Platinum Group Metals Reports First Quarter 2017 Results and Operational Update
788 – 550 Burrard Street
Vancouver, BC V6C 2B5
P: 604-899-5450
F: 604-484-4710
News Release No. 17-334
January 13, 2017
Platinum Group Metals Reports First Quarter 2017 Results
and Operational Update
(Vancouver/Johannesburg) Platinum Group Metals Ltd. (PTM-TSX; PLG-NYSE MKT)
(“Platinum Group” or the “Company”) reports the Company’s operating and financial
results for the three months ended November 30, 2016 and provides an operational
update and outlook. For details of the consolidated interim financial statements (the
“Financial Statements”) and Management’s Discussion and Analysis for the three months
ended November 30, 2016, 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.
Operations at Maseve Mine
The Company is currently focused on development and stoping in the best grade
thickness areas in Block 11 of the Maseve Mine, which was ac cessed and opened for
mining late in calendar 2016. Block 11 is modelled to be flat dipping with good grade
and thickness and is the most important block to the near-term mine plan.
Redpath Mining South Africa Pty Limited, a subsidiary of Canadian headquartered
Redpath Mining Contractors and Engineers (“Redpath”), recently won the tender to
provide bord and pillar mining, hybrid mechanized mining and ore transport from Block
11. Since June 2016 Redpath has been providing efficient long hole mining services in
Blocks 9 and 12 of the Maseve Mine. The changeover to Redpath as the principal mining
contractor at the Maseve Mine was undertaken with affected parties during the latter part
of the first fiscal quarter ended November 30, 2016 and in to early January 2017. The
operational and administrative changeover is now well advanced.
Redpath has also entered into a letter of intent whereby they will install, operate and
maintain a 1.0 km conveyor towards Block 11, linking into underground silos and the
existing 1.4 km conveyor to surface and 1.7 km conveyor system into the mill. Cost for
the conveyor installation to be borne by Redpath is estimated at Rand 25.0 million
(approximately US $1.8 million) and Redpath will recoup their investment by way of a
per tonne charge now being negotiated. Redpath has also added four units to the
trucking fleet on a rental basis to ensure efficient ore transport.
R. Michael Jones, CEO of Platinum Group Metals said “We are pleased that after working
with us on the mining of some of our smaller blocks, Redpath has won the tender to mine
Block 11 and will become an important partner in the Maseve M ine ramp up. Redpath
will continue with mining in Blocks 9 and 12 and will takeover ore transport for these
blocks from the previous development contractor. Redpath is also scheduled to set up
PLATINUM GROUP METALS LTD. …2
for mining in Block 16 early in 2017 . Redpath has demonstrated excellent leadership
skills with a commitment to safety and a disciplined and open approach. The engagement
with Redpath is a win-win collaboration that demonstrates confidence in the potential at
the Maseve Mine from a well regarded global mining contractor. The more tonnes mined
from Block 11, the better both Redpath and the Company will do. We see Redpath as an
excellent partner”.
Management changes have been made at the Maseve Mine and a process of rationalizing
and consolidating underperforming and redundant contractors was underta ken in late
calendar 2016. Safety has remained a priority during these changes. Many mining
services previously provided by several contractors will now be consolidated under the
management of Redpath, increasing efficiency.
During December 2016, Block 1 1 began to produce mined tonne s, contributing
approximately 21.3% (8,388 tonnes) of mined ore flow to monthly production. Double
decline access and through ventilation to Block 11 was completed in late December 2106.
Now that infrastructure is coming on line where needed, and with contractor changeover
being undertaken , Block 11 is scheduled to contribute approximately 50% (30,000
tonnes) to mined ore flow in January 2017. Mining rates in the second half of January
2017 and in the months ahead are scheduled to continue improving as Block 11 is further
developed. During 2017 Block 11 is scheduled to build up to 70-80% of mined ore flow.
At full production Block 11 is planned to provide up to 76,000 tonnes of ore a month.
Production ramp up at the Maseve Mine has been behind plan since commissioning in
April 2016 due primarily to poor mining contractor performance and delayed
infrastructure completion. As disclosed in the Company’s press release dated November
29, 2016, a much -publicized safety drive in the Northwest Region by the inspectorate
branch of the South African Department of Mineral Resources (“DMR”) during the latter
part of the Company’s first fiscal quarter resulted in intermittent work stoppages at the
Maseve Mine, also causing a loss of some development and production.
Production in September, October, November and December 2016 was 1,823, 907, 1,237
and 1,509 4E ounces respectively. C ontractor issues, change over of contractors, and
concerns raised by the DMR have been addressed and the Company is again focused on
safely increasing mined tonnage at grade from planned blocks while at the same tim e
reducing costs in 2017.
