Platinum Group Metals Ltd 6-K, filed Jul 13, 2023
Platinum Group Metals Ltd (PLG)
About this 6-K
Platinum Group Metals Ltd filed this 6-K on July 13, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of: July 2023
Commission File Number: 001-33562
PLATINUM GROUP METALS LTD.
Suite 838 - 1100 Melville Street, Vancouver BC, V6E 4A6, CANADA
Address of Principal Executive Office
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F
or Form 40-F.
Form 20-F [ ] Form 40-F [X]
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PLATINUM GROUP METALS LTD. | |
| /s/ Frank Hallam | |
| Date: July 13, 2023 | Frank Hallam |
| President and Chief Executive Officer |
EXHIBIT INDEX
EXHIBITS 99.1 AND 99.2 INCLUDED WITH THIS REPORT ARE HEREBY INCORPORATED BY REFERENCE INTO THE REGISTRANT'S REGISTRATION STATEMENT ON FORM F-10 (FILE No. 333-265633), AS AMENDED AND SUPPLEMENTED (THE "REGISTRATION STATEMENT"), AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED, AND EXHIBIT 99.3 IS HEREBY INCORPORATED BY REFERENCE AS AN EXHIBIT TO SUCH REGISTRATION STATEMENT.
Platinum Group Metals Ltd.
Interim Condensed Consolidated Financial Statements
(Expressed in thousands of United States Dollars unless otherwise noted)
For the period ended May 31, 2023
Filed: July 13, 2023
PLATINUM GROUP METALS LTD.
Consolidated Statements of Financial Position
(in thousands of United States Dollars)
| |
May 31, 2023 |
August 31, 2022 |
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| ASSETS | ||||||
| Current | ||||||
| Cash and cash equivalents | $ | 8,218 | $ | 12,330 | ||
| Amounts receivable | 436 | 382 | ||||
| Prepaid expenses | 134 | 52 | ||||
| Total current assets | 8,788 | 12,764 | ||||
| Performance bonds and other assets | 204 | 190 | ||||
| Mineral properties (Note 3) | 38,597 | 40,373 | ||||
| Property, plant and equipment | 580 | 352 | ||||
| Total assets | $ | 48,169 | $ | 53,679 | ||
| LIABILITIES | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 622 | $ | 1,121 | ||
| Total current liabilities | 622 | 1,121 | ||||
| Asset retirement obligation | 83 | 95 | ||||
| Share based liabilities | 949 | 864 | ||||
| Lease liability | 346 | 44 | ||||
| Total liabilities | $ | 2,000 | $ | 2,124 | ||
| SHAREHOLDERS' EQUITY | ||||||
| Share capital (Note 7) | $ | 937,102 | $ | 934,976 | ||
| Contributed surplus | 33,358 | 32,077 | ||||
| Accumulated other comprehensive loss | (172,263 | ) | (166,155 | ) | ||
| Deficit | (772,928 | ) | (768,397 | ) | ||
| Total shareholders' equity attributable to shareholders of Platinum Group Metals Ltd. | $ | 25,269 | $ | 32,501 | ||
| Non-controlling interest | 20,900 | 19,054 | ||||
| Total shareholders' equity | $ | 46,169 | $ | 51,555 | ||
| Total liabilities and shareholders' equity | $ | 48,169 | $ | 53,679 | ||
Contingencies and Commitments (Note 9)
Approved by the Board of Directors and authorized for issue on July 13, 2023
|
/s/ Stuart Harshaw |
|
/s/ Diana Walters |
||
|
Stuart Harshaw, Director |
|
Diana Walters, Director |
||
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
PLATINUM GROUP METALS LTD.
Consolidated Statements of Loss and Comprehensive Loss
(in thousands of United States Dollars except share and per share data))
| Three months ended | Nine months ended | |||||||||||||
| May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | |||||||||||
| Expenses | ||||||||||||||
| General and administrative | $ | 896 | $ | 817 | $ | 2,922 | $ | 3,257 | ||||||
| Interest | - | - | - | 1,650 | ||||||||||
| Foreign exchange loss (gain) | 12 | 56 | (289 | ) | 115 | |||||||||
| Share of joint venture expenditures - Lion Battery (Note 4) | - | - | 295 | 253 | ||||||||||
| Stock based compensation expense | 472 | 446 | 1,586 | 1,730 | ||||||||||
| $ | 1,380 | $ | 1,319 | $ | 4,514 | $ | 7,005 | |||||||
| Other Income | ||||||||||||||
| Gain on fair value derivatives & other instruments | $ | - | $ | - | $ | - | $ | (12 | ) | |||||
| Write-off due to prospecting right closures | - | - | - | 223 | ||||||||||
| Loss on partial repayment of debt and convertible notes | - | 31 | - | 135 | ||||||||||
| Finance income | (144 | ) | (40 | ) | (465 | ) | (91 | ) | ||||||
| Loss for the period | $ | 1,236 | $ | 1,310 | $ | 4,049 | $ | 7,260 | ||||||
| Items that may be subsequently reclassified to net loss: | ||||||||||||||
| Currency translation adjustment | $ | 2,854 | $ | 396 | $ | 6,108 | $ | 2,792 | ||||||
| Comprehensive loss for the period | $ | 4,090 | $ | 1,706 | $ | 10,157 | $ | 10,052 | ||||||
| Net loss attributable to: | ||||||||||||||
| Shareholders of Platinum Group Metals Ltd. | $ | 1,236 | $ | 1,310 | $ | 4,049 | $ | 7,260 | ||||||
| $ | 1,236 | $ | 1,310 | $ | 4,049 | $ | 7,260 | |||||||
| Comprehensive loss attributable to: | ||||||||||||||
| Shareholders of Platinum Group Metals Ltd. | $ | 4,090 | $ | 1,706 | $ | 10,157 | $ | 10,052 | ||||||
| $ | 4,090 | $ | 1,706 | $ | 10,157 | $ | 10,052 | |||||||
| Basic and diluted loss per common share | $ | 0.01 | $ | 0.01 | $ | 0.04 | $ | 0.08 | ||||||
| Weighted average number of common shares outstanding: | ||||||||||||||
| Basic and diluted | 100,225,508 | 98,426,313 | 99,833,378 | 86,446,663 | ||||||||||
PLATINUM GROUP METALS LTD.
Consolidated Statements of Changes in Equity
(in thousands of United States Dollars except share and per share data)CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| |
# of Common Shares |
Share Capital |
Contributed Surplus |
Accumulated Other Comprehensive Income (loss) |
Deficit | Attributable to Shareholders of the Parent Company |
Non- Controlling Interest |
Total | ||||||||||||||||
| Balance August 31, 2021 | 75,271,126 | $ | 890,783 | $ | 30,102 | $ | (159,226 | ) | $ | (759,771 | ) | $ | 1,888 | $ | 17,585 | $ | 19,473 | |||||||
| Stock based compensation | - | - | 2,291 | - | - | 2,291 | - | 2,291 | ||||||||||||||||
| Restricted share units redeemed | 257,856 | 750 | (750 | ) | - | - | - | - | - | |||||||||||||||
| Share options exercised | 10,000 | 32 | (10 | ) | - | - | 22 | - | 22 | |||||||||||||||
| Share issuance - financing | 11,463,665 | 25,656 | - | - | - | 25,656 | - | 25,656 | ||||||||||||||||
| Shares issued to repay convertible debt | 11,793,509 | 18,941 | - | - | - | 18,941 | - | 18,941 | ||||||||||||||||
| Share issuance costs | - | (855 | ) | - | - | - | (855 | ) | - | (855 | ) | |||||||||||||
| Contributions of Waterberg JV Co. | - | - | - | - | (307 | ) | (307 | ) | 1,173 | 866 | ||||||||||||||
| Currency translation adjustment | - | - | - | (2,792 | ) | - | (2,792 | ) | - | (2,792 | ) | |||||||||||||
| Net loss for the period | - | - | - | - | (7,260 | ) | (7,260 | ) | - | (7,260 | ) | |||||||||||||
| Balance May 31, 2022 | 98,796,156 | $ | 935,307 | $ | 31,633 | $ | (162,018 | ) | $ | (767,338 | ) | $ | 37,584 | $ | 18,758 | $ | 56,342 | |||||||
| Stock based compensation | - | - | 605 | - | - | 605 | - | 605 | ||||||||||||||||
| Restricted share units redeemed | 7,883 | 40 | (40 | ) | - | - | - | - | - | |||||||||||||||
| Share options exercised | 148,333 | 328 | (121 | ) | - | - | 207 | - | 207 | |||||||||||||||
| Share issuance costs | - | (699 | ) | - | - | - | (699 | ) | - | (699 | ) | |||||||||||||
| Contributions of Waterberg JV Co. | - | - | - | - | (76 | ) | (76 | ) | 296 | 220 | ||||||||||||||
| Currency translation adjustment | - | - | - | (4,137 | ) | - | (4,137 | ) | - | (4,137 | ) | |||||||||||||
| Net loss for the period | - | - | - | - | (983 | ) | (983 | ) | - | (983 | ) | |||||||||||||
| Balance August 31, 2022 | 98,952,372 | $ | 934,976 | $ | 32,077 | $ | (166,155 | ) | $ | (768,397 | ) | $ | 32,501 | $ | 19,054 | $ | 51,555 | |||||||
| Stock based compensation | - | - | 1,744 | - | - | 1,744 | - | 1,744 | ||||||||||||||||
| Restricted share units redeemed | 149,438 | 377 | (417 | ) | - | - | (40 | ) | - | (40 | ) | |||||||||||||
| Share options exercised | 60,667 | 128 | (46 | ) | - | - | 82 | - | 82 | |||||||||||||||
| Share issuance - financing | 1,089,503 | 1,975 | - | - | - | 1,975 | - | 1,975 | ||||||||||||||||
| Share issuance costs | - | (354 | ) | - | - | - | (354 | ) | - | (354 | ) | |||||||||||||
| Contributions of Waterberg JV Co. | - | - | - | - | (482 | ) | (482 | ) | 1,846 | 1,364 | ||||||||||||||
| Currency translation adjustment | - | - | - | (6,108 | ) | - | (6,108 | ) | - | (6,108 | ) | |||||||||||||
| Net loss for the period | - | - | - | - | (4,049 | ) | (4,049 | ) | - | (4,049 | ) | |||||||||||||
| Balance May 31, 2023 | 100,251,980 | $ | 937,102 | $ | 33,358 | $ | (172,263 | ) | $ | (772,928 | ) | $ | 25,269 | $ | 20,900 | $ | 46,169 |
PLATINUM GROUP METALS LTD.
Consolidated Statements of Cash Flows
(in thousands of United States Dollars)
| For the nine months ended | ||||||
| May 31, 2023 | May 31, 2022 | |||||
| OPERATING ACTIVITIES | ||||||
| Loss for the period | $ | (4,049 | ) | $ | (7,260 | ) |
| Add items not affecting cash / adjustments: | ||||||
| Depreciation | 64 | 69 | ||||
| Interest expense | - | 1,650 | ||||
| Unrealized foreign exchange (gain) loss | (394 | ) | 84 | |||
| Gain on fair value of derivatives and other instruments | - | (12 | ) | |||
| Loss on repayment of debt and convertible notes | - | 135 | ||||
| Stock compensation expense | 1,586 | 1,730 | ||||
| Share of joint venture expenditures | 295 | 253 | ||||
| Directors' fees paid in deferred share units | 133 | 118 | ||||
| Write-off costs associated with prospecting right closure (Note 3) | - | 223 | ||||
| Net change in non-cash working capital (Note 10) | (722 | ) | (790 | ) | ||
| $ | (3,087 | ) | $ | (3,800 | ) | |
| FINANCING ACTIVITIES | ||||||
| Proceeds from issuance of equity | $ | 1,975 | $ | 25,831 | ||
| Equity issuance costs | (354 | ) | (855 | ) | ||
| Cash received from option exercises | 82 | 22 | ||||
| Share unit cash settlement | (40 | ) | - | |||
| Sprott Facility principal repayments | - | (9,400 | ) | |||
| Sprott Facility interest paid | - | (293 | ) | |||
| Convertible note interest paid | - | (826 | ) | |||
| Costs associated with repayment of debt and convertible debt | - | (128 | ) | |||
| Lease payments made | (65 | ) | (70 | ) | ||
| Cash received from Waterberg partners | 923 | 348 | ||||
| $ | 2,521 | $ | 14,629 | |||
| INVESTING ACTIVITIES | ||||||
| Performance bonds | $ | (29 | ) | $ | (38 | ) |
| Investment in Lion | (295 | ) | (250 | ) | ||
| Expenditures incurred on Waterberg Project | (2,848 | ) | (3,183 | ) | ||
| $ | (3,172 | ) | $ | (3,471 | ) | |
| Net (decrease) increase in cash | (3,738 | ) | 7,358 | |||
| Effect of foreign exchange on cash | (374 | ) | 211 | |||
| Cash, beginning of period | 12,330 | 6,059 | ||||
| Cash, end of period | $ | 8,218 | $ | 13,628 | ||
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
1. NATURE OF OPERATIONS
Platinum Group Metals Ltd. (the "Company") is a British Columbia, Canada company formed by amalgamation on February 18, 2002. The Company's shares are publicly listed on the Toronto Stock Exchange in Canada and the NYSE American, LLC ("NYSE American") in the United States of America. The Company is a development stage company conducting work on mineral properties it has staked or acquired by way of option agreements in the Republic of South Africa. Key metals of economic interest on the Company's mineral properties include platinum, palladium, rhodium, gold, copper, and nickel.
The Company's head office and principal place of business is located at Suite 838-1100 Melville Street, Vancouver, British Columbia, Canada, V6E 4A6. The Company's registered and records office is located at Suite 2300, 550 Burrard Street, Vancouver, British Columbia, Canada V6C 2B5.
These financial statements consolidate the accounts of the Company and its subsidiaries. Lion Battery Technologies Inc. ("Lion") is accounted for using the equity method as the Company jointly controls Lion despite owning a majority of Lion's shares. The Company's subsidiaries, associates and joint ventures as at May 31, 2023 are as follows:
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|
|
Place of |
Proportion of ownership |
|
|
Name of subsidiary |
Principal activity |
May 31, |
August 31, |
|
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|
|
|
|
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Platinum Group Metals (RSA) (Pty) Ltd. |
Development |
South Africa |
100.00% |
100.00% |
|
Mnombo Wethu Consultants (Pty) Limited(1) |
Development |
South Africa |
49.95% |
49.95% |
|
Waterberg JV Resources (Pty) Ltd.(1),(2) |
Development |
South Africa |
37.05% |
37.05% |
|
Lion Battery Technologies Inc. |
Research |
Canada |
52.64% |
53.70% |
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Notes: (1) The Company controls and consolidates Mnombo Wethu Consultants (Pty) Limited ("Mnombo") and Waterberg JV Resources (Pty) Ltd. ("Waterberg JV Co.") for accounting purposes. (2) Effective ownership of Waterberg JV Co. is 63.05% when Mnombo's ownership portion is combined with Platinum Group Metals (RSA) (Pty) Ltd. ("PTM RSA") ownership portion. |
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2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, applicable to the preparation of interim financial statements including International Accounting Standard International Accounting Standard 34 Interim Financial Reporting ("IAS 34").
The Company's significant accounting policies and critical accounting estimates applied in these interim financial statements are the same as those applied in Note 2 of the Company's annual consolidated financial statements as at and for the year ended August 31, 2022.
Presentation Currency
The Company's presentation currency is the United States Dollar ("USD").
Foreign Exchange Rates Used
The following exchange rates were used when preparing these consolidated financial statements:
Rand/USD
Period-end rate: R19.7488 (August 31, 2022 R17.0760)
Period average rate: R17.8965 (May 31, 2022 R15.2793)
CAD/USD
Period-end rate: C$1.3603 (August 31, 2022 C$1.3111)
Period average rate: C$1.3516 (May 31, 2022 C$1.2661)
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
3. MINERAL PROPERTIES
Since mid-2017, the Company's only active mineral property has been the Waterberg Project located on the Northern Limb of the Bushveld Igneous Complex.
Total capitalized costs for the Waterberg Project are as follows:
| Balance August 31, 2021 | $ | 43,953 | |
| Additions | 2,968 | ||
| Write-off costs associated with prospecting right closures | (223 | ) | |
| Foreign currency translation adjustment | (6,325 | ) | |
| Balance August 31, 2022 | $ | 40,373 | |
| Additions | 3,465 | ||
| Foreign currency translation adjustment | (5,241 | ) | |
| Balance May 31, 2023 | $ | 38,597 |
Waterberg Project
Ownership
On September 21, 2017, Waterberg JV Co. issued shares to acquire all existing Waterberg partner joint venture interests, resulting in 100% of the Waterberg prospecting rights being owned by Waterberg JV Co. Impala Platinum Holdings Ltd. ("Implats") subsequently acquired a 15% interest in Waterberg JV Co. on November 6, 2017 by way of the Implats Transaction (as defined below). Later, in March 2019 Japan Organization for Metals and Energy Security (formerly Japan Oil, Gas and Metals National Corporation) ("JOGMEC") completed the sale of a 9.755% interest in the Waterberg JV Co. to Hanwa Co., Ltd ("Hanwa"). In June 2023 JOGMEC and Hanwa reported the establishment of a special purpose company, HJ Platinum Metals Ltd. ("HJM"), to hold and fund their future equity interests in the Waterberg Project. The combined interests of JOGMEC and Hanwa have been consolidated into a 21.95% interest for HJM going forward, with JOGMEC to fund 75% of future equity investments into HJM and Hanwa the remaining 25%.
The Company currently holds a controlling 50.02% interest in Waterberg JV Co., comprised of a direct 37.05% interest and an indirect 12.97% interest by way of its 49.9% shareholding in Black Economic Empowerment ("BEE") partner Mnombo. Mnombo owns a 26.0% direct interest in Waterberg JV Co., Implats a 15.0% direct interest, and HJM a 21.95% direct interest.
Mining Right
On January 28, 2021, the South African Department of Mineral Resources and Energy ("DMRE") issued a letter to Waterberg JV Co. notifying the Company that a mining right (the "Waterberg Mining Right") had been granted over the Waterberg Project area as applied for in 2018. The Waterberg Mining Right was notarially executed on April 13, 2021, was registered at the Mineral and Petroleum Titles Registration Office on July 6, 2021 and currently remains active.
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
Project Area and Location
At May 31, 2023, the Waterberg Project consisted of active prospecting rights, applied for prospecting rights and the Waterberg Mining Right with a combined active project area of 29,227 hectares, located on the Northern Limb of the Bushveld Igneous Complex, approximately 85 km north of the town of Mokopane. Of the total project area, 20,532 hectares are covered by the Waterberg Mining Right. A further 4,207 hectares are covered by active prospecting rights and there are 4,488 hectares under application for incorporation into the Waterberg Mining Right. On March 9, 2022, Waterberg JV Co. passed a resolution to apply for closure on 50,985 gross hectares of prospecting rights, of which 14,209 hectares are now held within the granted mining right, leaving a net 36,776 hectares of uneconomic prospecting rights in process of being closed. Capitalized costs of $223 associated with the prospecting right closures were written off during the previous year.
