Platinum Group Metals Ltd.: Exhibit 99.2 - Filed by newsfilecorp.com
Platinum Group Metals Ltd.
(An
Exploration and Development Stage Company)
Supplementary Information and
MD&A
For the period ended February 28, 2017
This Management’s Discussion and
Analysis is prepared as of April 17, 2017
A copy of this report will be
provided to any shareholder who requests it.
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
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 April 17, 2017, and focuses on the Company’s
financial condition and results of operations for the period ended February 28,
2017. This MD&A should be read in conjunction with the Company’s condensed
consolidated interim financial statements for the period ended February 28, 2017
together with the notes thereto (the “Financial Statements”).
The Company prepares its financial statements in accordance
with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board. All dollar figures included
therein and in the following MD&A are quoted in United States Dollars
(“USD”) 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 USD as its presentation currency.
On January 26, 2016, the Company announced a consolidation of
its common shares on the basis of one new share for ten old shares (1:10). All
information regarding the issued and outstanding common shares, options and
weighted average number and per share information has been retrospectively
restated to reflect the ten to one consolidation.
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 with respect to:
| • |
statements regarding anticipated or potential
developments at the Maseve Mine (as defined below) including development
and construction activities, conveyor details, improved stoping and
tramming, access to Block II, mine plans, production trends, estimates and
assumptions (including production rate, grade per tonne and smelter
recovery), contractor and labor developments, the potential for a strike
and the potential results thereof, and production and cost efficiencies;
|
|
|
|
|
• |
ramp upand potential achievement of commercial production
at the Maseve Mine; |
|
|
|
|
• |
capital-raising activities, compliance with terms of
indebtedness and the adequacy of capital; |
|
|
|
|
• |
revenue, cash flow (and the effects of developments on
cash flow) and cost estimates and assumptions; |
|
|
|
|
• |
statements with respect to future events or future
performance; |
|
|
|
|
• |
corporate and asset level strategic alternatives;
|
|
|
|
| • |
anticipated exploration, development, construction,
production, permitting and other activities on the Company’s properties;
|
|
|
|
|
• |
the adequacy of capital, financing needs and the
availability of and potential for receiving further commitments;
|
|
|
|
|
• |
project economics; |
|
|
|
|
• |
future metal prices and exchange rates; |
|
|
|
|
• |
mineral reserve and mineral resource estimates; and
|
|
|
|
|
• |
potential changes in the ownership structures of the
Company’s projects. |
Forward-Looking Statements reflect the current expectations or
beliefs of the Company based on information currently available to the Company.
Forward-Looking Statements in respect of capital costs, operating costs,
production rate, grade per tonne and concentrator and smelter recovery are based upon
the estimates in the technical reports referred to in this MD&A and in the
documents incorporated by reference or otherwise referred to herein and ongoing
cost estimation work, and the Forward-Looking Statements in respect of metal
prices and exchange rates are based upon the three year trailing average prices
and the assumptions contained in such technical reports and ongoing estimates.
2
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Forward-Looking Statements are subject to several 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:
| • |
uncertainty of production, development plans and cost
estimates for the Maseve platinum and palladium mine (“Maseve
Mine”), formerly known as Project 1 (“Project 1”) and Project 3
(“Project 3”) of what was formerly the Western Bushveld Joint
Venture (the “WBJV”); |
|
|
|
| • |
additional financing requirements to achieve the
Company’s business objectives and remain in compliance with the covenants
set forth in the Sprott Facility (as defined herein) and the LMM Facility
(as defined herein); |
|
|
|
|
• |
the Company’s history of losses; |
|
|
|
| • |
the inability of the Company to generate sufficient cash
flow to make payment on its indebtedness under the Sprott Facility and the
LMM Facility and comply with the restrictions imposed by such
indebtedness; |
|
|
|
| • |
the Sprott Facility and the LMM Facility are secured and
the Company has pledged its shares of Platinum Group Metals (RSA)
Proprietary Limited (‘‘PTM RSA’’) to the Lenders (as defined
herein) under the Sprott Facility and the LMM Facility which potentially
could result in the loss of the Company’s interest in the Maseve Mine, the
Waterberg Project and in PTM RSA (as defined herein) in the event of a
default under either facility; |
|
|
|
|
• |
the Company’s negative cash flow; |
|
|
|
|
• |
the Company’s ability to continue as a going concern;
|
|
|
|
| • |
delays in the production ramp-up of the Maseve Mine which
could result in a default under the LMM Facility or the Sprott Facility;
|
|
|
|
| • |
there can be no assurance that underground development
and production ramp-up at the Maseve Mine will meet its production ramp-up
timeline or that production at the Maseve Mine will meet the Company’s
expectations; |
|
|
|
|
• |
delays in, or inability to achieve, planned commercial
production; |
|
|
|
| • |
completion of a feasibility study for the Waterberg
Project (defined below), which is subject to resource upgrade and economic
analysis requirements; |
|
|
|
| • |
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; |
|
|
|
|
• |
fluctuationsintherelativevaluesoftheU.S.Dollar,theRandandtheCanadianDollar;
|
|
|
|
|
• |
risks of doing business in South Africa, including but
not limited to, labour, economic and political instability; |
|
|
|
|
• |
volatility in metals prices; |
|
|
|
| • |
the failure of the Company or its joint venture partners
to fund their pro-rata share of funding obligations for Project 1 or the
