UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004.

OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    .

Commission file number 0-27918

Century Aluminum Company

(Exact name of Registrant as specified in its Charter)

Registrant’s telephone number, including area code: (831) 642-9300

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

     The registrant had 32,010,464 shares of common stock outstanding at November 3, 2004.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements.

CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)

See notes to consolidated financial statements

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CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)

See notes to consolidated financial statements

2

CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)

See notes to consolidated financial statements

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

1. General

     The accompanying unaudited interim consolidated financial statements of Century Aluminum Company (the “Company” or “Century”) should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2003. In management’s opinion, the unaudited interim consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented. Operating results for the first nine months of 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. Certain reclassifications of 2003 information were made to conform to the 2004 presentation.

2. Acquisitions

  Nordural Acquisition

     On April 27, 2004, the Company completed the acquisition of Nordural hf (“Nordural”) from Columbia Ventures Corporation (“CVC”), a privately-owned investment company headquartered in Vancouver, Washington. Nordural hf is an Icelandic company that owns and operates the Nordural facility, a primary aluminum reduction facility located in Grundartangi, Iceland, approximately 25 miles north of Reykjavik, Iceland’s capital. The results of operations of Nordural are included in the Company’s Statement of Operations beginning April 28, 2004.

     The Nordural acquisition is a significant step forward in achieving the Company’s strategic goals of reducing its average cost to produce aluminum and geographically diversifying its asset base. The Nordural facility, built in 1998, is the Company’s most recently constructed and lowest operating cost facility. The Company is expanding the Nordural facility to increase its annual production capacity to 467 million pounds, or more than double its current production capacity.

     The Company accounted for the acquisition as a purchase using the accounting standards established in Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” The Company recognized $107,259 of Goodwill in the transaction.

     The purchase price for Nordural was $195,346, allocated as follows:

     The appraisal, upon which portions of the purchase allocation will be based, is not yet complete and additional adjustments to the purchase price allocation may still be required. Century used a portion of the proceeds from a registered equity offering to finance the acquisition (see Note 18 – Equity Offering).

     The following tables represent the unaudited pro forma results of operations for the three and nine months ended September 30, 2004 and 2003 assuming the acquisition occurred on January 1, 2003. The unaudited pro forma amounts may not be indicative of the results that actually would have occurred if the transaction described above had been completed and in effect for the periods indicated.

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

   The Gramercy Acquisition

     On October 1, 2004, the Company, together with subsidiaries of Noranda, Inc. (“Noranda”), completed the joint purchase of the Gramercy, Louisiana alumina refinery owned by Kaiser Aluminum and Chemical Corporation (“Kaiser”) and Kaiser’s 49% interest in a Jamaican bauxite mining partnership. The purchase price was $23.0 million, subject to working capital adjustments. The Company and Noranda each paid one-half of the purchase price. Kaiser sold these alumina and bauxite assets as part of its reorganization to emerge from Chapter 11 bankruptcy. The bauxite mining partnership supplies all of the bauxite used for the production of alumina at the Gramercy refinery and also supplies bauxite to a third party refinery in Texas. The Gramercy refinery chemically refines bauxite into alumina, the principal raw material in the production of primary aluminum. The Gramercy refinery began operations in 1959 and had extensive portions rebuilt and modernized in 2000. Gramercy has an annual production capacity of 1.2 million metric tons of alumina, approximately 80% of which is supplied to the Hawesville facility and to a primary aluminum production facility separately owned by Noranda. The Hawesville Facility purchases all of its alumina requirements from Gramercy. The Company intends to apply the equity method of accounting for the Gramercy acquisition.

     In October 2004, certain bauxite loading equipment used by the bauxite mining partnership at its St. Ann, Jamaica port facility failed, resulting in the interruption of bauxite shipments from the facility. The St. Ann port facility is used to ship bauxite to the Gramercy alumina facility and to other customers. The Company does not anticipate any interruption in aluminum production at the Hawesville facility as a result of the equipment failure at the St. Ann port facility.

3. Stock-Based Compensation

     The Company has elected not to adopt the recognition provisions for employee stock-based compensation as permitted in SFAS No. 123, “Accounting for Stock-Based Compensation.” As such, the Company accounts for stock based compensation in accordance with Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees.” No compensation cost has been recognized for the stock option portions of the plan because the exercise prices of the stock options granted were equal to the market value of the Company’s stock on the date of grant. Had compensation cost for the Stock Incentive Plan been determined using the fair value method provided under SFAS No. 123, the Company’s net income and earnings per share would have changed to the pro forma amounts indicated below:

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4. Inventories

     Inventories consist of the following:

     At September 30, 2004 and December 31, 2003, approximately 70% and 78% of the inventories, respectively, were valued at the lower of last-in, first-out (“LIFO”) cost or market. The excess of LIFO cost (or market, if lower) over FIFO cost was approximately $824 and $3,762 at September 30, 2004 and December 31, 2003, respectively. Inventories at Nordural are stated at lower of first in, first out (“FIFO”) cost or market. Operating and other supplies inventories at all facilities are based upon the average cost method.

5. Intangible Asset

     The intangible asset consists of the power contract acquired in connection with the Company’s acquisition of an 80% interest in the Hawesville facility in April 2001. The contract value is being amortized over its term (ten years) using a method that results in annual amortization equal to the percentage of a given year’s expected gross annual benefit to the total as applied to the total recorded value of the power contract. In connection with the Company’s acquisition of the remaining 20% interest in the Hawesville facility from Glencore on April 1, 2003, the 20% portion of the power contract that was indirectly owned by Glencore was revalued in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” As a result, the gross carrying amount of the contract and the accumulated amortization, both related to the 20% portion of the contract indirectly owned by Glencore, were removed and the fair value of the 20% of the power contract acquired on April 1, 2003 was recorded. As of September 30, 2004, the gross carrying amount of the intangible asset was $153,592 with

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accumulated amortization of $63,701. For the three month periods ended September 30, 2004 and September 30, 2003, amortization expense for the intangible asset totaled $3,081 and $4,584, respectively. For the nine month periods ended September 30, 2004 and September 30, 2003, amortization expense for the intangible asset totaled $9,245 and $14,095, respectively. For the year ending December 31, 2004, the estimated aggregate amortization expense for the intangible asset will be approximately $12,326. The estimated aggregate amortization expense for the intangible asset for the following five years is as follows:

     The intangible asset is reviewed for impairment in accordance with SFAS 142, “Goodwill and Other Intangible Assets,” whenever events or circumstances indicate that its net carrying amount may not be recoverable.