Appeals and Legal Matters
On October 13, 2022, the Minister of the DMRE ruled to dismiss several appeals to the grant of the Waterberg Mining Right filed with the DMRE during 2021. In his ruling the Minister provided the regulatory reasons why each appeal was denied and also confirmed the DMRE's assessment that Waterberg JV Co. has complied with BEE requirements and social and labour plan community consultation procedures.
During 2021, an opposition group filed an urgent interdict application to the High Court seeking to restrain the activities of Waterberg JV Co. on certain surface rights over a portion of the project area. The appellants failed to support their "urgent" claim and did not properly respond to a replying affidavit and a joinder application. To force the interdict application to a conclusion, in July 2022 Waterberg JV Co. filed a Notice of Set Down with the High Court in Limpopo. A hearing to rule on the interdict application occurred on May 22, 2023, at which the court dismissed the urgent interdict application and ordered the applicants to pay costs to the defendants.
During 2021 another opposition group filed an application for an order in the High Court of South Africa to review and set aside the decision by the Minister of the Department of Forestry, Fisheries and the Environment ("DFFE") to refuse condonation for the late filing of the group's appeal against the grant of an EA for the Waterberg Project in November 2020. Senior Counsel and attorneys acting for Waterberg JV Co. filed a formal rebuttal, raising numerous factual and legal defences. The appellants have taken no action to progress their application opposing the decision of the DFFE.
Implats Transaction
On November 6, 2017, the Company and JOGMEC closed a transaction (the "Implats Transaction"), whereby Implats purchased an aggregate 15% equity interest in Waterberg JV Co. for $30 million. The Company sold an 8.6% interest for $17.2 million and JOGMEC sold a 6.4% interest for $12.8 million. As part of the transaction, Implats also acquired an option to increase its holdings in Waterberg JV Co. to 50.01% (the "Purchase and Development Option") in exchange for certain payments and project funding, and a right of first refusal to enter into an offtake agreement, on commercial arm's-length terms, for the smelting and refining of mineral products from the Waterberg Project ("Offtake ROFR") if Waterberg JV Co. proposes an offtake agreement with a third party. JOGMEC or its nominee retains a right to direct the marketing of Waterberg concentrate and to receive, at market prices, platinum, palladium, rhodium, gold, ruthenium, iridium, copper and nickel in refined mineral products at the volumes produced from the Waterberg Project.
On June 15, 2020, Implats delivered a formal notice of their election not to exercise their Purchase and Development Option due to increased economic uncertainty and reduced risk appetite in the short, medium and long-term as a result of the COVID-19 pandemic. Implats currently retains a 15.0% direct participating interest in Waterberg JV Co. and the Offtake ROFR.
Acquisition and Development of the Waterberg Project
In October 2009, PTM RSA, JOGMEC and Mnombo entered into a joint venture agreement regarding the Waterberg Project (the "JOGMEC Agreement"). Under the terms of the JOGMEC Agreement JOGMEC completed a $3.2 million work requirement to earn a 37% interest in the Waterberg JV property, leaving the Company with a 37% interest and Mnombo with a 26% interest. Following JOGMEC's earn-in, the Company funded Mnombo's 26% share of costs, totalling $1.12 million, until the earn-in phase of the joint venture ended in May 2012.
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
On November 7, 2011, the Company entered an agreement with Mnombo to acquire 49.9% of the issued and outstanding shares of Mnombo in exchange for a cash payment of R1.2 million and the Company's agreement to pay for Mnombo's 26% share of costs on the Waterberg JV property until the completion of a feasibility study. Mnombo's share of expenditures prior to this agreement, and Mnombo's share of expenditures post DFS, are still owed to the Company ($7.1 million at May 31, 2023, including accrued interest). The portion of Mnombo not owned by the Company is accounted for as a non-controlling interest, calculated at $8.3 million at May 31, 2023 ($7.8 million - August 31, 2022).
To May 31, 2023, an aggregate total of $83.8 million has been funded by all parties for exploration and engineering on the Waterberg Project. Until the Waterberg prospecting rights were transferred to Waterberg JV Co., all costs incurred by other parties were treated as cost recoveries by the Company.
4. LION BATTERY TECHNOLOGIES INC.
Lion was incorporated on June 17, 2019, with the objective to research new lithium battery technology utilizing platinum and palladium. The Company received 400,000 common shares of Lion, valued at a price of $0.01 per share, as the original founder of Lion. On July 12, 2019, the Company and Anglo American Platinum Limited ("Amplats") entered investment, shareholder and research agreements to facilitate Lion's objectives. Initially the Company and Amplats agreed to equally invest up to an aggregate of $4.0 million into Lion and on July 6, 2021 the Company and Amplats agreed to increase the planned funding to Lion by a further $2.73 million, to a total of up to $6.73 million, in order to allow the acceleration of certain research and commercialization activities (see below). All agreed funding into Lion by the Company and Amplats is to be exchanged for preferred shares of Lion at a price of $0.50 per share over an approximate three to five year period. Amplats and the Company have funded Lion equally for an aggregate $3.59 million as of May 31, 2023 as follows:
| Date | Gross Funding to Lion | ||
| July 2019 | $ | 1,100 | |
| June 2020 | $ | 700 | |
| February 2021 | $ | 700 | |
| February 2022 | $ | 500 | |
| February 2023 | $ | 590 | |
| Total | $ | 3,590 |
The Company accounts for Lion using equity accounting as Lion is jointly controlled with Amplats. Lion pays a fee of $3 per month to the Company for general and administrative services.
Subsequent to period end, Amplats and the Company each funded Lion $280 for an aggregate $560.
Research Program - Florida International University
On July 12, 2019, Lion entered into a Sponsored Research Agreement ("SRA") with Florida International University ("FIU") to fund a $3.0 million research program over approximately three years. On July 6, 2021 Lion agreed to increase the planned amount of research funding to FIU by a further amount of $1.0 million, for a total of up to $4.0 million. The first tranche by Lion to FIU under the SRA, totaling $1.0 million plus a one-time fee of $50, was funded by Lion in mid July 2019. Research work commenced at FIU during September 2019. During calendar 2020 FIU completed the first research milestone pursuant to the SRA, which triggered a second tranche of funding to FIU in the amount of $667. Based on research advancement, a third tranche in the amount of $667 was paid by Lion to FIU in February 2021. In February 2022 a fourth tranche of $500, in February 2023 a fifth tranche of $500 was paid by Lion to FIU and in June 2023 a sixth tranche of $350 was paid by Lion to FIU. Lion has provided aggregate research funding in the amount of $3.38 million to FIU as of May 31, 2023.
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
On August 4, 2020, the U.S. Patent and Trademark Office issued Patent No. 10,734,636 B2 entitled "Battery Cathodes for Improved Stability" to FIU. The patent includes the use of platinum group metals and carbon nanotubes and other innovations in a lithium battery. A second patent related to this technology was issued in December 2020 and a third was issued in June 2021. On October 4, 2022 a fourth patent No. 11,462,743 B2 was issued under the title "Battery comprising a metal interlayer" to FIU. This fourth patent involves the use of palladium as interlayer in batteries to stabilize and enable lithium metal anodes in various existing and emerging lithium battery technologies. On February 21, 2023 a fifth patent No. 11,588,144 B2 entitled "Battery Cathodes for Improved Stability" was issued to FIU. The patent involves the fabrication of cathodes using palladium as a catalyst in carbon nanotubes. Further patents are currently applied for. Under the SRA, Lion has exclusive rights to all intellectual property being developed by FIU including patents granted. Lion is also reviewing several additional and complementary opportunities focused on developing next-generation battery technology using platinum and palladium.
On June 21, 2023 the Company reported that Lion had engaged The Battery Innovation Center ("BIC") in Newberry, Indiana to help drive commercialization of its next generation lithium-sulfur and enhanced lithium-ion (NMC) technology using the unique catalytic properties of platinum and palladium. Under an agreed scope of work (the "SOW"), BIC is to conduct independent small scale and large scale trials to validate Lion's proprietary platinum and palladium based electrode composition, slurry, and films in both lithium-sulfur and lithium-ion (NMC811) coin and pouch cells. The SOW also includes additional research and development focused on improving performance and scale-up with the goal of creating prototypes for commercialization consideration.
5. SPROTT LOAN
In August, 2019, the Company entered a $20 million senior secured credit facility (the "Sprott Facility") with Sprott Private Resource Lending II (Collector), LP ("Sprott") which was to mature on August 14, 2022, but was fully repaid in February 2022. During the nine month period ended May 31, 2022, the Company repaid the then outstanding $9.4 million principal balance recognizing a loss on settlement of $279. During the nine month period ended May 31, 2022, interest payments of $293 were made and effective interest of $378 was recognized. Upon full repayment of the Sprott Facility in February 2022, the Company's pledge of its South African assets as security was fully released.
6. CONVERTIBLE NOTES
On June 30, 2017, the Company closed a private placement of $20 million aggregate principal amount of convertible senior subordinated notes due in 2022 (the "Convertible Notes"). The Convertible Notes bore interest at a rate of 6 7/8% per annum, payable in cash or at the election of the Company, in common shares of the Company or a combination of cash and common shares. During the nine month period ended May 31, 2022 effective interest of $1,275 was recognized on the Convertible Notes.
On January 20, 2022, the Company announced the purchase and cancellation, on a private placement basis, of the $19.99 million of Convertible Notes then outstanding. The principal outstanding balance of these Convertible Notes was repaid through the issuance of 11,793,509 common shares, at a price of $1.695 per share. The Company purchased $11.99 million of the Convertible Notes from an affiliate of Kopernik Global Investors, LLC on February 4, 2022 and $8 million of the Convertible Notes from affiliates of Franklin Templeton Investments on February 10, 2022.
7. SHARE CAPITAL
(a) Authorized
Unlimited common shares without par value.
(b) Issued and outstanding
At May 31, 2023, the Company had 100,251,980 common shares outstanding.
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
Fiscal 2023
On July 27, 2022, the Company entered into an equity distribution agreement with BMO Nesbitt Burns Inc. as Canadian Agent, and BMO as U.S. Agent, for a new at-the-market equity program (the "2022 ATM") to distribute up to $50,000 of common shares. No common shares were sold pursuant to the 2022 ATM prior to August 31, 2022. In the nine-month period ending May 31, 2023 the Company sold 1,089,503 shares at an average price of $1.81 for gross proceeds of $1,975 and net proceeds of $1,621 after share issuance costs of $354 were deducted.
Fiscal 2022
During the year ended August 31, 2022, the Company sold an aggregate of 7,923,842 shares pursuant to an at-the-market offering governed by the terms of a February 2021 equity distribution agreement with BMO Capital Markets (the "2021 ATM"). The Company sold these shares at an average price of $2.48 for gross proceeds of $19,656. Total share issuance costs of $1,554 were recognized during the year.
On February 11, 2022, the Company closed a non-brokered private placement with Deepkloof Limited ("Deepkloof"), a subsidiary of existing major shareholder Hosken Consolidated Investments Limited ("HCI") for 3,539,823 common shares at a price of $1.695 each for gross proceeds of $6,000 maintaining HCI's ownership in the Company at approximately 26% at that time.
On February 4 and 10, 2022, the Company issued 7,073,746 and 4,719,763 shares respectively at a price of $1.695 each in connection with the repayment of the Convertible Notes (See Note 6 for further details).
(c) Incentive stock options
The Company has entered into Incentive share purchase option agreements under the terms of its share compensation plan with directors, officers, consultants and employees. Under the terms of the share purchase option agreements, the exercise price of each option is set, at a minimum, at the fair value of the common shares at the date of grant. Options of the Company are subject to vesting provisions. All exercise prices are denominated in Canadian Dollars.
The following tables summarize the Company's outstanding share purchase options:
| Number of Share Options |
Average Exercise Price in CAD |
|||||
| Options outstanding at August 31, 2021 | 3,808,521 | $ | 3.96 | |||
| Granted | 1,273,000 | $ | 2.36 | |||
| Expired | (1,256,517 | ) | $ | 4.08 | ||
| Exercised | (158,333 | ) | $ | 1.86 | ||
| Options outstanding at August 31, 2022 | 3,666,671 | $ | 3.45 | |||
| Granted | 1,358,000 | $ | 2.36 | |||
| Cancelled | (80,167 | ) | $ | 3.36 | ||
| Exercised | (60,667 | ) | $ | 1.81 | ||
| Options outstanding at May 31, 2023 | 4,883,837 | $ | 3.17 |
| Number Outstanding at May 31, 2023 |
Number Exercisable at May 31, 2023 |
Exercise Price in CAD |
Average Remaining = Contractual Life (Years) |
|||||||
| 952,000 | 644,778 | $ | 6.58 | 2.55 | ||||||
| 99,000 | 66,000 | $ | 3.90 | 3.19 | ||||||
| 42,000 | 14,000 | $ | 3.40 | 3.31 | ||||||
| 601,836 | 666,836 | $ | 2.61 | 0.86 | ||||||
| 21,000 | 7,000 | $ | 2.52 | 3.75 | ||||||
| 1,158,000 | - | $ | 2.37 | 4.35 | ||||||
| 1,165,000 | 388,333 | $ | 2.32 | 3.55 | ||||||
| 200,000 | - | $ | 2.28 | 4.94 | ||||||
| 645,001 | 645,001 | $ | 1.81 | 1.51 | ||||||
| 4,883,837 | 2,431,948 | 2.99 |
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
During the nine-month period ended May 31, 2023, the Company granted 1,158,000 share purchase options, which will vest in three trances on the first, second and third anniversary of the grant. A further 200,000 share purchase options were issued with 50,000 vesting September 8, 2023 and 150,000 vesting when certain performance conditions are met.
During the year ended August 31, 2022, the Company granted 1,273,000 share purchase options, which will vest in three tranches on the first, second and third anniversary of their respective grants.
During the nine-month period ended May 31, 2023, the Company recorded $1,329 of stock compensation expense (May 31, 2022 - $1,804) related to share purchase options, of which $1,234 was expensed (May 31, 2022 - $1,662) and $95 was capitalized to mineral properties (May 31, 2022 - $142).
The Company used the Black-Scholes model to determine the grant date fair value of share purchase options granted. The following assumptions were used in valuing share purchase options granted during the period ended May 31, 2023 and the year ended August 31, 2022:
| Period ended | May 31, 2023 | August 31, 2022 |
| Risk-free interest rate | 3.45% | 1.18% |
| Expected life of options | 3.9 years | 3.5 years |
| Annualized volatility1 | 89% | 87% |
| Forfeiture rate | 0.6% | 2.0% |
| Dividend rate | 0.0% | 0.0% |
| 1The Company uses its historical volatility as the basis for the expected volatility assumption in the Black Scholes option pricing model. | ||
(d) Deferred Share Units
The Company has established a deferred share unit ("DSU") plan for non-executive directors. Each DSU has the same value as one Company common share. DSUs must be retained until the director leaves the Board of Directors, at which time the DSUs are redeemed.
During the nine-month period ended May 31, 2023, an expense of $153 was recorded in relation to vesting DSUs and director fees (May 31, 2022 - $118), with a recovery of $37 recorded as share-based compensation (May 31, 2022 - $364 recovery) in relation to the revaluation of fully vested DSUs.
At May 31, 2023 a total of 682,825 DSUs were issued and outstanding.
(e) Restricted Share Units
The Company has established a restricted share unit ("RSU") plan for officers and certain employees of the Company. Each RSU represents the right to receive one Company common share following the attainment of vesting criteria determined at the time of the award. RSUs vest over a three-year period.
During the nine-month period ended May 31, 2023, a stock compensation expense of $414 was recorded (May 31, 2022 - $487) of which $370 was expensed (May 31, 2022 - $432) and $44 was capitalized (May 31, 2022 - $55). During the nine-month period ended May 31, 2023 the Company issued 274,649 RSUs which vest evenly on the first, second and third anniversary of issuance. At May 31, 2023, 472,440 RSUs were issued and outstanding, with Nil being vested.
8. RELATED PARTY TRANSACTIONS
All amounts receivable and amounts payable owing to or from related parties are non-interest bearing with no specific terms of repayment. Transactions with related parties are in the normal course of business and are recorded at consideration established and agreed to by the parties. Transactions with related parties are as follows:
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
(a) During the nine-month period ended May 31, 2023, $234 (May 31, 2022 - $208) was paid or accrued to independent directors for directors' fees and services.
(b) During the nine-month period ended May 31, 2023, the Company paid or accrued payments of $40 (May 31, 2022 - $43) from West Vault Mining Inc., for accounting and administrative services. The Company and West Vault Mining have one officer in common.
(c) In May 2018, Deepkloof made a strategic investment in the Company by way of participation in a public offering and a private placement. Through the terms of the May 2018 private placement, HCI 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. HCI has exercised its right to nominate one person to the board of directors. As of May 31, 2023, HCI's ownership of the Company was reported at 24,837,349 common shares, representing a 24.8% interest in the Company.
(d) During the year ended August 31, 2022, the Company purchased and cancelled, on a private placement basis, the outstanding principal balance of $8 million of the Convertible Notes from affiliates of Franklin Templeton Investments (See Note 6 for further details).
9. CONTINGENCIES AND COMMITMENTS
The Company's remaining minimum payments under its office and equipment lease agreements in Canada and South Africa total approximately $574 to February 2029.
From year end the Company's aggregate commitments are as follows:
| Payments Due by Year | |||||||||||||||
| < 1 Year | 1 - 3 Years | 4 - 5 Years | > 5 Years | Total | |||||||||||
| Lease Obligations | $ | 114 | $ | 285 | $ | 175 | $ | - | $ | 574 | |||||
| Environmental Bonds | 41 | 123 | 82 | - | 246 | ||||||||||
| Totals | $ | 155 | $ | 408 | $ | 257 | $ | - | $ | 820 | |||||
Africa Wide Legal Action - Dismissed
On April 26, 2018 a transaction was completed selling 100% of the share interests in Maseve Investments 11 (Pty) Ltd. ("Maseve") to Royal Bafokeng Platinum Limited ("RBPlat") in a transaction valued at approximately US $74.0 million. Maseve owned and operated the Maseve Mine. Africa Wide Mineral Prospecting and Exploration Proprietary Limited ("Africa Wide") was required to simultaneously sell its 17.1% interest together with the Company's 82.9% interest in Maseve.
In September 2018, Africa Wide instituted legal proceedings in South Africa against PTM RSA, RBPlat and Maseve seeking to set aside the sale of Maseve. A trial to hear evidence occurred in the High Court of South Africa in October, 2021. On June 14, 2022, the High Court dismissed Africa Wide's challenge. Africa Wide appealed the ruling, which was ultimately dismissed by the South Africa Supreme Court of Appeal on November 10, 2022. Africa Wide was ordered to make payment of the defendants' costs. The Company has made no accruals for the award of costs due to the uncertainty of the recoverable amount. Africa Wide has no further avenue of appeal.
