Greetings and welcome to the Stillwater Mining Company third quarter 2016 results conference. At this time, all participant are in a listen only mode. A question and answer session will follow the formal presentation. [Operator Instructions] as a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mick McMullen, President and CEO for Stillwater Mining. Thank you Mr. McMullen you may begin.

Thank you very much and thank you everyone for joining us this morning. I'm joined here by our CFO Chris Bateman, our VP Legal Brent Wadman, and Mike Beckstead our VP of IR. There is an earnings deck, which has been loaded up on the website and I'll refer to that and specifically we will try to refer to the page numbers as we turn through this. So if we go do that deck and look at Slide 2 the forward looking statements, I would like people to read that and in particular understand some of the assumptions and analysis that management's made to arrive at some of the content of this presentation. Moving on to Slide 3, the third quarter highlights, I would say that this quarter was an another solid quarter for us and it was very much characterized by another strong year-on-year improvement to their safety track record and it looks like we will improve on our 2015 year safety, which in itself was a record. And I think this is very important for us seeing that we continue to demonstrate that you can have safe production and they actually go hand-in-hand and that you don't need to sacrifice safety in order to get strong production. We believe that there are still further opportunities in safety, we are continuing to push forward on many initiatives and I'll talk about some of those as we go through the Slide deck. You can see our mined sales ounces was up significantly on the previous year to just under a 132,000 ounces, and not unsurprisingly our cost of metal sold was also down quite significantly compared to the previous year just under $500 of PGM ounce. As we often say PGM ounce we define as a mix of platinum and…

Thanks Mick. Income for the quarter was $12.6 million and from the blue line on the graph you will see that prices recovered Q3, 2016 that $764 per combined PGM ounce that compares to a Q2 prices $665 and Q3 last year was around $693. So good price deployments. That deployments came on lower sales volume, we sold 131,800 mined ounce compared to 150,900 in Q2. So we did see a small mined inventory build with production of 138,800 compared to 137,100 the prior quarter. Moving on to the balance sheet. We finished the quarter with $439.4 million in cash and cash equivalents in short-term investment. The real driver of the reduction was the build in working capital as we saw a stronger recycling segment. In total we have around about 150,000 ounces in our inventory from the Columbus complex through the Johnson Matthey and that's up from about 125,000 last quarter. Part of the build was difference in mined production to sales, but the vast bulk of the build was with the strengthening recycling segment. We continue to sell fund the investment in our business and with Mick touched on the suspending capital numbers. Our total cash capital in the quarter went up, we spent just under $24 million cash capital this quarter compared to just under $20 million cash capital in the prior quarter. So the drive in the cash position was good operating performance, continued investment in the capital programs and a build in the recycling working capital.

All right. Thanks Chris. Going to Slide 10, this is one that we have put in really for analysts if they want to build a model. So looking at our cash cost per ton milled. You can see there, there is a couple changes that I just want to talk about. At the Stillwater Mine you can see our mining cost per toned milled went up, if you look at the very bottom line you can say our tons milled was down a bit from the previous quarter. We did see a little bit of an inventory build on the mining side, so we mined more tons than we milled and therefore we therefore we spent the dollars, but because the denominated here is tons milled. You saw a slight increase in cost per ton and similarly at days followed we saw a bit of drawdown in inventory, so we did say a bit of reduction in tons milled. But in general, pretty solid performance across the board from our total ton stocks and we think that again, if you look at the quantum of the numbers, clearly the biggest opportunity for us is to continue to drive that mining cost down, maybe a little bit of opportunity administration cost. But the quantum of the mining cost means that that’s where we will continue to focus our efforts. Going to Slide 11 and I found this to be a very useful graph, I talk a lot about productivity and people say why does it matter and I point them to this graph, because you can clearly see a very strong inverse correlation between productivity and all-in sustaining costs per ounce. This is about one of the metrics that we use to measure productivity, which is ounces per employ per month.…

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session [Operator Instructions]. Our first question comes from the line of Andrew Quail from Goldman Sachs. Please proceed with your question.

Hi Mick, Chris and team. Thanks very much for the update congratulations on another strong quarter. Just wanted to get some comments around the likely impact of, obviously, U.S. scrap steel prices moving up on your recycling business, I know you commented, Mick, about keeping the market share constant. But can you just give us what you are seeing and any trends, especially from a destocking point of view on the U.S. autos?

Andrew, there is - for North America, there is a pretty close correlation in their volumes to U.S. scrap steel prices, less so for other markets actually. And so, as we see, if we see scrap steel prices strengthen, which we did see through Q3. Although, they’ve actually been weakened a little bit, so they seem to have flattened a bit now. There's a pretty close correlation between our volumes and scrap steel prices. So if we see scrap steel prices go up then we're going to see our U.S. North American volumes go up in result.

