##### 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, 2005.
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the transition period from  to
 Commission File Number 1-13053
 STILLWATER MINING COMPANY
  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 2006 Annual Meeting of
Stockholders.




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##### 



TABLE OF CONTENTS
 GLOSSARY
 PART IITEMS 1, 1A AND 2
    
    BUSINESS, RISK FACTORS AND PROPERTIES
    
    
    6ITEM 3
    
    LEGAL PROCEEDINGS
    
    
    34ITEM 4
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    35PART IIITEM 5
    
    MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    35ITEM 6
    
    SELECTED FINANCIAL DATA
    
    
    36ITEM 7
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    44ITEM 7A
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    61ITEM 8
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    63ITEM 9
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    96ITEM 9A
    
    CONTROLS AND PROCEDURES
    
    
    96ITEM 9B
    
    OTHER INFORMATION
    
    
    99PART IIIITEM 10
    
    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    99ITEM 11
    
    EXECUTIVE COMPENSATION
    
    
    100ITEM 12
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    100ITEM 13
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    101ITEM 14
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    101PART IVITEM 15
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    101SIGNATURES
    
    
    105409A Nonqualified Deferred Compensation PlanConsent of KPMG LLPConsent of Behre Dolbear & Company, Inc.Rule 13a-14(a)/15d-14(a) Certification - CEORule 13a-14(a)/15d-14(a) Certification - VP and CFOSection 1350 CertificationSection 1350 Certification




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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
    
    The catalytic converter used in an automobiles exhaust and pollution control system and where so
indicated, similar materials used in petroleum refining or other chemical processes. Catalysts are
materials that facilitate one or more chemical reactions without being consumed in the reaction
themselves.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 and then effecting significant separation of gangue (waste) minerals from the metal
and/or metal minerals, discarding the waste and minor amounts of metal and/or metal minerals leaving
a concentrate of metal and/or metal minerals with a consequent 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 inclined 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 deform plastically 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 refinery, as the Companys final product, for the next
step in the refining process by third party toll refineries.Footwall
    
    The underlying side of a fault, orebody, or mine working; especially the wall rock beneath an
inclined vein, fault, or reef.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 non valuable metalliferous mineral in the ore.Grade
    
    The average assay of a ton of ore, reflecting metal content. With precious metals, grade is
expressed as troy ounces per ton of rock.
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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 shaftLenticular-shaped
    
    Resembling in shape the cross section of a double-convex lens.Lode claims
    
    Claiming the mineral rights along a lode (vein) structure of mineralized material on Federal
land; typically lode claims are 1,500 feet in length along the trend of the mineralized
material, the claim width typically being 600 feet wide.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 sufficient 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
from the formation of Stillwater Mining Company in which 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. 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.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 platinum, palladium,
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
measurements are farther apart or are otherwise less adequately spaced.
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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 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 auto, petroleum, chemical and medical, food
and other catalysts. Additionally, PGMs are 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
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.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 powdered 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.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 2005 HIGHLIGHTS
       6




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Highlights:
 
    
    The Companys revenues, in terms of dollars and ounces sold, for 2005 and 2004 were:
 Ounces of
    
    
    Ounces of
    
    
    Ounces ofYear ended December 31, (in thousands)
    
    $ of Palladium
    
    
    $ of Platinum
    
    
    $ of Other
    
    
    Palladium
    
    
    Platinum
    
    
    Other2005Mine production
    
    $
    153,669
    
    
    $
    110,538
    
    
    $
    
    
    
    
    431
    
    
    
    135
    
    
    
    Recycling activities
    
    
    8,970
    
    
    
    59,692
    
    
    
    22,033
    
    
    
    46
    
    
    
    68
    
    
    
    12Sales of Palladium received in Norilsk Nickel
transaction and other
    
    
    90,925
    
    
    
    11,515
    
    
    
    50,120
    
    
    
    457
    
    
    
    13
    
    
    
    26Total
    
    $
    253,564
    
    
    $
    181,745
    
    
    $
    72,153
    
    
    
    934
    
    
    
    216
    
    
    
    382004Mine production
    
    $
    162,209
    
    
    $
    104,475
    
    
    $
    
    
    
    
    432
    
    
    
    125
    
    
    
    Recycling activities
    
    
    9,548
    
    
    
    56,512
    
    
    
    10,328
    
    
    
    43
    
    
    
    69
    
    
    
    10Sales of Palladium received in Norilsk Nickel
transaction and other
    
    
    85,952
    
    
    
    6,132
    
    
    
    12,371
    
    
    
    375
    
    
    
    8
    
    
    
    11Total
    
    $
    257,709
    
    
    $
    167,119
    
    
    $
    22,699
    
    
    
    850
    
    
    
    202
    
    
    
    21
 
    
    The Company reported a net loss of $13.9 million, or $0.15 per diluted share in
2005 compared to net income of $29.8 million, or $0.33 per diluted share in 2004. See
Managements Discussion and Analysis of Financial Condition and Results of Operations 
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004.
    
    During 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.
    
    In reviewing and testing the Companys internal controls over financial reporting at
year-end 2005, the Companys internal auditors identified several control deficiencies in
the Companys accounting for miscellaneous metal sales that, in the judgment of management,
collectively aggregated to the level of a material weakness. These control issues did not
involve any of the Companys major commercial sales agreements. Initial estimates
indicated that there could be up to $3 million associated with these miscellaneous metal
sales; after further examination, the Company wrote down consigned inventory by $1.8
million at December 31, 2005.
    
    In 2005, the Company produced a total of 554,000 ounces of palladium and platinum
compared to 569,000 ounces in 2004. Total consolidated cash cost per ounce (a non-GAAP
measure) was $324 in 2005, compared with $297 in 2004. The higher consolidated total cash
cost per ounce was due to lower 2005 production volumes, particularly at the Stillwater
Mine. See Selected Financial and Operating Data for further discussion of non-GAAP
measures.
    
    On January 31, 2006, the Company amended its credit facility to reduce the effective
interest rate spread on the $140 million Term Loan entered into on August 3, 2004 by 100
basis points. A previous provision required the Company to fix the interest rate on
50% of the outstanding Term Loan balance through December 31, 2007, if and when the
underlying three-month LIBOR reached 4.50%. This provision was also amended to increase
this rate from 4.50% to 5.50%. Under the terms of the amendment, the Company would incur a
1% penalty on certain voluntary prepayment transactions that take place within one year of
the amendment date (see Note 7 to the Companys consolidated financial statements for
further discussion).
    
    The Company increased its capital expenditures for mine development during 2005 and
expects development expenditures to continue at the increased level through 2006. The
intent of this program is to increase the inventory of proven ore reserves at each mine, in
turn allowing for better advance economic analysis of appropriate mining methods in each
area, as well as supporting growth in mining rates. Infrastructure at the mines is also
being expanded to accommodate future production opportunities. The Company believes that
implementing 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.
  7




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HISTORY OF THE COMPANY
    GEOLOGY OF THE J-M REEF
      8




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ORE RESERVES
  Methodology
      SEC Guidelines
   9




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Results
   Proven and Probable Ore Reserves
    DECEMBER 31, 2005
    
    DECEMBER 31, 2004
    
    DECEMBER 31, 2003AVERAGE
    
    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
    
    
    2,458
    
    
    
    0.68
    
    
    
    1,664
    
    
    
    1,971
    
    
    
    0.65
    
    
    
    1,279
    
    
    
    2,052
    
    
    
    0.68
    
    
    
    1,387Probable Reserves
    
    
    15,638
    
    
    
    0.63
    
    
    
    9,812
    
    
    
    16,108
    
    
    
    0.63
    
    
    
    10,138
    
    
    
    15,428
    
    
    
    0.65
    
    
    
    10,073Total Proven and Probable
Reserves (1)
    
    
    18,096
    
    
    
    0.63
    
    
    
    11,476
    
    
    
    18,079
    
    
    
    0.63
    
    
    
    11,417
    
    
    
    17,480
    
    
    
    0.66
    
    
    
    11,460East Boulder Mine (2)Proven Reserves
    
    
    1,665
    
    
    
    0.47
    
    
    
    788
    
    
    
    1,225
    
    
    
    0.46
    
    
    
    558
    
    
    
    660
    
    
    
    0.43
    
    
    
    285Probable Reserves
    
    
    22,190
    
    
    
    0.53
    
    
    
    11,818
    
    
    
    22,302
    
    
    
    0.53
    
    
    
    11,886
    
    
    
    22,248
    
    
    
    0.53
    
    
    
    11,854Total Proven and Probable
Reserves (1)
    
    
    23,855
    
    
    
    0.53
    
    
    
    12,606
    
    
    
    23,527
    
    
    
    0.53
    
    
    
    12,444
    
    
    
    22,908
    
    
    
    0.53
    
    
    
    12,139Total Company Reserves (2)Proven Reserves
    
    
    4,123
    
    
    
    0.59
    
    
    
    2,452
    
    
    
    3,196
    
    
    
    0.57
    
    
    
    1,837
    
    
    
    2,712
    
    
    
    0.62
    
    
    
    1,672Probable Reserves
    
    
    37,828
    
    
    
    0.57
    
    
    
    21,630
    
    
    
    38,410
    
    
    
    0.57
    
    
    
    22,024
    
    
    
    37,676
    
    
    
    0.58
    
    
    
    21,927Total Proven and Probable
Reserves (1)
    
    
    41,951
    
    
    
    0.57
    
    
    
    24,082
    (3)
    
    
    41,606
    
    
    
    0.57
    
    
    
    23,861
    (3)
    
    
    40,388
    
    
    
    0.58
    
    
    
    23,599
    (3)
 
 (1)
    
    Reserves are defined as that part of a mineral deposit which 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 3.5 parts
palladium to 1 part platinum. Stillwater Mine is at a 3.4 to 1 ratio and the East Boulder
Mine is 3.6 to 1.(3)
    
    Average mining and processing losses of approximately 15% must be deducted to arrive at the
estimated recoverable ounces. 10




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Discussion
  
    
    Additions from new drilling to convert probable to proven ore reserves, more than offsetting 2005 and 2004 production,
    
    Additions from development drilling to convert mineralized inventory to probable ore reserves,
    
    Additions and deletions from adjustments to ore reserve estimation factors and mine planning criteria.
   
  11




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IMPAIRMENT OF LONG-LIVED ASSETS
 Accounting for
the Impairment or Disposal of Long-Lived Assets
     12




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CURRENT OPERATIONS
  
    
    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 of approximately 9.7 miles.
 STILLWATER MINE
    13




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EAST BOULDER MINE
  14




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EXPLORATION AND DEVELOPMENT ACTIVITIES
   ETALLURGICAL COMPLEX
 Smelter
   15




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Base Metals Refinery
      RECYCLING ACTIVITIES
    OTHER PROPERTIES
  16




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CREDIT AGREEMENT
         17




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Term facilityYear ended
    
    (in thousands)2006
    
    
    1,1112007
    
    
    1,1112008
    
    
    1,1112009
    
    
    1,1112010
    
    
    105,003Total
    
    $
    109,447
 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
    
    Price2006
    
    
    100
    %
    
    $
    339
    
    
    
    31
    %
    
    $
    707
    
    
    
    80
    %
    
    $
    425
    
    
    
    16
    %
    
    $
    8562007
    
    
    100
    %
    
    $
    339
    
    
    
    16
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    8502008
    
    
    82
    %
    
    $
    382
    
    
    
    20
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    8502009
    
    
    80
    %
    
    $
    380
    
    
    
    20
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    8502010
    
    
    80
    %
    
    $
    375
    
    
    
    20
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    850
  18




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##### Table of Contents



Recycling Activities
  Palladium acquired in connection with Norilsk Nickel transaction:
  TITLE AND ROYALTIES
   19




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##### Table of Contents



SAFETY
     EMPLOYEES
  NUMBER OFEMPLOYEES ATDECEMBER 31,SITE
    
    2005
    
    2004Stillwater Mine
    
    
    956
    
    
    
    972East Boulder Mine
    
    
    464
    
    
    
    408Smelter and Refinery Complex
    
    
    136
    
    
    
    142Columbus and Billings Administration and Support
    
    
    61
    
    
    
    53Total
    
    
    1,617
    
    
    
    1,575
  REGULATORY AND ENVIRONMENTAL MATTERS
 General
 20




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##### Table of Contents



Permitting and Reclamation
    21




---



##### Table of Contents



MMC NORILSK NICKEL INVESTMENT
   COMPETITION: PALLADIUM AND PLATINUM MARKET
 GENERAL
   22




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##### Table of Contents



GLOBAL DEMAND
 Platinum 2005 Interim Review Report
 
 
 Charts
reproduced from the Johnson Matthey Platinum 2005 Interim Review. Consent to cite Johnson Matthey was neither sought nor obtained.
  23




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##### Table of Contents



Chart reproduced from the Johnson Matthey Platinum 2005 Interim Review. Consent to cite
Johnson Matthey was neither sought nor obtained.
     24




---



##### Table of Contents



GLOBAL SUPPLY
  (BAR CHART)
    

(BAR CHART)
 Charts
reproduced from the Johnson Matthey Platinum 2005 Interim Review. Permission to reproduce was neither sought nor obtained.
    25




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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*
    
    $
    315
    
    
    $
    261
    
    
    $
    283
    
    
    $
    1,079
    
    
    $
    982
    
    
    $
    1,035
 
 *
    
    (Through March 13, 2006) AVAILABLE INFORMATION
  RISK FACTORS
  VULNERABILITY TO METALS PRICE VOLATILITYCHANGES IN SUPPLY AND DEMAND COULD REDUCE MARKET PRICES
   26




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27




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##### Table of Contents



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
  28




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##### Table of Contents



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
   29




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##### Table of Contents



AN EXTENDED PERIOD OF LOW PGM PRICES COULD RESULT IN A REDUCTION OF ORE RESERVES AND A FURTHER
ASSET IMPAIRMENT WRITEDOWN
    USERS OF PGMS MAY SUBSTITUTE OTHER MATERIALS FOR PALLADIUM AND PLATINUM
  30