6. Debt

     Secured First Mortgage Notes

     In August 2004, the Company completed a tender offer and consent solicitation for the Company’s 11.75% senior secured first mortgage notes due 2008 (the “Notes”). The principal purpose of the tender offer and consent solicitation was to refinance Century’s outstanding Notes with debt bearing a lower interest rate, thereby reducing the Company’s annual interest expense. On August 26, 2004, the Company purchased $315,055 in principal amount of Notes in the tender offer. Following the purchase, the Company has outstanding a principal amount of $9,945 of Notes. No principal payments are required until maturity. On or after April 15, 2005, the Company anticipates redeeming the balance of the Notes at 105.875% of the principal balance, plus accrued and unpaid interest. Holders received $1,096.86 for each $1,000 principal amount of Notes purchased in the tender offer, plus accrued and unpaid interest. Holders who tendered their Notes by August 6, 2004, received a consent payment of $20.00 per $1,000 of principal amount of Notes resulting in a total consideration of $1,116.86 for each $1,000 principal amount of Notes purchased in the tender offer, plus accrued and unpaid interest up to but not including the date of payment.

     The Company financed the tender offer and consent solicitation with a portion of the proceeds from the private placement of its 7.5% Senior Unsecured Notes due 2014 (“Senior Unsecured Notes”) in the aggregate principal amount of $250,000 and 1.75% Senior Convertible Notes due 2024 (“Convertible Notes”) in the aggregate principal amount of $175,000. The sale of the Convertible Notes closed August 9, 2004 resulting in net proceeds to the Company of approximately $169,209. The sale of the Senior Unsecured Notes closed August 26, 2004 and resulted in net proceeds to the Company of approximately $243,238. The Company used the remaining proceeds from these offerings and available cash to repay a portion of the outstanding debt at Nordural.

     The Company had unamortized discounts on the Notes of $71 and $2,690 at September 30, 2004 and December 31, 2003, respectively. In connection with the consent solicitation, the Company entered into a supplemental indenture that eliminated substantially all of the restrictive covenants and certain default provisions contained in the indenture governing the remaining Notes.

     In the third quarter of 2004, the Company recognized a loss on early extinguishment of debt of $47,448 related to the refinancing of the Notes. The loss was composed of the following:

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

  Issuance of Convertible Senior Notes

     On August 9, 2004, the Company completed the sale of $175,000 aggregate principal amount of its Convertible Notes in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”).

     The Convertible Notes are convertible at any time at an initial conversion rate of 32.7430 shares of Century common stock per one thousand dollars of principal amount of Convertible Notes, subject to adjustments for certain events. The initial conversion rate is equivalent to a conversion price of approximately $30.5409 per share of Century common stock. Upon conversion of a Convertible Note, the holder of such Convertible Note shall receive cash equal to the principal amount of the Convertible Note and, at Century’s election, either cash, Century common stock, or a combination thereof, for the Convertible Notes’ conversion value in excess of such principal amount, if any. In addition, the Convertible Notes will be redeemable at Century’s option beginning on August 6, 2009, and the holders may require Century to repurchase all or part of their Convertible Notes for cash on each of August 1, 2011, August 1, 2014 and August 1, 2019.

     The obligations of the Company pursuant to the Convertible Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Company’s existing domestic restricted subsidiaries other than Century Aluminum of Kentucky, LLC.

     The Company has agreed to file and cause to become effective a shelf registration statement with the Securities and Exchange Commission for the resale of the Convertible Notes and any shares of common stock issuable upon the conversion of the Convertible Notes. If the shelf registration statement is not filed on or prior to the date that is 120 days after August 9, 2004 or is not declared effective on or prior to the date that is 210 days after August 9, 2004 (each, a “Registration Default”), the annual interest rate on the Convertible Notes will increase by 0.25% following such Registration Default, not to exceed an aggregate of 0.50% per annum.

   Private Placement of Senior Unsecured Notes

     On August 26, 2004, the Company completed the sale of $250,000 aggregate principal amount of its Senior Unsecured Notes in a private placement exempt from the registration requirements of the Act.

     The indenture governing the Senior Unsecured Notes contains customary covenants, including limitations on the Company’s ability to incur additional indebtedness, pay dividends, sell assets or stock of certain subsidiaries and purchase or redeem capital stock.

     The obligations of the Company pursuant to the Senior Unsecured Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Company’s existing domestic restricted subsidiaries other than Century Aluminum of Kentucky, LLC.

     The Company has agreed to file and cause to become effective a registration statement to exchange the Senior Unsecured Notes for new notes in a transaction registered under the Act. The terms of the exchange notes will be substantially identical to the Senior Unsecured Notes, except that the exchange notes will not be subject to transfer restrictions. If the exchange offer is not

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

consummated on or prior to the date that is 210 days after August 26, 2004, the annual interest rate on the Senior Unsecured Notes will increase by 0.5% from the 210th day until the exchange offer is consummated.

   Revolving Credit Facility

     Effective April 1, 2001, the Company entered into a $100,000 senior secured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. The Revolving Credit Facility will mature on April 2, 2006. The Company’s obligations under the Revolving Credit Facility are unconditionally guaranteed by its domestic subsidiaries (other than Century Aluminum of Kentucky, LLC (the “LLC”) and certain subsidiaries formed in connection with the Nordural acquisition) and secured by a first priority security interest in all accounts receivable and inventory belonging to the Company and its subsidiary borrowers. The availability of funds under the Revolving Credit Facility is subject to a $30,000 reserve and limited by a specified borrowing base consisting of certain eligible accounts receivable and inventory. Borrowings under the Revolving Credit Facility are, at the Company’s option, at the LIBOR rate or the Fleet National Bank base rate plus, in each case, an applicable interest margin. The applicable interest margin ranges from 2.25% to 3.0% over the LIBOR rate and 0.75% to 1.5% over the base rate and is determined by certain financial measurements of the Company. There were no outstanding borrowings under the Revolving Credit Facility as of September 30, 2004 and December 31, 2003. Interest periods for LIBOR rate borrowings are one, two, three or six months, at the Company’s option. As of September 30, 2004, the Company had a borrowing base of $76,752 under the Revolving Credit Facility. The Company is subject to customary covenants, including limitations on capital expenditures, additional indebtedness, liens, guarantees, mergers and acquisitions, dividends, distributions, capital redemptions and investments.

