Platinum Group Metals Ltd. Reports First Quarter Results
Vancouver, British Columbia and Johannesburg, South Africa--(Newsfile Corp. - January 13, 2023) - Platinum Group Metals Ltd. (TSX: PTM) (NYSE American: PLG) ("Platinum Group", "PTM" or the "Company") reports the Company's financial results for the three months ended November 30, 2022 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 are to advance 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 three months ended November 30, 2022 (the "Financial Statements") and Management's Discussion and Analysis for the three months ended November 30, 2022 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 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. The Supreme Court determined that there was no reasonable prospect of success in an appeal and there was no other compelling reason why an appeal should be heard. Costs were again awarded to the defendants. Africa Wide has no further avenues of appeal or review. Africa Wide had filed an earlier application to the High Court seeking leave to appeal, which application was denied by the High Court on August 1, 2022, also with costs awarded to the defendants.
On November 1, 2022, preparations began for an infill drilling program at Waterberg. This work is a component of the Initial Budget as defined below. Details of work completed to date is provided below in the section entitled "Outlook".
On October 18, 2022, the directors and shareholders of Waterberg JV Resources (Pty) Ltd. ("Waterberg JV Co.") approved in principle a pre-construction work program (the "Work Program") for the Waterberg Project amounting to approximately $21.0 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, and this work is underway.
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 Nesbit 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 January 13, 2023, the Company has issued 1,043,569 Common Shares, through the U.S. Agent on the NYSE American pursuant to the 2022 ATM, at an average price of $1.82 for net proceeds of $1.85 million after directly attributable fees and expenses $0.05 million.
On June 21, 2022, the Company filed a 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 Common Shares, debt securities, warrants, subscription receipts, or a combination thereof up to an aggregate initial offering price of $250 million (or its equivalent in Canadian dollars) 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 February 11, 2022, the Company repaid the remaining principal balance due and outstanding interest on a $20 million senior secured loan facility with Sprott Private Resource Lending II (Collector), LP and the other lenders party thereto. After this repayment, the Company became debt free and the pledge of its South African assets as security was fully released.
On February 11, 2022, the Company completed a non-brokered private placement of 3,539,823 Common Shares at a price of $1.695 per Common Share to existing major beneficial shareholder, Hosken Consolidated Investments Limited ("HCI"), resulting in proceeds to the Company of $6.0 million (the "Private Placement"). Pricing of the Private Placement was consistent with the equity consideration paid by the Company to purchase and cancel its outstanding $19.99 million 6 7/8% Convertible Senior Subordinated Notes ("Convertible Notes") as described below. The Private Placement allowed HCI to return to a near 26% interest in the Company, as it held prior to the purchase and cancellation of the Convertible Notes.
On February 11, 2022, the Company reported the privately negotiated purchase and cancellation of the Company's Convertible Notes maturing on July 1, 2022. The Company issued to the holders, on a private placement basis, an aggregate of 11,793,509 Common Shares of the Company at a price of $1.695 per share in consideration for the $19.99 million principal outstanding balance of the Convertible Notes. The Company paid accrued and unpaid interest on the Convertible Notes in cash.
Results For The Three Months Ended November 30, 2022
During the three months ended November 30, 2022, the Company incurred a net loss of $1.61 million (November 30, 2021 - net loss of $3.32 million). The current period loss was lower primarily due to interest expense being $Nil in the current period versus $1.07 million in the first quarter of fiscal 2022 as the Company has repaid all of its remaining debt in fiscal 2022. General and administrative expenses during the current period were lower at $1.17 million (November 30, 2021 - $1.3 million). Share based compensation was $0.83 million (November 30, 2021 - $0.68 million). The foreign exchange gain recognized in the current period was $0.25 million (November 30, 2021 - $0.14 million loss) due to the U.S. Dollar increasing in value relative to the Canadian Dollar and the South African Rand during the current period.
At November 30, 2022, finance income consisting of interest earned and property rental fees in the period amounted to $0.14 million (November 30, 2021 - $0.03 million). Loss per share for the current period amounted to $0.02, as compared to a loss of $0.04 per share for the three months ended November 30, 2021.
Amounts receivable at November 30, 2022 (including 2022 ATM Offering proceeds receivable of $0.14 million) totalled $0.67 million (August 31, 2022 - $0.38 million) while accounts payable and accrued liabilities amounted to $1.19 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 three months ended November 30, 2022 were approximately $1.06 million (November 30, 2021 - $1.26 million). At November 30, 2022, $41.5 million in accumulated net costs had been capitalized to the Waterberg Project (November 30, 2021, $41.4 million). Total expenditures on the property since inception from all investor sources to November 30, 2022 are approximately $81.5 million.
For more information on mineral properties, see Note 3 of the Financial Statements.
Outlook
The Company's key 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"), Japan Organization for Metals and Energy Security (formerly Japan Oil, Gas and Metals National Corporation) ("JOGMEC") and Hanwa Co., Ltd. ("Hanwa"). Before project financing and a construction decision can be undertaken, arrangements will be required for project concentrate offtake or processing.
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 will focus 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 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.
From the Work Program the Initial Budget of approximately $2.5 million was approved for expenditure by March 31, 2023, and this work is underway. The Initial Budget includes an infill drilling program targeting near surface, modelled Inferred Mineral Resource blocks that have good potential for conversion to higher confidence levels, thereby allowing them to be added to early mine plans, potentially reducing early capital expenditure and the period to first mining. Several geotechnical holes are also planned. To date 16 planned T Zones holes have been completed and 6 of 16 planned F Zone holes have been completed. Mineralized material recovered from the drill program will be assayed and the remaining material will be processed to determine dry-stack tailings characteristics and provide additional concentrate metallurgical data. If dry stack tailings methods are implemented, it is estimated that mine water consumption could be reduced by 40% to 50%.
The Initial Budget for the Work Program is to be funded pro rata by the joint venture partners and was coordinated to match fiscal year and budgetary periods for JOGMEC and Hanwa. Subsequent expenditures in accordance with the Work Program are subject to expected approvals for sequential time periods ending on August 31, 2024.
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.
The Company is considering 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 and discussions with such parties are ongoing. As an alternative to a traditional concentrate offtake arrangement, studies are also underway to assess the economic feasibility of constructing a matte furnace and base metal refinery to process Waterberg concentrate. 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". A matte furnace and base metal refinery as described above is envisioned as a separate business from Waterberg JV Co. that could provide concentrate offtake terms to Waterberg JV Co. and possibly to other PGM miners. Discussions with potential participating partners and investors have occurred and are planned for the future.
As the world seeks to decarbonize and look for solutions to climate change, the unique properties of PGMs 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 partner Anglo 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.
Environmental, Social and Governance
Platinum Group recently 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").
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 return to strength in the market 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 outcome of the Company's pre-construction 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.
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.
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.
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