On July 10, 2023, the Company received notice that Africa Wide had applied for a reconsideration of the ruling of the Supreme Court of Appeal. Notwithstanding the lack of merit and unusual nature of this application, it was filed nearly seven months past the deadline for such a submission. The Company is opposing this application.
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PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements |
10. SUPPLEMENTARY CASH FLOW INFORMATION
Net change in non-cash working capital:
| Period ended | May 31, 2023 | May 31, 2022 | ||||
| Amounts receivable, prepaid expenses and other assets | $ | (193 | ) | $ | $(351 | ) |
| Accounts payable and other liabilities | (529 | ) | (439 | ) | ||
| $ | (722 | ) | $ | $(790 | ) |
11. SEGMENTED REPORTING
Segmented information is provided on the basis of geographical segments as the Company manages its business through two geographical regions - Canada and South Africa. The Chief Operating Decision Maker ("CODM") reviews information from the below segments separately so the below segments are separated.
The Company evaluates performance of its operating and reportable segments as noted in the following table:
| At May 31, 2023 | Assets | Liabilities | ||||
| Canada | $ | 7,584 | $ | 1,264 | ||
| South Africa | 40,585 | 736 | ||||
| $ | 48,169 | $ | 2,000 |
| At August 31, 2022 | Assets | Liabilities | ||||
| Canada | $ | 12,037 | $ | 1,777 | ||
| South Africa | 41,642 | 347 | ||||
| $ | 53,679 | $ | 2,124 |
| Comprehensive Loss for the period ended |
May 31, 2023 |
May 31, 2022 |
||||
| Canada | $ | 9,640 | $ | 8,354 | ||
| South Africa | 517 | 1,698 | ||||
| $ | 10,157 | $ | 10,052 |
Platinum Group Metals Ltd.
(A Development Stage Company)
Supplementary Information and Management's Discussion and Analysis
For the three and nine-month period ended May 31, 2023
This Management's Discussion and Analysis is prepared as of July 13, 2023
A copy of this report will be provided to any shareholder who requests it.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
MANAGEMENT'S DISCUSSION AND ANALYSIS
This management's discussion and analysis ("MD&A") of Platinum Group Metals Ltd. ("Platinum Group", the "Company" or "PTM") is dated as of July 13, 2023, and focuses on the Company's financial condition, cash flows and results of operations as at and for the three and nine-month period ended May 31, 2023. This MD&A should be read in conjunction with the Company's interim condensed consolidated financial statements for the period ended May 31, 2023, together with the notes thereto (the "Financial Statements").
The Company prepares its interim condensed consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"), applicable to the preparation of interim financial statements including International Accounting Standard 34, Interim Financial Reporting ("IAS 34"). All dollar figures included therein and in the following MD&A are quoted in United States Dollars unless otherwise noted. All references to "U.S. Dollars", "$" or to "US$" are to United States Dollars. All references to "C$" are to Canadian Dollars. All references to "R" or to "Rand" are to South African Rand. The Company uses the U.S. Dollar as its presentation currency.
PRELIMINARY NOTES
Note Regarding Forward-Looking Statements
This MD&A and the documents incorporated by reference herein contain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "Forward-Looking Statements"). All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will, may, could or might occur in the future are Forward-Looking Statements. The words "expect", "anticipate", "estimate", "may", "could", "might", "will", "would", "should", "intend", "believe", "target", "budget", "plan", "strategy", "goals", "objectives", "projection" or the negative of any of these words and similar expressions are intended to identify Forward-Looking Statements, although these words may not be present in all Forward-Looking Statements. Forward-Looking Statements included or incorporated by reference in this MD&A may include, without limitation, statements related to:
• the timely completion of additional required financings and potential terms thereof;
• the completion of appropriate contractual smelting and/or refining arrangements with Impala Platinum Holdings Ltd. ("Implats") or another third-party smelter/refiner;
• the projections set forth or incorporated into, or derived from, the DFS Technical Report (as defined below), including, without limitation, estimates of mineral resources and mineral reserves, and projections relating to future prices of metals, commodities and supplies, currency rates, capital and operating expenses, production rate, grade, recovery and return, and other technical, operational and financial forecasts;
• the approval of a water use licence and environmental permits for, and other developments related to, a deposit area discovered by the Company on the Waterberg property (the "Waterberg Project") located on the Northern Limb of the Bushveld Igneous Complex in South Africa, approximately 85 km north of the town of Mokopane;
• the Company's expectations with respect to the outcome of a review application in the High Court to set aside a decision by the Minister of the Department of Forestry, Fisheries and the Environment ("DFFE") to refuse condonation for the late filing of the appeal by individuals from a community group against the grant of an Environmental Authorization ("EA") for the Waterberg Project;
• the negotiation and execution of long term access agreements, on reasonable terms, with communities recognized as titled landowners of three farms where surface and underground mine infrastructure is planned, and rezoning for mining use;
• the development of performance indicators to measure and monitor key environmental, social sustainability and governance activities at the Waterberg Project;
• the ability of state electricity utility ESKOM Holdings Limited ("ESKOM") to supply sufficient power to the Waterberg Project;
• risks related to geopolitical events and other uncertainties, such as Russia's invasion of Ukraine;
• the adequacy of capital, financing needs and the availability of and potential for obtaining further capital;
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
• revenue, cash flow and cost estimates and assumptions;
• future events or future performance;
• development of next generation battery technology by the Company's battery technology joint venture (described below);
• potential benefits of Lion Battery Technologies Inc. engaging The Battery Innovation Center;
• governmental and securities exchange laws, rules, regulations, orders, consents, decrees, provisions, charters, frameworks, schemes and regimes, including interpretations of and compliance with the same;
• developments in South African politics and laws relating to the mining industry;
• anticipated exploration, development, construction, production, permitting and other activities on the Company's properties;
• project economics;
• future metal prices and currency exchange rates;
• the identification of several large-scale water basins that could provide mine process and potable water for the Waterberg Project and local communities;
• the Company's expectations with respect to the outcomes of litigation;
• mineral reserve and mineral resource estimates;
• potential changes in the ownership structures of the Company's projects;
• the Company's ability to license certain intellectual property;
• the potential use of alternative renewable energy sources for the Waterberg Project; and
• future assistance from the Member of the Executive Committee ("MEC") for the Limpopo Department of Economic Development, Environment and Tourism Advancement.
Forward-Looking Statements are subject to a number of risks and uncertainties that may cause the actual events or results to differ materially from those discussed in the Forward-Looking Statements, and even if events or results discussed in the Forward-Looking Statements are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things:
• the Company's additional financing requirements;
• the effect of future debt financing on the Company and its financial condition;
• the Company's history of losses and expectations that will continue to incur losses until the Company's Waterberg Project reaches commercial production on a profitable basis, which may never occur;
• the Company's negative operating cash flow;
• uncertainty of estimated mineral reserve and mineral resource estimates, production, development plans and cost estimates for the Waterberg Project;
• the Company's ability to bring properties into a state of commercial production;
• the potential impact of international conflict and geopolitical tensions and events on the Company;
• 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;
• fluctuations in the relative values of the U.S. Dollar, the Rand and the Canadian Dollar;
• volatility in metals prices;
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
• the possibility that the Company may become subject to the Investment Company Act of 1940, as amended;
• Implats or another third-party may not enter into appropriate contractual smelting and/or refining arrangements with Waterberg JV Resources Proprietary Limited ("Waterberg JV Co.");
• the ability of the Company to acquire the necessary surface access rights on commercially acceptable terms or at all;
• the ability of state electricity utility ESKOM to supply sufficient power to the Waterberg Project;
• the failure of the Company or the other shareholders of Waterberg JV Co. to fund their pro rata share of funding obligations for the Waterberg Project;
• any disputes or disagreements with the Company's other shareholders of Waterberg JV Co. or Mnombo Wethu Consultants Proprietary Limited ("Mnombo"), a South African Broad-Based Black Economic Empowerment ("BEE") company;
• the outcome of a review application to the High Court to set aside a decision by the DFFE to refuse condonation for the late filing of a community group's appeal against the grant of an EA for the Waterberg Project;
• the Company is subject to assessment by various taxation authorities, who may interpret tax legislation in a manner different from the Company, which may negatively affect the final amount or the timing of the payment or refund of taxes;
• the Company's ability to attract and retain its key management employees;
• contractor performance and delivery of services, changes in contractors or their scope of work or any disputes with contractors;
• conflicts of interest among the Company's officers and directors;
• any designation of the Company as a "passive foreign investment company" for its current and future tax years and potential adverse U.S. federal income tax consequences for U.S. shareholders;
• litigation or other legal or administrative proceedings brought against or relating to the Company, including the review application to set aside a decision by the Minister of the DFFE to refuse condonation for the late filing of the appeal by individuals from a community group against the grant of an EA for the Waterberg Project;
• information systems and cyber security risks;
• 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, including environmental hazards, industrial accidents, unusual or unexpected formations, safety stoppages (whether voluntary or regulatory), pressures, mine collapses, cave ins or flooding and the risk of inadequate insurance or inability to obtain insurance to cover these risks and other risks and uncertainties;
• property zoning 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, South Africa or other countries in which the Company does or may carry out business in the future;
• equipment shortages and the ability of the Company to acquire the necessary 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 operations or failures to comply with the terms of such permits;
• any adverse decision in respect of the Company's mineral rights and projects in South Africa under the Mineral and Petroleum Resources Development Act of 2002 (the "MPRDA");
• 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;
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
• the failure to maintain or increase equity participation by historically disadvantaged South Africans in the Company's prospecting and mining operations and to otherwise comply with the Amended Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry, 2018 (the "Mining Charter 2018");
• certain potential adverse Canadian tax consequences for foreign-controlled Canadian companies that acquire common shares of the Company ("Common Shares");
• socio economic instability in South Africa or regionally, including risks of resource nationalism;
• labour disruptions and increased labour costs;
• interruptions, shortages or cuts in the supply of electricity or water;
• characteristics of and changes in the tax and royalties systems in South Africa;
• a change in community relations;
• South African foreign exchange controls impacting repatriation of profits;
• land restitution claims or land expropriation;
• restriction on dividend payments;
• the risk that the Common Shares may be delisted;
• volatility in the price of the Common Shares;
• the exercise or settlement of stock options, restricted share units, or warrants resulting in dilution to the holders of Common Shares;
• future sales of equity securities decreasing the value of the Common Shares, diluting investors' voting power, and reducing our earnings per share;
• enforcing judgements based on the civil liability provisions of United States federal securities laws;
• global financial conditions;
• government imposed shutdowns or expense increases;
• water license risks; and
• other risks disclosed under the heading "Risk Factors" in this MD&A and in the Company's Canadian Annual Information Form for the year ended August 31, 2022 ("2022 AIF") and annual report on Form 40-F for the year ended August 31, 2022 as filed with the United States Securities and Exchange Commission ("2022 40-F").
These factors should be considered carefully, and investors should not place undue reliance on the Company's Forward-Looking Statements. In addition, although the Company has attempted to identify important factors that could cause actual actions or results to differ materially from those described in Forward-Looking Statements, there may be other factors that cause actions or results not to be as anticipated, estimated or intended.
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 because of new information, future events or results or otherwise.
Legislation and Mining Charter 2018
The MPRDA, the Mining Charter 2018 and related regulations in South Africa required that Waterberg JV Co.'s BEE shareholders own a 26% equity interest in Waterberg JV Co. to qualify for the grant of a mining right. Within five years of the effective date of a mining right, this BEE shareholding must be increased to 30%. The South African Department of Mineral Resources and Energy ("DMRE") had obtained an exemption from applying the generic BEE Codes of Good Practice ("Generic BEE Codes") under the Broad Based Black Economic Empowerment Act, 2003 until October 31, 2016, then extended until December 31, 2016. No further exemption was obtained thereafter, and, as a matter of law, the Generic BEE Codes now apply to the issuance and maintenance of licenses and other authorizations. As a matter of practice, the DMRE has continued to apply the provisions of Mining Charter 2018 rather than the Generic BEE Codes.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
For a comprehensive discussion of Mining Charter 2018 and the Generic BEE Codes, please refer to the section entitled "Risk Factors" in the Company's 2022 AIF and the separate 2022 40-F, which was also filed by the Company, as well as in the documents incorporated by reference therein. The 2022 AIF and the 2022 40-F may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov .
Mineral Reserves and Resources
The mineral resource and mineral reserve figures referred to in this MD&A and the documents incorporated herein by reference are estimates and no assurances can be given that the indicated levels of platinum, palladium, rhodium and gold (collectively referred to as "4E", or "PGEs") will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. By their nature, mineral resource and mineral reserve estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. Any inaccuracy or future reduction in such estimates could have a material adverse impact on the Company.
Note to U.S. Investors Regarding Reserve and Resource Estimates
Estimates of mineralization and other technical information included or incorporated by reference herein have been prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), which differs significantly from the requirements of the United States Securities and Exchange Commission (the "SEC") under subpart 1300 of Regulation S-K (the "SEC Modernization Rules"). The Company is not currently subject to the SEC Modernization Rules. Accordingly, the Company's disclosure of mineralization and other technical information herein may differ significantly from the information that would be disclosed had the Company prepared the resource estimates under the standards adopted under the SEC Modernization Rules.
Technical and Scientific Information
The technical and scientific information contained in this MD&A, including, but not limited to, all references to and descriptions of technical reports and studies, has been reviewed by an independent qualified person as defined in NI 43-101, Robert van Egmond, P.Geo., a consultant geologist to the Company and a former employee. Mr. van Egmond is an independent "qualified person" as defined in NI 43-101 (a "Qualified Person").
Non-GAAP Measures
This MD&A may include certain terms or performance measures commonly used in the mining industry that are not defined under IFRS as issued by the International Accounting Standards Board, which is incorporated in the CPA Canada Handbook. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Any such non-GAAP measures should be read in conjunction with our Financial Statements.
1. DESCRIPTION OF BUSINESS
Overview
Platinum Group Metals Ltd. is a British Columbia, Canada company formed on February 18, 2002, pursuant to an order of the Supreme Court of British Columbia approving an amalgamation between Platinum Group Metals Ltd. and New Millennium Metals Corporation. The Company is a platinum and palladium focused exploration and development company conducting work primarily on mineral properties it has staked or acquired by way of option agreements or applications in the Republic of South Africa.
The Company's business is currently focused on the engineering and development of the Waterberg Project, which hosts a PGE and base metal bearing deposit discovered in 2011 by the Company as a result of a regional exploration initiative targeting a previously unknown extension to the Northern Limb of the Bushveld Igneous Complex in South Africa.
On September 21, 2017, Waterberg JV Co. issued shares to all existing Waterberg partners pro rata to their joint venture interests, resulting in the Company holding a 45.65% direct interest in Waterberg JV Co., Japan Organization for Metals and Energy Security (formerly Japan Oil, Gas and Metals National Corporation) ("JOGMEC") holding a 28.35% interest and Mnombo, as the Company's BEE partner, holding 26%. Later, in March 2019, JOGMEC completed the sale of a 9.755% interest in the Waterberg JV Co. to Hanwa Co., Ltd. ("Hanwa").
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
On November 6, 2017, the Company, along with JOGMEC and Mnombo closed a strategic transaction to sell to Implats 15% of the Waterberg JV Co. for $30 million (the "Implats Transaction"). The Company sold Implats an 8.6% interest for $17.2 million and JOGMEC sold a 6.4% interest for $12.8 million. Implats also acquired an option to acquire a controlling interest in the Waterberg Project, which was later terminated in June 2020, as well as a right of first refusal to smelt and refine Waterberg Project concentrate (the "Offtake ROFR"). JOGMEC, or their nominee, retained a right to receive platinum, palladium, rhodium, gold, ruthenium, iridium, copper and nickel refined mineral products at the volumes produced from the Waterberg Project as well as a right to purchase or direct the sale of all or part of the project concentrate. Hanwa became JOGMEC's "nominee" by way of their purchase of a 9.755% interest in Waterberg JV Co. in March 2019.
On September 24, 2019, the Company published the results of the Definitive Feasibility Study for the Waterberg Project (the "Waterberg DFS"). The Waterberg DFS was approved by all Waterberg JV Co. shareholders on December 5, 2019. On October 7, 2019 the Waterberg DFS technical report entitled "Independent Technical Report, Waterberg Project Definitive Feasibility Study and Mineral Resource Update, Bushveld Complex, South Africa" (the "DFS Technical Report") was filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. The DFS Technical Report is dated October 4, 2019, and was prepared by Michael Murphy, P. Eng. of Stantec Consulting Ltd., Charles J Muller, B. Sc. (Hons) Geology, Pri. Sci. Nat. of CJM Consulting (Pty) Ltd., and Gordon I Cunningham, B. Eng. (Chemical), Pr. Eng., FSAIMM of Turnberry Projects (Pty) Ltd. DRA Projects SA (Pty) Ltd., an experienced South African engineering and EPCM firm, provided the plant design and compiled the capital cost estimates for the Waterberg Project Qualified Persons. The DFS Technical Report also supports the disclosure of an updated independent mineral resource estimate effective September 4, 2019.
An update to the Waterberg DFS, including the September 4, 2019, independent mineral resource estimate is underway currently and is described more fully below.
Implats currently retains a 15.0% participating project interest and the Offtake ROFR, whereby they hold a right to match concentrate offtake terms offered to Waterberg JV Co. by a bona fide third-party. The Company retains a controlling 50.02% direct (37.05%) and indirect (12.97% through its 49.9% shareholding in Mnombo) interest in the Waterberg Project and remains the Manager of the Waterberg Project, as directed by the technical committee of Waterberg JV Co. Mnombo retains a 26.0% direct interest in Waterberg JV Co., JOGMEC a 12.195% direct interest and Hanwa a 9.755% direct interest. In June 2023 JOGMEC and Hanwa reported the establishment of a special purpose company, HJ Platinum Metals Company Ltd. ("HJM"), to hold and fund their future equity interests in the Waterberg Project, with JOGMEC to fund 75% of future equity investments into HJM and Hanwa the remaining 25%. Consequently, JOGMEC and Hanwa's current shareholding percentages will dilute going forward as the combined funding obligations attributable to their aggregated shareholdings of 21.95% will be funded by HJM to which commensurate equity will be issued. On or about May 15, 2023 the Waterberg JV Co. shareholders concluded a Shareholder Variation and Consent Letter Agreement to record the restructuring of the respective Japanese shareholder interests in Waterberg JV Co. On July 7, 2023 HJM signed a Deed of Adherence, agreeing to be bound by the Waterberg JV Co Shareholders' Agreement and Memorandum of Incorporation.
The Company and Waterberg JV Co. are assessing commercial alternatives for mine development financing and concentrate offtake. Obtaining reasonable terms for Waterberg concentrate offtake from an existing smelter/refiner in South Africa is considered the preferred option. The Company is in discussion with several South African smelter operators, including Implats, with a view to establishing formal concentrate offtake arrangements for the Waterberg Project. Although discussions continue, to date no formal concentrate offtake terms have been achieved. The Company is also assessing the possibility of constructing a matte furnace and base metal refinery for the processing of Waterberg Project concentrate to produce an upgraded product for sale in the market without the need for treatment by a third-party offtaker. See more details below.
