Platinum Group Metals Ltd. Reports Second Quarter Results
838 – 1100 Melville Street
Vancouver, BC V6E 4A6
P: 604-899-5450
F: 604-484-4710
News Release No. 20-413
April 8, 2020
Platinum Group Metals Ltd. Reports Second Quarter Results
(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 29, 2020 and provides a summary of recent events and
outlook.
An implementation budget and work program are now underway advancing the Company’s
palladium dominant Waterberg project, located on the North Limb of the Bushveld Complex
in South Africa (the “ Waterberg Project”). The budget and program are 100% funded by
Impala Platinum Holdings Ltd. (“ Implats”) and are managed by Waterberg JV Resources
(Pty) Limited (“Waterberg JV Co.”) representing the joint venture owners, being Platinum
Group, Implats, Japan Oil, Gas and Metals National Corporation (“JOGMEC”), Hanwa Co.
Ltd. and Mnombo Wethu Consultants (Pty) Ltd. (“Mnombo”). The Waterberg P roject is
advancing while abiding by government health restrictions.
For details of the condensed consolidated interim financial statements for the six months
ended February 29, 2020 (the “Financial Statements”) and Management’s Discussion and
Analysis for the six months ended February 29, 2020 please see the Company’s filings 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 dollars 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.
Recent Events
On March 31, 2020 the termination date of Implats’ Purchase and Development Option
(the “ Purchase and Development Option ”) was amended, by formal agreement, from
the original date of April 17, 2020 to 90 calendar days following receipt of an executed
Mining Right for the Waterberg Project. In consideration, Implats is funding 100% of a new
implementation budget and work program (the “ Work Program”). The Wor k Program, to
cost approximately Rand 55 million , is aimed at increasing confidence in specific areas of
the Waterberg DFS while awaiting the grant of a Mining Right and Environmental
Authorization. Under the Purchase and Development Option Implats may el ect to increase
its stake in Waterberg JV Co. from 15% to 50.01% by purchasing an additional 12.195%
equity interest from JOGMEC for $34.8 million and earning a further 22.815% interest by
making a firm commitment to an expenditure of $130.0 million in development work.
Implats made a strategic investment of $30.0 million in November 2017 to purchase a 15%
stake in the project.
PLATINUM GROUP METALS LTD. …2
On December 19, 2019 the Company closed a non -brokered private placement of
3,225,807 c ommon shares at price of $1. 24 each for gross proceeds of $4. 0 million.
Hosken Consolid ated Investments Limited (“ HCI”), an existing major shareholder of the
Company, subscribed for 1,612,931 common shares through Deepkloof Limited
(“Deepkloof”), a wholly owned subsidiary of HCI , increasing HCI’s effective ownership
percentage in the Company to approximately 31.67%.
On September 24, 2019 the Company published the results of an independent Definitive
Feasibility Study for the Waterberg Project (the “Waterberg DFS”). Later, on December 5,
2019, the shareholders of Waterberg JV Co. formally approved the Waterberg DFS . The
Waterberg DFS concludes that the Waterberg Project will be one of the largest and
potentially lowest cash cost underground PGM mines globally. The associated technical
report entitled “Independent Technical Report, Waterberg Project Definitive Feasibility Study
and Mineral Resource Update, Bushveld Complex, South Africa” dated October 4, 2019 was
filed on SEDAR on October 7, 2019. Key findings of the Waterberg DFS include:
• The Waterberg DFS projects a fully mechanised, shallow, decline access palladium,
platinum, gold and rhodium (“ 4E”) mine at an annual steady state production rate of
420,000 4E ounces and a 45 year mine life on current reserves. Peak project funding is
estimated at $617 million.
• After-tax Net Present Value (“ NPV”) of $982 million, at an 8% real discount rate, using
spot metal prices as at September 4, 2019 (Incl. $1,546 Pd/oz) (“Spot Prices”).
• After-tax NPV of $333 million, at an 8% real discount rat e, using three -year trailing
average metal prices up until September 4, 2019 (Incl. $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.
• On site life of mine average cash cost (inclusive of by -product credits and smelter
discounts) for the spot price scenario equates to $640 per 4E ounce.
• Updated measured and indicated mineral resources1 of 242.4 million tonnes at 3.38g/t 4E
for 26.4 million 4E ou nces (using 2.5 g/t 4E cut -off) and the deposit remains open on
strike to the north and below a depth cut-off of 1,250-meters.
• Proven and probable mineral reserves 2 of 187.5 million tonnes at 3.24 g/t 4E for 19.5
million 4E ounces (using 2.5 g/t 4E cut -off), a significant increase from the Waterberg
Project’s 2016 Pre-Feasibility Study.
On August 21, 2019 the Company closed a public offering of securities on a bought deal
basis in the United States of 8,326,957 common shares of the Company at a price of $1.25
per share for gross proceeds of approximately $10.41 million.