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##### Table of Contents



IF THE COMPANY IS UNABLE TO OBTAIN SURETY BONDS 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.
  HEDGING AND LONG-TERM SALES CONTRACTS COULD LIMIT THE REALIZATION OF HIGHER METAL PRICES
   31




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##### Table of Contents



CHANGES TO REGULATIONS AND COMPLIANCE WITH REGULATIONS COULD INCREASE COSTS AND CAUSE DELAYS
    m m m m m
 THE COMPANY IS SUBJECT TO COVENANTS IN ITS CREDIT AND LEASE AGREEMENTS WHICH IT MAY NOT ALWAYS BE
ABLE TO MEET
  32




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##### Table of Contents



LIMITED AVAILABILITY OF ADDITIONAL MINING PERSONNEL AND UNCERTAINTY OF LABOR RELATIONS MAY AFFECT
THE COMPANYS ABILITY TO ACHIEVE ITS PRODUCTION TARGETS
  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
  33




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##### Table of Contents



FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION 404 OF THE
SARBANES-OXLEY ACT OF 2002 COULD HAVE A MATERIAL ADVERSE EFFECT ON
THE COMPANYS BUSINESS AND STOCK PRICE.
  Report of Independent Registered Public Accounting Firm ).
  Remediation Efforts pertaining to Deficiencies noted in
Managements Report on Internal Control Over Financial Reporting
 
 ITEM 3
 LEGAL PROCEEDINGS
     34




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##### Table of Contents



ITEM 4
 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5
 MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  35




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##### Table of Contents



ITEM 6
 SELECTED FINANCIAL DATA
 (in thousands, except per share and current ratio data)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001INCOME STATEMENT DATARevenues(1)Mine production
    
    $
    264,206
    
    
    $
    266,684
    
    
    $
    240,406
    
    
    $
    275,599
    
    
    $
    277,381PGM recycling
    
    
    90,695
    
    
    
    76,388
    
    
    
    8,866
    
    
    
    15,177
    
    
    
    29,202Sales of palladium received in Norilsk Nickel transaction and other
    
    
    152,561
    
    
    
    104,455
    
    
    
    6,551
    
    
    
    1,535
    
    
    
    Total revenues
    
    $
    507,462
    
    
    $
    447,527
    
    
    $
    255,823
    
    
    $
    292,311
    
    
    $
    306,583Costs and ExpensesCost of metals sold: (1)Mine production
    
    
    190,171
    
    
    
    173,571
    
    
    
    173,375
    
    
    
    174,090
    
    
    
    138,139PGM recycling
    
    
    85,522
    
    
    
    71,326
    
    
    
    7,988
    
    
    
    14,122
    
    
    
    27,087Sales of palladium received in Norilsk Nickel transaction and other
    
    
    139,705
    
    
    
    82,402
    
    
    
    6,728
    
    
    
    2,033
    
    
    
    Total cost of metals sold
    
    
    415,398
    
    
    
    327,299
    
    
    
    188,091
    
    
    
    190,245
    
    
    
    165,226Depreciation and amortization (1)Mine production
    
    
    79,032
    
    
    
    57,321
    
    
    
    41,285
    
    
    
    36,703
    
    
    
    22,048PGM recycling
    
    
    55
    
    
    
    48
    
    
    
    71
    
    
    
    71
    
    
    
    72Total depreciation and amortization
    
    
    79,087
    
    
    
    57,369
    
    
    
    41,356
    
    
    
    36,774
    
    
    
    22,120General and administrative (1)
    
    
    20,464
    
    
    
    19,737
    
    
    
    14,700
    
    
    
    13,903
    
    
    
    22,342Impairment of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    390,295
    
    
    
    
    
    
    
    Operating income (loss)
    
    $
    (7,356
    )
    
    $
    39,480
    
    
    $
    (380,696
    )
    
    $
    57,327
    
    
    $
    84,229Total income tax benefit (provision)
    
    $
    (13
    )
    
    $
    (3
    )
    
    $
    74,939
    
    
    $
    (8,945
    )
    
    $
    (20,325
    )Net income (loss)
    
    $
    (13,874
    )
    
    $
    29,838
    
    
    $
    (323,260
    )
    
    $
    31,684
    
    
    $
    65,804Other comprehensive income (loss), net of tax
    
    $
    (12,437
    )
    
    $
    (4,145
    )
    
    $
    585
    
    
    $
    (7,139
    )
    
    $
    12,872Comprehensive income (loss)
    
    $
    (26,311
    )
    
    $
    25,693
    
    
    $
    (322,675
    )
    
    $
    24,545
    
    
    $
    78,676Pro-forma net income (loss) assuming the new amortization method is
applied retroactively (2)
    
    $
    (13,874
    )
    
    $
    23,803
    
    
    $
    (241,729
    )
    
    $
    15,058
    
    
    $
    54,491Weighted average common shares outstandingBasic
    
    
    90,702
    
    
    
    90,180
    
    
    
    67,807
    
    
    
    42,900
    
    
    
    38,732Diluted
    
    
    90,702
    
    
    
    90,540
    
    
    
    67,807
    
    
    
    43,004
    
    
    
    39,214Basic earnings per share
    
    $
    (0.15
    )
    
    $
    0.33
    
    
    $
    (4.77
    )
    
    $
    0.74
    
    
    $
    1.70Diluted earnings per share
    
    $
    (0.15
    )
    
    $
    0.33
    
    
    $
    (4.77
    )
    
    $
    0.74
    
    
    $
    1.68Pro-forma amounts assuming the new amortization method is applied retroactively (2)Basic earnings per share
    
    $
    (0.15
    )
    
    $
    0.26
    
    
    $
    (3.56
    )
    
    $
    0.35
    
    
    $
    1.41Diluted earnings per share
    
    $
    (0.15
    )
    
    $
    0.26
    
    
    $
    (3.56
    )
    
    $
    0.35
    
    
    $
    1.39CASH FLOW DATANet cash provided by operating activities
    
    $
    141,134
    
    
    $
    136,840
    
    
    $
    47,215
    
    
    $
    52,138
    
    
    $
    106,792Net cash provided by (used in) investing activities
    
    $
    (134,261
    )
    
    $
    77,801
    
    
    $
    54,156
    
    
    $
    68,837
    
    
    $
    195,648Net cash provided by (used in) financing activities
    
    $
    (22,665
    )
    
    $
    1,352
    
    
    $
    29,639
    
    
    $
    14,751
    
    
    $
    85,548
 
 (1)
    
    The 2004, 2003, 2002 and 2001 amounts for revenues, cost of metals sold, depreciation
and amortization, and general and administration have been reclassified to conform with
current year presentation. See Note 2 to the Companys consolidated financial statements.(2)
    
    See Note 3 to the Companys consolidated financial statements 36




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##### Table of Contents



ITEM 6
 SELECTED FINANCIAL DATA
 (Continued)
 (in thousands, except per share and current ratio data)
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001BALANCE SHEET DATACash and cash equivalents
    
    $
    80,260
    
    
    $
    96,052
    
    
    $
    35,661
    
    
    $
    12,963
    
    
    $
    14,911Inventories
    
    $
    86,634
    
    
    $
    159,942
    
    
    $
    202,485
    
    
    $
    52,058
    
    
    $
    42,944Total current assets
    
    $
    268,911
    
    
    $
    303,655
    
    
    $
    265,006
    
    
    $
    112,475
    
    
    $
    85,790Property, plant and equipment
    
    $
    445,199
    
    
    $
    434,924
    
    
    $
    419,528
    
    
    $
    794,019
    
    
    $
    774,036Total assets
    
    $
    721,457
    
    
    $
    744,718
    
    
    $
    690,588
    
    
    $
    914,214
    
    
    $
    868,221Current portion of long-term debt and capital lease obligations
    
    $
    1,776
    
    
    $
    1,986
    
    
    $
    1,935
    
    
    $
    21,461
    
    
    $
    9,008Portion of debt repayable upon liquidation of finished palladium in inventory
    
    $
    7,324
    
    
    $
    19,076
    
    
    $
    74,106
    
    
    $
    
    
    
    $
    Total current liabilities
    
    $
    69,087
    
    
    $
    67,238
    
    
    $
    110,270
    
    
    $
    65,783
    
    
    $
    63,507Long-term debt and capital lease obligations
    
    $
    132,307
    
    
    $
    143,028
    
    
    $
    85,445
    
    
    $
    198,866
    
    
    $
    246,803Total liabilities
    
    $
    227,913
    
    
    $
    231,989
    
    
    $
    211,291
    
    
    $
    355,000
    
    
    $
    393,098Stockholders equity
    
    $
    493,544
    
    
    $
    512,729
    
    
    $
    479,297
    
    
    $
    559,214
    
    
    $
    475,123Working capital
    
    $
    199,824
    
    
    $
    236,417
    
    
    $
    154,736
    
    
    $
    46,692
    
    
    $
    22,283Current ratio
    
    
    3.9
    
    
    
    4.5
    
    
    
    2.4
    
    
    
    1.7
    
    
    
    1.4
 37




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##### Table of Contents



OPERATING AND COST DATA(in thousands, except per ounce and per ton costs)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Consolidated:Ounces produced:Palladium
    
    
    428
    
    
    
    439
    
    
    
    450
    
    
    
    476
    
    
    
    405Platinum
    
    
    126
    
    
    
    130
    
    
    
    134
    
    
    
    141
    
    
    
    121Total
    
    
    554
    
    
    
    569
    
    
    
    584
    
    
    
    617
    
    
    
    526Tons milled
    
    
    1,206
    
    
    
    1,212
    
    
    
    1,185
    
    
    
    1,257
    
    
    
    829Mill head grade (ounce per ton)
    
    
    0.50
    
    
    
    0.51
    
    
    
    0.53
    
    
    
    0.54
    
    
    
    0.66Sub-grade tons milled (1)
    
    
    80
    
    
    
    58
    
    
    
    84
    
    
    
    74
    
    
    
    65Sub-grade mill head grade (ounce per ton)
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.20
    
    
    
    0.17
    
    
    
    0.21Total tons milled (1)
    
    
    1,286
    
    
    
    1,270
    
    
    
    1,269
    
    
    
    1,331
    
    
    
    894Combined mill head grade (ounce per ton)
    
    
    0.48
    
    
    
    0.50
    
    
    
    0.51
    
    
    
    0.52
    
    
    
    0.63Total mill recovery (%)
    
    
    91
    
    
    
    91
    
    
    
    91
    
    
    
    90
    
    
    
    90Total operating costs per ounce (Non-GAAP)
    
    $
    278
    
    
    $
    254
    
    
    $
    249
    
    
    $
    256
    
    
    $
    230Total cash costs per ounce (Non-GAAP)(2), (3)
    
    $
    324
    
    
    $
    297
    
    
    $
    283
    
    
    $
    287
    
    
    $
    264Total production costs per ounce (Non-GAAP)(2), (3)
    
    $
    472
    
    
    $
    402
    
    
    $
    354
    
    
    $
    351
    
    
    $
    311Total operating costs per ton milled (Non-GAAP)
    
    $
    120
    
    
    $
    114
    
    
    $
    115
    
    
    $
    119
    
    
    $
    130Total cash costs per ton milled (Non-GAAP)(2), (3)
    
    $
    139
    
    
    $
    133
    
    
    $
    130
    
    
    $
    133
    
    
    $
    149Total production costs per ton milled (Non-GAAP)(2), (3)
    
    $
    203
    
    
    $
    180
    
    
    $
    163
    
    
    $
    163
    
    
    $
    175Stillwater Mine:Ounces produced:Palladium
    
    
    293
    
    
    
    311
    
    
    
    328
    
    
    
    379
    
    
    
    388Platinum
    
    
    88
    
    
    
    94
    
    
    
    100
    
    
    
    113
    
    
    
    116Total
    
    
    381
    
    
    
    405
    
    
    
    428
    
    
    
    492
    
    
    
    504Tons milled
    
    
    710
    
    
    
    728
    
    
    
    730
    
    
    
    892
    
    
    
    829Mill head grade (ounce per ton)
    
    
    0.57
    
    
    
    0.59
    
    
    
    0.62
    
    
    
    0.60
    
    
    
    0.66Sub-grade tons milled(1)
    
    
    80
    
    
    
    58
    
    
    
    84
    
    
    
    55
    
    
    
    65Sub-grade mill head grade (ounce per ton)
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.20
    
    
    
    0.16
    
    
    
    0.21Total tons milled(1)
    
    
    790
    
    
    
    786
    
    
    
    814
    
    
    
    947
    
    
    
    894Combined mill head grade (ounce per ton)
    
    
    0.53
    
    
    
    0.56
    
    
    
    0.58
    
    
    
    0.58
    
    
    
    0.63Total mill recovery (%)
    
    
    92
    
    
    
    92
    
    
    
    91
    
    
    
    90
    
    
    
    90Total operating costs per ounce (Non-GAAP)
    
    $
    270
    
    
    $
    238
    
    
    $
    231
    
    
    $
    235
    
    
    $
    230Total cash costs per ounce (Non-GAAP)(2), (3)
    
    $
    314
    
    
    $
    278
    
    
    $
    262
    
    
    $
    263
    
    
    $
    264Total production costs per ounce (Non-GAAP)(2), (3)
    
    $
    454
    
    
    $
    366
    
    
    $
    322
    
    
    $
    318
    
    
    $
    311Total operating costs per ton milled (Non-GAAP)
    
    $
    130
    
    
    $
    123
    
    
    $
    121
    
    
    $
    122
    
    
    $
    130Total cash costs per ton milled (Non-GAAP)(2), (3)
    
    $
    151
    
    
    $
    143
    
    
    $
    138
    
    
    $
    137
    
    
    $
    149Total production costs per ton milled (Non-GAAP)(2), (3)
    
    $
    219
    
    
    $
    189
    
    
    $
    169
    
    
    $
    165
    
    
    $
    175East Boulder Mine:Ounces produced:Palladium (4)
    
    
    135
    
    
    
    128
    
    
    
    122
    
    
    
    97
    
    
    
    17Platinum (4)
    
