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, 2007.

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 þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one).

Large Accelerated Filer o     Accelerated Filer þ     Non-Accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES o NO þ

At August 3, 2007 the Company had outstanding 92,220,347 shares of common stock, par value $0.01 per share.

STILLWATER MINING COMPANY

FORM 10-Q

QUARTER ENDED JUNE 30, 2007

INDEX

PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosure About Market Risk	38
Item 4. Controls and Procedures	40
PART II – OTHER INFORMATION	40
Item 1. Legal Proceedings	40
Item 6. Exhibits	40
SIGNATURES	41
CERTIFICATION
Articles of Agreement - United Steel Workers
Rule 13a-14(a)/15d-14(a) Certification - Chief Executive Officer
Rule 13a-14(a)/15d-14(a) 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
Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share data)

	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Revenues
Mine production	$	74,893		$	74,099		$	147,264		$	136,373
PGM recycling		83,914			39,579			153,902			74,254
Sales of palladium received in the Norilsk Nickel transaction		—			—			—			17,637
Other		2,156			3,148			6,247			28,521
Total revenues		160,963			116,826			307,413			256,785
Costs and expenses
Costs of metals sold
Mine production		54,718			49,965			103,029			94,201
PGM recycling		77,871			37,969			144,046			69,937
Sales of palladium received in Norilsk Nickel transaction		—			—			—			10,785
Other		2,184			3,162			6,205			28,279
Total costs of metals sold		134,773			91,096			253,280			203,202
Depreciation and amortization
Mine production		21,628			21,351			42,020			41,261
PGM recycling		28			25			52			50
Total depreciation and amortization		21,656			21,376			42,072			41,311
Total costs of revenues		156,429			112,472			295,352			244,513
Exploration		1			332			62			332
Marketing		1,112			682			3,213			890
General and administrative		6,289			5,961			12,963			12,058
Total costs and expenses		163,831			119,447			311,590			257,793
Operating loss		(2,868	)		(2,621	)		(4,177	)		(1,008	)
Other income (expense)
Other		(16	)		(1	)		(18	)		3
Interest income		3,023			3,070			5,986			5,050
Interest expense		(2,750	)		(2,735	)		(5,576	)		(5,540	)
Gain/(loss) on disposal of property, plant and equipment		95			(50	)		210			(235	)
Loss before income tax provision		(2,516	)		(2,337	)		(3,575	)		(1,730	)
Income tax provision		—			—			—			(10	)
Net loss	$	(2,516	)	$	(2,337	)	$	(3,575	)	$	(1,740	)
Other comprehensive income (loss), net of tax		5,446			(13,042	)		271			(29,592	)
Comprehensive income (loss)	$	2,930		$	(15,379	)	$	(3,304	)	$	(31,332	)
Weighted average common shares outstanding
Basic		91,927			91,207			91,759			91,135
Diluted		91,927			91,207			91,759			91,135
Basic loss per share
Net loss	$	(0.03	)	$	(0.03	)	$	(0.04	)	$	(0.02	)
Diluted loss per share
Net loss	$	(0.03	)	$	(0.03	)	$	(0.04	)	$	(0.02	)

See accompanying notes to the financial statements

3

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

	June 30,			December 31,
	2007			2006
ASSETS
Current assets
Cash and cash equivalents	$	57,200		$	88,360
Restricted cash		4,385			3,785
Investments, at fair market value		39,651			35,497
Inventories		125,752			106,895
Advances on inventory purchases		30,492			24,191
Accounts receivable		12,254			16,008
Deferred income taxes		1,654			5,063
Other current assets		5,843			4,540
Total current assets	$	277,231		$	284,339
Property, plant and equipment (net of $259,984 and $219,520 accumulated depreciation and amortization)		458,759			460,328
Long-term investment		2,537			1,869
Other noncurrent assets		9,583			9,487
Total assets	$	748,110		$	756,023
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	15,200		$	24,833
Accrued payroll and benefits		20,675			20,348
Property, production and franchise taxes payable		11,458			11,123
Current portion of long-term debt and capital lease obligations		1,282			1,674
Fair value of derivative instruments		15,756			15,145
Unearned income		7,638			5,479
Other current liabilities		7,861			6,988
Total current liabilities		79,870			85,590
Long-term debt		127,435			129,007
Fair value of derivative instruments		—			715
Deferred income taxes		1,654			5,063
Accrued workers compensation		10,808			10,254
Asset retirement obligation		8,910			8,550
Other noncurrent liabilities		4,499			4,288
Total liabilities	$	233,176		$	243,467
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; 92,125,936 and 91,514,668 shares issued and outstanding		921			915
Paid-in capital		622,783			617,107
Accumulated deficit		(93,438	)		(89,863	)
Accumulated other comprehensive loss		(15,332	)		(15,603	)
Total stockholders’ equity		514,934			512,556
Total liabilities and stockholders’ equity	$	748,110		$	756,023

See accompanying notes to the financial statements

4

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

	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Cash flows from operating activities
Net loss	$	(2,516	)	$	(2,337	)	$	(3,575	)	$	(1,740	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		21,656			21,376			42,072			41,311
Lower of cost or market inventory adjustment		1,430			42			1,430			1,140
(Gain)/loss on disposal of property, plant and equipment		(95	)		50			(210	)		235
Stock issued under employee benefit plans		1,484			941			2,930			2,254
Amortization of debt issuance costs		206			198			410			383
Share based compensation		1,345			933			2,513			1,527
Changes in operating assets and liabilities:
Inventories		(15,688	)		(39,572	)		(20,658	)		(43,652	)
Advances on inventory purchases		(7,014	)		(14,414	)		(6,301	)		(17,718	)
Accounts receivable		(1,615	)		(60	)		3,754			14,793
Employee compensation and benefits		631			254			327			824
Accounts payable		(1,096	)		2,669			(9,633	)		1,778
Property, production and franchise taxes payable		136			1,778			546			854
Workers compensation		(199	)		539			554			3,626
Asset retirement obligation		182			161			360			318
Unearned income		4,081			2,001			2,159			3,861
Restricted cash		(600	)		—			(600	)		—
Other		(2,214	)		(2,265	)		(803	)		(546	)
Net cash provided by (used in) operating activities		114			(27,706	)		15,275			9,248
Cash flows from investing activities
Capital expenditures		(18,812	)		(22,232	)		(40,408	)		(45,356	)
Purchase of long-term investment		(668	)		—			(668	)		—
Proceeds from disposal of property, plant and equipment		126			207			328			263
Purchases of investments		(25,148	)		(19,859	)		(48,140	)		(68,019	)
Proceeds from maturities of investments		27,181			38,532			44,178			69,250
Net cash used in investing activities		(17,321	)		(3,352	)		(44,710	)		(43,862	)
Cash flows from financing activities
Payments on long-term debt and capital lease obligations		(1,081	)		(461	)		(1,964	)		(9,915	)
Payments for debt issuance costs		—			—			—			(579	)
Issuance of common stock		219			601			239			805
Net cash provided by (used in) financing activities		(862	)		140			(1,725	)		(9,689	)
Cash and cash equivalents
Net decrease		(18,069	)		(30,918	)		(31,160	)		(44,303	)
Balance at beginning of period		75,269			66,875			88,360			80,260
Balance at end of period	$	57,200		$	35,957		$	57,200		$	35,957

See accompanying notes to the financial statements

5

Stillwater Mining Company
Notes to Financial Statements
(Unaudited)

Note 1 – General

     In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of Stillwater Mining Company (the “Company”) as of June 30, 2007, and the results of its operations and its cash flows for the three- and six-month periods ended June 30, 2007 and 2006. 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 financial statements in this quarterly report should be read in conjunction with the financial statements and notes thereto included in the Company’s March 31, 2007 Quarterly Report on Form 10-Q and in the Company’s 2006 Annual Report on Form 10-K.

     The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. The more significant areas requiring the use of management’s estimates relate to mineral reserves, reclamation and environmental obligations, valuation allowance for deferred tax assets, useful lives utilized for depreciation, amortization and accretion calculations, future cash flows from long-lived assets, and fair value of derivative instruments. Actual results could differ from these estimates.

Note 2 – Sales

Mine Production:

     Palladium, platinum, rhodium and gold are sold to a number of consumers and dealers with whom the Company has established trading relationships. Refined platinum group metals (PGMs) of 99.95% purity in sponge form are transferred upon sale from the Company’s account at third party refineries to the account of the purchaser. By-product metals are normally sold at market prices to customers, brokers or outside refiners. Copper and nickel by-products, however, are produced at less than commercial grade, so prices for these metals typically reflect a quality discount. By-product sales are reflected as a reduction to costs of metals sold. During the three-month periods ended June 30, 2007 and 2006, total by-product (copper, nickel, gold, silver and mined rhodium) sales were approximately $14.5 million and $10.1 million, respectively. Total by-product sales for the six-month periods ended June 30, 2007 and 2006 were approximately $28.4 million and $18.2 million, respectively.

     During 1998, the Company entered into three long-term sales contracts that contain guaranteed floor and ceiling prices for metal delivered. Metal sales under these contracts, not subject to these guaranteed floor and ceiling prices, are priced at a slight discount to market. In late 2000 and in 2001, the Company amended these contracts to extend the terms and to modify the pricing mechanisms. One of these contracts applied to the Company’s production through 2006, one applies into 2008 and one applies through 2010. Although one of these contracts expired at December 31, 2006, the palladium and platinum commitments under that contract have been largely assumed by the remaining contracts. Under the contracts, the Company currently has committed between 80% and 100% of its palladium production and 70% of its platinum production through 2010. The Company’s remaining production is not committed under these contracts and remains available for sale at prevailing market prices.

6

     Sales to significant customers as a percentage of total revenues for the three- and six-month periods ended June 30, 2007 and 2006 were as follows:

	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Customer A		36	%		46	%		36	%		39	%
Customer B		*			*			*			12	%
Customer C		28	%		16	%		24	%		13	%
Customer D		*			12	%		*			10	%
Customer E		*			*			14	%		*
		64	%		74	%		74	%		74	%

* Represents less than 10% of total revenues.

     The following table summarizes the floor and ceiling price structures for the 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
2007		100	%	$	339		16	%	$	975		70	%	$	425		14	%	$	850
2008		87	%	$	370		20	%	$	975		70	%	$	425		14	%	$	850
2009		80	%	$	380		20	%	$	975		70	%	$	425		14	%	$	850
2010		80	%	$	375		20	%	$	975		70	%	$	425		14	%	$	850

     The long-term sales contracts provide for adjustments to ounces committed based on actual production. These contracts contain termination provisions that allow the purchasers to terminate in the event the Company breaches certain provisions of the contract and the Company does not cure the breach within specified periods ranging from 10 to 30 days of notice. The contracts are not subject to the requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138 Accounting for Derivative Instruments and Certain Hedging Activities and SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, because the contracts qualify for the normal sales exception since they will not settle net and will result in physical delivery. The floors and ceilings embedded within the long-term sales contracts are treated as part of the host contract, not a separate derivative instrument and are therefore also not subject to the hedge accounting requirements of SFAS No. 133, SFAS No. 138, or SFAS No. 149.

PGM Recycling

     The Company enters into fixed forward sales relating to PGM recycling of catalyst materials. The Company accounted for these fixed forward sales as cash-flow hedges through the first quarter of 2006; thereafter, they have been accounted for under the normal sales provisions of SFAS No. 133, as amended by SFAS No. 138 and SFAS No. 149. The metals from PGM recycled materials are sold forward at the time of purchase and delivered against the fixed forward contracts when the ounces are recovered. All of these open transactions settle at various periods through November 2007. No hedging gains or losses related to PGM recycling were recognized in the three-month or six-month periods ended June 30, 2007 or 2006. 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. No margin deposits were required or outstanding during the second quarters of 2007 or 2006.

7

Other activities:

     The Company makes open market purchases of PGMs from time to time for resale to third parties. The Company recognized revenue of $2.2 million and $3.2 million on approximately 6,000 and 9,000 ounces of PGMs that were purchased in the open market and re-sold for the three-month periods ended June 30, 2007 and 2006, respectively. For the six-month periods ended June 30, 2007 and 2006, approximately 18,000 and 26,800 ounces of PGM’s were purchased in the open market and re-sold for approximately $6.2 million and $28.5 million, respectively.

Note 3 – Derivative Instruments

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

Commodity Derivatives

     The Company enters into fixed forward contracts and financially settled forward contracts to offset the price risk in its PGM recycling activity and on portions of its mine production. In the fixed forward transactions, metals contained in the recycled materials are normally sold forward and subsequently delivered against the fixed forward contracts when the finished ounces are recovered. The Company uses fixed forward transactions primarily to price in advance the metals processed in its recycling business. 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. These financially settled forward contracts are settled in cash at maturity. The Company normally uses financially settled forward contracts to reduce downside price risk associated with deliveries out of future mine production under the Company’s long term sales agreements.

     As of June 30, 2007, the Company was party to financially settled forward agreements covering approximately 39% of its anticipated platinum sales out of mine production from July 2007 through June 2008. These transactions are designed to hedge a total of 59,000 ounces of platinum sales from mine production for the next twelve months at an overall average price of approximately $1,016 per ounce.

     Until these forward contracts mature, any net change in the value of the hedging instrument is reflected in stockholders’ equity in accumulated other comprehensive income (loss) (AOCI). A net unrealized loss of $15.7 million on commodity hedging instruments existing at June 30, 2007, is reflected in AOCI (see Note 6). When these instruments are settled, any remaining gain or loss on the cash flow hedges will be offset by gains or losses on the future metal sales and will be recognized at that time in operating income.

     The following is a summary of the Company’s commodity derivatives as of June 30, 2007:

Mine Production:
Financially Settled Forwards

	Platinum Ounces		Average Price		Index
Third Quarter 2007		23,500	$	987	Monthly London PM Average
Fourth Quarter 2007		20,500	$	1,000	Monthly London PM Average
First Quarter 2008		9,000	$	1,104	Monthly London PM Average
Second Quarter 2008		6,000	$	1,054	Monthly London PM Average

8

Interest Rate Derivatives

     On July 28, 2006, the Company entered into an interest rate swap agreement that has the effect of fixing the interest rate on $50 million of the Company’s outstanding term loan debt through December 31, 2007. The effective fixed rate of the interest rate swap is 7.628% (see Note 11). The Company has elected not to account for this as a cash flow hedge, and accordingly, marked this transaction to market by recording a credit to interest expense of approximately $44,000 and $47,500 during the three-month and six-month periods ended June 30, 2007, respectively.

Note 4 – Share-Based Payments

     The Company sponsors stock option plans (the “Plans”) that enable the Company to grant stock options or nonvested shares to employees and non-employee directors. The Company has options outstanding under three separate plans: the 1994 Incentive Plan, the General Plan and the 2004 Equity Incentive Plan. As of June 30, 2007, there were approximately 7,801,000 shares of common stock authorized for issuance under the Plans, including approximately 5,250,000, 1,400,000 and 1,151,000 authorized for the 2004 Equity Incentive Plan, the General Plan and the 1994 Incentive Plan, respectively. Options for approximately 4,600,000 and 3,201,000 shares were available and reserved under the 2004 Equity Incentive Plan and the General Plan, respectively for grant as of June 30, 2007.

     The Compensation Committee of the Company’s Board of Directors administers the Plans and determines the exercise price, exercise period, vesting period and all other terms of instruments issued under the Plans. Officers’ and directors’ options expire ten years after the date of grant. All other options expire five to ten years after the date of grant, depending upon the original grant date. The Company received approximately $219,000 and $601,000 in cash from the exercise of stock options in the three-month periods ended June 30, 2007 and 2006, respectively, and approximately $239,000 and $805,000 for the six-month periods ended June 30, 2007 and 2006, respectively.

     The Company recognizes compensation expense associated with its stock option grants based on their fair market value on the date of grant using a Black-Scholes option pricing model. Stock option grants to employees generally vest in annual installments over a three-year period. The Company recognizes stock option expense ratably over the vesting period of the options. If options are canceled or forfeited prior to vesting, the Company stops recognizing the related expense effective with the date of forfeiture, but does not recapture expense taken previously. The compensation expense, recorded in general and administrative expense, related to the fair value of stock options during the three-month periods ended June 30, 2007 and 2006 was approximately $132,000 and $99,000, respectively, and approximately $200,000 and $177,000 during the six-month periods ended June 30, 2007 and 2006, respectively. Total compensation cost related to nonvested stock options not yet recognized is $169,114, $175,000, $54,717, and $5,578 for the remaining six months of 2007 and for years 2008, 2009 and 2010, respectively.