Platinum Group will be focussed on turning the Maseve Mine to positive cash flow in the
first half of calendar 2017. Development to other blocks near Block 11 with good grade
thickness is scheduled to continue during 2017. Twelve -month aggregate production
guidance for calendar 2017 is modelled at 100,000 to 120 ,000 4E ounces. Prior
production guidance should not be relied upon.
Results For The Three Months Ended November 30, 2016
During the three-months ended November 30, 2016, the Company incurred a net loss of
$2.45 million ( November 30 , 201 5 – net loss of $ 0.712 million). General and
administrative expenses during the three-month period were $1.167 million (November
30, 2015 - $1.394 million), losses on foreign exchange were $1.543 million (November
30, 2015 – gain of $0.399 million) while stock based compensation expense, a non-cash
item, totalled $ 0.40 million (November 30, 2015 - nil). Finance income consisting of
interest earned and property rental fees in the three-month period amounted to $0.30
PLATINUM GROUP METALS LTD. …3
million (November 30, 2015 - $0.283 million). Loss per share for the period ended
November 30, 2016 amounted to $0.03 (November 30, 2015 - $0.01 per share).
Accounts receivable at November 30, 2016 totalled $5.8 million while accounts payable
and accrued liabilities amounted to $16.832 million. Accounts receivable were comprised
of amounts receivable on sale of concentrate, value added taxes repayable to the
Company in South Africa and amounts receivable from partners. Accounts payable
included contract development and mining fees, drilling expenses, engineering fees,
accrued professional fees and regular trade payables for ongoing exploration ,
development and administration costs.
During the period ended November 30, 2016 the Company incurred approximately $27
million (November 30, 2015 - $34 million) in development, construction, equipment and
other costs for the Maseve M ine. Initial proceeds from concentrate sales before
commercial production are treated as a reduction in project capital cost with $3.1 million
being recognized to development costs in the period ended November 30, 2016. As at
November 30, 2016, the Comp any carried total deferred acquisition, development,
construction, equipment and other costs related to the Maseve Mine of $514 million.
During the period ended November 30, 2016 approximately $1.73 million was spent at
the Waterberg Project for engineering and exploration acti vities. At period end $21.7
million in net costs are capitalized to the Waterberg Project. The current budget for work
at Waterberg is fully funded by 28.35% joint venture partner the Japan Oil, Gas and
Metals National Corporation.
For more information on mineral properties, see Notes 4 and 5 of the Financial
Statements.
Loan Facilities Amended
To accommodate the Company for delayed production ramp up at the Maseve Mine, the
Sprott Resource Lending Partnership (“Sprott”) and Liberty Metals & Mining Holdings,
LLC (“LMM”) have agreed to provide the following waiver and amendments to their
existing loan facilities to the Company:
a three-month extension to the covenant whereby Maseve must reach and maintain
a three-month rolling average of at least 60% of planned production for a three -
month period to commence with the first measurement month of the original plan
moved to February 2017;
a three-month extension to the covenant whereby Maseve must reach and maintain
a three-month rolling average of at least 70% of planned production for a three -
month period to commence with the first measurement month of the original plan
moved May 2017;
to waive until February 15, 2017 the covenant to maintain at all times a working
capital in excess of $5,000,000; and
to postpone from January 31, 2017 to March 31, 2017 the commencement of the
requirement to pay the Sprott Lenders 50% of the proceeds of equity and debt
financings (excluding intercompany financings) of the Company or its subs idiaries
having a value exceeding $1,000,000 in the aggregate, in partial repayment of the
Sprott Facility.
PLATINUM GROUP METALS LTD. …4
In consideration of the above the Company has agreed to issue 568,819 common shares
of the Company as directed by Sprott and to LMM pursuant to the amended Sprott Facility
and amended LMM Facility. This amount is based on 1.0% of the outstanding principal
amount advanced by both the Sprott and LMM, being $425,000 and $4 53,440
respectively, converted to $1,153,391 Canadian dollars using the Bank of Canada noon
spot rate on January 12, 2017. The shares were then priced at the ten -day volume
weighted average price on the Toronto Stock Exchange (the “TSX”) of $2.253 Canadian
dollars per share, less a ten percent discount. The amendment fee shares shall be issued
within three business days after the Company’s receipt of the conditional approval of the
TSX and the approval of the NYSE MKT LLC for the listing of the amendment fee shares,
whichever occurs later, subject to compliance with applicable law. If the Company is
unable to obtain such approvals or does not issue the amendment fee shares by January
27, 2017 or either the TSX or the NYSE MKT LLC advises the Company that it will not
approve the listing of the amendment fee shares, the Company is required to pay the
amendment fee in cash within two business days thereafter. The shares will be subject
to a four month and one day hold period from the date of issuance under applicable
securities laws in Canada and where applicable will also be subject to resale restrictions
under the securities laws of the United States.
