative expenses in the first six months of 2005 were $9.9 million, compared to $7.6 million during the same period of 2004. The increase is primarily due to increased professional fees associated with Sarbanes-Oxley compliance and other regulatory responses, and to higher compensation costs, including amortization of restricted stock awards granted during the second quarter of 2004.

     Interest expense of $5.7 million in the first six months of 2005 decreased approximately $1.6 million from $7.3 million in the same period of 2004. Although interest rates are significantly higher in 2005 than in 2004, the first quarter of 2004 included the cost of certain compliance waivers under the Company’s financing covenants.

     Other comprehensive income. For the first six months of 2005, other comprehensive income includes a change in the fair value of derivatives of $4.3 million partially offset by a reclassification to earnings of $2.4 million, for commodity hedging instruments. For the same period of 2004, other comprehensive income included a change in value of $2.6 million for commodity instruments and a reclassification adjustment to interest expense of $0.3 million.

Liquidity and Capital Resources

     The Company’s net working capital at June 30, 2005, was $230 million compared to $236.4 million at December 31, 2004. The ratio of current assets to current liabilities was 4.4 at June 30, 2005 down from 4.5 at December 31, 2004. The decrease in net working capital resulted primarily from an increase in the Company’s cash and cash equivalents, offset by a net decrease in operating assets and liabilities of $37.6 million, primarily due to sales of palladium from inventory.

     In managing its cash, the Company from time to time utilizes certain short-term investments that management deems to be available for sale. These investments are typically auction-rate securities that contain short-term repricing features and, therefore, are highly liquid. For the comparable three and six month periods ended June 30, 2004, the Company has reclassified these short-term investments to conform to current-period presentation. The Company had no corresponding short-term investments at June 30, 2005.

     For the quarter ended June 30, 2005, net cash provided by operating activities was $34.9 million, compared to $24.6 million for the comparable period of 2004. The increase in cash provided by operations of $10.3 million, was primarily a result of:

	Three months ended
	June 30
in thousands	2005			2004
Cash collected from customers	$	121,591		$	92,792
Cash paid to suppliers, employees and other		(85,113	)		(65,235	)
Interest received		1,178			386
Interest paid		(2,717	)		(3,360	)
Net cash provided by operating activities	$	34,939		$	24,583

     Net cash used in investing activities was $4.5 million during the second quarter of 2005 compared to $23.6 million in the same period in 2004. The Company’s investing activities are capital expenditures for property, plant, equipment, and purchases and sales of investments.

     Net cash used in financing activities was $7.5 million for the second quarter of 2005, compared to cash provided of $1.9 million for the same period in 2004. The cash used in the second quarter of 2005 was primarily related to payments on long-term debt and capital lease obligations, including term loan prepayments associated with the proceeds from sales of palladium received in the Norilsk Nickel transaction.

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     Cash and cash equivalents increased by $22.9 million during the second quarter of 2005, compared to $2.9 million for the second quarter of 2004. A significant share of second-quarter 2004 ore production was retained in inventory until the refurbishment of the processing facilities was completed and processing capacity became available.

     For the six months ended June 30, 2005, net cash provided by operating activities was $80.3 million, compared to $39.7 million for the comparable period of 2004. The increase in cash provided by operations of $40.6 million, was primarily a result of:

	Six months ended
	June 30,
in thousands	2005			2004
Cash collected from customers	$	247,994		$	170,886
Cash paid to suppliers, employees and other		(164,240	)		(124,613	)
Interest received		2,192			671
Interest paid		(5,678	)		(7,261	)
Net cash provided by operating activities	$	80,268		$	39,683

     Net cash used in investing activities was $27.1 million during the first six months of 2005 compared to $37.7 million in the same period in 2004. The Company’s investing activities are capital expenditures for property, plant, equipment, and purchases and sales of investments.

     Net cash used in financing activities was $7.9 million, compared to cash provided of $1.5 million for the same period in 2004. The cash used in 2005 was primarily related to payments on long-term debt and capital lease obligations, again, including term loan prepayments associated with the proceeds from sales of palladium received in the Norilsk Nickel transaction.

     Cash and cash equivalents increased by $45.3 million during the first six months of 2005, compared to $3.5 million for the first six months of 2004. As noted above, a significant share of second-quarter 2004 ore production was retained in inventory until the refurbishment of the processing facilities was completed and processing capacity became available.

Credit Facility

     On August 3, 2004, the Company entered into a $180 million credit facility with a syndicate of financial institutions. The credit facility consists of a $140 million six-year term loan facility maturing July 30, 2010, bearing interest at a variable rate plus a margin (London Interbank Offer Rate (LIBOR) plus 325 basis points, or 6.375% at June 30, 2005) and a $40 million five-year revolving credit facility bearing interest, when drawn, at a variable rate plus a margin (LIBOR plus 225 basis points, or 5.375% at June 30, 2005) expiring July 31, 2009. The margin on the revolving credit facility adjusts quarterly according to a leverage ratio defined in the credit agreement. The revolving credit facility includes a letter of credit facility; undrawn letters of credit issued under this facility currently carry an annual fee of 2.375%. The remaining unused portion of the revolving credit facility bears an annual commitment fee of 0.75%. Amortization of the term loan facility commenced in August 2004.

     As of June 30, 2005, the Company has $123.9 million outstanding under the term loan facility. During 2004, the Company obtained letters of credit in the amount of $7.5 million as surety for its long-term reclamation obligation at East Boulder Mine. During 2005, the Company obtained additional letters of credit in the amount of $6.6 million as collateral for surety bonds. These letters of credit reduce amounts available under the revolving credit facility to $25.9 million at June 30, 2005.

     The credit facility requires as prepayments 50% of the Company’s annual excess cash flow, plus any proceeds from asset sales and the issuance of debt or equity securities, subject to specified exceptions. Such prepayments are to be applied first against the term loan facility balance, and once that is reduced to zero, against any outstanding

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revolving credit facility balance. The Company’s term loan facility allows the Company to choose between LIBOR loans of various maturities plus a spread of 3.25% or alternate base rate loans plus a spread of 2.25%. The alternate base rate is a rate determined by the administrative agent under the terms of the credit facility, and has generally been equal to the prevailing bank prime loan rate, which was 6.0% at June 30, 2005. The alternate base rate applies only to that portion of the term loan facility in any period for which the Company has not elected to use LIBOR contracts. Substantially all the property and assets of the Company are pledged as security for the credit facility.

     In accordance with the terms of the credit facility, the Company is required to remit 25% of the net proceeds from sales of palladium received in the Norilsk Nickel transaction to prepay its term loan facility. The Company’s credit facility contains a provision that defers each prepayment related to the sales of palladium received in the Norilsk Nickel transaction until the accumulated amount due reaches a specified level. As of June 30, 2005, $20.2 million of the long-term debt has been classified as a current liability, including approximately $18.9 million expected to be prepaid based on palladium sales under this arrangement during the next twelve months.

Contractual Obligations

     The Company is obligated to make future payments under various contracts such as debt and capital lease agreements. The following table represents significant contractual cash obligations and other commercial commitments as of June 30, 2005:

in thousands	2005(1)		2006		2007		2008		2009		Thereafter		Total
Term loan facility	$	626	$	1,251	$	1,251	$	1,251	$	1,252	$	118,266	$	123,897
Capital lease obligations, net of interest		263		483		464		458		547		15		2,230
Special Industrial Education Impact Revenue Bonds		80		165		178		190		97		—		710
Exempt Facility Revenue Bonds, net of discount		—		—		—		—		—		29,359		29,359
Operating leases		881		554		456		429		160		803		3,283
Other noncurrent liabilities		—		12,378		—		—		—		12,874		25,252
Total	$	1,850	$	14,831	$	2,349	$	2,328	$	2,056	$	161,317	$	184,731

(1) Amounts represent cash obligations for July — December 2005.

     Debt obligations referred to in the table are presented as due for repayment under the terms of the loan agreements, and before any prepayments from the proceeds of the sale of palladium acquired in the Norilsk Nickel transaction or out of excess cash flows. Under the provisions of the term loan facility, the Company is required to offer 25% of the net proceeds of the sale of palladium received in the Norilsk Nickel transaction to prepay borrowings under its credit facility. The Company’s credit facility contains a provision that defers each prepayment related to these sales of palladium received in the Norilsk Nickel transaction until the accumulated amount due reaches a specified level. As of June 30, 2005, the Company had approximately $18.9 million expected to be prepaid under this arrangement during the next twelve months. The credit facility also requires that 50% of the Company’s annual excess cash flow (as defined in the credit facility) be applied as prepayments of the credit facility. Amounts included in other noncurrent liabilities that are anticipated to be paid in 2006 include workers’ compensation costs, property taxes, and severance taxes. Noncurrent liabilities that are anticipated to be paid after 2009 are undiscounted asset retirement obligation costs. Assuming no early extinguishments of debt and no changes in interest rates from their levels at June 30, 2005, the estimated total interest payments will be approximately $5.2 million, $10.4 million, $10.3 million, $10.2 million, $10.0 million and $29.6 million for 2005 (July — December), 2006, 2007, 2008, 2009 and the years thereafter, respectively.

Critical Accounting Policies

     Listed below are the accounting policies that the Company believes are critical to its financial statements due to the degree of uncertainty regarding estimates or assumptions involved and the magnitude of the liability, revenue, or expense being reported.

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Ore Reserve Estimates

     Certain accounting policies of the Company depend on its estimate of proven and probable ore reserves including depreciation and amortization of capitalized mine development expenditures, income tax valuation allowances, post-closure reclamation costs and asset impairment. The Company updates its proven and probable ore reserves annually, following the guidelines for ore reserve determination contained in the SEC’s Industry Guide No. 7.

Mine Development Expenditures — Capitalization and Amortization

     Mining operations are inherently capital intensive, generally requiring substantial capital investment for the initial and concurrent development and infrastructure of the mine. Many of these expenditures are necessarily incurred well in advance of actual extraction of ore. Underground mining operations such as those conducted by the Company require driving tunnels and sinking shafts that provide access to the underground orebody and construction and development of infrastructure, including electrical and ventilation systems, rail and other forms of transportation, shop facilities, material handling areas and hoisting systems. Ore mining and removal operations require significant underground facilities used to conduct mining operations and to transport the ore out of the mine to processing facilities located above ground.

     Contemporaneously with mining, additional development is undertaken to provide access to ongoing extensions of the orebody, allowing more ore to be produced. In addition to the development costs that have been previously incurred, these ongoing development expenditures are necessary to access and support all future mining activities.

     Mine development expenditures incurred to date to increase existing production, develop new orebodies or develop mineral property substantially in advance of production are capitalized. Mine development expenditures consist of vertical shafts, multiple surface adits and underground infrastructure development including footwall laterals, ramps, rail and transportation, electrical and ventilation systems, shop facilities, material handling areas, ore handling facilities, dewatering and pumping facilities. Many such facilities are required not only for current operations, but also for all future planned operations.

