OM GROUP

Moderator: Greg GriffithApril 5, 20059:00 am CT

Operator: Good morning. My name is (James) and I will be your conference facilitator today.

At this time, I would like to welcome everyone to the 2003 Form 10-K and 2004

Unaudited Financial Reports conference call.

All lines have been placed on mute to prevent any background noise. After the speakers'

remarks, there will be a question and answer period. If you would like to ask a

question during this time, simply press star then the number 1 on your

telephone keypad. If you would like to withdraw your question, press star then

the number 2.

Thank you.

Mr. Griffith, you may begin your conference.

Greg Griffith: Thank you, (James). Good morning everyone.

With us today is OM Group’s senior management team -- Frank Butler, Chairman of the

Board and Interim Chief Executive Officer; Louis Schneeberger, Chief

Financial Officer; Dr. Steve Dunmead, Vice President and General Manager,

Cobalt; and Mark Bak, Vice President and General Manager, Nickel.

You’ll hear from each in just a minute, but we should plan on the call taking a little more

than an hour.

Now some quick housekeeping issues. You should have seen by now a copy of our press

release summarizing the impact of the recently completed restatement process,

as well as this morning’s press release announcing our 2004 unaudited results.

If you’ve not received both press releases, please call Lynn Copple at 206-263-7479 and

she will send both to you immediately, or you can find them as well as the

presentation materials we will be using this morning on our web site at

www.omgi.com.

Second, as everyone listening already knows, the comments made this morning may

include forward-looking statements based on current expectations that involve

risks and uncertainties that could cause the results of OMG to differ materially

from management’s current expectations. A list of those factors that may

impact our forward-looking statements can be found in either of the press

releases I’ve already mentioned.

And finally, we need to make sure everyone is clear on the parameters for today’s

discussion. The purpose of this conference call is to focus solely on the restated

financial results containing in the 2003 Form 10-K and provide some broad

commentary around our unaudited 2004 results.

On the other hand, we will not make any comments regarding 2005. It would be premature

and inappropriate to discuss any aspect of our 2005 business prospects until the

audit of our 2004 results has been completed, which we believe will happen

some time around June.

With all of that said, it’s now my please to turn the call over to Frank Butler.

Frank Butler: Thank you Greg. Good morning everyone.

I have a few comments to make, but I first want to thank everyone listening for bearing

with us throughout the restatement process. This has been a frustrating time for

all of us, and I sincerely apologize for the wait. I am truly happy this issue is

now out of our path.

There are few if any facts I can add that you won’t find in the 2003 Form 10-K, but on

behalf of the board and myself, I will say we now know that prior to December

2003, the company’s control over its accounting and financial reporting

processes were inadequate and the same situation was true for many of our

business systems.

It is clear that we must change our business focus and priorities. We are currently making

these changes at every level in the organization and I expect to achieve much

better results in the future.

It is my objective to expect better performance while communicating to you exactly how we

are performing against those expectations. We must invest the same tireless

efforts into reorienting the company that we did in restructuring the company.

And perhaps the results of these efforts will move us towards restoring

credibility with our fellow shareholders.

When the board asked me to step into the CEO position in January, the priorities were clear

-- complete the restatement and file the ‘03 10-K; settle the class action lawsuits;

develop the basis for a comprehensive long-range growth plan; and identify and

hire a great CEO.

The first two are essentially complete and the last two are within reach. The third priority is

not the focus of this morning’s discussion, but we are making progress.

I will tell you, we are establishing a clear definition of winning. We have made a number

of personnel changes. Except for Greg, I don’t believe any of today’s OMG

management team were in their current position or participated on the last

conference call.

Going forward, we will actively align our human resources with what the company needs

to provide excellent cobalt and nickel products to our customers, to be

increasingly an important contributing member of our industry supply chain,

and to operate the company in a financially responsible manner.

We are beginning to implement an annual planning process that links strategy requirements

with resource allocation and execution; business goals and objectives will be

well defined; accountability and performance against these objectives will be at

levels that may never have been seen before in this company. We have and will

continue to invest in the systems that give managers reliable information needed

to make good business decisions.

In just a minute, Lou will tell you about the changes we’ve made in the financial area in our

efforts towards compliance with Section 404 of the Sarbanes-Oxley Act.

I am pleased with the progress our board committee and its search firm are making to find

the right leader. We will find and hire the right person.

And I am happy to report that the board is fully engaged in its work. This board is quickly

and effectively becoming a fully-progressive board. We are united in a common

goal of actively assisting the current and future leaders of this company, steadily

raising OMG’s standing as a vital member of the cobalt and nickel supply

chains while driving continuous and sustainable improvements. And the board

is actively seeking additional directors.

I will now turn the proceedings over to Lou Schneeberger.

Lou Schneeberger: Thanks Frank. Good morning.

I will cover with you the restatement impact that we recently completed, how we have

changed how we operate since mid 2003, and conclude with a review of the

2004 results.

Please turn to Slide 4 titled, “Restatement impact.”

Please note that the details of the restatement are thoroughly discussed in Footnote B in

Form 10-K.

Basically charges and expenses that should have been recorded in years earlier than 2002

were not. Many of these were then expensed in 2002 or 2003, or were still not

expensed as of September 30, 2003. As a result, 2002 and 2003 results are

better than previously reported, and 2001 and earlier are worse.

We also disclosed that the cumulative impact was a reduction to retained earnings of $64

million as of the latest period reported, the third quarter of 2003.

Please turn to Slide 5, titled “Restatement impact -- review of adjustments.”

The restatement process began with a thorough and independent investigation under the

direction of our audit committee with the assistance of forensic lawyers and

accountants.

Once they concluded, their results were turned over to our financial team as well as our

auditors, which led to a re-review and audit of all areas for each year presented,

as well as (supported) all items on our December 31, 2003 balance sheet.

The final area overlapped the above two, which is a revision of the methodology to verify

that our inventory was recorded at the lower of cost or market. This has been a

big issue for our industry with the price volatility of both cobalt and nickel.

The majority of these entries that were restated were recorded at the corporate level by the

former corporate accounting team. We call them top-side adjustments.

The types of adjustments can generally be put into four groups -- double-counting at the

operating unit and at corporate; capitalizing items that are period costs that

should have been expensed; purchase accounting adjustments primarily to

inventory; and inventory lower of cost to market charges not expensed.

Please turn to Slide 6, titled, “Significant changes since 2003.”

There have been substantial, obvious changes to our business since the beginning of 2003,

beginning with the sale of Precious Metals and SCM, other restructuring,

significant reduction in total debt, and the major improvement in our markets.

Beyond these however, many other not-so-subtle changes have taken place. I will put these

in two groups -- business and financial.

