Stillwater Mining Company Reports Fourth Quarter and 2013 Results

Achieves Record Revenue and Recycling PGM Ounces; Improves 2014 Guidance

BILLINGS, MT--(Marketwired - Mar 3, 2014) - Stillwater Mining Company (NYSE: SWC) (TSX: SWC.U)

• Record total revenues for 2013 of $1.04 billion, up 29.9% from 2012
• 2013 mine production of 523,900 PGM ounces, up from 513,700 ounces in 2012
• Company record 616,700 ounces of recycled PGMs processed for the full year of 2013, up 38.5% from 2012
• Consolidated net loss attributable to common stockholders for the full year 2013 of $270.2 million or $2.28 per share
• Impairment charges of $461.8 million (before-tax) taken on the Altar property in Argentina and the Marathon properties in Canada
• Cash and highly liquid investments totaling $496.0 million at December 31, 2013, reflecting convertible debt repayment of $164.3 million in 2013

Stillwater Mining Company today reported record revenues for 2013 of $1.04 billion, an increase of 29.9% compared to 2012 revenues of $800.2 million. The increase in total revenues reflects higher year-over-year PGM prices, as well as increased mine sales volumes and significantly higher volume of recycled material in 2013.

The Company reported a consolidated net loss attributable to common stockholders of $270.2 million or $2.28 per share for 2013. The result includes a $290.4 million (before-tax) impairment charge recorded in third quarter of 2013 for the Altar mineral property in Argentina, reducing the carrying value to its estimated fair market value of $102.0 million. In addition, during the fourth quarter, the Company recorded a $171.4 million (before-tax) impairment of its Marathon properties in Canada, reducing the carrying value of Marathon to the estimated fair market value of $57.2 million. The after-tax effects on consolidated net loss attributable to common stockholders for the Altar and Marathon impairments were reductions of $226.5 million and $93.2 million, respectively. Adjusted for these impairments, after-tax consolidated net income attributable to common stockholders would have been approximately $49.5 million for 2013, compared to $55.0 million in 2012.

Commenting on the results, Mick McMullen, the Company's President and Chief Executive Officer, stated, "The fourth quarter results reflect the initial progress we are making on our strategic priorities. We achieved record-level revenues for the year, reflecting our position as a world-class provider of PGM materials, and we also achieved a record year in our recycling segment. We are making progress on our goals of maximizing high margin production ounces and optimizing the performance of our metallurgical facilities. After just a short time as Stillwater's CEO, I am pleased with the rapid progress we are making and believe we can further improve our all-in sustaining costs. We exited 2013 on solid financial footing and improved flexibility with reduced debt levels and a superior liquidity profile.

"Moving forward, we are keenly focused on maximizing the value of output from the Montana mines, our core assets, while improving productivity and reducing production costs. Our capital allocation priorities are focused on strong payback projects and optimizing the capital structure in a manner that we believe will quickly create significant, sustainable value to shareholders. Based on the strong end to 2013 combined with the positive progress we are making year-to-date on our strategic priorities, we have elected to update and improve our previously provided financial guidance."

2014 Guidance:

For the year ended December 31, 2013, the Company's Montana mines produced a total of 523,900 ounces of palladium and platinum compared to mine production of 513,700 combined ounces in 2012.

2013 Mine Production by Quarter:

Revenue from the Company's Mine Production segment for the fourth quarter of 2013 (including proceeds from the sale of by-products) totaled $114.7 million, a 0.7% decrease from $115.5 million in the same period of 2012. Combined sales realizations for mined palladium and platinum were essentially flat for the fourth quarter of 2013, averaging $869 per mined ounce, compared to $867 per mined ounce realized in the fourth quarter of 2012. The total quantity of mined palladium and platinum ounces sold in the fourth quarter of 2013 was 125,000 ounces, essentially unchanged from the same period in 2012. Sales ounces were less than production during the quarter due to timing differences in inventory flows.