     Expenditures incurred to sustain existing production and access specific ore reserve blocks or stopes provide benefit to ore reserve production over limited periods of time (secondary development) and are charged to operations as incurred. These costs include ramp and stope access excavations from primary haulage levels (footwall laterals), stope material rehandling/laydown excavations, stope ore and waste pass excavations and chute installations, stope ventilation raise excavations and stope utility and pipe raise excavations.

     The Company calculates amortization of capitalized mine development costs by the application of an amortization rate to current production. The amortization rate is based upon un-amortized capitalized mine development costs, and the related ore reserves. Capital expenditures are added to the un-amortized capitalized mine development costs as the related assets are placed into service. In the calculation of the amortization rate, changes in ore reserves are accounted for as a prospective change in estimate. Ore reserves and the further benefit of capitalized mine development costs are based on significant management assumptions. Any changes in these assumptions, such as a change in the mine plan or a change in estimated proven and probable ore reserves, could have a material effect on the expected period of benefit resulting in a potentially significant change in the amortization rate and/or the valuations of related assets. The Company’s proven ore reserves are generally expected to be extracted utilizing its existing mine development infrastructure. Additional capital expenditures will be required to access the Company’s estimated probable ore reserves. These anticipated capital expenditures are not included in the current calculation of depreciation and amortization.

     The Company’s mine development costs include the initial costs incurred to gain primary access to the ore reserves, plus the ongoing development costs of footwall laterals and ramps driven parallel to the reef that are used to access and provide support for the mining stopes in the reef.

     Prior to 2004, the Company amortized all such capitalized development costs at its mines over all proven and probable reserves at each mine. Following the asset impairment write-down at the end of 2003, the Company revisited its assumptions and estimates for amortizing capitalized mine development costs. Thereafter, the Company determined it would change its method of accounting for mine

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development costs as follows:

• Unamortized costs of the shaft at the Stillwater Mine and the initial development at the East Boulder Mine will continue to be treated as life-of-mine infrastructure costs, to be amortized over total proven and probable reserves at each location, and

• All ongoing development costs of footwall laterals and ramps, including similar development costs incurred before 2004, will be amortized over the ore reserves in the immediate and relevant vicinity of the development.

     This change in accounting method required the Company to measure the effect of the change at January 1, 2004, as if the new method of amortization had been used in all prior years. The credit for the cumulative effect of the change for all years prior to 2004 of $6.0 million is shown as the “Cumulative Effect of Accounting Change” in the Consolidated Statement of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2004.

     The calculation of the amortization rate, and therefore the annual amortization charge to operations, could be materially affected to the extent that actual production in the future is different from current forecasts of production based on proven and probable ore reserves. This would generally occur to the extent that there were significant changes in any of the factors or assumptions used in determining ore reserves. These factors could include: (1) an expansion of proven and probable ore reserves through development activities, (2) differences between estimated and actual costs of mining due to differences in grade or metal recovery rates, and (3) differences between actual commodity prices and commodity price assumptions used in the estimation of ore reserves.

Derivative Instruments

     From time to time, the Company enters into derivative financial instruments, including fixed forwards and financially settled forwards to manage the effect of changes in the prices of palladium and platinum on the Company’s revenue. The Company accounts for its derivatives in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (together with subsequent accounting guidance for derivative instruments and hedging activities in SFAS No. 138 and No. 149), which requires that derivatives be reported on the balance sheet at fair value, and, if the derivative is not designated as a hedging instrument, changes in fair value must be recognized in earnings in the period of change. If the derivative is designated as a hedge, and to the extent such hedge is determined to be highly effective, changes in fair value are either (a) offset by the change in fair value of the hedged asset or liability (if applicable) or (b) reported as a component of other comprehensive income in the period of change, and subsequently recognized in the determination of net income in the period the offsetting hedged transaction occurs. The Company primarily uses derivatives to hedge metal prices and interest rates. As of June 30, 2005, the net unrealized loss on outstanding derivatives associated with commodity instruments is valued at $6.9 million, and is reported as a component of accumulated other comprehensive income. Because these hedges are highly effective, the Company expects any ultimate gains or losses on the hedging instruments will be largely offset by changes in the value of the corresponding hedged transaction.

Income Taxes

     Income taxes are determined using the asset and liability approach in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes. This method gives consideration to the future tax consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities based on currently enacted tax rates. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

     In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Each quarter, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. A valuation allowance has been provided at June 30, 2005, for the portion of the Company’s net deferred tax assets, which, more likely than not, will not be realized (see Note 10 to the Company’s consolidated financial statements). Based on the Company’s current financial projections, and in view of the level of tax

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depreciation and depletion deductions available, it appears unlikely that the Company will owe any income taxes for the foreseeable future. However, if average realized PGM prices were to increase substantially in the future, the Company could owe income taxes prospectively on the resulting higher than projected taxable income.

Post-closure Reclamation Costs

     In accordance with SFAS No. 143, Accounting for Asset Retirement Obligations, the Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation ultimately is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss at the time of settlement.

     Accounting for reclamation obligations requires management to make estimates for each mining operation of the future costs the Company will incur to complete final reclamation work required to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by the Company. Any such increases in future costs could materially impact the amounts charged to operations for reclamation and remediation.

Asset Impairment

     As required by SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews and evaluates its long-lived assets for impairment when events and changes in circumstances indicate that the related carrying amounts of its assets may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset. Future cash flows include estimates of recoverable ounces, PGM prices (considering current and historical prices, long-term sales contracts prices, price trends and related factors), production levels and capital and reclamation expenditures, all based on life-of-mine plans and projections. If the assets are impaired, a calculation of fair market value is performed, and if fair market value is lower than the carrying value of the assets, the assets’ carrying value is reduced to their fair market value.

     The Company evaluated key factors in its business at December 31, 2004, to determine if there were any events or changes in circumstances that would indicated that the carrying value of the Company’s assets would not be recoverable. No factors were identified that, as of December 31, 2004, indicated that an impairment existed. Consequently, the Company concluded that there was no asset impairment as of December 31, 2004. A review of these key factors as of June 30, 2005, also did not indicate any asset impairment.

Deferred Compensation

     Effective May 3, 2005, the Company’s Board of Directors implemented the Stillwater Mining Company Non-Employee Directors’ Deferral Plan, which allows non-employee directors to defer all or any portion of their director compensation, in accordance with the provisions of Section 409A of the Internal Revenue Code and associated Treasury regulations. All amounts deferred under this plan are fully vested, and the deferral period under the plan and form of the deferral (in cash or as Company shares) is elected by each participant individually. In accounting for this plan, the Company follows the provisions of APB Opinion No. 12 on accounting for deferred compensation plans other than post-retirement plans. Under APB 12, other deferred compensation contracts shall be accounted for individually on an accrual basis in accordance with the terms of the underlying contract. Because all of the deferred compensation is fully vested, the Company recognizes the full amount deferred in any year as compensation expense in that year.

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FORWARD LOOKING STATEMENTS; FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION

     Some statements contained in this report 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, labor matters, 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 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” above in the Company’s 2004 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.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

     The Company is exposed to market risk, including the effects of adverse changes in metal prices and interest rates as discussed below.

Commodity Price Risk

     The Company produces and sells palladium, platinum and associated byproduct metals directly to its customers and also through third parties. As a result, financial performance can be materially affected when prices for these commodities fluctuate. In order to manage commodity price risk and to reduce the impact of fluctuation in prices, the Company enters into long-term contracts and from time to time uses various derivative financial instruments. Because the Company hedges only with instruments that have a high correlation with the value of the hedged transactions, changes in the fair value of the derivatives are expected to be offset by changes in the value of the hedged transaction.

     The Company has entered into long-term sales contracts with General Motors Corporation, Ford Motor Company and Mitsubishi Corporation. The contracts together cover significant portions of the Company’s mined PGM production through December 2010 and stipulate floor and ceiling prices for some of the covered production. In the first quarter of 2004 the Company also entered into three new sales contracts under which palladium volumes equal to the 877,169 ounces of palladium received in the Norilsk Nickel stock purchase transaction will be sold over a period of two years, primarily for use in automobile catalytic converters. Under these agreements, the Company will sell approximately 36,500 ounces of palladium per month, ending in the first quarter of 2006, at a slight volume discount to the market price at the time of delivery. Under one of these agreements, the Company also will sell 3,250 ounces of platinum and 1,900 ounces of rhodium per month also at a slight discount to market prices. The Company from time to time may need to purchase platinum and rhodium in the open market to fulfill this monthly delivery obligation.

     The Company enters into fixed forwards and financially settled forwards that are accounted for as cash-flow hedges to hedge the price risk in its PGM recycling and mine production activities. In the fixed forward transactions, normally metals contained in the spent catalytic materials are sold forward at the time the materials are received and are delivered against the fixed forward contracts when the finished ounces are recovered. Financially settled forwards may be used as a mechanism to hedge against fluctuations in metal prices associated with future production. Under financially settled forwards, at each settlement date the Company receives the difference between the forward price and the market price if the market price is below the forward price, and the Company pays the difference

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between the forward price and the market price if the market price is above the forward price. The Company’s financially settled forwards are settled in cash at maturity.

     As of June 30, 2005, the Company was party to financially settled forward agreements covering approximately 61% of its anticipated platinum sales from mine production for the period from July 2005 through May 2007. These transactions are designed to hedge a total of 162,300 ounces of platinum sales from mine production for the next twenty-three months at an overall average price of approximately $830 per ounce.

     The Company enters into fixed forwards and financially settled forwards relating to PGM recycling of catalyst materials. These transactions are accounted for as cash-flow hedges. These sales of metals derived from processing spent catalytic materials are sold forward at the time of receipt and delivered against the cash flow hedges when the ounces are recovered. All of these open transactions will settle at various periods through October 2005 (see Note 9 to the Company’s consolidated financial statements). The unrealized gain on these instruments related to PGM recycling due to changes in metal prices at June 30, 2005, was $0.5 million. The corresponding unrealized gain on these instruments was $2.1 million at June 30, 2004. The Company has credit agreements with its major trading partners that provide for margin deposits in the event that forward prices for metals exceed the Company’s hedge contract prices by a predetermined margin limit. The Company had no margin deposits outstanding or required at June 30, 2005, or June 30, 2004.

     Until these contracts mature, any net change in the value of the hedging instrument due to changes in metal prices is reflected in stockholders’ equity in accumulated other comprehensive income. A net unrealized loss of $6.9 million on these hedging instruments ($6.4 million unrealized loss related to financially settled forwards for mine production and a $0.5 million unrealized gain related to fixed forwards for PGM recycling), existing at June 30, 2005, is reflected in accumulated other comprehensive income (see Note 4 to the Company’s consolidated financial statements). Because these hedges are highly efficient, when these instruments are settled any remaining gain or loss on the cash flow hedges will be offset by losses or gains on the future metal sales and will be recognized at that time in operating income. All commodity instruments outstanding at June 30, 2005, are expected to be settled within the next twenty-three months.

