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, 2017 and provides recent highlights
and outlook. For details of the audited consolidated
financial statements (the “
Financial Statements”),
Management’s Discussion and Analysis, and Annual Information Form
for the year ended August 31, 2017, 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.
The Company has refocussed its business on the large scale, bulk
minable Waterberg Project in South Africa. The Waterberg Project
was recently acknowledged with an investment of $30.0 million by
Impala Platinum Holdings Ltd. (“Implats”) to buy a
15% stake in the project. During 2017 the Company undertook
to exit conventional platinum mining by agreeing to sell its
position in the Maseve Mine in a transaction valued at
approximately $74.0 million, the proceeds of which will be used to
repay a majority of the Company’s secured debt.
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 November 23, 2017, the Company executed
definitive agreements to sell its rights and interests in Maseve
Investments 11 (Pty) Ltd. (“Maseve”) to Royal
Bafokeng Platinum Limited (“RBPlat”) in a
transaction valued at approximately $74.0 million (the
“Maseve Sale Transaction”)1. RBPlat is to
first pay Maseve $58 million in cash to acquire the concentrator
plant and certain surface assets of the Maseve Mine. This first
payment is conditional upon governmental approval and the
satisfaction or waiver of certain conditions precedent.
Subject to further governmental approval, RBPlat is to next pay
the Company’s wholly-owned subsidiary, Platinum Group Metals (RSA)
(Pty) Ltd. (“PTM RSA”), $7.0 million in ordinary
shares of RBPlat plus approximately $4.0 million in cash to acquire
PTM RSA’s remaining loans due from Maseve, and is to pay PTM RSA
and Africa Wide Mineral Prospecting and Exploration Proprietary
Limited, in proportion to their respective equity interests in
Maseve, a further $5.0 million by issuance of ordinary shares of
RBPlat to acquire 100% of the equity in Maseve. PTM’s
proceeds from the Maseve Sale Transaction are to be used to repay
the Company’s secured lenders, who were collectively owed
approximately $89 million in principal and accrued interest at
August 31, 2017.
On November 6, 2017, the Company, along with
Japan Oil, Gas and Metals National Corporation
(“JOGMEC”) and Mnombo Wethu Consultants (Pty) Ltd.
(“Mnombo”) closed a transaction to sell Implats
15% of the Waterberg Project for $30 million. Implats was
also granted an option to increase its stake to 50.01% through
additional share purchases from JOGMEC for an amount of $34.8
million and earn-in arrangements for $130 million paid to fund
development work on the Waterberg Project, as well as a right of
first refusal to smelt and refine Waterberg concentrate (the
“Implats Transaction”)2. The Company
received $17.2 million for its sale of an 8.6% project interest
(the “Implats Proceeds”).
On September 21, 2017, the Company completed
the planned corporatization of the Waterberg Project by transfer of
all Waterberg Project prospecting rights held by the Company on
behalf of the joint venture into Waterberg JV Resources (Pty)
Limited (“Waterberg JV Co.”). Effective
September 21, 2017 Waterberg JV Co. owned 100% of the prospecting
rights comprising the entire Waterberg Project area and Waterberg
JV Co. was owned 45.65% by PTM RSA, 28.35% by JOGMEC and 26% by
Mnombo, giving the Company total direct and indirect ownership of
58.62% at that time.
On July 7, 2017 the Company announced it was
taking steps to restructure mining operations at the Maseve Mine
due to the slower than planned production ramp up.
Restructuring work at Maseve was suspended in early September 2017
prior to the Maseve Sale Transaction.
On June 30, 2017 the Company issued and sold to
certain institutional investors $20 million aggregate principal
amount of convertible senior subordinated notes due 2022 (the
“Notes”) pursuant to applicable U.S. and Canadian
private placement exemptions. The Notes bear interest at a
rate of 6 7/8% per annum, payable semi-annually on January 1 and
July 1 of each year, beginning on January 1, 2018, in cash or at
the election of the Company, in common shares of the Company, or a
combination of cash and common shares, and will mature on July 1,
2022, unless earlier repurchased, redeemed or converted.
