Platinum Group Metals Ltd. Reports Third Quarter Results
838 – 1100 Melville Street
Vancouver, BC V6E 4A6
P: 604-899-5450
F: 604-484-4710
News Release No. 20-417
July 15, 2020
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, 2020 and provides a summary of recent events and outlook.
For details of the condensed consolidated interim financial statements (the “ Financial
Statements”) and Management’s Discussion and Analysis for the nine months ended May
31, 2020 please see the Company’s filings on SEDAR ( www.sedar.com) or on EDGAR
(www.sec.gov). Shareholders are encourag ed 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, Un ited States dollars and South African Rand.
Changes in exchange rates may create variances in the cash holdings or results reported.
Recent Events
Following the September 2019 independent Definitive Feasibility Study (the “ Waterberg
DFS”), approved by the joint venture in December 2019, an implementation and optimization
work program (the “Work Program”) is underway on the Company’s palladium dominant
Waterberg project, located on the North Limb of the Bushveld Complex in South Africa (the
“Waterberg Project”). Platinum Group owns the controlling stake in the Waterberg deposit,
which hosts 19.5 million ounces of palladium, platinum, gold and rhodium proven and
probable reserves. The Work Program is advancing, funded by Impala Platinum Holdings Ltd.
(“Implats”) while being managed by Waterberg JV Resources (Pty) Limited (“Waterberg JV
Co.”) on behalf of the joint venture owners, being Platinum Group, Imp lats, Japan Oil, Gas
and Metals National Corporation (“JOGMEC”), Hanwa Co. Ltd. (“Hanwa”) and Mnombo
Wethu Consultants (Pty) Ltd. (“Mnombo”).
On June 17, 2020 the Company closed a non -brokered private placement of 1,221,500
common shares at price of $1. 40 each for gross proceeds of $ 1.71 million. Hosken
Consolidated Investments Limited (“ HCI”), an existing major shareholder of the Company,
subscribed for 500,000 common shares through Deepkloof Limited (“Deepkloof”), a wholly
owned subsidiary of HCI, maintaining HCI’s effective ownership percentage in the Company
at approximately 31.59%.
On June 15, 2020 Implats delivered formal notice stating their intention not to exercise their
Purchase and Development Option (the “Purchase and Development Option”) to acquire
and earn into a 50.01% interest in the Waterberg Project. Implats stated that notwithstanding
the positive progress achieved on the Work Program to date, and the strategic alignment
between the Waterberg asset and Implats stated portfolio objec tives, the unprecedented
events brought about by the COVID -19 pandemic necessitated Implats to re -evaluate the
PLATINUM GROUP METALS LTD. …2
impact of the increased economic uncertainty on Implats’ strategy and risk appetite in the
short, medium and long term. Pursuant to the terms of the Purchase and Development
Option, although unlikely, Implats may still exercise the Purchase and Development Option
for a period of ninety days subsequent to their formal notice. Implats has indicated they
intend to continue discussions in good faith on potential smelter offtake arrangements for the
Waterberg Project. Implats reiterated their support of both the Waterberg Project and the
joint venture partners and plans to remain an active 15% participant, including funding of
their share of costs, subject to future considerations.
On March 31, 2020 the Implats’ Purchase and Development Option was amended, by formal
agreement, to extend the termination date from April 17, 2020 to ninety calendar days
following receipt of an executed Mining Right for the Waterberg Project. In consideration,
Implats agreed to fund 100% of the Work Program. The Work Program, budgeted to cost up
to 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 elect 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
Waterberg Project.
On December 19, 2019 the Company closed a non-brokered private placement of 3,225,807
common shares at price of $1.24 each for gross proceeds of $4.0 million. HCI subscribed for
1,612,931 common shares through Deepkloof , increasing HCI’s effective ownership
percentage in the Company to approximately 31.67%.
On September 24, 2019 the Company published the results of the Waterberg DFS. Later,
on December 5, 2019, the shareholders of Waterberg JV Co. formally approved the Waterberg
DFS. 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 rate, 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.
PLATINUM GROUP METALS LTD. …3
• Updated measured and indicated mineral resources1 of 242.4 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 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.
The Waterberg DFS concludes that the Waterberg Project will be one of the largest and
potentially lowest cash cost underground palladium, platinum, gold and rhodium (“ PGM”)
mines globally.
Results For The Nine Months Ended May 31, 2020
The Company has taken steps to cut costs and reduce debt during the last twelve months.