9

     Nonvested shares granted to non-management directors, certain members of management and other employees as of June 30, 2007 and 2006 along with the related compensation expense are detailed in the following table:

						Compensation Expense
		Nonvested		Market		Three months ended				Six months ended
		Shares		Value on		June 30,				June 30,
Grant Date	Vesting Date	Granted		Grant Date		2007		2006		2007		2006
May 7, 2004	May 7, 2007		348,170	$	4,460,058	$	123,890	$	371,671	$	495,562	$	743,343
May 3, 2005	May 3, 2008		225,346	$	1,654,040	$	137,837	$	137,837	$	275,673	$	275,673
April 27, 2006	October 26, 2006		9,752	$	160,030	$	—	$	53,343	$	—	$	53,343
April 27, 2006	April 27, 2009		288,331	$	4,731,512	$	394,293	$	262,862	$	788,585	$	262,862
February 22, 2007	February 22, 2010		426,514	$	5,433,788	$	447,966	$	—	$	636,365	$	—
May 3, 2007	November 3, 2007		17,654	$	280,000	$	93,331	$	—	$	93,331	$	—
Total compensation expense of nonvested shares						$	1,197,317	$	825,713	$	2,289,516	$	1,335,221

Non-Employee Directors’ Deferral Plan:

     Compensation expense deferred in common stock related to the Non-Employee Directors’ Deferral Plan was approximately $14,000 and $7,300 during the three-month periods ended June 30, 2007 and 2006, respectively, and approximately $24,000 and $12,500 for the six-month periods ended June 30, 2007 and 2006, respectively. The company match was made in Company common stock and resulted in compensation expense of approximately $2,800, and $1,500 during the three-month periods ended June 30, 2007 and 2006, respectively, and approximately $4,800 and $2,500 for the six-month periods ended June 30, 2007 and 2006, respectively.

Nonqualified Deferred Company Plan:

     Compensation expense deferred in cash under the Nonqualified Deferred Compensation Plan was approximately $61,000 and $48,000 for the second quarters of 2007 and 2006, respectively, and $212,000 and $70,000 for the six-month periods ended June 30, 2007 and 2006, respectively.

Note 5 – 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, 2007, the Company has net operating loss carryforwards (NOLs), which expire in 2009 through 2025. 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 management considers, more likely than not, will not be realized. Except for statutory minimum payments required under certain state and local tax laws, the Company has not recognized any income tax provision or benefit for the quarters ended June 30, 2007 and 2006, as any changes in the net deferred tax assets and liabilities have been offset by a corresponding change in the valuation allowance.

     Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainties in Income Taxes, an Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of June 30, 2007 and January 1, 2007, the Company had no unrecognized tax benefits. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in “Income tax provision” in the Statements of Operations and Comprehensive Income (Loss). There was no interest or penalties for the three-month and six-month periods ended June 30, 2007. The tax years subject to examination by the taxing authorities are the years ending December 31, 2006, 2005, 2004 and 2003.

10

Note 6 – Comprehensive Income (Loss)

     Comprehensive income (loss) consists of earnings items and other gains and losses affecting stockholders’ equity that are excluded from current net income. As of June 30, 2007, such items consist of unrealized gains and losses on derivative financial instruments related to commodity price hedging activities and available-for-sale marketable securities.

     The following summary sets forth the changes in accumulated other comprehensive loss in stockholders’ equity for the first six-month periods of 2007 and 2006:

(in thousands)	Available for Sale		Commodity			Accumulated Other
As of June 30, 2007	Securities		Instruments			Comprehensive Loss
Balance at December 31, 2006	$	177	$	(15,780	)	$	(15,603	)
Reclassification to earnings		—		7,275			7,275
Change in value		137		(12,587	)		(12,450	)
Comprehensive income (loss)	$	137	$	(5,312	)	$	(5,175	)
Balance at March 31, 2007	$	314	$	(21,092	)	$	(20,778	)
Reclassification to earnings		—		8,093			8,093
Change in value		90		(2,737	)		(2,647	)
Comprehensive income	$	90	$	5,356		$	5,446
Balance at June 30, 2007	$	404	$	(15,736	)	$	(15,332	)

(in thousands)	Available for Sale		Commodity			Accumulated Other
As of June 30, 2006	Securities		Instruments			Comprehensive Loss
Balance at December 31, 2005	$	202	$	(17,604	)	$	(17,402	)
Reclassification to earnings		—		5,398			5,398
Change in value		159		(22,107	)		(21,948	)
Comprehensive income (loss)	$	159	$	(16,709	)	$	(16,550	)
Balance at March 31, 2006	$	361	$	(34,313	)	$	(33,952	)
Reclassification to earnings		—		9,221			9,221
Change in value		70		(22,333	)		(22,263	)
Comprehensive income (loss)	$	70	$	(13,112	)	$	(13,042	)
Balance at June 30, 2006	$	431	$	(47,425	)	$	(46,994	)

     A portion of the change in value of available-for-sale securities in the table above represents the change in value of mutual fund investments which are classified as non-current assets on the balance sheet at June 30, 2007. The change in value during the three-month and six-month periods ended June 30, 2007 related to the mutual fund investments was approximately $25,000 and $35,000, respectively.

Note 7 – Earnings (Loss) per Share

     Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) 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. No adjustments were made to reported net income (loss) in the computation of earnings (loss) per share. The Company currently has only one class of equity shares outstanding.

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     Outstanding options for the three-month and six-month periods ended June 30, 2007 and 2006 were excluded from the computation of diluted earnings per share because the effect would have been antidilutive using the treasury stock method and inclusion of these options would have reduced the net loss per share.

     There was no effect of outstanding nonvested shares on diluted weighted average shares outstanding for the three-month and six-month periods ended June 30, 2007 and 2006 because the Company reported a net loss and inclusion of any of these shares would have reduced the net loss per share amounts.

Note 8 – 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 financial results of 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 automobile and petroleum catalysts to recover the PGMs contained in those materials. The Company allocates 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 of both business segments.

     The All Other group consists of assets and costs of various corporate and support functions, and for 2006 includes assets, revenues and costs associated with the palladium received in the Norilsk Nickel transaction. As noted previously, the program to sell the palladium received in the Norilsk Nickel transaction was completed during the first quarter of 2006.

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     The Company evaluates performance and allocates resources based on income or loss before income taxes. The following financial information relates to the Company’s business segments:

(in thousands)	Mine			PGM		All
Three months ended June 30, 2007	Production			Recycling		Other			Total
Revenues	$	74,893		$	83,914	$	2,156		$	160,963
Depreciation and amortization	$	21,628		$	28	$	—		$	21,656
Interest income	$	—		$	1,799	$	1,224		$	3,023
Interest expense	$	—		$	—	$	2,750		$	2,750
Income (loss) before income taxes	$	(1,358	)	$	7,814	$	(8,972	)	$	(2,516	)
Capital expenditures	$	18,574		$	99	$	139		$	18,812
Total assets	$	502,207		$	97,877	$	148,026		$	748,110

(in thousands)	Mine		PGM		All
Three months ended June 30, 2006	Production		Recycling		Other			Total
Revenues	$	74,099	$	39,579	$	3,148		$	116,826
Depreciation and amortization	$	21,351	$	25	$	—		$	21,376
Interest income	$	—	$	1,799	$	1,271		$	3,070
Interest expense	$	—	$	—	$	2,735		$	2,735
Income (loss) before income taxes	$	2,733	$	3,383	$	(8,453	)	$	(2,337	)
Capital expenditures	$	22,106	$	—	$	126		$	22,232
Total assets	$	499,992	$	90,735	$	135,881		$	726,608

(in thousands)	Mine		PGM		All
Six months ended June 30, 2007	Production		Recycling		Other			Total
Revenues	$	147,264	$	153,902	$	6,247		$	307,413
Depreciation and amortization	$	42,020	$	52	$	—		$	42,072
Interest income	$	—	$	3,360	$	2,626		$	5,986
Interest expense	$	—	$	—	$	5,576		$	5,576
Income (loss) before income taxes	$	2,425	$	13,164	$	(19,164	)	$	(3,575	)
Capital expenditures	$	40,117	$	136	$	155		$	40,408
Total assets	$	502,207	$	97,877	$	148,026		$	748,110

(in thousands)	Mine		PGM		All
Six months ended June 30, 2006	Production		Recycling		Other			Total
Revenues	$	136,373	$	74,254	$	46,158		$	256,785
Depreciation and amortization	$	41,261	$	50	$	—		$	41,311
Interest income	$	—	$	2,442	$	2,608		$	5,050
Interest expense	$	—	$	—	$	5,540		$	5,540
Income (loss) before income taxes	$	676	$	6,709	$	(9,115	)	$	(1,730	)
Capital expenditures	$	45,125	$	—	$	231		$	45,356
Total assets	$	499,992	$	90,735	$	135,881		$	726,608

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Note 9 – Investments

     The cost, gross unrealized gains, gross unrealized losses, and fair value of available-for-sale investment securities by major security type and class of security at June 30, 2007 are as follows:

			Gross		Gross
			unrealized		unrealized		Fair
(in thousands)	Cost		gains		losses		market value
At June 30, 2007
Federal agency notes	$	35,344	$	339	$	7	$	35,676
Commercial paper		3,937		38		—		3,975
Mutual funds		388		35		—		423
	$	39,669	$	412	$	7	$	40,074

     The mutual funds included in the investment table above are classified as non-current assets on the balance sheet.

Note 10 – Inventories

     For purposes of inventory accounting, the market value of inventory is generally deemed equal to the Company’s current cost of replacing the inventory, provided that: (1) the market value of the inventory may not exceed the estimated selling price of such inventory in the ordinary course of business less reasonably predictable costs of completion and disposal, and (2) the market value may not be less than net realizable value reduced by an allowance for a normal profit margin. In order to reflect costs in excess of market values, the Company, during the second quarter 2007, reduced the aggregate inventory carrying value of certain components of its in-process and finished good inventories by $1.4 million. No reduction of the aggregate inventory carrying value was recorded for the same period of 2006. During the first six months of 2007 and 2006, the carrying value of inventory was reduced by $1.4 million and $1.1 million, respectively.

     The costs of PGM inventories as of any date are determined based on combined production costs per ounce and include all inventoriable production costs, including direct labor, direct materials, depreciation and amortization and other overhead costs relating to mining and processing activities incurred as of such date. Inventories reflected in the accompanying balance sheet consisted of the following:

	June 30,		December 31,
(in thousands)	2007		2006
Metals inventory
Raw ore	$	562	$	596
Concentrate and in-process		34,733		37,086
Finished goods		72,960		53,081
		108,255		90,763
Materials and supplies		17,497		16,132
	$	125,752	$	106,895

Note 11 – 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 on July 30, 2010 and a $40 million five-year revolving credit facility expiring July 31, 2009. The revolving credit facility includes a letter of credit facility. At June 30, 2007, the credit facility interest rate was 7.625%. Substantially all the property and assets of the Company are pledged as security under the credit facility.

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     As of June 30, 2007, the Company has $98.9 million outstanding under the term loan facility. At June 30, 2007, the Company had obtained letters of credit in the amount of $20.6 million, as partial surety for certain of its long-term reclamation obligations, which reduced amounts available under the revolving credit facility to $19.4 million.

     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, 2007, without regard to the prepayments required to be offered out of excess cash flow, or paid at the Company’s discretion:

	Credit Facility
	Scheduled Repayments
Year ended	(in thousands)
2007 (July — December)	$	510
2008		1,019
2009		1,019
2010		96,305
Total	$	98,853

Note 12 – Regulations and Compliance

     On May 20, 2006, new federal regulations went into effect that by May 20, 2008 will tighten the maximum permissible diesel particulate matter (DPM) exposure limit for underground miners from the current level of 308 mg/m3 of elemental carbon to a new limit of 160 mg/m3 of total carbon. The Company utilizes a significant number of diesel-powered vehicles in its mining operations. Appropriate measurement methods and emission control standards do not yet exist that would ensure compliance in the Company’s mining environment with this new standard. The Company is aggressively exploring existing technologies to reduce DPM exposures to the lowest levels currently achievable and is actively working with MSHA, National Institute for Occupational Safety and Health (NIOSH) and various other companies in the mining industry to share best practices and consider compliance alternatives. During the second quarter of 2007, the Company evaluated the benefit of various bio-diesel blends in reducing DPM concentrations underground. While the Company believes that MSHA will continue to support these implementation efforts, there can be no assurance that the Company will not be held in violation of the standard and be subject to an MSHA enforcement action.

     MSHA has the statutory authority to issue citations for non-compliance and, in situations where it determines the health and safety of miners is at significant risk, to order cessation of mining operations until the risk is alleviated.

Item 2. Management’s Discussion and Analysis of 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, 2007. It should be read in conjunction with the financial statements included in this quarterly report, in the Company’s March 31, 2007 Quarterly Report on Form 10-Q and in the Company’s 2006 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, a surface mill and a concentrator. The Company also operates a smelter and base metals refinery at Columbus, Montana. Concentrates produced at the two mines are transported to the smelter and refinery where they are processed into a high-grade PGM filter cake that is sent to third-party refiners for final processing. Most of the finished palladium and platinum produced from mining is sold under contracts with major automotive manufacturers for use in automotive catalytic converters. These contracts include floor and ceiling prices on palladium and platinum. (Please see the table in Note 2 to this quarter’s financial statements for further detail on these floor and ceiling prices.)

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     The Company also recycles spent catalyst materials through its processing facilities in Columbus, Montana, recovering palladium, platinum and rhodium from these materials. The Company has agreements to purchase spent automotive catalyst from third-party collectors, and also processes material owned by others under toll processing arrangements.

     The Company reported a net loss for the second quarter of 2007 of $2.5 million, or $0.03 per fully diluted share, on revenues of $161.0 million, compared to a net loss of $2.3 million, or $.03 per diluted share on revenues of $116.8 million in the second quarter of 2006. The 2007 second quarter results reflected weak production at the Stillwater Mine, which suffered from low productivity and some operational issues.

     The Company’s labor agreement with USW Local 11-0001, which represents union employees at the Stillwater Mine and the Columbus processing facilities, expired on July 1, 2007. Contract negotiations began ahead of the scheduled expiration but the labor union failed twice to ratify a new agreement by the expiration date. Although the expiration date subsequently was extended for a few days to allow additional time to reach agreement, the members of the labor union rejected for a third time terms of a negotiated agreement and began a strike on the morning of July 11, 2007. The contract issues have since been resolved, and the union members returned to work on July 17, 2007 after ratifying a new labor agreement. The new four-year labor agreement provides for an immediate 3% wage increase for miners and a 4% increase for other employees as well as wage increases in subsequent years of the agreement. Other provisions include additional vacation days, some added flexibility for employees in scheduling days off, and an emergency leave program for probationary employees. In conjunction with this labor action, the Company lost approximately seven days of production during July 2007.

     Beyond the lost production during the strike, the Company also experienced sharply lower productivity at the Stillwater Mine in part due to the distraction of labor negotiations. In addition, the lower mining productivity was aggravated by problems encountered in starting up some new underground equipment and by higher attrition following a schedule change and cutback in contracted mining services during the first quarter of 2007. In conjunction with the recent attrition, the average experience level of the Company’s workforce has also declined, as some more seasoned miners have left and a growing percentage of the mining workforce is derived from the Company’s internal miner training programs. The result may be a period of reduced overall productivity until these newer miners gain more experience. To date, East Boulder production during 2007 has remained essentially on plan, but Stillwater Mine production is now below plan this year by about 30,000 ounces.

     While some of the Stillwater Mine shortfall could be made up during the remainder of the year, management has reduced its production guidance for the full year to reflect the effect of these issues. The Company previously had given production guidance for the full year 2007 in the range of 615,000 to 645,000 ounces of platinum and palladium from mining activities. In view of the problems discussed above, mine output is now expected to fall to between 555,000 ounces and 585,000 ounces for 2007. Mine production in 2006 was 601,000 ounces.