Lion Battery Technologies Inc.
On July 12, 2019, the Company, together with an affiliate of Anglo American Platinum Limited ("Amplats"), launched a venture through a jointly owned company, Lion Battery Technologies Inc. ("Lion"), to accelerate the development of next generation battery technology using platinum and palladium. The Company received 400,000 common shares of Lion, valued at a price of $0.01 per share, as the original founder of Lion. Under the terms of an investment agreement, both the Company and Amplats were to equally invest up to an aggregate of $4.0 million into Lion, of which approximately $1.0 million would be for general and administrative expenses and the commercialization of the technology developed, subject to certain conditions. On July 6, 2021, the Company and Amplats agreed to increase the planned funding to Lion by a further $2.7 million, to a total of up to $6.7 million, in order to allow the acceleration of certain research and commercialization activities. All agreed funding into Lion by the Company and Amplats is to be in exchange for preferred shares of Lion at a price of $0.50 per share over an approximate three to five year period.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
On July 12, 2019, the Company and Amplats each invested $550,000 as a first tranche of funding into Lion in exchange for 1,100,000 Lion preferred shares each. In June 2020, the Company and Amplats each invested $350,000 as a second tranche of funding in exchange for 700,000 Lion preferred shares each. In February 2021, Amplats and the Company each invested $350,000 as a third tranche of funding in exchange for 700,000 Lion preferred shares each. In February 2022, the Company and Amplats each invested $250,000 as the fourth tranche of funding, while in February 2023, the Company and Amplats each invested $295,000 for a fifth tranche of investment, in consideration for an aggregate 1,090,000 Lion preferred shares each. In June 2023, the Company and Amplats each invested $280,000 into Lion for a sixth tranche of investment, to be settled in exchange for 560,000 Lion preferred shares each. At May 31, 2023, the Company owned a 52.64% interest in Lion. If the Company should fail to contribute its share of a required subscription to Lion, it would be in breach of its investment agreement with Lion and Amplats and its interest in Lion may be subject to dilution.
On July 12, 2019, Lion entered into an agreement (the "Sponsored Research Agreement") with Florida International University ("FIU") to fund a $3.0 million research program over approximately a three-year period utilizing platinum and palladium to unlock the potential of Lithium Air and Lithium Sulphur battery chemistries to increase their discharge capacities and cyclability. On July 6, 2021 Lion agreed to increase the planned amount of research funding to FIU by a further amount of $1.0 million, for a total of up to $4.0 million. Under the Sponsored Research Agreement, Lion will have exclusive rights to all intellectual property developed and will lead all commercialization efforts. The first tranche of funding by Lion to FIU, totaling $1.0 million plus a one-time fee of $50,000, was paid by Lion in mid July 2019, with a second tranche of $666,667 funded in June 2020. A third tranche of funding by Lion to FIU of $666,667 was completed in February 2021 with the fourth and fifth tranches of funding for $500,000 each being funded in February 2022 and 2023. Lion has provided aggregate research funding in the amount of $3.4 million to FIU as of May 31, 2023. Subsequent to period end, in June 2023 Lion provided a sixth tranche of funding to FIU in the amount of $350,000.
On August 4, 2020, the U.S. Patent and Trademark Office issued Patent No. 10,734,636 B2 entitled "Battery Cathodes for Improved Stability" to FIU. The patent includes the use of platinum group metals and carbon nanotubes and other innovations in a lithium battery. A second patent related to this work was issued in December 2020 and a third was issued on June 15, 2021. On October 4, 2022, the U.S. Patent and Trademark Office issued Patent No. 11,462,743 B2 entitled "Battery comprising a metal interlayer" to FIU. The patent involves the use of palladium as interlayer in batteries to stabilize and enable lithium metal anodes in various existing and emerging lithium battery technologies. On February 21, 2023 the U.S. Patent and Trademark Office issued FIU a fifth patent No. 11,588,144 B2 entitled "Battery Cathodes for Improved Stability". This patent involves the fabrication of cathodes using palladium as a catalyst in carbon nanotubes. Further patents are currently applied for. Under the Sponsored Research Agreement, Lion has exclusive rights to all intellectual property being developed by FIU including patents granted. Lion is also reviewing several additional and complementary opportunities focused on developing next-generation battery technology using platinum and palladium.
During calendar year 2022 and into 2023, Company and FIU personnel held discussions with industry recognized third party battery specialists regarding Lion's intellectual property and patented technology. In December 2022 and March 2023 Company and FIU personnel visited two separate industrial battery laboratories. On June 21, 2023 the Company reported that Lion had engaged The Battery Innovation Center ("BIC") in Newberry, Indiana to help drive commercialization of its next generation lithium-sulfur and enhanced lithium-ion (NMC) technology using the unique catalytic properties of platinum and palladium. Under an agreed scope of work (the "SOW"), BIC is to conduct independent small scale and large scale trials to validate Lion's proprietary platinum and palladium based electrode composition, slurry, and films in both lithium-sulfur and lithium-ion (NMC811) coin and pouch cells. The SOW also includes additional research and development focused on improving performance and scale-up with the goal of creating prototypes for commercialization consideration.
Personnel
The Waterberg Project is operated by the Company primarily utilizing its own staff and personnel. Contract drilling, geotechnical, engineering and support services are also utilized as required. The Company's complement of managers, staff, and technical personnel currently consists of 9 individuals in South Africa and 5 individuals in Canada. PTM RSA and Waterberg JV Co. also utilize contract services from a professional security firm as well as consultants and temporary workers from time to time. At present, in addition to the 9 individuals described above, two specialized consultants are currently engaged in South Africa to assist with the implementation and execution of the Waterberg Social and Labour Plan ("Waterberg SLP") as well as community communication and engagement activities.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
2. PROPERTIES
Under IFRS, the Company capitalizes all acquisition, exploration and development costs related to mineral properties. The recoverability of these amounts is dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the development of the property, and any future profitable production, or alternatively upon the Company's ability to dispose of its interests on an advantageous basis. The Company evaluates the carrying value of its property interests on a regular basis. Management is required to make significant judgements to identify potential impairment indicators. Any properties that management deems to be impaired are written down to their estimated net recoverable amount.
For more information on mineral properties, see below and Note 3 of the Financial Statements.
MATERIAL MINERAL PROPERTY INTERESTS
Waterberg Project
Recent Activities
During the nine-month period ended May 31, 2023, approximately $3.5 million in expenditures were capitalized at the Waterberg Project for work carried out pursuant to the Initial Budget (as defined below). This work included infill and geotechnical drilling, mineral resource geology, feasibility engineering, infrastructure engineering and surveying. Baseline environmental monitoring studies continue. Work is also being carried out to identify, delineate and assess local deposits of calcrete and other aggregate materials ("Construction Aggregate") that may be suitable for road building and infrastructure pad foundations. Work on community engagement and components of the Waterberg SLP are also underway.
At period end, $38.6 million in accumulated net costs had been capitalized to the Waterberg Project. Total expenditures on the property since inception from all investor sources to May 31, 2023 are approximately $83.8 million.
On October 20, 2022, the Company announced that Waterberg JV Co. had approved in principle a $21 million preconstruction work program ("Work Program") for the Waterberg Project, focused on early infrastructure, de-risking and project optimization. Specific work items include infill and exploration drilling, initial road access, water supply, essential site facilities, a first phase accommodation lodge, a site construction power supply from state utility ESKOM Holdings Limited ("ESKOM"), and advancement of the Waterberg SLP.
An initial budget for the first $2.5 million of the Work Program (the "Initial Budget"), for the period up to March 31, 2023 has been completed. The budget for the second stage of the Work Program (the "Stage Two Budget") for a further $3.6 million up to August 31, 2023 was unanimously approved on March 24, 2023 by the Waterberg JV Co Board of Directors. Budgeted activities in the Stage Two Budget include mineral resource estimation and modelling, DFS Update engineering (as defined below), pre-construction engineering, electrical power supply engineering and the permitting and licensing of Construction Aggregate borrow pits at locations identified near the planned Waterberg mine site.
An update to the Waterberg DFS (the "DFS Update"), including updated resource and reserve estimates, is planned under the Work Program. Planned work is to include a review of cut-off grades, mining methods, geotechnical considerations, sub-level spacing, infrastructure plans, scheduling, concentrate offtake, dry stack tailings, costing and other potential revisions to the project's financial model.
As a precursor to the DFS Update, an infill drilling program ("Infill Drill Program") commenced in early November 2022 targeting near surface, modelled inferred mineral resource blocks that had good potential for conversion to higher confidence levels, which would potentially allow them to be added to early mine plans, potentially reducing early capital expenditure and the period to first mining. The Infill Drill Program was successfully completed in February 2023 and consisted of 16 T Zone NQ boreholes and 16 F Zone NQ boreholes. Detailed results of drilling of the T and F zone holes can be found in news releases dated January 26, 2023 and March 30, 2023 respectively. Mineralized material recovered from the drill program has been assayed and will be utilized to produce a sample concentrate for further metallurgical study. The waste rock material remaining after assaying and sample concentrate production is to be processed to determine dry-stock tailings characteristics. If dry stack tailings methods are implemented in the DFS Update mine water consumption could be reduced by 40% to 50%.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
During May 2023, Waterberg JV Co. also completed the drilling of one exploration borehole WE153 on prospecting rights owned by Waterberg JV Co. located adjacent to the north of the Waterberg Mining Right (as defined below). The borehole collar was positioned along a projected strike line approximately 16 km north from the area of delineated T Zone mineral resources and approximately 8 km north from the area of delineated F Zone mineral resources.
Borehole WE153 was drilled to a depth of 2,044.35 meters. At a depth of 1,272.98 meters WE153 intercepted 7.02 meters of mineralized T Zone displaying approximately 2% to 4% blebby copper, nickel, and iron sulphides. At a depth of 1,972.19 meters WE153 intercepted an F Zone intercept of 9.42 meters displaying approximately 2% to 4% blebby copper, nickel, and iron sulphides. After a depth of 1,981.61 meters, only sporadic sulphides were observed. Before closing the hole one T Zone deflection D1 was also drilled. The drill core was logged, and the mineralized intercepts recovered were sampled and sent for assay by Intertek Genalysis Minerals in Australia. T Zone mother hole D0 assay results for borehole WE153 were reported in a news release dated May 17, 2023. Assay results were subsequently received for a T Zone deflection D1 and for the F Zone intercept D0 described above. All borehole WE153 T Zone and F Zone 4E assay values in grams per tonne ("g/t") and prill split percentages are tabulated and reported below:
| Zone | Borehole ID |
From (m) |
To (m) |
Length (m) (1) |
Pt (g/t) |
Pd (g/t) |
Rh (g/t) |
Au (g/t) |
4PGE (g/t) |
Cu % |
Ni % |
| Drilled in 2023 | |||||||||||
| T Zone | WE153D0 | 1,272.98 | 1,280.00 | 7.02 | 3.51 | 5.99 | 0.25 | 0.70 | 10.45 | 0.16 | 0.10 |
| Prill Split | 33.6% | 57.4% | 2.3% | 6.7% | 100.0% | ||||||
| Includes | WE153D0 | 1,272.98 | 1,279.00 | 6.02 | 4.07 | 6.94 | 0.28 | 0.81 | 12.10 | 0.18 | 0.12 |
| Prill Split | 33.6% | 57.3% | 2.4% | 6.7% | 100.0% | ||||||
| T Zone | WE153D1 | 1273.8 | 1280 | 6.20 | 2.36 | 4.05 | 0.10 | 0.55 | 7.06 | 0.12 | 0.09 |
| Prill Split | 33.4% | 57.4% | 1.4% | 7.8% | 100.0% | ||||||
| F Zone | WE153D0 | 1972.5 | 1980.37 | 7.87 | 0.21 | 0.13 | 0.01 | 0.02 | 0.37 | 0.03 | 0.10 |
| Prill Split | 56.8% | 35.1% | 2.7% | 5.4% | 100.0% | ||||||
Notes:
(1) PThe true thickness is estimated at 85% to 90% of reported intercept based on available information.
Assay results from borehole WE153 for the T Zone are strong. Assay results from borehole WE153 for the F Zone are weak but do indicate the F Zone is present. The results from borehole WE153 support the hypothesis that the T Zone and F Zone continue for a significant distance northward from the known southern deposit area, indicating a future opportunity to delineate additional mineral resources that may be accessible from planned underground mine development.
Concentrate Offtake
Before a construction decision can be undertaken arrangements will be required for Waterberg Project concentrate offtake or processing. The Company and Waterberg JV Co. are assessing commercial alternatives for mine development financing and concentrate offtake.
As an alternative to a traditional concentrate offtake arrangement, the Company is conducting internal research and formal studies to evaluate the economic feasibility of establishing a smelter and base metal refinery business, jointly with third-party investors or partners, capable of processing Waterberg concentrate. The DFS Technical Report stated that "Additional smelting capacity may need to be constructed in the industry to be able to treat the flotation concentrate from Waterberg and the other potential Platreef miners." Conceptually, a Waterberg matte furnace and base metal refinery would be operated as a separate business from the Waterberg Project. Such a facility could provide fair market offtake terms to Waterberg JV Co., and possibly to other PGM miners, allowing for the production of an upgraded product for sale in the market without the need for treatment by a third-party smelter operator.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
An internal pre-feasibility study for a Waterberg matte furnace was completed for the Company by industry experts in late calendar 2021. The pre-feasibility study assessed the construction and operation of a 20 MW smelting furnace with two off air-blown converters capable of producing a matte suitable as feed to a standard base metal refinery in South Africa or elsewhere. In 2022 the Company completed a scope of work for a smelter and base metal refinery definitive feasibility study (the "Smelter DFS") examining plant and infrastructure requirements, downstream beneficiation, optimal location analysis, as well as down stream marketing considerations, permitting and power and water requirements. Submission of tenders for specific technical components of the engineering work were requested from industry recognized engineering firms in late calendar 2022 and early 2023. The Company is currently considering the estimated cost to complete the Smelter DFS vs the third party concentrate offtake discussions and opportunities it is working on at this time.
The Company is currently assessing the economic feasibility of constructing a matte furnace and base metal refinery outside of South Africa to process Waterberg concentrate. Working with a potential partner in a jurisdiction with less expensive power and water, engineers working for the Company have completed a trade off study which indicates that savings on power and water substantially offset the cost of additional concentrate transportation. Before concentrate could be exported from South Africa, a formal government approval would be required. Further studies are underway.
The Offtake ROFR allows Implats the opportunity to match concentrate offtake terms offered to Waterberg JV Co. by a bona fide third-party. Processing of Waterberg concentrate through a matte furnace owned by Waterberg JV Co. or by one or more of the Waterberg joint venture owners would not be subject to the Offtake ROFR as such an entity would not be a "bona fide third-party". Any transaction between Waterberg JV Co. and any one or more shareholders must be entered into on a bona fide arms-length basis and for fair value. Under the terms of the shareholders agreement governing Waterberg JV Co., Hanwa holds the exclusive right to purchase or direct the sale of all or part of the Waterberg Project concentrate or contained metal therein.
Waterberg DFS
On September 24, 2019, the Company published the results of the Waterberg DFS. Waterberg JV Co. shareholders approved the Waterberg DFS on December 5, 2019. Highlights of the Waterberg DFS include:
-
A significant increase in Mineral Reserves from the Waterberg Project's 2016 Pre-Feasibility Study for a large-scale, shallow, decline-accessible, mechanised, PGE mine. Use of backfill in the Waterberg DFS design lowers risk and increases mined ore extraction rates.
-
Annual steady state production rate of 420,000 4E ounces. Estimated mine life of 45 years on current reserves. The planned production rate is by careful design in order to reduce capital costs and simplify construction and ramp-up.
-
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 US$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 of 20.7% at Spot Prices and 13.3% at Three Year Trailing Prices.
-
Estimated project capital of approximately $874 million, including $87 million in contingencies. Peak project funding estimated at $617 million.
-
On site life of mine average cash cost (inclusive of by-product credits and smelter discounts) for the spot metal price scenario equates to $640 per 4E ounce.
-
Updated measured and indicated mineral resources of 242 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 an arbitrary depth cut-off of 1,250-meters.
-
Proven and probable mineral reserves of 187 million tonnes at 3.24 g/t 4E for 19.5 million 4E ounces (using 2.5 g/t 4E cut-off).
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
The mineral resources for the Waterberg Project increased slightly based on in-fill drilling done during preparation of the Waterberg DFS. The mineral resources have been estimated based on 441 diamond drill holes and 583 deflections and has been stated at a 2.5 g/t 4E cut-off (the base-case). In the Waterberg DFS, a 2.5 g/t 4E cut-off grade has been applied to the mineral resource model as an input into the mine design. At the 2.5 g/t 4E cut-off grade, the total measured and indicated mineral resources are estimated at 242 million tonnes grading 3.38 g/t 4E for an estimated 26.4 million ounces 4E. Total mineral reserves at a 2.5 g/t 4E grade cut-off are estimated at 187 million tonnes for 19.5 million ounces 4E.
The mineral reserves are a subset of the mineral resource envelope at a 2.5 g/t 4E cut-off, and they include only measured and indicated mineral resources with dilution and stope shapes considered. A minimum mining thickness of 2.4 meters and sublevel planning of 20 meters to 40 meters was considered in the mine plan for mineral reserves.
The mineral resources for the Waterberg Project are categorized and reported in terms of NI 43-101 and are tabulated below.
