Platinum Group Metals Ltd. Reports Second Quarter Results And Provides Waterberg Palladium Project Update
838 – 1100 Melville Street
Vancouver, BC V6E 4A6
P: 604-899-5450
F: 604-484-4710
News Release No. 19-392
April 12, 2019
Platinum Group Metals Ltd. Reports Second Quarter Results
And Provides Waterberg Palladium Project Update
(Vancouver/Johannesburg) Platinum Group Metals Ltd. (PTM:TSX; PLG:NYSE American)
(“Platinum Group” “PTM” or the “Company”) reports the Company’s financial results for the
six months ended February 28, 2019 and provides a summary of recent events and outlook.
For details of the condensed consolidated interim financial statements for the six months
ended February 28, 2019 (the “Financial Statements”) and Management’s Discussion and
Analysis for the six months ended February 28, 2019 please see the Company’s fili ngs on
SEDAR (www.sedar.com) or on EDGAR (www.sec.gov). Shareholders are encouraged to visit
the Company’s website at www.platinumgroupmetals.net. Shareholders may receive a hard
copy of the complete Financial Statements from the Company free of charge upon request.
All amounts herein are reported in United States dollar s (“USD”) unless otherwise specified.
The Company holds cash in Canadian dollars, United States dollars and South African Rand.
Changes in exchange rates may create variances in the cash holdings or results reported.
The Company is focused on completing a Definitive Feasibility Study (“DFS”) for the large
scale, palladium dominant and bulk min eable Waterberg Project in South Africa (the
“Waterberg Project”). The strong price outlook for palladium along with DFS optimization
work have helped the Company to better estimate the potential mine scale for the Waterberg
Project. Optimization work has determined that h igher extraction rates for mineralized
material are achievable by using tailings as backfill. See more details below in “Outlook”.
A technical committee of Waterberg JV Resources Pty Ltd. (“Waterberg JV Co.”) is overseeing
the DFS with participation from all partners. A formal Mining Right Application has been filed
and community consultation is ongoing. Power and water planning for the project is
advancing well including work under a regional water co -operation agreement with the
Capricorn Municipality and engineering and permitting work with power utility Eskom.
Impala Platinum Holdings Ltd. (“ Implats”) made a str ategic investment of $30.0 million in
November 2017 to purchase a 15% stake in the Waterberg Project, from which the Company
received $17.2 million for its 8.6% project interest sold. Implats may elect to increase its
stake to 50.01% by additional share purchases from Japan Oil, Gas and Metals National
Corporation (“JOGMEC”) for an amount of $34.8 million and a commitment to spend $130
million for development of the Waterberg Project. Implats will also have a right of first refusal
to smelt and refine Waterberg Project concentrate.
PLATINUM GROUP METALS LTD. …2
Recent Events
Prior to April 2, 2019 common share purchase warrants representing 968,670 shares at a
price of $1.70 each were exercised by holders. Proceeds to the Company totalled $1,646,739.
The Company’s two largest shareholders exercised approximately 91% of these warrants.
On March 7, 2019, the Company reported the transfer of a 9.755% interest in Waterberg
JV Co. to Hanwa Co. Ltd. (“Hanwa”) by JOGMEC. Prior to the transfer JOGMEC held a 21.95%
interest in the Waterberg Project. Hanwa was the successful bidder in a public tender process
for Japanese companies conducted by J OGMEC. Hanwa is a leading Japanese trading
company supplying a broad spectrum of products, including steel, non-ferrous metals, metals
and alloys, food, petroleum, chemicals, machinery, lumber and many other items, to a diverse
range of global customers.
On January 11, 2019, the Company paid $8.0 million to Liberty Metals & Mining Holdings,
LLC (“LMM”) in partial settlement of a secured loan facility due to LMM . The amount paid
represented net proceeds from the sale of 4.52 million common shares of JSE listed Royal
Bafokeng Platinum Ltd. received by the Company in April 2018 upon completion of stage two
of the sale of the Maseve Mine.
On November 16, 2018, the Company filed a National Instrument 43-101 technical report
for an updated independent mineral resource estimate for the Waterberg Project. The report,
entitled “Technical Report on the Mineral Resource Update for the Waterberg Project Located
in the Bushveld Igneous Complex, South Africa” is dated October 22, 2018 (with the effective
date of the mineral resources being September 27, 2018 ) and was prepared by Charles J
Muller, B. Sc. (Hons) (Geology), Pr. Sci. Nat., of CJM Consulting (Pty) Ltd. A copy of the
report can be found at www.sedar.com, at www.sec.gov and on the Company’s website.