    
    38
    
    
    
    36
    
    
    
    34
    
    
    
    28
    
    
    
    5Total (4)
    
    
    173
    
    
    
    164
    
    
    
    156
    
    
    
    125
    
    
    
    22Tons milled (4)
    
    
    496
    
    
    
    484
    
    
    
    455
    
    
    
    365
    
    
    
    85Mill head grade (ounce per ton)(4)
    
    
    0.40
    
    
    
    0.39
    
    
    
    0.39
    
    
    
    0.39
    
    
    
    0.31Sub-grade tons milled (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    Sub-grade mill head grade (ounce per ton)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.20
    
    
    
    Total tons milled (1), (4)
    
    
    496
    
    
    
    484
    
    
    
    455
    
    
    
    384
    
    
    
    85Combined mill head grade (ounce per ton)(4)
    
    
    0.40
    
    
    
    0.39
    
    
    
    0.39
    
    
    
    0.38
    
    
    
    0.31Total mill recovery (%) (4)
    
    
    89
    
    
    
    88
    
    
    
    89
    
    
    
    88
    
    
    
    92Total operating costs per ounce (Non-GAAP)
    
    $
    297
    
    
    $
    294
    
    
    $
    299
    
    
    $
    335
    
    
    $
    Total cash costs per ounce (Non-GAAP)(2), (3)
    
    $
    346
    
    
    $
    344
    
    
    $
    343
    
    
    $
    381
    
    
    $
    Total production costs per ounce (Non-GAAP)(2), (3)
    
    $
    511
    
    
    $
    491
    
    
    $
    441
    
    
    $
    478
    
    
    $
    Total production costs per ounce (Non-GAAP)(2), (3)Total operating costs per ton milled (Non-GAAP)
    
    $
    103
    
    
    $
    100
    
    
    $
    103
    
    
    $
    110
    
    
    $
    Total cash costs per ton milled (Non-GAAP)(2), (3)
    
    $
    120
    
    
    $
    117
    
    
    $
    118
    
    
    $
    125
    
    
    $
    Total production costs per ton milled (Non-GAAP)(2), (3)
    
    $
    178
    
    
    $
    167
    
    
    $
    151
    
    
    $
    156
    
    
    $
    
 38




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##### Table of Contents



(in thousands, where noted)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001SALES AND PRICE DATAOunces sold (000)Mine production:Palladium
    
    
    431
    
    
    
    432
    
    
    
    459
    
    
    
    469
    
    
    
    391Platinum
    
    
    135
    
    
    
    125
    
    
    
    131
    
    
    
    143
    
    
    
    114Total
    
    
    566
    
    
    
    557
    
    
    
    590
    
    
    
    612
    
    
    
    505Other PGM activities(7)Palladium
    
    
    502
    
    
    
    418
    
    
    
    5
    
    
    
    10
    
    
    
    11Platinum
    
    
    81
    
    
    
    77
    
    
    
    18
    
    
    
    19
    
    
    
    22Rhodium
    
    
    38
    
    
    
    21
    
    
    
    1
    
    
    
    3
    
    
    
    4Total
    
    
    621
    
    
    
    516
    
    
    
    24
    
    
    
    32
    
    
    
    37Average realized price per ounce(5)Mine production:Palladium
    
    $
    356
    
    
    $
    376
    
    
    $
    352
    
    
    $
    436
    
    
    $
    570Platinum
    
    $
    821
    
    
    $
    839
    
    
    $
    603
    
    
    $
    511
    
    
    $
    498Combined(6)
    
    $
    467
    
    
    $
    480
    
    
    $
    408
    
    
    $
    454
    
    
    $
    554Other PGM activities(7)Palladium
    
    $
    199
    
    
    $
    231
    
    
    $
    216
    
    
    $
    348
    
    
    $
    689Platinum
    
    $
    876
    
    
    $
    817
    
    
    $
    666
    
    
    $
    485
    
    
    $
    555Rhodium
    
    $
    1,861
    
    
    $
    1,032
    
    
    $
    512
    
    
    $
    816
    
    
    $
    1,748Average market price per ounce(5)Palladium
    
    $
    201
    
    
    $
    230
    
    
    $
    201
    
    
    $
    338
    
    
    $
    604Platinum
    
    $
    897
    
    
    $
    846
    
    
    $
    691
    
    
    $
    539
    
    
    $
    529Combined(6)
    
    $
    366
    
    
    $
    368
    
    
    $
    309
    
    
    $
    385
    
    
    $
    586
 
 (1)
    
    Sub-grade tons milled includes reef waste material only. Total tons milled
includes ore tons and sub-grade tons only. Amounts for 2002 and 2001, have been
adjusted to conform with the 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) plus royalties, taxes other than income tax
and other. 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
cost of revenues and accompanying discussion.(4)
    
    The ounces recovered and tons milled from the East Boulder Mine during 2001 were
generated from construction and development activities. Proceeds generated from the
ounces during 2001 were credited against capital mine development in 2001. Costs
incurred for the mining of these tons during 2001 were charged to capital mine
development in 2001.(5)
    
    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.(6)
    
    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.(7)
    
    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. 39




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##### Table of Contents



Reconciliation of Non-GAAP measures to cost of revenues
   Total Cost of Revenues
 Total Production Costs (Non-GAAP)
 Total Production Cost per Ton
Milled (Non-GAAP)
 Total Production Cost per Ounce (Non-GAAP)
 Total Cash Costs (Non-GAAP)
 Total Cash Cost per Ton Milled
(Non-GAAP)
 40




---



##### Table of Contents



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)
 41




---



##### Table of Contents



(in thousands, except per ounce and per ton data)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Consolidated:Total operating costs (Non-GAAP)
    
    $
    154,139
    
    
    $
    144,589
    
    
    $
    145,452
    
    
    $
    157,649
    
    
    $
    116,097Total cash costs (Non-GAAP)
    
    $
    179,308
    
    
    $
    168,915
    
    
    $
    165,528
    
    
    $
    177,175
    
    
    $
    132,810Total production costs (Non-GAAP)
    
    $
    261,112
    
    
    $
    228,940
    
    
    $
    206,570
    
    
    $
    216,405
    
    
    $
    156,749Divided by total ounces
    
    
    554
    
    
    
    569
    
    
    
    584
    
    
    
    617
    
    
    
    504Divided by total tons milled
    
    
    1,286
    
    
    
    1,270
    
    
    
    1,269
    
    
    
    1,331
    
    
    
    894Total operating cost per ounce (Non-GAAP)
    
    $
    278
    
    
    $
    254
    
    
    $
    249
    
    
    $
    256
    
    
    $
    230Total cash cost per ounce (Non-GAAP)
    
    $
    324
    
    
    $
    297
    
    
    $
    283
    
    
    $
    287
    
    
    $
    264Total production cost per ounce (Non-GAAP)
    
    $
    472
    
    
    $
    402
    
    
    $
    354
    
    
    $
    351
    
    
    $
    311Total operating cost per ton milled (Non-GAAP)
    
    $
    120
    
    
    $
    114
    
    
    $
    115
    
    
    $
    119
    
    
    $
    130Total cash cost per ton milled (Non-GAAP)
    
    $
    139
    
    
    $
    133
    
    
    $
    130
    
    
    $
    133
    
    
    $
    149Total production cost per ton milled (Non-GAAP)
    
    $
    203
    
    
    $
    180
    
    
    $
    163
    
    
    $
    163
    
    
    $
    175Reconciliation to consolidated cost of revenues:Total operating costs (Non-GAAP)
    
    $
    154,139
    
    
    $
    144,589
    
    
    $
    145,452
    
    
    $
    157,649
    
    
    $
    116,097Royalties, taxes and other
    
    $
    25,169
    
    
    $
    24,326
    
    
    $
    20,076
    
    
    $
    19,526
    
    
    $
    16,713Total cash costs (Non-GAAP)
    
    $
    179,308
    
    
    $
    168,915
    
    
    $
    165,528
    
    
    $
    177,175
    
    
    $
    132,810Asset retirement costs
    
    
    535
    
    
    
    457
    
    
    
    342
    
    
    
    508
    
    
    
    290Depreciation and amortization
    
    
    79,032
    
    
    
    57,321
    
    
    
    41,285
    
    
    
    36,703
    
    
    
    22,048Depreciation and amortization (in inventory)
    
    
    2,182
    
    
    
    2,247
    
    
    
    (585
    )
    
    
    2,019
    
    
    
    1,601Total production costs (Non-GAAP)
    
    
    261,057
    
    
    
    228,940
    
    
    
    206,570
    
    
    
    216,405
    
    
    
    156,749Change in product inventories
    
    
    141,512
    
    
    
    78,260
    
    
    
    13,844
    
    
    
    (4,636
    )
    
    
    922Costs of recycling activities
    
    
    85,522
    
    
    
    71,325
    
    
    
    7,988
    
    
    
    14,122
    
    
    
    27,087Recycling activities  depreciation
    
    
    55
    
    
    
    48
    
    
    
    71
    
    
    
    71
    
    
    
    72Add: Profit from recycling activities
    
    
    6,339
    
    
    
    6,105
    
    
    
    881
    
    
    
    984
    
    
    
    2,043Loss or (gain) on sale of assets and other costs
    
    
    112
    
    
    
    
    
    
    
    93
    
    
    
    73
    
    
    
    473Total consolidated cost of revenues
    
    $
    494,597
    
    
    $
    384,678
    
    
    $
    229,447
    
    
    $
    227,019
    
    
    $
    187,346Stillwater Mine:Total operating costs (Non-GAAP)
    
    $
    102,931
    
    
    $
    96,381
    
    
    $
    98,722
    
    
    $
    115,561
    
    
    $
    116,097Total cash costs (Non-GAAP)
    
    $
    119,681
    
    
    $
    112,463
    
    
    $
    111,938
    
    
    $
    129,355
    
    
    $
    132,810Total production costs (Non-GAAP)
    
    $
    172,938
    
    
    $
    148,365
    
    
    $
    137,670
    
    
    $
    156,391
    
    
    $
    156,749Divided by total ounces
    
    
    381
    
    
    
    405
    
    
    
    428
    
    
    
    492
    
    
    
    504Divided by total tons milled
    
    
    790
    
    
    
    786
    
    
    
    814
    
    
    
    947
    
    
    
    894Total operating cost per ounce (Non-GAAP)
    
    $
    270
    
    
    $
    238
    
    
    $
    231
    
    
    $
    235
    
    
    $
    230Total cash cost per ounce (Non-GAAP)
    
    $
    314
    
    
    $
    278
    
    
    $
    262
    
    
    $
    263
    
    
    $
    264Total production cost per ounce (Non-GAAP)
    
    $
    454
    
    
    $
    366
    
    
    $
    322
    
    
    $
    318
    
    
    $
    311Total operating cost per ton milled (Non-GAAP)
    
    $
    130
    
    
    $
    123
    
    
    $
    121
    
    
    $
    122
    
    
    $
    130Total cash cost per ton milled (Non-GAAP)
    
    $
    151
    
    
    $
    143
    
    
    $
    138
    
    
    $
    137
    
    
    $
    149Total production cost per ton milled (Non-GAAP)
    
    $
    219
    
    
    $
    189
    
    
    $
    169
    
    
    $
    165
    
    
    $
    175
 42




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##### Table of Contents



(in thousands, per ounce and per ton data)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Stillwater Mine continued:Reconciliation to cost of revenues:Total operating costs (Non-GAAP)
    
    $
    102,931
    
    
    $
    96,381
    
    
    $
    98,722
    
    
    $
    115,561
    
    
    $
    116,097Royalities, taxes and other
    
    
    16,750
    
    
    
    16,082
    
    
    
    13,216
    
    
    
    13,794
    
    
    
    16,713Total cash costs (Non-GAAP)
    
    $
    119,681
    
    
    $
    112,463
    
    
    $
    111,938
    
    
    $
    129,355
    
    
    $
    132,810Asset retirement costs
    
    
    370
    
    
    
    305
    
    
    
    280
    
    
    
    322
    
    
    
    290Depreciation and amortization
    
    
    52,295
    
    
    
    33,955
    
    
    
    26,134
    
    
    
    26,387
    
    
    
    22,048Depreciation and amortization (in inventory)
    
    
    592
    
    
    
    1,642
    
    
    
    (682
    )
    
    
    327
    
    
    
    1,601Total production costs (Non-GAAP)
    
    $
    172,938
    
    
    $
    148,365
    
    
    $
    137,670
    
    
    $
    156,391
    
    
    $
    156,749Change in product inventories
    
    
    6,773
    
    
    
    (3,764
    )
    
    
    6,156
    
    
    
    (287
    )
    
    
    922Add: Profit from recycling activities
    
    
    4,344
    
    
    
    4,274
    
    
    
    659
    
    
    
    738
    
    
    
    2,043Loss or (gain) on sale of assets and other costs
    
    
    81
    
    
    
    
    
    
    
    70
    
    
    
    74
    
    
    
    473Total cost of revenues
    
    $
    184,136
    
    
    $
    148,875
    
    
    $
    144,555
    
    
    $
    156,916
    
    
    $
    160,187East Boulder Mine:(1)Total operating costs (Non-GAAP)
    
    $
    51,208
    
    
    $
    48,208
    
    
    $
    46,730
    
    
    $
    42,088
    
    
    $
    Total cash costs (Non-GAAP)
    
    $
    59,627
    
    
    $
    56,452
    
    
    $
    53,590
    
    
    $
    47,820
    
    
    $
    Total production costs (Non-GAAP)
    
    $
    88,120
    
    
    $
    80,575
    
    
    $
    68,900
    
    
    $
    60,014
    
    
    $
    Divided by total ounces
    
    
    173
    
    
    
    164
    
    
    
    156
    
    
    
    125
    
    
    
    Divided by total tons milled
    
    
    496
    
    
    
    484
    
    
    
    455
    
    
    
    384
    
    
    
    Total operating cost per ounce (Non-GAAP)
    
    $
    297
    
    
    $
    294
    
    
    $
    299
    
    
    $
    335
    
    
    $
    Total cash cost per ounce (Non-GAAP)
    