Just on your guidance, it obviously looks very achievable. Just looking into next year on something like G&A. Obviously, you have done a lot of work restructuring over the last couple of years. Is that 30 million to 40 million, something, that we can model out for next couple of years or is there further downside to that?

I think, we'd be comfortable staying within that 30 million to 40 million. Obviously, we haven’t given guidance for next year just yet. But we don't see anything that will materially change G&A at this point.

I'm always looking to save a few extra dollars here or there Andrew. But again we have made a pretty significant cut in, and I don't - you're not going to see how we did significant thing.

And Chris, maybe one for you again on tax, just as we do our models going forward and more steady-state for you guys. And prices, it looks like stabilized. What are you guys paying in tax going forward, and what's the reasonable effective tax rate?

I think, low to mid 20s is a reasonable effective tax rate with the mix of business that we've got at the moment. We're obviously able to take percentage deflation on the mining income, and that lowers our effective tax rate at that level.

Our next question comes from the line of Dave Gagliano from BMO Capital Markets. Please proceed with your question.

I wanted to focus-in on Blitz a little bit more. I wanted to drill down a little bit on a couple of things. First of all, can you give us a sense of, given the expanded scope of the project, any early read on sustaining CapEx after it's up and running? That's my first question.

Not really, yes, although we have said that it will get our all-in sustaining cost down to that low to mid 500s. So, it's it will be a little bit, if you took out current sustaining CapEx per ounce and reduce that slightly, that's probably the best indications I could give you at this point. And the reasons are that the design we have for Blitz, the newer design, is a little bit more capital efficient. And the ounces the grade is high, so you get more ounces out at the same amount of development.

And then I just want to get a sense as to, in terms of ground conditions and any other issues that we should be thinking about as this project - obviously the scope has expanded significantly. In your view, what are the major risks associated with execution now that the project has expanded?

I don’t really see any risks, new risks that arise because of the scope expansion. Because it's the same, basically the same start that we're doing. But I think the risks associated with delivery of the project are the following. In terms of, first, production; its development rates on the 53 declined and associated infrastructure. So that will determine the timing of when we get there. And then the next risks if we look into first production, we will be ground brand conditions. If you recall at the Stillwater operations that when you get the very high price and the wider ore-body, which is what we've got. You typically get worst ground condition. So we will be using cemented rock field for the first start. So it's just - it's really more of the timing risk, just in terms of getting all of that in place in time. In terms of the broader ramp-up on overall project execution, I would say the risks then become really the key risks then becomes the timing or breakthrough of the Benbow decline into either the 56 or the QDM grade, effectively whichever gets there first. Because that really limits you in terms of how quickly you can ramp-up to full production. Because there is only so much ventilation you can get in from the portal end. And until you get some sort of ventilation breakthrough that’s your key risk in terms of being able to ramp-up the full production. And as I alluded to in my presentation, there is a lot of work underway in terms of how do we optimize that vent and either derisk that further or come up with alternative plans that would allows us to actually accelerate in further, Because quite frankly that actually is the determining factor for ramping up to that 370,000 to 330,000 ounce a year production.

Okay, that's helpful. Thank you. And then just…

And the last risk that I'll talk about actually is water. We have hit probably more water than what we expected there. And so we can mine through the water. However, we can't just let the water come out then we have to treat that water. So a part of, a small part of, but a part of the increase in capital is we are actually going to spend some additional money next year on expanding our water treatment plant, which then allows us to derisk that more and push on a bit quicker hopefully.

One last one, I didn't hear the word labor in this discussion. And I'm wondering, and historically that has been an issue with regards to expanding and labor becoming a bit of a challenge. And so can you just comment a little bit about the labor situation moving forward with again the increased project scope and things like that?

We have not exhausted our recall list from the layoff that we had in August of last year, which means that there is still people that we laid-off that would still be available to come back and work for us. And our attrition rates are running very low, I would say off the top of my head 6% to 10% per annum, which if you go back to times past when the companies have challenges securing labor, the attrition rates have been 15%, 20% and 25%. And so at this stage, labor doesn’t appear to be a significant challenge for us. However, if we continue to ramp-up faster, that might become a challenge. But I would say this is that as we improve productivity, we can execute more activities with the same workforce.

Our next question comes from the line of Daniel McConvey with Rossport Investments. Please proceed with your question.

Mick, it will be historic to have the Stillwater plant as a constraint for production. When you look at your non-Blitz production going forward for the next decade or so, in your plans, it's stable. So the question, so everything we're going to get from Blitz is pretty much for that time period of the increment. Is that fair?