The Company processed recycling material containing 120,000 ounces of palladium, platinum and rhodium through its smelter and refinery during the fourth quarter of 2013. This represents an increase of 1.2% over the total of 118,600 ounces processed during the fourth quarter of 2012. For the year ended December 31, 2013, the Company processed a record 616,700 ounces of recycled PGMs, a 38.5% increase from approximately 445,200 ounces processed during the same period of 2012. The increased volumes in 2013 were attributable to the addition of new suppliers of recycling material and ounces attributable to recycling from the reprocessing of furnace brick from the Company's own smelting facility.

2013 Recycling Activity by Quarter:

Recycling sales volumes for the fourth quarter of 2013 increased by 49.2%, to 129,200 ounces from 86,600 ounces sold in the fourth quarter of 2012. PGM Recycling revenue totaled $127.7 million for the 2013 fourth quarter, a 45.3% increase from the $87.9 million in the same period of 2012. The Company's combined average realized price for sales of recycled palladium, platinum and rhodium decreased to $985 per ounce in the fourth quarter of 2013 from $1,012 per ounce in the fourth quarter of 2012.

Combined total cash costs per mined ounce, net of by-product and recycling credits, (a non-GAAP measure) averaged $496 per ounce for the year ended December 31, 2013. See - "Reconciliation of Non-GAAP Measures to Consolidated Costs of Revenues." Note that, for historical reasons, the Company's measurement of total cash costs per mined ounce customarily has been reported net of credits for sales of by-products from mining and also net of PGM Recycling segment margins. During the third quarter of 2013, the Company received significant revenue from the sale of PGM ounces recovered from used furnace brick attributable to recycling, which resulted in significantly higher than normal levels of PGM Recycling segment credits during 2013. These larger than normal PGM Recycling segment credits offset a portion of the growth in total cash costs per mined ounce for the full year 2013. Please see - "Current Operations - Reprocessing of Furnace Brick," in the Company's 2013 Form 10-K for further details. The table below illustrates the effect of by-product and recycling credits on the average cash costs per mined ounce net of credits for the combined Montana mining operations.

* These are non-GAAP measures. For a full description and reconciliation of these and other non-GAAP measures to GAAP accounting measures, see Reconciliation of Non-GAAP Measures to Consolidated Costs of Revenues and the accompanying discussion in the Company's 2013 Annual Report on Form 10-K.

The Company is also now utilizing another, broader non-GAAP measure of mining efficiency, All-In Sustaining Cost, in monitoring and managing its performance going forward. This non-GAAP measure starts with total cash costs net of credits and adds back the recycling credit, plus corporate general and administrative costs (before depletion, depreciation and amortization) and capital outlays directed toward sustaining operations at the Company's operating mines. The resulting measure provides a comparative indication of the all-in resources consumed in any period to sustain the mining operations and produce at current levels.

* These are non-GAAP measures. For a full description and reconciliation of these and other non-GAAP measures to GAAP accounting measures, please see Reconciliation of Non-GAAP Measures to Consolidated Costs of Revenues and the accompanying discussion in the Company's 2013 Annual Report on Form 10-K.

Cash Flow and Liquidity

At December 31, 2013, the Company's consolidated available cash balance was $286.7 million, compared to $379.7 million at December 31, 2012. If highly liquid investments are included with available cash, the Company's balance sheet liquidity totaled $496.0 million at December 31, 2013, a decrease from $641.7 million at December 31, 2012. Most of this decrease resulted from redeeming $164.3 million of convertible debt in March of 2013. Of the Company's year-end 2013 consolidated cash balance, $24.3 million was dedicated to the Marathon project (and other related Canadian properties) and is unavailable for other corporate purposes. Net working capital -- comprised of total current assets (including available cash and investments), less current liabilities -- increased to $614.8 million at December 31, 2013, from $606.0 million at the end of 2012.

Net cash provided by operating activities (which includes changes in working capital) totaled $149.4 million for the year ended December 31, 2013, compared to $103.9 million of cash provided for the same period of 2012. The growth in cash from operations for the year ended December 31, 2013 was largely driven by lower year-end recycling advances and higher non-cash interest expense associated with the 1.75% convertible debentures. Capital expenditures were $129.0 million for the year ended December 31, 2013, compared to $112.1 million in the same period of 2012. Of the capital expenditures for the year ended December 31, 2013, $93.9 million was attributable to ongoing investments in the Montana mines and processing facility. Year-to-date capital expenditures include $22.6 million attributable to the major developments underway along the J-M Reef in Montana, (Blitz and Graham Creek developments).