On June 15, 2017 the Company reported that
Definitive Feasibility Study (“DFS”) engineering
work on the Waterberg Project was underway, including infill
drilling, resource modelling, mine plan optimization and
infrastructure engineering. The Company also reported that
several holes drilled in late 2016 returned assays including the
following intercepts:
- North Super F Zone Borehole WE097D3 returning 45.1
meters of 4.64 g/t 3PGE, including 16.6 meters of
7.28 g/t 3PGE;
- North Super F Zone Borehole WE096D0 returning 25.81
meters of 3.62 g/t 3PGE, including 6.15 meters of
4.89 3PGE; and
- T Zone Borehole WB211D2 returning 6.55 meters of 5.81
g/t 3PGE3.
The true width of the shallow dipping (30° to 35°) mineralized
zones that were sampled are approximately 82% to 87% of the
reported interval from the vertical intercept.
On April 26, 2017 the Company closed a public
offering of 15,390,000 common shares at a price of $1.30 per share,
for aggregate gross proceeds of $20,007,000.
On January 31, 2017 the Company closed a public
offering of 19,693,750 common shares, including the full exercise
of an over-allotment option granted to the underwriters, at a price
of $1.46 per share, for aggregate gross proceeds of
$28,752,875.
On November 1, 2016 the Company closed a public
offering of 22,230,000 common shares at a price of $1.80 per share,
for aggregate gross proceeds of approximately $40
million.
On October 19, 2016 the Company announced
positive results from an independent pre-feasibility study on the
Waterberg Project contained in a technical report dated October 19,
2016 and filed on SEDAR titled “Independent Technical Report on the
Waterberg Project Including Mineral Resource Update and
Pre-Feasibility Study”.
Results For The Year Ended August 31, 2017
During the year ended August 31, 2017, the Company incurred a
net loss of $590 million (August 31, 2016 - net loss of $36.7
million). General and administrative expenses during the year were
$5.7 million (August 31, 2016 - $5.4 million), gains on foreign
exchange were $4.6 million (August 31, 2016 - $1.7 million) while
stock based compensation expense, a non-cash item, totalled $1.1
million (August 31, 2016 - $0.2 million). At August 31, 2017,
the Company recognized an impairment charge against the carrying
value of the Maseve Mine in the amount of $589 million (August 31,
2016 - $41.4). Finance income consisting of interest earned
and property rental fees in the year amounted to $1.1 million
(August 31, 2016 - $0.1 million). Loss per share for the year
amounted to $4.30 as compared to a loss of $0.26 per share for
fiscal 2016.
Accounts receivable at August 31, 2017 totalled $2.1 million
while accounts payable and accrued liabilities amounted to $16.4
million. Accounts receivable were comprised of amounts receivable
on sale of concentrate, value added taxes repayable to the Company
in South Africa and amounts receivable from partners. Accounts
payable included contract development and mining fees, severance
and closure costs, drilling expenses, engineering fees, accrued
professional fees and regular trade payables.
Total expenditures by the Company for development, construction,
equipment and other costs for the Maseve Mine during the year
totaled approximately $136 million. Initial proceeds from
Maseve Mine concentrate sales before commercial production were
treated as a reduction in project capital cost, with $9.3 million
being recognized in the year ended August 31, 2017.
Production at the Maseve Mine fell behind schedule during the
year due to challenges related to the ramp up of stoping tonnes,
resulting in a loss of planned revenue from operations. The
Company announced a restructuring plan for Maseve on July 7,
2017. Restructuring work at Maseve was suspended in early
September 2017 prior to the sale of Maseve.
Total expenditures on the Waterberg Project for the year were
approximately $5.6 million, all of which was funded by joint
venture partner JOGMEC.
For more information on mineral properties, see Notes 5 to 7 of
the Financial Statements.
