##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the fiscal year ended December 31, 2006.
 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
  DELAWARE
    
    81-0480654(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 1321 DISCOVERY DRIVE, BILLINGS, MONTANA 59102
 (406) 373-8700
 Securities registered pursuant to Section 12(b) of the Act:
 NAME OF EACH EXCHANGETITLE OF EACH CLASS
    
    ON WHICH REGISTEREDCommon Stock, $0.01 par value
    
    The New York Stock ExchangePreferred Stock Purchase Rights
    
    The New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None
 o þ
 o þ
 þ o
 þ
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE
 Certain information required in Part III of this Annual Report on Form 10-K is incorporated
herein by reference to the registrants Proxy Statement for its 2007 Annual Meeting of
Stockholders.




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##### 



TABLE OF CONTENTS
  PART IITEMS 1, 1A AND 2 BUSINESS, RISK FACTORS AND PROPERTIES
    
    
    6ITEM 3 LEGAL PROCEEDINGS
    
    
    38ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    38PART IIITEM 5 MARKET FOR REGISTRANTS COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    39ITEM 6 SELECTED FINANCIAL DATA
    
    
    40ITEM 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    48ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    65ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    67ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    98ITEM 9A CONTROLS AND PROCEDURES
    
    
    98ITEM 9B OTHER INFORMATION
    
    
    99PART IIIITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE
    
    
    99ITEM 11 EXECUTIVE COMPENSATION
    
    
    101ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    101ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    101ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    101PART IVITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    101SIGNATURES
    
    
    104Consent of KPMG LLPConsent of Behre Dolbear & Company, Inc.Rule 13a-14(a)/15d-14(a) CertificationRule 13a-14(a)/15d-14(a) CertificationSection 1350 CertificationSection 1350 Certification




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##### Table of Contents



GLOSSARY OF SELECTED MINING TERMS
  Adit
    
    A horizontal tunnel or drive, open to the surface at one end, which is used as an entrance to
a mine.Anorthosite
    
    Igneous rock composed almost wholly of the mineral plagioclase feldspar.Assay
    
    The analysis of the proportions of metals in ore, or the testing of an ore or mineral for
composition, purity, weight, or other properties of commercial interest.Catalysts
    
    Catalysts are materials that facilitate one or more chemical reactions without being consumed
in the reaction themselves. As referenced in this report, platinum-group metals serve as
catalysts within the catalytic converters used in automotive exhaust and pollution control
systems and, where so indicated, within similar applications in petroleum refining or other
chemical processes.Close-spaced drilling
    
    The drilling of holes designed to extract representative samples of rock in a target area.Concentrate
    
    A mineral processing product that generally describes the material that is produced after
crushing and grinding ore effecting significant separation of gangue (waste) minerals from
the metal and/or metal minerals, and discarding the waste and minor amounts of metal and/or
metal minerals. The resulting concentrate of metal and/or metal minerals typically has an
order of magnitude higher content of metal and/or metal minerals than the beginning ore
material.Crystallize
    
    Process by which matter becomes crystalline (solid) from a gaseous, fluid or dispersed state.
The separation, usually from a liquid phase on cooling, of a solid crystalline phase.Cut-off grade
    
    The lowest grade of mineralized material that qualifies as ore in a given deposit. The grade
above which minerals are considered economically mineable considering the following
parameters: estimates over the relevant period of mining costs, ore treatment costs, general
and administrative costs, smelting and refining costs, royalty expenses, by-product credits,
process and refining recovery rates and PGM prices.Decline
    
    A gently sloped underground excavation constructed for purposes of moving mobile equipment,
materials, supplies or personnel from surface openings to deeper mine workings or as an
alternative to hoisting in a shaft for mobilization of equipment and materials between mine
levels.Dilution
    
    An estimate of the amount of waste or low-grade mineralized rock which will be mined with the
ore as part of normal mining practices in extracting an orebody.Drift
    
    A major horizontal access tunnel used for the transportation of ore or waste.Ductility
    
    Property of a solid material that undergoes more or less plastic deformation before it
ruptures. The ability of a material to stretch without fracturing.Fault
    
    A geologic fracture or a zone of fractures along which there has been displacement of the
sides relative to one another parallel to the fracture.Filter cake
    
    The PGM-bearing product that is shipped from the base metals refinery, as the Companys final
product, to a third-party toll refinery for the final extractive stages in the refining
process.Footwall
    
    The underlying side of a fault, orebody, or mine working; especially the wall rock beneath an
inclined vein, fault, or reef.
 2




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Gabbro rocks
(See Mafic/Ultramafic)
    
    A group of dark-colored igneous rocks composed primarily of the minerals plagioclase feldspar
and clinopyroxene, with minor orthopyroxene.Gangue material
    
    The non-metalliferous or waste metalliferous mineral in the ore.Grade
    
    The average metal content, as determined by assay of a ton of ore. For precious metals,
grade is normally expressed as troy ounces per ton of ore or as grams per metric tonne of
ore.Hanging wall
    
    The overlying side of a fault, orebody, or mine working; especially the wall rock above an
inclined vein, fault, or reef. (Compare footwall.)Hoist
    
    See shaftJackleg drill
    
    A manually operated rock drill, generally powered by compressed air, used to drill holes for
blasting rock and to install ground support hardware.Lenticular-shaped
    
    Resembling in shape the cross section of a double-convex lens.Lode claims
    
    Claims to the mineral rights along a lode (vein) structure of mineralized material on Federal
land; typically in the U.S. lode claims are 1,500 feet in length and 600 feet wide along the
trend of the mineralized material.Mafic rocks
    
    Igneous rocks composed chiefly of dark, ferromagnesian minerals in addition to
lighter-colored feldspars.Matrix
    
    The finer-grained material between the larger particles of a rock or the material surrounding
mineral particles.Mill
    
    A processing plant that produces a concentrate of the valuable minerals or metals contained
in an ore. The concentrate must then be treated in some other type of plant, such as a
smelter, to effect recovery of the pure metal. Term used interchangeably with concentrator.Millsite claims
    
    Claiming of Federal land for millsite purposes or other operations connected with mining lode
claims. Used for nonmineralized land not necessarily contiguous with the vein or lode.Mineral beneficiation
    
    A treatment process separating the valuable minerals from the host material.Mineralization
    
    The concentration of metals and their compounds in rocks, and the processes involved therein.Mineralized material
    
    A mineralized body which has been delineated by appropriately spaced drilling and/or
underground sampling to support a general estimate of available tonnage and average grade of
metals. Such a deposit does not qualify as a reserve until a comprehensive evaluation based
upon unit cost, grade, recoveries, and other material factors conclude legal and economic
feasibility.Mouat Agreement
    
    Mining and Processing Agreement dated March 16, 1984 regarding the Mouat family. The Mouat
royalty stems back to the formation of Stillwater Mining Company at which time claims staked
by the Mouats forebears in 1876 were leased to Stillwater Mining Company.Net smelter royalty
    
    A share of revenue paid by the Company to the owner of a royalty interest generally
calculated based on the imputed value of the PGM concentrate delivered to the smelter. At
Stillwater Mining Company, royalties are calculated on the mineral production subject to each
royalty as a percentage of the revenue received by the Company after deducting treatment,
refining and transportation charges paid to third parties, and certain other costs incurred
in connection with processing the concentrate at the Columbus smelter.Norite
    
    Coarse-grained igneous rock composed of the minerals plagioclase feldspar and orthopyroxene.
 3




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Ore
    
    That part of a mineral deposit which could be economically and legally extracted or produced
at the time of reserve determination.Outcrop
    
    The part of a rock formation that appears at the earths surface often protruding above the
surrounding ground.PGM
    
    The platinum group metals collectively and in any combination of palladium, platinum,
rhodium, ruthenium, osmium, and iridium. Reference to PGM grades for the Companys
operations include measured quantities of palladium and platinum only.PGM rich matte
    
    Matte is an intermediate product of smelting; an impure metallic sulfide mixture made by
melting sulfide ore concentrates. PGM rich matte is a matte with an elevated level of
platinum group metals.Probable (indicated) reserves
    
    Reserves for which quantity and grade and/or quality are computed from information similar to
that used for proven (measured) reserves, but the sites for inspection, sampling, and
measurement are farther apart or are otherwise less adequately spaced. The degree of
assurance, although lower than that for proven (measured) reserves, is high enough to assume
continuity between points of observation.Proven (measured) reserves
    
    Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are computed from the results of detailed
sampling; and (b) the sites for inspection, sampling and measurement are spaced so closely
and the geologic character is so well defined that size, shape, depth and mineral content of
reserves are well established.Recovery
    
    The percentage of contained metal actually extracted from ore in the course of processing
such ore.Reef
    
    A layer precipitated within the Stillwater Layered Igneous Complex enriched in platinum group
metal-bearing minerals, chalcopyrite, pyrrhotite, pentlandite, and other sulfide materials.
The J-M Reef, which the Company mines, occurs at a regular stratigraphic position within the
Stillwater Complex. Note: this use of reef is uncommon and originated in South Africa
where it is used to describe the PGM-bearing Merensky, UG2, and other similar layers in the
Bushveld Complex.Refining
    
    The final stage of metal production in which residual impurities are removed from the metal.Reserves
    
    That part of a mineral deposit which could be economically and legally extracted or produced
at the time of the reserve determination.Recycling materials
    
    Spent PGM-bearing materials collected for reprocessing from automotive, petroleum, chemical,
medical, food and other catalysts. Additionally, PGMs for recycling may be sourced from
scrap electronics and thermocouples, old jewelry and materials used in manufacturing glass.Shaft
    
    A vertical or steeply inclined excavation for the purposes of opening and servicing an
underground mine. It is usually equipped with a hoist at the top which lowers and raises a
conveyance for handling personnel and materials.Slag
    
    Slag is a nonmetallic product resulting from the mutual dissolution of flux and nonmetallic
impurities during smelting. A silica rich slag is a smelting slag that contains a relatively
high level of silica.Sill
    
    (1) With respect to a mine opening, the base or floor of the excavated area (stope); (2) With
respect to intrusive rock, a tabular intrusive unit that is conformable with surrounding rock
layers.Slusher
    
    (1) An electric double-drum winch with two steel ropes attached to an open-bottomed scoop
that transports (drags) ore from the rock face to a loading point, where the ore is
discharged. (2) A very selective mining method in which small ore stopes are mined using a
slusher.
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Smelting
    
    Heating ore or concentrate material with suitable flux materials at high temperatures
creating a fusion of these materials to produce a melt consisting of two layers with a slag
of the flux and gangue (waste) minerals on top and molten impure metals below. This
generally produces an unfinished product (matte) requiring refining.Sponge
    
    A granular (shot) form of PGM. Commonly, the form required for manufacture of many PGM-based
chemicals and catalysts.Stope
    
    A localized area of underground excavation from which ore is extracted.Strike
    
    The course, direction or bearing of a vein or a layer of rock.Tailings
    
    That portion of the mined material that remains after the valuable minerals have been
extracted.Tolling
    
    Processing of material owned by others for a fee without taking title to the material.Troy ounce
    
    A unit measure used in the precious metals industry. A troy ounce is equal to 31.10 grams.
The amounts of palladium and platinum produced and/or sold by the Company are reported in
troy ounces. There are 12 troy ounces to a troy pound.Ultramafic rocks
    
    Igneous rocks composed chiefly of dark, ferromagnesian minerals in the absence of significant
lighter-colored feldspars.Vein
    
    A mineralized zone having regular development in length, width and depth that clearly
separates it from neighboring rock.Wall rock
    
    The rock adjacent to, enclosing, or including a vein, layer, or dissemination of ore minerals.
 5




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PART I
 
 ITEMS 1, 1A AND 2
BUSINESS, RISK FACTORS AND PROPERTIES
 INTRODUCTION AND 2006 HIGHLIGHTS
       6




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Highlights:
 
    
    The Companys revenues, in terms of dollars and ounces sold, for 2006 and 2005 were:
 Year ended December 31,
    
    Palladium
    
    
    Platinum
    
    
    Rhodium
    
    
    Other
    
    
    Total
    
    
    Ounces of
    
    
    Ounces of
    
    
    Ounces of
    
    
    Total(in thousands)
    
    Revenue
    
    
    Revenue
    
    
    Revenue
    
    
    Revenue
    
    
    Revenue
    
    
    Palladium
    
    
    Platinum
    
    
    Rhodium
    
    
    Ounces2006Mine production
    
    $
    172,171
    
    
    $
    120,033
    
    
    $
    
    
    
    $
    
    
    
    $
    292,204
    
    
    
    466
    
    
    
    138
    
    
    
    
    
    
    
    604PGM recycling
    
    
    31,987
    
    
    
    143,259
    
    
    
    93,206
    
    
    
    1,489
    
    
    
    269,941
    
    
    
    100
    
    
    
    128
    
    
    
    22
    
    
    
    250Sales of palladium
received in Norilsk Nickel
transaction
    
    
    17,637
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,637
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    63Other
    
    
    10,538
    
    
    
    2,530
    
    
    
    20,298
    
    
    
    
    
    
    
    33,366
    
    
    
    33
    
    
    
    2
    
    
    
    6
    
    
    
    41Total
    
    $
    232,333
    
    
    $
    265,822
    
    
    $
    113,504
    
    
    $
    1,489
    
    
    $
    613,148
    
    
    
    662
    
    
    
    268
    
    
    
    28
    
    
    
    9582005Mine production
    
    $
    153,668
    
    
    $
    110,538
    
    
    $
    

    
    
    $
    

    
    
    $
    264,206
    
    
    
    431
    
    
    
    135
    
    
    
    
    
    
    
    566PGM recycling
    
    
    8,970
    
    
    
    59,692
    
    
    
    20,672
    
    
    
    1,361
    
    
    
    90,695
    
    
    
    46
    
    
    
    68
    
    
    
    12
    
    
    
    126Sales of palladium
received in Norilsk Nickel
transaction
    
    
    87,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87,309
    
    
    
    438
    
    
    
    
    
    
    
    
    
    
    
    438Other
    
    
    3,616
    
    
    
    11,515
    
    
    
    50,121
    
    
    
    
    
    
    
    65,252
    
    
    
    18
    
    
    
    13
    
    
    
    26
    
    
    
    57Total
    
    $
    253,563
    
    
    $
    181,745
    
    
    $
    70,793
    
    
    $
    1,361
    
    
    $
    507,462
    
    
    
    933
    
    
    
    216
    
    
    
    38
    
    
    
    1,187
 
    
    The Company reported net income of $7.9 million, or $0.09 per
diluted share in 2006 compared to a net loss of $13.9
million, or $0.15 per diluted share in 2005. See
Managements Discussion and Analysis of Financial Condition
and Results of Operations  Year Ended December 31, 2006
Compared to Year Ended December 31, 2005.
    
    Beginning in 2005, the Company embarked upon long-term
changes which, when realized, are expected to transform the
way the Company operates the mines, increase production
levels and reduce operating costs. They include continuing
to advance the safety systems, increasing the developed state
of both mines, expanding the use of selective mining methods,
increasing production levels, and reducing operating costs.
These efforts continued during 2006. The Company believes
that its implementation of more selective mining methods,
best suited to each mining area, will reduce the amount of
waste rock mined, thereby increasing the effective ore grade
realized. According to plan, such increases in effective
realized ore grade, along with measured growth in production
rates, are expected to generate economies of scale that will
reduce unit production costs over time. These operational
efforts are discussed in more detail in Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
    
    In 2006, the Company produced a total of 601,000 ounces of
palladium and platinum compared to 554,000 ounces in 2005.
Total consolidated cash cost per ounce (a non-GAAP measure)
was $295 in 2006, compared with $324 in 2005. This reduction
in cash costs reflected the benefit of higher production
volumes and increased credits from by-product sales and
recycling operations during 2006. See Selected Financial
and Operating Data for further discussion of non-GAAP
measures.
    
    The Companys 2006 capital expenditures totaled $97.8
million, up from $92.1 million in 2005. The growth in
expenditures was driven by efforts to advance the developed
state of the mines through accelerating the delineation and
development of proven reserves and through completing various
major infrastructure projects. Improvements in the
developed state of the mines allows for better advance
economic analysis of appropriate mining methods in each area,
supports growth in mining rates and contributes to more
efficient and cost-effective mining. Infrastructure projects
completed during 2006 included additional rail haulage and a
new sandfill facility at the Stillwater Mine and expanded
mine ventilation and tailings pond capacity at the East
Boulder Mine. For a discussion of certain risks associated
with the Companys business, please read Business and
PropertiesCurrent Operations, and Risk
Factors and Managements Discussion and Analysis of Financial Condition and Results of
Operations.
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HISTORY OF THE COMPANY
    GEOLOGY OF THE J-M REEF
      8




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ORE RESERVES
 proven probable
 Methodology
   See Proven and Probable Ore Reserves  Discussion for reserve sensitivity to metal
pricing).
   9




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SEC Guidelines
    Results
   Proven and Probable Ore Reserves
   10




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DECEMBER 31, 2006
    
    
    DECEMBER 31, 2005
    
    
    DECEMBER 31, 2004AVERAGE
    
    
    CONTAINED
    
    
    
    
    
    
    AVERAGE
    
    
    CONTAINED
    
    
    
    
    
    
    AVERAGE
    
    
    CONTAINEDTONS
    
    
    GRADE
    
    
    OUNCES
    
    
    TONS
    
    
    GRADE
    
    
    OUNCES
    
    
    TONS
    
    
    GRADE
    
    
    OUNCES(000s)
    
    
    (OUNCE/TON)
    
    
    (000s)
    
    
    (000s)
    
    
    (OUNCE/TON)
    
    
    (000S)
    
    
    (000s)
    
    
    (OUNCE/TON)
    
    
    (000S)Stillwater Mine (2)Proven Reserves
    
    
    2,775
    
    
    
    0.66
    
    
    
    1,818
    
    
    
    2,458
    
    
    
    0.68
    
    
    
    1,664
    
    
    
    1,971
    
    
    
    0.65
    
    
    
    1,279Probable Reserves
    
    
    15,539
    
    
    
    0.63
    
    
    
    9,749
    
    
    
    15,638
    
    
    
    0.63
    
    
    
    9,812
    
    
    
    16,108
    
    
    
    0.63
    
    
    
    10,138Total Proven and Probable
Reserves (1)
    
    
    18,314
    
    
    
    0.63
    
    
    
    11,567
    
    
    
    18,096
    
    
    
    0.63
    
    
    
    11,476
    
    
    
    18,079
    
    
    
    0.63
    
    
    
    11,417East Boulder Mine (2)Proven Reserves
    
    
    2,011
    
    
    
    0.45
    
    
    
    902
    
    
    
    1,665
    
    
    
    0.47
    
    
    
    788
    
    
    
    1,225
    
    
    
    0.46
    
    
    
    558Probable Reserves
    
    
    22,116
    
    
    
    0.48
    
    
    
    10,579
    
    
    
    22,190
    
    
    
    0.53
    
    
    
    11,818
    
    
    
    22,302
    
    
    
    0.53
    
    
    