   Industrial Revenue Bonds

     Effective April 1, 2001, in connection with its acquisition of the Hawesville facility, the Company assumed industrial revenue bonds (the “IRBs”) in the aggregate principal amount of $7,815. From April 1, 2001 through April 1, 2003, Glencore assumed 20% of the liability related to the IRBs consistent with its ownership interest in the Hawesville facility during that period. The IRBs mature on April 1, 2028, and bear interest at a variable rate not to exceed 12% per annum determined weekly based on prevailing rates for similar bonds in the bond market, with interest paid quarterly. The IRBs are secured by a Glencore guaranteed letter of credit and the Company provides for the servicing costs for the letter of credit. The Company has agreed to reimburse Glencore for all costs arising from the letter of credit. The Company’s maximum potential amount of future payments under the reimbursement obligations for the Glencore letter of credit securing the IRBs would be $8,150. The interest rate on the IRBs at September 30, 2004 was 2.00%. The IRBs are classified as current liabilities because they are remarketed weekly and could be required to be repaid upon demand if there is a failed remarketing, as provided in the indenture governing the IRBs. The Company’s reimbursement obligations related to the Glencore letter of credit securing the IRBs are guaranteed by each of its material consolidated subsidiaries, except for the LLC (see Note 17 for a discussion of note guarantees), and secured by a first priority interest in the 20% interest in the Hawesville facility.

   Glencore Note Payable

     On April 1, 2003, in connection with its acquisition of the remaining 20% interest in the Hawesville facility, the Company issued a six-year $40,000 promissory note payable to Glencore bearing interest at a rate of 10% per annum (the “Glencore Note”). In April 2004, the Company paid the remaining $14,000 of principal on the Glencore Note, which consisted of a $2,000 required principal payment and an optional $12,000 prepayment of principal.

   Term Loan Facility – Nordural

     As of September 30, 2004, Nordural had approximately $83,370 of debt, principally consisting of a senior term loan facility maturing December 31, 2009. In September 2004, the Company repaid $100,000 of the loan facility with available cash resulting in an outstanding balance under the loan facility of $71,384 at September 30, 2004. Amounts borrowed under Nordural’s loan facility generally bear interest at the applicable LIBOR rate plus a margin of 1.45% per year, plus an applicable percentage to cover certain lender compliance costs.

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

     Nordural’s obligations under the loan facility are secured by the stock of Nordural and substantially all of Nordural’s assets. Amounts outstanding under the loan facility are payable semiannually in installments through December 31, 2009. The amount of each installment is based on a scheduled rate that fluctuates between 2.74% and 3.88% of outstanding principal. Nordural may voluntarily prepay all or part of the loan facility without penalty provided it gives five business days’ notice, subject to a minimum payment threshold. The agreement provides for mandatory prepayment upon the receipt of proceeds from certain asset sales, events impairing the value of assets and insurance recoveries. If the price of aluminum falls below designated levels for six months prior to a payment date and the debt coverage ratio is less than one to one, the loan facility provides for deferral of principal payments. Principal payments are increased if certain debt coverage ratios are exceeded and/or the price of aluminum exceeds designated levels.

     Nordural’s loan facility contains customary covenants, including limitations on additional indebtedness, security interests, investments, asset sales, loans, guarantees, capital expenditures, mergers and acquisitions, amendments to various agreements used in the operation of the Nordural facility, hedging agreements, distributions and share capital redemptions.

     Nordural Refinancing and Expansion Financing

     The Company has agreed to terms on a five year $310,000 senior term loan facility with a syndicate of banks led by Landsbanki Islands hf. and Kaupthing Bank hf, subject to customary closing conditions including the negotiation and execution of definitive agreements. Amounts borrowed will be used to repay debt currently outstanding at Nordural and to finance a portion of the costs associated with the ongoing expansion of the Nordural facility. The term loan facility can be extended by an additional seven years upon the satisfaction of certain conditions.

7. Contingencies and Commitments

  Environmental Contingencies

     The Company believes its current environmental liabilities do not have, and are not likely to have, a material adverse effect on the Company’s financial condition, results of operations or liquidity. However, there can be no assurance that future requirements at currently or formerly owned or operated properties will not result in liabilities which may have a material adverse effect.

     Century Aluminum of West Virginia, Inc. (“Century of West Virginia”) continues to perform remedial measures at its Ravenswood facility pursuant to an order issued by the Environmental Protection Agency (“EPA”) in 1994 (the “3008(h) Order”). Century of West Virginia also conducted a RCRA facility investigation (“RFI”) under the 3008(h) Order evaluating other areas at the Ravenswood facility that may have contamination requiring remediation. The RFI has been approved by appropriate agencies. Century of West Virginia has completed interim remediation measures at two sites identified in the RFI, and the Company believes no further remediation will be required. A Corrective Measures Study, which will formally document the conclusion of these activities, is being completed with EPA. The Company believes a significant portion of the contamination on the two sites identified in the RFI is attributable to the operations of Kaiser, which had previously owned and operated the Ravenswood facility, and is the financial responsibility of Kaiser.

     On September 28, 2004, the Bankruptcy Court for the District of Delaware approved an agreement by Kaiser to transfer its environmental liability at Ravenswood to TRC Companies, Inc., and TRC Environmental Corporation (collectively “TRC”). The Bankruptcy Court also approved an agreement between, Kaiser, TRC, Century of West Virginia and Pechiney Rolled Products, Inc. (“Pechiney”), effective as of September 1, 2004, pursuant to which TRC assumed all of Kaiser’s environmental liabilities at Ravenswood. TRC also purchased insurance in amounts the Company believes are sufficient to cover the costs of any TRC liability at Ravenswood. Also, as of September 1, 2004, Century of West Virginia and Pechiney entered into an agreement releasing Century of West Virginia from all of the environmental indemnification obligations for Kaiser-related matters arising out of the Century of West Virginia’s 1999 sale of the Ravenswood rolling mill to Pechiney.

     Under the Company’s agreement with Southwire Company to purchase the Hawesville, Kentucky facility, Southwire indemnified the Company against all on-site environmental liabilities known to exist prior to April 1, 2001 (the “Closing”) and against risks associated with off-site hazardous material disposals which pre-dated the Closing.