Outstanding balance sheet debt at December 31, 2013, was $310.7 million, down from $461.1 million at December 31, 2012. The Company's reported debt balance currently includes $274.0 million of 1.75% convertible debentures and $2.2 million of 1.875% convertible debentures, $29.6 million of exempt facility revenue bonds, a capital lease of $4.6 million and $0.3 million of financing for a small installment land purchase.

Other Matters

Notwithstanding the accounting impairment charge recorded in the third quarter of 2013, the Company is reviewing alternatives to optimize the value of its investment in the Altar project in Argentina. Some minimum level of annual expenditures will be required in order to maintain the Company's good standing and preserve its asset position at Altar. Future levels of exploration spending at Altar are discretionary and will be evaluated year by year.

The Company is currently completing a final feasibility study and an updated economic assessment of the Marathon PGM-copper project in Canada. As was announced previously, the initial findings of the feasibility study indicate that changes to the design and scale of the project will be required if the project is to achieve acceptable economic returns. Because these changes are likely to modify the environmental scope of the project, the joint federal and provincial panel responsible for reviewing the environmental impacts of the project has agreed to suspend its review activities until the final project scope is determined. At this stage, it is not yet clear if the scope changes being evaluated will be adequate to result in acceptable project economics. If an alternative project scope does result in an economically viable project, significant additional evaluation and design work will be required prior to any future decision to proceed with construction at Marathon.

Fourth Quarter Results - Details

For the fourth quarter of 2013, the Company's Stillwater Mine produced 98,700 ounces of palladium and platinum, an increase of 1.2% from the 97,500 ounces produced in the fourth quarter of 2012. Production at the Company's East Boulder Mine of 42,400 ounces in the fourth quarter of 2013 reflected an increase of 21.1% over the 35,000 ounces produced in the same quarter of 2012.

Costs of metals sold (before depletion, depreciation and amortization expense) increased to $201.4 million in the fourth quarter of 2013 from $155.6 million in the fourth quarter of 2012. Mine Production costs included in costs of metals sold increased to $76.9 million in the 2013 fourth quarter from $70.0 million in the 2012 fourth quarter. PGM Recycling costs, which primarily reflect the cost of acquiring spent catalytic materials for processing, totaled $124.5 million in the fourth quarter of 2013, significantly more than the $85.6 million reported in the fourth quarter of 2012. The increase was due to higher volumes sold and the associated higher total market value of the materials acquired for processing.

General and administrative costs were $6.1 million in the fourth quarter of 2013, down from the $8.9 million incurred during the same period of 2012. The decrease was primarily due to lower share-based compensation costs following vesting associated with the technical change in control in the second quarter of 2013. Exploration expenses were $0.9 million in the fourth quarter of 2013 compared to $1.2 million, in the same period of 2012. Marketing expenses declined to $0.2 million in the 2013 fourth quarter compared to $3.3 million in the same quarter of 2012, reflecting the curtailment of palladium jewelry marketing efforts in 2013.

Interest expense reported for the fourth quarter of 2013 and 2012 was $5.3 million and $6.6 million, respectively. This decrease is due in part to the pay down on the outstanding debt associated with the 1.875% convertible earlier in the year, offset by interest expense related to the 1.75% convertible debentures, including the accretion of the debt discount that is charged to earnings over the expected life of the convertible debentures and offset by capitalized interest recognized as a cost of the Company's ongoing projects.

During the fourth quarter of 2013, the Company recorded a net foreign currency transaction gain of $2.5 million, primarily related to the deferred tax liability recorded in association with the acquisition of Peregrine Metals Ltd. The net foreign currency transaction gain recorded for the fourth quarter of 2012 was $2.2 million.

