Vancouver, British Columbia and Johannesburg, South Africa--(Newsfile Corp. - November 25, 2019) - Platinum Group Metals Ltd. (TSX: PTM) (NYSE American: PLG) ("Platinum Group" "PTM" or the "Company") reports the Company's financial results for the year ended August 31, 2019 and provides an update and outlook. The Company has focused its business on the palladium dominant Waterberg Project located on the North 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 mines globally. In 2019 the Company launched a new initiative using platinum and palladium in battery technology in collaboration with Anglo American and Florida International University.
The support of the Company's major shareholders has been important during 2019. The Company looks forward to 2020 with the important milestones of the grant of the Waterberg Project Mining Right currently under application and the decision of Waterberg partner Impala Platinum Holdings Ltd. ("Implats") on increasing their stake at Waterberg under option in the joint venture agreements.
The Company has filed a Form 20-F annual report, including the Company's audited consolidated financial statements (the "Financial Statements") and Management's Discussion and Analysis, for the year ended August 31, 2019 with the U.S. Securities and Exchange Commission on EDGAR (www.sec.gov) and with Canadian securities regulators on SEDAR (www.sedar.com). The annual report is also available on 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.
On September 24, 2019 the Company published the results of a Definitive Feasibility Study for the Waterberg Project (the "Waterberg DFS"). The associated technical report entitled "Independent Technical Report, Waterberg Project Definitive Feasibility Study and Mineral Resource Update, Bushveld Complex, South Africa" dated October 4, 2019 was SEDAR filed on October 7, 2019. Key findings of the Waterberg DFS include:
•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 $333 million, at an 8% real discount rate, using three-year trailing average metal prices up until September 4, 2019 (Incl. $1,055 Pd/oz) ("Three Year Trailing Prices").
•After-tax Internal Rate of Return ("IRR") of 20.7% at Spot Prices and 13.3% at Three Year Trailing Prices.
•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 Price scenario equates to $640 per 4E ounce.
•Updated measured and indicated mineral resources1 of 242.4 million tonnes at 3.38g/t 4E for 26.4 million 4E ounces (using 2.5 g/t 4E cut-off) and the deposit remains open on strike to the north and below a depth cut-off of 1,250-meters.
•Proven and probable mineral reserves2 of 187.5 million tonnes at 3.24 g/t 4E for 19.5 million 4E ounces (using 2.5 g/t 4E cut-off), a significant increase from the Project's 2016 Pre-Feasibility Study.
On August 21, 2019 the Company closed a public offering of securities on a bought deal basis in the United States of 8,326,957 common shares of the Company at a price of $1.25 per share for gross proceeds of approximately $10.41 million.
On August 21, 2019 the Company also completed or executed, as the case may be:
•A new credit agreement with Sprott Private Resource Lending II (Collector), LP ("Sprott") for a $20.0 million senior secured credit facility (the "2019 Sprott Facility") maturing August 21, 2021, bearing interest at 11.00% per annum and which may be extended for a further year at the option of the Company.
•A subscription by Deepkloof Limited ("Deepkloof"), a wholly owned subsidiary of Hosken Consolidated Investments Limited ("HCI"), on a private placement basis, for 6,940,000 common shares of the Company ("Common Shares") at a price of $1.32 per share for aggregate gross proceeds $9,160,800, increasing HCI's ownership percentage in the Company to 30.199%.
•A subscription by Liberty Metals & Mining, LLC ("LMM"), on a private placement basis, for 7,575,758 Common Shares at a price of $1.32 per share for aggregate gross proceeds of $10.0 million; and
•A payout agreement with respect to the full settlement of a $43.0 million secured loan facility due to LMM.
On July 12, 2019, Platinum Group, together with an affiliate of Anglo American Platinum Limited (''AAP''), launched a new venture through a jointly owned company, Lion Batteries Technologies Inc. (''Lion'') to accelerate the development of next generation battery technology using platinum and palladium.
On June 28, 2019 the Company closed a non-brokered private placement to Deepkloof for 1,111,111 Common Shares at a price of $1.17 each for gross proceeds of $1.3 million.
On April 15, 2019 the Company appointed Stuart Harshaw as a director. Mr. Harshaw was Vice President, Ontario Operations, for Vale Canada Limited until 2017.
On February 4, 2019 the Company closed a non-brokered private placement of 3,124,059 Common Shares at price of $1.33 each for gross proceeds of $4.155 million. Deepkloof subscribed for 2,141,942 Common Shares of this private placement.
On December 13, 2018, the Company consolidated its Common Shares on the basis of one new share for ten old shares (1:10). All share and per share numbers in this press release are presented on a post-consolidation basis.