Waterberg Project; the inability of the Company to find an additional and
suitable joint venture partner for Project 1 and Project 3 within such
time frame as may be determined by the South African Department of Mineral
Resources (“DMR”) in accordance with the South African Mineral and
Petroleum Resources Development Act 28 of 2002; |
|
|
|
|
• |
any disputes or disagreements with the Company’s joint
venture partners; |
|
|
|
|
• |
the ability of the Company to retain its key management
employees and skilled and experienced personnel; |
|
|
|
| • |
contractor performance and delivery of services,
including the ability of contractors to continue to perform in the event
of a strike amongst their employees, changes in contractors or their scope
of work or any disputes with contractors; |
|
|
|
|
• |
conflicts of interest; |
3
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
| • |
any designation of the Company as a “passive foreign
investment company” and potential adverse U.S. federal income tax
consequences for U.S. shareholders; |
|
|
|
|
• |
litigation or other legal or 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, 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 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 and failures to comply with legislation;
|
|
|
|
| • |
equipment shortages and the ability of the Company to
acquire the 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; |
|
|
|
| • |
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;
|
|
|
|
| • |
certain potential adverse Canadian tax consequences for
foreign-controlled Canadian companies that acquire common shares of the
Company; and |
|
|
|
| • |
the other risks disclosed under the heading “Risk
Factors” in the Company’s 2016 Annual Information Form dated November 29,
2016 (the “AIF”). |
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.
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
(“Pt”), palladium (“Pd”), rhodium (“Rh”) and gold
(“Au”) (collectively referred to as “4E”) 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.
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.
NOTE TO U.S. INVESTORS REGARDING 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”). The definitions of proven and probable
reserves used in NI 43-101 differ from the definitions in SEC Industry Guide 7
of the U.S. Securities and Exchange Commission (the “SEC”). Under SEC
Industry Guide 7 standards, a “final” or “bankable” feasibility study is
required to report reserves, the three-year historical average price is used in
any reserve or cash flow analysis to designate reserves and the primary environmental
analysis or report must be filed with the appropriate governmental authority. As
a 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 prefeasibility 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 in this MD&A and the documents incorporated by
reference herein 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.
4
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
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 included in this MD&A, has been reviewed and
approved by R. Michael Jones, P.Eng, President and Chief Executive Officer and a
director of the Company. Mr. Jones is a non-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
Handbook of the Canadian Institute of Chartered Accountants. 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. These 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 by amalgamation 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-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 production ramp
up at the Maseve Mine and exploration and engineering on the Waterberg Project,
a platinum and palladium property comprised of the 255 km2 Waterberg
Joint Venture Project (the “Waterberg JV Project”) and the adjoining 864
km2 Waterberg Extension Project (the “Waterberg Extension
Project”) and, both together referred to as the “Waterberg Project”.
The Maseve Mine milling facility is fully constructed and was
commissioned in February and March of 2016. The Maseve Mine is in the ramp up
phase of production. First concentrate was produced in February 2016. The
Company expects commercial production to be achieved in the first half of
calendar 2017, which is later than originally planned. Initial proceeds from
concentrate sales before commercial production are treated as a reduction in
project capital cost with $6.9 million being recognized to development costs in
the six-month period ended February 28, 2017.
5
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
PERSONNEL
As planned and announced by the Company earlier, Mr. Peter
Busse resigned as Chief Operating Officer (“COO”) of the Company on February 20,
2017. Mr. Busse joined Platinum Group in 2007 and has served as the Company’s
COO since that time. The functions that were formerly the responsibility of the
COO have been assumed by the Company’s senior management team in South Africa. A
replacement COO is expected to be appointed in due course.
The Company’s current complement of managers, staff and
consultants in Canada consists of approximately nine individuals and the
Company’s complement of managers, staff, consultants, security and casual
workers in South Africa consists of approximately 257 individuals, inclusive of
approximately 17 individuals active at the Waterberg Project.
The Waterberg Project is operated by the Company utilizing its
own staff and personnel. Contract drilling, geotechnical and support services
are utilized as required.
Maseve is operated by the Company on an “owner
managed-contractor” basis. The Company has hired full time local mining
specialists in South Africa while the Company drives to ramp up production at
the Maseve Mine. The Company’s management team has taken over many duties and
responsibilities previously assigned to contractors, resulting in improved
planning and execution capabilities at the Maseve Mine. Based on information
gathered and disseminated by a third party, the Company believes that the Maseve
Mine’s 12-month rolling average for Lost Time Injury Frequency Rate compares
favourably with averages among other platinum mines in the region. The Maseve
management team has frequent interaction and dialogue with the inspectorate
branch of the DMR and follows the DMR’s guidance carefully.