Business. We no longer manage using a matrix organization. Instead we have two distinct

groups -- cobalt and nickel. All authority and responsibility rests within the

teams, including responsibility for group accounting. Our focus is on making

money and generating cash flow versus revenues and production.

On the cobalt side specifically, understanding that we have a major impact on the market

and cobalt market pricing itself can and has impacted how we think and act.

Financial. First I would refer you to our comments in our recently-filed 10-K in Section

9A.

Strategy. All accounting is done at the operating level with a review and supervision by

group controllers. Top-side entries only exist from normal required

consolidation and illumination or related activities.

People. We have changed many members of our team and have added new roles that

previously did not exist. These include CFO, corporate controller, group

controllers, treasurer, tax manager, and director of internal audit.

We have chosen to replace our IT team with an outsourced, professionally-managed IT

organization.

Processes and controls. Each quarter the group controllers perform a detailed review of all

significant judgments and issues which begin at the operating unit level.

These are summarized and documented, which are then reviewed with our group VPs,

corporate controller, CFO, CEO, and director of investor relations. This group

has a thorough understanding of all key judgments and issues addressed to

close the books.

This information is then reviewed with our audit committee chairman as well as our

auditors prior to the release of our results to the public.

Systems. Beginning in early 2003, we began to use a consolidation software system for

month-end accounting which has sped up closing and improved its accuracy.

We have made substantial improvements to our main ERP systems, resulting in a

significant reduction in month-end clean-ups and improved user knowledge,

resulting in fewer errors in recording basic transactions.

Sarbanes-Oxley. We’ve spent the majority of 2004 reviewing and improving our internal

control environment with the assistance of PricewaterhouseCoopers. We

believe we are close to being 404 compliant now and expect to be compliant by

December 31, 2005.

We installed worldwide employee whistleblower program. We’ve also made many

governance changes, including separating the CEO and chairman’s role.

Please turn to Slide 7, entitled, “Fourth quarter of 2004 unaudited results.”

Sales improved to $355 million in the fourth quarter of 2004 from $312 million in the third

quarter of 2004, and substantially exceeded 2003’s fourth quarter of $258

million.

Prices began their steady rise for both cobalt and nickel in the fourth quarter of 2003.

Operating income remains strong at $40 million, which followed an even strong

third quarter of $48 million.

We posted an operating loss of $58 million in 2003’s fourth quarter, which was a result of

recording the $84.5 million charge to settle the class action lawsuits. This

charge is recorded in the caption corporate expenses.

Prior to this charge, 2003’s fourth quarter was the beginning of the market’s improvement

for both cobalt and nickel, resulting in an operating profit of $27 million.

Net income was $23 million following the strong third quarter of 2004 of $28 million.

Two-thousand and three’s fourth quarter resulted in a net loss of $71 million,

which began - which again was the result of recording the class action lawsuits.

Please turn to Slide 8 titled, “2004 unaudited results.”

Two-thousand and four was quite a year of plusses and minuses. The markets were very

strong. Our sales mix strategic changes were the right call. Our sales volumes

were generally flat. We had a couple of costly accidents that impacted both our

cobalt and nickel business. The euro strengthened sharply against the dollar,

and we went through a difficult, costly, and trying restatement. The restatement

alone cost us approximately $12 million.

I’ve already addressed many of the other impacts on our business except for a change from

LIFO to FIFO. Cobalt and nickel prices have been historically volatile, which

is a result of trader speculating versus inflation. Further, we have always

managed our operating units on FIFO and only at corporate did we convert to

LIFO.

We are required to make year-end projections of prices in quantities in LIFO that often

prove to be inaccurate, which results in fourth-quarter catch-ups. Therefore, we

believe that FIFO is a more meaningful measure of inventory (unintelligible)

cost.

If we had stayed on LIFO, our pre-tax income would have been negatively affected by

approximately $40 million.

We are directly affected by changes in prices of cobalt and nickel, as well as the euro and

the Australian dollar versus the US dollar. We hedge a great deal of our nickel

business, but do have mark-to-market impacts that we are working to eliminate

in 2005.

We do not hedge cobalt as it is not a traded commodity on established exchange. We have

chosen not to hedge the euro or the Aussie dollar in 2004, though we will focus

on this more in the second half of 2005.

Many investors ask us about our sensitivities to these. Let me summarize your estimated

affect at OMG. For every 1 penny euro change versus the US dollar impacts us

by $2.1 million. Every 1 cent Aussie dollar change versus the US dollar

impacts us by $700,000. Every dollar change in the cobalt price impacts us by

approximately $6.5 million, and every 10-cent change in nickel prices impacts

us by $3.6 million.

Please note that these are estimates and are not linear. They are affected by many factors,

including metal prices, production and sales volumes.

To briefly summarize this slide, sales grew to $1.3 billion from a little over $900 million in

2003. Operating - our operating profit was strong at $212 million from $67

million in 2003, before the impact of the class action lawsuits charge.

Income from continuing operations grew to $123 million from $28 million in 2003, again

before the class action lawsuits charge.

Could we have done better in 2004? For all of the reasons I’ve commented on earlier, my

answer is a definite yes, which does not take into account the management time

and attention required by the restatement and settling the class action lawsuits.

Please turn to Slide 9, titled “2004 balance sheet and capex.”

Inventory increased 54% from $259 million to $415 million. This $146 million increase

reflects a quantity increase of $79 million and a price increase of $67 million.

The quantity increase is primarily in the cobalt group as we took down our smelter in the

Congo for maintenance as well an increase in capacity in the first quarter of

2005. We would expect cobalt inventories to be back in balance by the end of

2005.

We expect to conclude our class action lawsuits in 2005. Our tentative agreement called for

a $74 million cash payment to escrow on April 8. Further, only after the

agreement makes its way through the courts, we would expect to turn over $8.5

million worth of OMG stock, probably in the July/August timeframe.

We currently have three debt instruments -- the $75 million revolver; $400 million in public

bonds; and a $30 million term debt obligation with a Finnish bank.

Our revolver will be reviewed and modified once we file all required financial information

with the SEC. We are in default on our $400 million in bonds only as a result

of the lack of time the SEC filings. We expect to address our bondholders to

(unintelligible) this default once we are current with all SEC filings. Our bonds

trade in the good range of (104) to (107). We are in compliance with our

Finnish debt obligation.

We have not spent at our historical levels in the capex area in 2002 and 2003. Normal

levels are generally at 1 times depreciation or approximately $50 million.

Let me now turn the presentation over to Steve Dunmead who will review our cobalt

business with you.

Steve Dunmead: Thanks Lou. Good morning everyone.

I’m Steve Dunmead, and I’ll give you a brief overview of the Q4 ‘04 results for the cobalt

business, a breakdown of our revenue streams by end markets and geographies,

and finally some highlights on items that impacted the cobalt market in 2004.