     The schedule change at the Stillwater Mine implemented during the first quarter of 2007 was strategically important but difficult from an employee morale perspective. Prior to the change, the Company employed two ten-hour shifts per day at the mine, with each crew working seven days on and then seven days off. Many of the Company’s employees benefited from this arrangement by commuting to work in Montana during their work shift, and then returning home to other states on their off days. The challenge facing the Company over the past several years has been sharply escalating costs for contract mining services and employee benefits. The schedule change increased the average work week from 35 hours to about 42 hours (with a corresponding increase in wages), and reduced the total number of work crews from four to three. It also has complicated the work schedule by eliminating the straight seven-day off shift. The change allowed the Company to reduce its use of contractors and to spread benefits costs over more working hours. However, it also has resulted in an increase in attrition as employees who formerly commuted to work from long distances no longer are able to do so, and some local employees have elected to find other employment rather than work the extended shifts. While attrition now appears to be slowing, the adjustment is taking some time to work through.

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     Recycling volumes fed into the Company’s processing facilities during the second quarter of 2007 increased from the second quarter of 2006, totaling 93,000 ounces of processed PGMs for the second quarter of 2007, compared to 88,000 ounces of processed PGMs for the comparable period of 2006, a 5.7% increase. For the six months recycling volumes totaled 180,000 ounces in 2007 as compared to 148,000 ounces in 2006, a 21.6% increase.

     Market prices for platinum-group metals were generally a little higher in the second quarter of 2007 than a year ago. However, the Company’s sales realizations to a large extent are only indirectly tied to market prices. For example, the provisions of the contracts with the automakers over the past several years have provided the Company with an average realized price on its sales of mined palladium higher than the corresponding market price of palladium. These contracts include minimum selling prices for palladium that on average are higher than market. Consequently, until the palladium market price exceeds these stipulated minimum selling prices, the Company realizes no additional benefit from palladium price increases.

     On the other hand, the Company’s realized price for platinum continues to be constrained by forward sales commitments entered into in earlier years at prices below the current market. During the second quarter of 2007 and 2006, the cost of these financially settled forward contracts totaled $8.1 million and $9.2 million, respectively. As indicated in Note 3 to the Company’s second quarter 2007 financial statements, the Company’s realized price under these forward sales commitments is expected to increase in future quarters and the volume of platinum sold forward at prices below current market will decline, so these commitments should have a much reduced effect on net income after 2007. Separately, the Company’s automobile contracts also impose a price ceiling of $850 per ounce that applies to 14% of its mine production of platinum through 2010.

     The Company’s balance of cash and cash equivalents (excluding restricted cash) was $57.2 million at June 30, 2007, down $18.1 million from March 31, 2007. Including the Company’s available-for-sale investments in highly liquid federal agency notes and commercial paper, the Company’s total available liquidity at June 30, 2007, is $96.9 million, down $20.0 million from $116.9 million from the end of the first quarter of 2007. This decrease in liquidity is accounted for by an increase of $23.5 million during the 2007 second quarter in working capital requirements of the recycling business. In addition to cash and liquid investments, the Company also had $19.4 million available to it under undrawn revolving credit lines at June 30, 2007.

     In the Company’s 2005 and 2006 Annual Reports on Form 10-K, management outlined its three broad strategic areas of focus: transformation of the mining methods employed in the Stillwater and East Boulder Mines, development of new markets for palladium; and growth and diversification of the Company’s business activities. Following is a brief summary of 2007 year-to-date activity in each of these areas of focus.

Transformation of Mine Production Methods

     The Company has identified a series of operating initiatives at the Stillwater and East Boulder Mines that are intended to increase efficiency, reduce unit costs of production, and increase total PGM ounces produced.

     Total ore tons mined, the grade of the extracted ore and metallurgical recovery percentages, drive the Company’s ultimate production of palladium and platinum. 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.

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     Ore production at the Stillwater Mine averaged 1,741 and 1,856 tons of ore per day during the second quarter and the first six months of 2007, respectively; this compares to an average of 1,977 tons and 1,967 tons of ore per day during the second quarter and first six months of 2006, respectively. The decline in production reflects the sharply reduced use of contract miners during 2007, as well as a certain amount of disruption associated with the schedule change, miner attrition, labor issues and other operational challenges associated with the mining transition.

     The rate of ore production at the East Boulder Mine averaged 1,640 and 1,538 tons of ore per day during the second quarter and the first six months of 2007, respectively, compared to an average of 1,592 and 1,641 tons of ore per day during the second quarter and first six months of 2006. East Boulder continues to perform about as planned in 2007, and has been spared most of the disruptions Stillwater Mine has experienced this year.

     In addressing the long-term economic viability and sustainability of its mines, the Company has focused on five transformational objectives. These objectives include overlapping efforts to (1) strengthen safety and ensure environment compliance, (2) improve the developed state of the mines by increasing proven reserves and upgrading infrastructure, (3) shift mining methods away from highly mechanized mining and toward more selective extraction, (4) increase overall production rates toward the permitted capacity of each mine, and (5) reduce total mining support costs through improved mining efficiencies. During the first six months of 2007, the Company continued its excellent performance in safety and environmental compliance, maintained its accelerated capital development program to expand infrastructure and increase proven reserves, and modestly expanded its use of more selective extraction methods.

     Anticipated benefits of the more selective mining methods include improved ore grades and access to previously uneconomic mineralized material, significant reductions in waste material mined and overall development requirements, less spending on capital equipment acquisition and maintenance, and ultimately much lower capital and operating costs per ounce of production. This is a continuing effort that will be implemented progressively over the next three to five years. Tonnage from captive cut-and-fill mining stopes was 607 tons per day during the second quarter, compared to 703 tons per day averaged during the first quarter of 2007. Also, mechanical ramp-and-fill mining in the Upper West portion of the Stillwater Mine during the second quarter averaged 288 tons per day, compared to an average of 250 tons per day during the first quarter of 2007.

     The grade of the Company’s ore reserves, measured in combined palladium and platinum 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. However, the composite average grade at each mine tends to be fairly stable. For the three and six month periods ended June 30, 2007, the average mill head grade for all tons processed from the Stillwater Mine was 0.58 ounces per ton of ore compared to the average grade in 2006 for the same periods of 0.59 and 0.58. For the three and six month periods ended June 30, 2007, the average mill head grade for all tons processed from the East Boulder Mine was 0.37 and 0.38 PGM ounces per ton of ore, respectively, compared to 0.40 during the same period in 2006.

     During the second quarter of 2007, the Company introduced an experimental effort in certain areas of the East Boulder Mine to develop lateral mining drifts along the reef itself (reef laterals) rather than in the footwall adjacent to the reef (footwall laterals). Because the reef lateral drifts necessarily are wider than the reef itself, this will result in somewhat higher dilution (and therefore in a little lower average realized ore grade), however, if this approach is successful, it could improve the efficiency of primary development efforts in the mine. This effort does not affect the move toward increased captive cut and fill mining within the stopes themselves. Management will report on the results of this initiative as it progresses.

     During the three and six month periods ended June 30, 2007, the Company’s mining operations produced a total of 102,400 and 213,400 ounces of palladium, respectively, and 30,700 and 63,800 ounces of platinum, respectively. For the same periods in 2006, the mines produced 115,000 and 228,000 ounces of palladium, respectively, and 34,000 and 67,000 ounces of platinum, respectively.

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     The Company is maintaining its emphasis on accelerated primary development at both mines. For the three and six month periods ended June 30, 2007, primary development (excluding laterals developed in the reef) totaled approximately 8,000 and 20,000 feet, respectively. Definitional drilling for the quarter totaled approximately 123,000 feet. Management believes this investment in mine development, although resource intensive, will result in more efficient and productive mining operations over the longer term. Capital spending requirements at the mines are expected to decline in future years once the current development targets are achieved.

Market Development

     The Company channels its efforts to develop and broaden markets for palladium through the Palladium Alliance International (the “Alliance”), a trade organization established for that purpose in early 2006. The Alliance’s principal goals include establishing palladium’s jewelry market presence as a specific elegant brand of precious metal, distinct from platinum and white gold, and instituting a system of standards for use of the palladium brand that will emphasize palladium’s rarity and value. The Alliance is dedicated to nurturing palladium’s jewelry role, and building demand, by sponsoring technical articles in jewelry trade publications illustrating methods of fabricating palladium jewelry, providing a website with information on palladium suppliers and retailers (www.luxurypalladium.com), organizing presentations at industry trade shows and supporting targeted image advertising in critical jewelry markets. During the first half of 2007, the Alliance funded several palladium television commercial spots presented in Shanghai and Beijing, and coordinated an effort to broaden and unify image-building marketing efforts among palladium producers and fabricators.

     As noted above, Stillwater’s mine production currently is largely committed under long-term sales agreements with Ford Motor Company and General Motors Corporation, one of which will expire in 2008 and the other at the end of 2010. These contracts provide for fixed percentages of monthly mined PGM production to be delivered at small discounts to the market price for each metal. The contracts also include certain floor and ceiling prices on stipulated portions of the metal delivered; these floor prices over the years have proven highly advantageous to Stillwater, particularly in times of low PGM market prices. The delivery commitments under these contracts expire at the end of 2010. The Company is currently exploring opportunities with various industry consumers of PGMs regarding sales commitments beyond the 2010 contract period.

     Palladium market prices remained relatively stable during the second quarter of 2007, ending the period at $365 per ounce, after increasing somewhat during the first quarter of this year. Platinum prices ended the second quarter of 2007 at $1,273 per ounce, up $155 per ounce from the end of 2006. The Company believes recent PGM pricing activity reflects both fundamental demand for the metals and a certain amount of investment activity.

Growth and Diversification

     Management is pursuing various opportunities to diversify its current mining and processing operations. This is a multi-faceted effort. Over the past year, the volume of the Company’s recycling operations has grown substantially, thereby reducing the degree of financial dependence solely on performance of the Company’s mines in each period. This commitment will continue during 2007 and 2008 with the addition of a second smelter furnace within the Columbus processing facilities; the new furnace will accommodate expansion of both mining production and recycling volumes over the next several years, as well as, potentially improving metal recoveries.

     Also, as announced previously, late last year the Company invested $1.9 million to purchase approximately an 11% interest in Pacific North West Capital Corp., a Canadian exploration company with substantial exploration expertise that has identified several promising PGM targets. The Company invested an additional $0.7 million in Pacific North West Capital Corp. during the second quarter of 2007 and maintains a 10% interest. On July 3, 2007, the Company invested $1.5 million in Benton Resource Corp., another Canadian exploration company, providing Stillwater with an attractive opportunity for future participation in Benton’s Goodchild Project as well as an equity interest in Benton itself.

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     These investments in generative exploration projects are inherently long-term and fairly speculative in nature, but are intended to build a portfolio of attractive opportunities for the future. The Company also is continuously evaluating various later-stage mineral development projects, and in some cases even acquisition of operating properties, when they appear to offer good investment value and mesh with Stillwater’s corporate expertise. Management is proceeding deliberately in these growth and diversification efforts.

Federal Regulations

     As discussed in Note 12 to the Company’s financial statements, MSHA published a final rule in the Federal Register on May 18, 2006, that addressed diesel particulate matter exposure of underground metal and nonmetal miners. The final rule phases in the final limit of 160 Total Carbon (“TC”) micrograms per cubic meter of air (160TC µg/m3) over a two-year period. Consequently, on May 20, 2006, the interim limit became 308 micrograms of elemental carbon (“EC”) per cubic meter of air (308EC µg/m3), which is the same as the prior interim limit; on January 20, 2007, the limit was adjusted to 350TC µg/m3; and on May 20, 2008, the final limit of 160TC µg/m3 will become effective. MSHA has stated its intention to convert the TC limits to comparable EC limits later through a separate rulemaking.

     Appropriate measurement methods and emission control standards do not yet exist that would ensure continuous compliance in the Company’s mining environment with this new standard. Mine operators must continue to use engineering and administrative controls supplemented by respiratory protection to reduce miners’ exposures to the prescribed limits. The final rule establishes new requirements for medical evaluation of miners required to wear respiratory protection and transfer of miners who are medically unable to wear a respirator and deletes the existing provision that restricts newer mines from applying for an extension of time in which to meet the final concentration limit.

     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 companies in the mining industry to share best practices and consider compliance alternatives. During the second quarter of 2007, the Company evaluated the benefit of various bio-diesel blends in reducing DPM concentrations underground. Preliminary results are encouraging and suggest that bio-diesel blends may play a key role in the Company’s ultimate compliance efforts. While the Company believes that MSHA will continue to support these efforts, in the absence of full compliance there can be no assurance that the Company will not be held in violation of the standard and be subject to an MSHA enforcement action.

     MSHA has the statutory authority to issue citations for non-compliance and, in situations where it determines the health and safety of miners is at significant risk, to order cessation of mining operations until the risk is alleviated.

PGM Recycling

     PGMs (palladium, platinum and rhodium) contained in spent catalytic converter materials are purchased from third-party suppliers or received under tolling agreements and are processed by the Company through its metallurgical complex. A sampling facility crushes and samples the spent catalysts prior to their being blended for smelting in the electric furnace. The spent catalytic material is sourced from third parties, who collect primarily from automobile repair shops and automobile yards that disassemble old cars for the recycling of their parts. The Company also regularly processes spent PGM catalysts from petroleum refineries.

     Recycling activity has expanded over the past several years. During this year’s second quarter, the Company processed recycled materials at a rate of approximately 17.2 tons per day, up from approximately 16.9 tons per day in the second quarter of 2006. Revenues from PGM recycling were $83.9 million for the second quarter of 2007 compared to $39.6 million in revenue for the same period in 2006. This revenue increase of $44.3 million reflects both the higher catalyst processing volumes and higher underlying PGM prices in 2007. Recycling volumes are expected to remain fairly flat during the remainder of 2007.

20

Corporate and Other Matters

     As discussed in Note 3 to the financial statements, at June 30, 2007, the Company had secured platinum prices in the forward market on a portion of future sales by entering into financially settled forward transactions covering approximately 59,000 ounces of platinum or about 39% of the Company’s anticipated platinum mine production for the period from July 2007 through June 2008 at an average price of about $1,016 per ounce. The Company entered into these transactions in the past in order to reduce the Company’s financial exposure to any sharp decline in platinum prices during the capital intensive portion of the mine transformation program. These hedges are expected to reduce the overall 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 recorded hedging expense in the second quarter of 2007 totaling $8.1 million for financially-settled forward contracts that settled below market price during the quarter. For the second quarter of 2006, the Company recorded corresponding hedging expense of $9.2 million. These amounts are recorded as a reduction of mine production revenue.

     The Company is party to a $180 million credit facility dated August 3, 2004, comprised of a $140 million term loan facility and a $40 million revolving credit facility. Additional discussion of this facility is provided in the Company’s 2006 Annual Report on Form 10-K. As of June 30, 2007, the Company had $98.9 million outstanding under its term loan credit facility. At June 30, 2007, the Company had undrawn letters of credit outstanding in the amount of $20.6 million as partial surety for certain of its long-term reclamation obligations, which left the remaining amount available under the revolving credit facility at $19.4 million. Approximately $1.3 million of the Company’s outstanding long-term debt (including $1.0 million associated with the term loan facility) was classified as a current liability at June 30, 2007, reflecting principal amounts required to be repaid within the next twelve months.

     On July 28, 2006, the Company entered into an interest rate swap agreement that has the effect of fixing the interest rate on $50 million of the Company’s outstanding term loan debt through December 31, 2007. The effective fixed rate of the interest rate swap is 7.628%. The Company has elected not to account for this as a cash flow hedge, and accordingly, marked this transaction to market by recording a credit to interest expense of approximately $44,000 and $47,500 during the three-month and six-month periods ended June 30, 2007, respectively.

     In preparing the 2007 business plan the Company projected its future compliance with the financial covenants in the credit facility. While the business plan shows the Company remaining in compliance with all financial ratios through the life of the credit facility, it also shows the capital expenditure forecasts for 2007 and 2008 exceeding the covenant limits in the credit agreement. The Company has met with the affected lenders and discussed the business rationale for the covenant overruns, and the lenders have indicated their preliminary support for an amendment to cure the problem. Consequently, the Company expects to reach a resolution with the lenders prior to any event of default taking place.

     At June 30, 2007, the Company had posted surety bonds with the State of Montana in the amount of $13.1 million and had obtained a $7.5 million letter of credit to satisfy the current $20.6 million of financial guarantee requirements determined by the regulatory agencies. The state is currently in the process of finalizing an updated environmental impact statement and is expected to recommend a substantial increase in these financial guarantees. The Company has adequate financial resources to meet these increased obligations.