    $
    346
    
    
    $
    344
    
    
    $
    343
    
    
    $
    381
    
    
    $
    Total production cost per ounce (Non-GAAP)
    
    $
    511
    
    
    $
    491
    
    
    $
    441
    
    
    $
    478
    
    
    $
    Total operating cost per ton milled (Non-GAAP)
    
    $
    103
    
    
    $
    100
    
    
    $
    103
    
    
    $
    110
    
    
    $
    Total cash cost per ton milled (Non-GAAP)
    
    $
    120
    
    
    $
    117
    
    
    $
    118
    
    
    $
    125
    
    
    $
    Total production cost per ton milled (Non-GAAP)
    
    $
    178
    
    
    $
    167
    
    
    $
    151
    
    
    $
    156
    
    
    $
    Reconciliation to cost of revenues:Total operating costs (Non-GAAP)
    
    $
    51,208
    
    
    $
    48,208
    
    
    $
    46,730
    
    
    $
    42,088
    
    
    $
    Royalities, taxes and other
    
    
    8,419
    
    
    
    8,244
    
    
    
    6,860
    
    
    
    5,732
    
    
    
    Total cash costs (Non-GAAP)
    
    $
    59,627
    
    
    $
    56,452
    
    
    $
    53,590
    
    
    $
    47,820
    
    
    $
    Asset retirement costs
    
    
    165
    
    
    
    152
    
    
    
    62
    
    
    
    186
    
    
    
    Depreciation and amortization
    
    
    26,737
    
    
    
    23,366
    
    
    
    15,151
    
    
    
    10,315
    
    
    
    Depreciation and amortization (in inventory)
    
    
    1,591
    
    
    
    605
    
    
    
    97
    
    
    
    1,693
    
    
    
    Total production costs (Non-GAAP)
    
    $
    88,120
    
    
    $
    80,575
    
    
    $
    68,900
    
    
    $
    60,014
    
    
    $
    Change in product inventories
    
    
    (4,967
    )
    
    
    (379
    )
    
    
    960
    
    
    
    (6,382
    )
    
    
    Add: Profit from recycling activities
    
    
    1,995
    
    
    
    1,831
    
    
    
    222
    
    
    
    246
    
    
    
    Loss or (gain) on sale of assets and other costs
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    (1
    )
    
    
    Total cost of revenues
    
    $
    85,148
    
    
    $
    82,027
    
    
    $
    70,105
    
    
    $
    53,877
    
    
    $
    Other PGM activities(2)Reconciliation to cost of revenues:Change in product inventories
    
    $
    139,705
    
    
    $
    82,402
    
    
    $
    6,728
    
    
    $
    
    
    
    $
    Recycling activities  depreciation
    
    
    55
    
    
    
    48
    
    
    
    71
    
    
    
    71
    
    
    
    72Costs of recycling activities
    
    
    85,522
    
    
    
    71,325
    
    
    
    7,988
    
    
    
    14,122
    
    
    
    27,087Loss or (gain) on sale of assets and other costs
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total cost of revenues
    
    $
    225,313
    
    
    $
    153,775
    
    
    $
    14,787
    
    
    $
    14,193
    
    
    $
    27,159
 
 (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. 43




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##### Table of Contents



ITEM 7
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
  2005 Performance
     44




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##### Table of Contents



Strategic Initiatives
     
    
    Marketing Palladium  Significant market support for platinum has existed for many years,
while corresponding support for palladium has been limited. As a result, efforts to develop
new or expanded applications for palladium have been unpredictable. Palladium has emerged in
the last couple of years as a primary jewelry metal based primarily on its price relative to
gold and platinum. The Company has closely followed this development and championed and
chronicled it for the industry. More over, the Company has undertaken a limited effort to
promote or bring some structure to market development for palladium including the following
areas:
    45




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##### Table of Contents




    
    Transforming Mining Operations  Stillwater Mining Company has identified a series of
operating changes designed to increase efficiency, reduce unit costs of production, and
increase total PGM ounces produced, in essence a total reworking of mine operations, all in an
effort to address the Companys economic viability after 2010 when the Company no longer has
the benefit of the PGM pricing floors included in the current contracts with the auto
companies.
          46




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47




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##### Table of Contents



Key Issues Facing the Company
 
    
    The cash flow from sale of the palladium received in the 2003
Norilsk Nickel transaction will come to an end during the first
quarter of 2006. These ounces have been carried as inventory on
the Companys financial statements at a cost of $169 per ounce.
With the relatively low palladium prices in late 2004 and most of
2005, the profit margin on these sales at times has been small,
although the total cash generation from the sales has been
significant  typically, between $6 and $8 million per month. The
remaining ounces are scheduled to be sold by the end of February
2006, at which time their substantial cash flow benefit will come
to an end.
    
    The Companys long-term sales agreements with General Motors, Ford
and Mitsubishi, which include floor prices that have protected the
Company in times of low PGM prices, will all expire on or before
December 31, 2010. (While two of these contracts will expire
before 2010, the terms of the third contract provide for it to
absorb most of the production previously sold under the expiring
agreements.) These contracts currently cover all of the Companys
mined production of palladium and about 80% of the Companys mined
output of platinum. Once these contracts are gone, unless the
Company enters into similar arrangements thereafter, the Company
essentially will be exposed to the full volatility of PGM prices.
At the price levels prevailing during most of 2005, the Companys
cash flow would have been negative without the floor prices in
these contracts.During the third and fourth quarters of 2005 and first quarter of 2006, the major U.S. bond
rating agencies downgraded the corporate ratings of General Motors Corporation and Ford Motor
Company. Under applicable law, in the event one or both of these companies becomes insolvent or
files for protection under the bankruptcy statutes, their respective obligations under these 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 Companys mechanized mining methods, taken together with the associated maintenance and
support functions, are high cost, largely as a result of the complexity of the orebody the
Company mines. Significant quantities of waste material are moved as part of the typical
mining process. In addition, the Company incurs high capital costs for ongoing development
that is necessary to sustain continuing
operations. (These capital costs were unusually high in 2005, as is discussed below.) When
2005 operating and capital costs are combined, mining operations in 2005 did not produce
positive cash flow.
 48




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Several other major PGM producers in the mining industry either produce PGMs as a by-product of
other refining or enjoy ores with a substantially higher proportion of the historically
higher-priced platinum over palladium. The Company does not enjoy these advantages, putting it
at a disadvantage when prices are low. The Companys unit costs generally are affected by the
level of ore production, by the consistency and quality of the ore mined, by the mining method
utilized, and by overall operating efficiency.
    
    Despite very substantial progress over the past four years, safety
issues remain of paramount importance. Rigorous application of
task analysis, employee education and incident follow-up have
reduced the Companys incident rates to well below the national
average for underground mines. However, despite these encouraging
statistics, the Company experienced a fatality underground during
2005. The Company continues to coordinate closely with MSHA and
industry safety groups to ensure best practices are in place and
being followed.
    
    With the general strengthening of mineral prices over the past two
years, the demand for experienced miners has grown significantly.
There is now a shortage of skilled miners within the United States
and Canada, and as new operations are developed, the shortage has
grown. Coming off the past decade or so of depressed commodity
prices, very few new miners and mining engineers were being
trained, so the industry is now faced with a fixed or declining
pool of skilled workers in an expanding market. The Companys
operations are relatively manpower intensive, so a shortage of
skilled labor could restrict the Companys ability to maintain or
expand production levels.The Companys hourly workforce is represented by the United Steelworkers of America under two
separate labor agreements. The agreement covering the workers at the Stillwater Mine and at the
Companys processing facilities in Columbus, Montana was renewed in July 2004 following a
ten-day work stoppage and will expire on June 30, 2007. As reported previously, the labor
agreement covering the hourly workforce at the East Boulder Mine was renewed during 2005 and
will expire on June 30, 2008. The Company cannot assure that it will not experience labor
interruptions or other disagreements with labor unions or employees in the future.
    
    With the steep decline in palladium price between 2001 and early
2004, the Company cut back on mine development expenditures in
order to conserve cash. As a result, the Companys proven ore
reserves had steadily declined, to the extent that by 2004 some
production was of necessity coming out of probable reserves that
typically had been drilled but not fully evaluated prior to the
start of production. The time and capital cost of
restoring the Companys proven ore reserves is significant and now
being undertaken and is critical to efficient mining.
    
    The volatility of PGM prices, driven in part by occasional supply
surpluses that emerge particularly in palladium, is of significant
long-term concern at the Companys current production cost levels.
Obviously, the Company has no direct control over PGM prices,
although there are steps it can take  hedging, long-term sales
agreements, etc.  to reduce exposure to price volatility.
Producer economics, along with recycling opportunities, suggest
that the supply of PGMs is likely to grow gradually over time,
probably more from the expansion of existing operations than from
new ventures, which at least at this point all appear to be fairly
low grade. That leaves some opportunity on the demand side for
fostering new or expanded uses for PGMs, and particularly for
palladium.As of December 31, 2005, the Company had secured platinum prices in the forward market by
entering into financially settled forward transactions covering over half of the Companys
anticipated platinum mine production for the period from January 2006 through June 2008. In
view of the exceptionally wide price disparity between platinum and palladium that exists at
December 31, 2005, the Company notes that the price of platinum could weaken if consumers begin
substituting significant quantities of palladium and other metals for platinum in major
applications. In order to protect against this downside, as of December 31, 2005, the Company
had open financially settled forward contracts covering a total of 188,400 ounces of platinum at
an overall average price of about $882 per ounce. The hedges are expected to modestly reduce
the overall volatility of the Companys earnings and cash flow. Under these hedging
arrangements, in return for protection against downward movements in the platinum price, the
Company gives up the benefit of increases in the platinum price on the hedged ounces. The
Company recorded costs in 2005 totaling $8.0 million for fixed forward and financially-settled
forward contracts that settled below market price during 2005. Corresponding costs recorded in
2004 and 2003 totaled $1.3 million in each year.
 CAPITALIZED MINE DEVELOPMENT
  49




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
    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
   50




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##### Table of Contents



Ounces of
    
    
    Ounces of
    
    
    Ounces of(in thousands)
    
    $ of Palladium
    
    
    $ of Platinum
    
    
    $ of Other
    
    
    Palladium
    
    
    Platinum
    
    
    Other2005Mine production
    
    $
    153,668
    
    
    $
    110,538
    
    
    $
    
    
    
    
    431
    
    
    
    135
    
    
    
    PGM Recycling
    
    
    8,970
    
    
    
    59,692
    
    
    
    22,033
    
    
    
    46
    
    
    
    68
    
    
    
    12Sales of Palladium
received in Norilsk
Nickel transaction
and other
    
    
    90,925
    
    
    
    11,515
    
    
    
    50,120
    
    
    
    439
    
    
    
    13
    
    
    
    26Total
    
    $
    253,564
    
    
    $
    181,745
    
    
    $
    72,153
    
    
    
    916
    
    
    
    216
    
    
    
    382004Mine production
    
    $
    162,209
    
    
    $
    104,475
    
    
    $
    
    
    
    
    432
    
    
    
    125
    
    
    
    PGM Recycling
    
    
    9,548
    
    
    
    56,512
    
    
    
    10,328
    
    
    
    43
    
    
    
    69
    
    
    
    10Sales of Palladium
received in Norilsk
Nickel transaction
and other
    
    
    85,952
    
    
    
    6,132
    
    
    
    12,371
    
    
    
    375
    
    
    
    8
    
    
    
    11Total
    
    $
    257,709
    
    
    $
    167,119
    
    
    $
    22,699
    
    
    
    850
    
    
    
    202
    
    
    
    212003Mine production
    
    $
    161,624
    
    
    $
    78,782
    
    
    $
    
    
    
    
    459
    
    
    
    131
    
    
    
    PGM Recycling
    
    
    1,036
    
    
    
    5,085
    
    
    
    2,745
    
    
    
    5
    
    
    
    8
    
    
    
    Other
    
    
    
    
    
    
    6,551
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    1Total
    
    $
    162,660
    
    
    $
    90,418
    
    
    $
    2,745
    
    
    
    464
    
    
    
    149
    
    
    
    1
 51




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RESULTS OF OPERATIONS
 YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004
 Revenues.
      Cost of Metals Sold.
    52




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##### Table of Contents



Depreciation and amortization
 General and administrative
 Loss on disposal on property, plant and equipment
 Interest income and expense.
 Total income tax benefit (provision).
 Other comprehensive income (loss), net of tax.
 YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003
 Revenues.
    53




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Cost of Metals Sold.
       Depreciation and amortization
 General and administrative
 Loss on disposal on property, plant and equipment
 Impairment of property, plant and equipment.
 54




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##### Table of Contents



Interest income and expense.
 Total income tax benefit (provision).
 LIQUIDITY AND CAPITAL RESOURCES
  Net cash provided by operating activities
 Year ended December 31,(in thousands)
    
    2005
    
    
    2004
    
    
    2003Cash collected from customers
    
    $
    498,361
    
    
    $
    433,118
    
    
    $
    271,093Cash paid to suppliers, employees, etc.
    