That is correct. The plan is for both operations flat to up slightly.

Okay.

Over that, actually 10 to 15-year period…

When is we've got the pre-fees. When is the feasibility coming on Blitz completed?

Well, we are not doing a separate feasibility study given that we are actually building it. We will be in production of this thing in just over 12 months time. So, we are not updating the market for a separate feasibility study on that.

And how much is ventilation challenged going forward? If I remember rightly - are you allowed to build more vents, more over-the-top?

We are, at the moment, the design for Blitz is for the bulk of the ventilation to come basically through connecting the two declines up, the one coming in from the Benbow end and the one coming in from the portal end, or the two coming in from the portal end. And that’s still the plan. However, that limits your ability to ramp-up before that happens. And so the work that’s underway at the moment is, is there a better plan for the period between now 2021, 2022, that would allow you to drag pull that ramp-up to full production. And that we don’t have the answer for all of that, we are working on at the moment. So the plan that we currently have is effectively the original plan, but that limits the time frame at which you can ramp-up the full production. So, I’m always a continuous improvement kind of guy. So if there’s a better plan that allows us to ramp-up the full production before that, we should be looking at that.

[Operator Instructions] Our next question comes from the line of Lawson Winder from Bank of America, Merrill Lynch. Please proceed with your question.

Hi Mick and team, thanks for doing the call and congratulations on the results, very-very nice. Just a couple of questions, first of all, maybe a little color around the slowdown you highlighted at Stillwater. Are you expecting to see tonnage come off, or is it just grade that'll be coming off? And I'm referring to Q4 and Q1 '17.

You won't see much of it in Q4. It's really going to be Q1. It's a bit of a grade and maybe a little tonnage. We use one of our better stopes, and we just - we have to take it offline, because basically we got to put the haulage infrastructure in place there, and it's probably for a quarter. And it's not going to be a material impact, but it'll be a few thousand ounces, I think.

So you expect to be done the work by the end of Q1 '17.

Half the way through Q2, I suspect. It depends on how quickly the work goes, and we will bake that into our guidance for next year. I'm not saying that it's going to be a hugely material impact. But I also like to - I also don't want people to get surprises, I'd rather give you a little heads up and say you know Q1 next year might see a few thousand ounces off relative to where we are. But also Q3 we've just delivered a very strong quarter. I like to give people a heads up anyway.

Well, that's much appreciated. Also, I noticed there is no Slide this quarter on the advanced rates the 56 East. Are you able to share that with us, I think the last update was June.

Yes, it's flat to down slightly. We haven't seen any big improvements there. Part of the reason is that we actually took those guys off onto the 53 and the 59. So again we - as I said earlier, the critical path, the first production six months ago was the 56. Now that we've got the 56 up, past where we need to go down to the first stope, the critical path to production is the 53. And so, we actually took the crew up there and pushed them from the 1st of August down under the 53. So we're continually looking at what is the critical path to get first production. And so while that was a 56, we pushed that hard. Then it became the 53. So now we're pushing that hard. And then it's going to become the 59. And so some of the capital that we have said that we have added in or dragged forward here is that we're going to spend about an extra $10 million on ramp up to the 59, which was previously scheduled for four or five years out, when they're going to - actually, we've already started it. And we're also going to spend another $10 million on our dedicated fleet for that 53, 59 and 56, which again we think will allow us to speed up a bit more.

So it sounds to me like the limiting factor in going full out on both 56 and 53 at the same time, there's just the amount of equipment that's available to you, is that fair?

That's one off.

And then the other I guess would be spending, or just how much you wish to spend?

When you got $440 million in the bank, I don't think that's a constraint. I think it’s also designed like - if you go back a year ago to today, the plant for bleach looks very different, which is fine. But you actually want to have that plant in place before you start making those changes. So we have been able to make some changes. But you’ve got to get the plant in place before you actually make those changes.

And then in the past or often in the past, you've guided to Blitz’s average grade being somewhere in the range of 0.6 to 0.7 ounce per ton. How would lower Blitz compared to that, may be like on a percentage versus the mid-point of that range?

It would be in the same range. I mean what we had said is that if you look at the drilling results from the first stope block that we have drilled out and we are now getting closer, having to do on the second stope block. The drilling we are seeing at the moment is at or above the top end to that grade range. I am not so sure put my hand and my heart and say the entire things got to be like that yet. But the first block will too look like being higher than that range.

You recently said in an interview, actually it was in September. You had indicated that you'd be looking to initiate a dividend. I think you’d said that it could be as early as 2017. I guess, in light of the additional spending you guys will be doing to increase the production at Blitz. Does the thinking on that timing changed at all? And then also, have you put any thought into potential levels?