Results of Operations

     The Company reported a net loss of $2.5 million for the second quarter of 2007 compared to a net loss of $2.3 million for the second quarter of 2006. Recycling margins (including financing income) increased to $7.8 million in the second quarter of 2007 from $3.4 million in the second quarter of 2006, reflecting increased recycling volumes and higher prices for PGMs. Offsetting this improvement, however, was a decline in overall mining margins to a loss of $1.4 million from a positive $2.7 million in the same quarter of last year. As discussed previously, the weaker results from mining reflected lower Stillwater Mine output in the 2007 second quarter associated with labor issues, attrition, reduced use of mining contractors and problems with new equipment.

21

Three-month period ended June 30, 2007 compared to the three-month period ended June 30, 2006.

     Revenues. Revenues increased by 37.7% to $161.0 million for the second quarter of 2007 compared to $116.9 million for the second quarter of 2006. The following analysis covers key factors contributing to the increase in revenues:

Revenues, PGM ounces sold and PGM prices

	Three months ended
	June 30,
								Percentage
(in thousands)	2007		2006		Increase			Change
Revenues	$	160,963	$	116,826	$	44,137			38	%
Mine Production Ounces Sold:
Palladium		116		118		(2	)		(2	%)
Platinum		32		35		(3	)		(9	%)
Total		148		153		(5	)		(3	%)
Other PGM Activities Ounces Sold:
Palladium		32		21		11			52	%
Platinum		31		18		13			72	%
Rhodium		6		4		2			50	%
Total		69		43		26			60	%
By-products from Mining Ounces/Pounds Sold:(1)
Rhodium (oz.)		1		1		—			0	%
Gold (oz.)		3		2		1			50	%
Silver (oz.)		2		1		1			100	%
Copper (lb.)		85		88		(3	)		(3	%)
Nickel (lb.)		261		390		(129	)		(33	%)
Average realized price per ounce
Mine Production:
Palladium	$	386	$	378	$	8			2	%
Platinum	$	949	$	839	$	110			13	%
Combined	$	506	$	484	$	22			5	%
Other PGM Activities:
Palladium	$	355	$	329	$	26			8	%
Platinum	$	1,225	$	1,060	$	165			16	%
Rhodium	$	5,923	$	4,019	$	1,904			47	%
By-products from mining:(1)
Rhodium ($/oz.)	$	6,160	$	5,054	$	1,106			22	%
Gold ($/oz.)	$	655	$	621	$	34			5	%
Silver ($/oz.)	$	13	$	12	$	1			8	%
Copper ($/lb.)	$	3.39	$	4.21	$	(0.82	)		(19	%)
Nickel ($/lb.)	$	22.74	$	8.14	$	14.60			179	%
Average market price per ounce
Palladium	$	368	$	345	$	23			7	%
Platinum	$	1,289	$	1,189	$	100			8	%
Combined	$	564	$	539	$	25			5	%

⁽¹⁾ By-product metals sold reflect contained metal. Realized prices reflect net values (discounted due to product form and transportation and marketing charges) per unit received. By-product sales are not recorded as revenue but as a reduction to costs of metals sold.

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     Revenues from sales of mine production were $74.9 million in the second quarter of 2007, compared to $74.1 million for the same period in 2006, a 1.1% increase. The overall increase in mine production revenues reflects a 3.2% decrease in the total quantity of metals sold to 148,100 ounces in the second quarter of 2007 compared to 153,000 ounces in the same period of 2006 and higher average realizations in 2007. The Company’s average combined realized price on sales of palladium and platinum from mining operations was $506 per ounce in the second quarter of 2007, compared to $484 per ounce in the same quarter of 2006.

     Revenues from PGM recycling grew substantially, increasing to $83.9 million in the second quarter of 2007 from $39.6 million for the same period in 2006. Volumes of recycled metal sold during the second quarter of 2007 increased to approximately 78,000 ounces compared to approximately 60,000 ounces in the same period of 2006. The improved performance is primarily attributable to higher realized prices for PGMs and the timing of inventory flows in the second quarter of 2006. The Company’s combined average realization on recycling sales (which include palladium, platinum and rhodium) was $1,337 per ounce in the second quarter of 2007, up from $1,155 per ounce in the second quarter of last year.

     Costs of metals sold. Costs of metals sold increased to $134.8 million in the second quarter of 2007 from $91.1 million in the second quarter of 2006, up $43.7 million, a 48.0% increase. The higher cost in 2007 was driven primarily by higher acquisition costs for recycling catalysts as the underlying value of the contained metal increased, raising costs in the 2007 quarter by $39.9 million.

     The costs of metals sold from mine production were $54.7 million for the second quarter of 2007, compared to $50.0 million for the second quarter of 2006, a 9.4% increase. The increase primarily reflects higher mining costs in the second quarter of 2007. The Company recognized a $1.4 million lower-of-cost-or-market adjustment to reflect a realizable value of metals lower than cost in inventory in the second quarter of 2007. No reduction of the aggregate inventory carrying value was recorded for the same period of 2006.

     Total consolidated cash costs per ounce produced, a non-GAAP measure of extraction efficiency, in the second quarter of 2007 decreased slightly to $320 per ounce, compared to $322 per ounce in the second quarter of 2006. This reduction resulted from strong recycling and by-product credits during the second quarter of 2007 that more than offset increased direct costs of mining.

     The costs of metals sold from PGM recycling activities were $77.9 million in the second quarter of 2007, compared to $38.0 million in the second quarter of 2006, a 105.0% increase. The $39.9 million increase was due to the higher volumes of PGM ounces sold and the associated higher costs of acquiring the catalyst material.

     Production. During the second quarter of 2007, the Company’s mining operations produced approximately 133,100 ounces of PGMs, including approximately 102,400 and 30,700 ounces of palladium and platinum, respectively. This is down from the approximately 149,000 ounces of PGMs produced in the second quarter of 2006, including approximately 115,000 and 34,000 ounces of palladium and platinum, respectively. This shortfall in 2007 was mostly attributable to weaker output from Stillwater Mine, as discussed above.

     The Company’s second quarter 2007 mine production included 84,500 ounces from the Stillwater Mine, a 14.6% decrease over the same quarter last year, and 48,600 ounces from East Boulder Mine, a 2.9% decrease. For the comparable quarter of 2006, Stillwater Mine produced 99,000 ounces and East Boulder produced 50,000 ounces.

     Recycled ounces processed grew to 93,000 ounces in the second quarter of this year from 88,000 ounces in the second quarter of 2006.

     General and administrative. General and administrative expenses in the second quarter of 2007 were $7.4 million, compared to $7.0 million during the second quarter of 2006, a 5.7% increase. The increase was mainly due to the Company’s continuing efforts to market palladium in worldwide jewelry markets in support of the Palladium Alliance International, spending approximately $1.0 million on marketing in the second quarter of 2007 compared to $0.7 million in the same period of 2006.

23

     Interest income and expense. Interest expense was $2.8 million and $2.7 million in the second quarters of 2007 and 2006, respectively. The Company’s total debt balance declined to $128.7 million at June 30, 2007 from $131.4 million at June 30, 2006, but interest rates increased slightly between the periods. Interest income was also nearly flat at $3.0 million in the second quarter of 2007 and $3.1 million in the second quarter last year. The Company’s balance of cash, cash equivalents, and other liquid investments earning interest (excluding restricted cash) increased to $96.9 million at June 30, 2007 from $90.6 million at June 30, 2006.

     Other comprehensive loss. For the second quarter of 2007, other comprehensive loss included the total change in the fair value of derivatives of $2.7 million, reduced by $8.1 million of hedging loss recognized in current earnings. For the same period of 2006, other comprehensive loss included a change in the fair value of derivatives of $22.3 million reduced by $9.2 million in hedging loss recognized in current earnings.

24

Six-month period ended June 30, 2007, compared to the six-month period ended June 30, 2006.

     Revenues. Revenues were $307.4 million for the first six months of 2007, compared to $256.8 million for the same period of 2006, for an increase of 19.7%. The following discussion covers key factors affecting revenues:

Revenues, PGM ounces sold and PGM prices

	Six months ended
	June 30,							Percentage
(in thousands)	2007		2006		Increase			Change
Revenues	$	307,413	$	256,785	$	50,628			20	%
Mine Production Ounces Sold:
Palladium		225		225		—			0	%
Platinum		66		64		2			3	%
Total		291		289		2			1	%
Other PGM Activities Ounces Sold:
Palladium		69		107		(38	)		(36	%)
Platinum		59		41		18			44	%
Rhodium		12		14		(2	)		(14	%)
Total		140		162		(22	)		(14	%)
By-products from Mining Ounces/Pounds Sold:(1)
Rhodium (oz.)		2		2		—			0	%
Gold (oz.)		6		5		1			20	%
Silver (oz.)		4		3		1			33	%
Copper (lb.)		468		346		122			35	%
Nickel (lb.)		567		831		(264	)		(32	%)
Average realized price per ounce
Mine Production:
Palladium	$	382	$	370	$	12			3	%
Platinum	$	931	$	826	$	105			13	%
Combined	$	506	$	471	$	35			7	%
Other PGM Activities:
Palladium	$	345	$	287	$	58			20	%
Platinum	$	1,189	$	1,018	$	171			17	%
Rhodium	$	5,497	$	3,413	$	2,084			61	%
By-products from mining:(1)
Rhodium ($/oz.)	$	6,039	$	4,252	$	1,787			42	%
Gold ($/oz.)	$	661	$	588	$	73			12	%
Silver ($/oz.)	$	13	$	11	$	2			18	%
Copper ($/lb.)	$	2.89	$	2.71	$	0.18			7	%
Nickel ($/lb.)	$	19.98	$	7.01	$	12.97			185	%
Average market price per ounce
Palladium	$	355	$	318	$	37			12	%
Platinum	$	1,238	$	1,111	$	127			11	%
Combined	$	555	$	486	$	69			14	%

⁽¹⁾ By-product metals sold reflect contained metal. Realized prices reflect net values (discounted due to product form and transportation and marketing charges) per unit received. By-product sales are not recorded as revenue but as reduction to costs of metals sold.

25

     Revenues from mine production were $147.3 million in the first six months of 2007, compared to $136.4 million for the same period in 2006, an 8.0% increase. The increase in mine production revenues was mostly due to increased PGM sales realizations, and to a lesser extent to growth in the quantity of metals sold, 291,100 ounces sold in the first six months of 2007 compared to 289,000 ounces in the same period of 2006. Ounces sold attributable to East Boulder Mine production decreased to approximately 90,300 in the first half of 2007 from approximately 102,900 ounces in the same period of 2006. Sales attributable to production from the Stillwater Mine increased to approximately 200,800 ounces in the first half of 2007 from approximately 186,600 ounces in the first half of last year. East Boulder continues its transition away from sublevel extraction and toward more selective mining methods. The Stillwater production problems discussed above took place during June and July, and so will affect third-quarter 2007 sales volumes.

     Revenues from PGM recycling were $153.9 million for the first six months of 2007, compared to $74.3 million for the same period in 2006. This increase in revenues from PGM recycling resulted mostly from growth in the quantity of recycled PGMs sold from approximately 72,000 ounces in the first six months of 2006, compared to approximately 121,000 ounces in the same period of 2007 and to a lesser extent by a $243 per ounce increase in the combined average realized price for these metals (including platinum, palladium and rhodium) to $1,271 per ounce for the first six months of 2007 from $1,028 per ounce for the first half of 2006.

     For the first six months of 2006, revenues from sales of palladium received in the Norilsk Nickel transaction and other sales activities totaled $46.2 million, including $17.6 million from contractual sales out of the palladium inventory from the Norilsk Nickel transaction, and $28.6 million from other metals acquired for resale. These sales and all related agreements associated with the Norilsk Nickel transaction ended in the first quarter of 2006.

     Costs of metals sold. Costs of metals sold overall for the Company were $253.3 million for the first six months of 2007, compared to $203.2 million for the same period of 2006, a 24.7% increase.

     The costs of metals sold from mine production were $103.0 million for the first six months of 2007, compared to $94.2 million for the same period of 2006, a 9.3% increase. This increase primarily reflects higher mining costs during the first half of 2007. The Company recognized a $1.4 million lower-of-cost-or-market adjustment to reflect a realizable value of metals lower than cost in inventory for the six month period ended June 30, 2007; this compared to a lower-of-cost-or-market adjustment of $1.1 million recorded in the first half of 2006.

     Total consolidated cash costs per ounce produced, a non-GAAP measure, in the first six months of 2007 decreased to $314 per ounce compared to $318 per ounce in the same period of 2006. Analysis of this difference between the two periods indicates that higher labor and materials costs in mining have been offset by increases in by-product credits, and the remaining difference is more than accounted for by increased severance tax and royalty costs associated with higher metals prices.

     The costs of metals sold from PGM recycling activities were $144.0 million in the first six months of 2007, compared to $70.0 million in the same period of 2006. The significant growth has been driven by two principal factors: an increase in ounces sold to approximately 121,000 ounces in the first six months of this year from approximately 72,000 ounces in the first half of 2006; and, secondly, an increase in the average cost per ounce – driven by the cost of raw catalyst material, and reflecting growth in the underlying value of the metal it contains – to $1,183 per ounce (for platinum, palladium and rhodium) in the first half of 2007 from $968 per ounce during the first half of 2006.

     The costs of metals sold from sales of palladium received in the Norilsk Nickel transaction and other sales activities were $39.1 million in the first six months of 2006. There were no corresponding costs associated with the Norilsk Nickel transaction in the first six months of 2007 as these sales ended in the first quarter of 2006.

     Production. During the first six months of 2007, the Company’s mining operations produced approximately 277,200 ounces of PGMs, including approximately 213,400 and 63,800 ounces of palladium and platinum, respectively. This compares with approximately 295,000 ounces of PGMs in the first six months of 2006, including approximately 228,000 and 67,000 ounces of palladium and platinum, respectively, a 6.0% period-on-period decrease in total PGM production. The Stillwater Mine produced approximately 182,500 ounces of PGMs in the first six months of 2007, compared with approximately 192,000 ounces of PGMs in the same period of 2006, a 4.9% decrease. Production at the Stillwater Mine was affected by lower productivity, workforce attrition following a schedule change, ground conditions and mechanical problems with new underground mining equipment. The East Boulder Mine produced approximately 94,700 ounces of PGMs in the first six months of 2007, compared with approximately 103,000 ounces of PGMs for the same period of 2006, an 8.1% decrease, in line with Company expectations.

26

     General and administrative. General and administrative expenses in the first six months of 2007 were $13.0 million, compared to $12.1 million during the same period of 2006. The increase resulted from increased professional fees and compensation costs, including amortization of deferred stock awards granted during the first six months of 2007. The Company expanded its marketing program in 2006 and continued this effort in 2007. Marketing expense for the first six months of 2007 was $3.2 million compared to $0.9 million for the comparable period in 2006.

     Interest expense of $5.6 million in the first six months of 2007 remained unchanged from the same period in 2006. The effect of sharply higher interest rates over the past year was fully offset by the reduction in the Company’s outstanding debt balance. Interest income increased to $6.0 million for the first six months of 2007 from $5.1 million in the comparable period of 2006. This increase primarily is driven by higher interest rates and growth in recycling activities.

     Other comprehensive loss. For the first six months of 2007, other comprehensive loss includes a change in the fair value of derivatives of $15.3 million offset by a reclassification to earnings of $15.4 million, for commodity hedging instruments. For the same period of 2006, other comprehensive loss included a change in value of $44.4 million for commodity instruments and a reclassification to earnings of $14.6 million.

Liquidity and Capital Resources

     The Company’s cash and cash equivalents totaled $57.2 million at June 30, 2007, down $18.1 million from March 31, 2007. By including the Company’s available-for-sale investments in highly liquid federal agency notes and commercial paper, the Company’s total available liquidity at June 30, 2007, was $96.9 million, down $20.0 million from $116.9 million at the end of the first quarter of 2007. Working capital comprised of marketable inventories (see Note 10 to the Company’s financial statements) and advances thereon in the Company’s PGM recycling business totaled about $97.1 million at the end of the second quarter of 2007, up from $70.9 million at the beginning of the year, mostly reflecting the impact of the higher PGM prices. The Company also had $19.4 million available to it under undrawn revolving credit lines at June 30, 2007.