2013 Full-Year Results - Details

For the year ended December 31, 2013, the Company's Stillwater Mine produced 366,100 ounces of palladium and platinum, a decrease of 3.0% from the 377,400 ounces produced in the same period of 2012. Production at the Company's East Boulder Mine of 157,800 ounces for the year ended December 31, 2013 reflected a 15.8% increase from the 136,300 ounces produced in the same period of 2012. During 2013 the Stillwater Mine experienced unexpected negative fluctuations in ore grade delivered to the mill, a challenge that was largely offset by better-than-expected ore grades realized at the East Boulder Mine. The 2013 ore quality variances at Stillwater Mine appear to have been isolated and not indicative of a longer-term issue and by the last two months of 2013, actual ore grades were above budgeted ore grades.

Costs of metals sold (before depletion, depreciation and amortization expense) increased to $841.3 million for the year ended December 31, 2013 from $623.9 million in the same period of 2012. Mine Production costs included in costs of metals sold increased to $314.0 million for the year ended December 31, 2013 from $288.9 million in the same period of 2012. PGM Recycling costs, which primarily reflect the cost of acquiring spent catalytic materials for processing, totaled $527.4 million for the year ended December 31, 2013, more than the $334.9 million reported in the same period of 2012. The increase was due to higher volumes sold and the related higher total cost to acquire materials for processing.

General and administrative costs were $42.0 million for the year ended December 31, 2013, up from the $40.9 million incurred during the same period of 2012. The Company recognized $11.2 million in total exploration expenses related to its mineral properties in both Canada and South America for the year ended December 31, 2013 and $15.0 million in the same period of 2012. Marketing expenses declined to $4.4 million for the year ended December 31, 2013 compared to $11.2 million in the same time period of 2012, reflecting the curtailment of marketing palladium for jewelry in 2013. As a result of the proxy contest and the change in control provisions in the Company's employee and director equity incentive plans, the Company recognized costs of $4.3 million and $9.1 million (non-cash), respectively, for the year ended December 31, 2013. These costs were incurred during the first and second quarters of 2013.

Interest expense reported for the year ended December 31, 2013, and 2012 was $23.0 million and $10.9 million, respectively. This increase is principally the result of the interest expense related to the 1.75% convertible debentures, including the accretion of the debt discount that is charged to earnings over the expected life of the convertible debentures and offset by capitalized interest recognized as a cost of the Company's ongoing projects.

During the years ended December 31, 2013 and 2012, the Company recorded a net foreign currency transaction gain of $18.2 million and $15.2 million, respectively. Approximately $17.4 million and $15.4 million of the 2013 and 2012 net gain, respectively, related to the remeasurement into U.S. dollars of the deferred taxes recorded in association with the acquisition of Peregrine Metals Ltd. The gain reflects the result of high inflation in Argentina as the obligation is remeasured from Argentine pesos into U.S. dollars.

2013 Results Webcast and Conference Call

Stillwater Mining Company will conduct a conference call to discuss 2013 results at 12:00 noon Eastern Standard Time on Monday, March 3, 2014.

Dial-In Numbers:
United States: (800) 288-9626
International: (612) 332-0228

The conference call will be simultaneously webcast through the Company's website at www.stillwatermining.com in the Investor Relations section.

A telephone replay of the call will be available for one week following the event. The replay dial-in numbers are (800) 475-6701 (U.S.) and (320) 365-3844 (International), access code 319541. In addition, the call transcript will be archived in the Investor Relations section of the Company's website.

About Stillwater Mining Company
Headquartered in Billings, Montana, Stillwater Mining Company is the only U.S. producer of platinum group metals (PGMs) and the largest primary producer of PGMs outside of South Africa and the Russian Federation. PGMs are rare precious metals used in a wide variety of applications, including auto catalysts, fuel cells, hydrogen purification, electronics, jewelry, dentistry, medicine, coinage and other uses. Stillwater Mining Company is engaged in the development, extraction, processing, smelting and refining of PGMs from a geological formation in southern Montana known as the J-M Reef. This is the only known significant source of PGMs in the United States and one of the highest grade PGM resources in the world. The Company also owns the Marathon PGM-copper deposit in Ontario, Canada and the Altar porphyry copper-gold deposit located in the San Juan province of Argentina. The Company's shares are traded on the New York Stock Exchange under the symbol SWC and on the Toronto Stock Exchange under the symbol SWC.U. Information about Stillwater Mining Company can be found at its website: www.stillwatermining.com