Outlook
The Company’s key busi ness objectives for fiscal 2017 will be to safely ramp-up the
Maseve Mine and to advance the Waterberg Project through feasibility and into
preparations for a mining right application.
At the time of writing the Company is well advanced in a changeover process to improve
contractor and labour performance , increase stope mining, reduce contractor
redundancy, improve efficiencies and reduce costs. The Maseve Mine has demonstrated
good grade thickness confirmation to block model estimates and good recovery to design
specifications. At present good progress is being made developing Block 11 and mined
tonnage is beginning to come on line.
At November 30, 2016, the Company held $27.507 million in cash. In order to achieve
positive cash flow and to maintain its working capital covenants under existing loan
facilities, the Company estimates that it will need to source $5 million to $15 million of
additional funding by way of refinancing its existing debt, the issuance of new debt,
private or public offerings of equity or the sale of project or property interests.
About Platinum Group Metals Ltd.
Platinum Group, based in Johannesburg, South Africa and Vancouver, Canada, has a
successful track record with more than 20 years of experience in exploration, mine
discovery, mine construction and mine operations.
Formed in 2002, Platinum Group holds significant mineral rights in the Bushveld Igneous
Complex of South Africa, which is host to over 70% of the world's primary platinum
production. The Company is currently focused on ramping up the Maseve Mine, its first
near-surface platinum mine, to commercial production.
Platinum Group has delineated new reserves on the North Limb of the Bushveld Complex
on the Waterberg Project. Waterberg represents a new bulk type of large scale, shallow
low cost platinum, palladium and gold deposit.
PLATINUM GROUP METALS LTD. …5
Qualified Person
R. Michael Jones, P.Eng., the Company’s President, Chief Executive Officer and a
significant shareholder of the Company, is a non-independent qualified person as defined
in National Instrument 43 -101 Standards of Disclosure for Mineral Pro jects and is
responsible for preparing the technical information contained in this news release.
On behalf of the Board of
Platinum Group Metals Ltd.
“Frank R. Hallam”
CFO 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 MKT LLC have not reviewed and do not accept
responsibility for the accuracy or adequacy of this news release, which has been prepared
by management.
The securities described herein will not be registered under the S ecurities Act of 1933,
as amended (the "Securities Act"), or any state securities laws and may not be offered
or sold in the United States or to, or for the account or benefit of, U.S. persons absent
registration or an applicable exemption from the registr ation requirements of the
Securities Act and applicable state securities laws.
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 futur e 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 adequacy of capital; potential financings; the use of proceeds of financings;
potential share issuances or payments under the credit facility amendments; repayment
of indebtedness; ramp up and potential achievement of commercial production at the
Maseve Mine; the Company’s key objectives; the potential to ch ange underperforming
contractors, increase mining, reduce contractor redundancy, improve efficienc ies and
reduce costs; advancing the Waterberg Project through feasibility and into preparations
for a mining right application; and the Company’s plans and es timates regarding
exploration, studies, development, construction , production, cash flows and other
activities and developments. Statements of mineral resources and mineral reserves also
constitute forward -looking statements to the extent they represent es timates of
mineralization that will be encountered on a property and/or estimates regarding future
costs, revenues and other matters. Although the Company believes the forward-looking
statements in this press release are reasonable, it can give no assuran ce that the
PLATINUM GROUP METALS LTD. …6
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 discretion in the use of proceeds of financings; risks related to indebtedness;
the Company’s capital requirements may exceed its current expectations; the uncertainty
of cost, operational and economic projections; the ability of the Company to negotiate
and complete future funding transactions; variations in market conditions; the nature,
quality and quantity of any mineral deposits that may be locat ed; metal prices; other
prices and costs; currency exchange rates; the Company’s ability to obtain any necessary
permits, consents or authorizations required for its activities; the Company’s ability to
produce minerals from its properties successfully or profitably, to continue its projected
growth, or to be fully able to implement its business strategies; and other risk factors
described in the Company’s Form 40-F annual report, annual information form and other
filings with the Securities and Exchange Commission and Canadian securities regulators,
which may be viewed at www.sec.gov and www.sedar.com, respectively.
Cautionary Note to U.S. and other Investors
Estimates of mineralization and other technical information included or referenced in this
press release 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, 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 resu lt, 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", "measured
mineral resource", "indicated mineral resource" and "inferred mineral resource" ar e
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 no t
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. "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. Under Canadian securities laws, esti mates of inferred
mineral resources may not form the basis of feasibility or pre -feasibility studies, except
in rare cases. Additionally, disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian securities laws; however, the SE C normally only permits
issuers to report mineralization that does not constitute "reserves" by SEC standards as
in place tonnage and grade without reference to unit measurements. Accordingly,
information contained or referenced in this press release conta ining descriptions of the
Company's mineral deposits 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.