    
    (351,708
    )
    
    
    (285,461
    )
    
    
    (209,852
    )Interest received
    
    
    5,228
    
    
    
    2,218
    
    
    
    500Interest paid
    
    
    (10,747
    )
    
    
    (13,035
    )
    
    
    (14,526
    )Net cash provided by operating activities
    
    $
    141,134
    
    
    $
    136,840
    
    
    $
    47,215
      55




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CREDIT AGREEMENT
     56




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##### Table of Contents



Term facilityYear ended
    
    (in thousands)2006
    
    
    1,1112007
    
    
    1,1112008
    
    
    1,1112009
    
    
    1,1112010
    
    
    105,003Total
    
    $
    109,447
 CONTRACTUAL OBLIGATIONS
  (in thousands)
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    TotalTerm debt facility
    
    $
    1,111
    
    
    $
    1,111
    
    
    $
    1,111
    
    
    $
    1,111
    
    
    $
    105,003
    
    
    $
    
    
    
    $
    109,447Capital lease obligations
    
    
    501
    
    
    
    494
    
    
    
    457
    
    
    
    547
    
    
    
    14
    
    
    
    
    
    
    
    2,013Special Industrial Education Impact Revenue Bonds
    
    
    165
    
    
    
    178
    
    
    
    190
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    630Exempt Facility Revenue Bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    30,000Operating leases
    
    
    554
    
    
    
    456
    
    
    
    429
    
    
    
    160
    
    
    
    160
    
    
    
    642
    
    
    
    2,401Asset retirement obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,732
    
    
    
    53,732Other noncurrent liabilities
    
    
    
    
    
    
    9,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,560Payments of interest
    
    
    11,123
    
    
    
    10,981
    
    
    
    10,853
    
    
    
    10,670
    
    
    
    7,122
    
    
    
    25,200
    
    
    
    75,949Total
    
    $
    13,454
    
    
    $
    22,780
    
    
    $
    13,040
    
    
    $
    12,585
    
    
    $
    112,299
    
    
    $
    109,574
    
    
    $
    283,732
   57




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FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION
  CRITICAL ACCOUNTING POLICIES
 Mine Development Expenditures  Capitalization and Amortization
      58




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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 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
   59




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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
 60




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##### Table of Contents



ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  COMMODITY PRICE RISK
        61




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##### Table of Contents



Mine Production:
 Financially Settled Forwards
 Platinum
    
    AverageOunces
    
    Price
    
    IndexFirst Quarter 2006
    
    
    24,900
    
    
    $
    820
    
    
    Monthly London PM AverageSecond Quarter 2006
    
    
    25,500
    
    
    $
    823
    
    
    Monthly London PM AverageThird Quarter 2006
    
    
    26,500
    
    
    $
    838
    
    
    Monthly London PM AverageFourth Quarter 2006
    
    
    26,500
    
    
    $
    887
    
    
    Monthly London PM AverageFirst Quarter 2007
    
    
    24,000
    
    
    $
    893
    
    
    Monthly London PM AverageSecond Quarter 2007
    
    
    20,000
    
    
    $
    925
    
    
    Monthly London PM AverageThird Quarter 2007
    
    
    19,500
    
    
    $
    947
    
    
    Monthly London PM AverageFourth Quarter 2007
    
    
    15,500
    
    
    $
    985
    
    
    Monthly London PM AverageFirst Quarter 2008
    
    
    3,000
    
    
    $
    893
    
    
    Monthly London PM AverageSecond Quarter 2008
    
    
    3,000
    
    
    $
    909
    
    
    Monthly London PM Average
 PGM Recycling:
 Fixed Forwards
 Platinum
    
    Palladium
    
    RhodiumOunces
    
    Price
    
    Ounces
    
    Price
    
    Ounces
    
    PriceFirst Quarter 2006
    
    
    13,960
    
    
    $
    962
    
    
    
    6,410
    
    
    $
    263
    
    
    
    1,988
    
    
    $
    2,972
  INTEREST RATE RISK
  62




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ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
        Billings, MontanaMarch 16, 2006
 63




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated Framework
     
    
    The Company did not maintain effective company-level controls as defined in the COSO
criteria. Specifically, the following deficiencies were identified within the Companys
control environment:
 
    
    Pertaining to Financial Statement Preparation The Company at December 31, 2005,
did not maintain sufficient numbers of adequately trained personnel in accounting and
other functions critical to financial reporting. Consequently, in some cases,
accounting controls were not performed consistently, accurately, and timely and an
effective review of certain technical accounting matters was not accomplished;
    
    Pertaining to the Application of Accounting Pronouncements The Company, in
certain instances, did not have effective policies and procedures in place to determine
and document its judgment regarding the appropriate application of accounting principles
within its financial reporting process; and
    
    Pertaining to Accounting for Miscellaneous Metal Sales The Company did not have
an effective process in place to ensure that all relevant contractual, sales and
production information was communicated in a timely manner among the sales, operations
and accounting functions.
 The combination of these deficiencies resulted in a more than remote likelihood that a
material misstatement of the Companys annual or interim financial statements would not be
prevented or detected, and contributed to the development of other material weaknesses
described below.
 64




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##### Table of Contents




    
    Procedures related to the Companys controls over consigned inventory at a third-party
location were not adequate to safeguard the metal and ensure that the amounts reflected in
the general ledger represented actual offsite consigned inventory amounts. Specifically,
the Company had not designed and implemented procedures requiring Company personnel to (i)
regularly confirm amounts of consigned inventory on hand at the outside location; (ii)
reconcile the amounts of consigned inventory to the general ledger on a monthly basis; and
(iii) periodically perform a physical observation of the consigned inventory. These
deficiencies resulted in a more than remote likelihood that a material misstatement of the
Companys annual or interim financial statements would not be prevented or detected, and
contributed to expensing $1.8 million of consigned inventory that could not be accounted
for at December 31, 2005.
    
    Procedures related to the Companys controls over by-product sales were not adequate to
ensure that sales of byproducts were properly reflected in the general ledger.
Specifically, the Company had not designed or implemented procedures related to byproducts
requiring Company personnel to (i) invoice sales in a timely manner; (ii) reconcile sales
to the general ledger; (iii) match cash receipts to amounts invoiced; and (iv) verify and
monitor aging of receivables. These deficiencies resulted in a more than remote likelihood
that a material misstatement of the Companys annual or interim financial statements would
not be prevented or detected.
    
    There was inadequate design and operation of the preparation and management review and
approval of the annual financial reporting process. As a result of deficiencies identified
during the performance of audit procedures, the Company was required to make material
revisions, including adjustments, reclassifications, corrections of errors and changes in
disclosures, to the Companys consolidated financial statements as of and for the year
ended December 31, 2005 prior to their issuance.
   Billings, MontanaMarch 16, 2006
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STILLWATER MINING COMPANY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (in thousands, except per share data)
 Year ended December 31,
    
    2005
    
    
    2004
    
    
    2003REVENUESMine production
    
    $
    264,206
    
    
    $
    266,684
    
    
    $
    240,406PGM recycling
    
    
    90,695
    
    
    
    76,388
    
    
    
    8,866Sales of palladium received in Norilsk Nickel transaction and other
    
    
    152,561
    
    
    
    104,455
    
    
    
    6,551Total revenues
    
    
    507,462
    
    
    
    447,527
    
    
    
    255,823COSTS AND EXPENSESCost of metals sold:Mine production
    
    
    190,171
    
    
    
    173,571
    
    
    
    173,375PGM recycling
    
    
    85,522
    
    
    
    71,326
    
    
    
    7,988Sales of palladium received in Norilsk Nickel transaction and other
    
    
    139,705
    
    
    
    82,402
    
    
    
    6,728Total costs of metals sold
    
    
    415,398
    
    
    
    327,299
    
    
    
    188,091Depreciation and amortization:Mine production
    
    
    79,032
    
    
    
    57,321
    
    
    
    41,285PGM recycling
    
    
    55
    
    
    
    48
    
    
    
    71Total depreciation and amortization
    
    
    79,087
    
    
    
    57,369
    
    
    
    41,356Total costs of revenues
    
    
    494,485
    
    
    
    384,668
    
    
    
    229,447General and administrative
    
    
    20,464
    
    
    
    19,739
    
    
    
    14,700Loss on disposal of property, plant and equipment
    
    
    112
    
    
    
    3,640
    
    
    
    Impairment of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    390,295Norilsk Nickel transaction related expenses
    
    
    
    
    
    
    
    
    
    
    3,043Restructuring costs (credits), net
    
    
    (243
    )
    
    
    
    
    
    
    (966
    )Total costs and expenses
    
    
    514,818
    
    
    
    408,047
    
    
    
    636,519OPERATING INCOME (LOSS)
    
    
    (7,356
    )
    
    
    39,480
    
    
    
    (380,696
    )OTHER INCOME (EXPENSE)Interest income
    
    
    5,228
    
    
    
    2,218
    
    
    
    500Interest expense
    
    
    (11,733
    )
    
    
    (17,892
    )
    
    
    (17,595
    )INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE
    
    
    (13,861
    )
    
    
    23,806
    
    
    
    (397,791
    )Income tax benefit (provision) before provision for valuation allowance
and reduction of deferred tax assets
    
    
    (13
    )
    
    
    (3
    )
    
    
    161,921Provision for valuation allowance for net deferred tax assets
    
    
    
    
    
    
    
    
    
    
    (70,304
    )Reduction of deferred tax asset for net operating loss carry forwards resulting from ownership change
    
    
    
    
    
    
    
    
    
    
    (16,678
    )Total income tax benefit (provision)
    
    
    (13
    )
    
    
    (3
    )
    
    
    74,939INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES
    
    
    (13,874
    )
    
    
    23,803
    
    
    
    (322,852
    )CUMULATIVE EFFECT OF ACCOUNTING CHANGES, NET OF INCOME TAX BENEFIT OF $264 IN 2003
    
    
    
    
    
    
    6,035
    
    
    
    (408
    )NET INCOME (LOSS)
    
    
    (13,874
    )
    
    
    29,838
    
    
    
    (323,260
    )Other comprehensive income (loss), net of tax
    
    
    (12,437
    )
    
    
    (4,145
    )
    
    
    585COMPREHENSIVE INCOME (LOSS)
    
    $
    (26,311
    )
    
    $
    25,693
    
    
    $
    (322,675
    )Pro-forma amounts assuming the new amortization method is applied retroactively (see Note 3):NET INCOME (LOSS)
    
    
    
    
    
    $
    23,803
    
    
    $
    (241,729
    )
  66




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STILLWATER MINING COMPANY
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (in thousands, except per share data)
 (Continued)
 Year ended December 31,
    
    2005
    
    
    2004
    
    
    2003BASIC AND DILUTED EARNINGS (LOSS) PER SHAREIncome (loss) before cumulative effect of accounting changes
    
    $
    (13,874
    )
    
    $
    23,803
    
    
    $
    (322,852
    )Cumulative effect of accounting changes
    
    
    
    
    
    
    6,035
    
    
    
    (408
    )Net income (loss)
    
    $
    (13,874
    )
    
    $
    29,838
    
    
    $
    (323,260
    )Weighted average common shares outstandingBasic
    
    
    90,702
    
    
    
    90,180
    
    
    
    67,807Diluted
    
    
    90,702
    
    
    
    90,540
    
    
    
    67,807Basic earnings (loss) per shareIncome (loss) before cumulative effect of accounting changes
    
    $
    (0.15
    )
    
    $
    0.26
    
    
    $
    (4.76
    )Cumulative effect of accounting changes
    
    
    
    
    
    
    0.07
    
    
    
    (0.01
    )Net income (loss)
    
    $
    (0.15
    )
    
    $
    0.33
    
    
    $
    (4.77
    )Diluted earnings (loss) per shareIncome (loss) before cumulative effect of accounting changes
    
    $
    (0.15
    )
    
    $
    0.26
    
    
    $
    (4.76
    )Cumulative effect of accounting changes
    
    
    
    
    
    
    0.07
    
    
    
    (0.01
    )Net income (loss)
    
    $
    (0.15
    )
    
    $
    0.33
    
    
    $
    (4.77
    )Pro-forma amounts assuming the new amortization method is applied retroactively (see Note 3):Basic earnings (loss) per shareNet income (loss)
    
    
    
    
    
    $
    0.26
    
    
    $
    (3.56
    )Diluted earnings (loss) per shareNet income (loss)
    
    
    
    
    
    $
    0.26
    
    
    $
    (3.56
    )
  67




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STILLWATER MINING COMPANY
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts)
 December 31,
    
    2005
    
    
    2004ASSETSCurrent assetsCash and cash equivalents
    
    $
    80,260
    
    
    $
    96,052Restricted cash
    
    
    2,685
    
    
    
    2,650Investments, at fair market value
    
    
    55,668
    
    
    
    13,150Inventories
    
    
    86,634
    
    
    
    159,942Accounts receivable
    
    
    27,287
    
    
    
    18,186Deferred income taxes
    
    
    5,313
    
    
    
    6,247Other current assets
    
    
    11,064
    
    
    
    7,428Total current assets
    
    
    268,911
    
    
    
    303,655Property, plant and equipment, net
    
    
    445,199
    
    
    
    434,924Other noncurrent assets
    
    
    7,347
    
    
    
    6,139Total assets
    
    $
    721,457
    
    
    $
    744,718LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    14,407
    
    
    $
    15,029Accrued payroll and benefits
    
    
    17,801
    
    
    
    13,395Property, production and franchise taxes payable
    
    
    9,542
    
    
    
    9,183Current portion of long-term debt and capital lease obligations
    
    
    1,776
    
    
    
    1,986Portion of debt repayable upon liquidation of finished palladium in inventory
    
    
    7,324
    
    
    
    19,076Fair value of derivative instruments
    
    
    13,284
    
    
    
    3,918Accrued restructuring costs
    
    
    
    
    
    
    577Other current liabilities
    
    
    4,953
    
    
    
    3,027Total current liabilities
    
    
    69,087
    
    
    
    66,191Long-term debt and capital lease obligations
    
    
    132,307
    
    
    
    143,028Fair value of derivative instruments
    
    
    4,318
    
    
    
    1,047Deferred income taxes
    
    
    5,313
    
    
    
    6,247Other noncurrent liabilities
    
    
    16,888
    
    
    
    15,476Total liabilities
    
    
    227,913
    
    
    
    231,989Stockholders equityPreferred stock, $0.01 par value, 1,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 200,000,000 shares authorized, 90,992,045and
90,433,665 shares issued and outstanding
    
    
    910
    
    
    
    904Paid-in capital
    
    
    607,828
    
    
    
    600,708Accumulated deficit
    
    
    (97,792
    )
    
    
    (83,918
    )Accumulated other comprehensive loss
    
    
    (17,402
    )
    
    
    (4,965
    )Total stockholders equity
    
    
    493,544
    
    
    
    512,729Total liabilities and stockholders equity
    
    $
    721,457
    
    
    $
    744,718
  68




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##### Table of Contents



STILLWATER MINING COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Year ended December 31,
    