    11,886Total Proven and Probable
Reserves (1)
    
    
    24,127
    
    
    
    0.48
    
    
    
    11,481
    
    
    
    23,855
    
    
    
    0.53
    
    
    
    12,606
    
    
    
    23,527
    
    
    
    0.53
    
    
    
    12,444Total Company Reserves (2)Proven Reserves
    
    
    4,786
    
    
    
    0.57
    
    
    
    2,721
    
    
    
    4,123
    
    
    
    0.59
    
    
    
    2,452
    
    
    
    3,196
    
    
    
    0.57
    
    
    
    1,837Probable Reserves
    
    
    37,656
    
    
    
    0.54
    
    
    
    20,327
    
    
    
    37,828
    
    
    
    0.57
    
    
    
    21,630
    
    
    
    38,410
    
    
    
    0.57
    
    
    
    22,024Total Proven and Probable
Reserves (1)
    
    
    42,442
    
    
    
    0.54
    
    
    
    23,048
    (3)
    
    
    41,951
    
    
    
    0.57
    
    
    
    24,082
    (3)
    
    
    41,606
    
    
    
    0.57
    
    
    
    23,861
    (3)
 
 (1)
    
    Reserves are defined as that part of a mineral deposit that could be economically and
legally extracted or produced at the time of the reserve determination. Proven ore reserves
are defined as ore reserves for which (a) quantity is computed from dimensions revealed in
outcrops, trenches, workings or drill holes; grade and/or quality are computed from the
results of detailed sampling and (b) the sites for inspection, sampling and measurement are
spaced so closely and the geologic character is so well defined that size, shape, depth and
mineral content of ore reserves are well-established. Probable ore reserves are defined as
ore reserves for which quantity and grade and/or quality are computed from information similar
to that used for proven ore reserves, but the sites for inspection, sampling, and measurement
are farther apart or are otherwise less adequately spaced. The degree of assurance, although
lower than that for proven ore reserves, is high enough to assume continuity between points of
observation. The proven and probable ore reserves reflect variations in the PGM content and
structural impacts on the J-M Reef. These variations are the result of localized depositional
and structural influences on the distributions of economic PGM mineralization. Geologic
domains within the reserve boundaries of the two mines include areas where as little as 0% and
up to 100% of the J-M Reef is economically mineable. The ore reserve estimate gives effect to
these assumptions. See Business and Properties  Risk Factors and Managements Discussion
and Analysis of Financial Condition and Results of Operations  Factors That May Affect Future
Results and Financial Condition.(2)
    
    Expressed as palladium plus platinum in-situ ounces at a ratio of approximately 3.56 parts
palladium to 1 part platinum. Stillwater Mine is at a 3.5 to 1 ratio and the East Boulder
Mine is 3.6 to 1.(3)
    
    Average mining and processing losses of approximately 12.8% must be deducted to arrive at the
estimated recoverable ounces. 11




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Discussion
    
    
    Additions to proven ore reserves from new drilling more than offset 2006 and 2005 ore
production,
    
    Deletions from probable ore reserves as areas are converted by new drilling from
probable to proven ore reserves,
    
    Additions from development activity to convert mineralized inventory to probable ore reserves,
    
    Additions and deletions from adjustments to ore reserve estimation factors and mine planning criteria.
   
  IMPAIRMENT OF LONG-LIVED ASSETS
 Accounting for
the Impairment or Disposal of Long-Lived Assets
 12




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CURRENT OPERATIONS
  Properties and Facilities  March 2006
 
  
    
    Surface access limitations (property ownership and environmental sensitivity);
    
    Topographic and climatic extremes involving rugged mountainous terrain and substantial elevation differences;
    
    Specific characteristics of the mineralized zone (narrow  average width 5 feet, depth  up to 1.5 miles of vertical
extent, and long  approximately 28 miles in length);
    
    Downward angle of mineralized zone dipping from near vertical to 38 degrees;
    
    A deposit which extends both laterally and to depth from available mine openings; and
    
    Probable ore reserves extending for a lateral distance of approximately 34,000 feet at the Stillwater Mine and
approximately 17,000 feet at the East Boulder Mine  a combined distance underground of approximately 9.7 miles.
 13




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STILLWATER MINE
      14




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##### Table of Contents



EAST BOULDER MINE
    15




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##### Table of Contents



EXPLORATION AND DEVELOPMENT ACTIVITIES
    16




---



##### Table of Contents



Location and Development Activity
    
    2006
    
    2005
    
    2004Stillwater MinePrimary Development (equivalent feet)(1)
    
    
    31,156
    
    
    
    37,806
    
    
    
    31,940Footwall Lateral (equivalent feet)(1)
    
    
    15,257
    
    
    
    19,863
    
    
    
    16,206Definition drilling (feet)
    
    
    436,920
    
    
    
    505,616
    
    
    
    471,227East Boulder MinePrimary Development (equivalent feet)(1)
    
    
    15,235
    
    
    
    18,349
    
    
    
    14,563Footwall Lateral (equivalent feet)(1)
    
    
    6,077
    
    
    
    10,605
    
    
    
    9,541Definition drilling (feet)
    
    
    226,597
    
    
    
    242,849
    
    
    
    163,551
 
 (1)
    
    Based on one linear foot of excavation, 11feet wide by 12 feet high (cross-section of
132 ft.2). ETALLURGICAL COMPLEX
 Smelter
   Base Metals Refinery
    17




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##### Table of Contents



RECYCLING ACTIVITIES
     OTHER PROPERTIES
  CREDIT AGREEMENT
   18




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##### Table of Contents



19




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##### Table of Contents



Credit FacilityScheduled RepaymentsYear ended
    
    (in thousands)2007
    
    $
    1,0192008
    
    
    1,0192009
    
    
    1,0192010
    
    
    96,305Total
    
    $
    99,362
 PGM SALES AND HEDGING ACTIVITIES
 Mine Production
    PALLADIUM
    
    PLATINUMSubject to
    
    Subject to
    
    Subject to
    
    Subject toFloor Prices
    
    Ceiling Prices
    
    Floor Prices
    
    Ceiling Prices% of Mine
    
    Avg. Floor
    
    % of Mine
    
    Avg. Ceiling
    
    % of Mine
    
    Avg. Floor
    
    % of Mine
    
    Avg. CeilingYear
    
    Production
    
    Price
    
    Production
    
    Price
    
    Production
    
    Price
    
    Production
    
    Price2007
    
    
    100
    %
    
    $
    339
    
    
    
    16
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    8502008
    
    
    83
    %
    
    $
    376
    
    
    
    20
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    8502009
    
    
    80
    %
    
    $
    380
    
    
    
    20
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    8502010
    
    
    80
    %
    
    $
    375
    
    
    
    20
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    850
 Accounting for Derivative Instruments
and Certain Hedging Activities 
 Accounting
for Derivative Instruments and Hedging Activities
 20




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##### Table of Contents



Recycling Activities
  Palladium acquired in connection with Norilsk Nickel transaction
  TITLE AND ROYALTIES
   21




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##### Table of Contents



SAFETY
   22




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##### Table of Contents



EMPLOYEES
  Number ofEmployees atSITE
    
    December 31,2006
    
    2005Stillwater Mine
    
    
    972
    
    
    
    956East Boulder Mine
    
    
    523
    
    
    
    464Smelter and Refinery Complex
    
    
    156
    
    
    
    136Columbus and Billings Administrative Support
    
    
    68
    
    
    
    61Total
    
    
    1,719
    
    
    
    1,617
  REGULATORY AND ENVIRONMENTAL MATTERS
 General
   23




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##### Table of Contents



Permitting and Reclamation
     24




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##### Table of Contents



MMC NORILSK NICKEL INVESTMENT
   COMPETITION: PALLADIUM AND PLATINUM MARKET
 GENERAL
   GLOBAL DEMAND
  Platinum 2006 Interim Review Report
  25




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##### Table of Contents



(BAR CHART)
    
    (BAR CHART)
 26




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##### Table of Contents



Charts reproduced from the Johnson Matthey Platinum 2006 Interim Review. Consent to cite
Johnson Matthey was neither sought nor obtained.
   
 Chart reproduced from the Johnson Matthey Platinum 2006 Interim Review. Consent to cite
Johnson Matthey was neither sought nor obtained.
 27




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##### Table of Contents



GLOBAL SUPPLY
  (BAR CHART)
    
    (BAR CHART)
 Charts reproduced from the Johnson Matthey Platinum 2006 Interim Review. Permission to
reproduce was neither sought nor obtained.
    28




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##### Table of Contents



PRICES
  PALLADIUM
    
    PLATINUMYEAR
    
    HIGH
    
    LOW
    
    AVERAGE
    
    HIGH
    
    LOW
    
    AVERAGE1996
    
    $
    144
    
    
    $
    114
    
    
    $
    128
    
    
    $
    432
    
    
    $
    367
    
    
    $
    3971997
    
    $
    239
    
    
    $
    118
    
    
    $
    177
    
    
    $
    497
    
    
    $
    343
    
    
    $
    3961998
    
    $
    419
    
    
    $
    201
    
    
    $
    284
    
    
    $
    429
    
    
    $
    334
    
    
    $
    3721999
    
    $
    454
    
    
    $
    285
    
    
    $
    358
    
    
    $
    457
    
    
    $
    342
    
    
    $
    3772000
    
    $
    970
    
    
    $
    433
    
    
    $
    680
    
    
    $
    622
    
    
    $
    414
    
    
    $
    5442001
    
    $
    1,090
    
    
    $
    315
    
    
    $
    604
    
    
    $
    640
    
    
    $
    415
    
    
    $
    5292002
    
    $
    435
    
    
    $
    222
    
    
    $
    338
    
    
    $
    607
    
    
    $
    453
    
    
    $
    5392003
    
    $
    269
    
    
    $
    148
    
    
    $
    201
    
    
    $
    840
    
    
    $
    603
    
    
    $
    6912004
    
    $
    333
    
    
    $
    178
    
    
    $
    230
    
    
    $
    936
    
    
    $
    767
    
    
    $
    8462005
    
    $
    295
    
    
    $
    172
    
    
    $
    201
    
    
    $
    1,012
    
    
    $
    844
    
    
    $
    8972006
    
    $
    404
    
    
    $
    261
    
    
    $
    320
    
    
    $
    1,355
    
    
    $
    982
    
    
    $
    1,1432007*
    
    $
    351
    
    
    $
    329
    
    
    $
    338
    
    
    $
    1,217
    
    
    $
    1,118
    
    
    $
    1,166
 
 *
    
    (Through February 20, 2007)
 AVAILABLE INFORMATION
 http://www.stillwatermining.com
 RISK FACTORS
  VULNERABILITY TO METALS PRICE VOLATILITYCHANGES IN SUPPLY AND DEMAND COULD REDUCE MARKET PRICES
   29




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30




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THE COMPANY DEPENDS UPON A FEW CUSTOMERS AND ITS SALES AND OPERATIONS COULD SUFFER IF IT LOSES ANY
OF THEM
     FAILURE TO RENEW LONG-TERM SALES CONTRACTS FOR OUNCES PRODUCED FROM MINE PRODUCTION COULD RESULT IN
CURTAILMENT OR CLOSURE OF OPERATIONS
  31




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THE COMPANY IS A RELATIVELY HIGH COST PRIMARY PRODUCER
    ACHIEVEMENT OF THE COMPANYS PRODUCTION GOALS IS SUBJECT TO UNCERTAINTIES
   ORE RESERVES ARE VERY DIFFICULT TO ESTIMATE AND ORE RESERVE ESTIMATES MAY REQUIRE ADJUSTMENT IN THE
FUTURE; CHANGES IN ORE GRADES, MINING PRACTICES AND ECONOMIC FACTORS COULD MATERIALLY AFFECT THE
COMPANYS PRODUCTION AND REPORTED RESULTS
   32




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##### Table of Contents



Year endedDecember 31,
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001
    
    2000
    
    1999
    
    1998
    
    1997(in percent)Stillwater Mine
    
    
    94
    
    
    
    101
    
    
    
    62
    
    
    
    52
    
    
    
    71
    
    
    
    104
    
    
    
    111
    
    
    
    66
    
    
    
    150
    
    
    
    163East Boulder Mine (1)
    
    
    91
    
    
    
    110
    
    
    
    125
    
    
    
    86
    
    
    
    91
    
    
    
    88
    
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    *
 
 (1)
    
    East Boulder Mine commenced full-time commercial production on January 1, 2002.
  AN EXTENDED PERIOD OF LOW PGM PRICES COULD RESULT IN A REDUCTION OF ORE RESERVES AND A FURTHER
ASSET IMPAIRMENT WRITEDOWN
   33




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##### Table of Contents



USERS OF PGMS MAY SUBSTITUTE OTHER MATERIALS FOR PALLADIUM AND PLATINUM
  IF THE COMPANY IS UNABLE TO OBTAIN SURETY COVERAGE TO COLLATERALIZE ITS RECLAMATION LIABILITIES,
OPERATING PERMITS MAY BE AFFECTED
  MINING RISKS AND POTENTIAL INADEQUACY OF INSURANCE COVERAGE  THE COMPANYS BUSINESS IS SUBJECT TO
SIGNIFICANT RISKS THAT MAY NOT BE COVERED BY INSURANCE
  
    
    unusual and unexpected rock formations affecting ore or wall rock characteristics,
 
    
    ground or slope failures,
 
    
    cave-ins, ground water influx and other mining or ground-related problems,
 
    
    environmental hazards,
 
    
    industrial accidents,
 
    
    organized labor disputes or work slow-downs,
 
    
    metallurgical and other processing, smelting or refining problems,
 
    
    wild fires, flooding and periodic interruptions due to inclement or hazardous weather conditions or other acts of God,
 
    
    mechanical equipment failure and facility performance problems, and
 
    
    the availability and cost of critical materials, equipment and skilled manpower.
 34




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##### Table of Contents



HEDGING AND LONG-TERM SALES CONTRACTS COULD LIMIT THE REALIZATION OF HIGHER METAL PRICES
   CHANGES TO REGULATIONS AND COMPLIANCE WITH REGULATIONS COULD INCREASE COSTS AND CAUSE DELAYS
    35




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##### Table of Contents



m m
 THE COMPANY IS SUBJECT TO COVENANTS IN ITS CREDIT AND LEASE AGREEMENTS WHICH IT MAY NOT ALWAYS BE
ABLE TO MEET
  LIMITED AVAILABILITY OF ADDITIONAL MINING PERSONNEL AND UNCERTAINTY OF LABOR RELATIONS MAY AFFECT
THE COMPANYS ABILITY TO ACHIEVE ITS PRODUCTION TARGETS
    36




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##### Table of Contents



UNCERTAINTY OF TITLE TO PROPERTIES  THE VALIDITY OF UNPATENTED MINING CLAIMS IS SUBJECT TO TITLE
RISK
  RELIANCE ON THIRD PARTIES FOR SOURCING OF RECYCLING MATERIALS
  THE COMPLEXITY OF PROCESSING PLATINUM GROUP METALS POSES OPERATIONAL AND ENVIRONMENTAL RISKS IN
ADDITION TO TYPICAL MINING RISKS
  37




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##### Table of Contents



ITEM 3
 LEGAL PROCEEDINGS
     
 ITEM 4
 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  38




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##### Table of Contents



PART II
 
 ITEM 5
 MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
 PERFORMANCE GRAPH
  
 Cumulative Total Return
 12/31/01
    
    12/31/02
    
    12/31/03
    
    12/31/04
    
    12/31/05
    
    12/31/06Stillwater Mining Company
    
    $
    100.00
    
    
    $
    28.92
    
    
    $
    51.73
    
    
    $
    60.86
    
    
    $
    62.54
    
    
    $
    67.51Peer Group
    
    
    100.00
    
    
    
    114.68
    
    
    
    158.35
    
    
    
    144.56
    
    
    
    267.81
    
    
    
    452.93Russell 2000
    
    
    100.00
    
    
    
    79.52
    
    
    
    117.09
    
    
    
    138.55
    
    
    
    144.86
    
    
    
    171.47
  39




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##### Table of Contents



ITEM 6
 SELECTED FINANCIAL DATA
 (in thousands, except per share and current ratio data)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002INCOME STATEMENT DATARevenues(1)Mine production
    
    $
    292,204
    
    
    $
    264,206
    
    
    $
    266,684
    
    
    $
    240,406
    
    
    $
    275,599PGM recycling
    
    
    269,941
    
    
    
    90,695
    
    
    
    76,388
    
    
    
    8,866
    
    
    
    15,177Sales of palladium received in Norilsk Nickel transaction
    
    
    17,637
    
    
    
    87,309
    
    
    
    85,952
    
    
    
    
    
    
    
    Other
    
    
    33,366
    
    
    
    65,252
    
    
    
    18,503
    
    
    
    6,551
    
    
    
    1,535Total revenues
    
    $
    613,148
    
    
    $
    507,462
    
    
    $
    447,527
    
    
    $
    255,823
    
    
    $
    292,311Costs and ExpensesCost of metals sold: (1)Mine production
    
    
    199,982
    
    
    
    190,171
    
    
    
    173,571
    
    
    
    173,375
    
    
    
    174,090PGM recycling
    
    
    250,444
    
    
    
    85,522
    
    
    
    71,326
    
    
    
    7,988
    
    
    
    14,122Sales of palladium received in Norilsk Nickel transaction
    
    
    10,785
    
    
    
    74,542
    
    
    
    63,774
    
    
    
    
    
    
    
    Other
    

    
 32,300
    
    
    
    65,163
    
    
    
    18,628
    
    
    
    6,728
    
    
    
    2,033Total costs of metals sold
    
    
    493,511
    
    
    
    415,398
    
    
    
    327,299
    
    
    
    188,091
    
    
    
    190,245Depreciation and amortization (1)Mine production
    
    
    83,583
    
    
    
    79,032
    
    
    
    57,321
    
    
    
    41,285
    
    
    
    36,703PGM recycling
    
    
    100
    
    
    
    55
    
    
    
    48
    
    
    
    71
    
    
    
    71Total depreciation and amortization
    
    
    83,683
    
    
    
    79,087
    
    
    
    57,369
    
    
    
    41,356
    
    
    
    36,774General and administrative (1)
    
    
    28,018
    
    
    
    20,464
    
    
    
    19,739
    
    
    
    14,700
    
    
    
    13,903Impairment of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    390,295
    
    
    
    Operating income (loss)
    
    $
    7,936
    
    
    $
    (7,356
    )
    
    $
    39,480
    
    
    $
    (380,696
    )
    
    $
    57,327Total income tax benefit (provision)
    
    $
    (10
    )
    
    $
    (13
    )
    
    $
    (3
    )
    
    $
    74,939
    
    
    $
    (8,945
    )Net income (loss)
    
    $
    7,929
    
    
    $
    (13,874
    )
    
    $
    29,838
    
    
    $
    (323,260
    )
    
    $
    31,684Other comprehensive income (loss), net of tax
    
    $
    1,799
    
    
    $
    (12,437
    )
    
    $
    (4,145
    )
    