On Slide 10, you will see that the revenue for the cobalt business in Q4 ‘04 was

approximately $150 million, up 51% versus Q4 ‘03 and down 8% versus the

prior quarter. Full-year revenue was at approximately $643 million, up 70%

versus 2003.

From an operating profit standpoint, Q4 ‘04 came in at approximately $20 million, up 35%

versus Q4 ‘03 and down 46% versus the prior quarter. Full-year operating

profit was at $148 million, up 170% versus 2003.

Our Q4 ‘04 results were positively impacted versus the prior year by cobalt price, which

increased by approximately $2 a pound and better overall product premiums,

but somewhat offset by lower sales volumes, refined cobalt volumes, and a

weaker dollar.

The lower sales and refined cobalt volumes were primarily due to walking away from some

unprofitable business, which had a positive impact on product premiums.

Compared to the prior quarter, our results were negatively impacted by the cobalt price,

which was $18.83 versus $23.17 a pound. The unplanned smelter shutdown of

approximately three weeks was due to a transformer malfunction and an

inventory correction in the battery sector.

For the first eight months of 2004, the battery sector was purchasing at a year-over-year

increase of approximately 30% while true demand was increasing at something

approximating 20%. This market remains one of high growth and the inventory

correction should work its way out during the first two quarters of 2005.

At the bottom of Slide 10, you will see a breakdown of our sales by end market. In Q4

‘04, 81% of our cobalt business revenue came from the five key markets listed.

The percentage of revenue in the battery sector in Q4 was up versus the prior year but

down substantially versus the prior quarter. This again is a reflection of the

inventory correction in the battery sector that started in Q4 ‘04. We’ll discuss

more about the growth in these key markets in a subsequent slide.

On the next slide, you’ll see a comparison between 2003 and 2004 for our revenue by end

markets and geography. From an end-market perspective, you can see that our

sales into the battery sector grew from 28% in 2003 to 38% in 2004.

Obviously up to this point in time, we have taken advantage of our cobalt

position and growth in this key market. We also believe that we are well

positioned for next-generation portable power applications.

We sell a wide variety of products, from low sodium cobalt oxide to battery-grade powder

to mixed metal precursors into this market. This includes sales into lithium ion,

nickel metal hydride, and (NiCad) applications.

In addition, high oil and gas prices have spurred a great deal of new commercial activity in

the hybrid electric vehicle market in which we believe we are well positioned for

the future whether the choice technology ends up being nickel metal hydride as

it is today or lithium ion for this high-power application.

From a geographical standpoint, our sales have shifted significantly toward Asia with 46%

of our cobalt revenue in Asia and approximately 25% each in Europe and the

Americas.

On Slide 12, we point out a few key issues that impacted the overall cobalt market in 2004

versus 2003.

From a supply-and-demand standpoint, overall demand for cobalt was up 10% in 2004.

The first half of 2004 also saw very limited supply increases in refined cobalt.

This was due to a combination of the low cobalt prices that we have seen for the

prior 30 months, resulting in the shutdown of some unprofitable facilities,

specifically in Africa, and the length of the supply pipeline from Africa.

The combination of these two factors resulted in a substantial increase in cobalt price, from

approximately $9.69 a pound in 2003 to $22.76 a pound in 2004 -- a 134%

increase.

Most of the key applications for cobalt saw significant growth in 2004 versus 2003. As

discussed previously, true demand for cobalt in rechargeable battery

applications was up approximately 20%. This was driven by increased use of

laptop computers versus PCs, growth in cell phones, growth into new

applications like digital cameras, MP3 players, and power tools.

The overall alloy sector, which includes superalloys, was up approximately 10% with

general uptick in manufacturing in the aerospace industry.

The other three main markets -- hard metal, tire, and catalyst -- were all up strongly,

approximately 10% in 2004. The tire market is being driven by increased use of

steel-belted radial tires globally, specifically in developing countries, while the

catalyst market is being driven by high oil and gas prices and increased

regulations on sulfur emissions.

The rest of the markets -- pigments and ceramics, coatings and inks, were essentially flat.

From a raw materials standpoint, demand for cobalt in China increased by 28% over 2003.

The high cobalt prices resulted in an increase in artisanal mining activities in the

Democratic Republic of Congo, with a majority of these low-grade raw

materials being shipped to China.

Based upon the non-mechanized nature of these mining activities and the continued efforts

of the Congolese government to generate more value inside the country, we do

not believe that these supplies are a viable long-term solution.

Finally, during 2004 we prepared for the Q1 ‘05 shutdown of our joint venture Big Hill

smelter by building an additional 1200 tons of feed inventory. This feed will

allow us to meet the demands of our customers during the routine maintenance

and de-bottlenecking of the smelter. We expect this de-bottlenecking to result in

approximately a 30% increase in capacity.

At this point I’ll turn this call over to Mark Bak who will discuss the nickel business.

Mark Bak: Good morning.

I’d like to start out reviewing the 2004 nickel financial results. Please turn to Slide 13.

For the fourth quarter of 2004, the nickel group reported an operating profit of $31.4

million, almost 50% higher than the corresponding quarter in 2003. Two-

thousand and four fourth quarter sales volume was 10% higher than the same

period in 2003, driven by an increase in sales in our specialty product business.

Two-thousand and four full-year operating profit was $111.1 million compared to $58.3

million in 2003. Corresponding full-year nickel - refined nickel volume was

49,600 tons in 2004 versus 51,200 tons in 2003.

The increased profit resulted from the strong nickel price, improved sales premiums, and

enhancements in our manufacturing cost structure and operational efficiencies.

The positives were somewhat offset by a strong euro and Aussie dollar, as well as

extended downtime associated with an equipment failure in our Australian

upgrade facility.

Switching to the analysis of our sales, the second half of the chart on Page 13 outlines the

major end-use markets served. This chart gives you a breakdown by quarter.

If you flip to Page 14, you can see OMG’s 2004 full-year market analysis. Although

approximately 75% of all primary nickel in the industry is used for the

production of stainless steel, OMG supplied significantly less of its material to

this industry, which has historically commanded the lowest premiums.

OMG has had an active program to maximize our net premiums, which we define as

premiums minus duties, packaging, distribution, and financing costs. This

effort has resulted in the end-market shifts you see on the attached charts.

As far as our democratic - or geographic distribution, Europe remains our major stronghold

due to the low distribution and financing costs, thereby maximizing our net

premiums.

The switch from the Americas to Asia shows the trend related to demand generated by

China, pushing premiums upward in that region.

On the next slide, I would like to cover some business and market dynamics, starting with

the nickel market in general.

The fundamentals in the nickel market remained strong in 2004. The market saw a supply

deficit as strong growth in the stainless steel production continued.

The nickel price was relatively volatile throughout the year as speculative fund buying and

selling created fluctuations in the nickel price over and above the normal supply-

and-demand market forces.

