Ladies and gentlemen, thank you for standing by, and welcome to the Stillwater Mining Company 2008 fourth quarter and year-end results conference call. For the conference, all the lines are in a listen-only mode. However, there will be an opportunity for your questions, and instructions will be given at that time. (Operator instructions) As a reminder, today’s call is being recorded. Now with that being said, I will turn the conference now to Mr. Frank McAllister. Please go ahead, sir.

Thank you, John. Welcome, everybody. We appreciate your joining us for the Stillwater Mining Company’s year-end 2008 results conference call. I am Frank McAllister, Chairman and CEO of Stillwater Mining Company. And on the telephone with me here today are Greg Struble, our Executive Vice President and Chief Operating Officer; Greg Wing, our Vice President and Chief Financial Officer; and John Stark, the Vice President of Human Resources, Secretary, and Corporate Counsel, and he also has responsibility for marketing; and Terry Ackerman, our Vice President for East Boulder operations.

Now regarding 2008 financial results, we have recorded a loss for the full year of 2008 of $112.7 million or $1.21 per share on revenues of for the year of $855.7 million [inaudible] valuation-based adjustments during 2008, most of which fell in the fourth quarter. We also accrued $5.4 million of corporate restructuring expenses during the fourth quarter related to employee layoffs and operational changes. We will discuss these operational changes in more detail shortly.: As we commented elsewhere, even with our operational changes, PGM prices will have to strengthen considerably before the company will be able to report positive earnings. However, at today's prices, the operational changes that we have made should allow us to actually manage the company so as to maintain net cash flow at least slightly positive and EBITDA solidly positive. The largest difference between earnings and cash flow is roughly $80 million per year or about $160 per ounce of non-cash depreciation and amortization expense, and that is a very high hurdle at today's price levels.: Our available cash and short-term investments actually grew significantly during the fourth quarter. As of September 30, 2008, we recorded available cash and short-term investments of $129 million, but by year-end, that same balance had grown to about $181 million benefiting from the liquidation of recycling inventories during the quarter's prices and volumes came down. However, despite the growth in available cash during the quarter, we concluded that our overall liquidity diminished as the drop in working capital was greater than the increase in cash. The key focus then of our fourth-quarter operating changes was to stem that cash consumption. The company's total liquidity now appears to have stabilized with these measures in place at current PGM prices.: Elaborating a little on metal prices, 2008 was a tremendously volatile…

Our average for 2008, the company’s on average for 2008, the company's total cash costs for mining and processing net of credits for byproducts and recycling plus capital expenditures and corporate overhead all in consumed about $640 per mined ounce. To begin with, assuming no changes at all to how we operated in 2008, then without the contracts, just remained cash neutral at $640 per ounce; we would need the equivalent of a palladium of about $300 per ounce and a platinum price of $1800 per ounce.:

Stillwater has been involved in recycling for some – at some level for many years and begin seeking to increase its involvement substantially about five years ago in late 2003. We were reviewing this the other day and determined that in the five years in 2004 through 2008, we purchased in aggregate over 1.2 billion of recycled products and earned over 100 million on the recycling business.: However, the business is changing. The volumes of auto catalysts recycling fell off very steeply during the fourth quarter of 2008, probably driven by several factors. First, the much lower PGM prices reduced the recycling value of each catalytic converter making the business less compelling to those that are in it. This decline in value probably also caught some collectors short as material they held in inventory was suddenly worth much less than they had paid for, and incenting [ph] to hold back the material from the market hoping prices will improve.:

The most significant of these changes occurred in the East Boulder mine where we temporally shut down operations during the last two weeks of November to finalize the redesign of a new more streamlined mining plant for 2009. This new optimized mining plant required only 50% of the labor to deliver approximately 80% of the ounces mined in 2008.: In early December, operations were restarted under this new operating scenario and the results through year-end have been quite encouraging. Our direct site mining and processing costs per ounce including the capital development costs have decreased by over 80% from November and December when compared to the ten months prior to the restructuring. Our initial goal back in November was to reduce our direct site mining and processing costs per ounce by 28% from 2008 year-to-date average through October. As of February 2009, we have seen an average reduction of over 29% in direct site mining and processing plus capital development costs per ounce. We are truly optimistic that our East Boulder team can sustain this positive trend in cost containment and productivity.:

First, we reduced significantly Stillwater's contracted labor expense. Next, we increased the overall skill base of the mining workforce, and finally improved the mines production capacity. Total ounce production at the Stillwater mine increased in the fourth quarter over 7.5% compared to the first three quarters of 2008 with most of this improvement coming in November and December.: On the cost side, direct site mining and processing cost, including capital development decreased by over 6% in the fourth quarter compared to the previous three quarters. The combined effect of higher ounces and lower cost translated into 12.8% decrease in direct site mining and processing cost per ounce, including capitalized development. This is on track to meeting our overall 24% improvement target in 2009 and we're confident we're moving in a measured and sustainable direction to achieve that required degree of savings by the end of April.: Along with these costs and production improvements, the Stillwater mine achieved a 74% improvement in its total safety incident rate when compared to the previous quarter. The total incident rate in the fourth quarter of 2008 was 0.9 incidents per 100 equivalent man-years worked, a dramatic improvement despite the many disruptions during that quarter.: Now as Frank mentioned earlier, at the Columbus Metallurgical Complex, we have seen a marked decrease in our third quarter – since the third quarter of 2008 in the volume of recycling material receipt, a direct result of this down market for PGMs. However, despite this downturn, we are completing the construction of the new number two electric smelter furnace with commissioning scheduled to begin later this month. This project is on plan with respect to cost and timing and we anticipate a new furnace will be in full operation by sometime in mid to late May.: Continuous capital investments…

Frank?:

Well, to this point today, we have talked about some low prices, the difficulty in the operating environment and the sobering financial results for the fourth quarter of last year. That’s hard; however, I'm an optimist, so I would be – I would like to spend a few minutes today describing my views over the longer-term outlook for these metals and why I think that we're continuing to follow.:

But the growth story doesn't just end there. Catalytic converter requirements for motorcycles, small equipments and off road engine emissions are emerging predominantly again using palladium, again with substantial and increasing volume requirements. So again why palladium and why now? Technologically, virtually all automotive catalysts is made possible using a combination of three PGMs. From a technical standpoint, platinum, palladium and rhodium are increasingly becoming interchangeable because the three metals fall within the same catalysts basket and research has continued to uncover new ways to substitute each metal for the others in many applications.: Importantly, however, beyond this basket of metals, palladium, platinum and rhodium, there are no commercial alternatives to PGMs for treating auto, truck, bus, motorcycle and other engine emissions, and such engines cannot move off the assembly line without a catalytic converter. So the use of PGM catalysts in automotive applications is virtually mandated by law and it isn't just reaching here in the United States and in Europe and in Japan, but it is reaching even the growing companies – countries and companies that produce cars in the Far East and China and India as well.:

Switching from rhodium to palladium for NOX treatment has been discussed in terms of meeting four to as much as eight times as much palladium to get the same catalytic results. And obviously when the price of palladium was $400 and the price of rhodium was $10,000, that was an easy piece of arithmetic to do. But that too now may be getting closer to a one-to-one, one for one replacement ratio. And while the substitution ratio at one-to-one requires less palladium in each application than before, the increasing opportunity to use palladium causes overall demand increase and all other things being equal palladium’s price to rise.: So as these metals are becoming interchangeable, why is the price of palladium not more in line with that of platinum and rhodium? One important reason continues to be the random and unpredictable nature of the sales out of government palladium inventories from Russia. Some of those Russian fiscal inventories held in Switzerland, some recently came into the United States, and some remains to be exported in the future. But we also conclude that the interchangeability of PGMs in catalytic converters applications and the market-driven shift towards palladium may not yet be recognized fully by the market.:

Let me address the automotive front. The recent challenges to automotive demand first emerged in association with a sharp increase in crude oil prices that began in mid-2007 and carried over into 2008. Demand for vehicles and particularly for SUVs and light trucks that are the mainstay of the US auto companies declined sharply as oil prices in mid 2008 rose to $150 per barrel level. Thereafter, as the economy began to contract and prices of petroleum and other commodities declined, the credit markets effectively froze up and housing prices fell, constraining both the availability of credit and the appetite of consumers for taking on new debt.:

Those we regard as critical include the following. Growth in worldwide auto production will continue strong despite the correction. Secondly, world demand for catalytic controls on all engine emissions continues to strengthen worldwide in all countries. Currently, nearly 60% of PGM annual production is consumed in catalytic converters engineering just to identify a viable alternatives to PGMs for engine emission catalysts to [inaudible]. And engineering advances facilitate increased substitution between this basket of metals, the PGM metals, platinum, palladium and rhodium.: It is important to note that although the automotive production is off sharply in North America and Europe, these two regions only account for about half of the worldwide new car build at this point in time. Further, North America and Europe are mature markets with minimal year on year growth over the past decade. Most of the growth in the automotive sector has been driven from Asia in recent years. Automotive output in China is continuing to grow although under current economic conditions at a slower pace than before. The typical current number of cars being built is about 70 million cars per year, that is expected to grow to the hundred million level in the next five to six – next 10 years or so.:

As all those who know me are aware I can't complete any discussion on PGMs without mentioning palladium jewelry. Platinum and palladium both now have significant positions in the jewelry market. Platinum’s position has well been established for several decades while palladium has only emerged in the last five years. But acceptance of palladium as an excellent jewelry metal continues to grow and strengthen. High prices for platinum over the past few years took a toll on its jewelry volumes but some growth has nevertheless continued in palladium jewelry and although prices now have fallen off sharply for both metals, the discretionary character of jewelry spending coupled with tough economic times appeared to have delayed any robust recovery in jewelry volumes to date except in China where jewelry is considered a form of precious metal investment. Russia and China, both platinum and palladium jewelry volumes surged in late 2008 as prices fell. Elsewhere it will likely take economic recovery before jewelry consumption will again play an important role in supporting PGM prices.: And finally investment, the past couple of years have seen the emergence of Europe of exchange traded funds, ETFs, specialized in platinum and palladium investments. These investment vehicles which hold physical metal in inventory are a new source of PGM demand and represent mainstream investors to access PGM bullion investments conveniently broadening participation in these markets. I’d just comment that there are no PGM ETFs available to the US investor at this time.:

(Operator instructions) And we have on line John Bridges with JP Morgan, please go ahead.:

Hi, John. Ankush Agarwal – JP Morgan: Hi, Frank, Greg. This is Ankush Agarwal.

Ankush, how are you doing? Ankush Agarwal – JP Morgan: Good thanks. How are you?

Good. Ankush Agarwal – JP Morgan: I have two questions. First one is more of a clarification regarding the byproduct revenues the way they are reported, so please if you could just confirm that now you're reporting the byproduct credits as a part of the revenue while earlier they were deducted from the operating costs and the income statement.

That is correct. That is exactly what is taking place, Ankush. Ankush Agarwal – JP Morgan: And they're still being deducted from cash costs reported on a per ounce and per ton basis?

That’s correct. Ankush Agarwal – JP Morgan: Okay. Great, thanks. And then secondly, assuming the auto contracts remain intact until 2010 and given where the spot pricing is, do you expect to – did you expect to do any further restructuring before the end of 2010, or have you now reached steady state that is cash flow neutral?

We are at a steady state that is cash flow neutral at our current prices. Obviously if the price were to slip, to add back, we might have to come back and revisit that. We would expect probably from this time forward that there are two or three things that are going to affect those prices. First of all, and I didn't speak to it very greatly in my comments, but if you see the gold prices, the gold prices hovered between $900 and $1,000, currently at about $925, $935, something like that today, $920 I guess today. It appears that platinum and gold are both kind of trading as precious metals, they're kind of the place where people put money in questionable times and so to a certain…

And Mr. McAllister, you are connected, please go ahead.

Okay, Ankush, I apologize for that. We had a heavy spring snow here today and I'm sure that some of the power lines are getting cut so we had a momentary bump in the power. I apologize. Ankush, are you still on? Ankush Agarwal – JP Morgan: Yes, I am.