    $
    585
    
    
    $
    (7,139
    )Comprehensive income (loss)
    
    $
    9,728
    
    
    $
    (26,311
    )
    
    $
    25,693
    
    
    $
    (322,675
    )
    
    $
    24,545Pro-forma net income (loss) assuming the new amortization method
is applied retroactively (2)
    
    $
    7,929
    
    
    $
    (13,874
    )
    
    $
    23,803
    
    
    $
    (241,729
    )
    
    $
    15,058Weighted average common shares outstandingBasic
    
    
    91,260
    
    
    
    90,702
    
    
    
    90,180
    
    
    
    67,807
    
    
    
    42,900Diluted
    
    
    91,580
    
    
    
    90,702
    
    
    
    90,540
    
    
    
    67,807
    
    
    
    43,004Basic earnings per share
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.33
    
    
    $
    (4.77
    )
    
    $
    0.74Diluted earnings per share
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.33
    
    
    $
    (4.77
    )
    
    $
    0.74Pro-forma amounts assuming the new amortization method
is applied retroactively (2)Basic earnings per share
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.26
    
    
    $
    (3.56
    )
    
    $
    0.35Diluted earnings per share
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.26
    
    
    $
    (3.56
    )
    
    $
    0.35CASH FLOW DATANet cash provided by operating activities
    
    $
    96,963
    
    
    $
    141,134
    
    
    $
    136,840
    
    
    $
    47,215
    
    
    $
    52,138Net cash provided by (used in) investing activities
    
    $
    (78,909
    )
    
    $
    (134,261
    )
    
    $
    77,801
    
    
    $
    54,156
    
    
    $
    68,837Net cash provided by (used in) financing activities
    
    $
    (9,954
    )
    
    $
    (22,665
    )
    
    $
    1,352
    
    
    $
    29,639
    
    
    $
    14,751
 
 (1)
    
    The 2005, 2004 and 2003 amounts for revenues, cost of metals sold, depreciation and
amortization, and general and administration have been reclassified to conform with current
year presentation.(2)
    
    See Note 3 to the Companys financial statements 40




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##### Table of Contents



ITEM 6
 SELECTED FINANCIAL DATA
 (Continued)
 (in thousands, except per share and current ratio data)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002BALANCE SHEET DATACash and cash equivalents
    
    $
    88,360
    
    
    $
    80,260
    
    
    $
    96,052
    
    
    $
    35,661
    
    
    $
    12,963Inventories
    
    $
    106,895
    
    
    $
    86,634
    
    
    $
    159,942
    
    
    $
    202,485
    
    
    $
    52,058Total current assets
    
    $
    284,339
    
    
    $
    268,911
    
    
    $
    303,655
    
    
    $
    265,006
    
    
    $
    112,475Property, plant and equipment
    
    $
    460,328
    
    
    $
    445,199
    
    
    $
    434,924
    
    
    $
    419,528
    
    
    $
    794,019Total assets
    
    $
    756,023
    
    
    $
    721,457
    
    
    $
    744,718
    
    
    $
    690,588
    
    
    $
    914,214Current portion of long-term debt and capital lease obligations
    
    $
    1,674
    
    
    $
    1,776
    
    
    $
    1,986
    
    
    $
    1,935
    
    
    $
    21,461Portion of debt repayable upon liquidation of finished palladium in
inventory
    
    $
    
    
    
    $
    7,324
    
    
    $
    19,076
    
    
    $
    74,106
    
    
    $
    Total current liabilities
    
    $
    85,590
    
    
    $
    69,087
    
    
    $
    67,238
    
    
    $
    110,270
    
    
    $
    65,783Long-term debt and capital lease obligations
    
    $
    129,007
    
    
    $
    132,307
    
    
    $
    143,028
    
    
    $
    85,445
    
    
    $
    198,866Total liabilities
    
    $
    243,467
    
    
    $
    227,913
    
    
    $
    231,989
    
    
    $
    211,291
    
    
    $
    355,000Stockholders equity
    
    $
    512,556
    
    
    $
    493,544
    
    
    $
    512,729
    
    
    $
    479,297
    
    
    $
    559,214Working capital
    
    $
    198,749
    
    
    $
    199,824
    
    
    $
    236,417
    
    
    $
    154,736
    
    
    $
    46,692Current ratio
    
    
    3.3
    
    
    
    3.9
    
    
    
    4.5
    
    
    
    2.4
    
    
    
    1.7
 41




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##### Table of Contents



OPERATING AND COST DATA(in thousands, except per ounce and per ton costs)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    2002Consolidated:Ounces produced:Palladium
    
    
    463
    
    
    
    428
    
    
    
    439
    
    
    
    450
    
    
    
    476Platinum
    
    
    138
    
    
    
    126
    
    
    
    130
    
    
    
    134
    
    
    
    141Total
    
    
    601
    
    
    
    554
    
    
    
    569
    
    
    
    584
    
    
    
    617Tons milled
    
    
    1,289
    
    
    
    1,206
    
    
    
    1,212
    
    
    
    1,185
    
    
    
    1,257Mill head grade (ounce per ton)
    
    
    0.51
    
    
    
    0.50
    
    
    
    0.51
    
    
    
    0.53
    
    
    
    0.54Sub-grade tons milled (1)
    
    
    62
    
    
    
    80
    
    
    
    58
    
    
    
    84
    
    
    
    74Sub-grade mill head grade (ounce per ton)
    
    
    0.13
    
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.20
    
    
    
    0.17Total tons milled (1)
    
    
    1,351
    
    
    
    1,286
    
    
    
    1,270
    
    
    
    1,269
    
    
    
    1,331Combined mill head grade (ounce per ton)
    
    
    0.49
    
    
    
    0.48
    
    
    
    0.50
    
    
    
    0.51
    
    
    
    0.52Total mill recovery (%)
    
    
    91
    
    
    
    91
    
    
    
    91
    
    
    
    91
    
    
    
    90Total operating costs per ounce (Non-GAAP)
    
    $
    240
    
    
    $
    278
    
    
    $
    254
    
    
    $
    249
    
    
    $
    256Total cash costs per ounce (Non-GAAP)(2), (3)
    
    $
    295
    
    
    $
    324
    
    
    $
    297
    
    
    $
    283
    
    
    $
    287Total production costs per ounce (Non-GAAP)(2), (3)
    
    $
    432
    
    
    $
    472
    
    
    $
    402
    
    
    $
    354
    
    
    $
    351Total operating costs per ton milled (Non-GAAP)
    
    $
    107
    
    
    $
    120
    
    
    $
    114
    
    
    $
    115
    
    
    $
    119Total cash costs per ton milled (Non-GAAP)(2), (3)
    
    $
    131
    
    
    $
    139
    
    
    $
    133
    
    
    $
    130
    
    
    $
    133Total production costs per ton milled (Non-GAAP)(2), (3)
    
    $
    192
    
    
    $
    203
    
    
    $
    180
    
    
    $
    163
    
    
    $
    163Stillwater Mine:Ounces produced:Palladium
    
    
    314
    
    
    
    293
    
    
    
    311
    
    
    
    328
    
    
    
    379Platinum
    
    
    95
    
    
    
    88
    
    
    
    94
    
    
    
    100
    
    
    
    113Total
    
    
    409
    
    
    
    381
    
    
    
    405
    
    
    
    428
    
    
    
    492Tons milled
    
    
    739
    
    
    
    710
    
    
    
    728
    
    
    
    730
    
    
    
    892Mill head grade (ounce per ton)
    
    
    0.60
    
    
    
    0.57
    
    
    
    0.59
    
    
    
    0.62
    
    
    
    0.60Sub-grade tons milled(1)
    
    
    62
    
    
    
    80
    
    
    
    58
    
    
    
    84
    
    
    
    55Sub-grade mill head grade (ounce per ton)
    
    
    0.13
    
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.20
    
    
    
    0.16Total tons milled(1)
    
    
    801
    
    
    
    790
    
    
    
    786
    
    
    
    814
    
    
    
    947Combined mill head grade (ounce per ton)
    
    
    0.56
    
    
    
    0.53
    
    
    
    0.56
    
    
    
    0.58
    
    
    
    0.58Total mill recovery (%)
    
    
    92
    
    
    
    92
    
    
    
    92
    
    
    
    91
    
    
    
    90Total operating costs per ounce (Non-GAAP)
    
    $
    228
    
    
    $
    270
    
    
    $
    238
    
    
    $
    231
    
    
    $
    235Total cash costs per ounce (Non-GAAP)(2), (3)
    
    $
    280
    
    
    $
    314
    
    
    $
    278
    
    
    $
    262
    
    
    $
    263Total production costs per ounce (Non-GAAP)(2), (3)
    
    $
    400
    
    
    $
    454
    
    
    $
    366
    
    
    $
    322
    
    
    $
    318Total operating costs per ton milled (Non-GAAP)
    
    $
    116
    
    
    $
    130
    
    
    $
    123
    
    
    $
    121
    
    
    $
    122Total cash costs per ton milled (Non-GAAP)(2), (3)
    
    $
    143
    
    
    $
    151
    
    
    $
    143
    
    
    $
    138
    
    
    $
    137Total production costs per ton milled (Non-GAAP)(2), (3)
    
    $
    205
    
    
    $
    219
    
    
    $
    189
    
    
    $
    169
    
    
    $
    165East Boulder Mine:Ounces produced:Palladium (4)
    
    
    149
    
    
    
    135
    
    
    
    128
    
    
    
    122
    
    
    
    97Platinum (4)
    
    
    43
    
    
    
    38
    
    
    
    36
    
    
    
    34
    
    
    
    28Total (4)
    
    
    192
    
    
    
    173
    
    
    
    164
    
    
    
    156
    
    
    
    125Tons milled (4)
    
    
    550
    
    
    
    496
    
    
    
    484
    
    
    
    455
    
    
    
    365Mill head grade (ounce per ton)(4)
    
    
    0.39
    
    
    
    0.40
    
    
    
    0.39
    
    
    
    0.39
    
    
    
    0.39Sub-grade tons milled (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19Sub-grade mill head grade (ounce per ton)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.20Total tons milled (1), (4)
    
    
    550
    
    
    
    496
    
    
    
    484
    
    
    
    455
    
    
    
    384Combined mill head grade (ounce per ton)(4)
    
    
    0.39
    
    
    
    0.40
    
    
    
    0.39
    
    
    
    0.39
    
    
    
    0.38Total mill recovery (%) (4)
    
    
    89
    
    
    
    89
    
    
    
    88
    
    
    
    89
    
    
    
    88Total operating costs per ounce (Non-GAAP)
    
    $
    266
    
    
    $
    297
    
    
    $
    294
    
    
    $
    299
    
    
    $
    335Total cash costs per ounce (Non-GAAP)(2), (3)
    
    $
    326
    
    
    $
    346
    
    
    $
    344
    
    
    $
    343
    
    
    $
    381Total production costs per ounce (Non-GAAP)(2), (3)
    
    $
    501
    
    
    $
    511
    
    
    $
    491
    
    
    $
    441
    
    
    $
    478Total operating costs per ton milled (Non-GAAP)
    
    $
    93
    
    
    $
    103
    
    
    $
    100
    
    
    $
    103
    
    
    $
    110Total cash costs per ton milled (Non-GAAP)(2), (3)
    
    $
    113
    
    
    $
    120
    
    
    $
    117
    
    
    $
    118
    
    
    $
    125Total production costs per ton milled (Non-GAAP)(2), (3)
    
    $
    174
    
    
    $
    178
    
    
    $
    167
    
    
    $
    151
    
    
    $
    156
 42




---



##### Table of Contents



(in thousands, where noted)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002SALES AND PRICE DATAOunces sold (000)Mine production:Palladium (oz.)
    
    
    466
    
    
    
    431
    
    
    
    432
    
    
    
    459
    
    
    
    469Platinum (oz.)
    
    
    138
    
    
    
    135
    
    
    
    125
    
    
    
    131
    
    
    
    143Total
    
    
    604
    
    
    
    566
    
    
    
    557
    
    
    
    590
    
    
    
    612Other PGM activities:(6)Palladium (oz.)
    
    
    196
    
    
    
    502
    
    
    
    418
    
    
    
    5
    
    
    
    10Platinum (oz.)
    
    
    130
    
    
    
    81
    
    
    
    77
    
    
    
    18
    
    
    
    19Rhodium (oz.)
    
    
    28
    
    
    
    38
    
    
    
    21
    
    
    
    1
    
    
    
    3Total
    
    
    354
    
    
    
    621
    
    
    
    516
    
    
    
    24
    
    
    
    32By-products from mining: (7)Rhodium (oz.)
    
    
    4
    
    
    
    3
    
    
    
    3
    
    
    
    4
    
    
    
    4Gold (oz.)
    
    
    11
    
    
    
    11
    
    
    
    9
    
    
    
    11
    
    
    
    11Silver (oz.)
    
    
    6
    
    
    
    6
    
    
    
    10
    
    
    
    6
    
    
    
    5Copper (lb.)
    
    
    892
    
    
    
    911
    
    
    
    868
    
    
    
    1,129
    
    
    
    619Nickel (lb.)
    
    
    1,585
    
    
    
    1,307
    
    
    
    1,282
    
    
    
    1,379
    
    
    
    1,231Average realized price per ounce(5)Mine production:Palladium ($/oz.)
    
    $
    370
    
    
    $
    356
    
    
    $
    376
    
    
    $
    352
    
    
    $
    436Platinum ($/oz.)
    
    $
    868
    
    
    $
    821
    
    
    $
    839
    
    
    $
    603
    
    
    $
    511Combined(5)
    
    $
    484
    
    
    $
    467
    
    
    $
    480
    
    
    $
    408
    
    
    $
    454Other PGM activities:(6)Palladium
    
    $
    306
    
    
    $
    199
    
    
    $
    231
    
    
    $
    216
    
    
    $
    348Platinum
    
    $
    1,122
    
    
    $
    876
    
    
    $
    817
    
    
    $
    666
    
    
    $
    485Rhodium
    
    $
    4,111
    
    
    $
    1,861
    
    
    $
    1,032
    
    
    $
    512
    
    
    $
    816By-products from mining:(7)Rhodium ($/oz.)
    
    $
    4,516
    
    
    $
    2,155
    
    
    $
    952
    
    
    $
    487
    
    
    $
    844Gold ($/oz.)
    
    $
    603
    
    
    $
    444
    
    
    $
    410
    
    
    $
    365
    
    
    $
    312Silver ($/oz.)
    
    $
    12
    
    
    $
    7
    
    
    $
    5
    
    
    $
    5
    
    
    $
    5Copper ($/lb.)
    
    $
    2.91
    
    
    $
    1.55
    
    
    $
    1.19
    
    
    $
    0.68
    
    
    $
    0.62Nickel ($/lb.)
    
    $
    10.04
    
    
    $
    5.96
    
    
    $
    6.30
    
    
    $
    4.10
    
    
    $
    2.96Average market price per ounce(5)Palladium
    
    $
    320
    
    
    $
    201
    
    
    $
    230
    
    
    $
    201
    
    
    $
    338Platinum
    
    $
    1,143
    
    
    $
    897
    
    
    $
    846
    
    
    $
    691
    
    
    $
    539Combined(5)
    
    $
    508
    
    
    $
    366
    
    
    $
    368
    
    
    $
    309
    
    
    $
    385
 
 (1)
    
    Sub-grade tons milled includes reef waste material only. Total tons milled includes
ore tons and sub-grade tons only. Amounts for 2002 have been adjusted to conform to
current year presentation.(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. 43




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##### Table of Contents



Reconciliation of Non-GAAP measures to costs of revenues
   Total Costs of Revenues
 Total Production Costs (Non-GAAP)
 Total Production Cost per Ton
Milled (Non-GAAP)
 Total Production Cost per Ounce (Non-GAAP)
 44




---



##### Table of Contents



Total Cash Costs (Non-GAAP)
 Total Cash Cost per Ton Milled
(Non-GAAP)
 Total Cash Cost per Ounce (Non-GAAP)
 Total Operating Costs (Non-GAAP)
 Total Operating Cost per Ton
Milled (Non-GAAP)
 Total Operating Cost per Ounce (Non-GAAP)
 45




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##### Table of Contents



(in thousands, except per ounce and per ton data)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Consolidated:Total operating costs (Non-GAAP)
    
    $
    144,144
    
    
    $
    154,139
    
    
    $
    144,589
    
    
    $
    145,452
    
    
    $
    157,649Total cash costs (Non-GAAP)
    
    $
    177,045
    
    
    $
    179,308
    
    
    $
    168,915
    
    
    $
    165,528
    
    
    $
    177,175Total production costs (Non-GAAP)
    
    $
    259,619
    
    
    $
    261,112
    
    
    $
    228,940
    
    
    $
    206,570
    
    
    $
    216,405Divided by total ounces
    
    
    601
    
    
    
    554
    
    
    
    569
    
    
    
    584
    
    
    
    617Divided by total tons milled
    
    
    1,351
    
    
    
    1,286
    
    
    
    1,270
    
    
    
    1,269
    
    
    
    1,331Total operating cost per ounce (Non-GAAP)
    
    $
    240
    
    
    $
    278
    
    
    $
    254
    
    
    $
    249
    
    
    $
    256Total cash cost per ounce (Non-GAAP)
    
    $
    295
    
    
    $
    324
    
    
    $
    297
    
    
    $
    283
    
    
    $
    287Total production cost per ounce (Non-GAAP)
    
    $
    432
    
    
    $
    472
    
    
    $
    402
    
    
    $
    354
    
    
    $
    351Total operating cost per ton milled (Non-GAAP)
    
    $
    107
    
    
    $
    120
    
    
    $
    114
    
    
    $
    115
    
    
    $
    119Total cash cost per ton milled (Non-GAAP)
    
    $
    131
    
    
    $
    139
    
    
    $
    133
    
    
    $
    130
    
    
    $
    133Total production cost per ton milled (Non-GAAP)
    
    $
    192
    
    
    $
    203
    
    
    $
    180
    
    
    $
    163
    
    
    $
    163Reconciliation to consolidated costs of revenues:Total operating costs (Non-GAAP)
    
    $
    144,144
    
    
    $
    154,139
    
    
    $
    144,589
    
    
    $
    145,452
    
    
    $
    157,649Royalties, taxes and other
    
    $
    32,901
    
    
    $
    25,169
    
    
    $
    24,326
    
    
    $
    20,076
    
    
    $
    19,526Total cash costs (Non-GAAP)
    
    $
    177,045
    
    
    $
    179,308
    
    
    $
    168,915
    
    
    $
    165,528
    
    
    $
    177,175Asset retirement costs
    
    
    650
    
    
    
    535
    
    
    
    457
    
    
    
    342
    
    
    
    508Depreciation and amortization
    
    
    83,583
    
    
    
    79,032
    
    
    
    57,321
    
    
    
    41,285
    
    
    
    36,703Depreciation and amortization (in inventory)
    
    
    (1,659
    )
    
    
    2,182
    
    
    
    2,247
    
    
    
    (585
    )
    
