Greetings and welcome to the Stillwater Mining Company Second Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mick McMullen, President and CEO. Thank you, sir. Please go ahead.

Thank you very much and thank you everyone for dialing in for our second quarter 2015 results presentation. I will run through the presentation firstly and then I will open the floor to questions. I am joined here by Chris Bateman, our Chief Financial Officer; and Mike Beckstead, our Head of Investor Relations. We have a deck that’s online and I would like to draw people's attention to the forward-looking statements on Slide 2, in particular, that we intend to make forward-looking statements including our 2015 mine production and cost estimates, maintaining a disciplined approach to operational efficiencies, additional opportunities future savings, adding a third TBM crew in August, receiving our Benbow portal payment by year-end, encouraging results from Graham Creek area, clear and concise action to protect shareholder interests, expected reduction in development rates, anticipated savings from headcount reductions and anticipated reorganization costs and positioning the company to withstand all phases of the PGM pricing cycle. All of those statements are subject to the statutory safe harbors and investors are cautioned not to put undue reliance on these forward-looking statements. We disclaim any obligation to update these forward-looking statements. We do encourage all investors to consider all the disclosures made in the company's annual report on Form 10-K. With that I might move into the body of the presentation on Slide 3 for the second quarter highlights. We did process 151,600 ounces of palladium, platinum and rhodium in the quarter, which was just under a 13% increase over the prior year. We had a record month in June, the highest ever, both ounces and tons that we have processed through the facility. We had a net loss of $27.3 million or $0.23 a share. That compared to $17.9 million or $0.14 a share of earnings in the prior year…

As Mick mentioned, we had a reported loss of $27.3 million. The after-tax impairment charge on our Marathon property in Canada was $34.3 million. This lead the Marathon property down to a fair value of $8.6 million. The other major driver in terms of earnings is the declining price environment compared to the corresponding period last year. Moving on to cash flow. This is the first quarter for quite some time that we haven't added cash although as we have said previously, build and recycling capital signals a strengthening of the recycling business. We added $11 million in recycling capital. We actually sold a lot more material in the quarter than we previously had but we did see a strengthening of the purchased material market in the quarter which led to more inventories there. Capital spending was right in line with our guidance of $30.3 million. So as a result the reduction in cash balance could be explained by the increase in recycling.

Thanks, Chris. Turning to Slide 7 where we look at the cost per ton performance for each operation and consolidated. Again, despite a large reduction in our all-in sustaining cost we did see continued reductions in our mine site costs. If you look at the Stillwater Mine, our cost per ton again came down to $227 a ton from the prior quarter. We will point out that our milling costs were quite a bit higher than the previous periods. That's because we expensed a mill motor replacement there which is the equivalent of around about $9 a ton. So adjusting for that, it's broadly in line with the previous periods. Our mining cost per ton continue to trend down after we had seen a little bit of a tick up in the previous quarter. You can see volumes despite a fairly extended shutdown in June, milled volumes were still reasonable but, again, we would like to see them higher. East Boulder continued a good cost performance, again, after we saw a bit of a tick up in mining cost in Q1. We saw that downward trend of the mining cost, again strong performance on the milling cost and the downstream cost. So I would say, overall, reasonably good cost control of both sides. We would still like to do better than that but an extended shutdown of that Stillwater Mine in June did drive that sort of increasing costs there. Turning to Slide 8. For this quarterly period we have broken out the all-in sustaining cost by month and the production just so that people can understand the impact of that shutdown we had at the Stillwater Mine. You can see from this graph here that the blue part of the bar is the production of the East Boulder Mine.…

[Operator Instructions] Our first question comes from the line of David Gagliano with BMO. Please go ahead with your questions.

Regarding the changes to the profile and considering obviously the weak pricing environment, I am wondering would you continue to run at a lower rate in 2016, i.e. defer capital spending. How should we be thinking about production profile for 2016?