     The Company is spending a total of about $36 million during 2007 and 2008 to add a second smelting furnace and other process enhancements at its processing facilities in Columbus, Montana. The addition of the second furnace is intended to accommodate forecasted increases in processing volumes due to expansion of mine output and to growing volumes of recycled material over the next several years. The second furnace will also mitigate an operational risk, as virtually all of the Company’s metal production is dependent on the availability of the smelter facility. Sometime in the future, the Company will need to take down the existing smelter furnace for a month or so to replace its refractory brick lining. In the past the smelter simply stockpiled material during the rebricking and processed it following the outage, however, total throughput demand at the furnace has now increased to a level where that is no longer feasible. The second furnace may also allow for extending the residence time of matte in the furnace, which should improve PGM furnace recoveries.

     Net cash provided from operating activities reduced by this growth in recycling-related operating capital, was $0.1 million in the second quarter of 2007 compared to net cash used in operating activities of $27.7 million in the same period of 2006. Capital expenditures were $18.8 million in the second quarter 2007 compared to $22.2 million in the second quarter of 2006. The Company paid down $1.1 million of its debt obligations during the second quarter of 2007, in accordance with the terms of its credit agreement and capital leases. Outstanding debt at June 30, 2007 was $128.7 million.

27

Credit Facility

     As of June 30, 2007, the Company had $98.9 million outstanding under the term loan facility. At June 30, 2007, the Company had obtained letters of credit in the amount of $20.6 million as partial surety for certain of its long-term reclamation obligations, which reduced amounts available under the revolving credit facility to $19.4 million at June 30, 2007. As of June 30, 2007, $1.0 million of the long-term debt under this facility was classified as a current liability (see Note 11 to the Company’s financial statements).

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 and the related interest payments as of June 30, 2007:

in thousands	2007(1)		2008		2009		2010		2011		Thereafter		Total
Term loan facility	$	510	$	1,019	$	1,019	$	96,305	$	—	$	—	$	98,853
Capital lease obligations		78		—		—		—		—		—		78
Special Industrial Education Impact Revenue Bonds		93		190		97		—		—		—		380
Exempt Facility Revenue Bonds		—		—		—		—		—		30,000		30,000
Operating leases		156		275		240		240		240		699		1,850
Asset retirement obligations		—		—		—		—		—		69,479		69,479
Payments of interest		6,589		10,662		10,276		6,696		2,400		20,400		57,023
Other noncurrent liabilities		—		17,400		—		—		—		—		17,400
Total	$	7,426	$	29,546	$	11,632	$	103,241	$	2,640	$	120,578	$	275,063

⁽¹⁾ Amounts represent cash obligations for July – December 2007.

     Debt obligations referred to in the table above are presented as due for repayment under the current terms of the loan agreements and before any effect of payments out of excess cash flow. Amounts included in other noncurrent liabilities that are anticipated to be paid in 2008 include workers’ compensation costs, property taxes and severance taxes. Interest payments noted in the table above assume no early extinguishments of debt and no changes in interest rates.

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.

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 income tax valuation allowances, post-closure reclamation costs, asset impairment and mine development expenditures. 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.

28

     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.

     The Company accounts for mine development costs as follows:

Unamortized costs of the shaft at the Stillwater Mine and the initial development at the East Boulder Mine are 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 will be amortized over the ore reserves in the immediate and relevant vicinity of the development.

     The calculation of the amortization rate, and therefore the annual amortization charge to operations, could be materially impacted 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.

29

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, 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. SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138 Accounting for Derivative Instruments and Certain Hedging Activities and SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, provides an exception for certain derivative transactions that meet the criteria for “normal purchases and normal sales” transactions; effective April 1, 2006, the Company began applying the normal purchase and sale exception for certain forward sales of recycled material that require physical delivery of metal. If the derivative transaction 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 (loss) in the period of change, and subsequently recognized in the determination of net income (loss) in the period the offsetting hedged transaction occurs. The Company primarily uses derivatives to hedge metal prices and interest rates. As of June 30, 2007, the net unrealized loss on outstanding derivatives associated with commodity instruments is valued at $15.7 million, and is reported as a component of accumulated other comprehensive loss. Because these hedges are highly effective, the Company expects any ultimate gains or losses on the hedging instruments will be largely offset by corresponding changes in the value of the 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, 2007, for the portion of the Company’s net deferred tax assets, which, more likely than not, will not be realized (see Note 5 to the Company’s financial statements). Based on the Company’s current financial projections, and in view of the level of tax 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

     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.

30

     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

     In accordance with the methodology prescribed 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 may not be recoverable. Impairment is considered to exist if 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 contract 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 are reduced to their fair market value.

31

Stillwater Mining Company
Key Factors
(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2007		2006		2007		2006
OPERATING AND COST DATA FOR MINE PRODUCTION
Consolidated:
Ounces produced (000)
Palladium		102		115		213		228
Platinum		31		34		64		67
Total		133		149		277		295
Tons milled (000)		309		323		614		649
Mill head grade (ounce per ton)		0.48		0.51		0.49		0.50
Sub-grade tons milled (000) (1)		16		14		37		29
Sub-grade tons mill head grade (ounce per ton)		0.12		0.12		0.12		0.13
Total tons milled (000) (1)		325		337		651		678
Combined mill head grade (ounce per ton)		0.46		0.49		0.47		0.48
Total mill recovery (%)		90		91		91		91
Total operating costs per ounce (Non-GAAP)	$	260	$	269	$	252	$	266
Total cash costs per ounce (Non-GAAP) (2) (3)	$	320	$	322	$	314	$	318
Total production costs per ounce (Non-GAAP) (2) (3)	$	476	$	460	$	466	$	458
Total operating costs per ton milled (Non-GAAP)	$	106	$	119	$	107	$	116
Total cash costs per ton milled (Non-GAAP) (2) (3)	$	131	$	142	$	134	$	138
Total production costs per ton milled (Non-GAAP) (2) (3)	$	195	$	203	$	198	$	199
Stillwater Mine:
Ounces produced (000)
Palladium		64		76		140		148
Platinum		20		23		43		44
Total		84		99		183		192
Tons milled (000)		158		180		336		356
Mill head grade (ounce per ton)		0.58		0.59		0.58		0.58
Sub-grade tons milled (000) (1)		16		14		37		29
Sub-grade tons mill head grade (ounce per ton)		0.12		0.12		0.12		0.13
Total tons milled (000) (1)		174		194		373		385
Combined mill head grade (ounce per ton)		0.54		0.56		0.54		0.55
Total mill recovery (%)		0.91		92		0.92		92
Total operating costs per ounce (Non-GAAP)	$	229	$	259	$	228	$	261
Total cash costs per ounce (Non-GAAP) (2) (3)	$	291	$	310	$	291	$	311
Total production costs per ounce (Non-GAAP) (2) (3)	$	425	$	428	$	421	$	434
Total operating costs per ton milled (Non-GAAP)	$	111	$	132	$	111	$	130
Total cash costs per ton milled (Non-GAAP) (2) (3)	$	141	$	159	$	142	$	155
Total production costs per ton milled (Non-GAAP) (2) (3)	$	205	$	219	$	206	$	217

32

Stillwater Mining Company
Key Factors (continued)
(Unaudited)

	Three months ended				Six months ended
	June 30,						June 30,
	2007		2006		2007			2006
OPERATING AND COST DATA FOR MINE PRODUCTION
(Continued)
East Boulder Mine:
Ounces produced (000)
Palladium		38		39		73			80
Platinum		11		11		21			23
Total		49		50		94			103
Tons milled (000)		151		143		278			293
Mill head grade (ounce per ton)		0.37		0.40		0.38			0.40
Sub-grade tons milled (000) (1)		—		—		—			—
Sub-grade tons mill head grade (ounce per ton)		—		—		—			—
Total tons milled (000) (1)		151		143		278			293
Combined mill head grade (ounce per ton)		0.37		0.40		0.38			0.40
Total mill recovery (%)		89		89		89			90
Total operating costs per ounce (Non-GAAP)	$	313	$	288	$	298		$	277
Total cash costs per ounce (Non-GAAP) (2) (3)	$	371	$	347	$	359		$	331
Total production costs per ounce (Non-GAAP) (2) (3)	$	566	$	524	$	552		$	503
Total operating costs per ton milled (Non-GAAP)	$	101	$	101	$	101		$	97
Total cash costs per ton milled (Non-GAAP) (2) (3)	$	120	$	120	$	122		$	116
Total production costs per ton milled (Non-GAAP) (2) (3)	$	183	$	181	$	188		$	176

33

Stillwater Mining Company
Key Factors (continued)
(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
(in thousands, where noted)	2007		2006		2007		2006
SALES AND PRICE DATA
Ounces sold (000)
Mine production:
Palladium (oz.)		116		118		225		225
Platinum (oz.)		32		35		66		64
Total		148		153		291		289
Other PGM activities: (6)
Palladium (oz.)		32		21		69		107
Platinum (oz.)		31		18		59		41
Rhodium (oz.)		6		4		12		14
Total		69		43		140		162
By-products from mining: (7)
Rhodium (oz.)		1		1		2		2
Gold (oz.)		3		2		6		5
Silver (oz.)		2		1		4		3
Copper (lb.)		85		88		468		346
Nickel (lb.)		261		390		567		831
Average realized price per ounce (5)
Mine production:
Palladium ($/oz.)	$	386	$	378	$	382	$	370
Platinum ($/oz.)	$	949	$	839	$	931	$	826
Combined (5)	$	506	$	484	$	506	$	471
Other PGM activities: (6)
Palladium	$	355	$	329	$	345	$	287
Platinum	$	1,225	$	1,060	$	1,189	$	1,018
Rhodium	$	5,923	$	4,019	$	5,497	$	3,413
By-products from mining: (7)
Rhodium ($/oz.)	$	6,160	$	5,054	$	6,039	$	4,252
Gold ($/oz.)	$	655	$	621	$	661	$	588
Silver ($/oz.)	$	13	$	12	$	13	$	11
Copper ($/lb.)	$	3.39	$	4.21	$	2.89	$	2.71
Nickel ($/lb.)	$	22.74	$	8.14	$	19.98	$	7.01
Average market price per ounce (5)
Palladium	$	368	$	345	$	355	$	318
Platinum	$	1,289	$	1,189	$	1,238	$	1,111
Combined (5)	$	564	$	539	$	555	$	486

(1)	Sub-grade tons milled includes reef waste material only. Total tons milled includes ore tons and sub-grade tons only.
(2)	Total cash costs include period costs of mining, processing and administration at the mine site (including mine site overhead and credits for metals produced other than palladium and platinum from mine production). Norilsk Nickel transaction expenses and interest income and expense are not included in total cash costs.
(3)	Total cash cost per ton, represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measurement that management uses to monitor and evaluate the efficiency of its mining operations. See table “Reconciliation of Non-GAAP measures to costs of revenues” and accompanying discussion.
(4)	The Company’s average realized price represents revenues, which include the effect of contract floor and ceiling prices, hedging gains and losses realized on commodity instruments and contract discounts, divided by ounces sold. The average market price represents the average London PM Fix for the actual months of the period.
(5)	The Company reports a combined average realized and market price of palladium and platinum at the same ratio as ounces that are produced from the refinery.
(6)	Ounces sold and average realized price per ounce from other PGM activities primarily relate to ounces produced from processing of catalyst materials and palladium received in the Norilsk Nickel transaction.
(7)	By-product metals sold reflect contained metal. Realized prices reflect net values (discounted due to product form and transportation and marketing charges) per unit received.

34

Reconciliation of Non-GAAP Measures to Costs of Revenues

     The Company utilizes certain non-GAAP measures as indicators in assessing the performance of its mining and processing operations during any period. Because of the processing time required to complete the extraction of finished PGM products, there are typically lags 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 costs of revenues (a GAAP measure included in the Company’s Statement of Operations and Comprehensive Income (Loss)) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP measures to assess the costs associated with its producing and processing activities in a particular period and to compare those costs between periods.

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

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

     Total Production Costs (Non-GAAP): Calculated as total costs of revenues (for each mine or combined) adjusted to exclude gains or losses on asset dispositions, costs and profit from 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.

35

     When divided by the total tons milled in the respective period, Total Production Cost per Ton Milled (Non-GAAP) — measured for each mine or combined — 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. 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 combined — 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 amortization and asset retirement costs from Total Production Costs (Non-GAAP) for each mine or combined. 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 combined — 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. 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 combined — 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 combined 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 combined — 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. 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 combined — 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.

36

Reconciliation of Non-GAAP Measures to Costs of Revenues

	Three months ended						Six months ended
	June 30,						June 30,
(in thousands)	2007			2006			2007			2006
Consolidated:
Reconciliation to consolidated costs of revenues:
Total operating costs (Non-GAAP)	$	34,597		$	40,061		$	69,807		$	78,545
Royalties, taxes and other		8,022			7,828			17,305			15,164
Total cash costs (Non-GAAP)	$	42,619		$	47,889		$	87,112		$	93,709
Asset retirement costs		182			161			360			318
Depreciation and amortization		21,628			21,351			42,020			41,261
Depreciation and amortization (in inventory)		(1,031	)		(1,045	)		(371	)		(153	)
Total production costs (Non-GAAP)	$	63,398		$	68,356		$	129,121		$	135,135
Change in product inventories		7,317			2,738			8,969			32,681
Costs of recycling activities		77,871			37,969			144,046			69,937
Recycling activities — depreciation		28			25			52			50
Add: Profit from recycling activities		7,815			3,384			13,164			6,710
Loss or (gain) on sale of assets and other costs		(95	)		50			(210	)		235
Total consolidated costs of revenues	$	156,334		$	112,522		$	295,142		$	244,748
Stillwater Mine:
Reconciliation to costs of revenues:
Total operating costs (Non-GAAP)	$	19,383		$	25,641		$	41,620		$	50,022
Royalties, taxes and other		5,230			5,098			11,449			9,814
Total cash costs (Non-GAAP)	$	24,613		$	30,739		$	53,069		$	59,836
Asset retirement costs		127			116			250			230
Depreciation and amortization		12,400			11,996			24,563			24,192
Depreciation and amortization (in inventory)		(1,255	)		(374	)		(1,076	)		(686	)
Total production costs (Non-GAAP)	$	35,885		$	42,477		$	76,806		$	83,572
Change in product inventories		3,465			(1,402	)		3,380			(4,486	)
Add: Profit from recycling activities		4,944			2,265			8,573			4,376
Loss or (gain) on sale of assets and other costs		(90	)		13			(205	)		171
Total costs of revenues	$	44,204		$	43,353		$	88,554		$	83,633
East Boulder Mine:
Reconciliation to costs of revenues:
Total operating costs (Non-GAAP)	$	15,214		$	14,420		$	28,187		$	28,524
Royalties, taxes and other		2,792			2,730			5,856			5,350
Total cash costs (Non-GAAP)	$	18,006		$	17,150		$	34,043		$	33,874
Asset retirement costs		55			45			109			88
Depreciation and amortization		9,228			9,355			17,457			17,068
Depreciation and amortization (in inventory)		225			(671	)		706			533
Total production costs (Non-GAAP)	$	27,514		$	25,879		$	52,315		$	51,563
Change in product inventories		1,668			978			(616	)		(1,897	)
Add: Profit from recycling activities		2,870			1,119			4,591			2,334
Loss or (gain) on sale of assets and other costs		—			—			—			28
Total costs of revenues	$	32,052		$	27,976		$	56,290		$	52,028
Other PGM activities: (1)
Reconciliation to costs of revenues:
Change in product inventories	$	2,184		$	3,162		$	6,205		$	39,064
Recycling activities — depreciation		28			25			52			50
Costs of recycling activities		77,871			37,969			144,046			69,937
Loss or (gain) on sale of assets and other costs		(5	)		37			(5	)		36
Total costs of revenues	$	80,078		$	41,193		$	150,298		$	109,087

⁽¹⁾ Other PGM activities include recycling and sales of palladium received in the Norilsk Nickel transaction and other.

37

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 that could cause results to differ materially from management’s expectations is found in the section entitled “Risk Factors” in the Company’s 2006 Annual Report on Form 10-K.

     The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The Company disclaims any obligation to update forward-looking statements.

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 by-product 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 transactions.

     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. The contract with Mitsubishi Corporation expired at the end of 2006; most of the production dedicated to the Mitsubishi contract was absorbed under the other contracts.