    
    2,019Total production costs (Non-GAAP)
    
    
    259,619
    
    
    
    261,057
    
    
    
    228,940
    
    
    
    206,570
    
    
    
    216,405Change in product inventories
    
    
    41,642
    
    
    
    141,512
    
    
    
    78,260
    
    
    
    13,844
    
    
    
    (4,636
    )Costs of recycling activities
    
    
    250,444
    
    
    
    85,522
    
    
    
    71,325
    
    
    
    7,988
    
    
    
    14,122Recycling activities  depreciation
    
    
    100
    
    
    
    55
    
    
    
    48
    
    
    
    71
    
    
    
    71Add: Profit from recycling activities
    
    
    25,389
    
    
    
    6,339
    
    
    
    6,105
    
    
    
    881
    
    
    
    984Loss or (gain) on sale of assets and other costs
    
    
    279
    
    
    
    112
    
    
    
    
    
    
    
    93
    
    
    
    73Total consolidated costs of revenues
    
    $
    577,473
    
    
    $
    494,597
    
    
    $
    384,678
    
    
    $
    229,447
    
    
    $
    227,019Stillwater Mine:Total operating costs (Non-GAAP)
    
    $
    93,230
    
    
    $
    102,931
    
    
    $
    96,381
    
    
    $
    98,722
    
    
    $
    115,561Total cash costs (Non-GAAP)
    
    $
    114,726
    
    
    $
    119,681
    
    
    $
    112,463
    
    
    $
    111,938
    
    
    $
    129,355Total production costs (Non-GAAP)
    
    $
    163,823
    
    
    $
    172,938
    
    
    $
    148,365
    
    
    $
    137,670
    
    
    $
    156,391Divided by total ounces
    
    
    409
    
    
    
    381
    
    
    
    405
    
    
    
    428
    
    
    
    492Divided by total tons milled
    
    
    801
    
    
    
    790
    
    
    
    786
    
    
    
    814
    
    
    
    947Total operating cost per ounce (Non-GAAP)
    
    $
    228
    
    
    $
    270
    
    
    $
    238
    
    
    $
    231
    
    
    $
    235Total cash cost per ounce (Non-GAAP)
    
    $
    280
    
    
    $
    314
    
    
    $
    278
    
    
    $
    262
    
    
    $
    263Total production cost per ounce (Non-GAAP)
    
    $
    400
    
    
    $
    454
    
    
    $
    366
    
    
    $
    322
    
    
    $
    318Total operating cost per ton milled (Non-GAAP)
    
    $
    116
    
    
    $
    130
    
    
    $
    123
    
    
    $
    121
    
    
    $
    122Total cash cost per ton milled (Non-GAAP)
    
    $
    143
    
    
    $
    151
    
    
    $
    143
    
    
    $
    138
    
    
    $
    137Total production cost per ton milled (Non-GAAP)
    
    $
    205
    
    
    $
    219
    
    
    $
    189
    
    
    $
    169
    
    
    $
    165
 46




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##### Table of Contents



(in thousands, per ounce and per ton data)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Stillwater Mine continued:Reconciliation to costs of revenues:Total operating costs (Non-GAAP)
    
    $
    93,230
    
    
    $
    102,931
    
    
    $
    96,381
    
    
    $
    98,722
    
    
    $
    115,561Royalties, taxes and other
    
    
    21,496
    
    
    
    16,750
    
    
    
    16,082
    
    
    
    13,216
    
    
    
    13,794Total cash costs (Non-GAAP)
    
    $
    114,726
    
    
    $
    119,681
    
    
    $
    112,463
    
    
    $
    111,938
    
    
    $
    129,355Asset retirement costs
    
    
    470
    
    
    
    370
    
    
    
    305
    
    
    
    280
    
    
    
    322Depreciation and amortization
    
    
    49,620
    
    
    
    52,295
    
    
    
    33,955
    
    
    
    26,134
    
    
    
    26,387Depreciation and amortization (in inventory)
    
    
    (993
    )
    
    
    592
    
    
    
    1,642
    
    
    
    (682
    )
    
    
    327Total production costs (Non-GAAP)
    
    $
    163,823
    
    
    $
    172,938
    
    
    $
    148,365
    
    
    $
    137,670
    
    
    $
    156,391Change in product inventories
    
    
    1,882
    
    
    
    6,773
    
    
    
    (3,764
    )
    
    
    6,156
    
    
    
    (287
    )Add: Profit from recycling activities
    
    
    17,612
    
    
    
    4,344
    
    
    
    4,274
    
    
    
    659
    
    
    
    738Loss or (gain) on sale of assets and other costs
    
    
    187
    
    
    
    81
    
    
    
    
    
    
    
    70
    
    
    
    74Total costs of revenues
    
    $
    183,504
    
    
    $
    184,136
    
    
    $
    148,875
    
    
    $
    144,555
    
    
    $
    156,916East Boulder Mine(1)Total operating costs (Non-GAAP)
    
    $
    50,914
    
    
    $
    51,208
    
    
    $
    48,208
    
    
    $
    46,730
    
    
    $
    42,088Total cash costs (Non-GAAP)
    
    $
    62,319
    
    
    $
    59,627
    
    
    $
    56,452
    
    
    $
    53,590
    
    
    $
    47,820Total production costs (Non-GAAP)
    
    $
    95,796
    
    
    $
    88,120
    
    
    $
    80,575
    
    
    $
    68,900
    
    
    $
    60,014Divided by total ounces
    
    
    192
    
    
    
    173
    
    
    
    164
    
    
    
    156
    
    
    
    125Divided by total tons milled
    
    
    550
    
    
    
    496
    
    
    
    484
    
    
    
    455
    
    
    
    384Total operating cost per ounce (Non-GAAP)
    
    $
    266
    
    
    $
    297
    
    
    $
    294
    
    
    $
    299
    
    
    $
    335Total cash cost per ounce (Non-GAAP)
    
    $
    326
    
    
    $
    346
    
    
    $
    344
    
    
    $
    343
    
    
    $
    381Total production cost per ounce (Non-GAAP)
    
    $
    501
    
    
    $
    511
    
    
    $
    491
    
    
    $
    441
    
    
    $
    478Total operating cost per ton milled (Non-GAAP)
    
    $
    93
    
    
    $
    103
    
    
    $
    100
    
    
    $
    103
    
    
    $
    110Total cash cost per ton milled (Non-GAAP)
    
    $
    113
    
    
    $
    120
    
    
    $
    117
    
    
    $
    118
    
    
    $
    125Total production cost per ton milled (Non-GAAP)
    
    $
    174
    
    
    $
    178
    
    
    $
    167
    
    
    $
    151
    
    
    $
    156Reconciliation to costs of revenues:Total operating costs (Non-GAAP)
    
    $
    50,914
    
    
    $
    51,208
    
    
    $
    48,208
    
    
    $
    46,730
    
    
    $
    42,088Royalties, taxes and other
    
    
    11,405
    
    
    
    8,419
    
    
    
    8,244
    
    
    
    6,860
    
    
    
    5,732Total cash costs (Non-GAAP)
    
    $
    62,319
    
    
    $
    59,627
    
    
    $
    56,452
    
    
    $
    53,590
    
    
    $
    47,820Asset retirement costs
    
    
    180
    
    
    
    165
    
    
    
    152
    
    
    
    62
    
    
    
    186Depreciation and amortization
    
    
    33,963
    
    
    
    26,737
    
    
    
    23,366
    
    
    
    15,151
    
    
    
    10,315Depreciation and amortization (in inventory)
    
    
    (666
    )
    
    
    1,591
    
    
    
    605
    
    
    
    97
    
    
    
    1,693Total production costs (Non-GAAP)
    
    $
    95,796
    
    
    $
    88,120
    
    
    $
    80,575
    
    
    $
    68,900
    
    
    $
    60,014Change in product inventories
    
    
    (439
    )
    
    
    (4,967
    )
    
    
    (379
    )
    
    
    960
    
    
    
    (6,382
    )Add: Profit from recycling activities
    
    
    7,777
    
    
    
    1,995
    
    
    
    1,831
    
    
    
    222
    
    
    
    246Loss or (gain) on sale of assets and other costs
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    (1
    )Total costs of revenues
    
    $
    103,174
    
    
    $
    85,148
    
    
    $
    82,027
    
    
    $
    70,105
    
    
    $
    53,877Other PGM activities(2)Reconciliation to costs of revenues:Change in product inventories
    
    $
    40,199
    
    
    $
    139,705
    
    
    $
    82,402
    
    
    $
    6,728
    
    
    $
    Recycling activities  depreciation
    
    
    100
    
    
    
    55
    
    
    
    48
    
    
    
    71
    
    
    
    71Costs of recycling activities
    
    
    250,444
    
    
    
    85,522
    
    
    
    71,325
    
    
    
    7,988
    
    
    
    14,122Loss or (gain) on sale of assets and other costs
    
    
    52
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    Total costs of revenues
    
    $
    290,795
    
    
    $
    225,313
    
    
    $
    153,775
    
    
    $
    14,787
    
    
    $
    14,193
 
 (1)
    
    The East Boulder Mine commenced commercial production activities at the beginning of 2002.(2)
    
    Other PGM activities include recycling and sales of palladium received in the Norilsk Nickel
transaction and other. 47




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##### Table of Contents



ITEM 7
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
  2006 Performance
    48




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As disclosed in the Companys 2005 Annual Report on Form 10-K, in reviewing and testing the
Companys internal controls over financial reporting at year-end 2005, the Company identified
several internal control deficiencies that in the judgment of management individually or in the aggregate comprised material weaknesses. As a
result, additional audit procedures were performed before the issuance of the Companys 2005
audited financial statements to ensure that they fairly presented, in all material respects, the
financial position of the Company at December 31, 2005. The Company further addressed these
control deficiencies during the first half of 2006 and following additional testing reported that
all material weaknesses in internal controls over financial reporting had been remedied. The
Company has continued to monitor its internal controls during 2006, and the Company has performed
required testing of internal controls over financial reporting as of December 31, 2006. Management
believes that the Companys internal controls over financial reporting are, in all material
respects, fully effective as of December 31, 2006.Strategic Initiatives- The Companys management is continuing to address several structural issues
that bear on its future performance. The structural issues being addressed include:First, despite above-market floor prices in the Companys contracts with the auto companies and
despite the Companys costs per ounce of PGM production being competitive with other primary PGM
producers in the industry, the Companys high grade reserve is palladium rich with a ratio of 3.6
ounces of palladium to one ounce platinum as compared with the platinum-rich ratio of its South
African peers. Consequently, the Companys operations, as currently configured, are marginally
competitive when palladium prices are low.Second, capital spending to extend the developed state of both mines and to expand smelting
capacity was increased starting in 2005 and will continue to remain high through 2008. This has
affected the Companys cash generation capacity and liquidity. As a result, although liquidity
improved modestly in 2006, liquidity is expected to remain constant or decline modestly in 2007.Third, the Companys operating profile has been essentially that of one-product, one-operation
which would benefit from diversification and growth in light of the historical volatility of the
PGM markets. Extended periods of low PGM prices, particularly once the floor prices in the
Companys auto contracts expire, could put both the Company and its shareholders investment at
risk. While the Company continues to view itself as a primary PGM producer, attractive
opportunities to further diversify within PGMs are scarce. Growth in the recycling of spent PGM
catalytic material has begun the process of an operational diversification while complementing the
Companys PGM base. Gold, silver, nickel and copper are produced as by-products of the Companys
operations. Management thinks it is prudent and beneficial to stockholders to diversify the
current operational structure.In response to these structural issues, the Company is implementing a number of key strategic
initiatives intended to secure a sustainable future for the Company and its stockholders:
transforming the mines, marketing palladium and diversifying and growing operations and the
Company. Each initiative is intended to support sustainable development surrounding the Companys
business and is discussed in more detail in the following paragraphs. Each initiative is underway
although full implementation will take several years. Those involving external markets are beyond
managements direct control for which a projection of specific results and timing is not possible.
    
    Transforming Mining Operations  Stillwater Mining Company has identified a series of
comprehensive operating changes designed to increase efficiency, reduce unit costs of
production, and increase total PGM ounces produced, all in an effort to address the Companys
sustainability beyond 2010 when the Company no longer has the benefit of the PGM pricing
floors included in the current contracts with the auto companies. These changes are grouped
into five overlapping stages:
      Safety Since 2001, the Company has implemented a multi-faceted program of continual improvement
in safety for employees throughout the Company. The Companys G.E.T. (Guide, Educate and Train)
Safe safety and health management systems focus on accident prevention, seeking opportunities for
safer mining methods and increased employee awareness and training. Specific areas of emphasis
include enhanced work place examinations, joint union/management safety committees, critical task
analysis, loss control representatives drawn from the mining workforce, implementation of
measurable safety standards and intra-operational safety audits. Employee led focus teams have
been successful in solving many safety related challenges.
 49




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##### Table of Contents



Developed state 
     Selective Mining 
   50




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##### Table of Contents



These adjustments to the Companys mining methods will initially result in a modest reduction in
total ore tons produced and an expected increase in realized grade that more than offsets the
tonnage reduction. With less equipment and development required, over time capital expenditure
requirements will be reduced, along with maintenance and support costs. Ultimately the net result
will be to increase ounces produced at a reduced cost per ounce.Production Increases The Company plans over time to increase mine production to design capacity
thereby increasing total PGM production and reducing unit cash costs. Design capacity at the
Stillwater Mine is approximately 2,750 ore tons per day, and at the East Boulder Mine, 2,000 ore
tons per day, which would represent an increase of about 34% over average 2006 production levels.
At design capacity production would be in excess of 800,000 ounces per year.Average daily production at the Stillwater Mine in 2006 was 2,026 tons, compared to 1,944 tons per
day in 2005. The Company intends to gradually increase production at the Stillwater Mine toward
full capacity. Although the concentrator at the Stillwater Mine is designed for 3,000 tons per
day, after allowing for reprocessing of slag from the smelter, net ore capacity is approximately
2,750 tons per day.Average daily production at the East Boulder Mine in 2006 was 1,506 tons per day, up from 1,359
tons per day during 2005. Full permitted capacity at the East Boulder concentrator is
approximately 2,000 tons per day.Expanding Smelter Capacity With the continuing growth in the Companys metallurgical processing
volumes, both from increased mine production and from added recycling volumes, surplus furnace
capacity at the smelter is becoming more restricted. The furnace is lined with refractory brick
that must be replaced periodically, requiring an extended four- to five-week shutdown of the
smelter facility. In the past, the Company has simply stockpiled concentrates during the furnace
shutdowns and has utilized the surplus capacity in the furnace to process the stockpiled material
incrementally once the furnace came back online. With the much higher level of furnace utilization
currently required, in the future there will not be enough surplus capacity to process the
accumulated stockpiles.In response to this concern, the Company has determined to invest approximately $35 million over
the next two years in upgrading the metallurgical facilities, including the addition of a second
smelting furnace. The second furnace will eliminate this stage of processing as a bottleneck,
provide backup in the event of a catastrophic furnace outage, and potentially allow one of the
furnaces to be used for slag cleaning, increasing total recovery of PGMs in the circuits.
    
    Marketing Palladium  Significant market support for platinum has existed for many years,
while corresponding support for palladium has been limited. The Company hopes that palladium
will emerge as a primary jewelry metal based mainly on its favorable price relative to gold
and platinum. The Company closely followed this development championing and chronicling it
for the industry. Moreover, the Company has undertaken a leadership role in promoting market
development for palladium.Palladium used for jewelry Last year in its Annual Report, the Company chronicled the potential
of palladium jewelry as a substitute for white gold in the Chinese jewelry markets, increasing from
almost nothing in 2003 to over 1.0 million ounces in 2005, but declined slightly in 2006. In
support of this developing market, the Company began sponsoring regular jewelry industry technical
articles for the U.S. market on working with palladium in making jewelry.The Company also has worked with various jewelry manufacturers outside of China, assisting in their
development of palladium jewelry lines for U.S. and European markets. Palladium wedding jewelry
and accessories, including a bridal line, are now widely available in the U.S. Palladium chains
are now being produced in Italy for distribution worldwide. Palladiums lower price and lower
comparative weight relative to white gold, combined with its high purity and attractive bright
white appearance, appear to be driving this emerging popularity.In early 2006, Stillwater Mining Company formed the Palladium Alliance International (PAI), a
not-for-profit industry marketing organization. PAI promotes the use of palladium in the jewelry
market worldwide. The Company has discussed the concept of the PAI with industry participants and
invited their participation. The PAI was first introduced at the JA jewelry show in New York City
in early 2006. It was formally launched at the JCK show in Las Vegas in June of 2006 and in
Shanghai and Beijing later in the year. These efforts have generated interest from the jewelry
industry.
 51




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##### Table of Contents



Palladium used for diesel engines- Two years ago, in response to the development of catalytic
converters for diesel engines using only platinum, the Company recognized and reported that the
higher temperature stability of palladium could make it a useful adjunct to the use of platinum in
reducing diesel particulate matter (i.e., soot) emitted by diesel engines. Since then, this
technology has been developed and implemented. With the migration from clean gasoline engines
using palladium-rich catalytic converters to clean diesel engines  which now enjoy almost a 50%
market share of new cars produced in Europe and have potential for much broader use in other
regions of the world  platinum has tended to predominate for these vehicles. However, partial substitution of palladium for platinum in
diesel catalytic converters has been increasing over the past several years, largely driven by the
relative economics. The mandatory introduction of ultra-low sulfur diesel in the United States
during 2006 has also facilitated increased use of palladium in controlling diesel emissions.Palladium used for hydrogen energy- The Company has also turned its attention to potential
applications for palladium in fuel cells and a future hydrogen economy. Significant research
programs already exist with government and private funding in these areas, so the Company does not
see any need for a role in funding direct palladium research at this time. However, the Company
has encouraged the allocation of government research funds to this area, and has tracked published
papers regarding research findings on topics of potential interest. The Company also has
informally encouraged consideration of palladium as an alternative in applications that would
appear to hold promise, particularly with regard to fuel cell technology.
    