Sure, David. Look, as you know we don’t give out our guidance for the next year yet. So I can't really go into the detail but I think the current plan that we are implementing now is a plan that we would expect to be in place for the next year or two at least. So as we have said previously before, we sort of expected to see modest increases in production between now and when Blitz hopefully comes online around about 2018. So I think our current guidance is a pretty reasonable view for the next year or so.

Okay. All right. That’s helpful. And then just in terms of the decline in unit cost moving forward. Can you just give us a bit of a sense as to how we should be thinking about that in terms of the timing? So it's a rather steep decline from the second quarter reported numbers. I am wondering how quickly that will come into play.

Well, we are rolling out the changes as we speak. And so, again, if you look at where we ended up in the second quarter, stripping up June with, the Stillwater Mine was down for two weeks out of the month effectively. I think if we can just get some consistency, we can deliver on those numbers quite readily. But the changes in terms of the capital spend, they are being rolled in now as we speak.

And then last question. On Slide 8, I appreciate the color on the decline in East Boulder in June -- I am sorry, in Stillwater in June. If I look at the Slide there for East Boulder, it also looks like there was a -- I mean if I just eyeball, it looks like there was about a rather significant decline from April to June, about 15% to maybe 20% decline in monthly production. Is that just monthly variability or is there anything else going on there?

No. And it wasn’t quite that large. April was a really strong month. Really strong.

Okay. Thanks.

So I think I can say that the East Boulder Mine continues to perform above budget, month in, month out. The only variable is how much it outperforms budget by.

Okay. Thank you. Our next question comes from the line of John Bridges with JP Morgan. Please go ahead with your question.

I just wonder what you could say about the situation of the labor negotiations. Where do you see things going from here?

Sure. Thanks, John. Well, as we have announced, we believe we have reached impasse on the negotiations and which means that the union has proposed and the committee has recommended twice the same deal and their members have voted that down both times. And therefore we believe we have reached impasse. So the impasse enables us to implement our last, best final offer. We would obviously like, we would like to workforce to continue working. They are continuing working at this stage. But I think this is a very difficult pricing environment. You can see in terms of the cost structure the Stillwater Mine, changes need to be made, and as and when new information comes to hand we will be in a position to announce that. But as of this morning the workforce is working under the expired agreement.

I recognize this is a difficult situation probably for both parties. Just wondering, the hoist problem, what happened to lead to the extended outage?

One of the maintenance parts that was supplied by a manufacturer was incorrectly manufactured. And it's a credit to our teams actually that they managed to get the thing running with only an extra eight days, quite frankly. So that was the main issue, is that when they went to replace the part, one of the main parts did actually turned out to be incorrectly manufactured.

And then given the long pipeline between your mine and money getting your checking account, just wondered, could you frame the rate at which this change in the PGM prices is going to work its way into your income statement.

Chris, I will hand that over to you.

You are looking typically at two to three months between it. But in terms of when the price hits, the price hits in the current month because we sell based on an average price for the month. In terms of how long from when we produce something, it's about two to three months before it's out. The price in July will hit our income statement because that’s what we will have sold the mine ounces, a small premium to the average price.

I am just wondering if there -- given the rapid change in price whether there is a sort of concentrated adjustment factors that could come in and surprise us there in Q3.

Sorry, John, it's not like where you have a provisional pricing and then a final settlement where, for instance in the base metal world if you have a rapid fall in copper price for instance, you can sometimes end up owing the smelter money that they have overpaid you for that. That's not the way we sell the stuff.

[Operator Instructions] Out next question comes from the line of Matthew Griffiths with Bank of America. Please go ahead with your question.

I just wanted to go back to the notification to the union that the negotiations have reached impasse and you mentioned just a moment ago that this allows you to implement your last, best and final offer. And I was wondering if you have actually done that or if you need a third-party like the labor board to agree with you that an impasse has been reached.