     A summary of the Company’s derivative financial instruments as of June 30, 2005, is as follows:

Mine Production:
Financially Settled Forwards

	Platinum		Average
	Ounces		Price		Index
Third Quarter 2005		23,200	$	810	Monthly London PM Average
Fourth Quarter 2005		23,200	$	801	Monthly London PM Average
First Quarter 2006		24,400	$	818	Monthly London PM Average
Second Quarter 2006		25,500	$	823	Monthly London PM Average
Third Quarter 2006		21,000	$	823	Monthly London PM Average
Fourth Quarter 2006		21,000	$	862	Monthly London PM Average
First Quarter 2007		16,000	$	870	Monthly London PM Average
Second Quarter 2007		8,000	$	876

Secondary Processing:
Fixed Forwards

	Platinum				Palladium				Rhodium
	Ounces		Price		Ounces		Price		Ounces		Price
Third Quarter 2005		17,192	$	877		3,801	$	185		1,780	$	1,911
Fourth Quarter 2005		3,286	$	889		—	$	—		—	$	—

Interest Rate Risk

     During the first quarter of 2002, the Company entered into two identical interest rate swap agreements. These swaps fixed the interest rate on $100.0 million of the Company’s debt. The interest rate swap agreements were effective March 4, 2002, and matured on March 4, 2004. The Company has not replaced or renewed the interest rate

40

swap agreements and consequently is exposed to the full effect on earnings and cash flow of fluctuations in interest rates.

     As of June 30, 2005, the Company had $123.9 million outstanding under the term loan facility, bearing interest based on a variable rate plus a margin (LIBOR plus 325 basis points, or 6.375% at June 30, 2005). As of June 30, 2005, the Company’s credit facility allows the Company to choose between loans based on LIBOR plus a spread of 3.25% or alternative base rate loans plus a spread of 2.25%. The alternative base rate is a rate determined by the administrative agent under the new credit facility, and has generally been equal to the prevailing bank prime loan rate, which was 6.0% at June 30, 2005. The final maturity of the term loan facility is July 30, 2010.

     As of June 30, 2005, the Company had a $40 million revolving credit facility. This revolving credit facility includes a letter of credit facility. The Company has obtained letters of credit in the amount of $14.1 million, which reduces the amounts available under the revolving credit facility to $25.9 million at June 30, 2005. The letters of credit carry an annual fee of 2.25% at June 30, 2005. The remaining unused portion of the revolving credit facility carries an annual commitment fee of 0.75%.

     If the annual effective interest rate of the variable rate debt increases (or decreases) by 1%, the effect on interest expense would be an increase (or a decrease) of approximately $1.2 million annually.

Item 4. Controls and Procedures

     (a) Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

     (b) Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

41

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     The Company is involved in various claims and legal actions arising in the ordinary course of business, including employee injury claims. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity and the likelihood that a loss contingency will occur in connection with these claims is remote.

Stockholder Litigation

     In 2002, nine lawsuits were filed against the Company and certain senior officers in United States District Court, Southern District of New York, purportedly on behalf of a class of all persons who purchased or otherwise acquired common stock of the Company from April 20, 2001 through and including April 1, 2002. They assert claims against the Company and certain of its officers under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Plaintiffs challenge the accuracy of certain public disclosures made by the Company regarding its financial performance and, in particular, its accounting for probable ore reserves. In July 2002, the court consolidated these actions, and in May 2003, the case was transferred to federal district court in Montana. In May 2004, defendants filed a motion to dismiss plaintiffs’ second amended complaint, and in June 2004, plaintiffs filed their opposition and defendants filed their reply. Defendants have reached an agreement in principle with plaintiffs to settle the federal class action subject to documentation and court approval. Under the proposed agreement, any settlement amount will be paid by the Company’s insurance carrier and will not involve any out-of-pocket payment by the Company or the individual defendants. In light of the proposed settlement, the parties have requested that the hearing on defendants’ motion to dismiss be taken off calendar, without prejudice to their right to reinstate the motion in the event the parties are not successful in negotiating the terms of the final settlement papers.

     On June 20, 2002, a stockholder derivative lawsuit was filed against the Company (as a nominal defendant) and certain of its current and former directors in state court in Delaware. It arises out of allegations similar to those in the class action and seeks damages allegedly on behalf of the stockholders of Stillwater for breach of fiduciary duties by the named directors. No relief is sought against the Company, which is named as a nominal defendant.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

42

Item 4. Submission of Matters to a Vote of Security Holders

     The Company’s annual meeting of stockholders was held on May 3, 2005. The following table sets forth the proposals presented at the annual meeting and the votes cast in connection with each proposal. Further information regarding these proposals was included in the Company’s proxy statement filed with the Securities and Exchange Commission on April 6, 2005.

Proposal	For		Against		Abstain		Withheld
1. To elect nine directors to the Company’s Board of Directors
Craig L. Fuller		81,267,531						5,528,741
Patrick M. James		85,040,338						1,755,934
Steven S. Lucas		84,958,094						1,838,178
Joseph P. Mazurek		80,343,541						6,452,731
Francis R. McAllister		84,950,250						1,846,022
Sheryl K. Pressler		84,891,451						1,904,821
Donald W. Riegle		84,129,680						2,666,592
Todd D. Schafer		84,610,549						2,185,723
Jack E. Thompson		84,982,408						1,813,864
2. To ratify the appointment of KPMG LLP as the Company’s independent accountants for 2005		86,777,570		76,202		42,500

Item 5. Other Information

None

Item 6. Exhibits

EXHIBITS

Number	Description
10.1	Contract between Stillwater Mining Company and USW International Union, Local 1, East Boulder Unit, effective July 10, 2005.
31.1	Rule 13a-14(a)/15d-14(a) Certification — Chief Executive Officer, dated August 8, 2005.
31.2	Rule 13a-14(a)/15d-14(a) Certification — Vice President and Chief Financial Officer, dated August 8, 2005.
32.1	Section 1350 Certification, dated August 8, 2005.
32.2	Section 1350 Certification, dated August 8, 2005.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

STILLWATER MINING COMPANY
(Registrant)

Date: August 8, 2005	By:	/s/ Francis R. McAllister
		FRANCIS R. McALLISTER
		Chairman and Chief Executive Officer (Principal Executive Officer)
Date: August 8, 2005	By:	/s/ Gregory A. Wing
		GREGORY A. WING
		Vice President and Chief Financial Officer (Principal Financial Officer)

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EXHIBIT INDEX

Number	Description
10.1	Contract between Stillwater Mining Company and USW International Union, Local 1, East Boulder Unit, effective July 10, 2005.
31.1	Rule 13a-14(a)/15d-14(a) Certification — Chief Executive Officer, dated August 8, 2005.
31.2	Rule 13a-14(a)/15d-14(a) Certification — Vice President and Chief Financial Officer, dated August 8, 2005.
32.1	Section 1350 Certification, dated August 8, 2005.
32.2	Section 1350 Certification, dated August 8, 2005.

EX-10.1

Exhibit 10.1

CONTRACT

BETWEEN

STILLWATER MINING COMPANY

AND

USW International Union, Local 1
EAST BOULDER UNIT

ARTICLES OF AGREEMENT	1
ARTICLE 1 RECOGNITION	1
ARTICLE 2 NON-DISCRIMINATION	1
ARTICLE 3 UNION SECURITY	2
ARTICLE 4 MANAGEMENT RIGHTS	2
ARTICLE 5 MANAGEMENT-UNION COMMITTEE	4
ARTICLE 6 GRIEVANCE AND ARBITRATION	4
ARTICLE 7 MEDICAL ARBITRATION	7
ARTICLE 8 SENIORITY	7
ARTICLE 9 PROBATIONARY PERIOD	8
ARTICLE 10 JOB POSTINGS	9
ARTICLE 11 LAY-OFF AND RECALL	9
ARTICLE 12 SEVERANCE PAY	11
ARTICLE 13 HOURS OF WORK AND OVERTIME	11
ARTICLE 14 SICK/PERSONAL LEAVE/ATTENDANCE	12
ARTICLE 15 CLASSIFICATION AND WAGES	14
ARTICLE 16 SAFETY AND HEALTH	14
ARTICLE 17 BENEFITS	16
ARTICLE 18 HOLIDAYS	18
ARTICLE 19 VACATION	19
ARTICLE 20 UNION LEAVES OF ABSENCE	20

ARTICLE 21 FAMILY AND MEDICAL LEAVE	21
ARTICLE 22 MILITARY SERVICE	23
ARTICLE 23 BEREAVEMENT LEAVE	23
ARTICLE 24 JURY AND WITNESS SERVICE	23
ARTICLE 25 CONTRACTING OUT	24
ARTICLE 26 MISCELLANEOUS	24
ARTICLE 27 MINE/PLANT CLOSURE	26
ARTICLE 28 NO STRIKE	26
ARTICLE 29 PAST PRACTICE	26
ARTICLE 30 VALIDITY	26
ARTICLE 31 COMPLETE AGREEMENT	27
ARTICLE 32 TERM OF AGREEMENT	27

ARTICLES OF AGREEMENT

This Agreement is between Stillwater Mining Company East Boulder Operation (“Company”), its successors and assigns, and the USW International Union, Local 1 (“Union”), East Boulder Unit, its successors and assigns.

ARTICLE 1
RECOGNITION

Section 1. The Company recognizes the Union as the sole and exclusive bargaining representative for the following Company employees employed by the Company at 12 Miles FS 205, McLeod, Montana. All hourly production and maintenance employees, including warehouse employees, and custodians; but excluding all temporary employees, student summer hires, professional employees, technical employees, office clerical employees, guards, dispatchers and supervisors, and those above the rank of supervisor.

Section 2. The Union’s Workers’ Committee represents Union interests to the Company. The Workers’ Committee will be selected by the Union, and consist of four (4) members, including the Local Unit Chairman who will be the Chair. The three (3) remaining members will consist of one (1) Miner’s Representative, one (1) Surface Representative, and one (1) Underground Representative. Alternates may be selected to replace absent Committee members.

Section 3. The Local Unit Chairman will promptly notify the Company, in writing, of the names of the Workers’ Committee members and Stewards. The Company will be notified, in writing, of any changes to these groups.

Section 4. The activities of the Union’s Workers’ Committee will not result in any disruption of the Company’s operations, and employees will not neglect their duties and responsibilities.

ARTICLE 2
NON-DISCRIMINATION

Section 1. The Company and Union agree that neither will discriminate nor harass any employee or applicant for employment because of race, creed, marital status, color, age, disability, religion, national origin or sex in violation of any applicable Federal, State or local law.

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ARTICLE 3
UNION SECURITY

Section 1. Every employee covered by this Agreement must, for the life of this Agreement after the grace period described below, satisfy a financial obligation to the Union as the exclusive bargaining representative. Under this Agreement, the financial obligation for union members is an amount equivalent to monthly dues, and for non-members a fee amount, as determined by the Union, to perform the duties as exclusive representative under this Agreement.