1 Measured 58.5 million tonnes at 3.42 g/t 4E and Indicated 183.9 million tonnes at 3.37 g/t 4E
2 Proven 48.3 million tonnes at 3.28 g/t 4E and Probable 139.2 million tonnes at 3.22 g/t 4E
PLATINUM GROUP METALS LTD. …3
On August 21, 2019 the Company also completed or executed, as the case may be:
A new credit agreement with Sprott Private Resource Lending II (Collector), LP
(“Sprott”) for a $20.0 million senior secured credit facility (the “ 2019 Sprott
Facility”) maturing August 21, 20 21, bearing interest at 11.00% per annum and
which may be extended for a further year at the option of the Company.
A subscription by Deepkloof, on a private placement basis , for 6,940,000 common
shares of the Company (“Common Shares”) at a price of $1.32 per share for
aggregate gross proceeds $9,160,800.
A subscription by Liberty Metals & Mining, LLC (“ LMM”), on a p rivate placement
basis, for 7,575,758 Common Shares at a price of $1.32 per share for aggregate
gross proceeds of $10.0 million; and
A payout agreement with respect to the full settlement of a $43.0 million secured
loan facility due to LMM.
On July 12, 2019, Platinum Group, together with an affiliate of Anglo American Platinum
Limited (‘‘Anglo’’), launched a new venture through a jointly owned company, Lion Battery
Technologies Inc. (‘‘ Lion’’) to accelerate the development of next generation battery
technology using platinum and palladium.
Results For The Six Months Ended February 29, 2020
The Company has taken significant steps to cut costs and reduce debt during the last year.
During the six months ended February 29, 2020, the Company realized a net loss of $2.55
million ( February 28, 2019 – net loss of $ 9.46 million). General and administrative
expenses during the period were $1.91 million (February 28, 2019 - $2.91 million). Losses
on foreign exchange were $ 0.36 million (February 29, 2019 – $0.56 million), primarily due
to variance in the US Dollar to Canadian Dollar exchange rate. S tock based compensation
expense, a non -cash item, totalled $ 0.74 million ( February 28, 2019 - $0.16 million).
Interest costs of $2.71 million were lower in the current period ( February 28, 2019 - $4.98
million) due to lower debt levels. A gain on fair value of financial instruments of $ 3.06
million was recognized in the current period (February 28, 2019 - $2.43 million loss) due
predominantly to a decrease in the value of unexercised US$1.70 common share purchase
warrants that expired on November 22, 2019. Basic and diluted loss per share for the six
months ended February 29, 2020 totalled $0.04 as compared to a loss of $ 0.32 per share
for the six months ended February 28, 2019.
Accounts receivable at February 29, 2020 totalled $0.40 million (February 28, 2019 - $0.51
million) while accounts payable and accrued liabilities amounted to $ 0.94 million (February
28, 2019 - $4.02 million). Accounts receivable were comprised of mainly of amounts
receivable for value added taxes repayable to the Company in South Africa. Accounts
payable consisted primarily of engineering and professional fees and regular trade payables.
Total expenditures on the Waterberg Project, before partner reimbursements, for the six
months ended February 29, 2020 were approximately $1.70 million (February 28, 2019 -
$5.13 million). At period end, $37.41 million in accumulated net costs had been capitalized
PLATINUM GROUP METALS LTD. …4
to the Waterberg Project. Total expenditures on the property since inception to February
29, 2020 are approximately $72 million.
For more information on mineral properties, see Note 3 of the Financial Statements.
Outlook
The Company’s key business objective is to advance the palladium dominant Waterberg
Project to a development and construction decision. The Company achieved several of these
key objectives during the past twelve months. The positive results of the recent Waterberg
DFS provide a solid value assessment for the Waterberg Project in 2020. Engineering is
proceeding on the Waterberg Project as planned.
The execution of the amended Purchase and Development Option on March 31, 2020 was a
positive milestone as Implats approved 100% funding of a Rand 55 million Work Program
for the Waterberg P roject. Over the next few months, the Work Program will focus on
project optimization, risk mitigation and housing considerations. The Work Program is
currently being carried out remotely in compliance with South African stay at home orders
aimed at halting the spread of the COVID-19 virus.
The Company will continue working towards its next major milestone of obtaining the Mining
Right for the Waterberg Project. The expected grant of a Mining Right may be delayed from
previous guidance as a result of the current South African stay at home order and possible
future restrictions. Contact with government and regulatory agencies has continued to
date.
Concentrate offtake negotiations with Impla ts are currently in process, along with other
offtake possibilities being considered, subject to Impla ts’ right to match. The current spot
metal basket price per 4E ounce for the Waterberg Project is approximately 18% above the
spot 4E metal basket price in the Waterberg DFS.
The long term market outlook for strong palladium demand and the potential for continued
palladium supply deficits indicates a bright future for the Waterberg Project. In the near
term, the COVID-19 pandemic and related measures taken by government s have created
uncertainty and adverse impacts.