As at February 28, 2017, the total labour force at the Maseve
Mine totalled approximately 1,883 people. The Company had 89 permanent and
temporary employees and directly managed 550 contractor employees assigned to
engineering (47 employees), security (91 employees), mining sub-contractors (239
employees) and support services (173 employees). Redpath Mining South Africa
(Pty) Limited, a subsidiary of Canadian headquartered Redpath Mining Contractors
and Engineers (“Redpath”), assumed its role as the principal mining
contractor during the second fiscal quarter ending February 28, 2017 (the
“Second Quarter”). As at February 28, 2017, Redpath employed
approximately 739 persons, approximately one half of whom were sourced from
previous contractors at the Maseve Mine as well as limited numbers of external
recruits. Underground mining contractor JIC Mining Services had approximately
376 people, including mining sub-contractors, assigned to working in development
ends only on both the north and south mine areas at the Maseve Mine. As the
Maseve Mine ramps up production, Company management continues to streamline and
refine contractor engagement for underground mining and development at the
Maseve Mine to improve operational efficiencies and rates of production. Plans
in progress at the date of this MD&A will continue to consolidate
contracting services and reduce the number of people onsite over the next few
months. See more detail at “PROPERTIES - SOUTH AFRICAN PROPERTIES - Maseve
Mine - Maseve – Operations” below under Section 2.
During December 2015, Tailing Technology (Pty) Limited
(“TTL”) was engaged to provide concentrator management, operating and
maintenance services for the Maseve mill. TTL personnel were inducted to site
and completed training and the establishment of operating procedures and
protocols in December 2015 and January 2016. At February 28, 2017, TTL had
approximately 102 employees onsite plus approximately 27 sub-contractor
personnel. TTL is currently in negotiations with the Association of Mineworkers
and Construction Union (“AMCU”) in an attempt to avoid labour action
resulting from TTL’s recognition of AMCU’s organization of 58% of its workforce.
Please see “PROPERTIES – SOUTH AFRICAN PROPERTIES – Maseve Mine – Labour
Relations” below.
The Company has worked closely for several years with local
communities and a human resource specialist company to create a database of
local persons interested in work at the Maseve Mine, including their skill and
experience details. The Company has set a target of 30% local employment for the
mine, including persons under the employ of contractors. At February 28, 2017,
approximately 14% of the onsite Maseve workforce comprised local persons from
surrounding communities. The Company continues to work to achieve its local
employment target as circumstances and the availability of candidates allow.
Under IFRS, the Company defers 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
management deems to be impaired are written down to their estimated net
recoverable amount.
6
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Management believes that indicators of impairment existed for
the Maseve Mine as of fiscal year end August 31, 2016 and at February 28, 2017,
consisting of lower platinum and palladium prices compared to previous years and
the low market capitalization of the Company. A formal impairment analysis was
performed for the Maseve Mine as of August 31, 2016, resulting in an after-tax
non-cash impairment charge of $41.4 million. The key assumptions used in
determining the recoverable amount (fair value less costs to sell) for the
Maseve Mine as a “cash generating unit” are estimated long-term commodity
prices, discount rates, cash costs of production, capital expenditures and
foreign exchange rates.
The assumptions used in determining the recoverable amount for
the Maseve Mine at February 28, 2017 have not changed significantly from those
used at year-end, August 31, 2016. A new impairment analysis was undertaken at
February 28, 2017 using updated inputs and an impairment of $55 million was
recognized on the Maseve Mine, reducing the current carrying value of the Maseve
Mine to a similar level as estimated at August 31, 2016.
For more information on mineral properties, see below and Notes
4 and 5 of the Company’s February 28, 2017 condensed consolidated interim
financial statements.
SOUTH AFRICAN PROPERTIES
The Company conducts its South African exploration and
development work through its wholly-owned direct subsidiary Platinum Group
Metals RSA Proprietary Limited (“PTM RSA”). Development of the Maseve
Mine is conducted through Maseve Investments 11 Proprietary Limited
(“Maseve”), a company which is held 82.9% by PTM RSA and 17.1% by Africa
Wide Mineral Prospecting and Exploration Proprietary Limited (“Africa
Wide”), which is in turn owned 100% by Johannesburg Stock Exchange listed,
Wesizwe Platinum Limited (“Wesizwe”). See “Maseve Mine – Africa Wide
Dilution” below for details regarding the dilution of Africa Wide’s shareholding
in Maseve.
The Company is the operator of the Waterberg Project, with
JOGMEC and Mnombo Wethu Consultants (Pty) Ltd. (“Mnombo”) being joint
venture partners. During 2015, the parties amended the then existing agreements
between them and agreed to consolidate the Waterberg JV Project and Waterberg
Extension Project into one unitized project area. See further details below at
“Waterberg Projects – History of Acquisition”.