    2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (13,874
    )
    
    $
    29,838
    
    
    $
    (323,260
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    79,087
    
    
    
    57,369
    
    
    
    41,285Lower of cost or market inventory adjustment
    
    
    2,466
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    (74,733
    )Cumulative effect of change in accounting method
    
    
    
    
    
    
    (6,035
    )
    
    
    672Restructuring costs (credits), net
    
    
    (243
    )
    
    
    
    
    
    
    (966
    )Cash paid on accrued restructuring costs
    
    
    (334
    )
    
    
    (103
    )
    
    
    (280
    )Impairment of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    390,295Loss on disposal of property, plant and equipment
    
    
    112
    
    
    
    3,640
    
    
    
    Stock issued under employee benefit plans
    
    
    4,715
    
    
    
    3,934
    
    
    
    3,456Amortization of debt issuance costs
    
    
    624
    
    
    
    4,857
    
    
    
    3,069Share based compensation
    
    
    2,371
    
    
    
    1,071
    
    
    
    670Changes in operating assets and liabilities:Inventories
    
    
    73,024
    
    
    
    50,825
    
    
    
    (2,728
    )Accounts receivable
    
    
    (9,101
    )
    
    
    (14,409
    )
    
    
    14,870Accounts payable
    
    
    (622
    )
    
    
    5,248
    
    
    
    (4,529
    )Restricted cash
    
    
    (35
    )
    
    
    
    
    
    
    (400
    )Other
    
    
    2,944
    
    
    
    605
    
    
    
    (206
    )NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    141,134
    
    
    
    136,840
    
    
    
    47,215CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (92,074
    )
    
    
    (76,739
    )
    
    
    (55,256
    )Proceeds from disposal of property, plant and equipment
    
    
    129
    
    
    
    238
    
    
    
    Purchases of investments
    
    
    (98,419
    )
    
    
    (40,650
    )
    
    
    (18,775
    )Proceeds from sales and maturities of investments
    
    
    56,103
    
    
    
    39,350
    
    
    
    19,875NET CASH USED IN INVESTING ACTIVITIES
    
    
    (134,261
    )
    
    
    (77,801
    )
    
    
    (54,156
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt
    
    
    
    
    
    
    140,000
    
    
    
    Payments on long-term debt and capital lease obligations
    
    
    (22,683
    )
    
    
    (137,544
    )
    
    
    (59,191
    )Issuance of common stock related to Norilsk Nickel transaction (1)
    
    
    
    
    
    
    
    
    
    
    100,000Stock issuance costs related to Norilsk Nickel transaction
    
    
    
    
    
    
    
    
    
    
    (9,801
    )Issuance of common stock, net of stock issue costs
    
    
    40
    
    
    
    2,734
    
    
    
    175Payments for debt issuance costs
    
    
    (22
    )
    
    
    (3,838
    )
    
    
    (1,606
    )Other
    
    
    
    
    
    
    
    
    
    
    62NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    (22,665
    )
    
    
    1,352
    
    
    
    29,639CASH AND CASH EQUIVALENTSNet increase (decrease)
    
    
    (15,792
    )
    
    
    60,391
    
    
    
    22,698Balance at beginning of year
    
    
    96,052
    
    
    
    35,661
    
    
    
    12,963BALANCE AT END OF YEAR
    
    $
    80,260
    
    
    $
    96,052
    
    
    $
    35,661(1) Non-cash financing activitiesFair value of common stock issued
    
    
    
    
    
    
    
    
    
    $
    248,213Inventory received in connection with the Norilsk Nickel transaction
    
    
    
    
    
    
    
    
    
    
    (148,213
    )Issuance of common stock related to Norilsk Nickel transaction
    
    
    
    
    
    
    
    
    
    $
    100,000
  69




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STILLWATER MINING COMPANY
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (in thousands)
 Retained Earnings
    
    Accumulated OtherShares
    
    Common
    
    Paid-in
    
    (Accumulated
    
    Comprehensive Income
    
    Total StockholdersOutstanding
    
    Stock
    
    Capital
    
    Deficit)
    
    (Loss)
    
    EquityBALANCE AT DECEMBER 31, 20012
    
    
    43,587
    
    
    $
    436
    
    
    $
    350,679
    
    
    $
    209,504
    
    
    $
    (1,405
    )
    
    $
    559,214Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (323,260
    )
    
    
    
    
    
    
    (323,260
    )Change in net unrealized gains on derivative
financial instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    585
    
    
    
    585Common stock issued under employee benefit plans
    
    
    769
    
    
    
    8
    
    
    
    3,448
    
    
    
    
    
    
    
    
    
    
    
    3,456Common stock issued under stock plans
    
    
    45
    
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    175Tax benefit from stock options exercised
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    63Amortization of unearned restricted stock
    
    
    
    
    
    
    
    
    
    
    670
    
    
    
    
    
    
    
    
    
    
    
    670Forfeiture of unearned restricted stock
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase and retirement of common stock
    
    
    (2
    )
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    (18
    )Common stock issued in connection with Norilsk
Nickel transaction (see Note 14)
    
    
    45,463
    
    
    
    455
    
    
    
    237,957
    
    
    
    
    
    
    
    
    
    
    
    238,412BALANCE AT DECEMBER 31, 2003
    
    
    89,849
    
    
    $
    899
    
    
    $
    592,974
    
    
    $
    (113,756
    )
    
    $
    (820
    )
    
    $
    479,297Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,838
    
    
    
    
    
    
    
    29,838Change in net unrealized gains on derivative
financial 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
    
    
    
    
    
    
    
    
    
    
    
    2,734Restricted shares of common stock granted to
officers and employees
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned restricted 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 derivative
financial 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
    
    
    
    
    
    
    
    
    
    
    
    33Restricted shares of common stock granted to
officers and employees
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned restricted stock
    
    
    
    
    
    
    
    
    
    
    1,934
    
    
    
    
    
    
    
    
    
    
    
    1,934BALANCE AT DECEMBER 31, 2005
    
    
    90,992
    
    
    $
    910
    
    
    $
    607,828
    
    
    $
    (97,792
    )
    
    $
    (17,402
    )
    
    $
    493,544
  70




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##### Table of Contents



STILLWATER MINING COMPANY
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1
NATURE OF OPERATIONS
    NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 PRINCIPLES OF CONSOLIDATION
  CASH AND CASH EQUIVALENTS
  RESTRICTED CASH
  INVESTMENTS
  INVENTORIES
   71




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##### Table of Contents



RECEIVABLES
  PROPERTY, PLANT AND EQUIPMENT
      LEASES
 Accounting for
Leases.
 72




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##### Table of Contents



ASSET IMPAIRMENT
 Accounting for
the Impairment or Disposal of Long-
Lived Assets.
  FAIR VALUE OF FINANCIAL INSTRUMENTS
  REVENUE RECOGNITION
  Revenue Recognition
 HEDGING PROGRAM
 Accounting for Derivative Instruments and Hedging Activities Accounting for
Derivative Instruments and Certain Hedging Activities, and Amendment of Statement 133
on Derivative Instruments and Hedging Activities,
   73




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##### Table of Contents



METALS REPURCHASE TRANSACTIONS
 Accounting for Product Financing Arrangements,
 RECLAMATION AND ENVIRONMENTAL COSTS
 Accounting for
Asset Retirement Obligations.
   INCOME TAXES
 Accounting for Income Taxes
  STOCK-BASED COMPENSATION
 Share Based Payment
 Accounting for Stock-Based
Compensation.
 74




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##### Table of Contents



(in thousands)
    
    2004
    
    
    2003Net income (loss), as reported
    
    $
    29,838
    
    
    $
    (323,260
    )Add stock-based employee compensation expense included in reported net income (loss), net of tax
    
    
    1,071
    
    
    
    670Deduct total stock-based employee compensation expense determined under fair-value based method
for all rewards, net of tax
    
    
    (1,787
    )
    
    
    (1,836
    )Pro forma net income (loss)
    
    $
    29,122
    
    
    $
    (324,426
    )Earnings (loss) per share, as reported:Basic
    
    $
    0.33
    
    
    $
    (4.77
    )Diluted
    
    $
    0.33
    
    
    $
    (4.77
    )Pro forma earnings (loss) per share:Basic
    
    $
    0.32
    
    
    $
    (4.78
    )Diluted
    
    $
    0.32
    
    
    $
    (4.78
    )
 75




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##### Table of Contents



EARNINGS (LOSS) PER SHARE
    COMPREHENSIVE INCOME
  DEBT ISSUANCE COSTS
  STOCK ISSUANCE COSTS
  USE OF ESTIMATES
  76




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##### Table of Contents



NOTE 3
CHANGE IN AMORTIZATION METHOD FOR MINE DEVELOPMENT ASSETS
     NOTE 4
INVESTMENTS
   Gross
    
    
    Grossunrealized
    
    
    unrealized
    
    
    Fair(in thousands)
    
    Cost
    
    
    gains
    
    
    losses
    
    
    market valueAt December 31, 2005Available for sale:Federal agency notes
    
    $
    37,719
    
    
    $
    89
    
    
    $
    
    
    
    $
    37,808Commercial paper
    
    
    17,747
    
    
    
    113
    
    
    
    
    
    
    
    17,860$
    55,466
    
    
    $
    202
    
    
    $
    
    
    
    $
    55,668
  77




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##### Table of Contents



NOTE 5
INVENTORIES
     (in thousands)
    
    2005
    
    
    2004Metals inventoryRaw ore
    
    $
    2,206
    
    
    $
    672Concentrate and in-process
    
    
    24,661
    
    
    
    20,512Finished goods
    
    
    35,945
    
    
    
    42,777Palladium inventory from Norilsk Nickel transaction
    
    
    10,694
    
    
    
    84,83573,506
    
    
    
    148,796Materials and supplies
    
    
    13,128
    
    
    
    11,146$
    86,634
    
    
    $
    159,942
 NOTE 6
PROPERTY, PLANT AND EQUIPMENT
  (in thousands)
    
    2005
    
    
    2004Machinery and equipment
    
    $
    51,987
    
    
    $
    40,224Leased equipment
    
    
    2,666
    
    
    
    2,766Buildings and structural components
    
    
    142,438
    
    
    
    142,115Mine development
    
    
    300,407
    
    
    
    238,132Land
    
    
    7,721
    
    
    
    7,721Construction-in-progress:Stillwater Mine
    
    
    47,488
    
    
    
    43,217East Boulder Mine
    
    
    33,334
    
    
    
    20,095Other construction-in-progress
    
    
    554
    
    
    
    460586,595
    
    
    
    494,730Less accumulated depreciation and amortization
    
    
    (141,396
    )
    
    
    (59,806
    )$
    445,199
    
    
    $
    434,924
 78




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##### Table of Contents



(in thousands)
    
    2005
    
    
    2004
    
    
    2003Stillwater Mine
    
    $
    53,059
    
    
    $
    47,052
    
    
    $
    41,985East Boulder Mine
    
    
    38,041
    
    
    
    25,095
    
    
    
    13,037Other construction-in-progress
    
    
    1,005
    
    
    
    4,712
    
    
    
    565Total capital expenditures
    
    
    92,105
    
    
    
    76,859
    
    
    
    55,587Acquired by capital lease transactions
    
    
    (31
    )
    
    
    (120
    )
    
    
    (331
    )Total cash paid for capital expenditures
    
    $
    92,074
    
    
    $
    76,739
    
    
    $
    55,256
 79




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##### Table of Contents



NOTE 7
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
 CREDIT AGREEMENT
         80




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##### Table of Contents



Term facility (inYear ended
    
    thousands)2006
    
    
    1,1112007
    
    
    1,1112008
    
    
    1,1112009
    
    
    1,1112010
    
    
    105,003Total
    
    $
    109,447
 EQUIPMENT LEASE AGREEMENTS
  Year ended December 31, (in thousands)2006
    
    
    6262007
    
    
    5932008
    
    
    5192009
    
    
    5642010
    
    
    15Total minimum lease payments
    
    
    2,317Less amount representing interest
    
    
    304Present value of net minimum lease payments
    
    
    2,013Less current portion
    
    
    501Total long-term capital lease obligation
    
    $
    1,512
 EXEMPT FACILITY REVENUE BONDS
  SPECIAL INDUSTRIAL EDUCATION IMPACT REVENUE BONDS
  81




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##### Table of Contents



CASH PAID FOR INTEREST
  NOTE 8
RESTRUCTURING COSTS
   TotalContract
    
    
    Employee
    
    
    Restructuring(in thousands)
    
    Terminations
    
    
    Terminations
    
    
    AccrualBalance at December 31, 2002
    
    $
    1,659
    
    
    $
    267
    
    
    $
    1,926Cash paid
    
    
    (13
    )
    
    
    (267
    )
    
    
    (280
    )Accural adjustments
    
    
    (966
    )
    
    
    
    
    
    
    (966
    )Balance at December 31, 2003
    
    $
    680
    
    
    $
    
    
    
    $
    680Cash paid
    
    
    (103
    )
    
    
    
    
    
    
    (103
    )Balance at December 31, 2004
    
    $
    577
    
    
    $
    
    
    
    $
    577Cash paid
    
    
    (334
    )
    
    
    
    
    
    
    (334
    )Accrual adjustments
    
    
    (243
    )
    
    
    
    
    
    
    (243
    )Balance at December 31, 2005
    
    $
    
    
    
    $
    
    
    
    $
    
 NOTE 9
ASSET RETIREMENT OBLIGATION
      82




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##### Table of Contents



Stillwater
    
    
    East Boulder(in thousands)
    
    Mine
    
    
    Mine
    
    
    TotalBalance at January 1, 2003
    
    $
    3,093
    
    
    $
    681
    
    
    $
    3,774Accretion expense
    
    
    280
    
    
    
    62
    
    
    
    342Balance at December 31, 2003
    
    $
    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
    
    
    $
    6,792Accretion expense
    
    
    370
    
    
    
    166
    
    
    