Let me clarify. I said, look, my goal is that I think it would be good for shareholder at some form of return out of the business. I am not so sure I actually gave the timeframe of when we might look to do a dividend. But I think it's certainly something feedback, some shareholders indicates that, not all of them but reasonable amount of them would like to see something. But no, we haven't settled on what we think that mine look like. Yes, we are spending more money on Blitz or I really actually. But I don’t think we are spending a lot more money on Blitz. We're just spending it faster, which is, I think, that's a better thing. Because the faster you spend the money the cheaper it usually costs you. And our goal has always been to self-fund everything through operations. So, I don’t see the plan for Blitz really changing out thinking in terms of shareholder return, one way or another.

Our next question comes from the line of Lucas Pipes from FBR & Company. Please proceed with your question.

Just a quick follow-up on Blitz. I think the one aspect that hasn't been discussed in detail is on the concentrator. When you mentioned that you will need additional capacity there or that would be the bottleneck as it currently stand. So, how quickly do you think you have to add the capacity at the concentrator? And what sort of zip code are we looking at in terms of capital required for that?

Well, I think, I’d like to get the study done before I start telling people what the numbers look like. On the current Blitz plan like you wouldn’t need it - you may be able to squeeze all of those expenses on the current capacity, it's tied I suspect. So you are looking three-four years out before you’d need to do anything on it.

Just kind of from your experience in the industry, I understand, and appreciate you want to get a study done. But if you we were to say kind of worst case scenario. What could we’d be looking at?

I think your comment about, I’d like to get the study done, first, is the correct comment. Let me get some numbers first before I start giving you numbers.

And then maybe to change the topic just slightly, Mick, how do you think about the value of the smelter? I think one could make the argument that it has unique attributes in terms of the cash flow that it generates. Do you think it could make sense on a standalone basis, or where you maybe sell a portion of that to the public? How would you think about the value of that business, and how it could fit in? And how quickly you could maybe crystallize the value if there is a discrepancy?

Look, I think those types of assets should and do trade at higher multiples than the mining assets, really because they are sort of more industrial type earnings. Particularly, the way we run the business, I think that business needs to get a little bit bigger first before we think more about it. But yes, I think that’s always an option. I’ve always said that we’d look at all options to increase shareholder value. And if one of those options was that you did something with that business, obviously we are always going to need access to the smelter because the whole point is that by having that smelter, we don’t have to go to a third-party smelter ourselves. But, yes, I think those types of businesses trade at pretty high types of earnings multiples. And if at some point thought that it may seems to do something with that, either the strategic or something, then we’d certainly consider, depending on the valuation, I guess.

And when you say size, is that defined by certain level of EBITDA?

Yes, probably, realistically. And if the next question is, what is that number then at this stage, I don’t have any answer for you.

I certainly didn’t mean to ask that question. But I appreciate your candor and thank you very much and continue the best, best of luck with everything.

Our next question comes from the line of Sam Crittenden with RBC Capital Markets. Please proceed with your question.

Just wondering if you could talk a little bit about the mining method in Blitz, and just really curious on how much is the narrow manual type mining with jacklegs and things like that versus the more automated methods?

It will be pretty identical to the Stillwater Mine now, which has almost no narrow jackleg mining, handheld mining. We, off the top of my head, I would say that we would get maybe 1% or 2% of our Stillwater Mine ounces from jacklegging and almost none over to East Boulder. The only jackleg activity we do is bolting in those narrow headings. And, again, as I said, we are moving towards away from it.] So the mining method over at Blitz will be ramp-and-fill under cemented rock-fill probably for the most part based on the ground conditions we see or the first stope block, which is identical to what they were doing in the old, what they call off-shaft area of the Stillwater Mine. So, it’s nothing new for us.

And then just curious on any permits you might require for an expanded concentrator, and then I guess presumably expanded footprint at surface. You might need for, for once Blitz gets up and running. Is there any significant permitting required?

No, not for what we're envisioning. And let's just be clear, you don’t need an expanded concentrator for really the bulk of Blitz. It just becomes a limiting factor. There's no doubt that mine can do more ounces than what we're currently seeing it can do. But you need to concentrate to treat those ounces through, so therefore we're looking at how do we expand that. We had a little bit of thermos required for Blitz, and the Stillwater concentrator runs 11 days on, three days off. So that's your first thing as you just - you actually run a 24/7 for stock. And then we have some other levers we can pull in terms of getting a bit more capacity out of it before we have to spend any or any material amounts of money.

There are no further questions in the queue. I'd like to hand the call back over to management for closing comments.

Well thanks everybody for dialing in, and the good questions. We look forward to talking to you all again at the next quarterly results presentation. Thanks everyone.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.