Maseve Mine
Maseve – Operations
Maseve Phase 1 underground development at the north mine
declines (the “North Declines”) and surface preparation for mill and
concentrator construction commenced in late 2010 and finished in late 2012.
Phase 1 site construction and underground development transitioned into Phase 2
in late 2012 and early 2013, consisting of an additional twin decline access and
development into the south mine portion of the deposit (the “South
Declines”), milling and concentrating facilities, a tailings storage
facility (“TSF”) and continued underground development at the north
mine.
Phase 2 construction at the Maseve Mine was substantially
complete in late 2015 in terms of surface plant and equipment and the cost
budget estimate scope of work. Cold commissioning was carried out in December
2015 and January 2016. Hot commissioning and first production occurred in
February and March of 2016. Several minor, occasional mechanical breakdowns have
occurred at the mill, as per normal operating expectations, since March of 2016.
Recoveries on low grade commissioning material and development muck since
commissioning have been consistent with design criteria.
Commissioning feed to the plant in February and March 2016 was
primarily sourced from the low-grade development stockpiles. During April and
May 2016, tonnes from underground development and mined tonnes from stoping were
introduced along with the feed from the low-grade development stockpile. From
May to November 2016, mill feed was primarily development material, being mostly
muck from primary access headings developed on reef. During the Second Quarter,
access into planned mining stopes increased. Looking forward, tonnes from
mining, as opposed to on reef development, are planned to make up an increasing
percentage of mill feed, thereby increasing the average grade and recovery of material milled.
7
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
As disclosed in the Company’s press release dated November 29,
2016, a much-publicized safety inspection drive in the Northwest Region by the
inspectorate branch of the DMR during the latter part of the Company’s first
fiscal quarter resulted in intermittent Section 54 work stoppages at the Maseve
Mine, causing a delay in some development and production. Some after effects of
these stoppages continued into December 2016 while DMR concerns were addressed,
requested actions were completed and the responsible contractor employees were
re-trained. Procedural improvements were implemented based on DMR advice to help
reduce the likelihood of future Section 54 stoppages and the Company has
remained focused on safely increasing mined tonnage at grade from planned blocks
while at the same time reducing costs. During the Second Quarter, the DMR
attended the Maseve Mine on several occasions and made several recommendations.
While the DMR discussed safety issues with management, it did not impose any
further Section 54 work stoppages.
Although mined tonnes from Block 11 have increased from month
to month since December, 2016, the tonnes mined and delivered have been less
than planned. As well as the other reasons described herein, this is
substantially due to low availability levels for trackless mobile machinery
(“TMM”), such as dump trucks (“DT’s”) and load haul dump machines
(“LHD’s”). Mine crews are demonstrating the ability to blast tonnes at or
near plan in Block 11, but lower than required TMM availability has restricted
the ability to remove waste and ore from the mine. Considerable effort is being
applied to improve TMM maintenance and availability. A new, highly experienced
mine engineer and mechanical team has been hired to re-organize and improve TMM
maintenance. In addition, the planned completion of a new conveyor now under
construction by Redpath towards Block 11 will significantly improve the
efficiency of moving ore from the mine and will also reduce the number of
required DT’s for tramming from approximately 11 units to five. As of the date
hereof this new conveyor is approximately 60% complete.
Underperforming contractors and labour have been a significant
impediment to meeting development and production targets at the Maseve Mine.
Equipment maintenance skills have been an important area requiring improvement.
During the Second Quarter, the Company made certain changes. Underperforming
contractors were terminated or given a reduced scope of work, while at the same
time, Redpath’s scope of work regarding mine production tonnage was increased.
The Company also replaced several senior managers. The Company incurred some
temporary inefficiencies and additional costs through January 2017 to make the
required changes. Improvements in operations have now occurred and the Company
believes the actions taken will benefit Maseve’s current and future operations.
See more detail below.
During March 2017 the Maseve Mine reported 2,598 4E ounces
produced in concentrate, demonstrating improved stoping and the positive effects
of Block 11 production coming online. This March production was the best level
achieved since completion of commissioning and shows a positive trend. Planned
conveyor and silo completions are on track and targeted to be completed at the
end of April 2017 and are expected to facilitate and continue to improve
performance.
Improvements in stoping tonnes versus development during
production ramp up from Block 11 are in progress at the time of writing.
Production levels in December, January and into February 2017 were hampered by
the process of changing the primary underground mining contractor to Redpath,
senior management changes, equipment operator performance and slowly improving
equipment availability. Production during February 2017 was also hampered by an
extraordinary rain event over a period of days around February 20, 2017, which
caused surface flooding in the region of the Maseve Mine and some underground
flooding at the Maseve Mine. Mining operations in Block 11 were suspended for
three days and mining operations in general were negatively affected for
approximately ten days. Milling operations were also suspended at the same time
for approximately a week while an electrical transformer belonging to ESKOM
Holdings Limited ("ESKOM"), South Africa's state owned electricity
utility, was replaced. The transformer failed during the rain event described
above, but it is not known if the rain event was the sole cause of the fault
condition in the transformer. As a result of the mill downtime, the three days
of milling planned for February 2017 were completed in March 2017.