    Diversification  While Stillwater Mining Company regards itself as principally a palladium
and platinum company, it has not limited its consideration of future growth opportunities to
PGMs, given the scarcity of PGM resources.In 2003 the Company entered into a long-term sourcing agreement for spent auto catalytic materials
utilizing its smelter and base metal refinery to recycle these materials reclaiming them for reuse.
Materials processed grew respectably in 2004 and 2005, but during 2006 the Company sharply
increased the material processed to 349,000 ounces or up 68% over the volumes processed in 2005.
Recognizing the sustaining impact this has for both the Companys business and the environment, the
Company plans to continue to expand this activity. Additional materials are being sourced in the
market. A second smelting furnace is being constructed to provide both capacity and reliability of
operation. Thus, growth in the recycling of spent PGM catalytic material has begun the process of
an operational diversification while complementing the Companys PGM base.The Company also produces gold, silver, nickel and copper as by-products from its existing
operations, each of which would be geologically and operationally compatible with its existing
capabilities and expertise.Because mines, by their very nature, have a finite life, either through exhaustion of their
minerals or exhaustion of their economics, mining companies often seek to reduce single mine risk
by developing a portfolio of mines and reserve holdings. In view of the scarcity of economically
attractive PGM projects, the Company believes that it should consider other metals and perhaps
diversify its business.During the fourth quarter of 2006, the Company invested $1.9 million to secure approximately an 11%
interest in Pacific North West Capital Corp., a Canadian exploration company that centers its
efforts on identifying and defining potential PGM reserve targets. Management believes that
gaining access to Pacific North West Capitals seasoned exploration staff will result in a more
effective exploration program than could be achieved using an internal exploration effort at this
time.The Company will report further on this diversification initiative as appropriate.Key Issues Facing the Company Several issues need to be addressed in conjunction with the
Companys ongoing strategic efforts. These are outlined briefly below:Contracts Beginning in 2005, the major U.S. bond rating agencies have successively downgraded the
corporate ratings of General Motors Corporation and Ford Motor Company, two of the Companys major
customers. Under applicable law, in the event one or both of these companies should become
insolvent or file for protection under the bankruptcy statutes, their respective obligations under
the PGM supply agreements could be voided. In addition, under the terms of the Companys credit
facility, a default by Ford or General Motors or the early termination of these contracts could
prohibit additional loans and trigger a requirement for the immediate repayment of the Companys
outstanding loans. The deterioration of the credit of these two customers places additional
emphasis on the Companys need to reduce its mining costs, so as to reduce its dependency on the
above-market pricing in the automotive contracts.In late 2003, the Company entered into an agreement with a major U.S. collector of spent
catalyst material to purchase substantial volumes for processing. This agreement has since been
modified and extended to facilitate expansion of these activities. The commercial terms of this
agreement are confidential, but either party is able to terminate the relationship at its
discretion upon providing ninety days notice. Under the agreement, the Company advances cash for
purchase and collection of these spent catalyst materials. These advances are reflected as
advances on inventory purchases on the balance sheet until such time as the material has been
received and title has transferred to the Company. The Company also has spot purchase and tolling
arrangements with other suppliers of spent catalytic materials.
 52




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##### Table of Contents



Miners 
 Labor Contract 
 PGM Prices 
 Platinum Hedges 
 CAPITALIZED MINE DEVELOPMENT
   53




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##### Table of Contents




    
    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 development costs of footwall laterals and ramps, including similar development costs
incurred before 2004, are to be amortized over the ore reserves in the immediate and
geologically relevant vicinity of the development.
   REVENUES
     54




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##### Table of Contents



Year ended December 31,
    
    Palladium
    
    
    Platinum
    
    
    Rhodium
    
    
    Other
    
    
    Total
    
    
    Ounces of
    
    
    Ounces of
    
    
    Ounces of
    
    
    Total(in thousands)
    
    Revenue
    
    
    Revenue
    
    
    Revenue
    
    
    Revenue
    
    
    Revenue
    
    
    Palladium
    
    
    Platinum
    
    
    Rhodium
    
    
    Ounces2006Mine production
    
    $
    172,171
    
    
    $
    120,033
    
    
    $
    
    
    
    $
    
    
    
    $
    292,204
    
    
    
    466
    
    
    
    138
    
    
    
    
    
    
    
    604PGM recycling
    
    
    31,987
    
    
    
    143,259
    
    
    
    93,206
    
    
    
    1,489
    
    
    
    269,941
    
    
    
    100
    
    
    
    128
    
    
    
    22
    
    
    
    250Sales of palladium
received in Norilsk Nickel
transaction
    
    
    17,637
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,637
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    63Other
    
    
    10,538
    
    
    
    2,530
    
    
    
    20,298
    
    
    
    
    
    
    
    33,366
    
    
    
    33
    
    
    
    2
    
    
    
    6
    
    
    
    41Total
    
    $
    232,333
    
    
    $
    265,822
    
    
    $
    113,504
    
    
    $
    1,489
    
    
    $
    613,148
    
    
    
    662
    
    
    
    268
    
    
    
    28
    
    
    
    9582005Mine production
    
    $
    153,668
    
    
    $
    110,538
    
    
    $
    
    
    
    $
    
    
    
    $
    264,206
    
    
    
    431
    
    
    
    135
    
    
    
    
    
    
    
    566PGM recycling
    
    
    8,970
    
    
    
    59,692
    
    
    
    20,672
    
    
    
    1,361
    
    
    
    90,695
    
    
    
    46
    
    
    
    68
    
    
    
    12
    
    
    
    126Sales of palladium
received in Norilsk Nickel
transaction
    
    
    87,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87,309
    
    
    
    438
    
    
    
    
    
    
    
    
    
    
    
    438Other
    
    
    3,616
    
    
    
    11,515
    
    
    
    50,121
    
    
    
    
    
    
    
    65,252
    
    
    
    18
    
    
    
    13
    
    
    
    26
    
    
    
    57Total
    
    $
    253,563
    
    
    $
    181,745
    
    
    $
    70,793
    
    
    $
    1,361
    
    
    $
    507,462
    
    
    
    933
    
    
    
    216
    
    
    
    38
    
    
    
    1,1872004Mine production
    
    $
    162,209
    
    
    $
    104,475
    
    
    $
    
    
    
    $
    
    
    
    $
    266,684
    
    
    
    432
    
    
    
    125
    
    
    
    
    
    
    
    557PGM recycling
    
    
    9,548
    
    
    
    56,512
    
    
    
    10,033
    
    
    
    295
    
    
    
    76,388
    
    
    
    42
    
    
    
    69
    
    
    
    11
    
    
    
    122Sales of palladium
received in Norilsk Nickel
transaction
    
    
    85,952
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,952
    
    
    
    376
    
    
    
    
    
    
    
    
    
    
    
    376Other
    
    
    
    
    
    
    6,133
    
    
    
    12,370
    
    
    
    
    
    
    
    18,503
    
    
    
    
    
    
    
    4
    
    
    
    9
    
    
    
    13Total
    
    $
    257,709
    
    
    $
    167,120
    
    
    $
    22,403
    
    
    $
    295
    
    
    $
    447,527
    
    
    
    850
    
    
    
    198
    
    
    
    20
    
    
    
    1,068
 RESULTS OF OPERATIONS
 YEAR ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER 31, 2005
 Revenues
     55




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##### Table of Contents



Cost of Metals Sold 
      Depreciation and amortization
 Exploration 
 Marketing
 General and administrative
 56




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##### Table of Contents



Interest income and expense
 Total income tax provision
 Other comprehensive income (loss), net of tax
 YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004
 Revenues
      Cost of Metals Sold
 57




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##### Table of Contents



Depreciation and amortization
 General and administrative 
 Loss on disposal of property, plant and equipment
 Interest income and expense
 58




---



##### Table of Contents



Total income tax provision
 Other comprehensive income (loss), net of tax
 LIQUIDITY AND CAPITAL RESOURCES
         59




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##### Table of Contents



CREDIT AGREEMENT
         60




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##### Table of Contents



Credit FacilityScheduled RepaymentsYear ended
    
    (in thousands)2007
    
    $
    1,0192008
    
    
    1,0192009
    
    
    1,0192010
    
    
    96,305Total
    
    $
    99,362
 CONTRACTUAL OBLIGATIONS
  (in thousands)
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalTerm loan facility
    
    $
    1,019
    
    
    $
    1,019
    
    
    $
    1,019
    
    
    $
    96,305
    
    
    $
    
    
    
    $
    
    
    
    $
    99,362Capital lease obligations
    
    
    477
    
    
    
    460
    
    
    
    522
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,459Special Industrial Education Impact Revenue Bonds
    
    
    178
    
    
    
    190
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    465Exempt Facility Revenue Bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    30,000Operating leases
    
    
    298
    
    
    
    268
    
    
    
    233
    
    
    
    233
    
    
    
    233
    
    
    
    697
    
    
    
    1,962Asset retirement obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,479
    
    
    
    69,479Payments of interest
    
    
    10,824
    
    
    
    10,720
    
    
    
    10,290
    
    
    
    6,696
    
    
    
    2,400
    
    
    
    20,400
    
    
    
    61,330Other noncurrent liabilities
    
    
    
    
    
    
    14,386
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,386Total
    
    $
    12,796
    
    
    $
    27,043
    
    
    $
    12,161
    
    
    $
    103,234
    
    
    $
    2,633
    
    
    $
    120,576
    
    
    $
    278,443
  61




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##### Table of Contents



FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION
  CRITICAL ACCOUNTING POLICIES
 Mine Development Expenditures  Capitalization and Amortization
       62




---



##### Table of Contents




    
    Unamortized costs of the shaft at the Stillwater Mine and the initial development at the
East Boulder Mine will continue to be treated as life-of-mine infrastructure costs, to be
amortized over total proven and probable reserves at each location, and
    
    All ongoing development costs of footwall laterals and ramps, including similar
development costs incurred before 2004, will be amortized over the ore reserves in the
immediate and geologically relevant vicinity of the development.
   Asset Impairment
 Accounting for
the Impairment or Disposal of Long-Lived Assets
  63




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##### Table of Contents



Income Taxes
 Accounting for Income Taxes
  Post-closure Reclamation Costs
 Accounting for
Asset Retirement Obligations
   Derivative Instruments
 Accounting for Derivative Instruments and Hedging Activities
 64




---



##### Table of Contents



ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  COMMODITY PRICE RISK
     65




---



##### Table of Contents



Mine Production:Financially Settled Forwards
 PlatinumOunces
    
    
    Avg. Price
    
    
    IndexFirst Quarter 2007
    
    
    26,500
    
    
    $
    915
    
    
    Monthly London PM AverageSecond Quarter 2007
    
    
    28,000
    
    
    $
    1,000
    
    
    Monthly London PM AverageThird Quarter 2007
    
    
    23,500
    
    
    $
    987
    
    
    Monthly London PM AverageFourth Quarter 2007
    
    
    20,500
    
    
    $
    1,000
    
    
    Monthly London PM AverageFirst Quarter 2008
    
    
    9,000
    
    
    $
    1,104
    
    
    Monthly London PM AverageSecond Quarter 2008
    
    
    6,000
    
    
    $
    1,054
    
    
    Monthly London PM Average
 PGM Recycling:Fixed Forwards
 Platinum
    
    Palladium
    
    RhodiumOunces
    
    Avg. Price
    
    Ounces
    
    Avg. Price
    
    Ounces
    
    Avg. PriceFirst Quarter 2007
    
    
    18,725
    
    
    $
    1,147
    
    
    
    9,622
    
    
    $
    327
    
    
    
    4,682
    
    
    $
    4,931
  INTEREST RATE RISK
  66




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##### Table of Contents



ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Report of Independent Registered Public Accounting Firm
 
 three-year
   Share-Based Payment,
  Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO),
  
 67




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
      Share-Based Payment
   
 68




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##### Table of Contents



STILLWATER MINING COMPANY
 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (in thousands, except per share data)
 Year ended December 31,
    
    2006
    
    
    2005
    
    
    2004REVENUESMine
production
    
    $
    292,204
    
    
    $
    264,206
    
    
    $
    266,684PGM recycling
    
    
    269,941
    
    
    
    90,695
    
    
    
    76,388Sales of palladium received in Norilsk Nickel transaction
    
    
    17,637
    
    
    
    87,309
    
    
    
    85,952Other
    
    
    33,366
    
    
    
    65,252
    
    
    
    18,503Total revenues
    
    
    613,148
    
    
    
    507,462
    
    
    
    447,527COSTS AND EXPENSESCost of metals sold:Mine production
    
    
    199,982
    
    
    
    190,171
    
    
    
    173,571PGM recycling
    
    
    250,444
    
    
    
    85,522
    
    
    
    71,326Sales of palladium received in Norilsk Nickel transaction
    
    
    10,785
    
    
    
    74,542
    
    
    
    63,774Other
    
    
    32,300
    
    
    
    65,163
    
    
    
    18,628Total costs of metals sold
    
    
    493,511
    
    
    
    415,398
    
    
    
    327,299Depreciation and amortization:Mine production
    
    
    83,583
    
    
    
    79,032
    
    
    
    57,321PGM recycling
    
    
    100
    
    
    
    55
    
    
    
    48Total depreciation and amortization
    
    
    83,683
    
    
    
    79,087
    
    
    
    57,369Total costs of revenues
    
    
    577,194
    
    
    
    494,485
    
    
    
    384,668Exploration
    
    
    332
    
    
    
    
    
    
    
    Marketing
    
    
    4,186
    
    
    
    592
    
    
    
    548General and administrative
    
    
    23,221
    
    
    
    19,872
    
    
    
    19,191Loss on disposal of property, plant and equipment
    
    
    279
    
    
    
    112
    
    
    
    3,640Restructuring credits, net
    
    
    
    
    
    
    (243
    )
    
    
    Total costs and expenses
    
    
    605,212
    
    
    
    514,818
    
    
    
    408,047OPERATING INCOME (LOSS)
    
    
    7,936
    
    
    
    (7,356
    )
    
    
    39,480OTHER INCOME (EXPENSE)Other
    
    
    94
    
    
    
    11
    
    
    
    (2
    )Interest income
    
    
    11,322
    
    
    
    5,217
    
    
    
    2,220Interest expense
    
    
    (11,413
    )
    
    
    (11,733
    )
    
    
    (17,892
    )INCOME (LOSS) BEFORE INCOME TAX PROVISION
    
    
    7,939
    
    
    
    (13,861
    )
    
    
    23,806Income tax provision
    
    
    (10
    )
    
    
    (13
    )
    
    
    (3
    )INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE
    
    
    7,929
    
    
    
    (13,874
    )
    
    
    23,803CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF INCOME TAX
BENEFIT
    
    
    
    
    
    
    
    
    
    
    6,035NET INCOME (LOSS)
    
    
    7,929
    
    
    
    (13,874
    )
    
    
    29,838Other comprehensive income (loss), net of tax
    
    
    1,799
    
    
    
    (12,437
    )
    
    
    (4,145
    )COMPREHENSIVE INCOME (LOSS)
    
    $
    9,728
    
    
    $
    (26,311
    )
    
    $
    25,693Pro-forma amounts assuming the new amortization method is applied retroactively (see Note 3):NET INCOME
    
    
    
    
    
    
    
    
    
    $
    23,803
  69




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##### Table of Contents



STILLWATER MINING COMPANY
 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (in thousands, except per share data)
 (Continued)
 Year ended December 31,
    
    2006
    
    
    2005
    
    
    2004BASIC AND DILUTED EARNINGS (LOSS) PER SHAREIncome (loss) before cumulative effect of accounting change
    
    $
    7,929
    
    
    $
    (13,874
    )
    
    $
    23,803Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    6,035Net income (loss)
    
    $
    7,929
    
    
    $
    (13,874
    )
    
    $
    29,838Weighted average common shares outstandingBasic
    
    
    91,260
    
    
    
    90,702
    
    
    
    90,180Diluted
    
    
    91,580
    
    
    
    90,702
    
    
    
    90,540Basic earnings (loss) per shareIncome (loss) before cumulative effect of accounting change
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.26Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    0.07Net income (loss)
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.33Diluted earnings (loss) per shareIncome (loss) before cumulative effect of accounting change
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.26Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    0.07Net income (loss)
    
    $
    0.09
    
    
    $
    (0.15
    )
    
    $
    0.33Pro-forma amounts assuming the new amortization method is applied retroactively (see Note 3):Basic earnings per shareNet income
    
    
    
    
    
    
    
    
    
    $
    0.26Diluted earnings per shareNet income
    
    
    
    
    
    
    
    
    
    $
    0.26
  70




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##### Table of Contents



STILLWATER MINING COMPANY
 BALANCE SHEETS
 (in thousands, except share and per share amounts)
 December 31,
    
    2006
    
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    88,360
    
    
    $
    80,260Restricted cash
    
    
    3,785
    
    
    
    2,685Investments, at fair market value
    
    
    35,497
    
    
    
    55,668Inventories
    
    
    106,895
    
    
    
    86,634Advances on inventory purchases
    
    
    24,191
    
    
    
    6,950Accounts receivable
    
    
    16,008
    
    
    
    27,287Deferred income taxes
    
    
    5,063
    
    
    
    5,313Other current assets
    
    
    4,540
    
    
    
    4,114Total current assets
    
    
    284,339
    
    
    
    268,911Property, plant and equipment, net
    
    
    460,328
    
    
    
    445,199Long-term investment
    
    
    1,869
    
    
    
    Other noncurrent assets
    
    
    9,487
    
    
    
    7,347Total assets
    
    $
    756,023
    
    
    $
    721,457LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    24,833
    
    
    $
    14,407Accrued payroll and benefits
    
    
    20,348
    
    
    
    17,801Property, production and franchise taxes payable
    
    
    11,123
    
    
    
    9,542Current portion of long-term debt and capital lease obligations
    
    
    1,674
    
    
    
    1,776Portion of debt repayable upon liquidation of finished palladium in inventory
    
    
    
    
    
    
    7,324Fair value of derivative instruments
    
    
    15,145
    
    
    
    13,284Unearned
income
    
    
    5,479
    
    
    
    69Other current liabilities
    
    
    6,988
    
    
    
    4,884Total current liabilities
    
    
    85,590
    
    
    
    69,087Long-term debt and capital lease obligations
    
    
    129,007
    
    
    
    132,307Fair value of derivative instruments
    
    
    715
    
    
    
    4,318Deferred income taxes
    
    
    5,063
    
    
    
    5,313Accrued workers compensation
    
    
    10,254
    
    
    
    5,854Asset retirement obligation
    
    
    8,550
    
    
    
    7,328Other noncurrent liabilities
    
    
    4,288
    
    
    
    3,706Total liabilities
    
    $
    243,467
    
    
    $
    227,913Stockholders equityPreferred stock, $0.01 par value, 1,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 200,000,000 shares authorized, 91,514,668and
90,992,045 shares issued and outstanding
    
    
    915
    
    
    
    910Paid-in capital
    
    
    617,107
    
    
    
    607,828Accumulated deficit
    
    
    (89,863
    )
    
    
    (97,792
    )Accumulated other comprehensive loss
    
    
    (15,603
    )
    
    
    (17,402
    )Total stockholders equity
    
    
    512,556
    
    
    
    493,544Total liabilities and stockholders equity
    
    $
    756,023
    
    
    $
    721,457
  71




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##### Table of Contents



STILLWATER MINING COMPANY
 STATEMENTS OF CASH FLOWS
 (in thousands)
 Year ended December 31,
    
    2006
    
    
    2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    7,929
    
    
    $
    (13,874
    )
    
    $
    29,838Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    83,683
    
    
    
    79,087
    
    
    
    57,369Lower of cost or market inventory adjustment
    
    
    2,519
    
    
    
    2,466
    
    
    
    Loss on disposal of property, plant and equipment
    
    
    279
    
    
    
    112
    
    
    
    3,640Cumulative effect of change in accounting method
    
    
    
    
    
    
    
    
    
    
    (6,035
    )Restructuring credits, net
    
    
    
    
    
    
    (243
    )
    