Outlook
The Company’s key business objectives are to advance the
Waterberg Project and repay its secured lenders. In the near
term, the Company’s liquidity will be constrained until the Maseve
Sale Transaction is complete and financing has been obtained to
repay and discharge remaining amounts due to the Company’s secured
lenders and for working capital purposes. Amounts due to the
lenders after the Maseve Sale Transaction total approximately
$104.0 million, including a termination fee for the Maseve Mine
production payment obligation in the amount of $15.0 million, if
paid by March 31, 2018. All of the approximately $74.0
million in proceeds from the Maseve Sale Transaction are to be
applied to the Company’s secured debt. As part of
re-structuring arrangements agreed with the secured lenders the
Company must raise $20.0 million in subordinated debt and/or equity
within 30 days of the first lien loan facility of approximately $40
million being repaid from the proceeds of the Maseve Sale
Transaction, and raise a further $10.0 million in subordinated debt
and/or equity before June 30, 2018.
The Company has set aside an amount of $5.0 million from the
Implats Proceeds toward its share of DFS costs, including drilling
in progress. Waterberg JV Co. plans to advance the Waterberg
Project to completion of a DFS and a construction decision for a
total cost of approximately $10.0 million, paid pro-rata by
Waterberg JV Co. shareholders. Drilling to increase the
confidence in certain areas of the known mineral resource to the
measured category is underway. Technical teams from all of
the partners, including Implats, and independent engineers are
involved in the technical planning and oversight of the DFS.
Waterberg JV Co. plans to file a mining right application
during 2018.
The Waterberg Project has the potential to be a low-cost
platinum and palladium producer based on a fully mechanized mine
plan. The deposit is dominated by palladium. The price
of palladium has approximately doubled since late 2015 due to its
primary use in catalytic converters for automobiles.
The Company also advises that its Financial Statements for the
fiscal year ended August 31, 2017, included in the Company's Form
6-K, 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.The Company continues to assess corporate
and asset level strategic alternatives with advisors BMO Nesbitt
Burns Inc. and Macquarie Capital Markets Canada Ltd.
Qualified Person
R. Michael Jones, P.Eng., the Company’s President, Chief
Executive Officer and a significant shareholder of the Company, is
a non-independent qualified person as defined in National
Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI
43-101”) and is responsible for preparing the technical information
contained in this news release. He has verified the data by
reviewing the detailed information of the geological and
engineering staff and independent qualified person reports as well
as visiting the Waterberg Project site regularly.
About Platinum Group Metals Ltd.
Platinum Group holds significant mineral rights and large-scale
reserves of platinum and palladium in the Bushveld Igneous Complex
of South Africa, which is host to over 70% of the world's primary
platinum production. Platinum Group is partnered at Waterberg with
JOGMEC, Implats and Mnombo, an empowerment partner. Platinum Group
is the operator of the Waterberg Project, a bulk minable
underground deposit in northern South Africa. Implats recently made
a strategic investment in the Waterberg Project.
“Frank R. Hallam”
On behalf of the Board of Platinum
Group Metals Ltd.
For further information
contact: R.
Michael Jones,
President or
Kris Begic, VP, Corporate
Development
Platinum Group Metals Ltd.,
Vancouver
Tel: (604) 899-5450 / Toll Free: (866)
899-5450
www.platinumgroupmetals.net
Disclosure
The Toronto Stock Exchange and the NYSE American
LLC have not reviewed and do not accept responsibility for the
accuracy or adequacy of this news release, which has been prepared
by management.