A summary of monthly production since commissioning follows:
| Month |
Dry Tonnes
Milled |
Average Grade
in gms/tonne |
Recovery % |
4E Ounces in
Concentrate |
| Commissioning |
138,889 |
0.69 |
65.2 |
2,013 |
| April, 2016 |
83,866 |
0.86
|
72.7
|
1,682 |
| May, 2016 |
97,542 |
0.77
|
67.0
|
1,620 |
| June, 2016 |
55,945 |
1.11
|
74.6
|
1,488 |
| July, 2016 |
54,420 |
1.01
|
76.8
|
1,362 |
| August, 2016 |
50,306 |
1.48
|
79.1
|
1,893 |
| September, 2016
|
55,897 |
1.29
|
78.4
|
1,823 |
| October, 2016
|
22,316 |
1.59
|
79.3
|
907
|
| November, 2016
|
29,945 |
1.58
|
81.4
|
1,237 |
| December, 2016
|
39,297 |
1.51
|
79.2
|
1,509 |
| January, 2017
|
34,661 |
1.53
|
79.2
|
1,351 |
| February, 2017
|
29,146 |
1.59
|
80.3
|
1,193 |
| March,
2017(1) |
51,663 |
1.88
|
83.3
|
2,598(2) |
8
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Several important operational advancements were completed
during the Second Quarter, which the Company expects will positively affect
future production, as described below:
|
• |
Significant advancement into Block 11 in preparation for
increased mining from this important mining block was achieved. Five
development ends and 17 mining faces or “bords” are now active in Block
11, representing an increase of nine mining faces since December 2016. The
work focus in Block 11 is beginning to shift to mechanized bord and pillar
mining. |
|
|
|
| • |
The second of the two primary access declines into Block
11 was successfully completed on December 30, 2016. This second primary
access has created a new, more efficient ventilation district at Block 11,
which enhances the ability to blast and operate in this area. The
establishment of a second roadway has also improved access and egress and
has allowed for more efficient tramming of ore. |
|
|
|
| • |
A “heads of terms” was signed in January 2017 with
Redpath. The heads of terms agreement contemplated that the parties would
enter into a more detailed contract mining agreement, which is now in the
process of being negotiated. Redpath had earlier won a competitive open
tender to provide bord and pillar mining, hybrid mechanized mining and ore
transport from Block 11. |
|
|
|
| • |
During January 2017 Redpath entered a letter of intent
whereby they would install, operate and maintain a 1.0 km conveyor towards
Block 11, linking into underground silos and the existing 1.4 km conveyor
to surface and 1.7 km conveyor system into the mill. Construction of this
conveyor commenced in February 2017. As of the date hereof this
construction is approximately 60% complete and is on track for completion
at the end of April 2017. Cost for the conveyor installation to be borne
by Redpath was estimated at Rand 25.0 million (approximately $1.8
million), which Redpath would recoup by way of a per tonne charge.
|
|
|
|
| • |
Since June 2016 Redpath has been onsite long hole mining
blocks 9 and 12 utilizing a Raptor 55 long hole drill rig. In mid-January
2017, Redpath also took over long hole mining duties in Block 16 utilizing
a second Raptor drill rig. The long hole method employed by Redpath has
proven capable of producing tonnage with reasonable dilution. |
|
|
|
| • |
During the Second Quarter a monthly cost reduction
program was undertaken through a process of rationalizing and
consolidating underperforming and redundant contractors at the Maseve
Mine. This process was undertaken cooperatively with the involvement of
affected contractors, the National Union of Mineworkers, and on occasion,
the DMR. Many mining services previously provided by several contractors
are now consolidated under the management of Redpath. As the changeover
process is completed, the Company expects to achieve improved production
and cost efficiencies because of these changes. |
The contribution of mined tonnage from Block 11 is a critical
factor to achieving positive cash flow at the Maseve Mine. Block 11 is a large,
well-drilled and stable mining block estimated to host 545,000 4E Merensky Reef
(“MR”) ounces (3,066,512 tonnes at 5.53 gpt 4E Indicated). This block is
modelled as flat dipping at an average of nine degrees, with an average seam
thickness of 157 cm (as published in the technical report titled “An Independent
Technical Report on the Maseve Project (WBJV Project areas 1 and 1A) located on
the Western Limb of the Bushveld Igneous Complex, South Africa” dated August 28,
2015, with an effective date of July 15, 2015 (the “Project 1 Report”)).
The flat dip and good quality of the MR in Block 11 reef has been confirmed with over
150 meters of strike length exposed to date in underground development.