This financial obligation is a condition of continued employment and is in consideration for the cost of representation and collective bargaining and is not contingent upon present or future membership in the Union.

The grace period for this Agreement is thirty (30) calendar days following the completion of the employee’s probationary period or by the thirtieth (30th) calendar day following the effective date of this Agreement, whichever is later.

Neither the Union, Company, nor any of their officers, agent or members will intimidate or coerce employees about membership or non-membership in the Union. If any dispute arises as to whether there has been any violation of this provision (or whether an employee affected by this Agreement has failed to meet the financial obligation), the dispute will be submitted directly to arbitration for determination.

The Union will indemnify and save the Company harmless against any and all claims, demands, suits or other forms of liability that will arise out of or by reason of action taken by the Company complying with the provisions of this Article.

Section 2. For employees in the bargaining unit, the Company agrees to deduct the Union dues for the month from the wages due each month, providing each employee from whose check Union dues are to be deducted has on file a signed payroll deduction authorization.

ARTICLE 4
MANAGEMENT RIGHTS

Section 1. Management retains all the general and traditional rights to manage the business as well as any rights under the law or agreed by the parties. These rights rest exclusively in management who are the sole decision makers regarding the Company’s operations. The following list of specific management rights is not intended to be all-inclusive, but are some of those rights considered to be general rights of management. The fact that a particular management right is not included in the following listing does not mean the right does not exist.

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Section 2. The Company has the right to determine the number of employees required by the Company at any place from time to time, for any and all operations; to determine the jobs, content of jobs and to modify, combine or end any job, classification, department or operation; to hire, classify, transfer, promote, demote and layoff employees; to determine qualifications, evaluate performance and assign and direct the workforce; to maintain order and discipline; and to reprimand, suspend, discharge and otherwise discipline for just cause.

Section 3. The Company has the right to create and administer rules, policies and procedures. This will include the right to establish or revise attendance, work, substance abuse, drug and/or alcohol testing, functional testing and safety rules. The Company has the right to establish or revise a disciplinary policy to address violations of these rules.

Section 4. The Company also has the right to determine the number and types of facilities and working places; the kinds and locations of machines, tools and equipment to be used; and the right to schedule production; to maintain efficiency; to introduce new or improved research methods, materials, processes, techniques, machinery and equipment, means of processing, distribution and mining; to set the standards of productivity and the products to be produced; to determine employees’ working schedules, including, but not limited to, the number of hours and shifts to be worked; to determine when overtime work is necessary and to assign overtime; to choose customers; to utilize part-time and temporary employees; to decide where or when training on a particular operation or job is required, how much training is required and the right to move or retrain employees; to determine the amount and form of any incentive and/or bonus compensation to be paid in addition to wages; to establish, implement, modify, suspend or terminate any contract or incentive program; to use independent contractors to perform any work or services.

Section 5. The Company’s failure to exercise any right or function reserved to it, or the exercise of a management right in a particular way, will not prevent the Company from exercising any of its rights in the future or in some other way not in conflict with this Agreement. The only restrictions on management rights are those expressly provided for in this Agreement.

Section 6. The exercise of these rights alleged to be in conflict with any other provision of this Agreement will be subject to the grievance and arbitration procedures.

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ARTICLE 5
MANAGEMENT-UNION COMMITTEE

Section 1. The Company and the Union recognize the benefits of an open forum where information, mutual concerns, interests, and complaints (not covered by the grievance and arbitration procedures) affecting the workplace can be freely discussed, with a view to exploring possible solutions which are acceptable and beneficial to employees, the Union and the Company. Without limiting the opportunity for the Union and the Company to meet informally at the East Boulder Operations, the parties agree to establish a Management-Union Committee (MUC).

Section 2. The Workers’ Committee will serve as representatives for the Union at MUC meetings. The Company representatives will be comprised of Senior Management personnel.

Section 3. MUC meetings will normally be held during regular business hours, as necessary, on at least a quarterly basis. Logistics for the meeting will be mutually agreed upon and coordinated through the Human Resources Department. Senior Management from the East Boulder Operations will discuss agenda items with the Local Unit Chairman prior to the meeting. A formal meeting agenda will be given to all Committee members at least five (5) days prior to the meeting, whenever possible.

Section 4. For employees on their regularly scheduled shifts, time spent at MUC meetings will be considered as time worked and will be paid at an employee’s normal base rate. The Company will make every reasonable effort to schedule the MUC members on shift during MUC meetings.

Section 5. The MUC is limited to joint discussion and consultation, and is not intended to limit or restrict the rights reserved to the Union or the Company by this Agreement. The Committee is not intended to take the place of normal communication between employees and the Company, or to serve as an alternative to the grievance and arbitration procedures of this Agreement.

ARTICLE 6
GRIEVANCE AND ARBITRATION

Section 1. It is recognized that, from time to time, dispute(s) between the Company and its employees may occur. The employees will try to settle these differences as quickly as possible with their immediate foreman or supervisor. The employee has the right to be accompanied and assisted by a Steward or Committee Member. If the disagreement cannot be resolved between the parties, a grievance may be filed. A “grievance” is a dispute as to the

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interpretation, application, or alleged violation of any of the provisions of this Agreement.

Section 2. Should a grievance arise that is not verbally settled with the immediate supervisor, an earnest effort will be made to settle such grievances in the following manner:

Step 1: The grievance shall be presented in writing to the Human Resources Department within fifteen (15) days from the time the employee has knowledge of the occurrence. The supervisor has fifteen (15) days to respond in writing to the grievance. If the supervisor’s written answer is not accepted, the Union must advance the grievance through the Human Resources Department to the applicable manager or his designee in writing within fifteen (15) days following the supervisor’s written answer.

Step 2: The applicable manager or his designee will have up to fifteen (15) days to conduct a grievance meeting. The meeting will be comprised of no more than three Union Representatives and up to three Company Representatives, to include at least one representative from the department from which the grievance arose. In an earnest effort to resolve the dispute, the Company and Union will disclose throughout the grievance process, facts and information relied upon. Following the meeting the Company will have fifteen (15) days to respond in writing to the grievance. The Union will have fifteen (15) days to respond in writing to the Companies’ answer from the second step meeting.

Section 3. Failure by either party to comply with the time limits set forth in this Article shall result in the grievance being advanced to the next step. The time limits set forth in this Article may be extended, in writing, by mutual agreement, on a case-by-case basis. The Company will pay for time spent by Union representatives in grievance meetings that are scheduled during their regular working hours.

Section 4. If the answer from the grievance Step 2 meeting is not accepted by the Union, the grievance will automatically be referred to arbitration. The Company and Union will agree on a tentative date for the arbitration, not to exceed 50 days following the Union’s notice to the Company that they do not accept the Company’s Step 2 response.

A. The Company and the Union mutually agree to select a three (3)-member arbitration panel. The arbitrators will normally reside in the State of Montana and will have direct experience in collective bargaining disputes. The parties will establish a rotation for the arbitration panel. Following the hearing, the arbitrator’s decision will be reduced to writing and submitted to both parties within five (5) working days from the date of the hearing.

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B. Should the members of the panel be unavailable or in instances where the Company and the Union determine not to use a member of the Panel, the following procedure will be utilized. The parties shall refer the grievance to the Federal Mediation and Conciliation Service. The parties shall request the Federal Mediation Service to submit a panel of seven (7) arbitrators. Each party shall have the right to reject one panel of arbitrators. Striking of the first name shall be determined by the flip of a coin and then the parties shall alternately strike a name until one arbitrator is left. The arbitrator shall be notified of selection by a letter from the parties requesting that the arbitrator set a time for the hearing, subject to the availability of the Company and the Union representative. Arbitration hearings shall be held in Billings, Montana.

Section 5. In rendering a decision, the arbitrator will be governed and limited by this Agreement’s provisions, applicable law, and the expressed intent of the parties as described in this Agreement. The arbitrator will have no power to add to, subtract from, or modify any of the terms and provisions of this Agreement, or substitute his judgment for that of the Company. The arbitrator will confine his judgment strictly to the facts submitted in the hearing, the evidence before him, and this Agreement’s express terms and provisions. The arbitrator’s decision will be final and binding upon the parties.

Section 6. The Company and the Union shall bear the costs of their respective expenses, and shall share, equally, the cost of the arbitrator.

Section 7. The Union and the employees waive their right to pursue any judicial or administrative remedy against the Company as to any matter subject to the procedures established in this Article until such procedures are exhausted. Any settlement under the procedures established under this Article, short of arbitration, will be binding upon the Company, the Union, and the employees and will preclude any further administrative or judicial relief.

Section 8. Any employee has the right to have a Steward or Committee Member present if they are called into a meeting, which may result in disciplinary action.

Section 9. If it is necessary for a Steward or Committee Member to take time off during their regularly scheduled shift to investigate or resolve a grievance, they shall request the permission of their immediate supervisor, which permission shall not be unreasonably withheld. When a Steward or Committee Member enters an area other than their normal work area, they shall inform the supervisor of that area of their presence and reason for being there. As well, a Steward or Committee Member shall inform their supervisor when returning to their normal work area or duties.

Section 10. Grievances dealing with suspensions and/or discharges will be moved immediately to Step 2 of the grievance procedure.

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Section 11. The Union, by not exercising any functions thus reserved to it or by exercising any such function in a particular way, shall not be deemed to have waived its right to exercise such function as set forth in this Agreement.

ARTICLE 7
MEDICAL ARBITRATION

Section 1. In the event a dispute arises concerning the physical fitness of an employee to return to work or to continue to work, an attempt to resolve the dispute by conference or consultation between a licensed physician selected by the Company and a licensed physician selected by the Union, will first be made.

Section 2. If no satisfactory conclusion is reached and the Union or the Company so elects, a Board of three (3) licensed physicians will be selected, one by the Company, one by the Union, and one by the two so-named, who will decide the case. The decision of the Board will be final and binding on both parties to this Agreement and retroactive to the date the dispute arose.

Section 3. The Company will bear the expense of the physician of its choice, and the Union will bear the expense of the physician of its choice. The expense of the third physician will be paid by the losing party. In the event that the decision of the Board does not result in a clear-cut losing party, the expense of the third physician will be paid equally by the parties.

ARTICLE 8
SENIORITY

Section 1 . Company seniority will be determined by an employee’s date of original employment with the Company, or predecessor companies Chevron or Manville, if there has been no service break. Company seniority will apply only for purpose of applicable benefit plans and earned vacation.

Section 2. Union seniority will be determined from the employee’s date of original employment with the Company at its facilities covered by this Agreement or date of employment if there had been a break in service. An employee’s union seniority will be lost if the employee:

A.	Quits.
B.	Is discharged for just cause.
C.	Fails to work for any reason for two (2) years, or length of service, whichever is less.
D.	Fails to return to work upon termination of a leave of absence.

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In addition, an employee’s Union seniority shall be lost if the employee is promoted to a full-time non-bargaining unit position for a period in excess of one (1) year. If the employee returns to the bargaining unit, he/she must make the Union whole.