On October 25, 2018, the Company published an updated independent mineral resource
estimate for the Waterberg Project on a 100% basis totalling 26.34 million ounces of platinum,
palladium, rhodium and gold (together known as “4E”) (242.5 million tonnes at 3.38 g/t 4E
comprised of 63.04% palladium, 29.16% platinum, 6.37% gold and 1.43% rhodium) , with
6.26 million 4E ounces recognized in the higher confidence Measured category. The updated
resource assessment forms the basis for mine design, scheduling and capital cost estimation
as part of the DFS. The Waterberg deposit is dominated by palladium and also contains
copper and nickel. Inferred mineral resources are estimated at 7.0 million 4E ounces (66.67
million tonnes at 3.26 g/t 4E). The T zone Measured and Indicated mineral resources
increased in grade from 3.88 g/t 4E in 2016 to 4.51 g/t 4E in 2018. All of the preceding was
estimated at a 2.5 g/t 4E cut-off grade, which is the preferred scenario for the project.
On October 10, 2018, the Company announced that a recent Mining Right Application for
the Waterberg Project had been accepted by South Africa’s Department of Mineral Resources.
The application is supported by the Company and all of the Waterberg Project partners
including Implats, JOGMEC and Mnombo Wethu Consultants (Pty) Ltd. The process of
consultation under the Mineral and Petroleum Resources Development Act, 2002 and current
Environmental Assessment regulations has commenced. Many public meetings have already
been completed. Significant feedback from the meetings has been considered in the DFS
designs. Local training and employment are key components of the project to maximize the
value of the project for all stakeholders.
PLATINUM GROUP METALS LTD. …3
Results For The Six Months Ended February 28, 2019
During the six months ended February 28, 2019 the Company incurred a net loss of $ 9.5
million (February 28, 2018 – net loss of $26.9 million). General and administrative expenses
during the six-month period were $2.9 million (February 28, 2018 - $3.1 million), losses on
foreign exchange were $0.6 million (February 28, 2018 – $3.2 million) due to the US Dollar
increasing in value relative to the Company’s functional currency of the Canadian Dollar.
At February 28, 2019, finance income consisting of interest earned and property rental fees
in the period amounted to $0.3 million (February 28, 2018 - $0.4 million), while a gain on
marketable securities of $0.6 million was recognized in the current period (February 28, 2018
- $Nil). Loss per share for the period amounted to $0.32 as compared to a loss of $1.65 per
share for the six months ended February 28, 2018.
Accounts receivable at February 28, 2019 totalled $0.2 million (February 28, 2018 - $2.8
million) while accounts payable and accrued liabilities amounted to $3.7 million (February 28,
2018 - $10.8 million). Accounts receivable were comprised of mainly of amounts receivable
for value added taxes repayable to the Company in South Africa and amounts due from joint
venture partners and related parties. Accounts payable at February 28, 2019 related mostly
to ongoing work at the Waterberg Project with the decrease as compared to February 28,
2018 being primarily due to settlement of payables related to mine closure costs.
Total expenditures on the Waterberg Project , before partner reimbursements, for the six-
month period were approximately $5.1 million (February 28, 2018 - $3.9 million). At February
28, 2019, $36 million in accumulated net costs had been capitalized to the Waterberg Project.
Total expenditures by all parties on the property since inception are approximately $ 67
million.
For more information on mineral properties, see Note 4 of the Financial Statements.
Outlook
The Company’s key business objective is to advance the Waterberg Project to development.
The Waterberg project is dominated by palladium at a time when palladium supply is
estimated to be in deficit. Mines with palladium as their primary economic mineral are rare.
Waterberg JV Co. is advancing the Waterberg Project to completion of a DFS. The DFS is
being managed by Platinum Group and a technical committee with comprehensive input at all
levels from the Waterberg Project partners.
The positive long-term market outlook for platinum group element s and the value increase
created by higher extraction per mining level supports the DFS design change to utilize
backfill. Backfill utilizes tailings and concrete to fill in mined out stopes to allow the extraction
of mineralized material that would otherwise be left as support pillars. The Company expects
that the mining extraction of pillars in the DFS versus the PFS design will have a positive
effect on tonnes and ounces for reserves. Ancillary benefits include a reduced tailings foot
print, as tailings are put underground i n backfill, and increased safety and certainty on the
production profile. Two twin declines systems are now planned in the working DFS design
rather than three in the PFS design.
