Platinum Group Metals Ltd. Announces Positive Independent Definitive Feasibility Study for the Waterberg Palladium Mine IRR Post Tax of 20.7% at Spot Metal Prices Including an
838 – 1100 Melville Street
Vancouver, BC V6E 4A6
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News Release No. 19-400
September 24, 2019
Platinum Group Metals Ltd. Announces Positive Independent
Definitive Feasibility Study for the Waterberg Palladium Mine
IRR Post Tax of 20.7% at Spot Metal Prices Including an
Estimated Smelter Discount (September 4, 2019)
Proven and Probable Mineral Reserves Estimated at
19.5 Million Ounces of Palladium, Platinum, Gold and Rhodium
for a Life of Mine Plan of 45 years
Annual Steady State Production of 420,000 Ounces of
Palladium, Platinum Gold and Rhodium plus 16.7 million Pounds
of Nickel and Copper
Fully Mechanised, Shallow, Decline-Accessed Mine would be
One of the Largest and Lowest
Cash Cost Underground PGM Mines Globally
(Vancouver/Johannesburg) Platinum Group Metals Ltd. (PTM-TSX; PLG-NYSE American)
(“Platinum Group” or the “Company”) announces positive results from an Independent
Definitive Feasibility Study (“DFS”) on the Waterberg Project (the “Project”) completed by
international and South African engineering firms Stantec Consulting International LLC
(“Stantec”) and DRA Projects SA (Pty) Ltd. (“DRA”) along with a large team of specialists.
The DFS was managed by Waterberg JV Resources (Pty) Ltd. (“Waterberg JV”) representing
the owners of Platinum Group, Impala Platinum Holdings Ltd. (“Implats”), Japan Oil, Gas and
Metals National Corporation (“JOGMEC”), Ha nwa Co. Ltd. (“Hanwa”) and Mnombo Wethu
Consultants (Pty) Ltd. (“Mnombo”). All of the partners contributed actively to the Project
through the technical committee and the Board of Waterberg JV.
Highlights of the DFS include:
A significant increase in Mineral Reserves from the Project’s 2016 Pre-Feasibility Study
(“PFS”) for a large-scale, shallow, decline-accessible, mechanised, palladium, platinum,
gold and rhodium (“4E”) mine. Use of backfill in the DFS design lowers risk and increases
mined ore extraction rates.
Annual Steady State production rate of 420, 000 4E ounces, which is a lower production
rate than in the PFS. This result is by careful design in order to reduce capital costs and
simplify construction and ramp-up.
After-tax Net Present Value (“NPV”) of US$ 982 million, at an 8% real discount rate, using
spot metal prices as at September 4, 2019 (Incl. US$ 1,546 Pd/oz) (“Spot Prices”).
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After-tax NPV of US$ 333 million, at an 8% real discount rate, using three-year trailing
average metal prices up until September 4, 2019 (Incl. US$ 1,055 Pd/oz) (“Three Year
Trailing Prices”).
After-tax Internal Rate of Return (“IRR”) of 20.7% at Spot Prices and 13.3% at Three
Year Trailing Prices.
Estimated project capital of approximately US$ 874 million, includin g US$ 87 million in
contingencies. Peak project funding estimated at US$ 617 million.
On site Life of Mine (LOM) average cash cost (inclusive of by-product credits and smelter
discounts) for the Spot Metal Price scenario equates to US$ 640 per 4E ounce.
Updated Measured and Indicated Mineral Resources of 242 million tonnes at 3.38g/t 4E
for 26.4 million 4E ounces (using 2.5 g/t 4E cut-off) and the deposit remains open on
strike to the north and below an arbitrary depth cut-off of 1,250-meters.
Proven and Probable Mineral Reserves of 187 million tonnes at 3.24 g/t 4E for 19.5 million
4E ounces (using 2.5 g/t 4E cut-off).
R. Michael Jones, CEO and co-founder of Platinum Group said, “The DFS provides a clear
outline of the world-class nature of the Wate rberg Palladium deposit and concludes that it
can be one of the largest fully mechanised, lo w cost platinum group metals mines in the
world. A large global team of approximatel y 100 independent professionals and specialists
as well as excellent participation from our partner Implats, have contributed to an optimized
mining plan that reduced capital from the earlier plan and significantly increased the Mineral
Reserves for a 45 year life, 420,000 4E ounce per year steady state mine plan”.