Well, let me try and come back to my comment. My comments really comes to precious metal prices. It would appear that the platinum price and the gold price are obviously trading as places where people are putting money and investments are going into those areas. So we would suggest, we would see that there probably would be some impact upon both of those prices, gold and platinum going forward. The thing that is happening then is, and I come back to my palladium comments of earlier, is that that is pushing people then affordability wise to move to palladium in a very big way from the standpoint of palladium as we look at some of the charts going forward and some of the other people who are doing work on palladium, we're seeing negative, in other words are using up inventory in very large amounts going forward the next for five years. So we're going to see prices probably trend upwards as this becomes evident to the marketplace and obviously as this trend continues. That said, what we would expect to do then and we come back to the contracts, last year we replaced one of the contracts, pushed that forward to 2012, the question is whether or not when we get into 2010, will some of these auto companies still want to contract with us on that basis and what would the pricing be at that point in time and can we been push forward some of these contracts with floor prices that would benefit the company going forward? Now that said what we are trying to do though is to get ourselves into a position to where we are not relying so much on floor prices but relying upon being able to produce at whatever the market price for the metals are. What that means is we would have to change our operations in the future. We're constantly changing them based upon some of the efforts that we went into last year. The efforts going on at East Boulder are a different approach to mining than we have taken before. It’s been very successful to date, we are very pleased with that. Some of that learning is obviously going to be moved over to the Stillwater Mining, some of it already has, and we would expect that some of this will benefit not just the company, but it is going to benefit our employees long-term as well. Does that help? Ankush Agarwal – JP Morgan: Okay, thank you. Yes, it does. So the gold copper prices that you – this restructuring is based on is closer to spot right now?

The platinum price is based on spot right now. We do have some ceiling prices which we – actually the auto companies are benefiting from the ceiling price, so we have solid 14% of our platinum right now at $850. The remainder is sold at spot prices, much of which goes to the auto companies, but it goes at spot prices. So as the platinum price goes up, that is where we are getting our volatility or additional value in the company. About probably 100,000 ounces of production for the year 2009 based upon our projected numbers that are unhedged, so as the price of platinum goes up, obviously we get that advantage back into the company. Ankush Agarwal – JP Morgan: And is there any sensitivity to the other byproduct metal prices…

Yes. We are completely sensitive to nickel, to copper, to gold and silver. We produce small amounts of gold and silver and to rhodium. And the rhodium volatility, it is about three and a half to 4,000 ounces of rhodium we produce a year from our mines. The rhodium volatility in the past has been more akin to our recycling business where we have substantially greater amounts of rhodium. I believe last year we must have been in the 35,000 ounce range for the recycled rhodium. And obviously there we are paying for it, but there is some advantage that we take on those higher prices to the profitability of that business. Ankush Agarwal – JP Morgan: Okay. Thanks a lot and good luck Frank with all the efforts you're making.

Thank you very much.

And next in line we have Victor Flores with HSBC. Please go ahead.

Good morning, Victor. Victor Flores – HSBC: Thanks. Good afternoon. How are you? Frank, how are you?

Good. Victor Flores – HSBC: Let me – let me – can I ask a few questions about CapEx, could you tell us what the split in CapEx is for 2009 between the two operations and the refinery?

We haven't disclosed that per se but let me be a little bit – the guys are going to sort it out here, let me talk about it in general. First of all, there is very little CapEx going over East Boulder. The amount of CapEx would be about $4 million or $5 million. At the smelter, we are completing the second furnace. That second furnace, as I mentioned earlier is actually going to begin to be warmed up this month and it will be fully online sometime in May. And the total cost of that was about $25 million and I think the remainder that we are spending this year is somewhere in the $10 million range.

Yes.

So we have got a total capital spending for the year of $39 million.

That’s correct.

So if you take five out and take about 10 out, that is 15, so you have got about 19 left over at Stillwater.

31 at Stillwater.

31 at Stillwater. Sorry, I'm way over. Victor Flores – HSBC: Thanks. Second question goes to the decision obviously given the situation to curtail CapEx, how long can you go on this reduced capital spending before it starts to hurt?