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

     Prior to the Closing, the EPA had issued a final Record of Decision (“ROD”), under the Comprehensive Environmental Response, Compensation and Liability Act, directing that certain response actions be taken at the Hawesville facility. Under its agreement with Century, Southwire agreed to perform all obligations under the ROD. The total costs for the obligations to be undertaken and paid for by Southwire relative to these liabilities are estimated under the ROD to be $12,600, and the forecast of annual operating and maintenance costs is $1,200. Century Kentucky, LLC (“Century Kentucky”) will operate and maintain the ground water treatment system required under the ROD on behalf of Southwire, and Southwire will reimburse Century Kentucky for any expense that exceeds $400 annually.

     If any on-site environmental liabilities become known prior to March 31, 2007 that were not known to exist at Closing but which arose from pre-Closing activities at the Hawesville facility, the Company will share the costs of remedial action with Southwire pro rata depending on the year the liability is identified. The Company will be responsible for any such liabilities which first become known on or after March 31, 2007. The Company also will be responsible for any post-Closing environmental liabilities which result from a change in laws.

     The Company acquired the Hawesville facility by purchasing all of the outstanding equity securities of Metalsco Ltd. (“Metalsco”), which was a wholly owned subsidiary of Southwire. Metalsco previously owned certain assets unrelated to the Hawesville plant’s operations (“Unwanted Assets”). All Unwanted Assets owned by Metalsco were distributed to Southwire prior to the Closing, and Southwire indemnified the Company for all liabilities related to the Unwanted Assets. Southwire also retained ownership of and full responsibility for certain land adjacent to the Hawesville facility containing potliner disposal areas.

     Southwire has secured its indemnity obligations to the Company for environmental liabilities through April 1, 2008 by posting a letter of credit in the Company’s favor in the amount of $14,000. Southwire is obligated to post an additional $15,000 if its net worth drops below a pre-determined level prior to April 1, 2008. The amount of security Southwire provides may increase (but not above $14,500 or $29,500, as applicable) or decrease (but not below $3,000) if certain specified conditions are met.

     The Company cannot be certain Southwire will be able to meet its indemnity obligations. In that event, under certain environmental laws which impose liability regardless of fault, the Company may be liable for any outstanding remedial measures required under the ROD and for certain liabilities related to the unwanted properties. If Southwire fails to meet its indemnity obligations or if the Company’s shared or assumed liability is significantly greater than anticipated, the Company’s financial condition, results of operations and liquidity could be materially adversely affected.

     Century is a party to an EPA Administrative Order on Consent (the “Order”) pursuant to which other past and present owners of an alumina refining facility at St. Croix, Virgin Islands have agreed to carry out a Hydrocarbon Recovery Plan to remove and manage hydrocarbons floating on groundwater underlying the facility. Pursuant to the Hydrocarbon Recovery Plan, recovered hydrocarbons and groundwater are delivered to the adjacent petroleum refinery where they are received and managed. Lockheed Martin Corporation (“Lockheed”), which sold the facility to one of the Company’s affiliates, Virgin Islands Alumina Corporation (“Vialco”), in 1989, has tendered indemnity and defense of this matter to Vialco pursuant to terms of the Lockheed–Vialco Asset Purchase Agreement. Management does not believe Vialco’s liability under the Order or its indemnity to Lockheed will require material payments. Through September 30, 2004, the Company has expended approximately $440 on the Recovery Plan. Although there is no limit on the obligation to make indemnification payments, the Company expects the future potential payments under this indemnification will be approximately $200 which may be offset in part by sales of recoverable hydrocarbons.

     The Company, along with others, including former owners of its former St. Croix facility, received notice of a threatened lawsuit alleging natural resource damages involving the subsurface contamination at the facility. Century has entered into a Joint Defense Agreement with the other parties who received notification of the threatened lawsuit. While it is not presently possible to determine the outcome of this matter, the Company’s known liabilities with respect to this and other matters relating to compliance and cleanup, based on current information, are not expected to be material and should not materially adversely affect the Company’s operating results. However, if more stringent compliance or cleanup standards under environmental laws or regulations are imposed, previously unknown environmental conditions or damages to natural resources are discovered, or if

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

contributions from other responsible parties with respect to sites for which the Company has cleanup responsibilities are not available, the Company may be subject to additional liability, which may be material.

     Nordural is subject to various Icelandic and other environmental laws and regulations. These laws and regulations are subject to change, which changes could result in increased costs. Operating in a foreign country exposes the Company to political, regulatory, currency and other related risks. The Nordural facility, built in 1998, uses technology currently defined to be “best available technology” under the European Union’s Integrated Pollution Prevention and Control Directive of 1996, or IPPC. The operational restrictions for the Nordural facility, as determined by the Icelandic Minister for the Environment, are set forth in the facility’s operating license. The license currently allows for both the facility’s current and planned expansion capacity.

     On October 1, 2004, Century and Noranda Finance, Inc. (“Noranda”) jointly acquired the assets of the Gramercy Alumina plant located near Gramercy, Louisiana, from Kaiser with Bankruptcy Court approval. Prior to closing, Century and Noranda performed a pre-purchase due diligence investigation of the environmental conditions present at the Gramercy facility. The results of this investigation were submitted to state regulatory officials. In addition, as part of this submittal Century and Noranda agreed to undertake certain specified remedial activities at the Gramercy plant. As a result of this submittal, state environmental officials have confirmed that Century and Noranda met the conditions for Bona Fide Prospective Purchaser protections against liability for pre-existing environmental conditions at the facility. Accordingly, Century does not believe it faces any contingent environmental liabilities of a material nature resulting from its purchase of the Gramercy facility.

     In conjunction with the purchase of the Gramercy facility, Century and Noranda jointly purchased Kaiser’s 49% interest in Kaiser-Jamaica Bauxite Company (“KJBC”), a partnership located in Jamaica and 51% owned by the Jamaican government. Now reconstituted as St. Ann Jamaican Bauxite Partnership (“SAJBP”), the entity carries out bauxite mining, drying, storage and shipping operations. Century and Noranda performed a pre-purchase due diligence investigation of the KJBC operations which disclosed no significant environmental liabilities or regulatory non-compliance. While it is impossible to predict what future environmental requirements might be, Century does not believe that the acquisition of KJBC presents the Company with any material environmental liabilities.

     It is the Company’s policy to accrue for costs associated with environmental assessments and remedial efforts when it becomes probable that a liability has been incurred and the costs can be reasonably estimated. The aggregate environmental related accrued liabilities were $775 and $694 at September 30, 2004 and December 31, 2003, respectively. All accrued amounts have been recorded without giving effect to any possible future recoveries. With respect to ongoing environmental compliance costs, including maintenance and monitoring, such costs are expensed as incurred.