Results For The Year Ended August 31, 2019
The Company took significant steps to cut costs and reduce debt during fiscal 2019. During the year ended August 31, 2019, the Company incurred a net loss of $16.8 million (August 31, 2018 - net loss of $41.0 million). General and administrative expenses during the year were $4.7 million (August 31, 2018 - $6.1 million), losses on foreign exchange were $1.0 million (August 31, 2018 - $4.1 million loss) due to the US Dollar increasing in value relative to the parent company's functional currency of the Canadian Dollar, while stock based compensation expense, a non-cash item, totalled $0.8 million (August 31, 2018 - $0.1 million). Interest costs of $8.4 million were lower in the current year (August 31, 2018 - $18.4 million) due to lower debt levels. A recovery of $0.5 million was recognized on care and maintenance costs related to the Maseve Mine, as compared to care and maintenance costs of $14.4 million being charged to earnings in fiscal 2018. A loss on fair value of financial instruments of $2.7 million was recognized in the current year (August 31, 2018 - $3.7 million gain) due to an increase in the value of the embedded derivatives in the Company's convertible notes.
At August 31, 2019, finance income consisting of interest earned and property rental fees in the year amounted to $0.4 million (August 31, 2018 - $0.7 million). Loss per share for the year amounted to $0.52 as compared to a loss of $2.03 per share for fiscal 2018.
Accounts receivable at August 31, 2019 totalled $0.5 million (August 31, 2018 - $0.9 million) while accounts payable and accrued liabilities amounted to $4.1 million (August 31, 2018 - $3.6 million). Accounts receivable were comprised of mainly of amounts receivable for value added taxes repayable to the Company in South Africa. Accounts payable consisted primarily of Waterberg DFS engineering fees, accrued professional fees and regular trade payables.
Total expenditures on the Waterberg Project, before partner reimbursements, for the year were approximately $8.4 million (August 31, 2018 - $9.1 million). At year end, $36.8 million in accumulated net costs had been capitalized to the Waterberg Project (August 31, 2018 - $29.4 million). Total expenditures on the property since inception to August 31, 2019 are approximately $70.4 million.
For more information on mineral properties, see Note 5 of the Financial Statements.
The Company achieved several important business objectives during the past 12 months, including the repayment of a significant portion of the Company's secured debt and the completion of the Waterberg DFS. The positive results of the Waterberg DFS provide a solid base for the assessment of value for the Waterberg Project in the year ahead. The support of the major shareholders over the past year has strengthened the Company. The positive market outlook for palladium, including the potential for continued palladium supply deficits, has been recognized by market analysts. The Company looks to 2020 with an optimistic outlook and renewed enthusiasm.
The Company's key business objective is to advance the palladium dominant Waterberg Project to a development and construction decision. The Company currently awaits the approval of the Waterberg DFS by the shareholders of Waterberg JV Resources (Pty) Limited ("Waterberg JV Co."), expected in December 2019. After approval of the Waterberg DFS, within 90 business days Implats may elect to exercise a purchase and development option to increase its stake in Waterberg JV Co. from 15% to 50.01% by purchasing an additional 12.195% equity interest from the Japan Oil, Gas and Metals National Corporation ("JOGMEC") for $34.8 million and earning a further 22.815% interest by making a firm commitment to an expenditure of $130.0 million in development work. Implats made a strategic investment of $30.0 million in November 2017 to purchase an initial 15% stake in the project.
At present, the Company continues to work on advancing project permitting, infrastructure servitudes and community relationships with its partners Implats, JOGMEC, Hanwa and Mnombo through a technical committee of Waterberg JV Co. Concentrate offtake negotiations with Implats are currently in process, along with other offtake possibilities being considered, subject to Implats' right to match.
An interim implementation budget of Rand 22.9 million (approximately $1.95 million) was approved by Waterberg JV Co. at a meeting of its Board of Directors on September 3, 2019.
The Company also advises that its Financial Statements for the fiscal year ended August 31, 2019, included in the Company's Form 20-F, contain an audit report from its independent registered public accounting firm that includes a going concern emphasis of matter. The foregoing statement is required by Section 610(b) of the NYSE American Company Guide.
As well as the discussions within this press release, the reader is encouraged to also see the Company's disclosure made under the heading "Risk Factors" in the Company's Form 20-F, which was also filed as the Company's AIF in Canada.
R. Michael Jones, P.Eng., the Company's President, Chief Executive Officer and a shareholder of the Company, is a non-independent qualified person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") and is responsible for preparing the scientific and technical information contained in this news release. He has verified the data by reviewing the detailed information of the geological and engineering staff and independent qualified person reports as well as visiting the Waterberg Project site regularly.