     Since the third quarter of 2005, the major U.S. bond rating agencies have significantly downgraded the corporate ratings of General Motors Corporation and Ford Motor Company, both key customers. As a result, the debt of these companies no longer qualifies as investment grade. The Company’s business is substantially dependent on its contracts with Ford and General Motors, particularly when the floor prices in these contracts are significantly greater than the market price of palladium. Under applicable law, these contracts may be void or voidable if General Motors or Ford becomes insolvent or files for bankruptcy. The loss of either of these contracts could require the Company to sell at prevailing market prices, which might expose it to lower metal prices as compared to the floor prices under the contracts. In such an event, the Company’s operating plans could be threatened. In addition, under the Company’s credit facility, a default or modification of these contracts could prohibit additional loans or require the immediate repayment of outstanding loans. Thus, particularly in periods of relatively low PGM prices, termination of these contracts could have a material adverse impact on the Company’s operations and viability. Citing the decline in the financial positions of Ford and General Motors, as well as cash flow concerns following completion of the program to sell off the palladium received in the 2003 Norilsk Nickel transaction and the continuing high cost of operations, Standard and Poor’s and Moody’s each downgraded the Company’s corporate and senior debt credit ratings by one level during 2006.

38

     The Company has entered into fixed forwards and financially settled forwards to offset the price risk in its PGM recycling and mine production activities. In the fixed forward transactions, metals contained in the spent catalytic materials are normally sold forward and are subsequently 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, accounted for as cash flow hedges, the Company receives, at each settlement date, 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 net in cash at maturity.

     As of June 30, 2007, the Company was party to financially settled forward agreements covering approximately 39% of its anticipated platinum sales from mine production from July 2007 through June 2008. These transactions cover a total of 59,000 ounces of platinum sales from mine production at an overall average price of approximately $1,016 per ounce. Because the market price of platinum was approximately $1,273 per ounce at the end of the second quarter 2007, the Company has recorded unrealized hedging losses of approximately $15.7 million in Accumulated Other Comprehensive Loss as of June 30, 2007 (see Note 6 to the Company’s financial statements). Because these hedges are highly effective, 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, 2007, are expected to be settled within the next twelve months.

     The Company also enters into fixed forward sales relating to processing of spent PGM catalysts. These transactions require physical delivery of metal and cannot settle net. Consequently, effective with purchases of spent catalysts on or after April 1, 2006, the Company accounts for these forward sales commitments related to purchases of recycled material under the “normal purchase and sale” exception in SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. Sales of metals from PGM recycling are sold forward on the pricing date and subsequently are physically delivered against the forward sales commitments when the ounces are recovered. These forward sales commitments typically have terms of three months or less; all of these transactions were settled as of June 30, 2007 (see Note 3 to the Company’s financial statements). There was no unrealized loss related to PGM recycling on these instruments due to changes in metal prices at June 30, 2007 and an unrealized loss at June 30, 2006 of $0.6 million.

     The Company purchases catalyst materials from third parties for recycling activities to recover PGMs. At June 30 2007, working capital comprised of marketable inventories (see Note 10 to the Company’s financial statements) and advances thereon in the Company’s PGM recycling business totaled about $97.1 million, up from $70.9 million at the beginning of the year, mostly reflecting the impact of the higher PGM prices.

Interest Rate Risk

     As of June 30, 2007, the Company had $98.9 million outstanding under its $140 million term loan facility, bearing interest at a variable rate of 7.625% based upon LIBOR (5.375% at June 30, 2007) plus a 2.25% margin (See Note 11 to the Company’s financial statements). At the current LIBOR, this represents an interest cost of approximately $7.5 million per year. Although the margin on this debt is fixed, the LIBOR component is subject to short-term fluctuations in market interest rates. The Company also has in place an interest rate swap agreement through December 31, 2007, effectively fixing the rate on a notional principal amount of $50 million at 7.628%. Taking into account the effect of the interest rate swap, during 2007 each 1% increase in LIBOR increases the Company’s estimated annual interest cost by approximately $0.5 million. After 2007, when the interest rate swap expires, the same change in LIBOR will increase annual interest cost by about $1.0 million.

39

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.

     Management believes, to the best of its knowledge, that (i) this report does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements complete, accurate and not misleading, and (ii) the financial statements, and other financial information included in this report, fairly present in all material respects the Company’s financial condition, results of operations and cash flows as of, and for, the periods represented in this report.

     (b) Internal Control Over Financial Reporting. In reviewing internal control over financial reporting at June 30, 2007, management determined that during the second quarter of 2007 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) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 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. The proposed settlement of the federal class action has been approved by the Company’s board of directors, and is subject to final approval of the Montana District Court following notice to the class and a hearing, which currently is scheduled for November 15, 2007. The proposed settlement of the federal class action is also conditioned on approval by the Delaware Chancery Court of the proposed settlement to resolve the claims alleged in the related stockholder derivative lawsuit, unless the parties mutually agree in writing to proceed with settlement of the federal class action without such final court approval and dismissal of the derivative lawsuit. 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 hearing on defendants’ motion to dismiss has been 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 on behalf of the Company against certain of its current and former directors in Delaware Chancery Court. It contains claims for breach of fiduciary duty, contribution and indemnification against the named directors arising out of allegations that the named directors failed to maintain proper accounting controls and permitted materially misleading statements about the Company’s financial performance to be issued. The derivative action seeks damages allegedly on behalf of the stockholders of Stillwater. No relief is sought against the Company, which is named as a nominal defendant. The named director defendants have reached an agreement in principle to settle the derivative action. The proposed settlement of the derivative action has been approved by the Company’s board of directors, and is subject to documentation and approval by the Delaware Chancery Court following notice to the Company’s shareholders and a hearing.

Item 6.                      Exhibits

Exhibits: See attached exhibit index

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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 7, 2007	By:	/s/ Francis R. McAllister
		Francis R. McAllister
		Chairman and Chief Executive Officer (Principal Executive Officer)
Date: August 7, 2007	By:	/s/ Gregory A. Wing
		Gregory A. Wing
		Vice President and Chief Financial Officer (Principal Financial Officer)

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     EXHIBITS

Number	Description
10.1	Articles of Agreement between Stillwater Mining Company (Stillwater Mine & Mill, and the Processing and Warehouse facilities) and United Steel Workers (USW) Local 11-0001, ratified July 16, 2007 (filed herewith).
31.1	Rule 13a-14(a)/15d-14(a) Certification – Chief Executive Officer, dated, August 7, 2007
31.2	Rule 13a-14(a)/15d-14(a) Certification – Vice President and Chief Financial Officer, dated, August 7, 2007
32.1	Section 1350 Certification, dated, August 7, 2007
32.2	Section 1350 Certification, dated, August 7, 2007

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EX-10.1

Exhibit 10.1

CONTRACT

BETWEEN

STILLWATER MINING COMPANY

AND

USW INTERNATIONAL UNION

ARTICLES OF AGREEMENT	4
ARTICLE 1 – RECOGNITION	4
ARTICLE 2 – TERM OF AGREEMENT	5
ARTICLE 3 – NON DISCRIMINATION	5
ARTICLE 4 – UNION SECURITY	5
ARTICLE 5 – MANAGEMENT-UNION COMMITTEE	6
ARTICLE 6 – GRIEVANCE AND ARBITRATION	7
ARTICLE 7 – MEDICAL ARBITRATION	9
ARTICLE 8 – HEALTH AND SAFETY	10
ARTICLE 9 – SENIORITY	11
ARTICLE 10 – JOB POSTINGS	12
ARTICLE 11 – PROBATIONARY PERIOD	14
ARTICLE 12 – PERFORMANCE IMPROVEMENT PLAN/ PROGRESSIVE DISCIPLINE/ ATTENDANCE	14
ARTICLE 13 – HOURS OF WORK AND OVERTIME	16
ARTICLE 14 – SICK/PERSONAL LEAVE	17
ARTICLE 15 – LAY-OFF AND RECALL	19
ARTICLE 16 – SEVERANCE PAY	20
ARTICLE 17 – CLASSIFICATION AND WAGES	20
ARTICLE 18 – BENEFITS	21

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ARTICLE 19 – HOLIDAYS	23
ARTICLE 20 – VACATION	25
ARTICLE 21 – UNION LEAVES OF ABSENCE	26
ARTICLE 22 – FAMILY AND MEDICAL LEAVE	27
ARTICLE 23 – MILITARY SERVICE	29
ARTICLE 24 – BEREAVEMENT LEAVE	29
ARTICLE 25 – JURY AND WITNESS DUTY	30
ARTICLE 26 – CONTRACTING OUT	31
ARTICLE 27 – MANAGEMENT RIGHTS	31
ARTICLE 28 – MINE/PLANT CLOSURE	32
ARTICLE 29 – NO STRIKE	33
ARTICLE 30 – PAST PRACTICE	33
ARTICLE 31 – VALIDITY	33
ARTICLE 32 – MISCELLANEOUS	34
ARTICLE 33 – COMPLETE AGREEMENT	36

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ARTICLES OF AGREEMENT

This Agreement dated July 17, 2007, is made and entered into by and between Stillwater Mining Company (hereinafter referred to as the “Company”) its successors and assigns, and the USW International Union (hereinafter referred to as the “Union”) its successors and assigns. The general purpose of this agreement is to foster and promote a consistent, stable and cooperative relationship between the Company and its represented employees and to promote the mutual interests of the Company and the Union. By setting forth mutual promises and obligations herein assumed, the parties agree as follows:

ARTICLE 1
RECOGNITION

Section 1. The Company recognizes the Union as the sole and exclusive bargaining representative for the purpose of collective bargaining with respect to rates of pay, benefits, hours of employment and other conditions of employment pertaining to all Stillwater Mining Company employees employed by the Company at the facilities at 2562 Nye Road, Nye, Montana; and the facilities at 1891 1^st Avenue South and 1730 1^st Avenue South, Columbus, Montana, to wit: All hourly production and maintenance employees, including warehouse employees, laboratory technicians and custodians; but excluding all temporary employees, student summer hires, professional and technical employees, office clerical employees, guards, dispatchers and supervisors, and those above the rank of supervisor, as defined in the act; National Labor Relations Board case number 27-RC-7563, Certification dated December 19, 1995.

Section 2. The Company recognizes that the Union’s Workers’ Committee is the duly selected body which represents Union interests to the Company. The Workers’ Committee shall be selected by the Union, and consist of seven (7) members, including the Local Union President who shall be Chair. The six (6) remaining members of the Workers’ Committee shall consist of three (3) from the Mine, one (1) from the Concentrator/Surface, one (1) from the Smelter/BMR/Laboratory, and one (1) from Maintenance/Warehouse. Alternates may be selected by the Union to replace members of the Committee who may be absent.

Section 3. The Local Union President shall promptly notify the Company, in writing, of the names of the members of the Workers’ Committee and such stewards as it may select. The Company will be notified, in writing, of any changes and shall not be required to recognize the above until notified in writing.

Section 4. The Company recognizes the Workers’ Committee as the bargaining committee for purposes of collective bargaining; as representatives in the Management-Union Committee meetings as set forth in Article 5; and as Chief Stewards as set forth in Article 6. The Company recognizes the role of the International Union Representative. As such, the International Union Representative may be present at meetings between Management and the Union, provided notice is given in advance. The Union agrees that such activities will not result in any disruption of the Company’s operations, and employees will not neglect their duties and responsibilities.

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ARTICLE 2
TERM OF AGREEMENT

Section 1. This agreement shall remain in effect from 12:01 p.m. July 17, 2007 until 12:01 p.m. July 1, 2011, 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, shall continue in effect thereafter until terminated by either party upon ninety (90) days written notice of its desire to terminate or modify this Agreement.

ARTICLE 3
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.

Section 2. There shall be no discrimination or harassment by the Company, its officers, or agents, or the Union, or its members against any employee because of membership or non-membership in any lawful union, participation or non-participation in any lawful union activity, or because any employee has exercised or failed to exercise any right specifically provided under this Agreement.

ARTICLE 4
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 as set forth in Article 11, or by the thirtieth (30^th) calendar day following the effective date of this Agreement, whichever is later.

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Neither the Union or Company, nor any of their officers, agents or members shall 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 shall be submitted directly to the arbitration clause, as set forth in Article 6 for determination.

The Union shall indemnify and save the Company harmless against any and all claims, demands, suits or other forms of liability that shall arise out of or by reason of action taken by the Company in 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, provided each employee from whose check Union dues are to be deducted has on file a signed payroll deduction authorization.

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 under Article 6) affecting the workplace can be freely discussed, with a view to exploring solutions, which are acceptable and beneficial to the Union and the Company. Without limiting the opportunity for the Union and the Company to meet informally at the Nye or Columbus facilities, 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. Alternates will be selected by the Union. The Company representatives will be comprised of Management personnel from equally covered departments.

Section 3. MUC meetings will be held during regular business hours, normally on at least a monthly basis. Logistics for the meeting will be mutually agreed upon, and coordinated through the Human Resources Department. Senior Management from the Nye and Columbus facilities will discuss agenda items with the Local Union President prior to the meeting. A formal meeting agenda will be given to all committee members at least five (5) days prior to the meeting.

Section 4. For employees, time spent at MUC meetings will be considered as time worked and will be paid at an employee’s normal base rate, including reasonable travel time. Members attending the MUC meetings during their normally scheduled work hours will be made whole for any lost wages incurred as a result of attendance at the MUC meeting. The Company will make every reasonable effort to schedule the MUC members on shift during MUC meetings.

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Section 5. The Union and the Company agree that the Management-Union Committee is limited to joint discussions and consultation, and it is in no way 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, or to interfere with or attempt to renegotiate any of the provisions of this Agreement, except as set forth in Article 33.

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 Chief Steward. If the disagreement cannot be resolved between the parties, a grievance may be filed. A “grievance” is a dispute as to the 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.

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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.

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.

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

Section 9. If it is necessary for a steward or Chief Steward 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 Chief Steward 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 Chief Steward 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.

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 shall first be made.

Section 2. If no satisfactory conclusion is reached by the above, and the Union 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 shall be final and binding on both parties to the Agreement and retroactive to the date the dispute arose.

Section 3. The Company shall bear the expense of the physician of its choice, and the Union shall bear the expense of the physician of its choice. The expense of the third physician shall 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 shall be borne equally by the parties.

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ARTICLE 8
HEALTH AND SAFETY

Section 1. The Company and the Union believe an effective health and safety 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 shall 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) Joint Health and Safety Committee for the Nye facilities and one (1) Joint Health and Safety Committee for the Columbus facilities. The Nye Committee will consist of six (6) Union representatives and six (6) Management representatives. The Company and the Union will keep each other informed of their respective Committee members. These Committees will meet monthly to discuss health and safety issues, recommend corrective actions, and communicate health and safety information back to employees.

Section 3. Time spent in Joint Health and Safety Committees meetings and approved activities will be considered as time worked. All matters considered and handled by the Joint Health and Safety Committees will be reduced to writing, and the joint minutes will be maintained and communicated at the monthly Joint Health and Safety Committee meetings.

Section 4. The Joint Health and Safety Committee will assign (at their respective leadman rate) one bargaining unit employee to act as a Health and Safety Representative for the Nye mine. The Health and Safety Representative shall serve at the discretion of the Joint Health and Safety Committee and will be reviewed annually by the Nye facilities Joint Health and Safety Committee. The Committee shall establish duties and responsibilities as well as qualifications for the Representative. The Representative shall provide updates to the Committee on a monthly basis and administratively shall report to the Nye Safety Manager.

Section 5. The Company will conduct occupational health and medical monitoring to measure exposures in the workplace as appropriate, or upon the recommendation of the appropriate Health and Safety Committee. Results will be distributed to the appropriate Health and Safety Committees and the Local Union President, to the extent that employee confidentiality is not compromised.

Section 6. 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.

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Section 7. Personal protective equipment (PPE) required by statute, Company policy 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 PPE is damaged or destroyed through abnormal conditions, not attributed to abuse, will receive replacement PPE through the warehouse at Company expense. Employees will receive replacement PPE, excluding boots, when the PPE is damaged or worn out and not attributable to abuse and is returned to their supervisor.

Section 8. Prescription safety glasses will be provided at a rate of one (1) pair per year. Replacement non-prescription safety glasses will be available.

Section 9. The Company will provide for an ongoing health and safety training program. The content of health and safety training courses will be reviewed with the Health and Safety Committees prior to selection. Time spent on Company approved training will be 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 10. 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 9
SENIORITY

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

Section 2. Union seniority shall be determined from the employee’s date of original employment with the Company in bargaining unit positions at its facilities covered by this agreement, or with predecessor companies Chevron or Manville, if there had been no break in service.

