Stillwater and Mitsubishi Enter Into an Agreement for Development of Marathon Project in Canada

Wed Mar 28, 2012 8:00am EDT

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  BILLINGS, MT, Mar 28 (MARKET WIRE) -- 
STILLWATER MINING COMPANY (NYSE: SWC) (TSX: SWC.U) 

    Stillwater Mining Company ("Stillwater") announced today that it has
entered into an agreement with Mitsubishi Corporation in which the
Japanese global integrated business enterprise will acquire a 25%
interest in Stillwater's Marathon PGM and copper project for
approximately US$81.25 million and meet the ventures first cash call of
$13.6 million for a total cash payment by Mitsubishi of $94.6 million.
Mitsubishi will be responsible for funding its 25% share of operating,
capital and exploration expenditures on the Marathon properties and has
agreed to cooperate and support efforts to secure project financing for
Marathon. Mitsubishi also will have an option to purchase up to 100% of
the PGM production under a related supply agreement.

    This transaction represents a natural step forward in the development of
Marathon. From a financial perspective, the US$81.25 million that
Mitsubishi is paying for a 25% interest in Marathon demonstrates the
potential value accreting to this project as it advances toward
production. Stillwater's total investment in these properties to date is
about $159 million, suggesting a gain on the transaction of about $40
million, which will flow directly into equity under U.S. accounting rules
governing proceeds from the sale of a minority interest.

    Commenting on the Mitsubishi transaction, Frank McAllister, Stillwater's
chairman and CEO, observed, "This agreement brings a world-class partner
to a first-class PGM asset. The Marathon Project ranks as one of the few
PGM plays in North America, and Mitsubishi's financial commitment
highlights the significant potential value contained in this resource
opportunity. This transaction brings to the project a strategic
investment by an exceptional and globally integrated business partner and
at the same time allows us to be prudent in balancing the cash
requirements of our various growth projects.

    "For a number of years we at Stillwater have recognized the critical need
to grow and diversify the Company's production, which at present is
limited to our PGM operations along the J-M Reef in Montana. Consequently
we were very pleased to acquire Marathon in 2010. We recognized early on
that the development of Marathon likely would require raising new capital
and/or bringing in a partner. In this regard we are delighted to have the
support of Mitsubishi, with whom we have a long-standing commercial
relationship and already consider them a key business partner.
Mitsubishi's participation adds greater certainty to Marathon in return
for part ownership in the project -- a project which is now expected to
see Stillwater's future PGM production increase 30% and add a portfolio
diversifying component of copper. Mitsubishi's relationship with project
financing sources, particularly in Japan, should also greatly benefit the
project economics." 

    Concluding his remarks, Mr. McAllister reflected, "The Marathon Project
promises to make a substantial contribution to the economy of Northern
Ontario. Both the initial construction phase and subsequent mine
operations should generate significant employment opportunities, critical
investment, vibrant economic activity and new revenues for the peoples
and the Government of Ontario. Consistent with our long-established
commitment to responsible operations and partnering for environmental
excellence, we intend to demonstrate safe, sustainable development and
show respect for the people, communities and environment where we
operate. We invite those who live in the region surrounding this project
to approach us freely at any time with their concerns, so we can address
them openly in a spirit of mutual consultation."

    The Marathon deposit is located about 10 kilometers north of the town of
Marathon, Ontario, near the north shore of Lake Superior. Stillwater
acquired the property, which is an advanced-stage PGM/copper development
project, in November 2010. The town of Marathon is situated on the
Trans-Canada Highway about 300 kilometers east of the city of Thunder
Bay. The Marathon project is currently in the environmental assessment
and permitting stage. Once approved, the project would include
development of an open-pit mine and milling operation with one primary
pit and several smaller satellite pits. Concentrates produced at Marathon
would be transported off-site to a third-party smelter and refinery for
final processing. Initial projections suggest the mine would produce
about 200,000 ounces of PGMs (mostly palladium) and 37 million pounds of
copper per year over a mine life of about 11.5 years.

    Under the Mitsubishi agreement, Stillwater will own 75% and Mitsubishi
will own 25% of the Marathon properties. Closing of the transaction is
expected to occur within a few weeks. Stillwater personnel will oversee
the development, financing and ultimately the operation of the project.
Stillwater and Mitsubishi have committed to work together in seeking
project financing, which is expected to occur in due course once project
approvals are in place. Preproduction capital cost of the project is
currently projected to be between $550 and $650 million, with first
production of PGMs and copper projected in about 2016, subject to orderly
receipt of approvals. Outside of amounts provided through project
financing, Stillwater and Mitsubishi will be responsible for separately
funding their respective interests in the project.

    About Stillwater Mining Company

    Stillwater Mining Company is the only U.S. producer of palladium and
platinum and is the largest primary producer of platinum group metals
outside of South Africa and the Russian Federation. 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 on Stillwater
Mining 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. 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 2011 Annual Report on Form 10-K 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.

    

CONTACT: 

Mike Beckstead
(406) 373-8971 

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