9
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
During 2017, Block 11 is scheduled to build up to 70-80% of
mined ore flow. At full production Block 11 is planned to provide up to 76,000
tonnes a month of mined ore flow. Historical monthly mined tonnes for Block 11
are recorded in the table below:
| Month |
Block 11 Mined Tonnes |
Total Mined Tonnes |
Percentage |
| December, 2016 |
8,388
|
27,559
|
30.4%
|
| January, 2017 |
16,614
|
28,733
|
57.8%
|
| February, 2017 |
20,759
|
43,742
|
47.5%
|
| March, 2017 |
29,690
|
49,610
|
59.8%
|
Maseve – Underground Development
From the north box, cut underground mining has now developed
the North Declines on a southwest heading for 1,423 meters of primary advance to
where they reach the first infrastructure level at a vertical depth of 220
meters from surface. At the first infrastructure level, passageways and storage
bins for conveyor transfers from various mining blocks at depth are under
construction. Construction of a conveyor and chairlift to surface from the first
infrastructure level is complete and this equipment was inspected and
commissioned for use in March 2016.
From the first infrastructure level the North Declines was
split into two pairs of twin break-away declines, one of which is being
developed southeast toward planned mining blocks 9 and 12, and the other which
is being developed east towards planned mining blocks 10 and 11. Block 11 is the
most important block in the early mining profile due to its size, high
grade/thickness and stable geometry, which allows for the application of low
cost mining methods. See more on Block 11 above. From the break-away, the
declines to blocks 9 and 12 are developed for a further 1,163 meters of primary
advance to a vertical depth of 337 meters. Further, from the break-away, the
declines to blocks 10 and 11 have now been developed for a further 2,130 meters
of primary system advance to a vertical depth of 524 meters and have reached
their targeted mining area.
In addition to the primary decline development described above,
as at February 28, 2017, the following development has approximately been
completed and surveyed in the north mine area:
| |
i) |
4,327 meters of lateral access development, including
access from primary declines to mining blocks, ventilation passages,
return airways, ramps, waste raises and haulages. |
| |
|
|
| |
ii) |
5,119 meters of progressive reef development consisting
of raise and diagonal development into mining blocks, reef drives, reef
cubby’s and reef muck bays. |
| |
|
|
| |
iii) |
14,653 square meters bord and pillar and long hole
stoping. |
| |
|
|
| |
iv) |
1,862 meters of progressive infrastructure development
for cross cuts, station drives, substations, refuge bays, workshops and
water management facilities. |
Four ventilation raise bore shafts have been completed and
commissioned at the north mine. The N4A Vent Raise is now operational, but was
late being commissioned. The pilot hole for the fifth ventilation shaft N4C is
complete, but reaming has not yet commenced.
From the south box, cut underground mining has advanced the
South Declines for 1,783 meters of primary system advance to a vertical depth of
271 meters (as at February 28, 2017). Development of the South Declines has now
accessed Block 16. Primary access development at the south mine is currently
scheduled to be reduced for a period of time so that crews may focus efforts at
the north mine. Long hole mining in areas of Block 16 that are already developed
will be long hole mined in 2017 by Redpath utilizing a Raptor 55 long hole drill
rig (as discussed above).
In addition to the primary decline development described above,
as at February 28, 2017 the following development has approximately been
completed and surveyed in the south mine area:
10
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
| |
i) |
1,375 meters of lateral access development, including
access from primary declines to mining blocks, ventilation passages,
return airways and ramps. |
| |
|
|
| |
ii) |
824 meters of progressive reef development consisting of
diagonal development into mining blocks, reef drives, reef cubby’s and
reef muck bays. |
| |
|
|
| |
iii) |
39 meters of progressive infrastructure development for
cross cuts, station drives, substations, refuge bays, workshops and water
management facilities. |
| |
|
|
| |
iv) |
2,353 square meters long hole
stoping. |
At the time of writing, development at the Maseve Mine has six
working development ends and twenty-two established bords and stoping ends where
the MR is exposed and which are currently in production. Recent efforts have
been focused on opening more bords to increase face availability. Bord and
pillar stoping rates are planned to increase as targeted production blocks are
reached. The mining plan for the Block 11 area, the largest area of current
production, is largely unmodified following opening over 150 meters of strike
length at this time.
As development opens areas of MR, evaluation of initial mining
blocks is being completed by Company geologists. Shallow MR mine blocks are
exhibiting rolling features where the critical zone of the Bushveld Igneous
Complex is near the Transvaal Sediment floor rocks. This condition, referred to
as an abutment facies of the MR, is common to the shallow portions of the
adjacent operating mine. Mine geologists note that this condition is improving
as declines are advanced deeper into areas of the deposit which are less ductile
and more stable.