If an employee is re-employed subsequent to termination for an above-stated cause, said employee shall be considered a new employee for seniority purposes.

Section 3. Department Mine, Concentrator, Underground Maintenance and Warehouse seniority will be determined by the date on which the employee begins continuous service in one of the following departments:

A.	Mine
B.	Concentrator/Concentrator Maintenance/Surface
C.	Underground Maintenance
D.	Warehouse

The employee will lose department seniority in any previous department once department seniority is established in any other department.

Section 4. The Company will annually provide the Union with a current seniority list which will also be posted in the workplace.

Section 5. If employees are hired on the same day, seniority will be decided by the flip of a coin.

ARTICLE 9
PROBATIONARY PERIOD

Section 1. All new employees will be considered probationary employees for a period of seven hundred eighty (780) hours worked.

Section 2 Unless Company policies provide otherwise, probationary employees will not be eligible for any benefits granted to regular employees under this Agreement. No terms of this Agreement other than this Article and the appropriate wage rate will apply to probationary employees.

Section 3. Employees continued in employment after the end of the probationary period will become full-time employees and will be credited with continuous service from the original date of hire.

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ARTICLE 10
JOB POSTINGS

Section 1. Whenever the Company determines a vacancy, other than a temporary vacancy, exists in any biddable job classification, or a new job becomes available, the Company will post a job posting on the bulletin boards for ten (10) consecutive days. Employees desiring to bid on the vacancy will apply in writing to the Human Resources Department within the allotted ten (10) days. Laid off employees, who have seniority rights, will be eligible to bid on all job postings. Upon request, a copy of the job posting and of all bids will be provided to the Local Unit Chairman.

Section 2. The Company will determine the successful candidate based on relevant job-related criteria utilizing job skills assessment. The requisite skills, knowledge and ability to perform the relevant tasks of the job may be determined through tests, licenses or certifications. Employees who have incurred any of the following in the twelve (12) months prior to bidding or promotion are not entitled to consideration for advancement:

one (1) or more suspensions, or

two (2) or more written safety-related disciplinary actions, or

one (1) or more safety-related lost time incidents, or

one (1) or more MSHA medical reportable incidents.

Section 3. Temporary vacancies of less than ninety (90) days may be filled at the Company’s discretion.

Section 4. If the successful bidder proves unsatisfactory after a thirty (30) day evaluation period, or chooses not to continue in the new position within the thirty (30) day evaluation period, the employee will be returned to the position last held with no loss of seniority. The Company will then fill the position with the next senior qualified candidate from the original posting.

Section 5. An employee who is awarded a job posting outside his department cannot bid for another job for a period of one (1) year. An employee who is awarded a job posting within his department cannot bid for another job for a period of four (4) months.

ARTICLE 11
LAY-OFF AND RECALL

Section 1. For the purpose of lay-off and recall, qualifications to perform the job(s) concerned and seniority shall apply. The employee(s) with the least departmental seniority in the affected classification within the department shall be the first full-time employee laid off in each department, and so on. Employee(s) displaced from their classification(s) shall first be entitled to displace the junior

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employee in their department provided they are qualified to perform the work involved. Employee(s) not qualified to displace junior employees within their department shall be entitled to displace the junior employee in other departments, based upon Union seniority, provided they are qualified to perform the work involved. Upon recall, the last full-time employee laid off will be the first full-time employee recalled, providing such employee is qualified to perform the job in question, utilizing Union seniority. Temporary employees and probationary employees will be laid off prior to employees on the seniority list, unless the temporary or probationary employees have special skills not held by regular employees.

Section 2. An employee has fifteen (15) days to respond to a recall to work by certified mail. The fifteen (15) days will begin running when the Company makes its initial attempt to recall. Unless other arrangements are made, the recalled employee will have up to fifteen (15) days to return to work after responding to the Company’s offer. Failure to respond or return to work within the time limits outlined in this Section will result in a loss of seniority.

Section 3. The Company will meet with the MUC Committee to discuss any layoffs or reduction-in-force prior to implementation. The Company will notify the Union of any pending layoff or reduction-in-force as far in advance as possible. If a layoff is less than ninety (90) days in duration, the Company will pay its portion of the cost of fringe benefits during the layoff.

Section 4. For purposes of this Article, it is understood that an employee’s qualifications to perform a job will be based on relevant job-related criteria utilizing job Skills Assessment. The requisite skills, knowledge and ability to perform the relevant tasks of the job may be determined through tests, licenses or certifications.

Section 5. The proposed creation of a new test, or the elimination or change of an existing test, shall first be discussed with the area Chief Steward of the affected department. If the parties aren’t able to agree on such new test or changes, the Union may file a grievance as to the reasonableness of the test as set forth in this Agreement.

Section 6. Employees on lay off are required to inform the Company of any address changes via Certified Mail.

Section 7. If a laid-off employee, with recall rights, refuses a reinstatement offer, the employee forfeits his/her Union seniority.

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ARTICLE 12
SEVERANCE PAY

Section 1. Any full-time employee who loses seniority because of a long-term layoff or a permanent mine closure will be entitled to one (1) week of severance at the employee’s base rate of pay for each full year of continuous service with the Company up to a maximum of fifteen (15) weeks of pay.

Any full-time employee who is laid off and granted severance pay pursuant to this section, if re-employed and subsequently laid off through a reduction-in-force, shall be denied a second severance pay allowance unless continuous service since re-employment has been one year or more. Any employee who, is laid off or whose employment is severed and granted severance pay pursuant to this Section, returns to active work within a length of time which is less than that paid as severance, may continue to reimburse the Company the excess severance pay within sixty (60) days of recall. Any excess severance pay repaid to the Company as set forth above, shall be paid to the employee in the event of a subsequent lay-off.

ARTICLE 13
HOURS OF WORK AND OVERTIME

Section 1. The normal workweek will begin at 7:01 a.m. each Sunday and end at 7:00 a.m. the following Sunday. Overtime will paid for all hours worked in excess of forty (40) hours during a workweek.

Section 2. Changes in working schedules (other than temporary incidental changes) will be discussed with the MUC prior to implementation.

Section 3. An employee who is called back for immediate work after leaving Company property or who is called for immediate work outside their scheduled working hours, and actually begins working, will be paid time and one-half (1¹/2) for work actually performed. Under this Section, employees will be called out and paid for a minimum of five (5) hours at the time and one-half (1¹/2) rate (in lieu of travel time and mileage).

Section 4. If an employee’s regularly scheduled shift is canceled less than ninety (90) minutes before it is scheduled to begin, the employee will either work a minimum of four (4) hours or be paid four (4) hours at this regular hourly rate in lieu of work.

Section 5. Upon prior approval of the supervisors involved, employees may mutually agree to exchange shifts or days off provided the exchange does not cause any disruption or increased cost to the Company, and that the exchange does not cause the employee to be on duty more than sixteen (16) hours in any twenty-four (24) hour period.

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Section 6. The Company agrees that overtime will be distributed as uniformly and equally as possible and practical within each classification. Employees will not be forced to work overtime as long as there are employees in their classification who are qualified and willing to work such overtime. If no qualified employees volunteer to accept requested overtime, the Company will assign the overtime to a qualified employee, based on reverse order of department seniority. Employees who decline offered overtime will be charged for the overtime offered as if it has been worked for the purpose of overtime allocation.

Section 7. Any employee who has worked sixteen (16) consecutive hours will be compensated at double (2) time for all hours worked over sixteen (16). Any employee who has worked sixteen (16) or more hours will be allowed a rest period of at least eight (8) hours with no loss of overtime pay.

Section 8. Pyramiding of overtime is prohibited.

Section 9. For the purpose of computing weekly overtime the following will be considered as time worked: holidays, jury/witness service, union business involving contract administration or negotiations for the purpose of renewing this Agreement, which fall on an employee’s regularly scheduled work day; or meetings, training and conferences required by the Company. These hours will not exceed the number of hours in the employee’s normal work day.

Section 10. Except for the first shift worked for each work rotation, an employee will be given twenty-four (24) hours notice of a change in shift. In the event that such twenty-four (24) hours notice is not given, the employee shall receive one and one-half (1¹/2) times their base rate for all hours worked on the first shift of the change. This does not apply to employees requesting change of rotation.

Section 11. Employees who work a shift other than day shift will be paid a shift differential of fifty cents ($.50) per hour.

ARTICLE 14
SICK/PERSONAL LEAVE/ATTENDANCE

Section 1. Effective July 1, 2005 and each July 1 during the term of this Agreement, employees who have completed their probationary period shall have available six (6) full or partial, paid or unpaid days for sick/personal leave each year as well as one (1) vacation day. The vacation day may be taken at random and is to be used at the employee’s discretion to cover attendance issues. This leave is intended for time for which the employee is absent for reasons of non-work related sickness, injury or accident, emergency or personal business.

Section 2. In order to receive payment for hours absent in a shift under this Article, employees shall be required to submit on the first shift worked after the

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absence(s), a doctor’s statement verifying the employee’s inability to work due to his/her own non-occupational illness or injury.

Section 3. Commencing September 2006 and each year thereafter, employees shall be paid a bonus for all sick/personal days not used from July 1 of the previous year to July 1 of the current year. Such bonus shall be paid as follows:

No. of Unused Days	Bonus Calculation
6	2.00  X  hours/shift  X  base rate  X  6 days
5	1.75  X  hours/shift  X  base rate  X  5 days
4	1.50  X  hours/shift  X  base rate  X  4 days
3	1.50  X  hours/shift  X  base rate  X  3 days
2	1.25  X  hours/shift  X  base rate  X  2 days
1	1.00  X  hours/shift  X  base rate  X  1 day

Section 4. Employees who qualify for Short Term Disability (“STD”) benefits are required to use available vacation, the personal holiday and/or sick /personal days (or a combination thereof) to satisfy the waiting period. The Company will waive the advanced notice requirements for an employee electing to use paid vacation.

Section 5. Upon completion of their probationary period, employees shall be granted a pro-rated number of full or partial, unpaid or paid sick/personal days available for use in the remainder of the year. Employees completing their probationary period in July, August or September are eligible for four (4) sick/personal days; in October, November or December, three (3) days; in January, February or March, two (2) days; or in April, May or June, one (1) day.

Section 6. To maintain order and efficiency in the Stillwater Mining Company operation, employees must be available to perform their work on a full-time basis. Good attendance, including reporting to work on time, is a condition of continued employment.

Section 7. Any excused time off covered in the Collective Bargaining Agreement or under State or Federal employment law will be excluded from this Article; however, proper reporting off procedures must be followed for all absences.

Section 8. Reporting Off. Employees must call the designated call off number at least thirty (30) minutes prior to the start of their shift and state the reason for the absence. Calls must be made by the employee and not from spouses, family members or others. Employees who report off properly will use one (1) sick/personal day for each absence.