The dynamics of the growing economy in China has clearly been the driving force in the

nickel market, with China experiencing a 20% growth rate in consumption in

2004 in spite of the efforts by the government to cool this economy. This trend

is expected to continue as new stainless production comes on stream in China.

On the supply side, there is limited new capacity from major new nickel projects coming

onto the market in the foreseeable future. Aside of Inco’s Voisey Bay project,

which is scheduled to start producing nickel in 2006, the other two major new

projects in the works are focused on laterite-type ores, which are technically

difficult to process and projected to cost $1.4 to $2 billion to construct for a

50,000 ton to 60,000 ton per-year nickel output.

These projects are expected to start production at the end of 2007, but historically laterite

projects have seen excessive start-up delays. The addition of these three

projects brings a total of 150,000 tons of new nickel for the market by 2007.

This just barely covers the 4% historical nickel consumption growth level.

This trend lends itself to strong nickel prices in the foreseeable future.

Since our last public conference call, OMG has been aggressively shifting the focus of our

nickel business. With the change in leadership in the nickel business, we have

challenged the paradigms of our past business.

Our fidelity specialty electronics and plating business showed an improvement in operating

profit of 43% in 2004 due to the closing of our New Jersey production facility,

reduction of workforce, and growth in market share. This is an example of how

challenging our associates to participate in the improvement of the business has

paid off.

On the operations side, we have decreased costs for major restructuring which occurred in

2003. Rest assured, this effort to focus on continued cost reduction is ongoing.

Major accomplishments have also been made to our processes. This effort has resulted in

substantial increases in refining recoveries. These recovery improvements have

had a positive impact to our bottom line.

As mentioned previously, from a marketing perspective we have gone through a product

and market rationalization which has shifted our target areas from primarily a

stainless steel-driven approach to a maximization-of-premium approach. We

have also increased our specialty chemical business to take advantage of our

high-quality chemicals made in our state-of-the-art manufacturing facility.

Raw material procurement continues to be a challenge due to the dramatic increase in

demand for feed driven primarily by the market dynamics in China.

In 2004, we produced approximately 50,000 tons of nickel at our Harjavalta facility, which

is rated at a 60,000-ton capacity. OMG’s primary goal has been to procure

additional feed for this facility.

Although we succeeded in procuring an additional 9000 tons of feed during 2004, this was

somewhat offset by several production and mining problems experienced by

our suppliers.

On the feed side, we’re focused on three fronts. First is to take advantage of scrap and spot

opportunities; second is to focus on maximizing OMG-owned feed sources

through our Australian Cawse and MPI nickel assets.

Two-thousand and four, we spent $6-1/2 million in capital to begin operating our Cawse

Australian nickel facility, which was (brought) out of bankruptcy. Towards the

end of 2004, these efforts began to pay off as throughput rates and plant up-

time increased.

We still have some work ahead of us to get to the production rates we feel are ultimately

achievable at this facility.

Through MPI Nickel, OMG and its partner LionOre has been evaluating ways to maximize

the ore bodies located within our mining resources at the Black Swan and

Honeymoon Well deposits.

This effort has the potential to supply more than 30,000 tons of nickel feed to Harjavalta.

Final feasibility studies are underway to determine the most economical way of

capturing the value from these nickel resources.

Lastly, (we look) at purchasing feed from new nickel mines and potential alliances where

we can work with someone who has feed and would potentially need to invest

in nickel refining capability on their own. OMG is in discussions with multiple

parties to procure enough feed to fill out the Harjavalta facility.

With the upturn in nickel prices in 2004, there are many new mines sites looking to produce

nickel feed and many of these are logical feed sources for OMG.

And now I’ll turn the discussions over to Greg Griffith.

Greg Griffith: This concludes our prepared remarks and we’ll open it up for question and

answers.

Operator: At this time, I would like to remind everyone in order to ask a question, please

press star then the number 1 on your telephone keypad.

We will pause for just a moment to compile the Q&A roster...

Your first question comes from the line of Rosemarie Morbelli.

Rosemarie Morbelli: Good morning all, and congratulations on the good quarter.

Could you give us a feel for or more details on what you are doing in terms of changing the

throughput on the cobalt side? I am not sure. I mean, you were speaking so

fast that I am sure - not too sure I understood the exact comment.

Steve Dunmead: Are you referring to the smelter?

Rosemarie Morbelli: Yes.

Steve Dunmead: This is Steve Dunmead.

There’s some de-bottlenecking that we’re doing on the back end of the smelter. The routine

maintenance that is going on is just routine re-bricking of the furnace, which

needs to be done periodically.

From the capacity enhancement and the de-bottlenecking, we’re doing some modifications

to the back-end of the process that should allow approximately 30% more cobalt

to flow through the smelter.

Rosemarie Morbelli: Okay.

And you can handle that at Harjavalta?

Steve Dunmead: At Kokkola.

Rosemarie Morbelli: And what is the amount of metal that you are actually pulling out of the raw

materials at this stage? I...

Steve Dunmead: I don’t think that we’re prepared to answer that question.

Rosemarie Morbelli: All right.

And when you are done with this particular project, could you give us a feel as to where

your breakeven level will be? In other words, you used to lose money at $6 a

pound. Have you been able to increase that breakeven level?

Greg Griffith: Rosemarie, this is Greg. We will cover that information when we discuss our 2005

plan as well as our 2005 expectations, but for now, we’re confining our

comments to 2004.

Rosemarie Morbelli: All right.

And you did make a comment regarding the demand on the battery side, and if I understood

properly you are expecting the inventory correction to be over and the orders to

pick up again in the - by the second quarter of this year.

First, did I understand that properly? And second, is that based on existing orders or just,

you know, comments that you hear within the industry?

Steve Dunmead: I think that I’ll answer the first part.

The comments that we made were that we expect the inventory correction to work its way

through during the first two quarters of 2005. This is different for every

supplier - or every customer that we’re dealing with.

Relative to whether it’s orders or gut feel from the industry, it’s a little bit of both.

Rosemarie Morbelli: All right.

So you do have some orders for the second half.

Steve Dunmead: Well again, Rosemarie, we’re trying to focus on the 2004 revenue, giving

you some line of sight into 2005.

Rosemarie Morbelli: Okay.

And if we look at the gross margin, what was the impact from the shutdown of the smelter?

What would have been a normalized level? Do you have a feel for it?

Greg Griffith: No.

Again, we’ll give you our expectations for ‘05 margins that include the changes that we’ve

made at the smelter and the impact of the smelter shutdown, which started in

January of ‘05.

Rosemarie Morbelli: Oh, so it did not - because my question was referring to the fourth quarter.

So I guess the - that did not impact the gross margin in the fourth quarter?

Steve Dunmead: This is Steve Dunmead.

The impact of the three-week shutdown due to the transformer malfunction was

approximately $2 million to the negative for the fourth quarter.