The Waterberg Project will create approximately 1,100 new highly skilled jobs and a
significant investment in local training and busi ness opportunities is part of the benefits to
stakeholders including local communities, shareholders, provincial and national
governments. The Project includes an upgrad e to the local water infrastructure under a
current co-operation agreement with the municipality and a connection to the Eskom power
grid.
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Total Ounces Produced – Life of Mine
MINERAL RESOURCES AND RESERVE UPDATES
The Mineral Resources for the Waterberg Proj ect have been updated and have increased
slightly based on recent in-fill drilling. The Mineral Resources have been estimated based on
441 diamond drill holes and 583 deflections and has been stated at a 2.5 g/t 4E cut-off (the
base-case). In the DFS, a 2.5 g/t 4E cut-off grade has been applied to the Mineral Resource
model as an input into the mine design. At th e 2.5 g/t 4E cut-off grade, the total Measured
and Indicated Mineral Resources are estimated at 242 million tonnes grading 3.38 g/t 4E for
an estimated 26.4 million ounces 4E. Total Mineral Reserves at a 2.5 g/t 4E grade cut-off are
estimated at 187 million tonnes for 19.5 million ounces 4E. Waterberg is effectively estimated
in four zones and three complexes, each with twin declines from surface. The South Complex
has T Zone and F Zone Mineral Resources and Reserves. The Central Complex currently has
just F Zone Mineral Resources and Reserves, is the largest part of early production and also
has potential for expansion on the T Zone Mineral Resources. The North Complex just has F
Zone Mineral Resources and Reserves and is planned for the later part of the mine life from
2044 out to 2066. Future drilling from surface and underground is expected to result in the
delineation of additional Mineral Reserves, thereby extending the Project mine life. The
Mineral Resources are estimated in the two zones with the T Zone approximately 350 meters
above the F Zone with both zones striking northeast and dipping at approximately 38 degrees
to the west. An arbitrary depth cut-off of 1,250-meters has been applied in all zones.
The Mineral Reserves are a subset of the Mineral Resource envelope at a 2.5 g/t 4E cut-off
and they include only Measured and Indicat ed Mineral Resources with dilution and stope
shapes considered. A minimum mining thickness of 2.4 meters and sublevel planning of 20
meters to 40 meters was considered in the mine plan for Mineral Reserves.
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The Mineral Resources for the Waterberg Project are categorised and reported in terms of
the National Instrument for the Standards of Di sclosure for Mineral Projects within Canada,
2011 (“NI 43-101”) and are tabulated below.
Mineral Resource Estimate at 2.5 g/t 4E cut-off,
effective September 4, 2019 on 100% Project basis
T Zone at 2.5 g/t (4E) Cut-off
Mineral
Resource
Category
Cut-off
Tonnage
Grade Metal
4E Pt Pd Rh Au 4E Cu Ni 4E
g/t Tonnes g/t g/t g/t g/t g/t % % kg Moz
Measured 2.5 4,443,483 1.17 2.12 0.05 0.87 4.20 0.150 0.080 18,663 0.600
Indicated 2.5 17,026,142 1.37 2.34 0.03 0.88 4.61 0.200 0.094 78,491 2.524
M+I 2.5 21,469,625 1.34 2.29 0.03 0.88 4.53 0.189 0.091 97,154 3.124
Inferred 2.5 21,829,698 1.15 1.92 0.03 0.76 3.86 0.198 0.098 84,263 2.709
F Zone at 2.5 g/t (4E) Cut-off
Mineral
Resource
Category
Cut-off
Tonnage
Grade Metal
4E Pt Pd Rh Au 4E Cu Ni 4E
g/t Tonnes g/t g/t g/t g/t g/t % % kg Moz
Measured 2.5 54,072,600 0.95 2.20 0.05 0.16 3.36 0.087 0.202 181,704 5.842
Indicated 2.5 166,895,635 0.95 2.09 0.05 0.15 3.24 0.090 0.186 540,691 17.384
M+I 2.5 220,968,235 0.95 2.12 0.05 0.15 3.27 0.089 0.190 722,395 23.226
Inferred 2.5 44,836,851 0.87 1.92 0.05 0.14 2.98 0.064 0.169 133,705 4.299
Waterberg Aggregate Total 2.5 g/t (4E) Cut-off
Mineral
Resource
Category
Cut-off
Tonnage
Grade Metal
4E Pt Pd Rh Au 4E Cu Ni 4E
g/t Tonnes g/t g/t g/t g/t g/t % % kg Moz
Measured 2.5 58,516,083 0.97 2.19 0.05 0.21 3.42 0.092 0.193 200,367 6.442
Indicated 2.5 183,921,777 0.99 2.11 0.05 0.22 3.37 0.100 0.177 619,182 19.908
M+I 2.5 242,437,860 0.98 2.13 0.05 0.22 3.38 0.098 0.181 819,549 26.350
Inferred 2.5 66,666,549 0.96 1.92 0.04 0.34 3.27 0.108 0.146 217,968 7.008
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Mineral Resource
Category
Prill Split Waterberg Project Aggregate
Pt Pd Rh Au
% % % %
Measured 28.2 64.4 1.5 5.9
Indicated 29.4 62.6 1.5 6.5
M+I 29.1 63.0 1.5 6.4
Inferred 29.5 58.9 1.2 10.4
Notes:
1. 4E elements are platinum, palladium, rhodium and gold.