Section 3. Union and department seniority shall be lost if:

A.	the employee quits.
B.	the employee is discharged for just cause.
C.	the employee fails to work for any reason for two (2) years, or length of service, whichever is less.
D.	The employee fails to return to work after discharge from the military service in accordance with USERRA.
E.	the employee fails to return to work upon termination of a leave of absence.

In addition beginning with the effective date of this agreement, an employee’s seniority shall be lost if the employee is promoted to a full-time non-bargaining position for a period in excess of ninety (90) calendar days.

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.

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Section 4. Department 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.	Mine Maintenance
D.	Warehouse
E.	Metallurgical Complex/Smelter/BMR/Laboratory/Maintenance

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

Section 5. A seniority list shall be compiled and revised as necessary, but no less often than every six (6) months. The current seniority list will be posted in the workplace, with a copy to the Local Union President.

Section 6. In the event there is a tie based on seniority dates, seniority shall, in each application, be decided by the birthday rule. For example, a January 1 birth date would be senior over any other date in a calendar year, without the employee’s age being a factor.

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 bulletin covering such classification on the bulletin boards. The bid will remain posted for fifteen (15) consecutive days. Employees desiring to bid on the vacancy shall apply in writing to the Human Resources Department within the allotted fifteen (15) days. Upon request, a copy of the job posting and of all bids shall be provided to the Local Union President. At the end of the fifteen (15) days, the successful, senior qualified candidate will be determined based on union seniority. If no qualified candidate from within the bargaining unit applies or no bid is received within the time frame set forth above, the job may be filled by the Company from any other sources.

For purposes of this Article, it is understood that an employee’s qualifications to perform a job will be based on any relevant job-related criteria, utilizing established Job Classification – Task Proficiency Matrices. 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:

a.	one (1) or more suspensions, or
b.	two (2) or more written safety-related disciplinary actions, or
c.	one (1) or more safety-related lost time incidents, or
d.	one (1) or more MSHA/OSHA medical reportable/recordable incidents

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Section 2. The proposed creation of a new test, or the elimination or change of an existing test, shall first be discussed with the Union President and the 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 3. Laid off employees, who have seniority rights, shall be eligible to bid on all job postings, in accordance with Article 15, Lay-Off and Recall.

Section 4. From time to time, temporary vacancies of less than ninety (90) calendar days may occur due to illness, injury or an abnormal increase in workload. Vacancies of this nature will be filled at the Company’s discretion. Full-time job assignments so filled shall be open for bidding within forty-five (45) calendar days as set forth above.

Section 5. 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. Any employee determined to be unsatisfactory after 30 days will be notified in writing with a copy to the Worker’s Committee member from that area. The employee will be returned to the previous job classification with no loss of seniority.

Section 6. The Company will award the bid and, to the extent practicable, will transfer the successful bidder to the awarded position within twenty (20) days of acceptance. In the event the Company cannot allow the employee to transfer without negatively impacting the respective operation, the employee will be paid at the higher rate of pay beginning the twenty-first (21^st) day after acceptance. An employee who is awarded a job posting outside his/her 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.

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ARTICLE 11
PROBATIONARY PERIOD

Section 1. All new employees (including persons who have broken prior service) will be considered probationary employees for a period of seven hundred eighty (780) hours worked. Probationary employees shall be subject to transfer, promotion, demotion, layoff and/or discipline including discharge, at the sole discretion of the Company.

Section 2. Employees continued in employment after the end of the probationary period shall become full-time employees and shall be credited with continuous service from the original date of hire.

Section 3. 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.

ARTICLE 12
PERFORMANCE IMPROVEMENT PLAN /
PROGRESSIVE DISCIPLINE / ATTENDANCE

Performance Improvement Plan

Section 1. The purpose of the performance improvement process is to provide the Union and the Company with a uniform and fair method of addressing job performance issues.

Section 2. When a job performance problem has been identified and the severity of the problem does not warrant progressive discipline, the following procedure will be used in an attempt to improve performance and/or to modify behavior.

A meeting will be held with the employee within seven (7) working days of the Company’s last indication of the performance problem. At the meeting, the following will take place: The problem will be identified, and the Company representative will listen to the employee’s perspective on the problem and will be counseled. The Company will make an evaluation if the problem is likely to recur. If it is unlikely that the problem will recur, the issue will be dropped. If there is a probability that the problem will recur, then a Performance Improvement Plan (PIP) will be developed with the employee.

The plan will include: a statement of the plan’s objective, a description of the way in which performance improvement will be measured and identification of the date when the plan will be reviewed, the “plan completion date” must be stated on the PIP and cannot exceed one year in duration. All plans will be given to the employee with a copy to the Union President.

When a Performance Improvement Plan has been successfully completed, it will remain in the supervisor’s working file until twenty-four (24) months after it was originally written. After successful completion, it can only be cited as a basis for other PIP’s or discipline when the behavior involved is the same as or similar to the behavior which caused the writing of the original PIP. Twenty-four (24) months after the date the PIP originated, it will not be cited for other PIP’s, discipline or job performance issues. The PIP original copy will remain in the employee’s personnel file, located in the Human Resources Office.

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Progressive Discipline

Section 1. If an employee fails to successfully complete or repeats the problem the Performance Improvement Plan was designed to correct, a meeting will be held with the employee, the Union and the Company. The Company will listen to the employee’s reasons for not successfully completing the PIP. As a result of this meeting, the Company has the right to begin the progressive disciplinary procedure as follows:

Step 1:	Written Warning
Step 2:	One (1) day suspension without pay
Step 3:	Three (3) day suspension without pay
Step 4:	Discharge

Section 2. The type of progressive discipline given will be based upon the severity of the problem. Progressive disciplinary procedures may be taken by the Company for just cause. In cases of written warnings and suspensions, the Company will meet with the employee regarding the Performance Improvement Plan. The employee will also be informed that further failure to improve performance will result in the more severe discipline up to and including discharge.

Termination of employment will be in cases where the severity of the problem justifies termination or in cases where other progressive disciplinary steps have been taken.

Section 3. A Union representative will be present, if available, at the meeting with an employee establishing a PIP plan or upon the issuing of discipline. An employee may elect not to have a Union representative present.

Section 4. Records of disciplinary action will remain in the employee’s personnel file for twenty-four (24) months from the date it was originally written. Twenty-four (24) months after the date it originated, the disciplinary action will not be cited for other progressive discipline or job performance issues.

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ARTICLE 13
HOURS OF WORK AND OVERTIME

Section 1. The normal workweek will begin at 12:01 a.m. each Tuesday and end at 12:00 midnight the following Monday. Overtime will be 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 in a MUC meeting prior to implementation and will be included on the agenda, distributed to the members prior to the scheduled meeting.

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 his 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. Such requests may not be unreasonably withheld and will not be considered as flex time.

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. The existing overtime practices will be continued through the life of this Agreement.

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.

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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 workday.

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 beginning 2:00 p.m. but no later than 4:00 a.m. will be paid a shift differential of fifty cents ($.50) per hour.

ARTICLE 14
SICK/PERSONAL LEAVE/ATTENDANCE

Section 1. Effective July 17, 2007 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 or personal holiday. The vacation day or personal holiday 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 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 2007 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		1.00	X	hours/shift	X	base rate	X	2 days
1		1.00	X	hours/shift	X	base rate	X	1 day

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Section 4. Pursuant to the Family and Medical Leave provisions in Article 22, employees who qualify for Short Term Disability 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 requirement 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 contract 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 Dispatch 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 report to work within ninety (90) minutes at the Nye mine site or thirty (30) minutes at the Columbus facility from the start of his/her scheduled shift. Employees that will be tardy should make reasonable efforts to contact the Company prior to the start of their 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 contract year, 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.

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ARTICLE 15
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 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 shall notify the Union of any pending layoff or reduction-in-force as far in advance as possible. In the event of a short-term layoff (less than ninety (90) days in duration), the Company will maintain its portion of the cost to maintain Company benefits during said layoff.

Section 4. For purposes of this Article, it is understood that an employee’s qualifications to perform a job will be based on any relevant job-related criteria, utilizing established Job Classification – Task Proficiency Matrices. 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 Union President and 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 16
SEVERANCE PAY

Section 1. Any full time employee who is laid off as a result of a long-term reduction-in-force (90 days or more), and having been in continuous full-time service of the Company for at least one (1) year immediately prior to such lay-off shall be given one (1) week’s pay for each year of service with the Company at the employee’s present base rate up to a maximum of fifteen (15) weeks’ pay to be paid within thirty (30) days of lay-off.

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 17
CLASSIFICATION AND WAGES

Section 1. The classifications and rates of pay attached hereto as Appendix “A” shall be made a part of this Agreement and shall continue in effect for the duration of this Agreement.

Section 2. The proposed creation of a new classification(s) or the elimination or change of an existing classification(s) shall first be discussed at a meeting of the MUC Committee. If the parties are unable to agree on such new classification(s) or changes, the Union may file a grievance as set forth in this Agreement.

Section 3. 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 4. Supervisory or other management personnel shall not perform work which is normally performed by bargaining unit personnel, except for training or instruction, investigation, testing, emergencies, and situations in which no qualified bargaining unit employee is available to do the job required.

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Section 5. 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 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.

Section 6. Employees classified as leadmen or when day-rated as leadmen are not empowered to take disciplinary action, discharge, evaluate, schedule time off, medically test and medically report.

ARTICLE 18
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	(30 day supply)
Formulary	$20	(30 day supply)
Non-Formulary	$30	(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.

• 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

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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 20%; 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).

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.

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ARTICLE 19
HOLIDAYS

Section 1. The following days shall 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 **

** Personal Holiday: Any day during the calendar year which the employee elects to take with advance notice to, and approval from, the Company as set forth in Section 3 of this Article.

Section 2.

Pay for Holidays Worked

Employees who have completed the probationary period and work on any of the above holidays will receive:

A.	pay at the rate of time and one-half (1 1/2) for all hours worked, and
B.	pay at the regular straight-time rate for all hours worked on the holiday.

However, an employee absent on either the scheduled workday before or after the holiday will not receive pay under Section 2.B. of this Article if the absence is not approved by the Company. To be approved, the reason must be both verifiable by and acceptable to the Company.

Pay for Holidays Not Scheduled to Work

Employees who have completed the probationary period and are not scheduled to work on any of the above holidays will receive:

A. pay at the regular straight-time rate for eight (8) hours;

However, an employee absent on either the scheduled workday before or after the holiday will not receive pay if the absence is not approved by the Company. To be approved, the reason must be both verifiable by and acceptable to 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.

Pay for Holidays Scheduled, But Not Worked

A. Employees who have completed the probationary period and are scheduled to work on any of the above holidays but fail to work will not receive holiday pay.

Section 3. 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) week’s notice is given to the Company. Scheduled annual vacation shall take precedence over the scheduling of personal holidays.

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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 has 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, not unreasonably denied. No more than one (1) person per crew shall be allowed off on personal holiday on any particular day, except at Company discretion.

If the personal holiday is not used 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.

Full-time employees with at least one (1) year of continuous service who terminate or are laid off shall receive pay in lieu of the current year’s unused personal holiday.

Section 4. An employee who works on a higher rated job, other than their regular job, on the last scheduled shift immediately preceding and the first scheduled shift following an unworked holiday will receive holiday pay for such holiday at the rate of the higher rated job.

An employee who works on a higher rated job, other than their regular job, on a holiday shall be paid for such holiday at the holiday rate for the higher rated job.

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ARTICLE 20
VACATION

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

In Each Calendar Year In Which an
Employee Completes	Amount of Paid Vacation Available
1st through 4th year of service	80 hours
5th through 9th year of service	120 hours
10th through 20th year of service	160 hours
*21st year of service	170 hours
*22nd year of service	180 hours
*23rd year of service	190 hours
*24th year of service or more	200 hours

* Employees beginning their 21st – 24th years of service will be credited new hours on January 1, 2008.

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. Upon successful completion of their probationary period, employees who have credited service prior to January 1 of the current year will be eligible for a pro-rated regular vacation. Such pro-rated vacation shall be based on time worked in the preceding year and shall be scheduled, paid and administrated in a manner equal to other regular vacation. Vacation must be taken in full-shift increments, unless shift scheduling dictates otherwise. Vacation may, at Company request, be “carried over” into the next calendar year. All unused vacation will be paid to the employee. Vacation requests must be pre-authorized by the supervisor at least one calendar week in advance.

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. Vacation schedules shall be posted or circulated among employees during the month of January of each year for employees 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 union seniority. Where an employee elects to split vacation, that employee’s seniority rights shall 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 a operational conditions dictate; however, no employee shall be forced to take vacation which has already been approved at a time undesirable to the employee.

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Section 5. 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. If the employee elects to extend the vacation it will be their next scheduled shift.

Section 6. Employees who do not take unused vacation at Company request may be paid in lieu of, in addition to the amount earned by the employee based on time actually worked. If, due to an extreme situation, the Company 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. Subject to the provisions of Section 2 of this Article, employees may choose to receive pay in lieu of time off for vacation. For purposes of this Article, a full-shift of vacation will be determined by the number of hours that the employee is normally scheduled to work. Example: An employee working a 10-hour shift will be required to take 10 hours vacation per day.

Section 7. An employee may request their vacation date be changed and the Company may grant such request, based on operating needs and the existing approved vacation scheduled.

Section 8. An employee terminating service with the Company, for any reason, who has not taken the vacation due that year, shall be paid for the same at the time of termination. In the event part of the vacation has been taken, the employee will be paid for the unused portion not taken. In addition, for each complete calendar month worked during the current year, employees will receive 1/12 (one-twelfth) of their earned vacation allotment.

Section 9. Full-time employees with a least one (1) year of continuous service who are laid off or whose employment is terminated shall receive pay for any unused vacation, including a pro-rated amount earned in the current year.

ARTICLE 21
UNION LEAVES OF ABSENCE

Section 1. The Company may grant a leave of absence, without pay, for Union officials or members to attend Union functions. Such leaves shall be granted based on operating requirements of Company, but shall not be unreasonably withheld. Employees shall retain service, seniority and benefits during such leaves of absence.

Requests for such leaves must be made by the Union to the Company, and should be made with as much advance notice as possible, but not less than fourteen (14) calendar days except in extenuating circumstances.

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Section 2. Upon thirty (30) days written notice from the Union, a leave of absence to perform work for the Union will be granted for one (1) employee for a period of time of 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. Such employee will hold and accumulate seniority and continuous service for all purposes during such 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 22
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.

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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.

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.

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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.

ARTICLE 23
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 24
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 member listed above.

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ARTICLE 25
JURY AND WITNESS DUTY

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

Regular full-time employees who are absent because of jury duty, government subpoena where the Company is not a party, or Company subpoena, will be paid the difference between the jury duties or specified witness pay and their normal base wages for scheduled shifts missed. Employees will be required to provide documentation of such service to receive applicable pay.

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ARTICLE 26
CONTRACTING OUT

Section 1. The Company, having the availability of equipment, skills, manpower, or the time to do the work, shall 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 shall 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 Union President or designee, 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 Union President or designee, to discuss information concerning contracting out. Requests for such meetings shall not be unreasonably denied.

ARTICLE 27
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 to by the parties. These rights rest exclusively in management who are the sole decision makers regarding the operation of the business. The following list of specific management rights is not intended to be all-inclusive, but simply sets forth 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.

Section 2. Management retains 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, 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.

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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. Management retains 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; and, to use independent contractors to perform any work or services provided such contracting does not result in the layoff of employees covered by this Agreement.

Section 5. Management’s failure to exercise any right or function reserved to it, or the exercise of a management right in a particular way shall not prevent the Company from exercising any of its rights in the future or in some other way not in conflict with the express provisions of this Agreement. The only restrictions on management rights will be any documented memorandum of understanding with the Workers Committee 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 shall be subject to the grievance and arbitration procedures herein.

ARTICLE 28
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.

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ARTICLE 29
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 30
PAST PRACTICE

Section 1. This Agreement supersedes 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 negotiation for this Agreement.

ARTICLE 31
VALIDITY

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

Section 2. If any court shall hold any part of this Agreement invalid, such decision shall not invalidate the entire Agreement.

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ARTICLE 32
MISCELLANEOUS

Section 1. The Company and the Union desire every employee to be familiar with the provisions of the Collective Bargaining Agreement and employee’s rights and duties under it. 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.