Rosemarie Morbelli: Okay. Thank you.

Operator: Your next question comes from the line of Brett Levy.

Brett Levy: Hey guys.

When you guys make this payment in a couple of days, can you guys give a rough sense as

to where liquidity will be pro forma for that payment? And just some comfort

that it will be adequate?

Greg: Brett, you’re talking about the - funding the class action settlement?

Brett Levy: Exactly.

Greg: And - repeat your question one more time.

Brett Levy: When you said that on April 8 you guys are going to make a $75 million payment,

and I just wanted to get a sense as to what pro forma liquidity would be after

that payment.

Greg: Well again, we have an agreement in principle, and that is our expectation right now, but in

terms of the impact on liquidity, we’re not ready to comment on that right now.

Brett Levy: Is it fair to say that it will be adequate?

Greg: Did you say adequate?

Brett Levy: Exactly. Like you’ll be able to get through that period.

Lou Schneeberger: This is Lou Schneeberger.

We have plenty of cash as we indicated. At the end of ‘04 we have a $75 million credit

line, and as we indicated in our prior press release, we still have insurance

amounts that can be used also for settling that.

So we clearly believe that we will be able to fund the escrow payment and have plenty of

capital to run or operate business going forward.

Brett Levy: All right.

And then you guys talked a little bit about the Congo not being an adequate source of

supply in the long run. Can you put a little bit of color around of what the

longer-term strategy is there? I know it’s not a question about ‘05 guidance. I

just - I wanted to get a sense as to sort of, you know, cobalt supply strategy.

Steve Dunmead: This is Steve Dunmead.

I hope my comments weren’t misinterpreted. What I was talking about was that the

artisanal mining that has gone on with the high cobalt prices. This is non-

mechanized mining going on by thousands of people in the Congo by hand.

We do not believe that that is a long-term viable source. The Congo is a long-term viable

source of cobalt, but the artisanal mining activities are not.

Brett Levy: I see. So you’re just going to - you’re going to watch the - or participate in the

upgrade of the mining process in the Congo.

Steve Dunmead: As we do today.

Brett Levy: Perfect. Okay.

And then you guys had mentioned that you guys have moved to an external IT source. Can

you name that external IT group and talk about the timing and the amount of the

savings there?

Lou Schneeberger: In when 2004 began -- this is Lou Schneeberger -- our board had looked at

our information systems along with our management team and chose to go a

different direction. We hired a firm called Titan Technology Partners, who has -

who does IT outsourcing for a living. I believe they have 17 to 20 customers,

somewhere around there, companies the size of OM or larger, and they’ve been

working with us now, you know, beyond a full year. So they started with the

beginning of 2004.

There’s been many quite substantial improvements to our business, as I briefly indicated,

and in fact, beyond that, they’ve also done a lot of contract savings as well

where some of our contracts were really not being - they were not cost effective.

So not only were they working on ERP systems and our network operations, but they were

reviewing all of our IT-related contracts and resulted in quite a significant

savings.

So it’s the - it’s - they’re focus now includes looking at our ERP systems going forward as

well.

Brett Levy: Again, any way of quantifying kind of what they’ve accomplished and what the

target is?

Lou Schneeberger: Not at this time.

Brett Levy: In terms of dollars saved or dollars to be saved?

Lou Schneeberger: Not at this time.

Brett Levy: Not at this time.

And then the last one is you guys obviously do hedge a fair bit of your nickel. Can you

talk about the (unintelligible) and I believe the comment was a great deal.

Can you give a rough sense as to sort of what percentage hedged you and sort of the degree

to which, you know, you guys are trying to lock in current nickel prices for

2005 or 2006?

Mark Bak: Yeah, this is Mark Bak.

I’ll address that in a couple different ways. First of all, we don’t speculate on the nickel

price. The hedges that we use are basically two main categories. The first is to

lock in prices for our customers. This is done as a service to the customers, to

provide them a way to stabilize nickel prices.

And this activity’s neutral to our P&L. It shows up as a gain and a corresponding loss or

vice versa in the sales line at the time where the products are sold.

The second hedging mechanism that we use is what we call an offset hedging mechanism.

What we try to do on a contractual basis with our raw material suppliers is to

time the raw material flow through the plant to the time that we actually price the

raw material.

And that’s a natural hedge. So for instance we may not price raw materials until it flows

two months after arrival at our facility. At that time then the material’s coming

out the back and you’re selling it, so the corresponding raw material price and

sales price match.

The hedging mechanism that we use is to take care of any deviations to that. You will have

deviations based on spot sales that don’t match necessarily on a monthly

average compared to the raw materials, and in that case what we do is we hedge

the difference between our spot positions daily.

And all we’re trying to do there is to lock in that refined profit and get us away from major

swings that we would have in a FIFO accounting method.

Now when we hedge those volumes, they’re relatively minor compared to the total volume

because most of the volumes are actually that natural hedge that we talked about.

Normally when you use a hedging mechanism on the LME, you have to hedge into the

future, so the offset when the hedge closes doesn’t necessarily match timing-

wise to the month of the - in the financial statements.

And so in the 10-K -- I would assume you’re referring to some of the issues on hedging in

the 10-K -- the gains there are when the position is closed and that usually

follows by - follows the normal FIFO gain or loss by a month or two,

depending on the hedge mechanism we use.

Brett Levy: All right.

And then lastly...

Greg Griffith: Brett, this is Greg. We’ve got quite a line-up of people waiting to ask a question.

Brett Levy: Okay, I’m out. Thanks. Bye you guys.

Operator: Your next question comes from the line of Dan Leonard.

Dan Leonard: Mark, could you help me understand the quarter-to-quarter dynamics in 2004? If I

look at your sales number, it jumps from $200 million to $150 million to $150

million, or I guess now $170 million back to $222 million.

Is that all due to the price of the metal? Because it looks to me like the metal price hasn’t

fluctuated that much and I can’t imagine (the) demand fluctuates that much on a

quarter-to-quarter basis.

Mark Bak: In 2003, obviously the nickel price was substantially below in 2004. The fourth

quarter was $6.39 versus the $5.64.

Dan Leonard: (Mm-hm). Yeah. I understand the 2003 nickel prices were well below 2004, but if

I look at your reported 2004 nickel prices, for instance in September, the

average in the September quarter was $6.35 and of the December quarter was

$6.39, yet the sales difference is pretty large between those two quarters.

Mark Bak: Yeah, the fourth quarter we actually had some additional raw materials that came

through. It was a purchased from a facility that actually had their smelter go

down and so we’ve had some additional feed coming in to the facility.

Dan Leonard: Okay.

And that then affects how much you can sell?

Mark Bak: Yes.

Dan Leonard: And I guess a question more for Mark, but - or for Steve, I’m sorry. Mark, you

can jump in if you wish.