2. Cut-offs for Mineral Resources were established by a QP after a review of potential operating costs
and other factors.
3. Conversion factor used for kilograms (“kg”) to ounces (“oz”) is 32.15076
4. A 5% and 7% geological loss was applied to the Measured/Indicated and Inferred Mineral
Resources categories, respectively.
5. The Mineral Resources are classified in accordance with the National Instrument for the Standards
of Disclosure for Mineral projects within Canada, 2011 (“NI 43-101”). Mineral Resources that are
not Mineral Reserves do not have demonstrated economic viability and Inferred Mineral Resources
have a high degree of uncertainty.
6. The Mineral Resources are provided on a 100% Proj ect basis, Inferred and Indicated categories
are separate and the estimates have an effective date of 4 September 2019.
7. Mineral Resources were completed by Mr. CJ Muller of CJM Consulting.
8. Mineral Resources were estimated using kriging methods for geological domains created in
Datamine from 441 mother holes and 583 deflecti ons. A process of geological modelling and
creation of grade shells using indicating kriging was completed in the estimation process.
9. The Mineral Resources may be materially affected by metal prices, exchange rates, labour costs,
electricity supply issues or many other factors detailed in the Company's 2018 Annual Information
Form.
10. The data that formed the basis of the Mineral Re sources estimate are the drill holes drilled by
Platinum Group as project operator, which consist of geological logs, drill hole collars surveys,
downhole surveys and assay data. The area where each layer was present was delineated after
examination of the intersections in the various drill holes.
11. Numbers may not add due to rounding.
Proven Mineral Reserve Estimate at 2.5 g/t 4E cut-off,
effective September 4, 2019 on 100% Project basis.
Proven Mineral Reserve Estimate at 2.5 g/t 4E cut-off
Pt Pd Rh Au 4E Cu Ni 4E Metal
Zone Tonnes (g/t) (g/t) (g/t) (g/t) (g/t) (%) (%) Kg Moz
T Zone 3,963,694 1.02 1.84 0.04 0. 73 3.63 0.13 0.07 14,404 0.463
F Central 17,411,606 0.94 2.18 0.05 0.14 3.31 0.07 0.18 57,738 1.856
F South - - - - - - - - - -
F North 16,637,670 0.85 2.03 0.05 0.16 3.09 0.10 0.20 51,378 1.652
F Boundary North 4,975,853 0.97 2.00 0.05 0.16 3.18 0.10 0.22 15,847 0.509
F Boundary South 5,294,116 1.04 2.32 0.05 0.18 3.59 0.08 0.19 19,020 0.611
F Zone Total 44,319,244 0.92 2.12 0.05 0.16 3.25 0.09 0.20 143,982 4.629
Waterberg
Project Total 48,282,938 0.93 2.10 0.05 0.20 3.28 0.09 0.19 158,387 5.092
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Probable Mineral Reserve Estimate at 2.5 g/t 4E cut-off,
effective September 4, 2019 on 100% Project basis
Probable Mineral Reserve Estimate at 2.5 g/t 4E cut-off
Pt Pd Rh Au 4E Cu Ni 4E Metal
Zone Tonnes (g/t) (g/t) (g/t) (g/t) (g/t) (%) (%) Kg Moz
T Zone 12,936,870 1.23 2.10 0.02 0.82 4.17 0.19 0.09 53,987 1.736
F Central 52,719,731 0.86 1.97 0.05 0.14 3.02 0.07 0.18 158,611 5.099
F South 15,653 ,961 1.06 2.03 0.05 0.15 3.29 0.04 0.13 51,411 1.653
F North 36,984,230 0.90 2.12 0.05 0.16 3.23 0.09 0.20 119,450 3.840
F Boundary North 13,312,581 0.98 1.91 0.05 0.17 3.11 0.10 0.23 41,369 1.330
F Boundary South 7,616,744 0.92 1.89 0.04 0.13 2.98 0.06 0.18 22,737 0.731
F Zone Total 126,287,248 0.91 2.01 0.05 0.15 3.12 0.08 0.18 393,578 12.654
Waterberg Project