Mineral Resource Estimate at 2.5 g/t 4E cut-off, effective September 4, 2019 on 100% Project basis
| T Zone at 2.5 g/t (4E) Cut-off | |||||||||||
| Mineral Resource Category |
Cut-off | Tonnage | Grade | Metal | |||||||
| 4E | Pt | Pd | Rh | Au | 4E | Cu | Ni | 4E | |||
| g/t | Tonnes | g/t | g/t | g/t | g/t | g/t | % | % | Kg | Moz | |
| Measured | 2.5 | 4,443,483 | 1.17 | 2.12 | 0.05 | 0.87 | 4.20 | 0.150 | 0.080 | 18,663 | 0.600 |
| Indicated | 2.5 | 17,026,142 | 1.37 | 2.34 | 0.03 | 0.88 | 4.61 | 0.200 | 0.094 | 78,491 | 2.524 |
| M+I | 2.5 | 21,469,625 | 1.34 | 2.29 | 0.03 | 0.88 | 4.53 | 0.189 | 0.091 | 97,154 | 3.124 |
| Inferred | 2.5 | 21,829,698 | 1.15 | 1.92 | 0.03 | 0.76 | 3.86 | 0.198 | 0.098 | 84,263 | 2.709 |
| F Zone at 2.5 g/t (4E) Cut-off | |||||||||||
| Mineral Resource Category |
Cut-off | Tonnage | Grade | Metal | |||||||
| 4E | Pt | Pd | Rh | Au | 4E | Cu | Ni | 4E | |||
| g/t | Tonnes | g/t | g/t | g/t | g/t | g/t | % | % | Kg | Moz | |
| Measured | 2.5 | 54,072,600 | 0.95 | 2.20 | 0.05 | 0.16 | 3.36 | 0.087 | 0.202 | 181,704 | 5.842 |
| Indicated | 2.5 | 166,895,635 | 0.95 | 2.09 | 0.05 | 0.15 | 3.24 | 0.090 | 0.186 | 540,691 | 17.384 |
| M+I | 2.5 | 220,968,235 | 0.95 | 2.12 | 0.05 | 0.15 | 3.27 | 0.089 | 0.190 | 722,395 | 23.226 |
| Inferred | 2.5 | 44,836,851 | 0.87 | 1.92 | 0.05 | 0.14 | 2.98 | 0.064 | 0.169 | 133,705 | 4.299 |
| Waterberg Aggregate Total 2.5 g/t (4E) Cut-off | |||||||||||
| Mineral Resource Category |
Cut-off | Tonnage | Grade | Metal | |||||||
| 4E | Pt | Pd | Rh | Au | 4E | Cu | Ni | 4E | |||
| g/t | Tonnes | g/t | g/t | g/t | g/t | g/t | % | % | Kg | Moz | |
| Measured | 2.5 | 58,516,083 | 0.97 | 2.19 | 0.05 | 0.21 | 3.42 | 0.092 | 0.193 | 200,367 | 6.442 |
| Indicated | 2.5 | 183,921,777 | 0.99 | 2.11 | 0.05 | 0.22 | 3.37 | 0.100 | 0.177 | 619,182 | 19.908 |
| M+I | 2.5 | 242,437,860 | 0.98 | 2.13 | 0.05 | 0.22 | 3.38 | 0.098 | 0.181 | 819,549 | 26.350 |
| Inferred | 2.5 | 66,666,549 | 0.96 | 1.92 | 0.04 | 0.34 | 3.27 | 0.108 | 0.146 | 217,968 | 7.008 |
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
| Mineral Resource Category |
Prill Split Waterberg Project Aggregate | |||
| Pt | Pd | Rh | Au | |
| % | % | % | % | |
| Measured | 28.2 | 64.4 | 1.5 | 5.9 |
| Indicated | 29.4 | 62.6 | 1.5 | 6.5 |
| M+I | 29.1 | 63.0 | 1.5 | 6.4 |
| Inferred | 29.5 | 58.9 | 1.2 | 10.4 |
Notes:
(1) 4E elements are platinum, palladium, rhodium and gold.
(2) Cut-offs for mineral resources were established by a QP after a review of potential operating costs and other factors.
(3) Conversion factor used for kilograms ("kg") to ounces ("oz") is 32.15076.
(4) A 5% and 7% geological loss was applied to the measured/indicated and inferred mineral resources categories, respectively.
(5) The mineral resources are classified in accordance with NI 43-101. Mineral resources that are not mineral reserves do not have demonstrated economic viability and inferred mineral resources have a high degree of uncertainty.
(6) The mineral resources are provided on a 100% Project basis, inferred and indicated categories are separate and the estimates have an effective date of September 4, 2019.
(7) Mineral resources were completed by Mr. CJ Muller of CJM Consulting.
(8) Mineral resources were estimated using kriging methods for geological domains created in Datamine from 441 mother holes and 583 deflections. A process of geological modelling and creation of grade shells using indicating kriging was completed in the estimation process.
(9) The mineral resources may be materially affected by metal prices, exchange rates, labour costs, electricity supply issues or many other factors detailed in the Company's 2022 AIF.
(10) The data that formed the basis of the mineral resources estimate are the drill holes drilled by Platinum Group as project operator, which consist of geological logs, drill hole collars surveys, downhole surveys and assay data. The area where each layer was present was delineated after examination of the intersections in the various drill holes.
(11) Numbers may not add due to rounding.
Proven Mineral Reserve Estimate at 2.5 g/t 4E cut-off, effective September 4, 2019 on 100% Project basis
| Proven Mineral Reserve Estimate at 2.5 g/t 4E cut-off | ||||||||||
| Pt | Pd | Rh | Au | 4E | Cu | Ni | 4E Metal | |||
| Zone | Tonnes | (g/t) | (g/t) | (g/t) | (g/t) | (g/t) | (%) | (%) | Kg | Moz |
| T Zone | 3,963,694 | 1.02 | 1.84 | 0.04 | 0.73 | 3.63 | 0.13 | 0.07 | 14,404 | 0.463 |
| F Central | 17,411,606 | 0.94 | 2.18 | 0.05 | 0.14 | 3.31 | 0.07 | 0.18 | 57,738 | 1.856 |
| F South | - | - | - | - | - | - | - | - | - | - |
| F North | 16,637,670 | 0.85 | 2.03 | 0.05 | 0.16 | 3.09 | 0.10 | 0.20 | 51,378 | 1.652 |
| F Boundary North | 4,975,853 | 0.97 | 2.00 | 0.05 | 0.16 | 3.18 | 0.10 | 0.22 | 15,847 | 0.509 |
| F Boundary South | 5,294,116 | 1.04 | 2.32 | 0.05 | 0.18 | 3.59 | 0.08 | 0.19 | 19,020 | 0.611 |
| F Zone Total | 44,319,244 | 0.92 | 2.12 | 0.05 | 0.16 | 3.25 | 0.09 | 0.20 | 143,982 | 4.629 |
| Waterberg Project Total | 48,282,938 | 0.93 | 2.10 | 0.05 | 0.20 | 3.28 | 0.09 | 0.19 | 158,387 | 5.092 |
Probable Mineral Reserve Estimate at 2.5 g/t 4E cut-off, effective September 4, 2019 on 100% Project basis
| Probable Mineral Reserve Estimate at 2.5 g/t 4E cut-off | ||||||||||
| Pt | Pd | Rh | Au | 4E | Cu | Ni | 4E Metal | |||
| Zone | Tonnes | (g/t) | (g/t) | (g/t) | (g/t) | (g/t) | (%) | (%) | Kg | Moz |
| T Zone | 12,936,870 | 1.23 | 2.10 | 0.02 | 0.82 | 4.17 | 0.19 | 0.09 | 53,987 | 1.736 |
| F Central | 52,719,731 | 0.86 | 1.97 | 0.05 | 0.14 | 3.02 | 0.07 | 0.18 | 158,611 | 5.099 |
| F South | 15,653 ,961 | 1.06 | 2.03 | 0.05 | 0.15 | 3.29 | 0.04 | 0.13 | 51,411 | 1.653 |
| F North | 36,984,230 | 0.90 | 2.12 | 0.05 | 0.16 | 3.23 | 0.09 | 0.20 | 119,450 | 3.840 |
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
| Probable Mineral Reserve Estimate at 2.5 g/t 4E cut-off | ||||||||||
| Pt | Pd | Rh | Au | 4E | Cu | Ni | 4E Metal | |||
| Zone | Tonnes | (g/t) | (g/t) | (g/t) | (g/t) | (g/t) | (%) | (%) | Kg | Moz |
| F Boundary North | 13,312,581 | 0.98 | 1.91 | 0.05 | 0.17 | 3.11 | 0.10 | 0.23 | 41,369 | 1.330 |
| F Boundary South | 7,616,744 | 0.92 | 1.89 | 0.04 | 0.13 | 2.98 | 0.06 | 0.18 | 22,737 | 0.731 |
| F Zone Total | 126,287,248 | 0.91 | 2.01 | 0.05 | 0.15 | 3.12 | 0.08 | 0.18 | 393,578 | 12.654 |
| Waterberg Project Total | 139,224,118 | 0.94 | 2.02 | 0.05 | 0.21 | 3.22 | 0.09 | 0.18 | 447,564 | 14.390 |
Proven & Probable Mineral Reserve Estimate at 2.5 g/t 4E cut-off, effective September 4, 2019 on 100% Project basis
| Total Estimated Mineral Reserve at 2.5 g/t 4E cut-off | ||||||||||
| Pt | Pd | Rh | Au | 4E | Cu | Ni | 4E Metal | |||
| Zone | Tonnes | (g/t) | (g/t) | (g/t) | (g/t) | (g/t) | (%) | (%) | Kg | Moz |
| T Zone | 16,900,564 | 1.18 | 2.04 | 0.03 | 0.80 | 4.05 | 0.18 | 0.09 | 68,391 | 2.199 |
| F Central | 70,131,337 | 0.88 | 2.02 | 0.05 | 0.14 | 3.09 | 0.07 | 0.18 | 216,349 | 6.956 |
| F South | 15,653,961 | 1.06 | 2.03 | 0.05 | 0.15 | 3.29 | 0.04 | 0.13 | 51,411 | 1.653 |
| F North | 53,621,900 | 0.88 | 2.09 | 0.05 | 0.16 | 3.18 | 0.10 | 0.20 | 170,828 | 5.492 |
| F Boundary North | 18,288,434 | 0.98 | 1.93 | 0.05 | 0.17 | 3.13 | 0.10 | 0.23 | 57,216 | 1.840 |
| F Boundary South | 12,910,859 | 0.97 | 2.06 | 0.05 | 0.15 | 3.23 | 0.07 | 0.19 | 41,756 | 1.342 |
| F Zone Total | 170,606,492 | 0.91 | 2.04 | 0.05 | 0.15 | 3.15 | 0.08 | 0.19 | 537,560 | 17.283 |
| Waterberg Project Total | 187,507,056 | 0.94 | 2.04 | 0.05 | 0.21 | 3.24 | 0.09 | 0.18 | 605,951 | 19.482 |
Notes:
(1) The estimated mineral reserves have an effective date of September 4, 2019.
(2) A 2.5 g/t 4E stope cut-off grade was used for mine planning for the T Zone and the F Zone mineral reserves estimate. The cut-off grade considered April 2018 metal spot prices.
(3) Tonnes and grade estimates include planned dilution, geological losses, external overbreak dilution, and mining losses.
(4) 4E elements are platinum, palladium, rhodium and gold.
(5) Numbers may not add due to rounding.
The Waterberg Project financial performance has been estimated both at Spot Prices and at Three Year Trailing Prices as set out in the table below. The long-term real US$/Rand exchange rate for the Spot Price scenario is set at 15.00, which is based on an intra-day traded spot rate as of September 4, 2019. The US$/Rand exchange rates for the Three-Year Trailing Price scenario, is based on Bloomberg's nominal consensus forward-curve as at June 2019, which translates into a long-term real US$/Rand rate of 15.95. The price deck assumptions for each scenario are tabled below.
Waterberg DFS Technical Report Price Deck Assumptions in US$
| Parameter | Unit | Spot Prices (Sept 4, 2019) |
Three Year Trailing Prices (Sept 4, 2019) |
| US$ / Rand (Long-term Real) | US$/Rand (Real July 2019) | 15.00 | 15.95 |
| Platinum Palladium Gold Rhodium Basket Price (4E) Copper Nickel |
US$/oz (Real July 2019) US$/oz (Real July 2019) US$/oz (Real July 2019) US$/oz (Real July 2019) US$/oz (Real July 2019) US$/lb (Real July 2019) US$/lb (Real July 2019) |
980 1,546 1,548 5,036 1,425 2.56 8.10 |
931 1,055 1,318 1,930 1,045 2.87 5.56 |
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
| Parameter | Unit | Spot Prices (Sept 4, 2019) |
Three Year Trailing Prices (Sept 4, 2019) |
| Smelter Payability: 4E Metal Smelter Payability: Copper Smelter Payability: Nickel |
% Gross Sale Value % Gross Sale Value % Gross Sale Value |
85% 73% 68% |
85% 73% 68% |
Readers are directed to review the full text of the DFS Technical Report, available for review under the Company's profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov for additional information.
The known deposit strike length on the Waterberg Project is 13 km long so far, remains open along strike and begins from a depth of 140 meters vertical. The Waterberg DFS mine plan covers a strike length of approximately 8.5 km. The deposit is known to continue down dip below the arbitrary 1,250 meter cut off depth applied to the deposit for resource estimation purposes. The Waterberg Project and the deposit is still open for expansion. Based on airborne gravity surveys and drilling completed to date, additional drilling northward along strike is recommended for the future.
As a result of its shallow depth, good grade and a fully mechanized mining approach, the Waterberg Project can be a safe mine within the lowest quartile of the Southern Africa platinum group element industry cost curve.
The Waterberg DFS mine plan models production at 4.8 million tonnes of ore per annum and 420,000 4E ounces per year in concentrate. The mine initially accesses the orebody using two sets of twin decline tunnels with mining by fully mechanised long hole stoping methods and paste backfill. Paste backfill allows for a high mining extraction ratio as mining can be completed next to backfilled stopes without leaving internal pillars. Maintaining safety and reliability were key mine design criteria. As a result of the scale of the orebody, bulk mining on 20 to 40 meter sublevels with large underground equipment and conveyors for ore and waste transport provides high efficiency. Many of the larger successful underground mines in the world use the same method of mining with backfill and estimated costs were benchmarked against many of these operations.
Mining Right Grant
A formal mining right application ("MRA") for the Waterberg Project, including the Waterberg SLP, was accepted for filing by the DMRE on September 14, 2018. The Company held local public participation meetings on numerous occasions in advance of the MRA. A program of public consultation as part of the formal MRA and EA application for the Waterberg Project was completed in August 2019. An Environmental Impact Assessment ("EIA") and Environmental Management Program ("EMP") were filed with the DMRE on August 15, 2019. An EA was granted for the Waterberg Project on August 12, 2020, subject to a public notice period and finalization of issues raised by affected parties, which process was completed with the issue of the final EA on November 10, 2020.
On January 28, 2021, the DMRE issued a letter to Waterberg JV Co. notifying the Company that a mining right for the Waterberg Project (the "Waterberg Mining Right") had been granted. Public disclosure and notice of the Waterberg Mining Right grant was promulgated by the Company and Waterberg JV Co. as required under South African legislation. The Waterberg Mining Right was notarially executed on April 13, 2021, was registered at the Mineral and Petroleum Titles Registration Office on July 6, 2021 and remains active.
On and following March 5, 2021, the Company received several notices of appeal, filed with the DMRE by individual appellants from local communities, against the January 28, 2021 decision of the DMRE granting the Waterberg Mining Right. One group filed an application for an order in the High Court of South Africa to review and set aside the decision by the Minister of the DFFE to refuse condonation for the late filing of the group's appeal against the grant of an EA for the Waterberg Project in November 2020. Senior Counsel and attorneys acting for Waterberg JV Co. as an interested and affected party filed formal rebuttals to the appeals and applications, raising numerous factual and legal defences. Since filing their review application, the appellants have done nothing to progress their action.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
On July 30, 2021, Waterberg JV Co. received an urgent interdict application to the High Court seeking to restrain the activities of Waterberg JV Co. on certain surface rights over a portion of the project area. The appellants claimed to be interested and affected parties located near planned surface infrastructure. Waterberg JV Co. promptly filed an answering affidavit denying urgency and providing arguments why the application was without merit. The appellants did not respond. On November 16, 2021 the host Ketting community filed an application to join as a respondent and documenting their support for the Waterberg Mine. Once again, the appellants did not respond. To force the interdict application to a conclusion, in July 2022 Waterberg JV Co. filed a Notice of Set Down with the High Court in Limpopo. A hearing to rule on the interdict application occurred on May 22, 2023, at which the court dismissed the urgent interdict application and ordered the applicants to pay costs to the defendants.
On October 13, 2022 the Minister of the DMRE ruled to dismiss all appeals to the grant of the Waterberg Mining Right filed with the DMRE. In his ruling the Minister provided the regulatory reasons why each appeal was denied and also confirmed the DMRE's assessment that Waterberg JV Co. has complied with Broad-Based Black Economic Empowerment requirements and social and labour plan community consultation processes.
The Company believes that all requirements specified under the National Environmental Management Act, the MPRDA and other applicable legislation have been complied with and that the DFFE correctly approved and the DMRE correctly issued the EA and the Waterberg Mining Right. Based on long term consultation and dialogue with local communities, the Company also believes that the leadership and the majority of residents in the host communities support the Waterberg Project.
The MEC is aware of disagreements between Waterberg JV Co. and certain members of the local communities. Since late 2021 the MEC has hosted several meetings and engagements and facilitated mediation sessions with representatives of Waterberg JV Co. and community leaders to assist with the reconciliation of concerns. The most recent meeting occurred on March 28, 2023. Advancement has been made and many community concerns have been addressed. The MEC has stated its intention to assist all stakeholders so that further investment by Waterberg JV Co. may occur.
Waterberg JV Co. remains committed to engaging and working with all host communities to ensure that all legitimate concerns are addressed, and mining operations are conducted in a harmonious and respectful manner. Waterberg JV Co. aims to optimize the Waterberg Project for the benefit of all stakeholders.
Community Considerations
Training for a new mechanised mining workforce is an important component of the Waterberg Project life of mine plan and the Waterberg SLP. Planning for training programs has been undertaken with the assistance of global mine training leader, NORCAT, of Sudbury, Ontario. The Waterberg DFS modelled a significant investment in training, focussed on the immediate area of the Waterberg Project, working in cooperation with local communities, colleges and facilities.
Water supply and delivery are important issues affecting local communities near the Waterberg Project. Detailed hydrological work studying the utilization of known sources for significant volumes of groundwater has been conducted. In 2018, a co-operation agreement was entered into between Waterberg JV Co. and the Capricorn District Municipality for the development of water resources to the benefit of local communities and the mine. Hydrological work has identified several large-scale water basins that are likely able to provide mine process and potable water for the Waterberg Project and local communities. Test drilling of these water basins has been completed resulting in the identification of sufficient water supplies. Earlier drilling programs conducted by the Capricorn District Municipality identified both potable and high mineral unpotable water resources in the district. Drilling by Waterberg JV Co. has identified some potable water resources. Several boreholes proximal to the Waterberg Project identified large volumes of high mineral, unpotable water not suitable for agriculture. Hydrological and mill process specialists have tested the use of this water as mine process water. In general, ground water resources identified proximal to the Waterberg Project have the potential for usage by both the mine and local communities.
The establishment of servitudes for power line routes and detailed planning and permitting with ESKOM are also advancing. Power line environmental and servitude work is being completed by TDxPower in coordination with ESKOM. TDxPower has progressed electrical power connection planning for approximately a 70 km, 132MvA line to the Waterberg Project. Engineering refinement of steady state power requirements has resulted in a reduced demand of approximately 90MvA at steady state. Bulk power design and costing work for steady state requirements has commenced. ESKOM is engaged with project engineers to determine electrical power sources and availability. A temporary power line for the construction period from the nearby grid at Bochum is being designed and costed. Community engagement regarding power line routes and completion of an EIA for the power line routes is in process. ESKOM is experiencing power generation constraints leading to load-shedding, being the deliberate and scheduled shutdown of electric power in parts of its power-distribution network, when the demand strains the capacity of the system.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
Alternative renewable energy sources are also being considered for the Waterberg Project. One such option envisages a solar panel farm, including battery storage, to be built by a third party operator at a suitable location near the Waterberg Project. The cost of construction would be carried by the third party operator and the power provided would be charged to Waterberg JV Co. at rates that would include a return of capital to the third party operator.