Production at the Maseve Mine is behind schedule due to
challenges related to the ramp up of stoping tonnes. Difficulties and delays
have been caused in part by poor contractor performance and incomplete
underground infrastructure, causing bottlenecks in the movement of waste and ore
out of the mine. Work during the first fiscal quarter to complete ore silo
number one top infrastructure and the addition of a belt loader at this silo did
improve efficiencies. Top and bottom completions at silo number three (now
underway) and then silo number two are expected to further improve efficiencies
and capacity in the remainder of calendar 2017.
On September 19, 2016, the Company reported that primary
development at the Maseve Mine had accessed mining Block 11, hosting some of the
best grade thickness ore at the Maseve Mine. Development into Block 11 is in
progress with a focus on ramping up production from this block. A conveyor from
the first infrastructure level underground has been commissioned that feeds
directly to an overland conveyor and into the primary crusher and mill. A
conveyor leg section 1.0 km towards Block 11 is now under construction by
Redpath (as described above), which will significantly improve the ability to
move mined tonnes out of the mine and directly into the mill. At the time of
writing, approximately 900 meters of the planned 1.0 kilometer conveyor segments
have been constructed and conveyor top infrastructure has been delivered on
schedule. Conveyor sections will be commissioned sequentially as they are
completed towards Block 11. In the meantime, a double tramway is now being
utilized as both primary access declines have reached Block 11.
Company management and supervisory personnel are working with
mining crews to improve cycle times, utilization of drill jumbos, tramming and
the movement of personnel to and from underground working areas. Crews are also
being retrained to take advantage of the newly commissioned underground conveyor
and chairlift at the north mine. Third party independent mining specialists have
been assigned to site since March 2016 and their observations and assessments
are being used to modify underground development methodologies and routines to
improve efficiency and output. Stoping volumes are expected to increase in the
months ahead as mining areas are accessed, established and opened-up. The
successful execution of this stoping will be critical to meeting planned
production and ramp up.
Flexibility of mining using trackless mobile machinery in
certain blocks is part of the overall mine design. Most of the Company’s fleet
of underground mining equipment has been in use since major underground
development began in 2012 and 2013. As the Company’s fleet of underground mining
equipment ages, machine maintenance and availability have been restraining
factors. The Company has sourced additional supervisors, skilled artisans and
contract mechanics to address this issue and improvements in machine
availability are being noted. A budgeted refurbishment program is now underway
that is expected to improve unit availability throughout the remainder of
calendar 2017.
11
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
The rate of underground development at the Maseve Mine
continues to be an important factor with respect to mine ramp up and production
rates. Delays in underground development, stoping rates and planned tonnages
have resulted in production delays. Such delays have had, and will continue to
have, a negative impact on working capital requirements until sufficient mined
material is produced to allow mine operations to generate positive cash
flow.
Maseve Mine - Financial Overview
During the six-month period ended February 28, 2017, the
Company incurred and capitalised $61 million (February 29, 2016 - $58 million)
in development, construction, equipment and other costs for the Maseve Mine. At
period end, an impairment was recognized in the amount of $55 million, reducing
the current carrying value of the Maseve Mine to a similar level as estimated at
August 31, 2016 in Rand, based on updated inputs to the mine’s financial model.
As at February 28, 2017, post impairment, the Company carried total deferred
acquisition, development, construction, equipment and other costs related to the
Maseve Mine of $525 million and another $2.4 million related to Project 3. All
revenue generated from the sale of concentrate is treated as a reduction in
capital costs until commercial production at the Maseve Mine is declared. Africa
Wide’s non-controlling interest in Maseve as at February 28, 2017 was recorded
at $26.6 million.
The escalation of costs, wage increases, metal price
volatility, production ramp-up timing, grade variations and Rand volatility are
all material risk factors for the commercial viability of the Maseve Mine. Lower
metal prices, further delays in production ramp up or a stronger South African
Rand could all result in requirements for further financing being required.
Since 2012, operating costs in South Africa have continued to
escalate in Rand terms. The escalation of costs, metal price volatility,
completion of infrastructure, advancement of underground mining, production
ramp-up timing, grade variations, the availability of financing and Rand
volatility are all material risk factors for the Maseve Mine which could result
in the Company breaching one or more covenants under the Sprott Facility, or LMM
Facility. See Section 3., item A) “Liquidity and Capital Resources” below.
Maseve Mine - Social Development and
Responsibilities
Feedback from the public consultation processes for the
environmental assessment and social and labour plan developed for the Maseve
Mine has been constructive and positive. The mine capital development and
operations plan includes a significant investment in training through the life
of mine, and in conjunction with the social and labour plan, aims to achieve
maximum value from the project for all stakeholders, including local residents.
Based on interaction with the community, the completion of a skill and needs
assessment, and the Company’s training plans, the project has set a target for
30% of more than 2,000 jobs to be sourced with persons from the local
communities. To assist the Company in achieving these goals, the Company has
contracted the services of an experienced and professional South African human
resources company. The Company’s five year social and labour plan is nearing
completion and discussions on the new plan forward from April 2017 have been
consistent with the Company’s previous work in education, procurement and
training.