     Because of the issues and uncertainties described above, and the Company’s inability to predict the requirements of the future environmental laws, there can be no assurance that future capital expenditures and costs for environmental compliance will not have a material adverse effect on the Company’s future financial condition, results of operations, or liquidity. Based upon all available information, management does not believe that the outcome of these environmental matters, or environmental matters concerning Mt. Holly, will have a material adverse effect on the Company’s financial condition, results of operations, or liquidity.

   Legal Contingencies

     Prior to the Kaiser bankruptcy, Century was a named defendant, along with Kaiser and many other companies, in civil actions brought by employees of third party contractors who alleged asbestos-related diseases arising out of exposure at facilities where they worked, including Ravenswood. All of those actions relating to the Ravenswood facility have been dismissed or resolved with respect to the Company and as to Kaiser. Only 14 plaintiffs were able to show they had been on the Ravenswood premises during the period the Company owned the plant, and the parties have agreed to settle all of those claims for non-material amounts. The Company is awaiting receipt of final documentation of those settlements and the entry of dismissal orders. The Company does not expect the Kaiser bankruptcy will have any effect on the settlements reached on those asbestos claims. Since the Kaiser bankruptcy, the Company has been named in additional civil actions based on similar allegations with unspecified monetary claims against Century, 75 of which remain outstanding. To the best of the Company’s knowledge, of the

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

remaining civil actions, only two of the claimants were in the Ravenswood facility during the Company’s ownership, and both were employees of Kaiser or Century.

     The Company has pending against it or may be subject to various other lawsuits, claims and proceedings related primarily to employment, commercial, environmental and safety and health matters. Although it is not presently possible to determine the outcome of these matters, management believes their ultimate disposition will not have a material adverse effect on the Company’s financial condition, results of operations, or liquidity.

   Power Commitments

     The Hawesville facility currently purchases all of its power from Kenergy Corporation (“Kenergy”), a local retail electric cooperative, under a power supply contract that expires at the end of 2010. Kenergy acquires the power it provides to the Hawesville facility mostly from a subsidiary of LG&E Energy Corporation (“LG&E”), with delivery guaranteed by LG&E. The Hawesville facility currently purchases all of its power from Kenergy at fixed prices. Approximately 121 MW or 27% of the Hawesville facility’s power requirements are unpriced in calendar years 2006 through 2010. The Company will negotiate the price for the unpriced portion of the contract at such times as the Company and Kenergy deem appropriate.

     The Company purchases all of the electricity requirements for the Ravenswood facility from Ohio Power Company, a unit of American Electric Power Company, under a fixed price power supply agreement that runs through December 31, 2005.

     The Mt. Holly facility purchases all of its power from the South Carolina Public Service Authority (“Santee Cooper”) at rates established by published schedules. The Mt. Holly facility’s current power contract expires December 31, 2015. Power delivered through 2010 will be priced as set forth in currently published schedules, subject to adjustments for fuel costs. Rates for the period 2011 through 2015 will be as provided under then-applicable schedules.

     The Nordural facility purchases power from Landsvirkjun, a power company jointly owned by the Republic of Iceland and two Icelandic municipal governments, under a contract due to expire in 2019. The power delivered to the Nordural facility under its current contract is from hydroelectric and geothermal sources, both competitively-priced and renewable sources of power in Iceland, at a rate based on the London Metal Exchange (“LME”) price for primary aluminum. In connection with the planned expansion, Nordural has entered into a power contract with Orkuveita Reykjavikur (“OR”) and Hitaveita Sudurnesja hf (“HS”) for the supply of the additional power required for the expansion capacity. Power under this agreement will be generated from geothermal resources and prices will be LME-based. By the terms of a Second Amendment to the Landsvirkjun/Nordural Power Contract, dated as of April 21, 2004, Landsvirkjun has agreed on a best commercial efforts basis to provide backup power to Nordural should OR or HS be unable to meet the obligations of their contract to provide power for the Nordural expansion.

     The Company may suffer losses due to a temporary or prolonged interruption of the supply of electrical power to its facilities, which can be caused by unusually high demand, blackouts, equipment failure, natural disasters or other catastrophic events. The Company uses large amounts of electricity to produce primary aluminum, and any loss of power which causes an equipment shutdown can result in the hardening or “freezing” of molten aluminum in the pots where it is produced. If this occurs, the Company may experience significant losses if the pots are damaged and require repair or replacement, a process that could limit or shut down production operations for a prolonged period of time. Although the Company maintains property and business interruption insurance to mitigate losses resulting from catastrophic events, the Company may still be required to pay significant amounts under the deductible provisions of those insurance policies. Century’s coverage may not be sufficient to cover all losses, or certain events may not be covered. For example, certain of Century’s insurance policies do not cover any losses the Company may incur if its suppliers are unable to provide the Company with power during periods of unusually high demand. Certain material losses which are not covered by insurance may trigger a default under the Company’s Revolving Credit Facility. No assurance can be given that a material shutdown will not occur in the future or that such a shutdown would not have a material adverse effect on the Company.

13

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

  Labor Commitments

     Approximately 80% of the Company’s U.S. based workforce are represented by the United Steelworker’s of America (the “USWA”) and are working under agreements that expire as follows: March 31, 2006 (Hawesville) and May 31, 2006 (Ravenswood).

     There are six national labor unions representing Nordural’s work force. The current contract with these unions expires on December 31, 2004. The terms of a new contract are currently being negotiated.

  Other Commitments and Contingencies

     The Company may be required to make post-closing payments to Southwire up to an aggregate maximum of $7,000 if the price of primary aluminum on the LME exceeds specified levels during the seven years following closing of the Hawesville Acquisition in April 2001. No post-closing payments were made to Southwire through September 30, 2004; however, if LME prices remain at or above current levels, Southwire would be entitled to receive the entire $7,000 in 2005.

8. Forward Delivery Contracts and Financial Instruments

     As a producer of primary aluminum products, the Company is exposed to fluctuating raw material and primary aluminum prices. The Company routinely enters into fixed and market priced contracts for the sale of primary aluminum and the purchase of raw materials in future periods.

   Alumina Tolling

     Nordural is party to a long-term alumina tolling contract with a subsidiary of BHP Billiton (the “Tolling Agreement”) which is due to expire December 31, 2013. Under this contract, which is for all of the Nordural facility’s existing production capacity, Nordural receives an LME-based fee for the conversion of alumina, supplied by BHP Billiton, into primary aluminum. The contract includes customary termination provisions upon a force majeure event or material breach that could result in early termination. On August 1, 2004, the Company entered into a ten-year alumina toll conversion agreement with Glencore for Nordural’s expansion capacity. That contract also provides Nordural with an LME-based fee. The contract is effective in mid-2006.