Total 139,224,118 0.94 2.02 0.05 0.21 3.22 0.09 0.18 447,564 14.390
Proven & Probable Mineral Reserve Estimate at 2.5 g/t 4E cut-off,
effective September 4, 2019 on 100% Project basis
Total Estimated Mineral Reserve at 2.5 g/t 4E cut-off
Pt Pd Rh Au 4E Cu Ni 4E Metal
Zone Tonnes (g/t) (g/t) (g/t) (g/t) (g/t) (%) (%) Kg Moz
T Zone 16,900,564 1.18 2.04 0.03 0.80 4.05 0.18 0.09 68,391 2.199
F Central 70,131,337 0.88 2.02 0.05 0.14 3.09 0.07 0.18 216,349 6.956
F South 15,653,961 1.06 2.03 0.05 0.15 3.29 0.04 0.13 51,411 1.653
F North 53,621,900 0.88 2.09 0.05 0.16 3.18 0.10 0.20 170,828 5.492
F Boundary North 18,288,434 0.98 1.93 0.05 0.17 3.13 0.10 0.23 57,216 1.840
F Boundary South 12,910,859 0.97 2.06 0.05 0.15 3.23 0.07 0.19 41,756 1.342
F Zone Total 170,606,492 0.91 2.04 0.05 0.15 3.15 0.08 0.19 537,560 17.283
Waterberg Project
Total 187,507,056 0.94 2.04 0.05 0.21 3.24 0.09 0.18 605,951 19.482
Notes:
1. The estimated Mineral Reserves have an effective date of September 4, 2019.
2. A 2.5 g/t 4E stope cut-off grade was used for mine planning for the T Zone and the F Zone Mineral
Reserves estimate. The cut-off grade considered April 2018 metal spot prices.
3. Tonnes and grade estimates incl ude planned dilution, geological losses, external overbreak
dilution, and mining losses.
4. 4E elements are platinum, palladium, rhodium and gold.
5. Numbers may not add due to rounding.
MINING PLAN OUTPUTS
The DFS mine plan models production at 4.8 million tonnes of ore per annum and 420,000
4E ounces per year in concentrate. The mine initially accesses the orebody using two sets of
twin decline tunnels with mining by fully mech anised long hole stoping methods with paste
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backfill. Paste backfill allows for a high mining extraction ratio as mining can be completed
next to backfilled stopes without leaving internal pillars. Maintaining safety and reliability
were key mine design criteria. As a result of th e scale of the orebody, bulk mining on 20 to
40 meter sublevels with large underground equipment and conveyors for ore and waste
transport provides high efficiency. Many of the larger successful underground mines in the
world use the same method of mining with backfill and estimated costs were benchmarked
against many of these operations.
METALLURGICAL RECOVERY AND SMELTER ASSUMPTIONS
Following extensive test work at the PFS and DFS level, DRA, an experienced South African
engineering and EPCM firm, based the plant designs, metallurgical recoveries and costing on
a standard South African flotation MF-2 (Mill – Float – Mill – Float) circuit. Additional
metallurgical checks on mineral types and potential recoveries were completed at XPS Labs
in Sudbury, Ontario. The detailed design is ba sed on this metallurgical test work. Modelled
recoveries were completed for the different recovered elements and zones within the
Waterberg mining complex over the 45-year LOM and an average 4E recovery of 78.9% is
estimated. Copper recoveries are forecast at 83% and nickel recovery is modelled at 48%.
Net payability after smelter discount is estimated to be 85% on the 4E metal, 73% for copper
and 68% for nickel, based on an 80 g/t 4E target concentrate grade sold to a South African
smelter. The discounts on metal values have b een calculated and included as a cost per 4E
ounce for an estimate of financial returns.