During the nine months ended May 31, 2020, the Company realized a net loss of $5.9 million
(May 31, 2019 – net loss of $13.1 million). General and administrative expenses during the
nine month period were $ 2.7 million ( May 31, 2019 - $3.8 million). Losses on foreign
exchange were $4.1 million (May 31, 2019 – $7.3 million), primarily due to variance in the
US Dollar to Canadian Dollar exchange rate. Stock based compensation expense, a non-cash
item, totalled $1.1 million (May 31, 2019 - $0.5 million). Interest costs of $4.1 million were
lower in the current period (May 31, 2019 - $7.3 million) due to lower debt levels. A gain on
fair value of financial instruments of $ 3.1 million was recognized in the current period (May
31, 2019 - $0.8 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 nine months ended May 31, 2020 totalled $0.10 as compared
to a loss of $0.42 per share for the nine months ended May 31, 2019.
Accounts receivable at May 31, 2020 totalled $0.1 million (May 31, 2019 - $0.5 million) while
accounts payable and accrued liabilities amounted to $ 0.7 million ( May 31, 2019 - $4.0
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 nine
months ended May 31, 2020 were approximately $2.1 million (May 31, 2019 - $6.4 million).
At period end, $34 million in accumulated net costs had been capitalized to the Waterb erg
Project. Total expenditures on the property since inception to May 31, 2020 are approximately
$74.7 million. For more information on mineral properties, see Note 3 of the Financial
Statements.
Subsequent to period end, on June 30, 2020, the Company received a letter from the South
African Revenue Service advising that their audit of income tax returns for Platinum Group
Metals (RSA) Proprietary Limited (“PTM RSA”) for tax years 2014, 2015 and 2016 had been
completed with no reassessment or adjustment to the Company’s filed tax returns for the
three years audited.
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. …4
Outlook
The Company’s key business objective is to advance the palladium dominant Waterberg
Project to a development and construction decision. The positive results of the recent
Waterberg DFS provide a solid value assessment for the Waterberg Project. The long-term
market outlook for the metals to be produced at Waterberg remains positive. Following
Implats’ formal notice stating their intention not to exercise their Purchase and Development
Option, the Company has received interest from other potential strategic partners in the
Waterberg Project.
The Work Program now underway, paid for substantially by Implats, will focus on project
optimization, operational readiness and risk mitigation. The Work Program is currently being
carried out in compliance with South African health 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 . T he Company and
Waterberg JV Co. have begun a process to assess commercial alternatives for mine
development financing and concentrate offtake , subject to Implats’ right to match offtake
proposals. Several parties are currently in discussions with the Company.
The Company’s battery technology initiative through Lion Battery Technologies Inc. (‘‘Lion’’),
a new venture launched in July 2019 with an affiliate of Anglo Americ an Platinum Limited,
represents an exciting research, innovation and commercialization opportunity in the high -
profile lithium battery field using palladium and platinum. Recent laboratory work by Lion has
discovered innovations that are in line with our technical objectives and are now covered in
patent applications filed by Lion . The investment in Lion creates a potential vertical
integration with electric vehicles, which may otherwise be a potential threat to the platinum
and palladium market.
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
report on Form 20-F, which was also filed as the Company’s annual information form in
Canada.
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 scientific and technical information contained in t his news release. He has
verified the data by reviewing the detailed information of the geological and engineering staff
PLATINUM GROUP METALS LTD. …5
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 and majority owner of the Waterberg Project, a
palladium dominant bulk underground PGM deposit located in South Africa. The Waterberg
DFS was approved by Waterberg JV Co., the project joint venture company, on December 5,
2019. The Waterberg Project was discovered by Platinum Group and is being jointly advanced
with the shareholders of Waterberg JV Co., being Platinum Group, Implats, JOGMEC, Hanwa
and Mnombo.
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 government 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 availability, the Company’s ability to maintain its controls and
procedures regarding financial and disclosure matters and the availability of capital and 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 a nd 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, but are not limited to, s tatements regarding Implats’ continuation of discussions of
potential smelter offtake arrangements and continued participation in the Waterberg Project, the
market for PGM metals, the results of the Waterberg DFS, the Waterberg Project becoming one
of the largest and potentially lowest cash cost underground PGM mines globally, the completion
of the Work Program, financing and mine development of the Waterberg Project and the grant of
the Mining Right. Estimates of mineral reserves and mineral resources are also forward-looking
statements. Although the Company believes any forward-looking statements in this press release
PLATINUM GROUP METALS LTD. …6
are reasonable, it can give no assurance that the expectations and assumptions in such statements
will prove to be correct.
The Company caut ions 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 US $20 million senior secured facility with the Sprott Private Resource Lending
II (Collector), LP (“Sprott”) entered into August 21, 2019 (the “2019 Sprott 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 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 Project
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 development and ope rating 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
uncertainty of alternative funding sources for Waterberg JV Co.; 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 dispute s 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 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 competition in the mineral exploration industry; delays in obtaining, or a failure to obtain,
permits necessary for current or future operatio ns 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 Toronto 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 informati on 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 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 referred to or 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
PLATINUM GROUP METALS LTD. …7
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 addition, 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 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. In particular, “inferred mineral resources” have a great amount of uncertainty as to their
existence and great uncertainty as to their economic 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 Industry 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.