The Company’s battery technology initiative through Lion with Anglo represents an exciting
opportunity in the high-profile lithium battery research and innovation field. Recent work in
the lab on Lion’s innovations has been very promising and in line with our technical
objectives. The investment in Lion creates a potentia l vertical integration with a broader
industrial market development strategy to bring new technologies to market which use
palladium and platinum.
The Company will follow government health directives in the months ahead. The health and
safety of employees is a priority. The company plans to drive ahead with its core business
objectives while reducing costs where possible in this period of market uncertainty.
As well as the discussions within this press release, the reader is encouraged to also see the
Company’s disclosure made under the heading “Risk Factors” in the Company’s 2019 annual
Form 20-F, which was also filed as the Company’s AIF in Canada.
Qualified Person
PLATINUM GROUP METALS LTD. …5
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 (“NI 43 -101”) and is
responsible for preparing the scientific and 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. and Waterberg Project
Platinum Group Metals Ltd. is the operator of the Waterberg Project, a large, low cost, bulk
underground palladium and platinum deposit located in South Africa. The Waterberg Project
was discovered by Platinum Group and is being joi ntly developed with Implats, JOGMEC ,
Mnombo and Hanwa Co. Ltd.
The Company is also invested with Anglo in a promising battery technology that uses
platinum and palladium through a private battery technology company, Lion.
Platinum Group has implemented a work from home policy for both the South Africa and
Canadian offices , inline with government directives . The Company is continuing with
operations utilizing the Company’s pre -existing remote, secure IT connectivity and video
conferencing in order to continue working effectively.
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.
The recent COVID-19 pandemic and related measures taken by govern ment create uncertainty
and have had, and may continue to have, an adverse impact on many aspects of the Company’s
business, including employee health, workforce productivity and availability, travel restrictions,
contractor availability, supply availabili ty, the Company’s ability to maintain its controls and
procedures regarding financial and disclosure matters and the availability of insurance and the
costs thereof, some of which, individually or when aggregated with other impacts, may be
material to the Company.
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
PLATINUM GROUP METALS LTD. …6
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 ar e forward-looking statements. Forward-looking statements in
this press release include, without limitation, statements regarding the amendment to the
Purchase and Development Option and other agreements as discussed herein, potential exercise
by Implats of the Purchase and Development Option, financing and mine development at the
Waterberg Project and grant of the mine right application. Although the Company believes any
forward-looking statements in this press release are reasonable, it can give no assuran ce 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 possible adverse
impacts due the global outbreak of COVID -19 (as described above), 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 indebtedness; additional financing
requirements; the 2019 Sprott Facility is, and any new indebtedness may be, secured and the
Company has pledged its shares of Pl atinum Group Metals (RSA) Proprietary Limited (“PTM
RSA”), and PTM RSA has pledged its shares of Waterberg JV Co. to Sprott, under the 2019
Sprott Facility, which potentially could result in the loss of the Company’s interest in PTM RSA
and the Waterberg P roject in the event of a default under the 2019 Sprott 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, development plans and cost
estimates for the Waterberg Project; discrepancies between actual and estimated mineral
reserves and mineral resources, between actual and estimated developme nt 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; Implats may no t exercise the Purchase and Development
Option; the Company may become subject to the U.S. Investment Company Act; the failure of
the Company or the other shareholders to fund their pro rata share of funding obligations for
the Waterberg Project; any disputes or disagreements with the other shareholders of Waterberg
JV Co. or Mnombo; 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; exploration, development and mining risks and the
inherently dangerous nature of the mining industry, and the risk of inadequate i nsurance 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, cont rols, regulations 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 abil ity to obtain 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 opera tions 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 shares may be delisted from the
NYSE American or the T oronto Stock Exchange if it cannot maintain compliance with the
applicable listing requirements; and other risk factors described in the Company’s most recent
Form 20-F annual report, annual inform ation form and other filings with the U.S Securities and
Exchange Commission (“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 Company’s
business and potential interest in projects. Any forward-looking statement speaks only as of the
PLATINUM GROUP METALS LTD. …7
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 forward -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 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,
mineralization may not be classified as a “reserve” unless the mineralization can be economically
and legally extracted or produced at the time the “reserve” determination is made. As a result,
the reserves reported by the Company in accordance with NI 43 -101 may not qualify as
“reserves” under SEC Industry Guide 7. In addi tion, the terms “mineral resource”, “measured
mineral resource”, “indicated mineral resource” and “inferred 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 an d 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. In particular, “inferred mineral resources” have a great amount of
uncertainty as to their existence and great uncertainty as to their e conomic and legal feasibility.
It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded
to a higher category. Disclosure of “contained ounces” in a resource is permitted disclosure
under NI 43 -101; however, SEC Indu stry Guide 7 normally only permits issuers to report
mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in-place
tonnage and grade without reference to unit measures. 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.