   Primary Aluminum Sales Agreements

     Century has a contract with Pechiney (the “Pechiney Metal Agreement”) under which Pechiney purchases 23 to 27 million pounds, per month, of molten aluminum produced at the Ravenswood facility through December 31, 2005, at a price determined by reference to the U.S. Midwest Market Price. This contract will be automatically extended through July 31, 2007 provided that the Company’s power contract for the Ravenswood facility is extended or replaced through that date. Pechiney has the right, upon twelve months notice, to reduce its purchase obligations by 50% under this contract. In December 2003, Alcan Inc. (“Alcan”) completed an acquisition of Pechiney.

     The Pechiney rolling mill that purchases primary aluminum from the Company under this contract is located adjacent to the Ravenswood facility, which allows the Company to deliver molten aluminum, thereby reducing its casting and shipping costs. If Alcan materially reduces its purchases or fails to renew the contract when it expires, the Company’s casting, shipping and marketing costs at the Ravenswood facility would increase.

     On April 1, 2000, the Company entered into an agreement with Glencore, expiring December 31, 2009, to sell and deliver monthly, primary aluminum totaling approximately 110 million pounds per year at a fixed price for the years 2002 through 2009 (the “Original Sales Contract”). In January 2003, Century and Glencore agreed to terminate and settle the Original Sales Contract for the years 2005 through 2009. At that time, the parties entered into a new contract (the “New Sales Contract”) that requires Century to deliver the same quantity of primary aluminum as did the Original Sales Contract for these years. The New Sales Contract provides for variable pricing

14

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

determined by reference to the LME for the years 2005 through 2009. For deliveries through 2004, the price of primary aluminum delivered will remain fixed.

     Prior to the January 2003 agreement to terminate and settle the years 2005 though 2009 of the Original Sales Contract, the Company had been classifying and accounting for it as a normal sales contract under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” A contract that is so designated and that meets other conditions established by SFAS No. 133 is exempt from the requirements of SFAS No. 133, although by its terms the contract would otherwise be accounted for as a derivative instrument. Accordingly, prior to January 2003, the Original Sales Contract was recorded on an accrual basis of accounting and changes in the fair value of the Original Sales Contract were not recognized.

     According to SFAS No. 133, it must be probable that at inception and throughout its term, a contract classified as “normal” will not result in a net settlement and will result in physical delivery. In April 2003, the Company and Glencore net settled a significant portion of the Original Sales Contract, and it no longer qualified for the “normal” exception of SFAS No. 133. The Company marked the Original Sales Contract to current fair value in its entirety. Accordingly, in the first quarter of 2003 the Company recorded a derivative asset and a pre-tax gain of $41,700. Of the total recorded gain, $26,100 related to the favorable terms of the Original Sales Contract for the years 2005 through 2009, and $15,600 relates to the favorable terms of the Original Sales Contract for 2003 through 2004.

     The Company determined the fair value by estimating the excess of the contractual cash flows of the Original Sales Contract (using contractual prices and quantities) above the estimated cash flows of a contract based on identical quantities using LME-quoted prevailing forward market prices for aluminum plus an estimated U.S. Midwest premium adjusted for delivery considerations. The Company discounted the excess estimated cash flows to present value using a discount rate of 7%.

     On April 1, 2003, the Company received $35,500 from Glencore, $26,100 of which related to the settlement of the Original Sales Contract for the years 2005 through 2009, and $9,400 of which represented the fair value of the New Sales Contracts discussed below. In January 2003, the Company began accounting for the unsettled portion of the Original Sales Contract (years 2003 and 2004) as a derivative and recognizing period-to-period changes in fair value in current income. The Company also accounts for the New Sales Contract as a derivative instrument under SFAS No. 133. The Company has not designated the New Sales Contract as “normal” because it replaces and substitutes for a significant portion of the Original Sales Contract which, after January 2003, no longer qualified for this designation. The $9,400 initial fair value of the New Sales Contract is a derivative liability and represents the present value of the contract’s favorable term to Glencore in that the New Sales Contract excludes from its variable price an estimated U.S. Midwest premium, adjusted for delivery considerations. Because the New Sales Contract is variably priced, the Company does not expect significant variability in its fair value, other than changes that might result from the absence of the U.S. Midwest premium.

     In connection with the acquisition of the Hawesville facility in April 2001, the Company entered into a 10-year contract with Southwire (the “Southwire Metal Agreement”) to supply 240 million pounds of high-purity molten aluminum annually to Southwire’s wire and cable manufacturing facility located adjacent to the Hawesville facility. Under this contract, Southwire will also purchase 60.0 million pounds of standard grade molten aluminum each year for the first five years of the contract, with an option to purchase an equal amount in each of the remaining five years. Southwire has exercised this option through 2008. Prior to the acquisition of the 20% interest in the Hawesville facility on April 1, 2003, the Company and Glencore were each responsible for providing a pro rata portion of the aluminum supplied to Southwire under this contract. In connection with the Company’s acquisition of the 20% interest in the Hawesville facility, the Company assumed Glencore’s delivery obligations under the Southwire Metal Agreement. The price for the molten aluminum to be delivered to Southwire from the Hawesville facility is variable and will be determined by reference to the U.S. Midwest Market Price. This agreement expires on March 31, 2011, and will automatically renew for additional five-year terms, unless either party provides 12 months notice that it has elected not to renew.

     In connection with the acquisition of the 20% interest in the Hawesville facility, the Company entered into a ten-year contract with Glencore (the “Glencore Metal Agreement”) from 2004 through 2013 under which Glencore will purchase approximately 45 million pounds per year of primary aluminum produced at the Ravenswood and Mt.

15

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

Holly facilities, at prices based on then-current market prices, adjusted by a negotiated U.S. Midwest premium with a cap and a floor as applied to the current U.S. Midwest premium.

     Apart from the Pechiney Metal Agreement, the Glencore Metal Agreement, Original Sales Contract, New Sales Contract and Southwire Metal Agreement, the Company had forward delivery contracts to sell 194.3 million pounds and 351.8 million pounds of primary aluminum at September 30, 2004 and December 31, 2003, respectively. Of these forward delivery contracts, the Company had fixed price commitments to sell 12.8 million pounds and 70.5 million pounds of primary aluminum at September 30, 2004 and December 31, 2003, respectively. Of these forward delivery contracts, 5.6 million pounds and 53.5 million pounds at September 30, 2004 and December 31, 2003, respectively, were with Glencore.

