Platinum Group Metals Ltd. Reports Third Quarter Results
788 – 550 Burrard Street
Vancouver, BC V6C 2B5
P: 604-899-5450
F: 604-484-4710
News Release No. 18-377
July 16, 2018
Platinum Group Metals Ltd. Reports Third 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
nine months ended May 31 , 2018 and provides an update on recent events and the
Company’s outlook. For details of the condensed consolidated interim financial statements
for the nine months ended May 31, 2018 (the “Financial Statements”) and Management’s
Discussion and Analysis for the nine months ended May 31, 2018 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.
As previously reported, the Company has refocused its business on the large scale, bulk
mineable Waterberg Project in South Africa (the “ Waterberg Project ”). The Waterberg
project is dominated by palladium and has reserves in platinum, rhodium, gold, copper and
nickel. Impala Platinum Holdings Ltd. (“ Implats”) made a strategic investment of $30 .0
million in November, 2017 to purchase a 15% stake in the project. For more information
see news releases dated October 16, 2017 and November 6, 2017. PTM remains project
operator for a Definitive Feasibility Study (“DFS”) supervised by a technical c ommittee
comprised of members from each joint venture partner . A DFS resource drilling program
was largely completed in May, 2017 . DFS engineering work is advancing well and as
planned at present . Geotechnical d rilling and sampling for planning of the mine
infrastructure is also ongoing.
During 2017 the Company made the decision to sell its rights and interests in the Maseve
Mine. On September 6, 2017 the company announced a sale to Royal Bafokeng Platinum
Ltd. (“RBPlat”) in a transaction valued at approximately $74 million (the “ Maseve Sale
Transaction”). Definitive agreements were completed on November 23, 2017 and the two
stage Maseve Sale Transaction was completed on April 26, 2018.
All amounts herein are reported in United States dollars (“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.
Recent Events
On May 15, 2018, the Company announced the closing of a private placement of
15,090,999 units at a price of $0.15 per unit for gross proceeds of $2.3 million. Each unit
consisted of one common share and one common share purchase warrant with each
common share purchase warrant allowing the holder to purchase one further common share
of the Company at a price of $0.17 per share until November 15, 2019. The private
placement was a strategic investment by Hosken Consolidated Investments Limited (“HCI”),
a South African black empowerment investment holding company with a $1.1 billion market
PLATINUM GROUP METALS LTD. …2
capitalization listed on the JSE Securities Exchange. HCI also acquired a right to nominate
one person to the board of directors of the Company and a right to participate in future
equity financings of the Company to maintain its pro -rata interest (including the public
offering outlined below). Accordingly, the Company has appointed HCI’s nominee, Mr. John
Anthony Copelyn, B.A. Hons, B.Proc., Chief Executive O fficer of HCI, to its board of
directors.
On May 15, 2018, the Company also closed a marketed offering of 117,453,862 units,
including 3,453,862 units issued pursuant to an over -allotment option granted to the
underwriters, at a price of $0.15 per unit for gross proceeds of $17.62 million. Each unit
consisted of one common share and one common share purchase warrant with each
common share purchase warrant allowing the holder to purchase one further common share
of the Company at a price of $0.17 per share until November 15, 2019. HCI subscribed for
24,909,000 units of this public offering. From the proceeds of this offering an amount of
$12 million was paid against the LMM Facility (defined below).
On April 26, 2018 , stage two of the Maseve Sale Transaction to sell a 100% equity
interest in Maseve Investments 11 (Pty) Limited (“Maseve”) , owner of the Maseve Mine,
plus all of the Company’s remaining loans due from Maseve , was completed. R BPlat paid
4.87 million common shares, valued in September 2017 at approximately $12 million
(approximately $9.4 million on April 26, 2018). Later, on May 29, 2018 , the Company
received the required refund of Maseve’s environmental bond, valued at approximately $4
million in September 2017 (approximately $4.57 million on May 29, 2018). Of the 4 .87
RBPlat common shares received, 347,056 common shares were paid to Africa Wide Mineral
Prospecting and Exploration Proprietary Limited for their minority interest in Maseve.
On April 10, 2018 , the Company paid $46.9 8 million in settlement of all indebtedness
under a first secured loan f acility provided by a group of lenders led by Sprott Resource
Lending Partnership. On the same date the Company paid $6.32 million to Liberty Metals &
Mining Holdings, LLC (“LMM”) in partial se ttlement of fees and a production payment
termination fee under a second secured loan facility (the “LMM Facility”) . A payment of
Rand 3.26 million (approximately $270,000) was also received from RBPlat for an exchange
rate variance through the closing process of the Maseve Sale Transaction and was also paid
to LMM.