On China, what you’re calling the artisanal mining, is that enough to affect the cobalt price?

And beyond that, are you seeing - besides cobalt going into China are you

seeing any difference of the ability for the Chinese chemical companies to

manufacture cobalt-based chemicals versus what it used to be a couple years

ago?

Steve Dunmead: Relative to artisanal mining and its impact on cobalt price, I don’t believe

that there’s a significant impact on cobalt price because those units, whether

they are mined and then directly exported as low-grade unconcentrated materials

or whether they are upgraded to concentrate, the same number of units will

probably be exported, so I don’t think there’s a dramatic change in the cobalt

price.

My comments were really around the fact that we don’t believe setting up manufacturing

facilities that rely only on these low-grade concentrates is the right move for us.

The second part of your question related to the ability of the Chinese manufacturers to make

cobalt-based chemicals, certainly they’ve made strides, but as in most of these

metal-based specialty businesses, you have to be on the leading edge, whether it

be the battery market or the catalyst market, and we believe that we have a

competitive advantage there.

Dan Leonard: Okay.

And Mark, does OM Group now sell into the superalloy market?

Mark Bak: Yes we do, on the nickel side.

Dan Leonard: What about on the cobalt side?

Steve Dunmead: Not at this time.

Dan Leonard: Okay.

And finally, did I hear you right, Lou, that OM Group would have lost money in the fourth

quarter had you reported on LIFO?

Lou Schneeberger: Well, it wouldn’t have been fourth quarter because we would’ve of course

taking that charge throughout the year.

Dan Leonard: Oh, so the $40 million was a full year number?

Lou Schneeberger: Full year, yes.

Dan Leonard: Okay. Thank you very much. Thanks guys.

Operator: Your next question comes from the line of Dmitry Silverstien.

Dmitry Silverstien: Good morning. A couple of questions, since most of mine have been

answered.

Can you give us an idea of what the nickel and cobalt inventory were at the end of 2004 in

terms of tonnage or at least how it compares if you can’t talk about exact tons

versus your normal levels.

Lou Schneeberger: Well, in total our inventory basically as we ended ‘04 in dollars we had

$246 million of cobalt inventory and $170 million of nickel inventory in dollars.

Dmitry Silverstien: Okay.

So that would be at average prices for the quarter for me to figure out the volumes?

Lou Schneeberger: On the nickel side I can tell you, we ended up 2004 with 13,500 tons of

nickel inventory, and that includes material that’s on the water, material that -

raw material that’s at our nickel refinery, and finished - work in process and

finished product.

Dmitry Silverstien: Okay. Very good.

Secondly, can you give me an idea of where the mix stands in the nickel? I know you

talked about getting a little bit more into the value-added or the chemical part of

the nickel market versus just selling it as a metal to stainless steel manufacturers.

Where are you on a percentage of metal contained that goes out as a product versus a metal,

and where are you versus your longer-term goal?

Mark Bak: Okay, I don’t have the volumes per se, but our specialty sales were 17% of our total

sales.

Dmitry Silverstien: Okay.

And what - do you have a goal in mind of where you want to go to with that?

Mark Bak: Well, right now we’re looking at some different markets in the battery section -

sector.

And I think we have a pretty big market share on the products that we currently provide, so

we’re looking at in a lot of cases we’re over 50% of the market on some of our

specialties. In the case of fidelity, we’re over 70% market share to the certain

electronics markets.

So what we’re looking for now is new product opportunities to grow that business, and I

don’t have a specific number for you.

Dmitry Silverstien: Okay, fair enough.

And you talked about not having audited results for the - for 2004 until June, at which time

you will be able to discuss 2005. Do I take it to mean that the first quarter ‘05

won’t be discussed until some time in June/July as well?

Lou schneeberger: Yes.

Dmitry Silverstien: Okay. Thank you very much.

Operator: Your next question comes from the line of Saul Ludwig.

Saul Ludwig: Hey Lou, with the cobalt inventories, I think I read in the 10-K that now you are

going to mark your cobalt inventories to the market at the end of each quarter.

And there was a sharp drop as you know in cobalt from the end of the third to the end of

the fourth quarter. Was there any hit in the fourth quarter, any adjustment of

your cobalt inventories to reflect I think the price is around $18 at the end of the

year versus maybe $22, $23 at the end of the third quarter.

What effect did that change in cobalt price have on your inventory values or your fourth

quarter results?

Lou Schneeberger: We - as you indicated, Saul, we do look at mark-to-market accounting

thoroughly. We did not have any effect from market-to-market accounting at

the end of the fourth quarter of 2004 as we did our detailed look at it from there.

So the numbers that we have reported are based on historical cost. We did a thorough

review and did not have any impact from that standpoint.

Saul Ludwig: What was the - Mark gave us the tonnage of nickel at the end of the year. What

was the tonnage of cobalt?

Steve Dunmead: Saul, this is Steve Dunmead.

The biggest increase in the raw materials - or in the inventory was in the raw materials for

the smelter shipments.

Saul Ludwig: That was the 1200 tons referred to.

Steve Dunmead: Yes.

Saul Ludwig: Okay.

Greg, it looks as though the first two quarters of ‘04 were restated in some manner

upwardly. Do you have those numbers for us?

Greg Griffith: Well, they weren’t restated. When we gave the original fourth quarter quarterly

results, we said that they were unaudited and could be adjusted. We do have

what appears right now to be the adjustments of - and Lou can give you that.

Lou Schneeberger: Well, Saul, our first quarter press release if you recall we said that they did

not include the effects of the restatement adjustments for 2003 and earlier, and

in fact clearly we try to be conservative and it resulted ultimately in having

positive effects on 2003 as I indicated in my comments from the effects of these

restatement adjustments.

So when we decreased property, that appreciation expense didn’t come through. We had

some hedge accounting issues that negatively affected 2003 and then conversely

positively affected 2004. That was a very big piece of it, and then we has a

slight change in income taxes from a law that was passed in July of 2004 in

Finland lowering the tax rate from 29% to 26%.

Saul Ludwig: Well, the, you know, you gave us your fourth quarter was 79 cents, your third

quarter was 97 cents. What was your first two quarters?

Lou Schneeberger: Oh, I don’t have those numbers right in front of me, but we gave you the

year to date, so you got the obviously subtract the differences there to get the

first two quarters.

Saul Ludwig: Well, we can get the first half but not split.

Okay, and just finally, you talked about that you incurred $12 million of cost related to the

restructuring initiatives and restatements, you know. Are those expenses now

done and over with or did they carry in to ‘05 as well?

Lou Schneeberger: They carried into ‘05 but fell for the first quarter as we just finished the - as

you know, we just finished the 10-K. It did require a full quarters’ more of

work until we just filed the K on March 31. So we did have of course more

audit fees and other fees associated with that work.