    
    Cash paid on accrued restructuring costs
    
    
    
    
    
    
    (334
    )
    
    
    (103
    )Stock issued under employee benefit plans
    
    
    4,910
    
    
    
    4,715
    
    
    
    3,934Amortization of debt issuance costs
    
    
    783
    
    
    
    624
    
    
    
    4,857Share based compensation
    
    
    3,549
    
    
    
    2,371
    
    
    
    1,071Changes in operating assets and liabilities:Inventories
    
    
    (24,440
    )
    
    
    73,024
    
    
    
    50,825Advances on inventory purchases
    
    
    (17,241
    )
    
    
    (6,950
    )
    
    
    Accounts receivable
    
    
    11,279
    
    
    
    (2,151
    )
    
    
    (14,409
    )Employee compensation and benefits
    
    
    2,547
    
    
    
    4,406
    
    
    
    2,740Accounts payable
    
    
    10,426
    
    
    
    (622
    )
    
    
    5,248Property, production and franchise taxes payable
    
    
    1,581
    
    
    
    359
    
    
    
    679Workers compensation
    
    
    4,400
    
    
    
    793
    
    
    
    1,260Asset retirement obligation
    
    
    650
    
    
    
    536
    
    
    
    456Restricted cash
    
    
    (1,100
    )
    
    
    (35
    )
    
    
    Unearned
income
    
    
    5,410
    
    
    
    (595
    )
    
    
    (335
    )Other
    
    
    (201
    )
    
    
    (2,555
    )
    
    
    (4,195
    )NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    96,963
    
    
    
    141,134
    
    
    
    136,840CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (97,802
    )
    
    
    (92,074
    )
    
    
    (76,739
    )Purchase of long-term investment
    
    
    (1,869
    )
    
    
    
    
    
    
    Proceeds from disposal of property, plant and equipment
    
    
    615
    
    
    
    129
    
    
    
    238Purchases of investments
    
    
    (106,287
    )
    
    
    (98,419
    )
    
    
    (40,650
    )Proceeds from sales and maturities of investments
    
    
    126,434
    
    
    
    56,103
    
    
    
    39,350NET CASH USED IN INVESTING ACTIVITIES
    
    
    (78,909
    )
    
    
    (134,261
    )
    
    
    (77,801
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt
    
    
    
    
    
    
    
    
    
    
    140,000Payments on long-term debt and capital lease obligations
    
    
    (10,726
    )
    
    
    (22,683
    )
    
    
    (137,544
    )Issuance of common stock, net of stock issue costs
    
    
    825
    
    
    
    40
    
    
    
    2,734Payments for debt issuance costs
    
    
    (579
    )
    
    
    (22
    )
    
    
    (3,838
    )Other
    
    
    526
    
    
    
    
    
    
    
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    (9,954
    )
    
    
    (22,665
    )
    
    
    1,352CASH AND CASH EQUIVALENTSNet increase (decrease)
    
    
    8,100
    
    
    
    (15,792
    )
    
    
    60,391Balance at beginning of year
    
    
    80,260
    
    
    
    96,052
    
    
    
    35,661BALANCE AT END OF YEAR
    
    $
    88,360
    
    
    $
    80,260
    
    
    $
    96,052
  72




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##### Table of Contents



STILLWATER MINING COMPANY
 STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (in thousands)
 Retained Earnings
    
    
    Accumulated OtherShares
    
    
    Common
    
    
    
    
    
    
    (Accumulated
    
    
    Comprehensive Income
    
    
    Total StockholdersOutstanding
    
    
    Stock
    
    

Paid-in Capital
    
    
    Deficit)
    
    
    (Loss)
    
    
    EquityBALANCE AT DECEMBER 31, 2003
    
    
    89,849
    
    
    $
    899
    
    
    $
    592,974
    
    
    $
    (113,756
    )
    
    $
    (820
    )
    
    $
    479,297Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,838
    
    
    
    
    
    
    
    29,838Change in net unrealized gains on derivativefinancial instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,145
    )
    
    
    (4,145
    )Common stock issued under employee benefit
plans
    
    
    300
    
    
    
    3
    
    
    
    3,931
    
    
    
    
    
    
    
    
    
    
    
    3,934Common stock issued under stock plans
    
    
    278
    
    
    
    2
    
    
    
    2,732
    
    
    
    
    
    
    
    
    
    
    
    2,734Nonvested shares of common stock granted toofficers and employees
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned nonvested stock
    
    
    
    
    
    
    
    
    
    
    1,071
    
    
    
    
    
    
    
    
    
    
    
    1,071BALANCE AT DECEMBER 31, 2004
    
    
    90,434
    
    
    $
    904
    
    
    $
    600,708
    
    
    $
    (83,918
    )
    
    $
    (4,965
    )
    
    $
    512,729Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,874
    )
    
    
    
    
    
    
    (13,874
    )Change in net unrealized gains on derivativefinancial instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,639
    )
    
    
    (12,639
    )Change in fair market value of securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    202
    
    
    
    202Common stock issued under employee benefit
plans
    
    
    532
    
    
    
    6
    
    
    
    4,709
    
    
    
    
    
    
    
    
    
    
    
    4,715Stock option expense
    
    
    
    
    
    
    
    
    
    
    404
    
    
    
    
    
    
    
    
    
    
    
    404Common stock issued under stock plans
    
    
    
    
    
    
    11
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    40Common stock issued under Directors
deferral plan
    
    
    12
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    33Nonvested shares of common stock granted to
officers and employees
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned nonvested stock
    
    
    
    
    
    
    
    
    
    
    1,934
    
    
    
    
    
    
    
    
    
    
    
    1,934BALANCE AT DECEMBER 31, 2005
    
    
    90,992
    
    
    $
    910
    
    
    $
    607,828
    
    
    $
    (97,792
    )
    
    $
    (17,402
    )
    
    $
    493,544Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,929
    
    
    
    
    
    
    
    7,929Change in net unrealized gains on derivativefinancial instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,824
    
    
    
    1,824Change in fair market value of securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    (25
    )Common stock issued under employee benefit
plans
    
    
    409
    
    
    
    4
    
    
    
    4,906
    
    
    
    
    
    
    
    
    
    
    
    4,910Stock option expense
    
    
    
    
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    
    
    
    
    276Common stock issued under stock plans
    
    
    101
    
    
    
    1
    
    
    
    824
    
    
    
    
    
    
    
    
    
    
    
    825Common stock issued under Directors
deferral plan
    
    
    4
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    43Nonvested shares of common stock granted to
officers and employees
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned nonvested stock
    
    
    
    
    
    
    
    
    
    
    3,250
    
    
    
    
    
    
    
    
    
    
    
    3,250Forfeiture of nonvested stock
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    (20
    )BALANCE AT DECEMBER 31, 2006
    
    
    91,515
    
    
    $
    915
    
    
    $
    617,107
    
    
    $
    (89,863
    )
    
    $
    (15,603
    )
    
    $
    512,556
  73




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##### Table of Contents



STILLWATER MINING COMPANY
 NOTES TO THE FINANCIAL STATEMENTS
 NOTE 1
NATURE OF OPERATIONS
    NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 CASH AND CASH EQUIVALENTS
  RESTRICTED CASH
  INVESTMENTS
 Accounting for Certain Investments in Debt and Equity Securities
 The Equity Method
of Accounting for Investments in Common Stock.
 74




---



##### Table of Contents



INVENTORIES
  RECEIVABLES
  PROPERTY, PLANT AND EQUIPMENT
      75




---



##### Table of Contents



LEASES
 Accounting for Leases.
 ASSET IMPAIRMENT
 Accounting for the Impairment or Disposal of Long-Lived
Assets.
  FAIR VALUE OF FINANCIAL INSTRUMENTS
   Fair Value Measurements
 REVENUE RECOGNITION
  76




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##### Table of Contents



Revenue Recognition
 HEDGING PROGRAM
 Accounting for Derivative Instruments and Hedging Activities Accounting for
Derivative Instruments and Certain Hedging Activities, Amendment of Statement 133
on Derivative Instruments and Hedging Activities,
  METALS REPURCHASE TRANSACTIONS
 Accounting for Product Financing Arrangements,
 RECLAMATION AND ENVIRONMENTAL COSTS
 Accounting for
Asset Retirement Obligations .
  77




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##### Table of Contents



INCOME TAXES
 Accounting for Income Taxes
  Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 STOCK-BASED COMPENSATION
 Share Based Payment
 Accounting for Stock-Based Compensation.
 78




---



##### Table of Contents



(in thousands)
    
    2004Net income, as reported
    
    $
    29,838Add stock-based employee compensation expense included in reported net income, net of tax
    
    
    1,071Deduct total stock-based employee compensation expense determined under fair-value based
method for all rewards, net of tax
    
    
    (1,787
    )Pro forma net income
    
    $
    29,122Earnings per share, as reported:Basic
    
    $
    0.33Diluted
    
    $
    0.33Pro forma earnings per share:Basic
    
    $
    0.32Diluted
    
    $
    0.32
 EARNINGS (LOSS) PER SHARE
    COMPREHENSIVE INCOME
  DEBT ISSUANCE COSTS
  STOCK ISSUANCE COSTS
  79




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##### Table of Contents



USE OF ESTIMATES
  NOTE 3
CHANGE IN AMORTIZATION METHOD FOR MINE DEVELOPMENT ASSETS
   
    
    Unamortized costs of the shaft at the Stillwater Mine and the initial development at the
East Boulder Mine will continue to be treated as life-of-mine infrastructure costs, to be
amortized over total proven and probable reserves at each location, and
    
    All ongoing development costs of footwall laterals and ramps, including similar
development costs incurred before 2004, will be amortized over the ore reserves in the
immediate and geologically relevant vicinity of the development.
  NOTE 4
INVESTMENTS
  80




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##### Table of Contents



Gross
    
    
    Grossunrealized
    
    
    unrealized
    
    
    Fair(in thousands)
    
    Cost
    
    
    gains
    
    
    losses
    
    
    market value2006Federal agency notes
    
    $
    25,464
    
    
    $
    111
    
    
    $
    
    
    
    $
    25,575Commercial paper
    
    
    9,856
    
    
    
    66
    
    
    
    
    
    
    
    9,922Total
    
    $
    35,320
    
    
    $
    177
    
    
    $
    
    
    
    $
    35,4972005Federal agency notes
    
    $
    37,719
    
    
    $
    89
    
    
    $
    
    
    
    $
    37,808Commercial paper
    
    
    17,747
    
    
    
    113
    
    
    
    
    
    
    
    17,860Total
    
    $
    55,466
    
    
    $
    202
    
    
    $
    
    
    
    $
    55,668
  NOTE 5
INVENTORIES
     (in thousands)
    
    2006
    
    
    2005Metals inventory
Raw ore
    
    $
    596
    
    
    $
    2,206Concentrate and in-process
    
    
    37,086
    
    
    
    24,661Finished goods
    
    
    53,081
    
    
    
    35,945Palladium inventory from Norilsk Nickel transaction
    
    
    
    
    
    
    10,69490,763
    
    
    
    73,506Materials and supplies
    
    
    16,132
    
    
    
    13,128$
    106,895
    
    
    $
    86,634
 81




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##### Table of Contents



NOTE 6
PROPERTY, PLANT AND EQUIPMENT
  (in thousands)
    
    2006
    
    
    2005Machinery and equipment
    
    $
    61,206
    
    
    $
    51,987Leased equipment
    
    
    2,614
    
    
    
    2,666Buildings and structural components
    
    
    143,859
    
    
    
    142,438Mine development
    
    
    373,929
    
    
    
    300,407Land
    
    
    7,721
    
    
    
    7,721Construction-in-progress:Stillwater Mine
    
    
    47,428
    
    
    
    47,488East Boulder Mine
    
    
    40,658
    
    
    
    33,334Other construction-in-progress
    
    
    2,433
    
    
    
    554679,848
    
    
    
    586,595Less accumulated depreciation and amortization
    
    
    (219,520
    )
    
    
    (141,396
    )$
    460,328
    
    
    $
    445,199
  (in thousands)
    
    2006
    
    
    2005
    
    
    2004Stillwater Mine
    
    $
    53,650
    
    
    $
    53,059
    
    
    $
    47,052East Boulder Mine
    
    
    41,173
    
    
    
    38,041
    
    
    
    25,095Other
    
    
    2,979
    
    
    
    1,005
    
    
    
    4,712Total capital expenditures
    
    
    97,802
    
    
    
    92,105
    
    
    
    76,859Acquired by capital lease transactions
    
    
    
    
    
    
    (31
    )
    
    
    (120
    )Total cash paid for capital expenditures
    
    $
    97,802
    
    
    $
    92,074
    
    
    $
    76,739
 82




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##### Table of Contents



NOTE 7
 DEBT AND CAPITAL LEASE OBLIGATIONS
 CREDIT AGREEMENT
         83




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##### Table of Contents



Credit FacilityScheduled RepaymentsYear ended
    
    (in thousands)2007
    
    $
    1,0192008
    
    
    1,0192009
    
    
    1,0192010
    
    
    96,305Total
    
    $
    99,362
 EQUIPMENT LEASE AGREEMENTS
  Year ended December 31, (in thousands)2007
    
    $
    5692008
    
    
    5192009
    
    
    535Total minimum lease payments
    
    
    1,623Less amount representing interest
    
    
    164Present value of net minimum lease payments
    
    
    1,459Less current portion
    
    
    477Total long-term capital lease obligation
    
    $
    982
 84




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##### Table of Contents



EXEMPT FACILITY REVENUE BONDS
  SPECIAL INDUSTRIAL EDUCATION IMPACT REVENUE BONDS
  CASH PAID FOR INTEREST
  NOTE 8
 RESTRUCTURING COSTS
   (in thousands)Balance at December 31, 2003
    
    $
    680Cash paid
    
    
    (103
    )Balance at December 31, 2004
    
    $
    577Cash paid
    
    
    (334
    )Accrual adjustments
    
    
    (243
    )Balance at December 31, 2005
    
    $
    
 85




---



##### Table of Contents



NOTE 9
ASSET RETIREMENT OBLIGATION
  Stillwater
    
    
    East Boulder(in thousands)
    
    Mine
    
    
    Mine
    
    
    TotalBalance at January 1, 2004
    
    $
    3,373
    
    
    $
    743
    
    
    $
    4,116Liabilities incurred
    
    
    1,987
    
    
    
    
    
    
    
    1,987Accretion expense
    
    
    305
    
    
    
    151
    
    
    
    456Revision of estimated cash flows
    
    
    (689
    )
    
    
    922
    
    
    
    233Balance at December 31, 2004
    
    $
    4,976
    
    
    $
    1,816
    
    
    $
    6,792Liabilities incurred
    
    
    
    
    
    
    
    
    
    
    Accretion expense
    
    
    370
    
    
    
    166
    
    
    
    536Revision of estimated cash flows
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2005
    
    $
    5,346
    
    
    $
    1,982
    
    
    $
    7,328Liabilities incurred
    
    $
    
    
    
    $
    1,453
    
    
    $
    1,453Accretion expense
    
    
    470
    
    
    
    180
    
    
    
    650Revision of estimated cash flows
    
    
    
    
    
    
    (881
    )
    
    
    (881
    )Balance at December 31, 2006
    
    $
    5,816
    
    
    $
    2,734
    
    
    $
    8,550
    NOTE 10
 COMPREHENSIVE INCOME
   86




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##### Table of Contents



AccumulatedAvailable for
    
    
    
    
    
    
    
    
    
    
    OtherSale
    
    
    Commodity
    
    
    Interest Rate
    
    
    Comprehensive(in thousands)
    
    Securities
    
    
    Instruments
    
    
    Swaps
    
    
    LossBalance at December 31, 2003
    
    $
    
    
    
    $
    (910
    )
    
    $
    (443
    )
    
    $
    (1,353
    )Reclassification to earnings
    
    
    
    
    
    
    844
    
    
    
    443
    
    
    
    1,287Change in value
    
    
    
    
    
    
    (4,899
    )
    
    
    
    
    
    
    (4,899
    )Comprehensive income (loss)
    
    $
    
    
    
    $
    (4,055
    )
    
    $
    443
    
    
    $
    (3,612
    )Balance at December 31, 2004
    
    $
    
    
    
    $
    (4,965
    )
    
    $
    
    
    
    $
    (4,965
    )Reclassification to earnings
    
    
    
    
    
    
    8,021
    
    
    
    
    
    
    
    8,021Change in value
    
    
    202
    
    
    
    (20,660
    )
    
    
    
    
    
    
    (20,458
    )Comprehensive income (loss)
    
    $
    202
    
    
    $
    (12,639
    )
    
    $
    
    
    
    $
    (12,437
    )Balance at December 31, 2005
    
    $
    202
    
    
    $
    (17,604
    )
    
    $
    
    
    
    $
    (17,402
    )Reclassification to earnings
    
    
    
    
    
    
    31,055
    
    
    
    
    
    
    
    31,055Change in value
    
    
    (25
    )
    
    
    (29,231
    )
    
    
    
    
    
    
    (29,256
    )Comprehensive income (loss)
    
    $
    (25
    )
    
    $
    1,824
    
    
    $
    
    
    
    $
    1,799Balance at December 31, 2006
    
    $
    177
    
    
    $
    (15,780
    )
    
    $
    
    
    
    $
    (15,603
    )
 NOTE 11
 EMPLOYEE BENEFIT PLANS
  NOTE 12
 COMMON STOCK PLANS
 STOCK PLANS
   87




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##### Table of Contents



Non-management
    
    
    
    
    
    Nonvested
    
    
    MarketDirectors
    
    Vested
    
    
    Shares
    
    
    Value
    
    
    Compensation ExpenseGrant Date
    
    Date
    
    
    Granted
    
    
    Grant Date
    
    
    2006
    
    
    2005
    
    
    2004April 29, 2004
    
    October 29, 2004
    
    
    6,816
    
    
    $
    80,020
    
    
    $
    
    
    
    $
    
    
    
    $
    80,020May 3, 2005
    
    November 2, 2005
    
    
    10,904
    
    
    $
    80,035
    
    
    
    
    
    
    
    80,035
    
    
    
    April 27, 2006
    
    October 26, 2006
    
    
    9,752
    
    
    $
    160,030
    
    
    
    160,030
    (1)
    
    
    
    
    
    
    $
    160,030
    
    
    $
    80,035
    
    
    $
    80,020
 Certain members
    
    
    
    
    
    Nonvested
    
    
    Marketof Management
    
    
    
    
    
    Shares
    
    
    Value
    
    
    Compensation ExpenseGrant Date
    
    Vesting Date
    
    
    Granted
    
    
    Grant Date
    
    
    2006
    
    
    2005
    
    
    2004May 7, 2004
    
    May 7, 2007
    
    
    348,170
    
    
    $
    4,460,058
    
    
    $
    1,486,686
    
    
    $
    1,486,686
    
    
    $
    991,124May 3, 2005
    
    May 3, 2008
    
    
    225,346
    
    
    $
    1,654,040
    
    
    
    551,347
    
    
    