Section 9. Tardy. Employees will be considered Tardy should he/she call off properly and then report to work within three (3) hours from the start of his/her

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scheduled shift. Employees who are tardy will use one (1) sick/personal day upon the third offense. Every tardy thereafter, and within the twelve (12) month period, will result in the use of one sick/personal day.

Section 10. Employees who fail to properly report off shall be defined as AWOL and shall be charged sick/personal days as follows:

A.	Employee fails to report off properly, but calls within one hour after the start of shift – uses 2 sick/personal days
B.	Employee does not call off – uses 3 sick/personal days

Section 11. Employees who have further absence(s), not otherwise provided for in this Agreement, will be discharged.

ARTICLE 15
CLASSIFICATION AND WAGES

Section 1. The classifications and rates of pay are attached to this Agreement and will continue in effect for the duration of this Agreement.

Section 2. Employees temporarily assigned to work in a classification other than their current classification will continue to be paid the rate of pay for their current classification.

Section 3. Management personnel may perform bargaining unit work when training, investigating, testing, and in emergencies, or situations in which no qualified bargaining unit employee is available to do the job required.

Section 4. If a full-time employee is demoted, through no fault of their own, from their regular classification, the employee will receive the higher rate of pay for a period of one (1) week for each full year of service at the previous classification, at the time assigned to the lower classification. There will be no pyramiding of rate retention under this Article.

ARTICLE 16
SAFETY AND HEALTH

Section 1. The Company and the Union believe an effective safety and health program is essential for employee morale and well-being, as well as the long- term viability of the Company. Accordingly, the Company recognizes its obligation to prevent, correct and eliminate all unhealthy and unsafe working conditions and practices. Employees are also expected to recognize, address and report unhealthy or unsafe working conditions. Further, employees will

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follow all Company safety and health rules and procedures and comply with applicable State and Federal regulations.

Section 2. The Company will recognize one (1) Safety and Health Committee for the East Boulder Operations. The respective Safety and Health Committees will consist of representatives elected annually by members of each work group at each location. These Committees will meet monthly to discuss safety and health issues, recommend corrective actions, and communicate safety and health information back to employees.

Section 3. There will be a Joint Safety and Health Review Committee (“JSHRC”) at each location where a Safety and Health Committee exists. It will be composed of four (4) members of the Safety and Health Committee and will meet at least quarterly. There will be equal representation of Company appointees and Union appointees on the JSHRC. Time spent in JSHRC_meetings and approved activities will be considered as time worked. All matters considered and handled by the JSHRC will be reduced to writing, and the joint minutes will be maintained and communicated at the monthly Safety and Health Committee meetings.

Section 4. The Company will conduct occupational health and medical monitoring to measure exposures in the workplace as appropriate, or upon the recommendation of the JSHRC. Results will be distributed to the appropriate Safety and Health Committees and the Local Unit Chairman, to the extent that employee confidentiality is not compromised.

Section 5. The Company will pay for required medical examinations and the results will be kept in the employee’s confidential medical file. Upon request, a copy of these records will be provided to the affected employee.

Section 6. Personal protective equipment required by statute or for special tasks not regularly performed will be provided by the Company at no cost to the employee. Upon employment, the Company will provide a one-time allocation of other Company required personal protective equipment. The Company will allow employees to purchase subsequent or additional personal protective equipment through the warehouse at Company cost. Employees whose personal protective equipment is damaged or destroyed through abnormal conditions, not attributed to abuse, will receive replacement personal protective equipment through the warehouse at Company expense.

Section 7. Prescription safety glasses will be provided at a rate of one (1) pair per year. Replacement non-prescription safety glasses will be available.

Section 8. The Company will provide for an ongoing safety and health training program. The content of health and safety training courses will be reviewed with the JSHRC prior to selection. Time spent on Company approved training will be

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considered as time worked. The cost of Company approved training will be paid by the Company and expenses reimbursed based on current Company policy.

Section 9. No employee will perform unsafe work or be required to perform unsafe work. Employees performing unsafe work or unsafe practices will be subject to disciplinary action, up to and including discharge. Refusal to perform unsafe work will not warrant or justify any present or future disciplinary action.

ARTICLE 17
BENEFITS

Section 1. The Company will provide bargaining unit members with the benefits described in this Article.

Section 2. There will no unilateral changes by the Company to benefit levels during the life of this Agreement, except those required by regulatory agencies.

Section 3. BENEFIT PLANS

A. Health Insurance (medical, dental and prescription)

• The Company will pay 80% of premium and Employee will pay 20% of the premium. Employee premiums will be deducted on a pretax basis. Employee contributions will be subject to adjustment on January 1 of each year of this Agreement.

• Deductible does not apply to most provider services

• $1,000 / $2,000 out-of-pocket maximum amounts

• Diagnostic and preventative services: No deductible. Payable at 100 percent of the allowable fee. Dental work involving crowns are designated Type II service.

• Prescriptions

Generic	$	10	(maximum 30 day supply)
Formulary	$	20	(maximum 30 day supply)
Non-Formulary	$	30	(maximum 30 day supply)

• Some maintenance type prescriptions, i.e., high blood pressure, cardiovascular, insulin. etc., are available in a 90-day supply for the price of (2) co-pays through a mail order pharmacy.

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• Accident benefits are payable only for services provided within 90 days of the Accident. After 90 days or $500, whichever comes first, general Plan Benefits apply.

• Treatment of Chemical Dependency is subject to pre-authorization and case management

B. Short Term Disability

• Eligibility: All full-time active employees who regularly work at least 30 hours per week and have completed one (1) year of continuous service.

• Elimination Period: Loss of wages for 40 hours or 5 scheduled shifts, whichever is less, for Disability due to a non-occupational injury or illness.

• Schedule of Benefits

Less than 1 year of Company seniority ................ no benefits

1 year of Company seniority, but less than

5 years of Company seniority ................ 60% benefit up to 26 wks

5 years or more of Company seniority          100% benefit up to 26 wks

C. Long Term Disability

• Waiting Period: 180 days

• Benefit: 60% of regular pay, not to exceed $6,000 per month subject to reduction by deductible sources of income or Disability Earnings

• Maximum Period: Age 65

D. 401(k) Plan and Trust

• Employer contributions are equal to a 1 to 1 match based on an employee’s pretax contributions up to 6%.

• Employer matching contributions made in non-restricted Company stock

• Maximum employee deferral amount will be 60%; subject to Plan guidelines and limitations

• During the term of this Agreement, the Company will maintain the current matching contribution level for the 401(k) Plan and retains the ability to change the form of match (cash or stock)

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E.	Vision Service Plan
F.	Company Sponsored Life Insurance and Accidental Death & Dismemberment
G.	Employee Assistance Plan and Nurse Advisor
H.	Employee Stock Purchase Plan
I.	Flexible Spending Accounts

Section 4. Revised benefit brochure will be distributed to all employees periodically. This information is being provided as a summary only and not intended to replace or amend and benefit Plan Documents or Summary Plan Descriptions.

ARTICLE 18
HOLIDAYS

Section 1. The following days will be considered holidays:

New Year’s Day	Good Friday
Memorial Day	Independence Day
Labor Day	Thanksgiving
Day after Thanksgiving	Christmas Eve
Christmas Day	Personal Holiday

Section 2. Employees who are required to work on any of the above holidays will receive pay at the rate of time and one-half (1¹/2) plus holiday pay for all hours worked. Each full-time employee not required to work on these holidays will receive eight (8) hours pay for such holidays at their regular rate of pay. Employees scheduled to work on a holiday who fail to report to work will not receive holiday pay.

Section 3. When a Saturday or Sunday holiday is observed on a weekday, the holiday pay will apply on that weekday. Employees scheduled to work a rotating shift, will be paid holiday pay on the calendar day on which the holiday occurs. The actual holiday schedule will be posted each year, as soon as practical.

Section 4. An employee absent on either the scheduled workday before or after the holiday will not receive pay if the absence is not scheduled and approved by the Company. An employee who is receiving disability benefits on both the scheduled workday before and after the holiday will not receive pay for the holiday.

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Section 5. Employees will be entitled to one (1) personal holiday which may be taken after the employee has completed their probationary period, provided at least one (1) rotation’s notice is given to the Company. Scheduled annual vacation will take precedence over the scheduling of personal holidays. In the case where more than one employee per crew requests to take a personal holiday on the same day, department seniority will govern if the personal holiday had been scheduled between January 1 and March 31 of any year. Personal holidays will be allocated on a first come, first serve basis if scheduled after April 1 of any year. Personal holidays will be allocated and granted based on operational needs and the wishes of the employee. No more than one (1) person per crew will be allowed off on personal holiday on any particular day, except at Company discretion. When an employee takes the personal holiday immediately prior to or immediately after a holiday, the employee will be paid according to this Article, provided that the employee works the last scheduled shift prior to and the next scheduled shift after the holiday and the personal holiday. If the personal holiday is not scheduled to be taken in the calendar year, the employee will be paid for eight (8) hours for the personal holiday at their base rate. Personal holidays may not be banked or carried over into the next year.

ARTICLE 19
VACATION

Section 1. Employees will be eligible for paid vacation time in accordance with the following provisions.

Amount of Paid
Years of Service	Vacation Available
1 through 4	80 hours
5 through 9	120 hours
10 or more	160 hours

Section 2. At the beginning of the calendar year, each full-time employee who has completed one year of continuous service will be credited with vacation based on length of service. Employees who have less than one year of service, but have completed their probationary period, will be credited with a pro rata amount of vacation on January 1.

Section 3. At the beginning of each calendar year, full-time employees who have completed fourteen (14) or more years of continuous service will receive a one thousand dollar ($1,000) bonus.

Section 4. Employees may choose to receive pay in lieu of time off for vacation. Pay in lieu of time off will also be provided when the Company requests an employee to forego his vacation. If, due to an extreme situation, the Company

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requires an employee to work during a previously scheduled vacation, the Company will make the employee whole for any verifiable, non-refundable expenses incurred by the employee. Vacation cannot be carried over into the next calendar year without the Company’s approval. Vacation must be taken in full-shift increments, unless shift scheduling dictates otherwise.

Section 5. Vacation schedules will be posted or circulated among employees during the month of January of each year for employee to indicate their vacation preference. Vacation request forms will be utilized, with a copy of the approved form returned to the employee. Vacation will be scheduled to meet the preference of employees whenever possible. In case of conflict over any vacation period, vacation will be granted in order of department seniority. Where an employee elects to split a vacation, that employee’s seniority rights will prevail only for the first choice until all other employees in the vacation unit have had their first choice. It is understood that the Company retains the right to schedule vacations as operational conditions dictate. However, no employee will be forced to take vacation which has already been approved at a time undesirable to the employee. Vacation requests must be pre-authorized by the supervisor at least one (1) rotation’s notice in advance.

Section 6. Holidays falling during an employee’s vacation will be compensated for by holiday pay or by a one-day extension of the vacation, as the employee elects.

Section 7. Employees terminating service with the Company will be paid vacation earned in the current year.