PLATINUM GROUP METALS LTD. …4
The DFS owner’s team, including representatives from Impala Platinum, have visited Canadian
bulk underground mining operations and have worked closely with the independent mining
engineering team at Stantec.
As a result of the DFS design optimization described above, additional time and budget are
required to complete the DFS. Waterberg JV Co. has approved a change order for Rand 21.5
million (approximately $1.51 million) to fund the required work. The DFS is now targeted for
completion in August 2019. The additional time and investment are warranted to achieve the
production profile improvements in the DFS that are indicated by the design optimizations
described above.
An environmental authorization and mining right application are also being advanced. Public
consultation has occurred in a positive climate of mutual respect. Local involvement and
personnel training are a key part of the design for a modern, safe, responsible mine operating
at world class standards. The DFS team is working with NORCAT, a Sudbury, Canada based
global training specialist, to incorporate local skills development into the DFS.
We are also pleased to report advancement on our co-operation agreement with the Capricorn
Municipality for the supply of water to the project and planned increases in water delivery to
the local community as a component of the mine plan.
The Waterberg JV Co. team is working very well together with value-add contributions coming
from all partners, including senior team members from Impala working with Platinum Group
Metals as Manager of the DFS. We look forward to the finalization of the DFS.
In the near term, the Company’s liquidity will be constrained until financing has been obtained
to repay and discharge remaining amounts of secured debt and for working capital purposes.
The Company remains focussed on completing the Waterberg DFS. At the same time the
Company has started reviewing several new business opportunities focused on platinum group
element metals, including extraction opportunities and potential new uses. The Company will
continue to work closely with its major shareholders and lenders. The Company continues to
actively assess corporate and strategic alternatives with advisor BMO Nesbitt Burns Inc.
Qualified Person
R. Michael Jones, P.Eng., the Company’s President, Chief Executive Officer and a shareholder
of the Company, is a non-independent qualified person as defined in National Instrument 43-
101 Standards of Disclosure for Mineral Projects and is responsible for preparing the technical
information contained in this news release. He has verified the data by reviewing the detailed
information of the geological and engineering staff and independent qualified person reports
as well as visiting the Waterberg Project site regularly.
About Platinum Group Metals Ltd.
Platinum Group is the operator of the Waterberg Project, a bulk min eable underground
palladium deposit in northern South Africa. Waterberg was discovered by the Company and
has the potential to be a low-cost producer of palladium, platinum, rhodium and gold.
PLATINUM GROUP METALS LTD. …5
On behalf of the Board of
Platinum Group Metals Ltd.
Frank R. Hallam
CFO, Corporate Secretary and Director
For further information contact:
R. Michael Jones, President
or Kris Begic, VP, Corporate Development
Platinum Group Metals Ltd., Vancouver
Tel: (604) 899-5450 / Toll Free: (866) 899-5450
www.platinumgroupmetals.net
Disclosure
The Toronto Stock Exchange and the NYSE American have not reviewed and do not accept
responsibility for the accuracy or adequacy of this news release, which has been prepared by
management.
This press release contains forward-looking information within the meaning of Canadian securities
laws and forward -looking statements within the meaning of U.S. securities laws (collectively
“forward-looking statements”). Forward-looking statements are typically identified by words such
as: believe, expect, anticipate, intend, estimate, plans, postulate and similar expressions, or are
those, which, by their nature, refer to future events. All statements that are not statements of
historical fact are forward-looking statements. Forward-looking statements in this press release
include, without limitation, statements regarding the completion of a DFS by approximately July
31, 2019; Waterberg Project’s potential to be a bulk mineable, low cost, dominantly palladium
mine producing platinum and palladium based on a fully mechanized mine plan; the potential for
the Company to obtain financing to repay and discharge remaining amounts of secured debt and
for working capital purposes; new business opportunities; and corporate and strategic
alternatives. Mineral resource and reserve estimates are also forward-looking statements because
such estimates involve estimates of mineralization that may be encountered in the future if a
production decision is made, as well as estimates of future costs and values. Although the
Company believes the forward-looking statements in this press release are reasonable, it can give
no assurance that the expectations and assumptions in such statements will prove to be correct.