    367,564
    
    
    
    April 27, 2006
    
    April 27, 2009
    
    
    288,331
    
    
    $
    4,731,512
    
    
    
    1,051,447
    
    
    
    
    
    
    
    3,089,480
    
    
    
    1,854,250
    
    
    
    991,124Total compensation expense of nonvested shares
    
    
    
    
    
    $
    3,249,510
    
    
    $
    1,934,285
    
    
    $
    1,071,144
 
 (1)
    
    A total of 1,219 nonvested shares that were granted on April 27, 2006 to
non-management directors were forfeited in 2006 due to the resignation of one member from the
Companys board of directors. Compensation expense of $20,004 was reversed in 2006 due to
this resignation . Omnibus Opinion  1967 Accounting for Deferred
Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested
 Omnibus Opinion 1967 Accounting for
Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested
 88




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##### Table of Contents



Year ended December 31,
    
    2006
    
    2005
    
    2004Weighted average expected lives (years)
    
    
    3.8
    
    
    
    3.7
    
    
    
    3.7Interest rate
    
    
    4.8
    %
    
    
    4.4
    %
    
    
    2.8
    %Volatility
    
    
    58
    %
    
    
    56
    %
    
    
    64
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
  Weighted-AverageWeighted Average
    
    
    Grant-Date FairShares
    
    
    Exercise Price
    
    
    ValueOptions outstanding at December 31, 2003
    
    
    2,354,123
    
    
    $
    20.47Options exercisable at December 31, 2003
    
    
    2,038,076
    
    
    
    
    
    
    
    2004 ActivityOptions granted
    
    
    90,575
    
    
    
    13.98
    
    
    $
    6.80Options exercised
    
    
    (277,620
    )
    
    
    9.95
    
    
    
    Options canceled/forfeited
    
    
    (434,277
    )
    
    
    24.08
    
    
    
    Options outstanding at December 31, 2004
    
    
    1,732,801
    
    
    $
    20.92
    
    
    
    Options exercisable at December 31, 2004
    
    
    1,521,8672005 ActivityOptions granted
    
    
    70,125
    
    
    
    9.75
    
    
    $
    4.59Options exercised
    
    
    (11,429
    )
    
    
    3.65
    
    
    
    Options canceled/forfeited
    
    
    (273,500
    )
    
    
    22.75
    
    
    
    Options outstanding at December 31, 2005
    
    
    1,517,997
    
    
    $
    20.20
    
    
    
    Options exercisable at December 31, 2005
    
    
    1,361,5822006 ActivityOptions granted
    
    
    87,250
    
    
    
    12.26
    
    
    $
    5.86Options exercised
    
    
    (100,850
    )
    
    
    8.32
    
    
    
    Options canceled/forfeited
    
    
    (153,986
    )
    
    
    25.05
    
    
    
    Options outstanding at December 31, 2006
    
    
    1,350,411
    
    
    $
    20.02
    
    
    
    Options exercisable at December 31, 2006
    
    
    1,210,644
    
    
    
    20.97
  89




---



##### Table of Contents



Options Outstanding
    
    
    Options ExercisableAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange of
    
    Number
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageExercise Price
    
    Outstanding
    
    
    Contract Life
    
    
    Exercise Price
    
    
    Exercisable
    
    
    Exercise Price$  2.30    $  4.66
    
    
    17,096
    
    
    
    5.4
    
    
    $
    2.90
    
    
    
    17,096
    
    
    $
    2.90$  4.67    $  9.33
    
    
    148,259
    
    
    
    7.1
    
    
    $
    7.06
    
    
    
    118,486
    
    
    $
    6.77$  9.34    $13.99
    
    
    128,275
    
    
    
    6.9
    
    
    $
    12.04
    
    
    
    52,093
    
    
    $
    12.47$14.00    $18.65
    
    
    321,342
    
    
    
    3.0
    
    
    $
    15.73
    
    
    
    287,530
    
    
    $
    15.79$18.66    $23.31
    
    
    291,589
    
    
    
    4.8
    
    
    $
    19.35
    
    
    
    291,589
    
    
    $
    19.35$23.32    $27.98
    
    
    181,775
    
    
    
    2.4
    
    
    $
    26.50
    
    
    
    181,775
    
    
    $
    26.50$27.99    $32.64
    
    
    95,875
    
    
    
    3.1
    
    
    $
    30.49
    
    
    
    95,875
    
    
    $
    30.49$32.65    $37.30
    
    
    110,200
    
    
    
    4.0
    
    
    $
    34.65
    
    
    
    110,200
    
    
    $
    34.65$37.31    $41.96
    
    
    56,000
    
    
    
    3.7
    
    
    $
    38.30
    
    
    
    56,000
    
    
    $
    38.301,350,411
    
    
    
    4.3
    
    
    $
    20.02
    
    
    
    1,210,644
    
    
    $
    20.97
  Weighted-AverageGrant-Date FairNonvested Options
    
    Options
    
    ValueNonvested options at January 1, 2006
    
    
    156,415
    
    
    $
    9.93Options granted
    
    
    87,250
    
    
    
    12.26Options vested
    
    
    (84,338
    )
    
    
    10.15Options forfeited
    
    
    (19,560
    )
    
    
    5.71Nonvested options at December 31, 2006
    
    
    139,767
    
    
    $
    11.85
  NOTE 13
 INCOME TAXES
  December 31, (in thousands)
    
    2006
    
    
    2005Mine development costs
    
    $
    78,861
    
    
    $
    68,184Inventory
    
    
    837
    
    
    
    832Total deferred tax liabilities
    
    
    79,698
    
    
    
    69,016Noncurrent liabilities
    
    
    (7,847
    )
    
    
    (5,446
    )Property and equipment
    
    
    (19,977
    )
    
    
    (19,323
    )Current liabilities
    
    
    (5,901
    )
    
    
    (6,146
    )Inventory
    
    
    
    
    
    
    Net operating loss and other carryforwards
    
    
    (110,602
    )
    
    
    (105,776
    )Total deferred tax assets
    
    
    (144,327
    )
    
    
    (136,691
    )Valuation allowance
    
    
    64,629
    
    
    
    67,675Net deferred tax assets
    
    
    (79,698
    )
    
    
    (69,016
    )Net deferred tax liabilities
    
    $
    
    
    
    $
    
 90




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##### Table of Contents



Year ended December 31, (in thousands)
    
    2006
    
    
    2005
    
    
    2004Income (loss) before income taxes and cumulative
effect of accounting change
    
    $
    7,939
    
    
    $
    (13,861
    )
    
    $
    23,806Income tax (benefit) or expense at statutory rate of 35%
    
    $
    2,779
    
    
    $
    (4,851
    )
    
    $
    8,332State income tax benefit, net of federal benefit
    
    
    348
    
    
    
    (608
    )
    
    
    1,044Adjustments to prior years tax provisions
    
    
    (10
    )
    
    
    (4
    )
    
    
    (92
    )Change in valuation allowance
    
    
    (3,046
    )
    
    
    5,348
    
    
    
    (7,977
    )Other
    
    
    (61
    )
    
    
    128
    
    
    
    (1,304
    )Net income tax provision
    
    $
    10
    
    
    $
    13
    
    
    $
    3
   NOTE 14
 CAPITAL TRANSACTIONS
  NOTE 15
 SALES CONTRACTS
 Mine Production
   91




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PALLADIUM
    
    
    PLATINUMSubject to
    
    
    Subject to
    
    
    Subject to
    
    
    Subject toFloor Prices
    
    
    Ceiling Prices
    
    
    Floor Prices
    
    
    Ceiling Prices% of Mine
    
    Avg. Floor
    
    
    % of Mine
    
    Avg. Ceiling
    
    
    % of Mine
    
    Avg. Floor
    
    
    % of Mine
    
    Avg. CeilingYear
    
    
    Production
    
    Price
    
    
    Production
    
    Price
    
    
    Production
    
    Price
    
    
    Production
    
    Price2007
    
    
    
    100
    %
    
    $
    339
    
    
    
    
    16
    %
    
    $
    975
    
    
    
    
    70
    %
    
    $
    425
    
    
    
    
    14
    %
    
    $
    8502008
    
    
    
    83
    %
    
    $
    376
    
    
    
    
    20
    %
    
    $
    975
    
    
    
    
    70
    %
    
    $
    425
    
    
    
    
    14
    %
    
    $
    8502009
    
    
    
    80
    %
    
    $
    380
    
    
    
    
    20
    %
    
    $
    975
    
    
    
    
    70
    %
    
    $
    425
    
    
    
    
    14
    %
    
    $
    8502010
    
    
    
    80
    %
    
    $
    375
    
    
    
    
    20
    %
    
    $
    975
    
    
    
    
    70
    %
    
    $
    425
    
    
    
    
    14
    %
    
    $
    850
   PGM Recycling
  Palladium acquired in connection with Norilsk Nickel transaction and other activities
  92




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NOTE 16
DERIVATIVE INSTRUMENTS
 Commodity Derivatives
     Mine Production:
 Financially Settled Forwards
 PlatinumOunces
    
    Avg. Price
    
    IndexFirst Quarter 2007
    
    
    26,500
    
    
    $
    915
    
    
    Monthly London PM AverageSecond Quarter 2007
    
    
    28,000
    
    
    $
    1,000
    
    
    Monthly London PM AverageThird Quarter 2007
    
    
    23,500
    
    
    $
    987
    
    
    Monthly London PM AverageFourth Quarter 2007
    
    
    20,500
    
    
    $
    1,000
    
    
    Monthly London PM AverageFirst Quarter 2008
    
    
    9,000
    
    
    $
    1,104
    
    
    Monthly London PM AverageSecond Quarter 2008
    
    
    6,000
    
    
    $
    1,054
    
    
    Monthly London PM Average
 PGM Recycling:
 Fixed Forwards
 Platinum
    
    Palladium
    
    RhodiumOunces
    
    Avg. Price
    
    Ounces
    
    Avg. Price
    
    Ounces
    
    Avg. PriceFirst Quarter 2007
    
    
    18,725
    
    
    $
    1,147
    
    
    
    9,622
    
    
    $
    327
    
    
    
    4,682
    
    
    $
    4,931
 93




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##### Table of Contents



Interest Rate Derivatives
  (See Note 7).
 NOTE 17
RELATED PARTIES
  NOTE 18
SEGMENT INFORMATION
     94




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##### Table of Contents



(in thousands)
    
    Mine
    
    PGM
    
    AllYear ended December 31, 2006
    
    Production
    
    Recycling
    
    Other
    
    TotalRevenues
    
    $
    292,204
    
    
    $
    269,941
    
    
    $
    51,003
    
    
    $
    613,148Depreciation and amortization
    
    $
    83,583
    
    
    $
    100
    
    
    $
    
    
    
    $
    83,683Interest income
    
    $
    
    
    
    $
    5,992
    
    
    $
    5,330
    
    
    $
    11,322Interest expense
    
    $
    
    
    
    $
    
    
    
    $
    11,413
    
    
    $
    11,413Income (loss) before income taxes
    
    $
    8,411
    
    
    $
    25,334
    
    
    $
    (25,806
    )
    
    $
    7,939Capital expenditures
    
    $
    97,284
    
    
    $
    209
    
    
    $
    309
    
    
    $
    97,802Total assets
    
    $
    512,128
    
    
    $
    71,587
    
    
    $
    172,308
    
    
    $
    756,023
 (in thousands)
    
    Mine
    
    PGM
    
    AllYear ended December 31, 2005
    
    Production
    
    Recycling
    
    Other
    
    TotalRevenues
    
    $
    264,206
    
    
    $
    90,695
    
    
    $
    152,561
    
    
    $
    507,462Depreciation and amortization
    
    $
    79,032
    
    
    $
    55
    
    
    $
    
    
    
    $
    79,087Interest income
    
    $
    
    
    
    $
    1,221
    
    
    $
    3,996
    
    
    $
    5,217Interest expense
    
    $
    
    
    
    $
    
    
    
    $
    11,733
    
    
    $
    11,733Income (loss) before income taxes
    
    $
    (5,109
    )
    
    $
    6,339
    
    
    $
    (15,091
    )
    
    $
    (13,861
    )Capital expenditures
    
    $
    92,076
    
    
    $
    29
    
    
    $
    
    
    
    $
    92,105Total assets
    
    $
    488,508
    
    
    $
    27,446
    
    
    $
    205,503
    
    
    $
    721,457
 (in thousands)
    
    Mine
    
    PGM
    
    AllYear ended December 31, 2004
    
    Production
    
    Recycling
    
    Other
    
    TotalRevenues
    
    $
    266,684
    
    
    $
    76,388
    
    
    $
    104,455
    
    
    $
    447,527Depreciation and amortization
    
    $
    57,321
    
    
    $
    48
    
    
    $
    
    
    
    $
    57,369Interest income
    
    $
    
    
    
    $
    1,082
    
    
    $
    1,138
    
    
    $
    2,220Interest expense
    
    $
    
    
    
    $
    
    
    
    $
    17,892
    
    
    $
    17,892Income (loss) before income taxes and
cumulative effect of accounting change
    
    $
    32,152
    
    
    $
    6,096
    
    
    $
    (14,442
    )
    
    $
    23,806Capital expenditures
    
    $
    75,962
    
    
    $
    272
    
    
    $
    505
    
    
    $
    76,739Total assets
    
    $
    479,014
    
    
    $
    18,638
    
    
    $
    247,066
    
    
    $
    744,718
 NOTE 19
COMMITMENTS AND CONTINGENCIES
  REFINING AGREEMENTS
  PURCHASE COMMITMENT
  OPERATING LEASES
  95




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Minimum LeaseYear ended (in thousands)
    
    Payment2007
    
    $
    2982008
    
    
    2682009
    
    
    2332010
    
    
    2332011
    
    
    233Thereafter
    
    
    697Total
    
    $
    1,962
 SIGNIFICANT CUSTOMERS
  2006
    
    2005
    
    2004Customer A
    
    
    36
    %
    
    
    38
    %
    
    
    43
    %Customer B
    
    
    18
    %
    
    
    20
    %
    
    
    15
    %Customer C
    
    
    *
    
    
    
    20
    %
    
    
    15
    %Customer D
    
    
    11
    %
    
    
    *
    
    
    
    *65
    %
    
    
    78
    %
    
    
    73
    %
 
 *
    
    Represents less than 10% of total revenues LABOR UNION CONTRACTS
  LEGAL PROCEEDINGS
  REGULATIONS AND COMPLIANCE
 m m
 96




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##### Table of Contents



NOTE 20
QUARTERLY DATA (UNAUDITED)
  2006 Quarter Ended(in thousands, except per share data)
    
    March 31
    
    June 30
    
    September 30
    
    December 31Revenue
    
    $
    139,959
    
    
    $
    116,826
    
    
    $
    180,817
    
    
    $
    175,546Depreciation and amortization
    
    $
    19,935
    
    
    $
    21,376
    
    
    $
    20,003
    
    
    $
    22,369Operating income (loss)
    
    $
    1,428
    
    
    $
    (2,671
    )
    
    $
    6,171
    
    
    $
    3,008Net income (loss)
    
    $
    597
    
    
    $
    (2,337
    )
    
    $
    6,862
    
    
    $
    2,807Comprehensive income (loss)
    
    $
    (15,953
    )
    
    $
    (15,379
    )
    
    $
    28,316
    
    
    $
    12,744Basic earnings per share (loss)
    
    $
    0.01
    
    
    $
    (0.03
    )
    
    $
    0.08
    
    
    $
    0.03Diluted earnings per share (loss)
    
    $
    0.01
    
    
    $
    (0.03
    )
    
    $
    0.07
    
    
    $
    0.03
 2005 Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 31Revenue
    
    $
    128,377
    
    
    $
    125,410
    
    
    $
    119,713
    
    
    $
    133,962Depreciation and amortization
    
    $
    17,469
    
    
    $
    21,835
    
    
    $
    20,253
    
    
    $
    19,530Operating income (loss)
    
    $
    580
    
    
    $
    1,083
    
    
    $
    (7,231
    )
    
    $
    (1,788
    )Net income (loss)
    
    $
    (1,208
    )
    
    $
    (615
    )
    
    $
    (9,114
    )
    
    $
    (2,937
    )Comprehensive income (loss)
    
    $
    (950
    )
    
    $
    (2,833
    )
    
    $
    (18,294
    )
    
    $
    (4,234
    )Basic earnings per share (loss)
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.10
    )
    
    $
    (0.03
    )Diluted earnings per share (loss)
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.10
    )
    
    $
    (0.03
    )
 97




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ITEM 9
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 Not Applicable
 ITEM 9A
CONTROLS AND PROCEDURES
 (a)
    
    Disclosure Controls and Procedures.The Companys management, with the participation of the Companys Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the Exchange Act)), as of the end of the period covered by this report.
Based on such evaluation, the Companys Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, the Companys disclosure controls and procedures are
effective in recording, processing, summarizing and reporting, on a timely basis, information
required to be disclosed by the Company in the reports that it files or submits under the Exchange
Act.(b)
    
    Changes in Internal Controls.There have not been any significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of the review and evaluation. There
were no material weaknesses identified in the review and evaluation, and therefore no corrective
actions were taken.(c)
    
    Internal Control Over Financial Reporting.Section 404 of the Sarbanes-Oxley Act of 2002 requires that management document and test the
Companys internal control over financial reporting and include in this Annual Report on Form 10-K
a report on managements assessment of the effectiveness of the Companys internal control over
financial reporting. See Managements Report on Internal Control over Financial Reporting below.
The attestation report of our independent registered public accounting firm, KPMG LLP, on our
managements assessment of our internal control over financial reporting is included on page 68.Managements Report on Internal Control over Financial Reporting.Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the
supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control
over financial reporting based upon the framework in Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that
evaluation, our management concluded that our internal control over financial reporting is
effective, as of December 31, 2006.
 98




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##### Table of Contents



ITEM 9B
Other Information
 Not Applicable
 
 PART III
 
 ITEM 10
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE
   Name
    
    Age
    
    PositionFrancis R. McAllister
    
    
    64
    
    
    Chairman of the Board and Chief Executive OfficerStephen A. Lang
    
    
    51
    
    
    Executive Vice President and Chief Operating OfficerJohn R. Stark
    
    
    54
    
    
    Vice President, Human Resources, Secretary and Corporate CounselTerrell I. Ackerman
    
    
    53
    
    
    Vice President, Planning and Process OperationsGregory A. Wing
    
    
    57
    
    
    Vice President, and Chief Financial Officer
  EXECUTIVE OFFICERS
 Francis R. McAllister (age 64)
 Stephen A. Lang (age 51)
 John R. Stark (age 54)
 99




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##### Table of Contents



Terrell I. Ackerman (age 53)
 Gregory A. Wing (age 57)
  Audit Committee Financial Expert
  Code of Ethics
 http://www.stillwatermining.com.
 Corporate Governance
 http://www.stillwatermining.com
 NYSE CEO Certification
  100




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##### Table of Contents



ITEM 11
EXECUTIVE COMPENSATION
  
 ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
  
 ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14
PRINCIPAL ACCOUNTING FEES AND SERVICES
  