   Alumina Purchase Agreements

     The Company is party to long-term supply agreements with Glencore for the supply of alumina to the Company’s Ravenswood and Mt. Holly facilities that extend through December 2006 and January 2008 at prices indexed to the price of primary aluminum quoted on the LME.

     Prior to October 1, 2004, the Company purchased the alumina used at its Hawesville facility from Kaiser under a long term agreement that ran through December 2006. Kaiser filed for bankruptcy under Chapter 11 of the Bankruptcy Code in February 2002. Subsequent to that date, and with bankruptcy court approval, Kaiser agreed to assume the Company’s alumina supply agreement and a new alumina supply agreement for the Company’s Hawesville facility for the years 2006 through 2008. Through September 30, 2004, Kaiser continued to supply alumina to the Company pursuant to the terms of its agreement.

     On October 1, 2004, the Company and Noranda, Inc. jointly acquired the Gramercy alumina refinery and related Jamaican bauxite mining assets from Kaiser for $23,000, subject to closing adjustments. Century and Noranda each paid one-half, or $11,500, of the purchase price.

     The price the Company pays for alumina used by the Hawesville facility is now based on the cost of alumina production, rather than the LME price for primary aluminum. Those production costs may be materially higher than an LME-based price. The impact of the Gramercy acquisition to the Company’s cost of goods sold may not be materially different than under the Company’s existing LME-based contract with Gramercy in periods of high aluminum prices such as the Company is currently experiencing. However, the Company believes that the price of alumina based on production costs at Gramercy could be materially higher than under the LME-based contract price in periods when aluminum prices are low and natural gas prices are high.

   Anode Purchase Agreement

     Nordural has a contract for the supply of anodes for its existing capacity which expires in 2013. Pricing for the anode contract is variable and is indexed to the raw material market for petroleum coke products, certain labor rates, and maintenance cost indices.

   Financial Sales and Purchase Agreements

     To mitigate the volatility in its unpriced forward delivery contracts, the Company enters into fixed price financial sales contracts, which settle in cash in the period corresponding to the intended delivery dates of the forward delivery contracts. Certain of these fixed price financial sales contracts are accounted for as cash flow hedges depending on the Company’s designation of each contract at its inception.

16

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

Fixed Price Financial Sales Contracts at September 30, 2004:

     At September 30, 2004 and December 31, 2003, the Company had fixed price financial sales contracts with Glencore for 549.7 million pounds and 102.9 million pounds, respectively, of which 538.7 million pounds and 58.8 million pounds, respectively, were designated as cash flow hedges. These financial instruments are scheduled for settlement at various dates through 2007. The Company had no fixed price financial purchase contracts to purchase aluminum at September 30, 2004 or December 31, 2003. Additionally, to mitigate the volatility of the natural gas markets, the Company enters into fixed price financial purchase contracts, accounted for as cash flow hedges, which settle in cash in the period corresponding to the intended usage of natural gas.

Fixed Price Financial Purchase Contracts at September 30, 2004:

     At September 30, 2004 and December 31, 2003, the Company had financial purchase contracts for 3.1 million and 2.7 million DTH (one decatherm is equivalent to one million British Thermal Units), respectively. These financial instruments are scheduled for settlement at various dates through 2008.

     Based on the fair value of the Company’s fixed price financial sales contracts and financial purchase contracts as of September 30, 2004, accumulated other comprehensive loss of $17,599 is expected to be reclassified as a reduction to earnings over the next twelve month period.

     The forward financial sales and purchase contracts are subject to the risk of non-performance by the counterparties. However, the Company only enters into forward financial contracts with counterparties it determines to be creditworthy. If any counterparty failed to perform according to the terms of the contract, the accounting impact would be limited to the difference between the nominal value of the contract and the market value on the date of settlement.

9. Supplemental Cash Flow Information

     In the nine months ended September 30, 2004, the Company had two significant non-cash equity transactions. In April 2004, the Company issued approximately 67,000 shares of common stock to satisfy a performance share liability of $1,630 to certain employees of the Company. Additionally, in May 2004, Glencore exercised its option to convert its shares of cumulative convertible preferred stock. The Company issued 1,395,089 shares of common stock in exchange for Glencore’s $25,000 of preferred stock, see Note 14.

17

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

10. Asset Retirement Obligations

     In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This Statement establishes standards for accounting for legal obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company adopted the Standard during the first quarter of 2003. SFAS 143 requires that the Company record the fair value of a legal liability for an asset retirement obligation (“ARO”) in the period in which it is incurred and capitalize the ARO by increasing the carrying amount of the related asset. The liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. The Company’s asset retirement obligations consist primarily of costs associated with the removal and disposal of spent pot liner from its reduction facilities.

     With the adoption of SFAS 143 on January 1, 2003, Century recorded an ARO asset of $6,484, net of accumulated amortization of $7,372, a deferred tax asset of $3,430, and an ARO liability of $14,220. The net amount initially recognized as a result of applying the Statement was reported as a cumulative effect of a change in accounting principle. The Company recorded a one-time, non-cash charge of $5,878, for the cumulative effect of a change in accounting principle. For the year ended December 31, 2003, $1,795 of the additional ARO liability incurred was related to the acquisition of the 20% interest in the Hawesville facility in April 2003.

     The reconciliation of the changes in the asset retirement obligations is presented below:

11. New Accounting Standards

     Accounting for the Medicare Act

     On December 8, 2003, the “Medicare Prescription Drug Improvement and Modernization Act of 2003” (“the Act”) was signed into law. The Act introduces a prescription drug benefit under Medicare as well as a federal

18

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least “actuarially equivalent” to Medicare Part D.

     In the second quarter of 2004, a Financial Accounting Standards Board (FASB) Staff Position (FSP FAS106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Act of 2003”) was issued providing guidance on the accounting for the effects of the Act for employers that sponsor postretirement health care plans that provide prescription drug benefits. This FSP superseded FSP FAS 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Act of 2003.” The FSP is effective for the first interim or annual period beginning after June 15, 2004.