The Waterberg Project is planned to produce a sulphide concentrate at a grade that is
attractive to the current operating smelters in South Africa, with no significant penalty
elements. Implats holds a first right of refusal for smelter offtake and Hanwa of Japan holds
the rights to market the final refined metal at market prices.
PROJECT TIMELINE
The DFS project timeline includes a formal construction decision to be taken following the
granting of the Mining Right, expected in Q1 2020 with first production 3.5 years later. The
planned decline access provides for rapid and low-cost access to the shallow orebody. Under
the DFS mine plan, first production is estimated in late 2023 with ramp-up to steady state
by 2027. The LOM on current Mineral Reserves extends to 2066 and the deposit remains
open at depth and on strike.
CAPITAL COSTS AND INFRASTRUCTURE, INCLUDING POWER AND WATER
Capital costs to full production and peak funding of the Project are estimated predominantly
in South African Rand (ZAR), with all cost estimates expressed in ZAR real July 2019 terms.
Peak funding is estimated at US$ 617 million (ZAR 9.26 billion). Modelled costs are converted
to US Dollars at a long-term real exchange rate of 15.00 (ZAR/US$). The real escalation of
costs (in Rand terms) is estimated to be offset, over time, by the future devaluation of the
Rand against the US Dollar.
Regional infrastructure in the DFS capital cost estimate includes road upgrades to access the
mine area, a 74km power line to connect to the Eskom power utility grid and water pipelines
to drilled water resources with associated servitudes. Waterberg JV has executed a water co-
operation agreement with the Capricorn Municipa lity that surrounds the mine and has drill
tested, studied and assessed available water resources together with community needs in
detail. Improvement in service delivery of water to the region is included in the DFS capital
cost estimate and plans. Eskom has agreed to both a ‘self-build’ plan for the electrical
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infrastructure to an existing substation and the power allocation for the Project. Servitude
work for the power lines is well advanced.
Estimated Project Capital expenditure and anticipated Peak Funding are shown below.
Project Capital Breakdown
Cost Area ZAR Total
(ZAR million Real)
USD Total
(US$ million Real)
Underground Mining 6,097 406
Concentrator 2,580 172
Shared Services and Infrastructure 682 45
Regional Infrastructure 1,229 82
Site Support Services 234 16
Project Delivery Management 654 44
Other Capitalised Costs 331 22
Provisions 1,298 87
Total Project Capital (excl. Capitalised OpEx) 13,105 874
Capitalised Operating Costs 3,453 230
Total Project Capital (incl. Capitalised OpEx) 16,559 1,104
Peak Funding (Spot Prices) 9,255 617
Notes:
1. Project Capital is defined as all required capital expenditure until the Project achieves 70% of
planned steady-state production. This is projected to occur from January 2020 to December 2025.
2. A US$/ZAR exchange rate of 15.00 is used in all cost conversions
3. Post December 2025, the DFS estimates stay-in-business or sustaining capital for the LOM at US$
1.44 billion (ZAR 21.6 billion).
4. The DFS estimates peak funding at US$ 617 million (ZAR 9.26 billion) at Spot Prices, and US$ 667
million (ZAR 10.26 billion) at Three Year Trailing Prices. This includes all spend offset by revenue.
ENVIRONMENTAL, PERMITTING AND COMMUNITIES
A program of public consultati on as part of the formal Mining Right and Environmental
Authorisation applications for the Project wa s completed in August 2019. The process was
undertaken in a climate of mutual respect with good community interaction and comment.
The Environmental Impact Assessment and Environmental Management Programme was
filed on August 15, 2019 and government feedba ck is expected before the end of 2019. A
formal Mining Right Application, including a Social and Labour Plan, was accepted by the
South African Department of Mineral Resources and Energy (“DMR”) on September 14, 2018.
The Company held local public meetings on numerous occasions in advance of the Mining
Right Application and these meetings also had a good spirit of co-operation and mutual
respect. All of this work forms part of the Mining Right Application and a decision by the DMR
is expected in early 2020. The Project plan in the DFS assumes a positive decision during
calendar Q1 2020. Training for a new mechanised mining workforce is an important part of
the DFS and planning has been undertaken with the assistance of global mine training leader,
Norcat, of Sudbury, Ontario. The DFS modelled a significant investment in training, focussed
on the immediate area of the Project, working in co-operation with local colleges and
facilities.