Section 8. For employees on a 12-hour shift schedule, vacation will be taken and paid in ten (10) hour shift increments.

ARTICLE 20
UNION LEAVES OF ABSENCE

Section 1. The Company may grant a short-term unpaid leave of absence for Union officials or members to attend Union functions. These leaves will be granted based on the Company’s operational requirements. Employees will retain service, seniority and benefit during this leave of absence. Requests for these leaves must be made by the Union to the Company not less than fourteen (14) days before the leave.

Section 2. Upon thirty (30) days written notice from the Union, a long-term unpaid leave of absence to perform work for the Union will be granted for one (1) employee for up to one (1) year. The employee may elect to return to the employee’s previous classification with a thirty (30) day written notice for reinstatement from the Union to the Company. The employee will hold and

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accumulate seniority and continuous service for all purposes during the leave. Upon request, the employee will be allowed to continue in the Company Group Health Plan, and any Disability Plans, by paying the full cost of the benefits during the leave. Reinstatement will be granted if the employee is physically able to return to the previously held classification, as determined by the Company paid physical examination. If the employee is physically unable to return to the previous held classification, the employee will be allowed to return to a job the employee is qualified to perform, if such job exists.

ARTICLE 21
FAMILY AND MEDICAL LEAVE

Section 1. The Company will comply with all applicable State and Federal laws, which address employees’ rights to request or obtain family or medical leaves. Employees who have been employed for at least one (1) year and worked at least 1250 hours during the preceding twelve (12) month period, shall be granted leave of absence in the event of: the birth of a child and in order to care for that child; the placement of a child for adoption or foster care, and to care for the newly placed child; care for a spouse, child, or parent with a serious health condition; or a serious health condition that makes the employee incapable of performing the essential functions of his/her job.

Such leave will be guaranteed for up to a maximum of twelve (12) weeks in a rolling twelve (12) month period. Leave while an employee is off work receiving short-term disability benefits or worker’s compensation benefits will be designated as Family Medical Leave, to the extent that it qualifies under State or Federal law, and will run concurrently with Family Medical Leave Act “FMLA” leave.

Section 2. Request for such leave shall be made through the Human Resources Department. When the need for leave is foreseeable, the employee shall provide at least thirty (30) days advance notice. An employee may request more than one (1) family leave within a twelve (12) month period, but the total time on leave within that period may not exceed twelve (12) weeks.

Section 3. The employee will provide medical certification to the Company confirming the need for family and medical leave within 15 days of the request for leave. The request for such leave may require renewal and new medical certification submitted to the Company every thirty (30) days.

Section 4. Credited service for all purposes under this Agreement will accrue during the period covered by the family and medical leave of absence. The employee returning from family and medical leave will be reinstated to the position held prior to the leave, or a comparable position.

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Section 5 . Employees will not be disciplined for absences covered under the FMLA. Employees will not be required to use vacation for approved FMLA absences. However, the Company will waive the advanced vacation notice requirement for an employee electing to use paid vacation for this leave.

Available vacation, the personal holiday and/or sick/personal days (or a combination thereof) used to satisfy the waiting period for short-term disability benefits will not be charged against FMLA leave entitlement.

Section 6. Represented Employees that are absent from work due to their own non-occupational illness or injury and are eligible and approved for leave under the FMLA but do not qualify for STD benefits will be required to substitute paid leave for the unpaid leave provided under the FMLA.

Employees absent in the above circumstances will be provided the option of using available regular vacation, personal holiday and/or sick and personal days as paid time to be substituted for unpaid Family and Medical Leave. The Company will waive the advanced notice requirement for an employee electing to use paid vacation and/or personal holiday. The order and combination of which days to be used is at the option of the employee, provided that their selection is made in writing and received by the Human Resources department no later than 15 days after receiving notice that such selection needs to be made. If the employee makes no choice to the contrary within the 15 days, the Company will substitute available sick/personal days, regular vacation and the personal holiday, in that order, for all unpaid Family and Medical leave taken under the circumstances described herein.

Section 7. Employees will not perform work for pay while on family and medical leave, except with written permission of the Company.

Section 8. All other requirements and conditions under the FMLA of 1993 shall apply.

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ARTICLE 22
MILITARY SERVICE

Section 1. The Company shall accord to each employee who leaves active employment to enter military service of the United States or Reserve or National Guard, such rights as the employee shall be entitled to under the Uniform Services and Reemployment Rights Act (USERRA).

Section 2. With the exception of an Executive Order, any employee who is required to attend duty for the Reserve of the Armed Forces or the National Guard shall be paid, for a period or periods not to exceed a total of seventeen (17) days per calendar year and such pay shall be the excess of the employee’s base wages over Government base wage for the period of military leave, not to include any forms of living expenses.

ARTICLE 23
BEREAVEMENT LEAVE

Section 1. In the event of the death of an employee’s immediate family member, a reasonable period of unpaid leave will be granted to the employee. Immediate family includes the employee’s spouse, children, stepchildren, parents, stepparents, brothers, sisters, stepbrothers, stepsisters, grandparents and grandchildren, and the parents and grandparents of the employee’s spouse.

Section 2. To offset the expenses associated with attending the funeral, any employee who has completed the probationary period will be paid forty (40) hours of base wages in the event of the death of a spouse, child or step-child, or twenty-four (24) hours of base wages in the event of the death of any other immediate family members listed above.

ARTICLE 24
JURY AND WITNESS SERVICE

Section 1. Employees selected for jury duty or subpoenaed for witness service will be allowed the necessary time off to perform the service. Employees must contact their immediate supervisor prior to reporting for jury duty or subpoenaed witness service. An employee who reports and is then released from service must immediately contact the employee’s supervisor to coordinate return to work. The Company will make reasonable allowances for travel and shift schedules.

Section 2. Regular full-time employees who are absent because of jury duty, government subpoena where the Company is not a party, or Company

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subpoena, will be paid the difference between the jury duty or specified witness pay and their normal base wages for scheduled shifts missed. Employees will be required to provide documentation of service to receive applicable pay.

ARTICLE 25
CONTRACTING OUT

Section 1. The Company, having the availability of equipment, skills, manpower, or the time to do the work, will not contract out classified work now being done by employees of the Company as long as there are qualified employees or qualified former employees with re-employment rights and provided such contracting does not result in the layoff of employees or their displacement to other job classifications covered by this Agreement. This will not apply to the installation of equipment or construction or any other activities not ordinarily done by employees of the Company.

Section 2. Before commencing any major contract job to be performed on the premises, the Company will notify the Local Unit Chairman, in writing, describing the nature, scope, and expected duration of the work to be performed. The Company further agrees that it will meet, as necessary, with the Local Unit Chairman, to discuss information concerning contracting out. Requests for such meetings shall not be unreasonably denied.

ARTICLE 26
MISCELLANEOUS

Section 1. In July of each year, mechanics and electricians who are on the seniority list will receive a tool allowance of four hundred dollars ($400.00) and two hundred dollars ($200.00) respectively.

Section 2. In July of each year, the Company will provide a one hundred fifty dollar ($150.00) boot allowance for all employess on the seniority list. It is required that employee’s be in compliance with Stillwater Mining Company’s safey footwear equipment.

Section 3. The Company will provide a secure bulletin board at each of the locations covered by this Agreement.

Section 4. Employees in the bargaining unit will have access to their own personnel file, by appointment with the Human Resources Manager, for the purpose of reviewing it in person. A union representative may accompany the employee.

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Section 5. Required notices may be made by personal service, confirmed facsimile transmission or certified mail, return receipt requested. The designated party for the Company is the Human Resources Manager. The designated party for the Union is the International Representative. Each party will provide the other with the name and address of the individual who is authorized to receive notices under this Section.

Section 6. Any employee required to work more than two (2) hours beyond the normal quitting time will be provided with a meal. An additional meal will be furnished for each additional four (4) hours of continuous work. The Company may, with the agreement of the involved employees, in lieu of a meal and time to eat the meal, compensate the employee by the payment of one (1) additional hour at time and one-half (1¹/2).

Section 7. The Company shall provide reasonable access to East Boulder Mine property to the Local International Representative, Local President, Local Chairman and Workers Committee members for the purpose of conducting Union business as provided by existing permits, agreements, plans and proceedures.

Sectiion 8. The Company shall provide emergency response systems including medical, communication, and rescue coordination.

Section 9. It was agreed upon that the bus transporting employees to the East Boulder Operations will not leave the Big Timber designated departure location prior to 5:50 a.m. day shift and 5:50 p.m. night shift, with a site arrival time of fifteen (15) minutes before the start of shift. The bus is scheduled to depart the property fifteen (15) minutes after the end of shift. If the bus departs the property more than fifteen (15) minutes after the scheduled departure time as a result of Company actions, employees will receive one half (1/2) hour of their base pay. It is understood that employees will arrive at work and be ready on time for their scheduled shift or the Big Timber departure time will need to be re-adjusted. Bussing shall continue along existing routes including reasonable locations within the pickup and drop off points as provided by the bussing provider.

Section 10. The Company and the Union shall equally share the expense to print and provide a copy of this Agreement in booklet form produced by a union print shop, if available, to each employee.

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ARTICLE 27
MINE/PLANT CLOSURE

Section 1. The Company agrees it will notify the Union in writing of any mine/plant closure at least thirty (30) days in advance, or as is practical, in compliance with the Worker Adjustment Retraining and Notification Act. The Company and the Union shall meet to bargain in good faith regarding the effect and possible options for employees and the Company.

ARTICLE 28
NO STRIKE

Section 1. During the term of this Agreement, there will be no strike, work stoppage, picketing, honoring of any picket line at the Company premises, work slowdown, sympathy strike, or any other form of economic pressure directed against the Company or its services on the part of the Union or its members covered by this Agreement. The Company will not lock out any bargaining unit employee during the term of this Agreement.

Section 2. In the event of any breach of this Article, the Union will immediately declare publicly that such action is unauthorized, will immediately order its members to resume their normal duties and continue to take any necessary action to correct the problem and restore the Company to full operation.

ARTICLE 29
PAST PRACTICE

Section 1. This Agreement supercedes any previous oral and written agreements between the Company, its employees and the Union. The Company will not be bound by any past understandings, practices and/or customs between the Company, its employees, and the Union on matters not specifically governed by the terms of this Agreement, except those mutually agreed upon in writing during the negotiations for this agreement.

ARTICLE 30
VALIDITY

Section 1. Nothing contained in this Agreement will be construed in any way as interfering with the obligation of the parties to comply with any and all State and Federal laws, or any rules, regulations, and orders of duly constituted authorities pertaining to matters covered by this Agreement, and such compliance will not constitute a breach of this Agreement.

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Section 2. If any court holds any part of this Agreement invalid, that decision will not invalidate the entire Agreement.

ARTICLE 31
COMPLETE AGREEMENT

Section 1. This Agreement during its life may be amended only by mutual consent of the parties. Any amendments made to this Agreement will be reduced to written form and will be duly signed by the authorized representatives of the Company and the Union.