 PART IV
 
 ITEM 15
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
   PageReport of Independent Registered Public Accounting Firm
    
    
    67Statement of Operations and Comprehensive Income (Loss)
    
    
    69Balance Sheet
    
    
    71Statement of Cash Flow
    
    
    72Statement of Changes in Stockholders Equity
    
    
    73Notes to Financial Statements
    
    
    74
    101




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##### Table of Contents



EXHIBITS
 Number
    
    Description2.1
    
    Exchange Agreement for 10,000 shares of common stock, dated October
1, 1993 (incorporated by reference to Exhibit 2.1 to the
Registrants Registration Statement on Form S-1 (File No. 33-85904)
as declared effective by the Commission on December 15, 1994 (the
1994 S-1)).3.1
    
    Restated Certificate of Incorporation of Stillwater Mining Company,
dated October 23, 2003 (incorporated by reference to Exhibit 3.1 to
the Form 10-Q for the quarterly period ended September 30, 2003,
filed on October 27, 2003).3.2
    
    Amended and Restated By-Laws of Stillwater Mining Company,
(incorporated by reference to Exhibit 3.2 to the Form 8-K filed on
December 29, 2004).4.1
    
    Form of Indenture, dated April 29, 1996, between Stillwater Mining Company and Colorado National Bank
with respect to the Companys 7% Convertible Subordinated Notes Due 2003 (incorporated by reference to
Exhibit 4.1 of the Registrants Form 8-K, dated April 29, 1996).4.2
    
    Rights Agreement, dated October 26, 1995 (incorporated by reference to Form 8-A, filed on October 30,
1995).4.3
    
    Amendment No. 1, dated as of November 20, 2002, to the Rights Agreement between Stillwater Mining
Company and Computershare Trust Company, Inc. (incorporated by reference to Exhibit 4.1 of the
Registrants Form 8-K, dated November 21, 2002).10.2
    
    Mining and Processing Agreement, dated March 16, 1984 regarding the Mouat family; and Compromise of
Issues Relating to the Mining and Processing Agreement (incorporated by reference to Exhibit 10.8 to
the 1994 S-1).10.3
    
    Conveyance of Royalty Interest and Agreement between Stillwater Mining Company and Manville Mining
Company, dated October 1, 1993 (incorporated by reference to Exhibit 10.9 to the 1994 S-1).10.4
    
    Palladium Sales Agreement, made as of August 13, 1998, between Stillwater Mining Company and Ford
Motor Company (portions of the agreement have been omitted pursuant to a confidential treatment
request) (incorporated by reference to Exhibit 10.1 to the Registrants Form 8-K, dated July 21,
1998).10.5
    
    Palladium and Platinum Sales Agreement, made as of August 17, 1998, between Stillwater Mining Company
and General Motors Corporation (portions of the agreement have been omitted pursuant to a confidential
treatment request) (incorporated by reference to Exhibit 10.3 to the Registrants Form 8-K, dated July
21, 1998).10.7
    
    Employment Agreement between Francis R. McAllister and Stillwater Mining Company, dated July 23, 2001
(incorporated by reference to Exhibit 10.1 to the Form 10-Q for the quarterly period ended September
30, 2001).10.8
    
    Employment agreement between John R. Stark and Stillwater Mining Company dated July 23, 2001
(incorporated by reference to Exhibit 10.18 to the Form 10-K for the year ended December 31, 2001).10.9
    
    First Amendment Agreement to Palladium Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated October 27, 2000 (incorporated by reference to Exhibit 10.20 of the Registrants
2000 10-K) (portions of the agreement have been omitted pursuant to a confidential treatment request).10.10
    
    Second Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company
and Ford Motor Company, dated March 27, 2001 (incorporated by reference to Exhibit 10.1 to the Form
10-Q for the quarterly period ended March 31, 2001) (portions of the agreement have been omitted
pursuant to a confidential treatment request).10.11
    
    First Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company
and General Motors Corporation, dated November 20, 2000 (incorporated by reference to Exhibit 10.21 of
the Registrants 2000 10-K) (portions of the agreement have been omitted pursuant to a confidential
treatment request).10.12
    
    Refining Agreement between Stillwater Mining Company and Catalyst and Chemicals Division of Johnson
Matthey Inc. dated July 27, 2000 (incorporated by reference to Exhibit 10.22 of the Registrants 2000
10-K) (portions of the agreement have been omitted pursuant to a confidential treatment request).10.13
    
    Second Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company
and General Motors Corporation, dated February 14, 2001 (incorporated by reference to Exhibit 10.24 of
the Registrants 2001 10-K).
 102




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##### Table of Contents



Number
    
    Description10.16
    
    Third Amendment to Palladium and Platinum Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated March 13, 2002 (incorporated by reference to Exhibit 10.33 of the Registrants
2002 10-K) (portions of the agreement have been omitted pursuant to a confidential treatment request).10.17
    
    Employment Agreement between Terrell I. Ackerman and Stillwater Mining Company dated May 8, 2002
(incorporated by reference to Exhibit 10.34 of the Registrants 2002 10-K).10.18
    
    Amended and Restated General Employee Stock Plan, dated October 23, 2003 (incorporated by reference to
Exhibit 10.1 to the Form 10-Q for the quarterly period ended September 30, 2003).10.19
    
    Employment Agreement between Stephen A. Lang and Stillwater Mining Company dated September 1, 2003
(incorporated by reference to Exhibit 10.2 to the Form 10-Q for the quarterly period ended September
30, 2003).10.20
    
    Stock Purchase Agreement between Stillwater Mining Company and MMC Norilsk Nickel and Norimet Ltd.
dated June 23, 2003 (incorporated by reference to Exhibit 10.1 to the Form 8-K, dated June 23, 2003).10.21
    
    Registration Rights Agreement, Stillwater Mining Company and Norimet Ltd. dated June 23, 2003.
(incorporated by reference to Exhibit 10.2 to the Form 8-K dated June 23, 2003).10.23
    
    Palladium Sales Agreement, made as of March 3, 2004, among Stillwater Mining Company and Engelhard
Corporation (incorporated by reference to Exhibit 10.39 to the Form 10-K filed on March 15,
2004(portions of this agreement have been omitted pursuant to a confidential treatment request).10.24
    
    Employment Agreement between Gregory A. Wing and Stillwater Mining Company dated as of March 22, 2004
(incorporated by reference to Exhibit 10.40 to the Form 10-K filed on March 15, 2004).10.25
    
    Articles of Agreement between Stillwater Mining Company (East Boulder) Paper, Allied Industrial,
Chemical and Energy Workers International Union, ratified July 2002 (incorporated by reference to
Exhibit 10.41 to the Form 10-K filed on March 15, 2004).10.26
    
    Amendment No. 1 to Stockholders Agreement, dated as of March 19, 2004, made by and among Stillwater
Mining Company and MMC Norilsk Nickel (incorporated by reference to Exhibit 2.1 to the Form 10-Q filed
on May 7, 2004).10.28
    
    Articles of Agreement between Stillwater Mining Company (Stillwater Mine & Mill, and the Processing
and Warehouse facilities) Paper, Allied Industrial, Chemical and Energy Workers International Union,
ratified July 19, 2004 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on August 5,
2004).10.29
    
    Credit Agreement, dated August 3, 2004, between Stillwater Mining Company and TD Securities (USA),
Ltd. (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed on August 5, 2004).10.30
    
    Fourth Amendment to Palladium and Platinum Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated February 20, 2003 (incorporated by reference to Exhibit 10.1 to the Form 10-Q
filed on November 2, 2004).10.31
    
    Fifth Amendment to Palladium and Platinum Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated May 4, 2004 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on
November 2, 2004).10.33
    
    Contract between Stillwater Mining Company and USW International Union, Local 1, East Boulder Unit,
effective July 10, 2005 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on August 8,
2005).10.34
    
    409A Nonqualified Deferred
Compensation Plan. (incorporated by reference to Exhibit 10.34 to the
Form 10-K filed on March 16, 2006).10.35
    
    2004 Equity Incentive Plan (incorporated by reference to Appendix A to the Proxy statement, dated
April 29, 2004).10.36
    
    409A Non-Employee Directors Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to
the Form-8K dated May 9, 2005).10.37
    
    Amendment No. 1 to Credit Agreement, dated August 3, 2004, between Stillwater Mining Company and TD
Securities (USA), Ltd., dated January 31, 2006 (incorporated by reference to Exhibit 10.1 to the Form
8-K dated February 3, 2006).18.1
    
    Preferability letter from KPMG LLP dated March 30, 2005. (incorporated by reference to Exhibit 18.1 to
the Form 10-K filed on March 31, 2005).23.1
    
    Consent of KPMG LLP, Independent Registered Public Accounting Firm (filed herewith).23.2
    
    Consent of Behre Dolbear & Company, Inc. (filed herewith).31.1
    
    Rule 13a-14(a)/15d-14(a) Certification  Chief Executive Officer, (filed herewith).31.2
    
    Rule 13a-14(a)/15d-14(a) Certification  Vice President and Chief Financial Officer, (filed herewith).32.1
    
    Section 1350 Certification, (filed herewith).32.2
    
    Section 1350 Certification, (filed herewith).
 103




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##### Table of Contents



SIGNATURES
  STILLWATER MINING COMPANY
(Registrant)Dated: February 26, 2007
    By:
    /s/ Francis R. McAllisterFrancis R. McAllisterChairman and Chief Executive Officer  Signature and Title
    
    Date/s/ Francis R. McAllister
    
    February 26, 2007Francis R. McAllisterChairman, Chief Executive Officer and Director(Principal Executive Officer)/s/ Gregory A. Wing
    
    February 26, 2007Gregory A. WingVice President and Chief Financial Officer(Principal Accounting Officer)/s/ Craig L. Fuller
    
    February 26, 2007Craig L. Fuller, Director/s/ Patrick M. James
    
    February 26, 2007Patrick M. James, Director/s/ Steven S. Lucas
    
    February 26, 2007Steven S. Lucas, Director/s/ Joseph P. Mazurek
    
    February 26, 2007Joseph P. Mazurek, Director/s/ Sheryl K. Pressler
    
    February 26, 2007Sheryl K. Pressler, Director/s/ Donald Riegle Jr.
    
    February 26, 2007Donald W. Riegle Jr., Director/s/ Todd D. Schafer
    
    February 26, 2007Todd D. Schafer, Director
 104




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Description2.1
    
    Exchange Agreement for 10,000 shares of common stock, dated October
1, 1993 (incorporated by reference to Exhibit 2.1 to the
Registrants Registration Statement on Form S-1 (File No. 33-85904)
as declared effective by the Commission on December 15, 1994 (the
1994 S-1)).3.1
    
    Restated Certificate of Incorporation of Stillwater Mining Company,
dated October 23, 2003 (incorporated by reference to Exhibit 3.1 to
the Form 10-Q for the quarterly period ended September 30, 2003,
filed on October 27, 2003).3.2
    
    Amended and Restated By-Laws of Stillwater Mining Company,
(incorporated by reference to Exhibit 3.2 to the Form 8-K filed on
December 29, 2004).4.1
    
    Form of Indenture, dated April 29, 1996, between Stillwater Mining Company and Colorado National Bank
with respect to the Companys 7% Convertible Subordinated Notes Due 2003 (incorporated by reference to
Exhibit 4.1 of the Registrants Form 8-K, dated April 29, 1996).4.2
    
    Rights Agreement, dated October 26, 1995 (incorporated by reference to Form 8-A, filed on October 30,
1995).4.3
    
    Amendment No. 1, dated as of November 20, 2002, to the Rights Agreement between Stillwater Mining
Company and Computershare Trust Company, Inc. (incorporated by reference to Exhibit 4.1 of the
Registrants Form 8-K, dated November 21, 2002).10.2
    
    Mining and Processing Agreement, dated March 16, 1984 regarding the Mouat family; and Compromise of
Issues Relating to the Mining and Processing Agreement (incorporated by reference to Exhibit 10.8 to
the 1994 S-1).10.3
    
    Conveyance of Royalty Interest and Agreement between Stillwater Mining Company and Manville Mining
Company, dated October 1, 1993 (incorporated by reference to Exhibit 10.9 to the 1994 S-1).10.4
    
    Palladium Sales Agreement, made as of August 13, 1998, between Stillwater Mining Company and Ford
Motor Company (portions of the agreement have been omitted pursuant to a confidential treatment
request) (incorporated by reference to Exhibit 10.1 to the Registrants Form 8-K, dated July 21,
1998).10.5
    
    Palladium and Platinum Sales Agreement, made as of August 17, 1998, between Stillwater Mining Company
and General Motors Corporation (portions of the agreement have been omitted pursuant to a confidential
treatment request) (incorporated by reference to Exhibit 10.3 to the Registrants Form 8-K, dated July
21, 1998).10.7
    
    Employment Agreement between Francis R. McAllister and Stillwater Mining Company, dated July 23, 2001
(incorporated by reference to Exhibit 10.1 to the Form 10-Q for the quarterly period ended September
30, 2001).10.8
    
    Employment agreement between John R. Stark and Stillwater Mining Company dated July 23, 2001
(incorporated by reference to Exhibit 10.18 to the Form 10-K for the year ended December 31, 2001).10.9
    
    First Amendment Agreement to Palladium Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated October 27, 2000 (incorporated by reference to Exhibit 10.20 of the Registrants
2000 10-K) (portions of the agreement have been omitted pursuant to a confidential treatment request).10.10
    
    Second Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company
and Ford Motor Company, dated March 27, 2001 (incorporated by reference to Exhibit 10.1 to the Form
10-Q for the quarterly period ended March 31, 2001) (portions of the agreement have been omitted
pursuant to a confidential treatment request).10.11
    
    First Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company
and General Motors Corporation, dated November 20, 2000 (incorporated by reference to Exhibit 10.21 of
the Registrants 2000 10-K) (portions of the agreement have been omitted pursuant to a confidential
treatment request).10.12
    
    Refining Agreement between Stillwater Mining Company and Catalyst and Chemicals Division of Johnson
Matthey Inc. dated July 27, 2000 (incorporated by reference to Exhibit 10.22 of the Registrants 2000
10-K) (portions of the agreement have been omitted pursuant to a confidential treatment request).10.13
    
    Second Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company
and General Motors Corporation, dated February 14, 2001 (incorporated by reference to Exhibit 10.24 of
the Registrants 2001 10-K).




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##### Table of Contents



Number
    
    Description10.16
    
    Third Amendment to Palladium and Platinum Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated March 13, 2002 (incorporated by reference to Exhibit 10.33 of the Registrants
2002 10-K) (portions of the agreement have been omitted pursuant to a confidential treatment request).10.17
    
    Employment Agreement between Terrell I. Ackerman and Stillwater Mining Company dated May 8, 2002
(incorporated by reference to Exhibit 10.34 of the Registrants 2002 10-K).10.18
    
    Amended and Restated General Employee Stock Plan, dated October 23, 2003 (incorporated by reference to
Exhibit 10.1 to the Form 10-Q for the quarterly period ended September 30, 2003).10.19
    
    Employment Agreement between Stephen A. Lang and Stillwater Mining Company dated September 1, 2003
(incorporated by reference to Exhibit 10.2 to the Form 10-Q for the quarterly period ended September
30, 2003).10.20
    
    Stock Purchase Agreement between Stillwater Mining Company and MMC Norilsk Nickel and Norimet Ltd.
dated June 23, 2003 (incorporated by reference to Exhibit 10.1 to the Form 8-K, dated June 23, 2003).10.21
    
    Registration Rights Agreement, Stillwater Mining Company and Norimet Ltd. dated June 23, 2003.
(incorporated by reference to Exhibit 10.2 to the Form 8-K dated June 23, 2003).10.23
    
    Palladium Sales Agreement, made as of March 3, 2004, among Stillwater Mining Company and Engelhard
Corporation (incorporated by reference to Exhibit 10.39 to the Form 10-K filed on March 15,
2004(portions of this agreement have been omitted pursuant to a confidential treatment request).10.24
    
    Employment Agreement between Gregory A. Wing and Stillwater Mining Company dated as of March 22, 2004
(incorporated by reference to Exhibit 10.40 to the Form 10-K filed on March 15, 2004).10.25
    
    Articles of Agreement between Stillwater Mining Company (East Boulder) Paper, Allied Industrial,
Chemical and Energy Workers International Union, ratified July 2002 (incorporated by reference to
Exhibit 10.41 to the Form 10-K filed on March 15, 2004).10.26
    
    Amendment No. 1 to Stockholders Agreement, dated as of March 19, 2004, made by and among Stillwater
Mining Company and MMC Norilsk Nickel (incorporated by reference to Exhibit 2.1 to the Form 10-Q filed
on May 7, 2004).10.28
    
    Articles of Agreement between Stillwater Mining Company (Stillwater Mine & Mill, and the Processing
and Warehouse facilities) Paper, Allied Industrial, Chemical and Energy Workers International Union,
ratified July 19, 2004 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on August 5,
2004).10.29
    
    Credit Agreement, dated August 3, 2004, between Stillwater Mining Company and TD Securities (USA),
Ltd. (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed on August 5, 2004).10.30
    
    Fourth Amendment to Palladium and Platinum Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated February 20, 2003 (incorporated by reference to Exhibit 10.1 to the Form 10-Q
filed on November 2, 2004).10.31
    
    Fifth Amendment to Palladium and Platinum Sales Agreement between Stillwater Mining Company and Ford
Motor Company, dated May 4, 2004 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on
November 2, 2004).10.33
    
    Contract between Stillwater Mining Company and USW International Union, Local 1, East Boulder Unit,
effective July 10, 2005 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on August 8,
2005).10.34
    
    409A Nonqualified Deferred
Compensation Plan. (incorporated by reference to Exhibit 10.34 to the
Form 10-K filed on March 16, 2006).10.35
    
    2004 Equity Incentive Plan (incorporated by reference to Appendix A to the Proxy statement, dated
April 29, 2004).10.36
    
    409A Non-Employee Directors Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to
the Form-8K dated May 9, 2005).10.37
    
    Amendment No. 1 to Credit Agreement, dated August 3, 2004, between Stillwater Mining Company and TD
Securities (USA), Ltd., dated January 31, 2006 (incorporated by reference to Exhibit 10.1 to the Form
8-K dated February 3, 2006).18.1
    
    Preferability letter from KPMG LLP dated March 30, 2005. (incorporated by reference to Exhibit 18.1 to
the Form 10-K filed on March 31, 2005).23.1
    
    Consent of KPMG LLP, Independent Registered Public Accounting Firm (filed herewith).23.2
    
    Consent of Behre Dolbear & Company, Inc. (filed herewith).31.1
    
    Rule 13a-14(a)/15d-14(a) Certification  Chief Executive Officer, (filed herewith).31.2
    
    Rule 13a-14(a)/15d-14(a) Certification  Vice President and Chief Financial Officer, (filed herewith).32.1
    
    Section 1350 Certification, (filed herewith).32.2
    
    Section 1350 Certification, (filed herewith).