Greetings and welcome to the Stillwater Mining Company Fourth Quarter 2015 Results Conference Call. At this time, all participants are in a listen-only mode. A question answer and session will follow the formal presentation. [Operator Instructions] I would now like to turn the conference over to your host, Mick McMullen, President and CEO. Thank you. You may now begin.

Thank you very much and thank you everyone for dialing in. You’ve got myself and Chris Bateman, our Chief Financial Officer on the line, and we’ll run through a presentation which is available for our fourth quarter and full year 2015 results. So starting on that presentation, on slide 2, and read the forward-looking statements. If you could read that at your leisure, that’d be good. Moving to slide 3 to discuss our fourth quarter highlights, we had a very strong fourth quarter of last year. All-in sustaining costs, which is the key metric we measure our business on apart from cash, came in at $613 per mined ounce of platinum and palladium, which was approximately 15% reduction from the same period in the prior year. Cash and cash equivalents plus highly liquid investments grew slightly in the fourth quarter to approximately $464 million. That was an increase of $3.5 million from the previous quarter and that came in spite of all of the capital works we did plus buying a joint venture partner at Marathon. Mined production of platinum and palladium was quite good at 132,400 ounces. It was down slightly from the same period in the fourth quarter of 2014, which in itself was a very, very strong quarter for us. Recycling continues to grow. We’re up approximately 12% over the previous year and came in at just under 130,000 ounces of palladium, platinum and rhodium. Our SG&A costs continue to fall. They came in at $6.4 million for the quarter, which was a 9.5% reduction from the same period in the prior year. We had consolidated net income attributable to common stockholders of $4.4 million or $0.04 per diluted share, and I think that was a stellar performance just given the fall in the receive basket price…

Thanks, Mick. As Mick has said in his opening statements, we’ve seen a rapid drop in the price, in fact five quarters ago we were sitting just under $1,000 per PGM ounce, we’re now down to $667. Notwithstanding that, we delivered $4.4 million of net income in the fourth quarter and this was driven by a very strong fourth quarter cost performance even on the back of the restructuring in quarter three. Moving to slide 9, the balance sheet, we’re sitting on a very strong balance sheet, as you will be aware. In Q3, we repurchased $63.3 million of the convertible debt for $61 million. So that was a discount to face value. In Q4, we’ve added cash to that balance. Again, the strong cost performance drove this, notwithstanding the lower prices. In addition, we’ve had a very focused effort on managing our working capital. And we’ve seen a shift in the recycle business to more tolled ounces with some of the big contracts that we’ve signed.

Thanks, Chris. If we just turn to slide 10, I’ve talked at length in various calls about productivity and really we felt that productivity was the key structural issue that needed to be addressed within the business. This graph on slide 10, I think, highlights some of the improvements that we’ve made. And what you can see in green is the ounce per employee per month of non-project employee that is and in blue the East Boulder for the same metric. You can see going back to 2012 that the two mines were broadly the same, East Boulder was slightly high. But I’ll note that the reserve grade for the Stillwater Mine is approximately 40% higher than East Boulder. Despite that, East Boulder managed to have approximately the same ounce per employee per month outcome. And then going through 2013 and 2014, we saw – and 2015 in the first half, we saw quite a divergence with East Boulder becoming a significantly stronger performer in terms of productivity. Again, despite the significantly lower grade at East Boulder. In 2014, you can see the impact of bringing Graham Creek online had. If you recall, we brought that online ahead of schedule. It added approximately 20,000 to 25,000 ounces per annum to the East Boulder production profile. And that really drove a significant increase in the ounce metric that we look at. We’ve spent a lot of time at the Stillwater Mine looking at improving the operations here and looking at how we do things better. As Chris alluded to, we went through a restructuring process here during Q3. We’ve got a new incentive system in place here and that incentive system now has a metric that is part of that that is based on a site-wide cost per ounce target. We’ve…

[Operator Instructions] Our first question comes from David Gagliano from BMO Capital Markets.