Saul Ludwig: Are you guys going to have an annual meeting and a proxy statement?

Greg Griffith: Yes.

Saul Ludwig: And what’s the timing?

Greg Griffith: In conjunction with filing the ‘04 10-K.

Saul Ludwig: Okay great. Thank you very much.

Operator: Your next question comes from the line of Simone Dagnino.

Simone Dagnino: Good morning. Just a few housekeeping items. Thanks for the call.

Can you go through some of the cash flow items for the fourth quarter -- change in

working capital number, a what I would say is a GAAP cash flow from

operations number, just kind of (unintelligible) change in cash from third

quarter to fourth quarter.

Lou Schneeberger: We have not - hi, this is Lou Schneeberger.

We have not presented that information at this time, so we don’t have that information right

in front of us. So if you want to give Greg Griffith a call back, he can address

that with you at that time.

Simone Dagnino: Okay.

Is it fair to say that declining cash was mostly due to the working capital build there?

Lou Schneeberger: That’s part of it. The other part of it was as we begin the settlements when

we sold our precious metals business we did have some payments there as well

for some cash-related items.

Simone Dagnino: Okay.

And so you’re - in flipping to the settlement and the payment of that, that’s going to be out

of current facilities and cash flow (unintelligible) understand previous callers.

Lou Schneeberger: Well, I - this is Lou Schneeberger.

I guess I’ll just sort of repeat a bit of what I’ve said. We have cash on our balance sheet.

We have a $75 million revolving credit agreement, and as we’ve said on one of

our press releases that we have up to $30 million...

Simone Dagnino: Right.

Lou Schneeberger: ...of available insurance proceeds as well. The combination of those three

clearly will allow us to make our $74 million escrow payment on April 8.

Simone Dagnino: Okay, that’s it. All of the others have been answered. Thank you...

Man: Thank you.

Simone Dagnino: I’ll get off the phone.

Operator: Your next question comes from the line of Patrick Flavin.

Patrick Flavin: Could you help us with the currency relationships? In other words, can you explain

how the euro and A-dollar changes relate to an appreciating dollar and an

appreciating dollar?

Lou Schneeberger: I - this is Lou again.

Why the euro affects us as much as it does is because we have two very large operations in

Finland with a lot of people, a lot of utility costs, et cetera, and of course those

expenses are in euros. We buy our raw materials in dollars and we sell our raw

materials in dollars. So as the euro strengthens against the dollar, that’s where

we see the big increase in cost from that specifically.

Patrick Flavin: Okay, so and an appreciating euro is bad for you?

Lou Schneeberger: Yes.

Patrick Flavin: And is a depreciating euro good for you?

Lou Schneeberger: Yes.

Patrick Flavin: And what about the A-dollar?

Lou Schneeberger: The Aussie dollar is the same concept exactly but of course on a smaller

scale as our Cawse facility in the Outback is a much smaller operation.

But again there we pay our expenses for the people and utilities in Aussie dollars versus the

US dollar, so it’s exactly the same thing.

Patrick Flavin: Thank you.

Operator: Your next question from the line of Chris Kapsch.

Chris Kapsch: I had a follow-up on the restatement dollars. You mentioned $12 million. I was

curious over what period of time you incurred that cost and should we assume

if it was say over the last year should we assume that that level of cost

completely goes away on a run rate basis going forward and is there other cost

that you’ve incurred during this time period that also go away, i.e., extra legal

expenses and so forth.

Lou Schneeberger: This is Lou Schneeberger again.

The $12 million is - a good part of that is the variable cost of all this process. Yes, we did

have additional fees baked into that number. Clearly when we get to the second

quarter of 2005, those costs are over because not - we just finished that filing,

so most of our cost should resort to normal as we are in the process we’re in

right now. We clearly have to get the 2004 audit done. That audit probably will

be a bit more expensive than normal, but by the time we get to the 2005 audit,

we expect to be back to completely normal.

Chris Kapsch: And Lou, was the $12 million over the course of the last 12 months or so?

Lou Schneeberger: That was the calendar year of 2004.

Chris Kapsch: Okay.

And then I also had a follow up on the sensitivities that you mentioned early in the

presentation. If I compare those sensitivities, those earnings sensitivities to

similar numbers that were presented I think in late ‘03, the second half of ‘03,

the cobalt sensitivity is almost identical, and it looks like the nickel sensitivity

has increased pretty substantially.

I was curious what’s the driver behind that. Is it simply the higher nickel prices?

And secondly, is there any indication looking forward once you procure your nickel feed

for the second half of ‘05 and beyond how that sensitivity might be impacted.

Lou Schneeberger: I believe that the sensitivities that were provided before were the sensitivities

out of our refinery in Finland and we’ve added the sensitivities and the cost

facility to those numbers and that’s why they’re higher.

As far as going forward, I think Greg addressed that quite a bit, that we’re not here to talk

about 2005 numbers.

Chris Kapsch: Okay.

And then just one final question. You mentioned that, you now, over the last couple years

we’ve sort of throttled back quite a bit on capex and just curious, you know,

notwithstanding obviously there’s a maintenance turnaround now at the smelter,

but is there an anticipation that we’ll have to ramp capex back up over the next,

you know, year or two?

Greg Griffith: Hey Chris, this is Greg.

Chris Kapsch: Yeah.

Greg Griffith: We’ll give you an expectation of our capital expenditures for ‘05 when we lay out

our plans for ‘05.

Chris Kapsch: Okay.

Operator: Your next question comes from the line of David Markus.

David Markus: My questions have been answered. Thank you.

Operator: Your next question comes from the line of Greg Halter.

Greg Halter: Hi guys. I have one and then (Elliott) has a follow up.

Regarding the restatement process cost and legal fees of the $12 million, would that to sum

that up in 2004 put that corporate expense number around $35 million excluding

those additional costs?

Lou Schneeberger: Yes.

Greg Halter: Okay.

And (Elliott) has a question as well.

(Elliott): Good morning.

Last week I believe it was that Cobalt Development Institute indicated that China’s cobalt

output surged 75% last year. You mentioned about your increasing orientation

toward Asia.

Could you comment on what the outlook is for cobalt production in China in the future?

Steve Dunmead: Certainly - this is Steve Dunmead.

Certainly the same thing that’s happening in nickel with more and more production coming

out of China is occurring. One of the biggest cobalt and nickel refiners in China

has announced that they will be increasing their refining capacity and so we

expect that to happen, but the demand inside China is increasing rapidly also.

(Elliott): And second, Frank, I’d be appreciative of any comments you may have on the

timetable that the board has set for having a new CEO in place. Has the

interviewing process started yet, or could you give us some idea of when this

process might be completed.

Frank Butler: Yes.