There is a notification period and as the press release says, the union was notified yesterday. So we just go through a process now.

Okay. And so on the union's side, what is the, kind of the way forward there. Their options, I would imagine would be that they could join work under the last, best, final offer or not? Just can you walk me through what might happen on their end?

Well, Matt, I don't think it's really up to me to speculate as to what someone else may or may not do. So I can't really comment on that.

So are they in a position, whether they do or not, where they could call for a strike?

Yes, they are.

Okay. And you would be under no obligation to be just held to hiring, using those people as workers? You would be able to go out and hire others if that occurred?

Well, I think again, rather than getting into speculating about what circumstances may or may not occur, I can't really going into details.

Okay. I was just wondering, like legally if you were prohibited from hiring now that the contract has expired? If you are prohibited from hiring others.

Well, again, I don't think it's useful to speculate on an earnings call what may or may not happen based on [indiscernible].

Okay. Fair enough. Okay. Just I had another question, if I may. You mentioned that the basket price using like the spot prices today, is still below the all-in sustaining cost. Is there any kind of level at which you could kind of shrink Stillwater and make the cost to be below the basket price?

Well, I think we have put updated guidance out and that’s where we think the costs will come in. But I do point out to you that if you look at, Slide 8 I think it was, we have at times being below $700 on our all-in sustaining cost. I think that if we can get the operations running consistently and we continue to see improvements in some of our cost savings measures, we might well get there. But that’s not where we are guiding today. I would say, as I have said sometimes in the past, the key to running a business such as this is consistency. We have shown that on occasions we can get the cost down to where we would be making money today. We are not doing it consistently today.

It's probably also where, we are still focused on keeping our developed state. So while we have cut sustaining capital in line with the reduced production, there has been times in the past where the company has looked at reducing the developed state for a short period of time to weather down cycles in the pricing. We haven't done that at this point in time but that’s obviously an option at some point in time as well as looking at some of the project capital expenditure.

[Operator Instructions] Our next question comes from the line of Daniel McConvey with Rossport Investments. Please go ahead with your questions.

Mick, you implied the planning you are doing in the low price environment. I am wondering, hopefully PGM prices are coming towards a bottom. But let's say they did drop 20%-25%, you have a net cash situation which is where you want to be and I am sure you want to preserve that net cash position. Do you have other contingency plans to cut back further and kind of wait out a period of extremely low metal prices should that happen?

Sure. And again it's speculating as to what may or may not happen, but in the event that prices were to fall significantly from these levels -- and I am not so sure they could for an extended period of time just given where the cost curve support is in the industry. But as Chris Bateman noted earlier, the plan we have at the moment is actually to maintain the developed state that we have and to continue all of our development projects. And our development capital this year, the midpoint of the guidance is around about $45 million a year. Clearly, if things got very very tough, you could delay, defer or slow down or suspend altogether that project capital. And you could also, if you wanted to defer or reduce your sustaining capital spend, which would have you eating into your developed state. But again if you are in a, let's just call it a survival situation and you wanted to maintain a very strong cash balance, that would always be an option as a next step plan. We are not there yet but, absolutely. We have a very very strong balance sheet. I think probably one of the best in the PGM space. And we do have lots of options left to go to do some other stuff. And look, the developed state is the, it's the strongest that’s ever been in the history of the company. So it's effectively money in the bank that if we needed to, we could actually cut back significantly on development and start eating into that. Now you could do that for a period of a couple of years with no impact on production and then if you wanted to ramp back up on production, you would need to catch up on that. But as I have said earlier, we consistently see that we can do more development than we budget for year-in, year-out. So that’s always an option if you need to. But we are not near to that.

Thank you. This concludes today's question-and-answer session. I would like to turn the floor back to Mr. McMullen for closing remarks.

Thank you. And I thank everyone for dialing in and their thoughtful questions. We look forward to speaking to everyone again at the next quarterly results. Thank you.