Okay. Let me – I am going to have Greg speak to that as well but let me just add in here. First of all, we have reduced capital spending at the Stillwater mine but we have not reduced the sustaining capital needed to continue the development. In other words, we are developing there but it is not extending the development. So we have – we're in good shape at Stillwater. At East Boulder, we have reduced the development spending and there is only a short enough time before we would have to add some of that back. We originally estimated that might be 18 to 24 months and the question is are we doing well enough where we can have some of that back and still meet our objective with being cash neutral. Greg, do you have anything to add?

You actually right, Frank. Victor, what we are seeing at Stillwater, we don't want to compromise our developed state inventories. So that is the primary goal at Stillwater and we are in very good shape there. We have differed some of our longer term projects that would actually extend that beyond what we stated for 48 month type period. And as Frank mentioned, East Boulder, we're seeing some very good results around our capital accrues, and we are at point in time where we are trying to figure out how much more we need to start to factor back in. I feel confident and we are very optimistic that we will be able to actually start developing our work. Victor Flores – HSBC: Great. Thanks. And just let me ask you to clarify something, you mentioned that the cost-cutting initiatives that you had implemented had achieved 29% reduction and I heard you say cost and capital, is that correct?

This was at Stillwater, I believe, that is the objective. We're down about 12% in the last two months of the year. Our objective overall is 29%; that is correct.

At Stillwater.

At Stillwater. Victor Flores – HSBC: Including capital?

Yes.

Right. Victor Flores – HSBC: Okay. So does that imply that the operating cost side does not decline that much because overall the cuts in capital are fairly significant?

They are significant, but there is also a reduction, a narrowing down and sweeping down of the cost as well, the operating costs.

It is proportional.

That is proportional. Victor Flores – HSBC: Okay. And just let me ask one last question, Frank, you mentioned that the bulk of the floor pricing ends at the end of next year which means that if prices don’t improve, you will be exposed to some much lower palladium prices beginning partially in 2011. Now the previous plan I think had been to try to get grades up as a means of driving costs lower. If I look at the average grade mined during 2008 at Stillwater Mining, it is the lowest grade that this mine has produced since 1994. So it looks like the grades are going in the wrong direction. How long do think it will take or is it no longer the plan to get grades going up in order to bring cost down?

I think what you are seeing here probably Victor is the reality that the grades are lower and probably are going to stay somewhat lower than what we have seen in the past. That said, what we have to do then is focus on how we operate at these lower grades and at a good price – at a good cost, excuse me. I would just argue with you a little bit on your characterization of the low prices at the end of 2010. We would expect – we will be at market prices at the end of 2010, but we would expect there’s going to be some recovery on that. And that is just an outlook, I'm not arguing with you. Victor Flores – HSBC: I mean I've looked at it. I don't know what prices are going to be in 2011 or 2012 either.

Yes. Victor Flores – HSBC: But you are trying to run a mining operation with a long-term view…

Without a doubt. Victor Flores – HSBC: And you know, if prices don't recover, there has to be some sort of a Plan B ore perhaps the only Plan B as you suggested is maybe curtailing output?

Yes, and that is obviously always the option that we can take. What we have done is try to measure just exactly how that might look if in fact we had to take that option but at this point in time that is not the plan that we have. Victor Flores – HSBC: Okay, great. Thanks you so much.

Thank you, Victor.

And next we will go to the line of Jack Bill [ph] with Johnson Matthey. Please go ahead. Jack Bill – Johnson Matthey: How are you doing guys?

How are you doing today? Jack Bill – Johnson Matthey: All right. Frank, what do you think the effect will be on the price of palladium from the fact that the recycling ounces that are coming back are more and more palladium from the old palladium catalysts of 8, 10 and 12 years ago?