Section 2. The parties acknowledge that during the negotiations resulting in this Agreement, each had the unlimited right to make proposals with respect to all subjects of collective bargaining. The understandings and agreements arrived at by the parties after exercise of that right are included in this Agreement. Therefore, the Company and the Union each waive the right and each agrees that the other will not be obligated to bargain collectively with respect to any matter referred to by this Agreement or with respect to any subject not specifically referred to in this Agreement, except those required by law, even though the subject may not have been within the knowledge or contemplation of either or both of the parties at the time that they negotiated this Agreement.

ARTICLE 32
TERM OF AGREEMENT

Section 1. This Agreement will be in effect from July 1, 2005 until noon July 1, 2008, and if not terminated at the end of that period by sixty (60)_days written notice by one party to the other prior to this date, will continue in effect until terminated by either party upon ninety (90) days written notice of its desire to terminate or modify this Agreement.

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With their signatures, the authorized representatives of the parties express their agreement.

STILLWATER MINING COMPANY
By:
	John Stark
Date:
By:
	Kris Koss
Date:
By:
	Clayr Alexander
Date:
By:
	Jeff Sargent
Date:
USW International Union and its Local 1, East Boulder Unit
By:
	Steven Gentry
Date:

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By:
	Brad Shorey
Date:
By:
	Paul Crnkovich
Date:
By:
	Tom Tollefeson
Date:
By:
	Randy Aamodt
Date:
By
	Hugh Seward
Date:

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APPENDIX A
STILLWATER MINING COMPANY
BARGAINING UNIT BASE RATES STRUCTURE

	7/1/2005		7/1/2006		7/1/2007
Position Title	Base Rate		Base Rate		Base Rate
Leadman — Mechanic	$	25.57	$	26.33	$	27.12
Leadman — Electrician	$	25.57	$	26.33	$	27.12
Mechanic 1	$	23.46	$	24.16	$	24.88
Electrician 1	$	23.46	$	24.16	$	24.88
Leadman — Mine/Mill	$	23.34	$	24.04	$	24.76
Leadman Warehouse/	$	22.65	$	23.33	$	24.03
Construction/Equipment Operator
Mechanic II	$	21.61	$	22.26	$	22.93
Electrician II	$	21.61	$	22.26	$	22.93
Miner I	$	21.41	$	22.05	$	22.71
Mill Operator I	$	21.41	$	22.05	$	22.71
U/G Construction I	$	21.41	$	22.05	$	22.71
Diamond Driller I	$	21.41	$	22.05	$	22.71
Heavy Equipment Operator I	$	20.40	$	21.01	$	21.64
Miner II	$	20.40	$	21.01	$	21.64
Sand Plant Operator	$	20.40	$	21.01	$	21.64
U/G Equipment Operator I	$	20.40	$	21.01	$	21.64
Warehouse I	$	20.40	$	21.01	$	21.64
U/G Construction II	$	20.40	$	21.01	$	21.64
Mechanic III	$	18.37	$	18.93	$	19.49
Electrician III	$	18.37	$	18.93	$	19.49
U/G Equipment Operator II	$	17.60	$	18.13	$	18.67
Diamond Driller II	$	17.60	$	18.13	$	18.67
Heavy Equipment Operator II	$	17.60	$	18.13	$	18.67
Mill Operator II	$	17.60	$	18.13	$	18.67
Lead Custodian	$	17.60	$	18.13	$	18.67
UG Construction III	$	17.60	$	18.13	$	18.67
Miner III	$	17.60	$	18.13	$	18.67
Equipment Operator III	$	15.47	$	15.93	$	16.41
Warehouse II	$	15.47	$	15.93	$	16.41
Mill Operator III	$	15.47	$	15.93	$	16.41
Custodian	$	15.47	$	15.93	$	16.41
Probationary Rate	$	12.37	$	12.74	$	13.12

Stillwater Mining Company

Local 1

Lines of Progression and Bid Positions

Appendix B

Memorandum of Understanding

Between
Stillwater Mining Company
East Boulder Operation
AND
USW International Union, Local 1
East Boulder Unit

Stillwater Mining Company (Company), and USW International Union (Union), hereby agree as follows:

The following past practices or prior settlements will be continued throughout the duration of this Agreement:

1. MOU dated 02/28/03, between Company and Union regarding transfer rights to Columbus facilities of Stillwater Mining Company.

Stillwater Mining Company,
East Boulder Operations

Company Official

USW International Union, Local 1,
East Boulder Unit

Union Official

Signed this            day of           , 2005.

Memorandum of Understanding

Between
Stillwater Mining Company
East Boulder Operation
AND
USW International Union, Local 1
East Boulder Unit

Stillwater Mining Company (Company), and USW International Union (Union), hereby agree as follows:

The following past practices or prior settlements will be continued throughout the duration of this Agreement:

The Company provides a bonus payment to employees who participate in Mine Rescue and EMS at East Boulder Operations. The Company agrees to continue its current practice through the life of this Collective Bargaining Agreement.

Stillwater Mining Company,
East Boulder Operations

Company Official

USW International Union, Local 1,
East Boulder Unit

Union Official

Signed this            day of           , 2005.

Memorandum of Understanding

Between
Stillwater Mining Company
East Boulder Operation
AND
USW International Union, Local 1
East Boulder Unit

Stillwater Mining Company (Company), and USW International Union (Union), hereby agree as follows:

A Memorandum of agreement will be developed between the Company and USW International Union, Local 1, East Boulder Unit regarding job transfer opportunities for the Nye mine.

Until such memorandum is written, employees wishing to transfer to the Nye mine should contact the East Boulder Human Resource department. The Human Resource department will place the employee’s name on a transfer list.

The Company and Union will finalize the memorandum within sixty (60) days of ratification of the new contract.

Stillwater Mining Company,
East Boulder Operations

Company Official

USW International Union, Local 1,
East Boulder Unit

Union Official

Signed this            day of           , 2005

Memorandum of Understanding

Between
Stillwater Mining Company
East Boulder Operation
AND
USW International Union, Local 1
East Boulder Unit

Stillwater Mining Company (Company), and USW International Union (Union), hereby agree as follows:

The Company agrees to assign (at their respective leadman rate) one bargaining unit employee to act as a Health and Safety Representative for the East Boulder Operation, once the East Boulder Operation produces 1,800 tons per day on a sustainable basis or if East Boulder Operation’s safety incident rate exceeds MSHA’s incident rate for Underground Metal/Non-metal mines during any six-month period.

Stillwater Mining Company,
East Boulder Operations

Company Official

USW International Union, Local 1,
East Boulder Unit

Union Official

Signed this            day of           , 2005.

Memorandum of Understanding

Between
Stillwater Mining Company
East Boulder Operation
AND
USW International Union, Local 1
East Boulder Unit

Based on discussions through the negotiation of the Collective Bargaining Agreement (CBA), the Company recognizes employee concerns with the East Boulder Operational Incentive (Incentive). The Company will continue to communicate with employees and the Union on all aspects of the East Boulder Operational Incentive.

The Company will not make Plan changes which on the average reduce the operational incentive unless mutually agreed upon with the Union. Structural changes within the Incentive will be discussed with the Union prior to implementation. Normally the Company will give the Workers Committee thirty (30) days advance notice of such changes and to the employees involved, one incentive period prior to implementation. The Union will also be notified of any incidental or administrative adjustments, which may become necessary throughout the CBA period.

Modifications, exclusive rates, or rate adjustments due to special or abnormal circumstances are not subject to mutual agreement. Examples may include tunnel rehab, unique construction projects or other infrequent or one time projects.

This Memorandum of Understanding will expire with the Current Collective Bargaining Agreement.

Stillwater Mining Company,
East Boulder Operations

Company Official

USW International Union, Local 1,
East Boulder Unit

Union Official

Signed this            day of           , 2005.

Memorandum of Understanding

Between
Stillwater Mining Company
East Boulder Operation
AND
USW International Union, Local 1
East Boulder Unit

The Company and the Union mutually agree to extend the Labor Agreement set to expire on July 1, 2005 at 12:00 noon Mountain Daylight Time (MDT). This extension will remain in effect until 11:59 pm July 9, 2005 MDT.

Stillwater Mining Company,
East Boulder Operations

Company Official

USW International Union, Local 1,
East Boulder Unit

Union Official

Signed this            day of           , 2005.

Memorandum of Understanding

Between
Stillwater Mining Company
East Boulder Operation
AND
USW International Union, Local 1
East Boulder Unit

The Company agrees to review how the Safety Reward component applies to individual incentive distribution. The intent is for the review and resulting changes to East Boulder’s Operational Incentive to be effective for the incentive period beginning August 1, 2005.

The Safety Eligibility shall apply only to individuals separate from Attendance Eligibility and will not affect others within the work group.

This incentive modification may be subject to change if East Boulder Operation’s rolling three month safety incident rate exceeds MSHA’s incident rate for Underground Metal/Non-metal mines.

This Memorandum of Understanding will expire with the Current Collective Bargaining Agreement.

Stillwater Mining Company,
East Boulder Operations

Company Official

USW International Union, Local 1,
East Boulder Unit

Union Official

Signed this            day of           , 2005.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Francis R. McAllister, certify that;

1.	I have reviewed this Quarterly Report on Form 10-Q of Stillwater Mining Company (the “Company”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the Company and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s Board of Directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

Dated: August 8, 2005	/s/ Francis R. McAllister
	Francis R. McAllister
	Chairman and Chief
	Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Gregory A. Wing, certify that;

1.	I have reviewed this the Quarterly Report on Form 10-Q of Stillwater Mining Company (the “Company”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the Company and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s Board of Directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

Dated: August 8, 2005	/s/ Gregory A. Wing
	Gregory A. Wing
	Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the following certifications were made to accompany the Form 10-Q.

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
OF STILLWATER MINING COMPANY
PURSUANT TO 18 U.S.C. § 1350

Pursuant to 18 U.S.C. § 1350 and in connection with the accompanying quarterly report on Form 10-Q for the period ended June 30, 2005, that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the “Report”), I, Francis R. McAllister, Chief Executive Office of Stillwater Mining Company (the “Company”), hereby certify that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 8, 2005,

/s/ Francis R. McAllister

Francis R. McAllister

Chairman and Chief Executive Officer

The above certification is furnished solely to accompany the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-Q or as a separate disclosure statement.

EX-32.2

Exhibit 32.2

CERTIFICATION OF
CHIEF FINANCIAL OFFICER
OF STILLWATER MINING COMPANY
PURSUANT TO 18 U.S.C. § 1350

Pursuant to 18 U.S.C. § 1350 and in connection with the accompanying quarterly report on the Form 10-Q for the period ended June 30, 2005, that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory A. Wing, Vice President and Chief Financial Officer of Stillwater Mining Company (the “Company”), hereby certify that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 8, 2005,

/s/ Gregory A. Wing

Gregory A. Wing

Vice President and Chief Financial Officer

The above certification is furnished solely to accompany the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-Q or as a separate disclosure statement.