    536Balance at December 31, 2005
    
    $
    5,346
    
    
    $
    1,982
    
    
    $
    7,328
 NOTE 10
ASSET IMPAIRMENT
   NOTE 11
EMPLOYEE BENEFIT PLANS
  83




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##### Table of Contents



NOTE 12
COMMON STOCK PLANS AND AGREEMENTS
 STOCK PLANS
      Omnibus Opinion  1967 Accounting for Deferred
Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested
  84




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##### Table of Contents



Year ended December 31,
    
    2005
    
    2004
    
    2003Weighted average expected lives (years)
    
    
    3.7
    
    
    
    3.7
    
    
    
    3.8Interest rate
    
    
    4.4
    %
    
    
    2.8
    %
    
    
    2.4
    %Volatility
    
    
    56
    %
    
    
    64
    %
    
    
    64
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
 85




---



##### Table of Contents



Weighted-AverageWeighted Average
    
    
    Grant-Date FairShares
    
    
    Exercise Price
    
    
    ValueOptions outstanding at December 31, 2002
    
    
    2,551,445
    
    
    $
    22.19Options exercisable at December 31, 2002
    
    
    1,896,833
    
    
    
    
    
    
    
    2003 ActivityOptions granted
    
    
    253,325
    
    
    
    5.08
    
    
    $
    2.15Options exercised
    
    
    (44,963
    )
    
    
    3.91
    
    
    
    Options canceled/forfeited
    
    
    (406,547
    )
    
    
    23.48
    
    
    
    Options outstanding at December 31, 2003
    
    
    2,353,260
    
    
    $
    20.48
    
    
    
    Options exercisable at December 31, 2003
    
    
    2,037,5132004 ActivityOptions granted
    
    
    90,575
    
    
    
    13.98
    
    
    $
    6.62Options exercised
    
    
    (277,620
    )
    
    
    9.95
    
    
    
    Options canceled/forfeited
    
    
    (434,277
    )
    
    
    24.08
    
    
    
    Options outstanding at December 31, 2004
    
    
    1,731,938
    
    
    $
    20.92
    
    
    
    Options exercisable at December 31, 2004
    
    
    1,521,2042005 ActivityOptions granted
    
    
    68,800
    
    
    
    9.73
    
    
    $
    4.49Options exercised
    
    
    (11,429
    )
    
    
    3.65
    
    
    
    Options canceled/forfeited
    
    
    (274,300
    )
    
    
    22.72
    
    
    
    Options outstanding at December 31, 2005
    
    
    1,515,009
    
    
    $
    20.22
    
    
    
    Options exercisable at December 31, 2005
    
    
    1,360,819
   Options Outstanding
    
    Options ExercisableAverage
    
    Weighted
    
    
    
    
    
    WeightedRange of
    
    Number
    
    Remaining
    
    Average
    
    Number
    
    AverageExercise Price
    
    Outstanding
    
    Contract Life
    
    Exercise Price
    
    Exercisable
    
    Exercise Price$
2.31  $4.66
    
    
    38,176
    
    
    
    6.6
    
    
    $
    2.74
    
    
    
    20,533
    
    
    $
    2.77$
4.67  $9.33
    
    
    178,992
    
    
    
    7.7
    
    
    $
    6.75
    
    
    
    126,630
    
    
    $
    6.40$ 9.34  $13.99
    
    
    119,747
    
    
    
    4.8
    
    
    $
    12.29
    
    
    
    74,818
    
    
    $
    12.90$14.00  $18.65
    
    
    340,670
    
    
    
    3.4
    
    
    $
    15.67
    
    
    
    301,414
    
    
    $
    15.81$18.66  $23.31
    
    
    307,549
    
    
    
    5.7
    
    
    $
    19.37
    
    
    
    307,549
    
    
    $
    19.37$23.32  $27.98
    
    
    204,550
    
    
    
    3.1
    
    
    $
    26.49
    
    
    
    204,550
    
    
    $
    26.49$27.99  $32.64
    
    
    111,225
    
    
    
    3.7
    
    
    $
    30.41
    
    
    
    111,225
    
    
    $
    30.41$32.65  $37.30
    
    
    119,375
    
    
    
    4.7
    
    
    $
    34.59
    
    
    
    119,375
    
    
    $
    34.59$37.31  $41.97
    
    
    94,725
    
    
    
    3.0
    
    
    $
    38.20
    
    
    
    94,725
    
    
    $
    38.201,515,009
    
    
    
    4.6
    
    
    $
    20.22
    
    
    
    1,360,819
    
    
    $
    21.39
  86




---



##### Table of Contents



Weighted-AverageNonvested Options
    

Options
    
    
    Grant-Date Fair ValueNonvested options at January 1, 2005
    
    210,734
    
    $10.70Options granted
    
    68,800
    
    9.73Options vested
    
    (110,115)
    
    11.27Options forfeited
    
    (15,229)
    
    10.30Nonvested options at December 31, 2005
    
    154,190
    
    9.90
  RIGHTS AGREEMENT
  NOTE 13
INCOME TAXES
  Year ended December 31, (in thousands)
    
    2005
    
    
    2004
    
    
    2003Current federal
    
    $
    
    
    
    $
    
    
    
    $
    Current state
    
    
    13
    
    
    
    3
    
    
    
    Total current
    
    
    13
    
    
    
    3
    
    
    
    Deferred federal
    
    
    
    
    
    
    
    
    
    
    (60,620
    )Deferred state
    
    
    
    
    
    
    
    
    
    
    (14,583
    )Total deferred
    
    
    
    
    
    
    
    
    
    
    (75,203
    )Total income tax provision (benefit)
    
    
    13
    
    
    
    3
    
    
    
    (75,203
    )Less: Income tax allocated to cumulative effect adjustment
    
    
    
    
    
    
    
    
    
    
    264Net income tax provision (benefit)
    
    $
    13
    
    
    $
    3
    
    
    $
    (74,939
    )
  87




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##### Table of Contents



December 31, (in thousands)
    
    2005
    
    
    2004Mine development costs
    
    $
    68,184
    
    
    $
    57,647Inventory
    
    
    832
    
    
    
    Total deferred tax liabilities
    
    
    69,016
    
    
    
    57,647Noncurrent liabilities
    
    
    (5,446
    )
    
    
    (4,552
    )Property and equipment
    
    
    (19,323
    )
    
    
    (23,132
    )Current liabilities
    
    
    (6,146
    )
    
    
    (5,075
    )Inventory
    
    
    
    
    
    
    (1,172
    )Net operating loss and other carryforwards
    
    
    (105,776
    )
    
    
    (86,043
    )Total deferred tax assets
    
    
    (136,691
    )
    
    
    (119,974
    )Valuation allowance
    
    
    67,675
    
    
    
    62,327Net deferred tax assets
    
    
    (69,016
    )
    
    
    (57,647
    )Net deferred tax liabilities
    
    $
    
    
    
    $
    
   Year ended December 31, (in thousands)
    
    2005
    
    
    2004
    
    
    2003Income (loss) before income taxes and cumulative
effect of accounting change
    
    $
    (13,861
    )
    
    $
    23,806
    
    
    $
    (397,791
    )Income tax (benefit) or expense at statutory rate of 35%
    
    $
    (4,851
    )
    
    $
    8,332
    
    
    $
    (139,227
    )State income tax benefit, net of federal benefit
    
    
    (608
    )
    
    
    1,044
    
    
    
    (17,453
    )Adjustments to prior years tax provisions
    
    
    (4
    )
    
    
    (92
    )
    
    
    (3,333
    )Reduction of net operating losses resulting from ownership change
    
    
    
    
    
    
    
    
    
    
    16,678Change in valuation allowance
    
    
    5,348
    
    
    
    (7,977
    )
    
    
    70,304Other
    
    
    128
    
    
    
    (1,304
    )
    
    
    (1,908
    )Net income tax provision (benefit)
    
    $
    13
    
    
    $
    3
    
    
    $
    (74,939
    )
   NOTE 14
CAPITAL TRANSACTIONS
  88




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##### Table of Contents



NOTE 15
SALES CONTRACTS
 Mine Production:
   89




---



##### Table of Contents



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
    
    Price2006
    
    
    100
    %
    
    $
    339
    
    
    
    31
    %
    
    $
    707
    
    
    
    80
    %
    
    $
    425
    
    
    
    16
    %
    
    $
    8562007
    
    
    100
    %
    
    $
    339
    
    
    
    16
    %
    
    $
    975
    
    
    
    70
    %
    
    $
    425
    
    
    
    14
    %
    
    $
    8502008
    
    
    82
    %
    
    $
    382
    
    
    
    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:
  90




---



##### Table of Contents



NOTE 16
DERIVATIVE INSTRUMENTS
 Commodity Derivatives
     Mine Production:
Financially Settled Forwards
 Platinum
    
    AverageOunces
    
    Price
    
    IndexFirst Quarter 2006
    
    
    24,900
    
    
    $
    820
    
    
    Monthly London PM AverageSecond Quarter 2006
    
    
    25,500
    
    
    $
    823
    
    
    Monthly London PM AverageThird Quarter 2006
    
    
    26,500
    
    
    $
    838
    
    
    Monthly London PM AverageFourth Quarter 2006
    
    
    26,500
    
    
    $
    887
    
    
    Monthly London PM AverageFirst Quarter 2007
    
    
    24,000
    
    
    $
    893
    
    
    Monthly London PM AverageSecond Quarter 2007
    
    
    20,000
    
    
    $
    925
    
    
    Monthly London PM AverageThird Quarter 2007
    
    
    19,500
    
    
    $
    947
    
    
    Monthly London PM AverageFourth Quarter 2007
    
    
    15,500
    
    
    $
    985
    
    
    Monthly London PM AverageFirst Quarter 2008
    
    
    3,000
    
    
    $
    893
    
    
    Monthly London PM AverageSecond Quarter 2008
    
    
    3,000
    
    
    $
    909
    
    
    Monthly London PM Average
 Catalyst Recycling:
Fixed Forwards
 Platinum
    
    
    Palladium
    
    
    RhodiumOunces
    
    
    Price
    
    
    Ounces
    
    
    Price
    
    
    Ounces
    
    
    PriceFirst Quarter 2006
    
    
    13,960
    
    
    $
    962
    
    
    
    6,410
    
    
    $
    263
    
    
    
    1,988
    
    
    $
    2,972
 Interest Rate Derivatives
  91




---



##### Table of Contents



TotalDerivativeCommodity
    
    
    Interest Rate
    
    
    Financial(in thousands)
    
    Instruments
    
    
    Swaps
    
    
    InstrumentsBalance at December 31, 2002
    
    $
    
    
    
    $
    (2,318
    )
    
    $
    (2,318
    )Reclassification to earnings
    
    
    
    
    
    
    2,425
    
    
    
    2,425Change in fair value
    
    
    (910
    )
    
    
    (550
    )
    
    
    (1,460
    )Balance at December 31, 2003
    
    $
    (910
    )
    
    $
    (443
    )
    
    $
    (1,353
    )Reclassification to earnings
    
    
    844
    
    
    
    443
    
    
    
    1,287Change in fair value
    
    
    (4,899
    )
    
    
    
    
    
    
    (4,899
    )Balance at December 31, 2004
    
    $
    (4,965
    )
    
    $
    
    
    
    $
    (4,965
    )Reclassification to earnings
    
    
    8,021
    
    
    
    
    
    
    
    8,021Change in fair value of derivatives
    
    
    (20,660
    )
    
    
    
    
    
    
    (20,660
    )Balance at December 31, 2005
    
    $
    (17,604
    )
    
    $
    
    
    
    $
    (17,604
    )
 NOTE 17
SEGMENT INFORMATION
     92




---



##### Table of Contents



Mine
    
    
    Recycling
    
    
    All(in thousands)
    
    Production
    
    
    Activities
    
    
    Other
    
    
    TotalYear ended December 31, 2005Revenues
    
    $
    264,206
    
    
    $
    90,695
    
    
    $
    152,561
    
    
    $
    507,462Depreciation and amortization
    
    $
    79,032
    
    
    $
    55
    
    
    $
    
    
    
    $
    79,087Interest income
    
    
    
    
    
    $
    1,221
    
    
    $
    4,007
    
    
    $
    5,228Interest expense
    
    
    
    
    
    $
    
    
    
    $
    11,733
    
    
    $
    11,733Income (loss) before income taxes and
cumulative effect of accounting change
    
    $
    (5,109
    )
    
    $
    6,339
    
    
    $
    (15,091
    )
    
    $
    (13,861
    )Capital expenditures
    
    $
    92,076
    
    
    $
    29
    
    
    $
    
    
    
    $
    92,105Total assets
    
    $
    488,508
    
    
    $
    27,446
    
    
    $
    205,503
    
    
    $
    721,457Year ended December 31, 2004Revenues
    
    $
    266,684
    
    
    $
    76,388
    
    
    $
    104,455
    
    
    $
    447,527Depreciation and amortization
    
    $
    57,321
    
    
    $
    48
    
    
    $
    
    
    
    $
    57,369Interest income
    
    $
    
    
    
    $
    1,082
    
    
    $
    1,136
    
    
    $
    2,218Interest 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
    
    
    $
    744,718Year ended December 31, 2003Revenues
    
    $
    240,406
    
    
    $
    8,866
    
    
    $
    6,551
    
    
    $
    255,823Depreciation and amortization
    
    $
    41,285
    
    
    $
    71
    
    
    $
    
    
    
    $
    41,356Interest income
    
    $
    
    
    
    $
    74
    
    
    $
    426
    
    
    $
    500Interest expense
    
    $
    
    
    
    $
    
    
    
    $
    17,595
    
    
    $
    17,595Income (loss) before income taxes and
cumulative effect of accounting change
    
    $
    (364,549
    )
    
    $
    881
    
    
    $
    (34,123
    )
    
    $
    (397,791
    )Capital expenditures
    
    $
    55,166
    
    
    $
    
    
    
    $
    90
    
    
    $
    55,256Total assets
    
    $
    454,256
    
    
    $
    10,649
    
    
    $
    225,683
    
    
    $
    690,588
 NOTE 18
COMMITMENTS AND CONTINGENCIES
  REFINING AGREEMENTS
  PURCHASE COMMITMENT
  93




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##### Table of Contents



OPERATING LEASES
   Minimum LeaseYear ended (in thousands)
    