I looked at that Jack and when we get our numbers in, and obviously the palladium is growing, but when we get our numbers in and we look at it, we are just about 50-50 on platinum and palladium. What we're going to see we believe is that as the years progress here, we are going to see more and more of the diesel catalytic converters coming back in and that ratio is probably going to remain better than what we had anticipated earlier on. We were looking at what we thought maybe it was going to be something like 60% palladium and 40% platinum coming back in but that just hasn't panned out. One of the big things Jack that I didn't mention on the phone was that you bring up though is that the recycling volumes are down sharply this year and from the standpoint of available metal that is going to obviously have to be factored into the pricing in the marketplace because the volumes are off at least 50% maybe even more. And when you have got 2 million ounces, a million ounces of palladium and a million ounces of platinum that we are recycling in the year 2008, and that is not continuing in the year 2009, on top of reduced production in South Africa and in Russia and to a certain extent even here, what that is going to wind up doing is that has to be factored into pricing. So I don't really know the answer to the your question Jack because it just hasn't panned out the way we thought it was going to pan out and the way you guys have been looking at it as well. Jack Bill – Johnson Matthey: Right. I would agree with that. I think that the volumes of palladium although we're seeing them increase now in auto catalysts, the overall volume is down enough that the overall palladium is not really up and probably won't be at least in the near future.

Yes. Jack Bill – Johnson Matthey: Okay, thanks.

Thank you, Jack. Nice talking to you. Jack Bill – Johnson Matthey: Bye.

(Operator instructions) On the line we have James Steel with HSBC. Please go ahead. James Steel – HSBC:

Good morning. How are you doing, James? James Steel – HSBC: Very well, thanks. Just on the recycling question, some of the questions actually have – you have just answered, but nonetheless, how much would you envisage that steel prices would have to recover in order to put in a minimum to make it more profitable to recycle what is being held back in inventory?

The current scrap steel – honestly the scrap steel price that is governing it, and obviously the current scrap steel prices which I understand is probably in the $200 range is off sharply, again it is quarter of what it was last year. That is one of the factors obviously that is holding it back, but as we talk with people, it isn’t necessarily just the scrap steel or the steel price. It is actually people have to buy cars in order for this recycling business to kind of turn back up. And so it is kind of a chicken and egg, I don't know exactly which comes first. If you've got the cars being built then that means – and being sold, that means people are turning cars in, and it is just kind of a pipeline thing. We talked to a number of people about that and that may not sound realistic, but if you're not buying a real car, you’ve got to keep your old car, and the cash that goes down through the market place just doesn't happen. So, there's two or three things that has to happen. Obviously you have to have better steel prices, obviously you've got to be selling cars, obviously you have to be incentivized to be able to go out and cut the catalytic converters of the cars. So I think the catalytic converter pricing right now is not as big a deal as it is scrapping cars and the new car sales and obviously the steel price, with the steel price being at $200, that just doesn't incentivize people. Now part of all that is happening in the past is that the steel that comes off of these catalytic converters is not necessarily the prime stuff that they want in recycling. A lot of that has been going to China now but frankly the Chinese market is coming back up. Their stimulus package happens to be – looks like it is working. They have got some restructuring that is going on in their steel industry over there, but if the steel industry gets restructured and the volumes in their steel industry over there turn up, then in fact what we are going to see is some of the scrap metal coming off of these catalytic converters begin to flow again. And I would guess towards the end of this year, sometime we may see some of this begin to pop back up. That is if Mr. Bernanke is right that the economy is actually going to turn around later in this year. How's that for a long answer? James Steel – HSBC: That is very expansive, thank you. And just so that I got it right, did do say just a little bit earlier there that recycling volumes, auto recycling volumes are down 50% or more, that is this year compared to – for this year so far compared to last year?

Last year, yes. Last year or even the year before. They have been kind of rolling to that 2 million ounce level and when I say 2 million ounces, it is roughly 50-50 between platinum and palladium with obviously a good amount of rhodium in there as well, but we tend to look at the platinum and palladium and the volumes are way down this year, at least 50%. James Steel – HSBC: Now is that in the US or is that a global…

That’s a global number. James Steel – HSBC: Global, thank you.

Thank you. Operator?

No further questions.

Okay. Well I just would suggest to all those that are on the call, we appreciate your being on the call. We appreciate what is going on. We want you to go out and buy palladium jewelry; it is a bargain right now and…

And a new car.

And a new car, that’s right. Thank you very much. Operator?

Thank you. And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.