The interviewing process has begun and is progressing very nicely. As you know, it’s

difficult to predict how these things might turn out because you have to have a

lot of things go right, but I’m very pleased with the way it’s progressing and

we’re looking for some time in the summer for that to happen.

(Elliott): And in the interim, have there been any overtures from outside companies and an

interest acquiring OM Group? Or if that were to occur, what would your

reaction be?

Frank Butler: Well number one, I’ve had no inquiries, and number two is we would - I would

have to see what it is in order to understand how to deal with the enquiry.

(Elliott): Thank you.

Operator: Your next question comes from the line of Neal Jacobs.

Neal Jacobs: Good morning. Most of my questions have been answered. I just have one small

question.

The artisanal mining in the Congo, what percent of overall cobalt supply would you

estimate in 2004 that that mining constituted?

Steve Dunmead: This is Steve Dunmead. I don’t have that exact information in front of me.

I have it in the office and I will have Greg get that for you.

Neal Jacobs: Okay. Thank you.

Operator: Your next question comes from the line of David Troyer.

David Troyer: Hi, David Troyer, CSFB.

I think my question was partially asked with respect to the fourth quarter, but I was looking

to reconcile approximately $256 million of ‘04 EBITDA with an increase in net

debt for the year of about $25 million.

You know, clearly some of the major cash flow items are capex and interest expense and

changes in working capital, but I still have about a $50 million cash use hole

that I’m trying to fill in here.

Lou Schneeberger: David, this is Lou Schneeberger.

Twenty million dollars of the money went for - to Umicore during a lot of our settlements

there, because when we sold Precious Metals, we agreed and we accrued for the

final payments for bonuses, for taxes, et cetera, so $20 million went to that

change itself.

Of course you saw the change in accounts receivable in inventories, which was the lion’s

share from there. That’s really the biggest part. So capex a little less than $20

million and we had a small final contingent payment on our Harjavalta

acquisition of a little over $6-1/2 million.

That should account for all of the big changes (unintelligible) cash.

David Troyer: Okay.

And I apologize, you may have answered this already. Are there - is there the possibility of

future payments to Umicore?

Lou Schneeberger: Yes.

We - in our ending balance sheet at the end of ‘04, which we did send out to you, we have

$20 million left of - you’ll see it in the caption, retained liability for businesses

sold of $21 million. So we’ve still got $21 million thereabouts that we’ve

accrued for various work, including the Umicore payments from there.

David Troyer: Okay.

And then when you go over 2005, is it your expectation that you’ll be able to kind of

discuss some of the major cash flow items that will - that you would expect in

‘05, in addition to capex?

Lou Schneeberger: Certainly

David Troyer: Great. Thank you.

Operator: Your next question comes from the line of Dan Leonard.

Dan Leonard: Very quickly, :Lou.

The fourth quarter, do you know, what the fourth quarter would have been LIFO? You

gave me the full year adjustment.

Lou Schneeberger: No. We didn’t really go through that. We did an overall one-year look at it.

As we’re off of it, we just thought we’d give you a one shot look at the effects,

but we’ve stopped calculating LIFO and stopped tracking it, but just for a one-

time shot we thought we’d sort of tell you what the effect was. We don’t intend

to calculate what LIFO would have been anymore.

Dan Leonard: Okay.

And then if I could ask a question on the 2003 10-K, you wrote that your nickel supply,

you had 82% for 2005. My interpretation is that’s 100% for the first half and

60% for the second half.

Is that accurate?

Lou Schneeberger: Yes.

Dan Leonard: Thank you.

Operator: You have a follow-up question from the line of Dmitry Silverstien.

Dmitry Silverstien: Yes, a couple of questions.

First of all, can you give us an idea, I know you don’t talk about 2005 numbers yet, but can

you give us an idea of what the impact of the shutdown of the Big Hill for

maintenance will in the first quarter and whether or not it’s going to spread into

the second quarter?

Lou Schneeberger: No, we’ll give you that when we lay out ‘05.

Dmitry Silverstien: Okay.

In that case, can you update us on the - your utilization rates at the Kokkola refinery? Is it

back to basically being at full production rates or are you still running it throttled

back?

Greg Griffith: Throttled back, Dmitry? What’s your timeframe when you’re talking about that?

Dmitry Silverstien: Well, I’m just thinking back to your I guess it was 2002, 2003 decision to

cut production there by 20% and you really haven’t updated us on what was

going on since then with the cobalt market recovery. I’m assuming you’re

running full flat out, but I just want to make sure.

Greg Griffith: Well, what we did give you was cobalt refined production for ‘04 and ‘03, and

you’ll see the increase from ‘02. Whether or not at what percentage of capacity

or whatever, I don’t envision us of every talking about it in terms of what

percentage plant utilization is running at, but we’re refining the right amount of

cobalt to meet our plans and the market’s demand.

Dmitry Silverstien: Let me ask the question differently. Without giving me the exact levels of

your refining capacity, has the 20% reduction that you’ve undertaken in 2002,

has that been reversed or are you still running below the 2002 levels in terms of

your production capacity?

Steve Dunmead: This is Steve Dunmead.

We’re running above the 2002 levels.

Dmitry Silverstien: Okay. Thank you very much.

And the last question I have is is there anything going on in (Lubumbashi) that you wish to

update us on as far as the feedstock there is concerned and how much longer

you’ll be able to - in other words, update us on what’s going on with that part

of your Congo operations?

Man: Not at this time.

Dmitry Silverstien: Thank you, that’s it.

Operator: And your final question comes from the line of Saul Ludwig.

Saul Ludwig: In the - two questions. One, in the 10-K I think you did state in there that you

expected cap spending in 2005 to be $65 million. Could you just comment on -

and I’d say that’s a big increase. What would be the one or two most important

projects?

Greg Griffith: Well again, Saul, that has to do with our ‘05 spending, and we’ll comment and

update you on what our ‘05 capital plans are when we lay out ‘05.

Saul Ludwig: And then finally, would it be safe to assume that again, it’s an ‘05 question, but not

earnings or anything, that you will be generating cash from working capital as

you liquidate the inventories that were built up in anticipation of the smelter

rebuild.

Man: Yes.

Saul Ludwig: Great. Thank you very much.

Operator: Ladies and gentlemen, we have reached the end of the allotted time for questions

and answers.

Mr. Butler, do you have any closing remarks?

Frank Butler: Yes I do.

First of all, I’d like to thank you all again for your time this morning, and I would

encourage you to contact Greg Griffith directly for follow-up questions,

answers to follow-up questions, and any questions that you didn’t get

answered.

I believe you’re going to find us to be a different company now, I hope one that’s

committed to maintaining a transparent view of our performance and a dialogue

with the investment community that’s clear, concise, and consistent.

And this concludes this call, and I thank you for your time and I wish you have a good day.

Operator: This concludes today’s teleconference. You may now disconnect.

END