This press release contains forward-looking
information within the meaning of Canadian securities laws and
forward-looking statements within the meaning of U.S. securities
laws (collectively “forward-looking statements”). Forward-looking
statements are typically identified by words such as: believe,
expect, anticipate, intend, estimate, plans, postulate and similar
expressions, or are those, which, by their nature, refer to future
events. All statements that are not statements of historical fact
are forward-looking statements. Forward-looking statements in this
press release include, without limitation, statements regarding the
receipt and timing of required government approvals, satisfaction
of other conditions precedent and consummation of the Maseve Sale
Transaction as described herein; the Company’s intended use of
proceeds derived from the Maseve Sale Transaction; the Company’s
plans following the Maseve Sale Transaction; the completion of the
DFS for, and other developments related to, the Waterberg Project;
repayment of, and compliance with the terms of, indebtedness; the
Company’s liquidity, working capital and requirements to raise
additional funds; the Waterberg Project’s potential to be a
low-cost platinum and palladium producer; the Company’s ability to
continue as a going concern; and the Company’s assessment of
corporate and asset level strategic alternatives. Statements of
mineral resources and mineral reserves also constitute
forward-looking statements to the extent they represent estimates
of mineralization that will be encountered on a property and/or
estimates regarding future costs, revenues and other matters.
Although the Company believes the forward-looking statements in
this press release are reasonable, it can give no assurance that
the expectations and assumptions in such statements will prove to
be correct. The Company cautions investors that any forward-looking
statements by the Company are not guarantees of future results or
performance and that actual results may differ materially from
those in forward-looking statements as a result of various factors,
including risks related to indebtedness; risks related to the
nature of the Maseve Sale Transaction and the uncertainty as to
whether the Company can successfully obtain required government
approvals, satisfy other closing conditions and consummate the
Maseve Sale Transaction; potential delays in the foregoing; the
Company’s capital requirements may exceed its current expectations;
the uncertainty of cost, operational and economic projections; the
ability of the Company to negotiate and complete future funding
transactions and either settle or restructure its debt as required;
variations in market conditions; the nature, quality and quantity
of any mineral deposits that may be located; metal prices; other
prices and costs; currency exchange rates; the Company’s ability to
obtain any necessary permits, consents or authorizations required
for its activities and to effect the Maseve Sale Transaction; the
Company’s ability to produce minerals from its properties
successfully or profitably, to continue its projected growth, or to
be fully able to implement its business strategies; risks related
to contractor performance and labor disruptions; and other risk
factors described in the Company’s most recent annual report,
annual information form and other filings with the Securities and
Exchange Commission and Canadian securities regulators, which may
be viewed at www.sec.gov and www.sedar.com, respectively. Proposed
changes in the mineral law in South Africa if implemented as
proposed would have a material adverse effect on the Company
business and potential interest in projects.
Cautionary Note to U.S. and other Investors
Estimates of mineralization and other technical
information included or referenced in this press release have been
prepared in accordance with NI 43-101. The definitions of proven
and probable reserves used in NI 43-101 differ from the definitions
in SEC Industry Guide 7. Under SEC Industry Guide 7 standards, a
"final" or "bankable" feasibility study is required to report
reserves, the three-year historical average price is used in any
reserve or cash-flow analysis to designate reserves and the primary
environmental analysis or the report must be filed with the
appropriate governmental authority. As a result, the reserves
reported by the Company in accordance with NI 43-101 may not
qualify as "reserves" under SEC standards. In addition, the terms
"mineral resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource" are defined in and
required to be disclosed by NI 43-101; however, these terms are not
defined terms under SEC Industry Guide 7 and normally are not
permitted to be used in reports and registration statements filed
with the SEC. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. Investors are cautioned
not to assume that any part or all of the mineral deposits in these
categories will ever be converted into reserves; "inferred mineral
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian securities laws, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Additionally,
disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian securities laws; however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measurements. Accordingly,
information contained or referenced in this press release
containing descriptions of the Company's mineral deposits may not
be comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements of United
States federal securities laws and the rules and regulations
thereunder.
_____________________________________
1 For more details please refer to the Financial Statements,
Management’s Discussion and Analysis, and Annual Information Form
for the year ended August 31, 2017.
2 For more details please refer to the Financial Statements,
Management’s Discussion and Analysis, and Annual Information Form
for the year ended August 31, 2017.
3 For more details please refer to the Company’s news release
dated June 15, 2017 and titled “Platinum Group Metals Reports on
Waterberg Definitive Feasibility Study Work”.
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