On April 6, 2018 , stage one of the Maseve Sale Transaction to sell the Maseve
concentrator plant and certain surface assets of the Maseve Mine was completed. The
Company received payment from RBPlat for the Rand equivalent of $58 million in cash, less
the Rand equivalent of approximately $3.5 million which had been released from an escrow
deposit to the Company on March 15, 2018.
On March 8, 2018, the Japan Oil, Gas and Metals National Corporation (“JOGMEC”)
and Hanwa Co., Ltd. (“Hanwa”) signed a memorandum of understand ing to transfer part of
JOGMEC’s interest in the Waterberg Project to Hanwa. The agreement is the result of a
public tender on February 23, 2018 won by Hanwa. JOGMEC has started negotiation on the
terms of the transfer with Hanwa. With a successful negotiation, Hanwa will secure the
right to a supply of refined platinum group metals for exhaust emission catalytic converters,
fuel cells for cars, and nickel and other metals for rechargeable batteries. Hanwa is a
leading global trad ing company headquartered in Tokyo Japan with over 3,000 employees
and operations spanning steel, non -ferrous metals, metals and alloys, food, petroleum,
chemicals, machinery, lumber and other business sectors.
PLATINUM GROUP METALS LTD. …3
On November 23, 2017, the Company and RBPlat executed definitive agreements for the
Maseve Sale Transaction, valued at the time at approximately $74 million.
On November 6, 2017, the Company, JOGMEC and Mnombo Wethu Consultants (Pty) Ltd.
closed a transaction to sell 15% of the Waterberg Project to Implats for $30 million , from
which the Company received $17.2 million for its sale of an 8.6% project interest . Implats
may elect to increase its stake to 50.01% through additional share purchases from JOGMEC
for an amount of $34.8 million and earn into the remaining interest by committing to an
expenditure of $130 million for development work on the Waterberg Project . Implats will
also have a right of first refusal to smelt and refine Waterberg Project concentrate.
NYSE American
As previously disclosed , the Company is not in compliance with the continued listing
standards set forth in Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iii) of the NYSE
American Company Guide (the “Company Guide”) with respect to stockholders’ equity, or in
Section 1003(f)(v) of the Company Guide with respect to the selling price of the Company’s
common shares. On June 21, 2018, the Exchange notified the Company that it had
accepted the Company’s plan of compliance and granted the Company an extension until
November 23, 2018 to regain compliance with the requirements of Section 1003(f)(v) of the
Company Guide and until October 10, 2019 to regain compliance with Sections 1003(a)(i),
1003(a)(ii) and 1003(a)(iii) of the Company Guide. The Company is not currently in
compliance with NYSE American listing standards, but its listing is being continued pursuant
to an exception. The Company will be subject to periodic review by Exchange staff during
the extension period. If the Company is not in compliance with the Company Guide by the
applicable deadlines or if the Company does not make progress consistent with the plan
during the plan period, Exchange staff will initiate delisting proceedings as appropriate.
Results For The Nine Months Ended May 31, 2018
During the nine months ended May 31, 2018, the Company incurred a net loss of $ 37.6
million (May 31, 2017 – net loss of $ 286 million). During the previous comparable period
an impairment of $280 million was recognized. Also, d uring the current nine-month period,
care and maintenance costs a nd interest costs were charged to earnings, whereas in the
previous comparable period they had been capitalized . Other items include a foreign
exchange loss of $ 3.9 million (May 31 , 2017 - $1.8 million loss) due to the US Dollar
increasing in value relative to the parent company’s functional currency of the Canadian
Dollar. Also, a gain on fair value of financial instruments of $ 2.7 million was recognized in
the current period due to a decrease in the value of the embe dded derivatives in the
Company’s convertible notes, which did not exist in the previous comparable period.
Accounts receivable at May 31, 2018 totalled $0.9 million, comprised of value added taxes
repayable to the Company in South Africa and amounts due to/from partners. Accounts
payable and accrued liabilities amounted to $2.7 million (May 31, 2017 - $16.4 million) due
to payables at Maseve having been repaid.
During the nine-month period approximately $ 5.7 million was spent at the Waterberg
Project for engineering and exploration activities. At period end, $ 28 million in net costs
had been capitalized to the Waterberg Project. Total expenditures on the property since
inception are approximately $ 58 million. For more information on mineral properties, see
Note 5 of the Financial Statements.
PLATINUM GROUP METALS LTD. …4
Outlook
The Company’s key business objectives are to advance the Waterberg Project and repay
secured lender LMM. The Company plans to increase its profile by focusing on the
competitive nature of the large -scale Waterberg palladium reserves at a time when
palladium is attracting market attention and palladium supply is estimated to be in deficit.
In the near term, the Company’s liquidity will be constrained u ntil financing has been
obtained to repay and discharge remaining amounts due to LMM and for working capital
purposes. Remaining a mounts due to LMM total approximately $46 million, before the
Company’s 4.57 million RBPlat shares are sold and the proceeds applied against the LMM
Facility.