History of Acquisition
In 2007, PTM RSA began the application process for prospecting rights over the Waterberg area located on the Northern Limb of the Bushveld Igneous Complex, approximately 70 km north of the town of Mokopane, eventually acquiring prospecting rights over two adjacent areas known as the Waterberg JV Property and the Waterberg Extension Property. In September 2009, PTM RSA, JOGMEC and Mnombo entered a joint venture agreement whereby JOGMEC could earn up to a 37% participating interest in the Waterberg JV Property while at the same time Mnombo could earn a 26% participating interest in exchange for matching JOGMEC's expenditures on a 26/74 basis. On November 7, 2011, the Company executed an agreement with Mnombo's shareholders to acquire 49.9% of the issued and outstanding shares of Mnombo. Effective in May, 2015 the Waterberg JV Property and the Waterberg Extension Property were consolidated into the singular Waterberg Project and in September, 2017 the Waterberg Project prospecting rights were transferred into Waterberg JV Co. On November 6, 2017, the Company and JOGMEC closed the Implats Transaction and Implats acquired a 15% interest in Waterberg JV Co. and the right to match third-party offtake terms under the Offtake ROFR. In March 2019 JOGMEC completed a transfer of 9.755% of its 21.95% interest in Waterberg JV Co. to Hanwa. Under the terms of the transaction, Hanwa also acquired the exclusive right to purchase some, or all of the metals produced from the Waterberg Project at market prices. On May 10, 2022 JOGMEC confirmed and later announced its intention to maintain JOGMEC's interests in the Waterberg Project and to support funding contributions for project development to the extent possible. On June 9, 2023 it was announced that JOGMEC and Hanwa established HJM to hold and fund their future equity interests in the Waterberg Project.
Prior to 2022, the Waterberg Project comprised an aggregate of 66,003 hectares of granted prospecting rights and applied for prospecting rights including the 20,532 hectares covered by the Waterberg Mining Right. On March 9, 2022 Waterberg JV Co. passed a resolution to apply for closure on 50,985 gross hectares of prospecting rights, of which 14,209 hectares were held within the granted mining right, leaving a net 36,776 hectares of uneconomic prospecting rights to be closed. Closure applications have been filed and once they become effective, the project area will cover 29,227 hectares, being comprised of the Waterberg Mining Right covering 20,532 hectares, 4,207 hectares in the active prospecting right and 4,488 hectares of rights under application for incorporation into the Waterberg Mining Right.
Environmental, Social and Governance ("ESG")
Corporate Social Responsibility
Being a responsible corporate citizen means protecting the natural environment associated with its business activities, providing a safe workplace for its employees and contractors, and investing in infrastructure, economic development, and health and education in the communities where the Company operates so that it can enhance the lives of those who work and live there beyond the life of such operations. The Company takes a long-term view of its corporate responsibility, which is reflected in the policies that guide its business decisions, and in its corporate culture that fosters safe and ethical behaviour across all levels of Platinum Group. The Company's goal is to ensure that its engagement with its stakeholders, including its workforce, industry partners, and the communities where it operates, is continued, mutually beneficial and transparent. By building such relationships and conducting ourselves in this manner, the Company can address specific concerns of its stakeholders and work cooperatively and effectively towards achieving this goal.
Approach
The Company and Waterberg JV Co. are committed to conducting business in a responsible and sustainable manner. Our core ESG values are:
- maximizing the positive effect of our projects and operations for all stakeholders;
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
- caring for the environment in which we operate;
- contributing to both the short-term and long-term development of our host communities;
- ensuring safe and secure workplaces for our employees;
- contributing to the welfare of our employees and local communities; and
- promoting good corporate governance, through openness, transparency, and accountability;
We are working to develop a set of performance indicators to measure and monitor key environmental, social sustainability and governance activities at the Waterberg Project. We wish to achieve a high level of understanding and commitment from those who carry out our day-to-day activities. Our social performance indicators aim to cover social risk management, grievance management, community investment and human rights. Our environmental performance indicators aim to cover environmental impact mitigation, audits, water, energy, greenhouse gas emissions and environmental remediation and rehabilitation. Health and safety performance indicators are also to be recorded and monitored.
ESG Reporting and Assessment
We have partnered with Digbee Ltd. ("Digbee") to utilize an industry approved set of frameworks to assess and disclose our ESG metrics. Platinum Group completed its inaugural ESG disclosure submission with Digbee in September 2021. Digbee, a United Kingdom based company, is a new mining-focused expert network and ESG disclosure platform that amalgamates over thirty initiatives and reporting standards to generate an appropriate ESG score for development stage mining companies. Digbee encompasses widely recognized ESG standards including, the Equator Principles, the Global Reporting Initiative Standards, the sustainability accounting standards of the Sustainability Accounting Standards Board, and the recommendations for more effective climate-related disclosures established by the Task Force on Climate Related Disclosure Digbee has been endorsed by leading financial firms who support the Digbee ESG initiative such as Blackrock Inc., BMO, and Dundee Corporation.
The Company's ESG submission was based on both corporate level and project level disclosure. As part of the Waterberg Mining Right application process the Company developed a wide-ranging set of studies and plans in relation to potential ESG impacts. These studies and specialists were leveraged to form the basis of the Digbee ESG disclosure and subsequent outcomes.
Based on the information provided, Platinum Group achieved an overarching score from Digbee of BB with a range of CC to AA as of October 2022.
High Level Positive Outcomes from Digbee Assessment
- The Company has validated its financial transaction compliance and accuracy of financials through the submission of audited financials in both South Africa and Canada.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
- The Company has demonstrated its commitment to ESG values by working to align executive and senior management remuneration to ESG goals.
- The Company has empowered local communities by providing suitable representation to address their concerns.
- The Company has demonstrated its commitment to enhanced ESG through initiatives such as the incorporation of dry stack tailings into its DFS Update to reduce the TSF footprint and water consumption by approximately 40%.
High Level Potential Risks and Opportunities from Digbee Assessment
- While improvements have been made, diversity targets for employees remain low. While these targets align with local legislative requirements, they are still below international standards.
- The mine is planned in a water scarce area where the mine operation will have high water consumption. While studies indicate that there is sufficient water to support both the mine and the local towns, a small impact on the water table can affect water access to marginal grazing and subsistence farmers. Careful management is required to ensure the mine does not draw down on groundwater resources to the detriment of the needs of the local community.
ESG Objectives
We are continuing to work on enhancements to our community engagement processes for all our mining and environmental matters. We consider all stakeholders and confirm our commitment to the health and safety of our employees and surrounding communities. Health and safety also remain a top priority. Our ESG objectives include:
- reducing planned water consumption;
- achieving full compliance with regulations and reporting of greenhouse gas emissions;
- achieving minimum impact on vegetation and supporting and enabling local biodiversity;
- reducing planned industrial waste;
- resolving individual community member grievances;
- continuing and improving stakeholder communication and engagement programmes; and
- achieving zero significant environmental incidents.
Environmental
We have commissioned independent environmental site inspections and environmental management program compliance assessments at the Waterberg Project for all our mining and prospecting rights areas. Baseline environmental studies for air quality and water quality are currently underway over the Waterberg Project area. Annual environmental reports are filed with regulators. To date, there have been no significant environmental incidents at our Waterberg operation since exploration began on the property in 2011. As a requirement to the grant of the Waterberg Mining Right an EIA and EMP were filed with governmental regulators after a comprehensive consultation process with communities, regulators, environmental institutions, and other stakeholders over the last ten years. Several independent, third-party specialist consultants completed component studies as a part of the application process. The EIA and EMP were subsequently approved by the relevant regulators.
During 2020, an environmental rehabilitation bond was established for the future costs of mine closure and environmental restoration. As the operations at the Waterberg Project increase, so too will the quantum of this bond.
During 2020, a study examining the use of battery electric equipment for the Waterberg Project was completed and a study examining possible water use reduction and dry stacking solutions for tailings was completed.
Furthermore, the mineral resources targeted at the Waterberg Project are mineable PGEs. These metals are important elements in terms of reducing harmful emissions from internal combustion engines. Platinum is a critical element in fuel cells and the "hydrogen economy" in general, highlighting the mine's potential to contribute to a cleaner future.
Social
In response to the COVID-19 pandemic, we provided and delivered approximately US$5,000 in hygiene supplies, medical supplies, and personal protection equipment to local communities near the Waterberg Project. We ensured safe operation of exploration and office facilities during the government mandated and recommended activity suspensions. To date, work at the Waterberg Project has been related to exploration and engineering activities. Overall safety performance has been very good and strict safety protocols are followed.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
We maintain an open communication policy with communities near the Waterberg Project. We responded to concerns raised by individuals regarding water resources, roadways, heritage sites and planned infrastructure locations by thoroughly investigating each reported concern or claim. Meetings were held with community leaders and site inspections occurred with local community members accompanied by independent consultants, NGOs, government agencies and regulators. Although no material issues or events of regulatory non-compliance by the Company have been identified after these investigations, the Company remains committed to operating in a responsible manner and continues to work with local community leadership to ensure any identified issues are resolved in an appropriate and professional manner and in compliance with governing regulations. The Company is in the process of working with local communities to create community trusts. To ensure communities are well represented, we are covering the costs of legal representation for the communities.
Based on community meetings and direct feedback, and in part due to the Company's efforts to engage and support local communities, we believe local community residents support the development of the Waterberg Project and understand the expected economic benefits. Nonetheless, several parties within the local community filed appeals in 2021 objecting to the grant of the Waterberg Mining Right. Waterberg JV Co. responded to each appeal and all appeals were dismissed on October 13, 2022 by the Minister of the DMRE.
Social and Labour Plans
The Waterberg SLP was developed pursuant to DMRE guidelines for social and labour plans and has been submitted in accordance with regulation 46 of the MPRDA. The objective of a social and labour plan is to align the Company's social and labour principles with the related requirements established under Mining Charter 2018. These requirements include promoting employment and avoiding retrenchments, advancement of the social and economic welfare of all South Africans, contributing toward the transformation of the mining industry and contributing towards the socio-economic development of the communities proximal to the Waterberg Project. Contractors will be required to comply with the Waterberg SLP and policies, including commitment to employment equity and BEE, proof of competence in terms of regulations, commitment to undertake training programs, compliance with all policies relating to recruitment, training, health and safety, etc. In terms of human resources training, the Waterberg SLP will establish objectives for adult-based education training, learnerships and development of the skills required by mining industry, portable skills training for transition into industries other than mining, education bursaries and internships. The Waterberg SLP will also establish local economic development objectives for projects such as community centre refurbishment, high school refurbishment, water and reticulation projects, housing development, establishment of recreational parks and various other localized programmes for small scale industry, agriculture, entrepreneurship and health and education.
To support the Waterberg SLP for affected communities near the Waterberg Project, we have budgeted expenditures amounting to an aggregate R428.9 million ($21.72 million at May 31, 2023) over a five-year period. Expenditures are subject to the grant of all required permits and the commencement of development activities on site. At the end of each five-year period a new social and labour plan will be established, considering actual expenditures to date and changes to adjust for community feedback, needs and preferences. The Waterberg SLP includes the following provisions:
- Human Resource Development
Waterberg JV Co. is aware of the importance of human resources to accomplish its business objectives. Skills development is the foundation for attaining competent and productive employees who can contribute to meeting the mine's business objectives and contribute to the upliftment of their communities through their own personal economic success. The skills development plan for the Waterberg Project budgets R 13.3 million ($0.67 million at May 31, 2023) for the achievement of future career development opportunities within the mining industry and beyond the needs of the mine's operational requirements. The skills development plan seeks to achieve portable skills through accredited qualification by certified training providers and programmes. Emphasis is to be applied to employment equity and to participation by historically disadvantaged South Africans and women. Learnership, internship, bursary and youth training programs are planned. Targets have been established for procurement and employment levels for women and for people from the local community.
- Local Economic Development
The Local Economic Development ("LED") program will seek to enable local communities to become economically stronger by improving infrastructure, business skills, entrepreneurship, job creation and income. An amount of R 405.6 million ($20.5 million at May 31, 2023) has been budgeted for LED projects seeking to amplify opportunities as well as alleviate poverty within the surrounding communities of the mine. Programmes are to include infrastructure and educational support to local schools, mine and community bulk water supply and reticulation, extension and equipping of existing clinic/health facilities, and road construction.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
- Management of Downscaling
A budget of R 10.0 million ($0.51 million at May 31, 2023) has been established for training and skills development. We conducted a social audit and needs and skills assessment of the communities near the Waterberg Project to learn about these communities and to help direct our efforts towards the matters of importance to them. This work will guide our long-term training programs intended to increase skilled employment opportunities for local community members. Investment in human resource development and facilitation of training during the lifetime of the Waterberg Project intends to sustain skills that will support employment for workers beyond the life of the mine. The mine intends to comply with the Basic Conditions of Employment Act and the Department of Labour's Social Plan Guidelines with the goal of establishing skills that will be of value to employees at a future time of downscaling and retrenchment.
Governance
The Company has a Governance and Nomination Committee to ensure good corporate governance in the Company's stewardship. The committee's responsibilities include, but are not limited to:
- reviewing and making recommendations relating to respecting good corporate governance and the board's stewardship role in the management of the Company;
- the regular evaluation of the effectiveness of the board, its members, its committees and their charters;
- the evaluation of the performance of individual directors, the board, and committees of the board;
- the performance evaluation of the chairperson of the board and the chairperson of each board committee;
- the performance evaluation of the CEO and CFO, including performance against corporate objectives;
- CEO and CFO succession planning;
- overseeing compliance with the Company's Code of Business Conduct and Ethics, monitoring compliance with the code, investigating any alleged breach or violation of the code, authorizing any waiver granted in connection with the code; and
- overseeing compliance with any rules, regulations or guidelines promulgated by regulatory authorities relating to corporate governance.
On April 30, 2021, the Company established an Environmental, Health and Technical Advisory Committee, comprised of cross-disciplinary directors, to oversee capital projects and material transactions undertaken by the Company, its subsidiaries or its affiliates from an environmental, technical, financial and scheduling perspective and to be responsible for developing and monitoring standards for ensuring a safe and healthy work environment and to promote sustainable development.
The Company is subject to anti-corruption laws and regulations, including the Canadian Corruption of Foreign Public Officials Act and certain restrictions applicable to U.S. reporting companies imposed by the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar anti-corruption and anti-bribery laws in South Africa, that prohibit companies from bribing or making other prohibited payments to public officials to obtain or retain an advantage in the course of business.
The Company has previously adopted a Code of Business Conduct and Ethics, a Clawback Policy, and a Whistleblower Policy, amongst other customary codes and committees.
We also adhere to the corporate governance policies of the Toronto Stock Exchange and the NYSE American, LLC.
On February 28, 2023, the Company held its Annual General Meeting. All resolutions were passed in the form proposed by an affirmative vote of the shareholders.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
3. DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
A) Liquidity and Capital Resources
Recent Equity Financings
On February 5, 2021, the Company announced an equity distribution agreement with BMO Capital Markets whereby the Company could sell its Common Shares from time to time for up to $50 million in aggregate sales proceeds in "at the market" transactions (the "2021 ATM"). In aggregate to May 27, 2022 the Company sold 10,426,632 Common Shares in the 2021 ATM at an average price of US$2.94 for gross proceeds of US$30.6 million. As a portion of the total 2021 ATM sales, during the fiscal year ending August 31, 2022 the Company sold 7,923,842 Common Shares at an average price of US$2.48 per share for net proceeds of $19.7 million. No shares were sold subsequent to May 27, 2022 and the term of the 2021 ATM expired in June 2022.
On February 4 and 10, 2022, the Company issued 7,073,746 and 4,719,763 shares respectively at a price of US$1.695 to purchase and repay the Company's $19.99 million aggregate principal amount of 6 7/8% convertible senior subordinated notes maturing July 1, 2022 (the "Convertible Notes").
On February 11, 2022, the Company closed a non-brokered private placement with Deepkloof Limited ("Deepkloof") for 3,539,823 Common Shares at a price of US$1.695 each for gross proceeds of $6 million (the "February 2022 HCI PP") maintaining HCI's indirect ownership in the Company at approximately 26% at that time of the financing. Pricing for the February 2022 HCI PP was set to be consistent with the Company's shares issued to repay the Convertible Notes.
On June 21, 2022, the Company filed a new final short form base shelf prospectus (the "Shelf Prospectus") with the securities regulatory authorities in each of the provinces and territories of Canada and a corresponding registration statement on Form F-10 (the "Registration Statement") with the SEC under the Multijurisdictional Disclosure System established between Canada and the United States.
Pursuant to the Shelf Prospectus and the Registration Statement, the Company may offer and sell in Canada or the United States, Common Shares, debt securities, warrants, subscription receipts, or a combination thereof up to an aggregate initial offering price of $250 million from time to time, separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of the offering and as set out in an accompanying prospectus supplement, during the 25-month period that the Shelf Prospectus and the Registration Statement remain effective.
On July 27, 2022, the Company filed a supplement to the Shelf Prospectus and announced a new equity distribution agreement with BMO Capital Markets and BMO Nesbitt Burns Inc. whereby the Company can sell its Common Shares from time to time until July 21, 2024 for up to $50 million in aggregate sales proceeds in "at the market" transactions (the "2022 ATM"). No common shares were sold pursuant to the 2022 ATM prior to August 31, 2022. For the nine-month period ending May 31, 2023, the Company has sold 1,089,503 shares at an average price of US$1.81 for gross proceeds of $1.98 million and net proceeds of $1.6 million after deducting fees and expenses including $0.05 paid to BMO Capital Markets. Of this amount 45,934 shares were sold during the three-month period ended May 31, 2023 at an average price of US$1.75 for gross proceeds of $0.08 million and net proceeds of $0.08 million after deducting $0.002 million in fees paid to BMO Capital Markets.
The following reconciles the use of gross proceeds to recent financings and share issuances as at May 31, 2023 (in thousands of dollars):
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
| Use of Proceeds | 2021 ATM Offering |
Repayment of Convertible Notes |
February 11, 2022 Private Placement |
2022 ATM Offering |
Aggregate Proceeds |
Actual Use of Proceeds to May 31, 2023 |
||||||||||||
| Repayment of the Sprott Facility | $ | 6,400 | $ | 0 | $ | 3,000 | $ | 0 | $ | 9,400 | $ | 9,400 | ||||||
| Repayment of Convertible Notes | $ | 0 | $ | 19,990 | $ | 0 | $ | 0 | $ | 19,990 | $ | 19,990 | ||||||
| General corporate purposes | $ | 13,300 | $ | 0 | $ | 3,000 | $ | 1,975 | $ | 18,275 | $ | 16,116 | ||||||
| TOTAL | $ | 19,700 | $ | 19,990 | $ | 6,000 | $ | 1,975 | $ | 47,665 | $ | 45,506 |
Convertible Notes
On June 30, 2017, the Company closed a private placement of $20 million aggregate principal amount of convertible senior subordinated notes due in 2022 (the "Convertible Notes"). The Convertible Notes bore interest at a rate of 6 7/8% per annum, payable semi-annually in cash or at the election of the Company, in common shares of the Company or a combination of cash and common shares.