     The guidance in this FSP applies only to the sponsor of a single-employer defined benefit postretirement health plan for which the employer has concluded that prescription drug benefits available under the plan are actuarially equivalent and thus qualify for the subsidy under the Act and the expected subsidy will offset or reduce the employer’s share of the costs of postretirement prescription drug coverage provided by the plan. The Company determined that its plans were actuarially equivalent and elected to adopt the provisions of FSP FAS 106-2 in the third quarter of 2004 on a prospective basis. The Company compared the Medicare Part D plan to its retiree prescription drug coverage using actuarial equivalencies and reflecting the retiree premiums and cost sharing provisions of the various plans. This analysis showed Century’s plans provide more valuable benefits to retirees than the Medicare Part D plan. Based on the Company’s understanding of the intent of the Act and subsequent proposed regulations, the Company still believes its plans will meet the actuarial equivalence requirements necessary to receive the Medicare reimbursement.

     For retirees with post-65 prescription drug benefits, Century estimates the net effect on post-65 per capita medical and prescription drug costs to be a reduction of approximately 11 to 14% due to the Medicare reimbursement. The changes are assumed to have no impact on future participation rates in Century’s post-65 prescription drug programs.

     The Company has reduced its accumulated benefit obligation (ABO) for the subsidy related to benefits attributed to past service by approximately $16,400. The reduction will be recognized on the balance sheet through amortization. The effect of the subsidy on the measurement of net periodic postretirement benefit cost for the third and fourth quarters of 2004 is expected to be approximately $1,310 and will be recognized evenly over the third and fourth quarters. The effect will include lower amortization of actuarial losses of approximately $490, lower service costs of approximately $310, and lower interest costs on the ABO of approximately $510 for the third and fourth quarters. For further information on postretirement costs, see Note 15, “Components of Net Periodic Benefit Cost.”

     Accounting for the FASB Interpretation No. 46 (revised December 2003)

     In December 2003, the FASB issued FASB Interpretation (“FIN”) No. 46 (revised December 2003), “Consolidation of Variable Interest Entities.” This Interpretation clarifies the application of Accounting Research Bulletin (“ARB”) No. 51, “Consolidated Financial Statements” and replaces FIN No. 46, “Consolidation of Variable Interest Entities.” The Interpretation explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity to decide whether to consolidate that entity. The effective date of this Interpretation varies depending on several factors, including public status of the entity, small business issuer status, and whether the public entities currently have any interests in special-purpose entities. Century applied this Interpretation in the first quarter of 2004. The application of FIN No. 46 had no impact on the Company’s Consolidated Financial Statements.

19

12. Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

   Composition of Accumulated Other Comprehensive Loss:

13. Earnings Per Share

     The following table provides a reconciliation of the computation of the basic and diluted earnings per share for income from continuing operations:

20

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

     Options to purchase 313,179 and 711,867 shares of common stock were outstanding during the periods ended September 30, 2004 and 2003, respectively. For the nine month periods ended September 30, 2004 and 2003, incremental shares from the assumed conversion of stock options of 117,152 and 4,302 were included in the calculation of diluted earnings per share based upon the average market price of the common shares during the period; for the three month periods ended September 30, 2004 and 2003, no incremental shares were included in the calculation of diluted earnings per share because of the antidilutive effect.

14. Preferred Stock Dividends and Conversion

     In May 2004, the Company used a portion of the proceeds from a registered equity offering that closed in April 2004 to pay preferred stock dividends of $3,269 or $6.54 per preferred stock share. In May 2004, Glencore exercised its option to convert its $25,000 8.0% cumulative convertible preferred stock into shares of the Company’s common stock at a price of $17.92 per common share. The Company issued 1,395,089 shares of its common stock to Glencore in the conversion.

21

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

15. Components of Net Periodic Benefit Cost

     Employer Contributions

     The Company previously disclosed in its financial statements for the year ended December 31, 2003, that it expects to contribute $3,300 to its pension plans in 2004. As of September 30, 2004, contributions of $2,206 have been made.

     Medicare Act

     In the third quarter of 2004, the Company elected to start recording the benefits of a federal reimbursement for retiree prescription drug costs that will result from the Medicare legislation enacted in December 2003. The total reduction in 2004 postretirement medical expenses for the third and fourth quarters as a result of this federal reimbursement is anticipated to be approximately $1,310, of which approximately $655 was recorded in the third quarter of 2004. Century’s adoption of FSP 106-2 in conjunction with the change in Medicare prescription drug coverage reduced these costs (see Note 11, “Recently Issued Accounting Standards” for further information).

16. Restricted Cash

     At September 30, 2004, the Company had $1,675 in restricted cash held in escrow accounts for security of workers compensation self-insurance obligations.

22

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

17. Condensed Consolidating Financial Information

     The Company’s 11.75% Senior Secured First Mortgage Notes due 2008, 7.5% Senior Unsecured Notes due 2014, and 1.75% Convertible Senior Notes due 2024 are jointly and severally and fully and unconditionally guaranteed by all of the Company’s wholly owned direct and indirect domestic subsidiaries other than the LLC and a subsidiary formed in connection with the Nordural acquisition (together with the Company’s foreign subsidiaries, the “Non-Guarantor Subsidiaries”). The Company’s policy for financial reporting purposes is to allocate expenses to subsidiaries. For the three months ended September 30, 2004 and September 30, 2003, the Company allocated total corporate expenses of $48,274 and $285 to its subsidiaries, respectively. For the nine months ended September 30, 2004 and September 30, 2003, the Company allocated total corporate expenses of $48,330 and $2,875 to its subsidiaries, respectively. Additionally, the Company charges interest on certain intercompany balances.

     Because certain Non-Guarantor Subsidiaries are not “minor” as defined in Rule 3-10(f) of Regulation S-X under the Securities Exchange Act of 1934, as amended, the Company is providing the condensed consolidating financial information required under Rule 3-10(f). See Note 6 to the Consolidated Financial Statements for information about the terms of these notes.

     The following summarized condensed consolidating balance sheets as of September 30, 2004 and December 31, 2003, condensed consolidating statements of operations for the three and nine months ended September 30, 2004 and September 30, 2003 and the condensed consolidating statements of cash flows for the nine months ended September 30, 2004 and September 30, 2003 present separate results for Century Aluminum Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries.

     This summarized condensed consolidating financial information may not necessarily be indicative of the results of operations or financial position had the Company, the Guarantor Subsidiaries or the Non-Guarantor Subsidiaries operated as independent entities.

23

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
As of September 30, 2004

24

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Nine month periods ended September 30, 2004 and 2003
(Dollars in thousands)
(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2003