Section 2. The Company shall provide a safety shoe/boot allowance for all represented employees in the amount of $200.00 payable in July of each year. In addition the Company shall provide a safety shoe/boot allowance for all employees normally working underground at the Nye mine of $150.00 in the months of November and March. Probationary employees are entitled to the allowance after completing their probationary period and each contract year thereafter during the life of this Agreement. For the purpose of this article employees eligible for safety shoe/boot allowance shall be paid as per their classification on the last day of the month prior to the payment due.

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 shall 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, with the employee’s permission.

Entries placed in an employee’s permanent personnel file shall be in writing. A copy of such entries shall, upon request, be given to the involved employee. An employee may elect to provide a copy to their Union representative. The employee may also make a written reply to any disciplinary action and have same placed in the permanent personnel file.

The Company will provide, upon request, relevant and necessary information, to the Union, in order to administer the contract during its term.

Section 5. Required notices may be made by personal service, confirmed facsimile transmission, e-mail 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.

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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. Employees that have completed probation and have less then one (1) year of service may request an Emergency Leave of Absence for the reasons set-forth below in subsection (b). Before any leave of Absence can be considered under this article, the employees must have used all their vacation, sick/personal leave and personal holiday, and have a reasonable assurance of returning to work unrestricted.

a.	Upon an employee making the request for the Leave of Absence under this section of the Collective Bargaining Agreement, the Company and Union will meet to review the employee’s request and determine whether he or she has the special circumstance to qualify for such leave.
b.	This leave of absence will be utilized only for legitimate medical reasons. For purposes of this section, a legitimate medical reason is defined as one that satisfies the requirements for Family Medical Leave Act.
c.	Any occurrence which exceeds thirty (30) calendar days requires the employee to request an extension in writing to the Company’s Human Resource Department. Upon receipt of an extension request, the Company and Union will meet and determine if the extension will be approved.

Any occurrence request for leave under this section will require the employee to provide proof of medical condition.

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ARTICLE 33
COMPLETE AGREEMENT

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

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APPENDIX A STILLWATER MINING COMPANY
BARGAINING UNIT BASE RATES STRUCTURE

	7/17/2007		7/1/2008		7/1/2009		7/1/2010
Position Title	Base Rate		Base Rate		Base Rate		Base Rate
Leadman — Mechanic (Mine Maint/Concentrator/Smelter/BMR)		27.38		28.48		29.62		30.80
Leadman — Electrician (Mine Maint/Concentrator/Smelter/BMR)		27.38		28.48		29.62		30.80
Leadman (Lab)		27.38		28.48		29.62		30.80
Mechanic 1 (Mine Maint/Concentrator/Smelter/BMR)		25.13		26.14		27.19		28.28
Electrician 1 (Mine Maint/Concentrator/Smelter/BMR)		25.13		26.14		27.19		28.28
Hoistman 1		25.13		26.14		27.19		28.28
Leadman (Mine/Concentrator/Smelter/BMR)		25.00		26.00		27.04		28.12
Leadman (Warehouse)		24.26		25.23		26.24		27.29
Mechanic 2 (Mine Maint/Concentrator/Smelter/BMR)		23.15		24.08		25.04		26.04
Electrician 2 (Mine Maint/Concentrator/Smelter/BMR)		23.15		24.08		25.04		26.04
Miner 1		22.71		23.62		24.56		25.54
Sublevel Miner 1		22.71		23.62		24.56		25.54
Operator 1 (Concentrator/Smelter/BMR)		22.93		23.85		24.80		25.79
U/G Construction 1		22.93		23.85		24.80		25.79
Lab Tech 1		22.93		23.85		24.80		25.79
Hoistman 2		22.93		23.85		24.80		25.79
Diamond Driller 1		22.71		23.62		24.56		25.54
Raisebore 1		22.71		23.62		24.56		25.54
Heavy Equipment Operator 1		21.85		22.72		23.63		24.58
Miner 2		21.64		22.51		23.41		24.35
Sublevel Miner 2		21.64		22.51		23.41		24.35
Sand Plant Operator		21.85		22.72		23.63		24.58
Sandfiller		21.85		22.72		23.63		24.58
U/G Equipment Operator 1		21.85		22.72		23.63		24.58
Warehouse 1		21.85		22.72		23.63		24.58
U/G Construction 2		21.85		22.72		23.63		24.58
Mechanic 3 (Mine Maint/Concentrator/Smelter/BMR)		19.69		20.48		21.30		22.15
Electrician 3 (Mine Maint/Concentrator/Smelter/BMR)		19.69		20.48		21.30		22.15
U/G Equipment Operator 2		18.86		19.61		20.39		21.21
Diamond Driller 2		18.67		19.42		20.20		21.01
Heavy Equipment Operator 2		18.86		19.61		20.39		21.21
Operator 2 (Concentrator/Smelter/BMR)		18.86		19.61		20.39		21.21
Lab Tech 2		18.86		19.61		20.39		21.21
U/G Construction 3		18.86		19.61		20.39		21.21
Miner 3		18.67		19.42		20.20		21.01
Sublevel Miner 3		18.67		19.42		20.20		21.01
Raisebore 2		18.67		19.42		20.20		21.01
U/G Equipment Operator 3		16.57		17.23		17.92		18.64
Heavy Equipment Operator 3		16.57		17.23		17.92		18.64
Warehouse 2		16.57		17.23		17.92		18.64
Operator 3 (Concentrator/Smelter/BMR)		16.57		17.23		17.92		18.64
Lamp Repairer		16.57		17.23		17.92		18.64
Lab Technician 3		16.57		17.23		17.92		18.64
Custodian		16.57		17.23		17.92		18.64
Trainee/Laborer		15.00		15.50		16.00		16.50

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

The Company agrees to pay represented employees providing EMS service to Stillwater Mine and the Columbus facilities within the following guidelines.

• The Company will schedule appropriate EMS continuing education sessions at site.

• The Company will schedule adequate sessions for each EMS employee to keep their certification active and up to date.

• The Company will make reasonable efforts to schedule these sessions in such a fashion that the EMS employees will not have to miss any regularly scheduled work.

• It is expected, to the extent practicable, that represented EMS employees participate in continuing education classes that are scheduled on other than the employees’ regular shifts.

• Time spent in the EMS continuing education classes will be considered as worked time.

• Represented employees that attend and participate in EMS continuing education classes will be paid at their regular classified rate of pay for the time spent in such classes.

This Agreement will remain in effect until the end of the current term of the CBA, unless modified or extended by mutual consent.

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

Each year, employees classified as mechanics and electricians will receive a tool allowance of $400 and $200, respectively.

The Company agrees to continue to provide the Union with tool inventory guidelines and requirements for employees classified as mechanics and electricians in each of their respective departments.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

The Company agrees to provide busing for employees to the Stillwater Mine.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

Stillwater Mining Company (Company), and USW International Union hereby agree to the following:

Hourly employees represented by the USW International Union, Local 11-0001, Nye mine will be able to transfer to available hourly positions listed in the Collective Bargaining Agreement in place at the East Boulder mine under the following conditions:

• Employees wishing to transfer from Nye to East Boulder must contact their site Human Resource department.

• Employees requesting a transfer must have completed their probationary period under the CBA.

• The Company will determine the transfer qualifications 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 transfer are not eligible for transfer consideration:
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

• Employees may be given one transfer opportunity per rolling 12 months regardless whether they assume the position they are awarded or if they decline the position they are awarded.

• In the event the Company cannot afford to allow the employee to transfer at the requested time (due to manpower, required skill, etc.) the Company will put the employee on a list to be transferred at a time when the Nye operation will not be negatively impacted.

• Employees will establish new department seniority at the transferred location beginning with their first day of work at that facility. Company seniority will not be adversely affected for the purpose of vacation entitlement and 401-k vesting.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

Stillwater Mining Company (Company), and USW International Union, Local 11-0001 hereby agree as follows:

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

• Pay each of the employees assigned continuously to the Sandfill/Sand Plant Operator area (as determined by the Mine Department Deployment listings) after January 1, 2001, and after being assigned to either one or both of the areas for 90 or more days, the hourly wage rate listed for the Sandfiller/Sand Plant Operator in the Collective Bargaining Agreement.

• Change the classification of the Underground Equipment Operators working as Sandfillers or Sand Plant Operators to the appropriate Sandfiller/Sand Plant Operator classification.

• Develop a Sandfiller/Sand Plant Operator Training Pool position, jointly with the Union, for the purpose of training and developing employees at the Stillwater Mine in the skills required to become a Sandfiller or Sand Plant Operator. The Sandfiller/Sand Plant Operator Training Pool positions will be filled in accordance with Article 10 of the Collective Bargaining Agreement. Employees will be assigned to the Sandfiller/Sand Plant Operator Training Pool for a maximum of 90 working days. Employees being assigned to the Sandfiller/Sand Plant Operator Training Pool will retain their current hourly wage rate, not to exceed the Sandfiller or Sand Plant Operator wage rate as listed in the collective Bargaining Agreement.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

The Company agrees to review on a “case-by-case” basis eligible participant claim’s, that have been processed under the Company’s Health Plan in which there is support that indicates the level of benefit being provided has been reduced due to the conversion of Health Plan Providers between BCBS of Montana and Employee Benefit Management Services (EBMS).

Disputed claims shall be presented, in writing, to the Chair of the Benefit Committee within 30 days of first receipt/knowledge of alleged discrepancy to the benefit level. In the event a reduction in benefit levels is determined, a written response listing remediation will be forwarded to the participant with a copy to the Union.

It is understood that claims with adverse benefits determinations are still subject to the “Claims Procedures Guidelines” and “Claims Appeal Process” as listed in the Stillwater Mining Company Employee Health Benefit Plan Document.

It is also understood that neither signatory to this agreement will waive any rights under the parties Collective Bargaining Agreement.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

The Union and the Company recognize that it is the intent of the Company to establish and implement an Electrician Training Program at Stillwater Mine. The Union and the Company agree that available Electrician Trainee positions, as determined by Management, will be bid under the terms of the Collective Bargaining Agreement. It is further agreed that successful applicants for the Electrician Trainee program will be classified and paid as Electrician 3’s, upon their transfer date into the training program. Future upgrades as Electricians will depend upon the trainee’s ability to satisfy the applicable provisions of the CBA, as well as the requirements of the training program.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

Whenever the Metallurgical Complex determines a Trainee/Laborer vacancy exists, the vacancy will be posted as per Article 10, Job Postings of the Collective Bargaining Agreement.

For employees who have completed their probationary period, the hourly wage rate for internal candidates that have been awarded a Trainee/Laborer position will be at the Level 3 position rate for a BMR/Smelter Operator, Lab Technician, BMR/Smelter Mechanics, or BMR/Smelter Electrician. Probationary employees will be paid at the Trainee/Laborer rate.

Employees in training will transition to the Level 3 position provided they have acquired the requisite skills, knowledge and ability to perform the tasks per the Job Classification – Task Proficiency Matrix.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

Stillwater Mining Company (Company) at its Stillwater Mine and Columbus Processing facilities and United Steel Workers Local 11-1 (Union) have established tool lists and the following administrative guidelines through respective mutual agreements. The intent is to manage the cost and responsibility between supervision and represented hourly employees. The following points will govern the way the tool list and replacement of tools are to be done.

• Required Tool List(s): The Union and the Company have jointly agreed upon the list(s) of tools required for Mechanics and Electricians at the various sites and areas of work. Employees classified as Mechanics or Electricians will be expected to have all of the required tools listed for their site, classification and area and that all such tools will be at site when the employee is working in their classification. Employees promoted to higher grades within their classification that require additional tools will be allowed 30 calendar days from their date of promotion to bring the additional tools to site.

• Replacement of Damaged Tools: The Company will replace the following required tools that have been jointly agreed upon as “consumable” items. Those items are: hacksaw/blades, 3 pound hammer, utility knife/blades, small pipe wrench/jaws (10 to 18 inch), taps, dies, drill bits, tape measure and torpedo level. The employee will need to have taken reasonable precautions in the care of the tool in question. The employee needs to bring the core of the tool, if possible, to the supervisor with a reasonable explanation of the damage to the tool. The Company will replace such items in a timely fashion.

• Replacement of Lost or Stolen Tools: The Company has a method of investigating the theft or lost items at SMC. If the situation shows the employee to have been responsible in the care of the tools in question and through no fault of their own the tool is lost or stolen the Company will replace the tool with a tool of equal or better quality.

• Air Tools: The Company and the Union agree that the Company will furnish required air impacts. Effective with date of this MOU, the Company will begin a program to provide the necessary air impacts. As soon as is practicable, required air impacts will be purchased by the Company for employee use. As these are distributed, employees will be instructed to remove their personal air impacts from the property. During the transition period, the Company agrees to repair or replace employee’s air impacts that become worn out or damaged through normal use.

• Tools Needed to do the Job: The Union and the Company understand that as times change so do the tools needed to do efficient work. If there is a need to change the agreed upon lists it will be through meetings of the MUC and will be through mutual agreement.

• Employee Responsibility: The Company and the Union agree that employees have the primary responsibility for the proper care and security of Company provided tools as well as their own personal tools. It is in the best interest of both the Union and the Company that employees are allowed reasonable time to inspect, clean and/or secure all tools that they use. Broken tools should be returned to the manufacturer. Employees are encouraged to purchase required tools from manufacturers that provide lifetime replacement warranty. The Company and the Union also agree that the employees in these departments will be instructed to take home any and all tools not clearly defined on the agreed upon tool lists.

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

Based on discussions through the negotiation of the Collective Bargaining Agreement (CBA), the Company recognizes employee concerns with the Miner’s Incentive Plan (Plan.). The Company will, in good faith, work to improve communications between the employees, the Union and the Company on all aspects of the Miner’s Incentive Plan.

The Company will not make Plan reductions in the Miner’s Incentive unless mutually agreed upon with the Union. Structural changes within the Plan will be discussed with the Union prior to implementation. Thirty (30) days advance notice of such changes will be given to the Union and to the employees involved. The Union will also be notified of any incidental or administrative adjustments, which may become necessary throughout the CBA period. Changes where a rate or payment reduction is reasonably expected are subject to mutual agreement.

Modifications, exclusive rates or rate adjustments due to abnormal circumstances, for example those for Ground Types IV and V, that are presently provided for in the Miner’s Incentive Plan are not subject to mutual agreement.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

An employee who has qualified for Long Term Disability, Short Term Disability and/or Workers Compensation will be able to participate in the following benefit plans, Medical/Dental & Prescription Plan, Vision Service Plan, Employee Assistance Program, Nurse Advisor Program; provided the employee continues to pay their portion of the premium. Non-payment of premiums will result in loss of coverage.

The maximum benefit period is two (2) years. Employees will be eligible for COBRA benefits after the benefit period has been terminated.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

Safety Eligibility

The Safety Eligibility for Miner’s incentive shall change from a 50% loss of incentive to a 25% loss of incentive for a lost time accident, as long as the Nye Mine site’s year to date safety incident rate does not exceed 3.5.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007.

Memorandum of Understanding

Between
Stillwater Mining Company
AND
USW International Union

The Employee Incentive Plan (EIP) will continue until July 1, 2011. The Company will administer the EIP.

The Company will not make Plan percentage reductions in the EIP unless mutually agreed upon with the Union. Structural changes within the Plan will be discussed with the Union prior to implementation. Sixty (60) days advance notice of such changes will be given to the Union and thirty (30) days to the employees involved. The Union will also be notified of any incidental or administrative adjustments, which may become necessary throughout the CBA period.

The Company will administer the EIP. The incentive payment percentage shall range as shown below for an employees wages earned during the bonus month.

	90%	95%	100%	105%	110%
			Target
EIP	1.0%	2.0%	3.5%	6.0%	8.0%

The parties agree that during the term of this labor agreement the EIP targets shall be established as set up below.

Underground — the total tons broken target will be set by a rolling 3-month average (excluding July 2007). Changes in the target calculation will be limited to significant changes in operations.

Concentrator/Surface the targets for recovery and con-ratio will be set by a rolling 3-month average (excluding July 2007). Changes in the target calculation will be limited to significant changes in the process and/or operations.

Smelter/Refinery/Lab current matrix administration will continue. Changes in the target calculation will be limited to significant changes in operations.

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

Stillwater Mining Company

Company Official

USW International Union

Union Official

Signed this                      day of                                         , 2007

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, 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 7, 2007	/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 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, 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 7, 2007	/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 report on Form 10-Q for the period ended June 30, 2007 that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the “Report”), I, Francis R. McAllister, Chief Executive 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 7, 2007,

/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 report on Form 10-Q for the period ended June 30, 2007 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 7, 2007

/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.