Waterberg JV Co. plans to advance the Waterberg Project to completion of a DFS by early
2019. A DFS drill program to increase the confidence in certain areas of the known mineral
resource to the measured category was completed in May, 201 8. An updated resource
estimate for use in the DFS is expected in July or August, 2018. Technical teams from all
Waterberg Project partners, including Imp lats, and appointed independent engineers are
involved in the technical planning and oversight of the DFS. Waterberg JV Co. plans to file a
mining right application during 2018.
The Waterberg Project has the potential to be a low-cost platinum and palladium producer
based on a fully mechanized mine plan . The deposit is dominated by palladium. The price
of palladium has nearly doubled since 2015 due to its primary use in catalytic converters for
automobiles and limited market supply.
The Company continues to actively assess corporate and strategic alternatives with advisors
BMO Nesbitt Burns Inc. and Macquarie Capital Markets Canada Ltd.
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 (“ NI 43 -101”) 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 focused on, and is the operator of , the Waterberg Project, a bulk
mineable underground deposit in northern South Africa. Waterberg was discovered by the
Company. Waterberg has potential to be a low cost dominantly palladium mine and Impala
Platinum Holdings Limited, a smelter and refiner of platinum group metals, recently made a
strategic investment in the Waterberg Project.
On behalf of the Board of
Platinum Group Metals Ltd.
Frank R. Hallam
CFO, Corporate Secretary and Director
PLATINUM GROUP METALS LTD. …5
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 LLC 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 s uch 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, the Company’s realization and intended use of
proceeds derived from the Maseve Sale Transaction; JOGMEC’s potential transfer of a portion of
its interest in the Waterberg Project to Ha nwa; the potential for Implats to exercise its rights
and fund additional development work on the Waterberg Project; future sales of debt or equity;
repayment of, and compliance with the terms of, indebtedness; the timing and completion of a
DFS; the compl etion of a DFS drill program and an updated resource estimate to increase the
confidence in certain areas of the Waterberg Project known mineral resource to the measured
category; the filing of a mining right application for the Waterberg Project; the Wate rberg
Project’s potential to be a large scale, bulk mineable, fully mechanized, low -cost dominantly
palladium mine; the potential for the Company to complete other corporate and strategic
transactions; the Company regaining compliance with NYSE American co ntinued listing
standards; and the potential of the NYSE American initiating delisting procedures . Although the
Company believes the forward -looking statements in this press release are reasonable, it can
give no assurance that the expectations and assump tions 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 delays in the
Company’s ability to realize on the proceeds of the Maseve Sale Transaction; additional financing
requirements; the Company’s history of losses; the Company’s inability to generate suf ficient
cash flow or raise sufficient additional capital to make payment on its indebtedness, and to
comply with the terms of such indebtedness; the LMM Facility is, and any new indebtedness may
be, secured and the Company has pledged its shares of 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 negative cash flow; the
Company’s ability to continue as a going concern; completion of the definitive feasibility study
for the Waterberg Project, which is subject to resource upgrade and economic analysis
requirements; 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 development and operating costs, between
actual and estimated metallurgical recoveries and between estimated and actual production;
risks related to the nature of the Maseve Sale Transaction and the uncertainty as to whether the
PLATINUM GROUP METALS LTD. …6
Company can successfully obtain all required government approvals, satisfy other closing
conditions and consummate Step Two of the Maseve Sale Transaction; potential delays in the
foregoing; 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 funding obligations for the Waterberg Project; any disputes or
disagreements with the othe r shareholders of Waterberg JV Co., Mnombo Wethu Consultants
(Pty) Ltd. or Maseve; the ability of the Company to retain its key management employees and
skilled and experienced personnel; contractor performance and delivery of services, changes in
contractors or their scope of work or any disputes with contractors; conflicts of interest; capital
requirements may exceed its current expectations; the uncertainty of cost, operational and
economic projections; the ability of the Company to negotiate and complet e future funding
transactions and either settle or restructure its debt as required; 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 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, 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 ability to obtain and maintain necessary permits,
including environmental authorizations and water use licences; extreme competi tion 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 limit ed to, labour, economic and political instability
and potential changes to and failures to comply with legislation; and other risk factors described
in the Company’s most recent Form 20 -F annual report, annual information 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 date on which it is made and, except as may be required by
applicable securities laws, the Company disclaims any intent or obligat ion 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 National Instrume nt 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, the reserves reported by the Company in accordance with NI 43 -101 may not qualify as
“reserves” under SEC standards. 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 normally are not permitted to be
used in reports and registration statements filed with the SEC. 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 United States federal securities laws and the rules and
regulations thereunder.