I just wanted to drill down a bit more on the Blitz timeline and outlook. You mentioned obviously several years after first production in 2018, I was wondering if you could give us a sense, bit of a closer sense as to how we should be thinking about this in terms of when it ramps to full production? And also, you mentioned that obviously it’s primarily growth production. How much of that roughly 150,000 to 200,000 ounces is incremental versus replacement, the first, let’s say, first 10 years on average?

We haven’t gone into a lot of detail on that, Dave, and it’s a good question. And I think as we drill about more from underground, we’d be prepared to go into a lot more detail. But I think I can say that really on the current plan and I believe we can accelerate it, that project will take somewhere between two to five years to ramp up to full production. And virtually all of it for the first 10 years is growth. On the current mine plans, we don’t see any reduction in Stillwater, let’s call it the old Stillwater Mine production for at least a decade.

Just for clarity, to make sure, there is no additional CapEx at the mill or anything like that needed for this, correct?

That’s correct, because we run the mill on a 10-day on and 4-day off roaster, the plan would be that once Blitz comes on, we would actually start running the mill fulltime. One of the great things about developing a project like Blitz or Graham Creek is the very low capital intensity because you’re leveraging off your existing infrastructure, you’re leveraging off your existing mill, [your tiling dam] and so therefore you get a strong return on those dollars.

Our next question comes from Lucas Pipes from FBR Capital Markets.

So when I look at your 2016 guidance, compared to the fourth quarter, it struck me as conservative. How would you judge it? Where do you see maybe continued room for improvement over the course of 2016?

Look, I think it is conservative. I believe in this market, really in any market, but specifically this market, you want to be confident of hitting your guidance. So if you look at our all-in sustaining cost quarter by quarter, if you go back to Q3, it was in the order of $677 and then we got the $613 in Q4 after we did the restructuring during Q3. So I think just given where we sit now, we’re little bit wary of just assuming that Q4 is the new run rate going forward guaranteed. I’m quite confident that we can come in quite strongly as we go forward. And we have set the team a new internal target here to come up with a plan to actually continue to drive those costs down further. Again, I’m somewhat wary of using one quarter as your data point and then coming out with some very aggressive guidance, which you then for some reason struggle to hit. I can’t say that the performance into 2016 has been strong as we’ve actually continued to make improvements in the business. So we’re feeling quite confident in that guidance at this point in time.

That's very good to hear. And maybe two quick follow-up questions, more bigger picture. The first one would be you have a very strong balance sheet, where do you see the best use of capital? Is it cash on the balance sheet, is it may be buying back a little bit more debt, is it M&A? Just your thoughts would be welcome. And then also, appreciated the slide on the South African cost curve and you mentioned this is not sustainable. How quickly would you expect production to adjust out there? Would appreciate your thoughts.

I think that in terms of the cash on the balance sheet, we have a ranking system internally where we look at uses of cash and what the risk adjusted return would be on that. And we have bought debt back in total of about $93 million in the last couple of years back. So I’m quite debt-averse. I like to run the business in a net cash position if I can. We’re opportunistic I would say, so I don’t think people should be assuming that we will necessarily buy the debt back. We just look at where we think fair value is, given the stock price. I think the significant value in this particular market having a big cash buffer on the balance sheet, because people can buy the stock feeling quite confident that we don’t have a liquidity crunch coming. So that in itself is worth quite a bit, I believe. And again, if we were to look at M&A, you’d never say never, but I think it would have to be a very strategic high-return types of a transaction that would give us a better risk adjusted return than buying our debt back at a discount or continuing to develop our internal projects. When you have an orebody that’s 28 miles long and running over 0.5 ounce to the ton, that’s a fairly high hurdle rate, but something else would have to be better than that. But again, we always look at lots of stuff like I think the management team’s job is to look at what gives the shareholder the best return. But I would say that in any – I hope that people understand the way I run the business now is a very conservative way of running the business. So whatever we do, whether…

[Operator Instructions] Our next question comes from Garrett Nelson from BB&T Capital Markets.

It seems like you might have ended the year with higher level of inventories, given that your mine PGM production exceeded sales by about 12,000 ounces or so during the quarter. I also noticed that your production was also higher than your shipments in the third quarter. Was there any reason behind that? Do you expect that trend to reverse and that we will see some destocking over the next couple of quarters?