On January 20, 2022, the Company announced the purchase and cancellation, on a private placement basis, of the $19.99 million of Convertible Notes then outstanding. The principal outstanding balance of these Convertible Notes was repaid through the issuance of 11,793,509 common shares, at a price of US$1.695 per share. The Company purchased $11.99 million of the Convertible Notes from an affiliate of Kopernik Global Investors, LLC on February 4, 2022 and $8 million of the Convertible Notes from affiliates of Franklin Templeton Investments on February 10, 2022.
Sprott Facility
On August 15, 2019, the Company announced it had entered a senior secured credit facility (the "Sprott Facility") with Sprott Private Resource Lending II (Collector), LP ("Sprott") and other lenders party thereto. The credit facility was due to mature on August 14, 2022. The credit facility was fully repaid in February 2022 and the Company's pledge of its South African assets as security against the Sprott Facility have been fully released.
Liquidity
The Company currently has limited financial resources and does not generate revenue from the Waterberg Project. However, the Company has repaid in full both the Sprott Facility and the Convertible Notes, leaving the Company with materially reduced cash obligations over the next 12 months (see below). Current cash on hand ($8.2 million at May 31, 2023) is projected to be sufficient to cover the Company's budgeted expenditures over the next 12 months. Should the Company decide to begin construction of the Waterberg Mine in the next 12 months additional financing would be required.
Rising global inflation and increased potential supply chain disruptions could have a significant impact on the Company's operations and costs.
Contractual Obligations
The following table discloses the Company's contractual obligations as at May 31, 2023 (in thousands of dollars):
| Payments Due by Year | |||||||||||||||
| < 1 Year | 1 - 3 Years | 4 - 5 Years | > 5 Years | Total | |||||||||||
| Lease Obligations | $ | 114 | $ | 285 | $ | 175 | $ | - | $ | 574 | |||||
| Environmental Bonds | 41 | 123 | 82 | - | 246 | ||||||||||
| Totals | $ | 155 | $ | 408 | $ | 257 | $ | - | $ | 820 | |||||
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
Other contingencies: Refer to section 8 below - Risk Factors.
Accounts Receivable and Payable
Accounts receivable at May 31, 2023, totaled $0.4 million (August 31, 2022 - $0.4 million) being comprised mainly of South African value added taxes.
Accounts payable and accrued liabilities at May 31, 2023, totaled $0.6 million (August 31, 2022 - $1.1 million).
B) Results of Operations
Nine Month Period ended May 31, 2023
For the nine-month period ended May 31, 2023, the Company incurred a net loss of $4.0 million (May 31, 2022 - $7.3 million loss). General and administrative expenses totaled $2.9 million in the nine-month period (May 31, 2022 - $3.3 million) with the decrease due to reduced legal fees incurred in the current period. For the nine-month period ended May 31, 2023, there were no interest expenses (May 31, 2022 - $1.7 million) as both the Convertible Notes and Sprott Facility were fully repaid in the second quarter of fiscal 2022. During the nine month period ended May 31, 2023, a foreign exchange gain of $0.3 million was recognized primarily on cash held by the Company (May 31, 2022 - $0.1 million loss). Joint Venture expenditures for Lion amounted to $0.3 million in the nine-month period (May 31, 2022 - $0.3 million). Finance income of $0.5 million was recognized in the current period (May 31, 2022 - $0.1 million) with the increase due to higher interest rates and higher average cash balances in the current period. In the prior comparable period, the Company wrote-off $0.2 million in previously capitalized costs on prospecting rights the Company chose to close (May 31, 2023 - $Nil). Stock compensation expense was $1.6 million during the current nine-month period (May 31, 2022 - $1.7 million). The currency translation adjustment recognized in the nine-month period ended May 31, 2023 was a loss of $6.1 million (May 31, 2022 - $2.8 million loss) due predominantly to the Rand decreasing in value relative to the U.S. Dollar during the period. During the nine-month period ended May 31, 2023, $3.5 million was spent at the Waterberg Project (May 31, 2022 - $2.6 million).
Three Month Period May 31, 2023
For the three-month period ended May 31, 2023, the Company incurred a net loss of $1.2 million (May 31, 2022 - $1.3 million). General and administrative expenses totaled $0.9 million in the current quarter (May 31, 2022 - $0.8 million). For the three-month period ended May 31, 2023, there were no interest expenses (May 31, 2022 - $Nil) as both the Convertible Notes and Sprott Facility were repaid in the second quarter of fiscal 2022. Stock compensation expense was $0.5 million during the current three-month period (May 31, 2022 - $0.4 million). The currency translation adjustment recognized in the three-month period ended May 31, 2023 was a loss of $2.9 million (May 31, 2022 - $0.4 million loss) due predominantly to the Rand decreasing in value by 7.5% relative to the U.S. Dollar during the current three month period. During the three-month period ended May 31, 2023 $1.4 million was spent at the Waterberg Project (May 31, 2022 - $0.6 million).
Quarterly Financial Information
The following tables set forth selected quarterly financial data for each of the last eight quarters (In thousands of dollars, except for share data):
| Quarter ended | May 31, 2023 | Feb. 28, 2023 | Nov. 30, 2022 | Aug. 31, 2022 | ||||||||
| Net finance income(1) | $ | 144 | $ | 183 | $ | 138 | $ | 85 | ||||
| Net loss(2) | 1,236 | 1,199 | 1,614 | 990 | ||||||||
| Basic loss per share(3) | 0.01 | 0.01 | 0.02 | 0.01 | ||||||||
| Total assets | 48,169 | 51,150 | 54,545 | 53,679 | ||||||||
| Quarter ended | May 31, 2022 | Feb. 28, 2022 | Nov. 30, 2021 | Aug. 31, 2021 | ||||||||
| Net finance income(1) | $ | 40 | $ | 26 | $ | 25 | $ | 24 | ||||
| Net loss(2) | 1,310 | 2,634 | 3,316 | 4,228 | ||||||||
| Basic loss per share(3) | 0.01 | 0.03 | 0.04 | 0.06 | ||||||||
| Total assets | 58,246 | 53,859 | 50,994 | 51,199 |
Notes:
(1) The Company earns income from interest bearing accounts and deposits. Rand balances earn higher rates of interest than can be earned at present in Canadian or U.S. Dollars. Interest income varies relative to cash on hand.
(2) The Company fully repaid its outstanding loan and convertible debt in the quarter ended February 28, 2022, thus eliminating interest expenses and reducing net losses from the quarter ended February 28, 2022 onwards.
(3) Basic loss per share is calculated using the weighted average number of common shares outstanding. The Company uses the treasury stock method to calculate diluted earnings per share. Diluted per share amounts reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted to common shares. In periods when a loss is incurred, the effect of share issuances under options would be anti-dilutive, resulting in basic and diluted loss per share being the same.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
4. DIVIDENDS
The Company has never declared nor paid dividends on its Common Shares. The Company has no present intention of paying dividends on its Common Shares, as it anticipates that in the foreseeable future all available funds will be invested to finance its business. The Company plans to consider a dividend policy upon the establishment of positive cash flow.
5. RELATED PARTY TRANSACTIONS
All amounts receivable and accounts payable owing to or from related parties are non-interest bearing with no specific terms of repayment. All related party transactions are in the normal course of business and are recorded at consideration established and agreed to by the parties. Transactions with related parties are as follows (in thousands of dollars):
(i) During the nine-month period ended May 31, 2023, an amount of $234 (May 31, 2022 - $208) was paid or accrued to independent directors for directors' fees and services.
(ii) During the nine-month period ended May 31, 2023, the Company was paid or accrued payments of $40 (May 31, 2023 - $43) from West Vault Mining Inc., a company with one officer in common, for accounting and administrative services.
(iii) In fiscal 2018, Company closed a private placement with Deepkloof whereby HCI acquired a right to nominate one person to the board of directors of the Company (which has been exercised) and a right to participate in future equity financings of the Company to maintain its pro-rata interest. During the year ended August 31, 2022, the Company closed a non-brokered private placement with Deepkloof for 3,539,823 Common Shares at a price of US$1.695 per share for gross proceeds of $6 million, maintaining HCI's indirect ownership in the Company at approximately 26% at the time of the private placement. At May 31, 2023, HCI's indirect ownership of the Company was reported at 24,837,349 Common Shares, representing a 24.8% interest in the Company.
(iv) During the year ended August 31, 2022, the Company purchased and cancelled on a private placement basis the outstanding principal balance of $8 million of the Convertible Notes from affiliates of Company shareholder Franklin Templeton Investments. The Company does not have any further ongoing contractual or other commitments with respect to the Convertible Notes.
6. OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any special purpose entities nor is it party to any off-balance sheet arrangements.
7. OUTSTANDING SHARE DATA
The Company has an unlimited number of Common Shares authorized for issuance without par value. At both May 31, 2023 and at July 13, 2023, there were 100,251,980 Common Shares, 4,883,837 incentive stock options and 472,440 restricted share units outstanding.
8. RISK FACTORS
The Company is subject to a number of risks and uncertainties, each of which could have an adverse effect on results, business prospects or financial position. For a comprehensive list of the risks and uncertainties affecting our business, please refer to the section entitled "Risk Factors" in the 2022 AIF and 2022 40-F, and the documents incorporated by reference therein. The Company's 2022 AIF and 2022 40-F may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Certain risk factors are discussed below in more detail.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
International Conflict
International conflict and other geopolitical tensions and events, including war, military action, terrorism, trade disputes, and international responses thereto have historically led to, and may in the future lead to, uncertainty or volatility in global energy, supply chain and financial markets. Russia's 2022 invasion of Ukraine has led to sanctions being levied against Russia by the international community and may result in additional sanctions or other international action, any of which may have a destabilizing effect on commodity prices, supply chain and global economies more broadly. Volatility in commodity prices and supply chain disruptions may adversely affect the company's business and financial condition.
The extent and duration of the current Russian-Ukrainian conflict and related international action cannot be accurately predicted at this time and the effects of such conflict may magnify the impact of the other risks identified in this MD&A, including those relating to commodity price volatility and global financial conditions. The situation is rapidly changing, and unforeseeable impacts may materialize, and may have an adverse effect on the Company's business, results of operations and financial condition.
Africa Wide Legal Action
On April 26, 2018 a transaction was completed selling 100% of the share interests in Maseve Investments 11 (Pty) Ltd. ("Maseve") to Royal Bafokeng Platinum Limited ("RBPlat") in a transaction valued at approximately US $74.0 million. Maseve owned and operated the Maseve Mine. Africa Wide Mineral Prospecting and Exploration Proprietary Limited ("Africa Wide") was required to simultaneously sell its 17.1% interest together with the Company's 82.9% interest in Maseve.
In September 2018, Africa Wide instituted legal proceedings in South Africa against PTM RSA, RBPlat and Maseve seeking to set aside the sale of Maseve. A trial to hear evidence occurred in the High Court of South Africa in October, 2021. On June 14, 2022, the High Court dismissed Africa Wide's challenge. Africa Wide appealed the ruling, which was ultimately dismissed by the South Africa Supreme Court of Appeal on November 10, 2022. Africa Wide was ordered to make payment of the defendants' costs. The Company has made no accruals for the award of costs due to the uncertainty of the recoverable amount.
On July 10, 2023, the Company received notice that Africa Wide had applied for a reconsideration of the ruling of the Supreme Court of Appeal. Notwithstanding the lack of merit and unusual nature of this application, it was filed nearly seven months past the deadline for such a submission. The Company is opposing this application.
9. OUTLOOK
The Company's key business objective is to advance the Waterberg Project to a development and construction decision. Before a construction decision can be undertaken arrangements will be required for project financing and concentrate offtake or processing. The Company and Waterberg JV Co. are assessing commercial alternatives for mine development, concentrate offtake and financing.
The Work Program now underway (described above) will focus on initial road access, water supply, essential site facilities, a first phase accommodation lodge, a site construction power supply from ESKOM and advancement of the Waterberg SLP. Under the Work Program, the DFS Update (described above) is also planned, including a review of cut-off grades, mining methods, infrastructure plans, scheduling, concentrate offtake, dry stack tailings, costing and other potential revisions to the project's financial model. Once complete, the DFS Update will provide updated estimates of project capital requirements and peak funding.
As discussed above, the Company is conducting research and formal studies to evaluate the economic feasibility of establishing a smelter and base metal refinery business, jointly with third-party investors, capable of processing Waterberg concentrate as an alternative to a traditional concentrate offtake arrangement. Discussions with potential participating partners for such a matte furnace are in process. Discussions are also underway with existing smelter/refinery operators in South Africa who may be interested to enter formal concentrate offtake arrangements for the Waterberg Project.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
Project financing to meet peak funding requirements for the Waterberg Project as estimated in the Waterberg DFS is currently envisaged to be provided by approximately $200 million from Waterberg JV Co. shareholders, approximately $300 million from a metal stream arrangement, and approximately $100 to $150 million from a secured loan facility. Discussions and negotiations with potential financiers on the foregoing are underway. Capital cost estimates are subject to market conditions, which have been generally inflationary, and will be updated as a component to the DFS Update.
Notwithstanding some weakness during 2020 due to the economic effects of the COVID-19 pandemic, the markets for PGEs generally improved over the last several years until peaking in 2021. In the last year, PGE prices were somewhat volatile due to geopolitical tensions caused by the threat of Russian PGE exports being cut back or sanctioned, representing a significant supply risk. Major South African PGE producers are currently operating under recent wage settlement agreements. Supply risk due to union strike action at present appears to be unlikely. Power shortages due to rolling blackouts implemented by South African power utility Eskom are beginning to negatively impact PGE production in South Africa. The projected market penetration of battery electric vehicles in the future could soften the market for palladium in the longer term as demand for internal combustion engines with catalytic converters is potentially reduced. Other metals to be produced at Waterberg, being platinum, rhodium, gold, copper and nickel, are expected to see strong demand and prices in the longer term. Copper and nickel are important metals for battery electric vehicles and other electrical equipment. Platinum is projected to see strong pricing looking forward due to supply constraints and increased demand for utilization in hydrogen fuel cells and the equipment used to produce hydrogen.
As the world seeks to decarbonize and look for solutions to climate change, the unique properties of PGEs as powerful catalysts are being applied to various technologies as possible solutions for more efficient energy generation and storage. The Company's battery technology initiative through Lion with Amplats represents a new opportunity in the high-profile lithium battery research and innovation field. The investment in Lion creates a potential vertical integration with a broader industrial market development strategy to bring new technologies to market which use palladium and platinum. Research and development efforts by FIU on behalf of Lion continue. Technical results from Lion's research may have application to most lithium-ion battery chemistries and the scope of Lion's research work is being expanded. Senior officers of the Company and Lion partner Amplats spent time together at FIU in 2022 to review progress by the Lion research team and plan for the possible future commercialization of Lion's technology.
As well as the discussions within this MD&A, the reader is encouraged to also see the Company's disclosure made under the heading "Risk Factors" in the Company's 2022 AIF and separate 2022 40-F.
10. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Company's consolidated financial statements in conformity with IFRS required management to use estimates and assumptions that affect the reported amounts of assets and liabilities, as well as income and expenses. The Company's accounting policies are described in Note 2 of the Company's audited financial statements for the year ended August 31, 2022.
Determination of ore reserve and mineral resource estimates
The Company estimates its ore reserves and mineral resources based on information compiled by Qualified Persons as defined by NI 43-101. Reserves determined in this way are used in the calculation of depreciation, amortization and impairment charges, and for forecasting the timing of the payment of closure and restoration costs. In assessing the life of a mine for accounting purposes, mineral resources are only taken into account where there is a high degree of confidence of economic extraction. There are numerous uncertainties inherent in estimating ore reserves, and assumptions that are valid at the time of estimation and they may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in reserves being restated. Such changes in reserves could impact depreciation and amortization rates, asset carrying values and provisions for closure and restoration costs.
Assumption of control of Mnombo and Waterberg JV Co. for accounting purposes
The Company has judged that it controls Mnombo for accounting purposes as it owns 49.9% of the outstanding shares of Mnombo and has contributed all material capital to Mnombo since acquiring its 49.9% share. From inception to date, the Company has funded both the Company's and Mnombo's share of expenditures on the Waterberg Project. At May 31, 2023, Mnombo owed the Company approximately $7.1 million for funding provided. Currently there are no other sources of funding known to be available to Mnombo. If in the future Mnombo is not deemed to be controlled by the Company, the assets and liabilities of Mnombo would be derecognized at their carrying amounts. Amounts recognized in other comprehensive income would be transferred directly to retained earnings. If a retained interest remained after the loss of control, it would be recognized at its fair value on the date of loss of control. Although the Company controls Mnombo for accounting purposes, it does not have omnipotent knowledge of Mnombo's other shareholders activities. Mnombo's 50.01% shareholders are historically disadvantaged South Africans. The Company also determined that it controls Waterberg JV Co. given its control over Mnombo as well as its power over the investee.
PLATINUM GROUP METALS LTD.
(A Development Stage Company)
Supplementary Information and MD&A
For the period ended May 31, 2023
Assessment of impairment indicators for mineral properties and exploration and evaluation assets
The Company applies judgement to assess whether there are impairment indicators present that give rise to the requirement to conduct an impairment test. Events or changes in circumstances that could trigger an impairment test include; (i) significant adverse changes in the business climate including changes in forecasted future metal prices; (ii) significant changes in the extent or manner in which the asset is being used or its physical condition including significant decreases in mineral reserves; and (iii) significant decreases in the market price of the assets.
11. DISCLOSURE CONTROLS AND INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to both the SEC and Canadian Securities Administrators requirements are recorded, processed, summarized and reported in the manner specified by the relevant securities laws applicable to the Company. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the applicable securities legislation is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
Management is responsible for establishing and maintaining adequate internal controls over financial reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. There has been no change in our internal control over financial reporting during the period ended May 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
12. OTHER INFORMATION
Additional information relating to the Company for the period ended May 31, 2023, may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Readers are encouraged to review the Company's audited financial statements for the year ended August 31, 2022 together with the notes thereto as well as the Company's 2022 40-F and separate 2022 AIF filed in Canada.