    Payment2006
    
    
    5542007
    
    
    4562008
    
    
    4292009
    
    
    1602010
    
    
    1602011 and thereafter
    
    
    642Total
    
    $
    2,401
 SIGNIFICANT CUSTOMERS
  2005
    
    
    2004
    
    
    2003Customer A
    
    
    38
    %
    
    
    43
    %
    
    
    65
    %Customer B
    
    
    20
    %
    
    
    *
    
    
    
    23
    %Customer C
    
    
    20
    %
    
    
    15
    %
    
    
    *Customer D
    
    
    *
    
    
    
    15
    %
    
    
    *78
    %
    
    
    73
    %
    
    
    88
    %
 
 *
    
    Represents less than 10% of total revenues LABOR UNION CONTRACTS
  LEGAL PROCEEDINGS
  REGULATIONS AND COMPLIANCE
  94




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##### Table of Contents



NOTE 19
QUARTERLY DATA (UNAUDITED)
  (in thousands, except per share data)
    
    2005 Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 31Revenue
    
    $
    127,404
    
    
    $
    125,410
    
    
    $
    119,118
    
    
    $
    133,676Depreciation and amortization
    
    $
    17,469
    
    
    $
    21,835
    
    
    $
    20,253
    
    
    $
    19,530Operating income
    
    $
    580
    
    
    $
    1,083
    
    
    $
    (7,338
    )
    
    $
    (1,681
    )Income (loss) before cumulative effect of accounting change
    
    $
    (1,211
    )
    
    $
    (615
    )
    
    $
    (9,114
    )
    
    $
    (2,935
    )Cumulative effect of accounting change, net
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net income (loss)
    
    $
    (1,211
    )
    
    $
    (615
    )
    
    $
    (9,114
    )
    
    $
    (2,935
    )Comprehensive income (loss)
    
    $
    261
    
    
    $
    (2,218
    )
    
    $
    (9,180
    )
    
    $
    (1,300
    )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
    )
 2004 Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 31As revised for change in accounting method: (1)Revenue
    
    $
    100,693
    
    
    $
    84,207
    
    
    $
    144,565
    
    
    $
    118,062Depreciation and amortization (2)
    
    $
    14,776
    
    
    $
    8,947
    
    
    $
    19,679
    
    
    $
    13,967Operating income (loss)
    
    $
    11,446
    
    
    $
    16,508
    
    
    $
    6,446
    
    
    $
    5,080Loss before cumulative effect of accounting change
    
    $
    7,830
    
    
    $
    13,534
    
    
    $
    (944
    )
    
    $
    3,383Cumulative effect of accounting change, net
    
    $
    6,035
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    $
    13,865
    
    
    $
    13,534
    
    
    $
    (944
    )
    
    $
    3,383Comprehensive loss
    
    $
    13,382
    
    
    $
    16,931
    
    
    $
    (6,047
    )
    
    $
    1,427Basic loss per share
    
    $
    0.15
    
    
    $
    0.15
    
    
    $
    (0.01
    )
    
    $
    0.04Diluted loss per share
    
    $
    0.15
    
    
    $
    0.15
    
    
    $
    (0.01
    )
    
    $
    0.04
 
 (1)
    
    During the fourth quarter of 2004, the Company changed its accounting method for
amortizing capitalized mine development costs. (See Note 3). The quarterly earnings
data for 2004 have been revised to give retroactive effect to the change in accounting
method as of January 1, 2004.(2)
    
    2004 depreciation and amortization have been restated to conform with current
year presentation. 95




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##### Table of Contents



ITEM 9
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A
CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
  
    
    pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
the assets of the Company;
 
    
    provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the
Company; and
 
    
    provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
Companys assets that could have a material effect on the
financial statements.
   
    
    The Company did not maintain effective company-level controls over financial reporting.
Specifically, the following deficiencies were identified:
 
    
    Inadequately trained personnel.The Company did not maintain sufficient
adequately trained personnel in accounting and other functions critical to financial
reporting with sufficient technical expertise to adequately review and resolve
complex technical accounting matters;
    
    Inadequate controls over the application of new accounting pronouncements.
The Company did not have effective policies and procedures in place to determine and
document the appropriate application of new significant accounting principles within
its financial reporting process; and
    
    Inadequate communication among departments.The Company did not have an
effective process in place to ensure that all relevant contractual and sales
information was communicated in a timely manner among the sales and accounting
functions.
 96




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##### Table of Contents




    
    Inadequate financial statement preparation and review procedures.The Companys policies
and procedures relating to the financial reporting process did not ensure that accurate and
reliable annual consolidated financial statements were prepared and reviewed in a timely
manner. Specifically, the Company had insufficient review and supervision within the
accounting and finance departments and preparation and review procedures for footnote
disclosures accompanying the Companys financial statements. These deficiencies resulted in
material accounting errors, misclassifications, and insufficient disclosures in the
Companys preliminary consolidated financial statements as of and for the year ended
December 31, 2005.
    
    Inadequate controls over consigned inventory at a third-party location. The Company did
not have adequate controls over the accounting for and safeguarding of metal inventory at a
third-party location to ensure that the amounts reflected in the general ledger represented
actual offsite consigned inventory amounts. Specifically, the Company had not designed and
implemented procedures requiring its personnel to (i) regularly confirm amounts of consigned
inventory on hand at the outside location; (ii) reconcile the amounts of consigned inventory
to the general ledger on a monthly basis; and (iii) periodically perform a physical
observation of the consigned inventory. These deficiencies resulted in material
misstatements of consigned inventory and cost of metals sold in the preliminary consolidated
financial statements.
    
    Inadequate controls over invoicing of by-product sales.The Company lacked adequate
controls to ensure that sales of by-products were properly reflected in the general ledger.
Specifically, the Company had not designed or implemented procedures related to by-products
requiring personnel to (i) invoice sales in a timely manner; (ii) reconcile sales to the
general ledger; (iii) match cash receipts to amounts invoiced; and (iv) verify and monitor
aging of receivables. These deficiencies resulted in a more than remote likelihood that a
material misstatement of the annual or interim financial statements would not be prevented
or detected.
   Changes in Internal Control Over Financial Reporting
   Remediation Efforts pertaining to Deficiencies noted in Managements Report on Internal
Control Over Financial Reporting
  97




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##### Table of Contents




    
    Increased sufficiency and training of personnel
 ü
    
    In January 2006, the Company appointed a new Corporate Controller.ü
    
    The Company has created new accounting and contract administration positions and
is filling positions currently vacant in order to reduce individual workload and
strengthen financial oversight.ü
    
    The Company is strengthening its training and orientation efforts within the finance function.
 
    
    Application of accounting new pronouncements
 ü
    
    The Company has expanded its process for developing, documenting and reviewing
accounting procedures for new accounting pronouncements.
 
    
    Communication among departments
 ü
    
    Accounting and metals reconciliations have been implemented and new management reports provided.ü
    
    The accounting department is assuming certain metals functions previously performed by other staff.ü
    
    A new contract administrator position has been established.ü
    
    The Corporate Controller will review all new and amended sales agreements as part
of the standard due diligence on new agreements.ü
    
    Other non-standard transactions also will be routed through the Corporate Controller.
 
    
    Financial statement preparation and review procedures
 ü
    
    The Company has created new accounting positions and is filling positions currently
vacant in order to reduce individual workload and strengthen financial oversight.ü
    
    The Company has expanded its supporting workpapers for the consolidated financial statements.
 
    
    Controls over consigned inventory at a third-party location
 ü
    
    Processes for approving and tracking metal consignments have been formalized.ü
    
    A new contract administrator position has been established to
oversee contract provisions.ü
    
    A metals inventory reconciliation has been implemented, and new management reports are being provided.
 
    
    Controls over invoicing of by-product sales
 ü
    
    A new metals administrator position has been created to track all products and by-products.ü
    
    The process over follow-up on delinquent collections has been formalized for by-product accounts receivable.
 98




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##### Table of Contents



ITEM 9B
Other Information
 Not Applicable
 
 PART III
 
 ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   Name
    
    Age
    
    PositionFrancis R. McAllister
    
    
    63
    
    
    Chairman of the Board and Chief Executive OfficerStephen A. Lang
    
    
    50
    
    
    Executive Vice President and Chief Operating OfficerJohn R. Stark
    
    
    53
    
    
    Vice President, Human Resources, Secretary and Corporate CounselTerrell I. Ackerman
    
    
    52
    
    
    Vice President, Planning and Process OperationsGregory A. Wing
    
    
    56
    
    
    Vice President, and Chief Financial Officer
  EXECUTIVE OFFICERS
 Francis R. McAllister (age 63)
 Stephen A. Lang (age 50)
 John R. Stark (age 53)
 Terrell I. Ackerman (age 52)
 99




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##### Table of Contents



Gregory A. Wing (age 56)
  Audit Committee Financial Expert
  Code of Ethics
  Corporate Governance
  NYSE CEO Certification
  
 ITEM 11
EXECUTIVE COMPENSATION
  
 ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
  100




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##### Table of Contents



ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14
PRINCIPAL ACCOUNTING FEES AND SERVICES
  
 PART IV
 
 ITEM 15
EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
   PageReport of Independent Registered Public Accounting Firm
    
    
    63Consolidated Statements of Operations and Comprehensive Income
(Loss)
    
    
    66Consolidated Balance Sheets
    
    
    68Consolidated Statements of Cash Flows
    
    
    69Consolidated Statements of Changes in Stockholders Equity
    
    
    70Notes to Consolidated Financial Statements
    
    
    71
   (c)
    
    Not applicable
 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, among 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, among 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).10.6
    
    Palladium and Platinum Sales Agreement, made as of August 27, 1998, among Stillwater Mining Company
and Mitsubishi Corporation (portions of the agreement have been omitted pursuant to a confidential
treatment request) (incorporated by reference to Exhibit 10.4 to the 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
    
    Description10.14
    
    First Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company,
Mitsubishi Corporation and Mitsubishi International Corporation, dated April 1, 2001 (incorporated by
reference to Exhibit 10.2 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).10.15
    
    Second Amendment Agreement to Palladium, Platinum and Rhodium Sales Agreement between Stillwater
Mining Company and Mitsubishi International Corporation, dated November 30, 2001(incorporated by
reference to Exhibit 10.26 of the Registrants 2001 10-K).10.16
    
    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).10.22
    
    Palladium Sales Agreement, made as of February 1, 2004, among Stillwater Mining Company and Mitsubishi
Corporation (incorporated by reference to Exhibit 10.38 to the Form 10-K filed on March 15,
2004(portions of this agreement have been omitted pursuant to a confidential treatment request).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, (filed herewith).
 103




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##### Table of Contents



Number
    
    Description10.35
    
    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 8-K 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).
 104




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##### Table of Contents



SIGNATURES
  STILLWATER MINING COMPANY
(Registrant)Dated: March 16, 2006
    By:
    /s/ Francis R. McAllisterFrancis R. McAllisterChairman and Chief Executive Officer  Signature and Title
    
    Date/s/ Francis R. McAllister
    
    March 16, 2006Francis R. McAllisterChairman, Chief Executive Officer and Director
(Principal Executive Officer)/s/ Gregory A. Wing
    
    March 16, 2006Gregory A. WingVice President and Chief Financial Officer(Principal Accounting Officer)/s/ Craig L. Fuller
    
    March 16, 2006Craig L. Fuller, Director/s/ Patrick M. James
    
    March 16, 2006Patrick M. James, Director/s/ Steven S. Lucas
    
    March 16, 2006Steven S. Lucas, Director/s/ Joseph P. Mazurek
    
    March 16, 2006Joseph P. Mazurek, Director/s/ Sheryl K. Pressler
    
    March 16, 2006Sheryl K. Pressler, Director/s/
Donald W. Riegle Jr.
    
    March 16, 2006Donald W. Riegle Jr., Director/s/ Todd D. Schafer
    
    March 16, 2006Todd D. Schafer, Director/s/ Jack E. Thompson
    
    March 16, 2006Jack E. Thompson, Director
 105




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##### Table of Contents



EXHIBITS 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, among 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, among 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).10.6
    
    Palladium and Platinum Sales Agreement, made as of August 27, 1998, among Stillwater Mining Company
and Mitsubishi Corporation (portions of the agreement have been omitted pursuant to a confidential
treatment request) (incorporated by reference to Exhibit 10.4 to the 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).
 106




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##### Table of Contents



Number
    
    Description10.14
    
    First Amendment Agreement to Palladium and Platinum Sales Agreement between Stillwater Mining Company,
Mitsubishi Corporation and Mitsubishi International Corporation, dated April 1, 2001 (incorporated by
reference to Exhibit 10.2 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).10.15
    
    Second Amendment Agreement to Palladium, Platinum and Rhodium Sales Agreement between Stillwater
Mining Company and Mitsubishi International Corporation, dated November 30, 2001(incorporated by
reference to Exhibit 10.26 of the Registrants 2001 10-K).10.16
    
    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).10.22
    
    Palladium Sales Agreement, made as of February 1, 2004, among Stillwater Mining Company and Mitsubishi
Corporation (incorporated by reference to Exhibit 10.38 to the Form 10-K filed on March 15,
2004(portions of this agreement have been omitted pursuant to a confidential treatment request).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).10.2710.28
    
    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).10.32
    
    Credit Agreement, dated August 3, 2004, between Stillwater Mining Company and TD Securities (USA), Ltd.10.33
    
    Contract between Stillwater Mining Company and USW International Union, Local 1, East Boulder Unit,,
effective July 10, 2005.10.34
    
    409A Nonqualified Deferred Compensation Plan
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##### Table of Contents



Number
    
    Description10.35
    
    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 Plan10.37
    
    Amendment No. 1 to Credit Agreement, dated August 3, 2004, between Stillwater Mining Company and TD
Securities (USA), Ltd.18.1
    
    Preferability letter from KPMG LLP
dated March 30, 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).
 108