Some statements contained in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, therefore, involve uncertainties or risks that could cause actual results to differ materially. These statements may contain words such as "desires," "believes," "anticipates," "plans," "expects," "intends," "estimates" or similar expressions. Such statements also include, but are not limited to, comments regarding guidance; expansion plans, costs, grade, production and recovery rates; permitting; financing needs and the terms of future credit facilities; exchange rates; capital expenditures; increases in processing capacity; cost reduction measures; safety; timing for engineering studies; environmental permitting and compliance; litigating; labor matters; and the palladium, platinum, copper and gold market. These statements are not guarantees of the Company's future performance and are subject to risks, uncertainties and other important factors that could cause its actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Additional information regarding factors that could cause results to differ materially from management's expectations is found in the section entitled "Risk Factors" in the Company's 2013 Annual Report on Form 10-K, in its quarterly Form 10-Q filings, and in corresponding filings with Canadian securities regulatory authorities.

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

Reconciliation of Non-GAAP Measures to Consolidated Costs of Revenues

The Company utilizes certain non-GAAP measures as indicators in assessing the performance of its mining and processing operations during any period. Because of the processing time required to complete the extraction of finished PGM products, there are typically lags of one to three months between ore production and sale of the finished product. Sales in any period include some portion of material mined and processed from prior periods as the revenue recognition process is completed. Consequently, while costs of revenues (a GAAP measure included in the Company's Consolidated Statements of Comprehensive (Loss) Income) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP measures to assess the costs associated with its producing and processing activities in a particular period and to compare those costs between periods.

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

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

Total Cash Costs (Non-GAAP): This non-GAAP measure is calculated as total costs of revenues (for each mine or combined) adjusted to exclude gains or losses on asset dispositions, costs and profit from recycling activities, revenues from the sale of mine by-products, depreciation and amortization and asset retirement costs, and timing differences resulting from changes in product inventories. The Company uses this measure as a comparative indication of the cash costs related to production and processing operations in any period. It is a measure of extraction efficiency.

When divided by the total tons milled in the respective period, Total Cash Cost per Ton Milled (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of cash costs incurred per ton milled in that period. Because of variability of ore grade in the Company's mining operations, production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first weighed as they are fed into the mill, mill feed is the first point at which production tons are measured precisely. Consequently, Total Cash Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Cash Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.

When divided by the total recoverable PGM ounces from production in the respective period, Total Cash Cost per Ounce (Non-GAAP) -- measured for each mine or combined -- provides an indication of the level of cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because ultimately extracting PGM material is the objective of mining, the cash cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company's mines. Consequently, Total Cash Cost per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Cash Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.

Stillwater Mining Company
All-In Sustaining Cost a Non-GAAP Measure

All-In Sustaining Costs (Non-GAAP): This non-GAAP measure is used as an indicator from period to period of the level of total cash required by the business to maintain and operate the existing mines, including corporate administrative costs and replacement capital. The measure is calculated beginning with total cash costs (another non-GAAP measure, described above), and adding to it the recycling income credit, corporate overhead costs (excluding any depreciation and amortization costs and other non-recurring non-cash costs included in corporate overhead costs), marketing costs, and that portion of total capital expenditures associated with sustaining the current level of mining operations.

When divided by the total recoverable PGM ounces in the respective period, All-In Sustaining Costs per Ounce (non-GAAP) provides an indication of the level of total cash required to maintain and operate the mines per PGM ounce produced in the period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because the objective of PGM mining activity is to extract PGM material, the all-in cash cost per ounce to produce PGM material, administer the business and sustain the operating capacity of the mines is a useful measure for comparing overall extraction efficiency between periods. This measure is affected by the total level of spending in the period and by the grade and volume of ore produced.