13. LIST OF DIRECTORS AND OFFICERS
|
Directors |
Officers |
|
|
Diana Walters |
Stuart Harshaw |
Frank R. Hallam (President & CEO) |
|
Frank R. Hallam |
John Copelyn |
Greg Blair (CFO) |
|
Timothy Marlow |
Mpho Makwana |
Kris Begic (VP, Corporate Development) |
|
|
|
Mimy Fernandez-Maldonado (Corporate Secretary) |
Exhibit 99.3
CONSENT OF EXPERT
The undersigned hereby consents to the inclusion in the Management's Discussion and Analysis (the "MD&A") of Platinum Group Metals Ltd. (the "Company") for the period ended May 31, 2023 of references to the undersigned as an independent qualified person and the undersigned's name with respect to the disclosure of technical and scientific information contained in the MD&A (the "Technical Information"). The undersigned further consents to the incorporation by reference in the Company's Registration Statement on Form F-10 (File No. 333-265633) filed with the United States Securities and Exchange Commission, of the references to the undersigned's name and the Technical Information in the MD&A.
/s/ Rob van Egmond
Rob van Egmond, P.Geo.
Date: July 13, 2023
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Frank R. Hallam, Chief Executive Officer of Platinum Group Metals Ltd., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Platinum Group Metals Ltd. (the "issuer") for the interim period ended May 31, 2023.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's 1CFR is the Internal Control - Integrated Framework (COSO Framework) prepared by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
- 2 -
5.2 ICFR - material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on March 1, 2023 and ended on May 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: July 13, 2023
| /s/ Frank R. Hallam | |
| Frank R. Hallam Chief Executive Officer |
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Gregory Blair, Chief Financial Officer of Platinum Group Metals Ltd., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Platinum Group Metals Ltd. (the "issuer") for the interim period ended May 31, 2023.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's 1CFR is the Internal Control - Integrated Framework (COSO Framework) prepared by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
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5.2 ICFR - material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on March 1, 2023 and ended on May 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: July 13, 2023
| /s/ Gregory Blair | |
| Gregory Blair Chief Financial Officer |
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838 – 1100 Melville Street |
| News Release |
No. 23-469 July 13, 2023 |
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 month period ended May 31, 2023 and provides an update and outlook. The Company is focussed on advancing the Waterberg Project located on the Northern Limb of the Bushveld Complex in South Africa (the "Waterberg Project"). The Waterberg Project is planned as a fully mechanised, shallow, decline access palladium, platinum, gold and rhodium ("4E") mine and is projected to be one of the largest and lowest cost underground platinum group metals ("PGM" or "PGMs") mines globally.
The Company's near-term objectives include the advancement of the Waterberg Project to a development and construction decision, including the arrangement of construction financing and concentrate offtake agreements. The Company is also advancing an initiative through Lion Battery Technologies Inc. ("Lion") using platinum and palladium in lithium battery technologies in collaboration with Anglo American Platinum Limited ("Anglo") and Florida International University ("FIU").
For details of the condensed consolidated interim financial statements for the nine month period ended May 31, 2023 (the "Financial Statements") and Management's Discussion and Analysis for the nine month period ended May 31, 2023(the "MD&A") 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 June 21, 2023, the Company reported that Lion Battery Technologies Inc. ("Lion") had engaged The Battery Innovation Center ("BIC") in Newberry, Indiana to help drive commercialization of its next generation platinum and palladium based battery chemistries. Lion is advancing both proprietary lithium-sulfur and enhanced lithium-ion (NMC) technology using the unique catalytic properties of platinum and palladium. Under a scope of work, the BIC will conduct independent small and large scale trials to validate Lion's proprietary platinum and palladium based electrode composition, slurry, and films in both lithium-sulfur and lithium-ion (NMC811) coin and pouch cells. Collaboration with BIC will also include additional research and development focused on improving performance and scale-up with the goal of creating prototypes for commercialization consideration in 2024. Lion's target is to develop batteries with specific energies that are 20% to 100% higher than current technologies while meeting or exceeding their present cycle lives.
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On June 9, 2023, the Company reported that the Japan Organization for Metals and Energy Security ("JOGMEC") and Hanwa Co. Ltd. ("Hanwa") had established a special purpose company, HJ Platinum Metals Ltd. ("HJM"), to hold and fund their future equity interests in the Waterberg Project. The combined interests of JOGMEC (12.195%) and Hanwa (9.755%) were consolidated into a 21.95% interest for HJM going forward, with JOGMEC to fund 75% of future equity investments into HJM and Hanwa the remaining 25%.
On May 17, 2023, the Company reported that exploration borehole WE153 had intercepted platinum group metals mineralization consistent with both the T Zone and F Zone as found within the mineral resources and reserves of the Waterberg Project. Borehole WE153 was collared on prospecting rights owned by Waterberg JV Resources (Pty) Ltd. ("Waterberg JV Co.") located adjacent to the north of the Waterberg Project mining right. See the Company's May 31, 2023 MD&A for full details and assay results.
On March 30, 2023, the Company reported positive results from a completed infill drill campaign at the Waterberg Project. Assay results for sixteen planned F Zone boreholes were disclosed. During February 2023, recovered drill cores were logged and mineralized intercepts were sampled and sent for assay by Intertek Genalysis Minerals in Australia. Results will be incorporated into a definitive feasibility study update now underway and described more fully below.
On March 24, 2023, the directors, and shareholders of Waterberg JV Resources (Pty) Ltd. ("Waterberg JV Co.") approved a stage two budget of $3.6 million (the "Stage Two Budget") for continued work on the Waterberg Project. The Stage Two Budget, covering the period from April 1, 2023 to August 31, 2023, is a subcomponent of the $21 million Work Program (as defined below) approved in principle on October 18, 2022.
On February 21, 2023, the U.S. Patent and Trademark Office issued FIU a fifth patent, No. 11,588,144 B2, entitled "Battery Cathodes for Improved Stability". The patent involves the fabrication of cathodes using palladium as a catalyst in carbon nanotubes. The carbon structure provides a barrier between the catalyst and the electrolyte, thereby increasing the stability of the electrolyte during charging and discharging of a battery. Further patents are currently applied for. Under an agreement between Lion and FIU (the "Sponsored Research Agreement"), Lion has exclusive rights to all intellectual property being developed by FIU including the patents granted.
On January 26, 2023, the Company reported positive results from the infill drill campaign at the Waterberg Project. Assay results for sixteen planned T Zone boreholes and one of sixteen planned F Zone boreholes were disclosed. Recovered drill cores were logged and mineralized intercepts were sampled and sent for assay by Intertek Genalysis Minerals in Australia.
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On November 10, 2022, the South African Supreme Court of Appeal (the "Supreme Court") dismissed an August 31, 2022 application by Africa Wide Mineral Prospecting and Exploration Proprietary Limited ("Africa Wide") seeking leave to appeal the June 14, 2022 South African High Court (the "High Court") ruling dismissing their challenge to the 2018 sale of the Maseve Mine and awarding costs to the defendants. Costs were again awarded to the defendants. On July 10, 2023, the Company received notice that Africa Wide had applied for a reconsideration of the ruling of the Supreme Court of Appeal. Notwithstanding the lack of merit and unusual nature of this application, it was filed nearly seven months past the deadline for such a submission. The Company will oppose the application.
On October 18, 2022, the directors and shareholders of Waterberg JV Co. approved in principle a pre-construction work program (the "Work Program") for the Waterberg Project amounting to approximately $21 million over a 23-month period ending August 31, 2024. From the Work Program an initial budget (the "Initial Budget") of approximately $2.5 million was approved for expenditure by March 31, 2023.
On October 13, 2022, the South African Department of Mineral Resources and Energy ("DMRE") ruled to dismiss a series of appeals filed in 2021 against the grant of the Waterberg Mining Right. In its ruling the DMRE provided the regulatory reasons why each appeal was denied and confirmed the DMRE's assessment that Waterberg JV Co. has complied with Black Economic Empowerment requirements and Social and Labour Plan community consultation procedures.
On October 4, 2022, the U.S. Patent and Trademark Office issued FIU a fourth patent, No. 11,462,743 B2, entitled "Battery Comprising a Metal Interlayer". The patent involves the use of palladium as interlayer in batteries to stabilize and enable lithium metal anodes in various existing and emerging lithium battery technologies. Further patents are currently applied for. Under the Sponsored Research Agreement, Lion has exclusive rights to all intellectual property being developed by FIU including the patents granted.
On July 27, 2022, the Company entered into an Equity Distribution Agreement with BMO Nesbitt Burns Inc. (the "Canadian Agent") and BMO Capital Markets (the "U.S. Agent" and together with the Canadian Agent, the "Agents") for a new at-the-market equity program (the "2022 ATM") to distribute up to $50.0 million (or the equivalent in Canadian dollars) of Common Shares (the "Offered Shares"). The Offered Shares will be issued by the Company to the public from time to time, through the Agents, at the Company's discretion. The Offered Shares sold under the 2022 ATM will be sold at the prevailing market price at the time of sale. The net proceeds of any such sales under the 2022 ATM will be used for general working capital purposes, including the Work Program as described above. As of July 13, 2023, the Company has issued 1,089,503 Common Shares, through the U.S. Agent on the NYSE American pursuant to the 2022 ATM, at an average price of $1.81 for gross proceeds of $1.98 million. Directly attributable fees and expenses related to the 2022 ATM of $0.35 million were incurred in the nine month period ended May 31, 2023.
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Results For The Nine Month Period Ended May 31, 2023
During the nine month period ended May 31, 2023, the Company incurred a net loss of $4.05 million (May 31, 2022 - $7.26 million).
General and administrative expenses of $2.9 million (May 31, 2022 - $3.26 million ) during the current period were lower than the comparable period, with the higher expense at May 31, 2022 being primarily due to legal expenses for our successful defense at trial against claims by Africa Wide, which took place during October 2021 and February 2022. Interest expense was $Nil in the current period versus $1.65 million in the comparable nine month period of fiscal 2022. The Company repaid all its remaining debt in February 2022, thereby eliminating related future interest expense. The foreign exchange gain recognized in the current period was $0.29 million (May 31, 2022 - $0.12 million loss) due to the U.S. Dollar increasing in value relative to the Canadian Dollar during the current period. Lion Battery joint venture battery research and development expenses were $0.30 million during the nine month period (May 31, 2022 - $0.25 million). Stock compensation expense was $1.6 million during the period (May 31, 2022 - $1.73 million).
At May 31, 2023, finance income consisting primarily of interest earned in the period amounted to $0.47 million (May 31, 2022 - $0.09 million).
Loss per share for the current period amounted to $0.04, as compared to a loss of $0.08 per share for the nine month period ended May 31, 2022.
Amounts receivable at May 31, 2023, totalled $0.44 million (August 31, 2022 - $0.38 million) while accounts payable and accrued liabilities amounted to $0.62 million (August 31, 2022 - $1.12 million). Amounts receivable were comprised mainly of value added taxes repayable to the Company in South Africa. Accounts payable consisted primarily of Waterberg engineering fees, infill and geotechnical drilling costs, accrued professional fees and regular trade payables.
Total expenditures on the Waterberg Project, before partner reimbursements, for the nine month period ended May 31, 2023 were approximately $3.5 million (May 31, 2022 - $2.6 million). After accounting for foreign exchange gains or losses related to the U.S. Dollar, at May 31, 2023, $38.6 million in accumulated net costs were capitalized to the Waterberg Project (May 31, 2022 - $43.4 million). Total expenditures on the property since inception from all investor sources to May 31, 2023 are approximately $83.8 million. For more information about the Waterberg Project, see Note 3. of the Financial Statements, "Mineral Properties and Exploration and Evaluation Assets".
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Outlook
The Company's primary business objective is to advance the Waterberg Project to a development and construction decision. PTM is the operator of the Waterberg Project as directed by a technical committee comprised of representatives from joint venture partners Impala Platinum Holdings Ltd. ("Implats"), Mnombo Wethu Consultants (Pty) Ltd. ("Mnombo"), JOGMEC and Hanwa.
On October 18, 2022, Waterberg JV Co. approved in principle the pre-construction Work Program (as described above) of approximately $21.0 million over a 23-month period ending August 31, 2024. The Work Program is focussed on project infrastructure including initial road access, water supply, essential site facilities, a first phase accommodation lodge, a site construction power supply from state utility Eskom and advancement of the Waterberg Social & Labour Plan. An update to the 2019 Waterberg Definitive Feasibility Study ("DFS Update") is also underway, including a review of cut-off grades, mining methods, infrastructure plans, scheduling, concentrate offtake, dry stack tailings, costing and other potential revisions to the project's financial model.
From the Work Program, an Initial Budget of approximately $2.5 million was approved for expenditure by March 31, 2023, including thirty-two infill boreholes, several geotechnical boreholes, and one exploration borehole. The Initial Budget was completed as planned. A Stage Two Budget for $3.6 million in work was approved for expenditure on March 24, 2023. The Stage Two Budget, currently underway, includes DFS Update engineering, pre-construction engineering, electrical power supply engineering and the permitting and licensing of construction aggregate borrow pits identified near the Waterberg mine site.
The Initial Budget and the Stage Two Budget are being funded pro rata by the joint venture partners. Subsequent expenditures in accordance with the Work Program are subject to expected approvals for the next sequential time period beginning September 1, 2023.
The Company continues to work closely with regional and local communities and their leadership on mine development plans to achieve optimal outcomes and best value to all stakeholders.
Before project financing and a construction decision can be undertaken, arrangements will be required for project concentrate offtake or processing. Obtaining reasonable terms for Waterberg concentrate offtake from an existing smelter/refiner in South Africa is considered the preferred option and discussions with such parties are ongoing.
In addition to seeking reasonable terms for Waterberg concentrate offtake from an existing smelter/refiner in South Africa, the Company must also consider alternatives. The NI 43-101 definitive feasibility study technical report for the Waterberg Project entitled "Independent Technical Report, Waterberg Project Definitive Feasibility Study and Mineral Resource Update, Bushveld Complex, South Africa" dated October 4, 2019, stated that "Additional smelting capacity may need to be constructed in the industry to be able to treat the flotation concentrate from Waterberg and the other potential Platreef miners". The Company is assessing the economic feasibility of constructing a matte furnace and base metal refinery in South Africa, either with or without partners, to process Waterberg concentrate. A matte furnace and base metal refinery as described above is envisioned as a separate business from Waterberg JV Co. that could provide fair market concentrate offtake terms to Waterberg JV Co. and possibly to other PGM miners. Discussions with potential participating partners and investors are ongoing.
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The Company is also assessing the economic feasibility of constructing a matte furnace and base metal refinery outside of South Africa to process Waterberg concentrate. Working with a potential partner in a jurisdiction with less expensive power and water, the Company has completed a trade off study which indicates that savings on power and water substantially offset the cost of additional concentrate transportation. Before concentrate could be exported from South Africa, a formal government approval would be required. Further studies are underway.
As the world seeks to decarbonize and look for solutions to climate change, the adoption of battery electric vehicles is forecast to reduce the future demand for PGMs used in autocatalysis. The unique properties of PGMs as powerful catalysts are being applied to various technologies as possible solutions for more efficient energy generation and storage, which may create new demand for PGMs. The Company's battery technology initiative through Lion with partner Anglo represents one such new opportunity in the high-profile lithium battery research and innovation field. The investment in Lion creates a potential vertical integration with a broader industrial market development strategy to bring new technologies to market which use palladium and platinum. Research and development efforts by FIU on behalf of Lion continue. Technical results from Lion's research may have application to most lithium-ion battery chemistries and the scope of Lion's research work is being expanded.
Environmental, Social and Governance
In November 2022, Platinum Group received its second annual Environmental, Social and Governance ("ESG") disclosure report from Digbee Ltd. ("Digbee"), a United Kingdom based company that has developed an industry standard ESG disclosure framework for the mining sector providing a right-sized, future looking set of frameworks against which they can credibly disclose, track, compare and improve their ESG performance. Digbee ESG has been developed in consultation with mining companies, ESG specialists and capital providers and is endorsed by leading financial institutions, producing mining companies and other industry stakeholders. Digbee's reporting framework is aligned with global standards, including the Equator Principles.
Regulatory
As well as the discussions within this news release, the reader is encouraged to also see the Company's disclosure made under the heading "Risk Factors" in the Company's Annual Information Form for the year ended August 31, 2022 ("AIF") as filed with Canadian securities regulators and annual report on Form 40-F for the year ended August 31, 2022 ("Form 40-F") as filed with the U.S. Securities and Exchange Commission ("SEC").
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Qualified Person
Rob van Egmond, P.Geo., a consultant geologist to the Company and a former employee, is an independent qualified person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). Mr. van Egmond has reviewed, validated and approved the scientific and technical information contained in this news release and has previously visited the Waterberg Project site.
About Platinum Group Metals Ltd. and the Waterberg Project
Platinum Group Metals Ltd. is the operator of the Waterberg Project, a bulk underground palladium and platinum deposit located in South Africa. The Waterberg Project was discovered by Platinum Group and is being jointly developed with Implats, Mnombo, JOGMEC and Hanwa.
On behalf of the Board of
Platinum Group Metals Ltd.
Frank R. Hallam
President, CEO and Director
For further information contact:
Kris Begic, VP, Corporate Development
Platinum Group Metals Ltd., Vancouver
Tel: (604) 899-5450 / Toll Free: (866) 899-5450
www.platinumgroupmetals.net
Disclosure
The TSX 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 news 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", "may", "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 news release include, but are not limited to, statements regarding the success of the Company's objective to advance the Waterberg Project to a development and construction decision, the completion of the various phases of the Work Program, the planned DFS Update, the plan for and development of the Waterberg Project and the potential benefits and results thereof, financing and mine development of the Waterberg Project, potential commercial alternatives for mine development financing and concentrate offtake, financing and mine development of the Waterberg Project, the size and cost of the Waterberg Project, the economic feasibility of establishing a Waterberg matte furnace, the possible implementation of dry stack tailings methods and results on water consumption, work with local communities, the development of new battery technologies and the potential benefits of utilizing palladium and platinum therein, the commercialization thereof and Lion's development of next generation battery technology, a the market demand outlook for PGMs, the success of Lion's and FIU's research and development efforts, the expansion of Lion's research work into additional battery chemistries, the Company's ability to better access capital markets due to its ESG practices, the results of the Company's infill drill program at the Waterberg Project, and the Company's other future plans and expectations. Although the Company believes any forward-looking statements in this news release are reasonable, it can give no assurance that the expectations and assumptions in such statements will prove to be correct.
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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, the Company's inability to generate sufficient cash flow or raise additional capital, and to comply with the terms of any new indebtedness; additional financing requirements; and any new indebtedness may be secured, which potentially could result in the loss of any assets pledged by the Company; the Company's history of losses and negative cash flow; 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 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 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 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 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 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 shares may be delisted from the NYSE American or the TSX if it cannot maintain compliance with the applicable listing requirements; and other risk factors described in the Company's most recent Form 40-F annual report, AIF 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 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 because of new information, future events or results or otherwise.
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The technical and scientific information contained herein has been prepared in accordance with NI 43-101, which differs from the standards adopted by the SEC. Accordingly, the technical and scientific information contained herein, including any estimates of mineral reserves and mineral resources, may not be comparable to similar information disclosed by U.S. companies subject to the disclosure requirements of the SEC.