We’ve had a couple of good quarters’ mine production. I think the one thing to bear in mind is we’re measuring at two different points in time, so we talk about mine production being production coming out of the concentrator and the estimate of returnable ounces. And I think that harks back to the days before we had the Columbus processing facility. And then obviously sales, it had to go through the Columbus process and then on to Johnsen Maffei for refining. So it is fair to say in the last two quarters given the prices we haven’t been as aggressive at flushing out inventory. At the end of the quarter, I think we talked at the Q3 conference call that we held back some inventory or not moved it through the process as quickly, and certainly with the prices at the end of Q4 that wasn’t the same rush to push stuff out. But we’ll continue to watch our working capital levels very closely and manage them.

So I think it’s fair to say that when prices are low we do have some optionality as to whether we push ounces out or we don’t. If prices are quite low, we typically don’t push them out. So there is a bit of an inventory sitting in there that at some point we’ll look to liquidate.

And then on Blitz, I know you said you're expecting first production in 2018. But can you get any more granular on the timing, is that early 2018 or late 2018, just trying to determine, figure out how many ounces we should be modeling for 2018 from Blitz?

All I can say at this stage, just given the level of accuracy mid-2018 is about the best timeframe that I can give at the moment. We do have a work program underway at the moment to look to see if there is some way that we can accelerate that and it’s high on the priority list for our management team this year to see how we can both accelerate the time to first production, but then accelerate that ramp up period which is still relatively long. So all I can say there is a bit of work in progress at the moment. There will be some ounces come on, but we can’t really give more detail at the moment partly because it's several years out, but partly because we actually have a big work program underway at the moment, looking at the project and seeing if we can actually re-scope it a little bit to get some production from the end closest to the concentrator earlier rather than waiting until everything has developed at the far end.

Our next question comes from Matt Griffiths from Bank of America Merrill Lynch.

I just had another question for you on Blitz. I was just interested, I know it's probably a little early to get too detail, but on how the sustaining CapEx changes as you bring that on. I'm kind of thinking like do you have to ramp up the developed state of that part of the mine and maybe it's a little higher initially, or does that work get done maybe with the project CapEx? Anything you could add there would be really helpful.

The bulk of it gets done with the project CapEx initially and then rest of the sustaining CapEx would be not more on a dollar per ounce basis. They will obviously be more dollars you got to spend that you’re producing more ounces. So it’s relatively minor. I think from memory the first ramp system and it developed very similar to the way Graham Creek has developed, how we develop in 2,000 foot long blocks and then we put a ramp system up for each block and then we put the footwall laterals in them, drilled them out. I think from memory the first ramp system is about $3 million spend and you will get production out of it fairly quickly. So it’s relatively minor and on a dollar per ounce basis shouldn’t be any more than what we currently do.

And also just on the market, on the recycling business, I was just curious, you mentioned how the steel price or scrap steel price influences how the availability, I guess, of recycled material. Is there a limit to how long that part of the supply chain build inventory, do you have any sense of whether they have limitations or if they are near full or can this go on kind of indefinitely in this way?

It can go on indefinitely and the reason is that the scrap steel price is basically an impediment to whether a target is scrapped or not. And if it doesn’t get – if it makes it to the scrapyard, even if they don’t scrap the rest of the car, they will typically cut the can off and so it gets into the system. But what we’re seeing is that lower scrap steel prices mean that it actually cost you more to pick the car up and send it to the scrapyard than you get paid. And therefore those cars never make it into – are not making it into the system. So until that price point moves up a little bit, that stuff can probably be sitting out there indefinitely. So I think within the last year, we’ve seen investors be talking about a wave of recycling ounces and recycling is just not the case. We are, I believe, the largest auto cap recycler in the world now and the overall market is down significantly, most of our collectors are telling us the market is down 25% for them year on year. We’ve got one or two collectors who tell us they are up slightly, but net-net the overall market is down. And you can see that in the volumes of the listed scrap companies, there is a couple of large ones out there. You can see that very clearly in the volumes.

[Operator Instructions] There are no further questions. I would turn the call back over to our speakers for closing comments.

Thank you very much everyone and we will continue to drive the business forward and we look forward to speaking on the next quarterly call. Thank you.