The Company cautions investors that any forward -looking statements by the Company are not
guarantees of future results or performance and that actual results may differ materially from
those in forward -looking statements as a result of various factors, including the Company’s
inability to generate sufficient cash flow or raise sufficient additional capital to make payment on
its indebtedness, and to comply with the terms of such indebtedne ss; additional financing
requirements; the Company’s credit facility (the “ LMM Facility”) with Liberty Metals & Mining
Holdings, LLC (“LMM”) is, and any new indebtedness may be, secured and the Company has
pledged its shares of Platinum Group Metals (RSA) Proprietary Limited (“PTM RSA”), and PTM RSA
has pledged its shares of Waterberg JV Resources (Pty) Limited (“ Waterberg JV Co.”) to Liberty
Metals & Mining Holdings, LLC, a subsidiary of LMM, under the LMM Facility, which potentially could
result in the loss of the Company’s interest in PTM RSA and the Waterberg Project in the event of
a default under the LMM Facility or any new secured indebtedness; the Company’s history of losses
and negative cash flow; the Company’s ability to continue as a going concern; the Company’s
properties may not be brought into a state of commercial production ; uncertainty of estimated
production, deve lopment plans and cost estimates for the Waterberg Project; discrepancies
between actual and estimated mineral reserves and mineral resources, between actual and
PLATINUM GROUP METALS LTD. …6
estimated development and operating costs, between actual and estimated metallurgical
recoveries and between estimated and actual production; fluctuations in the relative values of the
U.S. Dollar, the Rand and the Canadian Dollar; volatility in metals prices; the failure of the
Company or the other shareholders to fund their pro rata share of fun ding obligations for the
Waterberg Project; any disputes or disagreements with the other shareholders of Waterberg JV
Co., Mnombo Wethu Consultants (Pty) Ltd. or Maseve; completion of a DFS for the Waterberg
Project is subject to economic analysis requirements; the ability of the Company to retain its key
management employees and skilled and experienced personnel; conflicts of interest; litigation or
other administrative proceedings brought against the Company; actual or alleged breaches of
governance processes or instances of fraud, bribery or corruption; the Company may become
subject to the U.S. Investment Company Act; exploration, development and mining risks and the
inherently dangerous nature of the mining industry, and the risk of inadequate insurance or
inability to obtain insurance to cover these risks and other risks and uncertainties; property and
mineral title risks including defective title to mineral claims or property; changes in national and
local government legislation, taxation, controls, re gulations and political or economic
developments in Canada and South Africa; equipment shortages and the ability of the Company
to acquire necessary access rights and infrastructure for its mineral properties; environmental
regulations and the ability to o btain and maintain necessary permits, including environmental
authorizations and water use licences; extreme competition in the mineral exploration industry;
delays in obtaining, or a failure to obtain, permits necessary for current or future operations or
failures to comply with the terms of such permits; risks of doing business in South Africa, including
but not limited to, labour, economic and political instability and potential changes to and failures
to comply with legislation; the Company’s common sha res may be delisted from the NYSE
American or the TSX if it cannot maintain or regain compliance with the applicable listing
requirements; and other risk factors described in the Company’s most recent Form 20 -F annual
report, annual information form and other filings with the SEC and Canadian securities regulators,
which may be viewed at www.sec.gov and www.sedar.com, respectively. Proposed changes in
the mineral law in South Africa if implemented as proposed would have a material adverse effect
on the Com pany’s business and potential interest in projects. Any forward -looking statement
speaks only as of the date on which it is made and, except as may be required by applicable
securities laws, the Company disclaims any intent or obligation to update any forw ard- looking
statement, whether as a result of new information, future events or results or otherwise.
Estimates of mineralization and other technical information included herein have been prepared
in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI
43-101”). The definitions of proven and probable reserves used in NI 43 -101 differ from the
definitions in SEC Industry Guide 7. Under SEC Industry Guide 7 standards, a “final” or “bankable”
feasibility study is required to report reserves, the three -year historical average price is used in
any reserve or cash flow analysis to designate reserves and the primary environmental analysis
or report must be filed with the appropriate governmental authority. As a result, th e reserves
reported by the Company in accordance with NI 43-101 may not qualify as “reserves” under SEC
Industry Guide 7. In addition, the terms “mineral resource” and “measured mineral resource” are
defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms
under SEC Industry Guide 7 and historically have not been permitted to be used in reports and
registration statements filed with the SEC pursuant to SEC Industry Guide 7 . Mineral resources
that are not mineral reserves do not have demonstrated economic viability. Investors are
cautioned not to assume that any part or all of the mineral deposits in these categories will ever
be converted into reserves. Accordingly, descriptions of the Company’s mineral deposits in this
press release may not be comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements of SEC Industry Guide 7.