Maseve Mine - Africa Wide Dilution
On October 18, 2013, Africa Wide informed the Company that it
would not be funding its approximate $21.8 million share of a unanimously
approved project budget and cash call for the Maseve Mine. On March 3, 2014,
Africa Wide informed the Company that it would not be funding its $21.52 million
share of a second unanimously approved cash call. As a result, the Company
entered arbitration proceedings against Africa Wide in accordance with the terms
of the Maseve shareholders’ agreement (the “Maseve Shareholders
Agreement”) to determine Africa Wide’s diluted interest in Maseve, and
therefore the Maseve Mine and Project 3. On August 20, 2014, an arbitrator ruled
in the Company’s favour on all matters and Africa Wide’s shareholding in Maseve
was reduced to 21.2766% based on the first missed cash call. Because of missing
the second cash call, Africa Wide’s ownership was further diluted to
approximately 17.1% and the Company’s ownership was increased to approximately
82.9% .
All funding provided by PTM RSA to Maseve for development and
construction of the Maseve Mine since the second cash call missed by Africa Wide
has been, and is planned to be, provided by way of intercompany loans. At
February 28, 2017 Maseve owed PTM RSA approximately Rand 4.3 billion ($326
million). All amounts due to PTM RSA are planned to be repaid by Maseve before
any distribution of dividends to shareholders.
12
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Legislation and regulation in South Africa require that a Black
Economic Empowerment (“BEE”) entity own a 26% equity interest in mining
projects that qualify for the grant of a Mining Right. Because Africa Wide is
the Company’s BEE partner for the Maseve Mine, the Company advised the DMR on
October 19, 2013 of Africa Wide’s decision to not fund the first cash call and
the resulting dilution implications. On October 24, 2013, the DMR provided the
Company with a letter stating that it will apply the provisions of the Mineral
and Petroleum Resources Development Act, 28 of 2002 (the “MPRDA”) to any
administrative processes or decisions to be conducted or taken within a
reasonable time and in accordance with the principles of lawfulness,
reasonableness and procedural fairness in giving the Company the opportunity to
remedy the effect of Africa Wide’s dilution. In addition to Africa Wide’s direct
equity interest in Maseve, a past sale by PTM RSA of an 18.5% interest in the
project that has become Wesizwe’s platinum mine is a component of the Maseve’s
BEE profile. Under the terms of the Maseve Shareholders Agreement, if Maseve is
instructed by the DMR to increase its BEE ownership, any agreed costs or
dilution of interests shall be borne equally by the Company and Africa Wide. The
Company may consider Mnombo as a BEE partner for the Maseve Mine.
In early June 2016, the DMR requested an update regarding the
Company’s efforts to increase the BEE equity ownership percentage in Maseve from
17.1% to 26%. The Company met with the DMR in early June 2016 and the DMR
requested a further update by August 7, 2016, while reminding the Company of the
risk of potential action under Sections 47 and 93 of the MPRDA if the Company
were not to increase the historically disadvantaged South African
(“HDSA”) ownership percentage. The Company believes that any action in
this regard is premature given that the court proceedings between the Chamber of
Mines and the DMR in regard to the ‘‘once empowered, always empowered’’
principle and the introduction of the Reviewed Broad Based Black-Economic
Empowerment Charter for the South African Mining and Minerals Industry both
remain pending. The Company has made several attempts to schedule a meeting with
the DMR to further discuss this issue. To date, while the Company has been
advised by the DMR that the matter will be discussed at a later date, no such
meeting has taken place and the DMR has not issued a notice of non-compliance
with the MPRDA.
As noted in the AIF, the DMR had obtained an exemption from
applying the generic BEE Codes of Good Practice (the “Generic BEE Codes”)
under the Broad-Based Black Economic Empowerment Act, 2003 (the “BEE
Act”) until October 31, 2016 and had applied for a further extension until
December 31, 2016. During such extension, when evaluating the issuance and
maintenance of licenses and other authorizations, the DMR would rely upon the
Amended Broad-Based Socio-Economic Empowerment Charter for the South African
Mining Industry (the “Mining Charter”), rather than the more onerous
provisions of the Generic BEE Codes. While this exemption was extended to
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 DMR has
continued to apply the provisions of the Mining Charter rather than the Generic
BEE Codes, and the assessment of the Company’s BEE compliance is therefore
uncertain. See the risk factors in the AIF captioned ‘‘The dilution of Africa
Wide may have a material adverse effect on the Company’s business and results of
operations’’ and ‘‘The failure to maintain or increase equity participation by
HDSAs in the Company’s prospecting and mining operations could adversely affect
the Company’s ability to maintain its prospecting and mining rights.’’
Maseve Mine - Labour Relations
In recent years, the gold and platinum mining industries in
South Africa have witnessed significant labour unrest and demands for higher
wages by certain labour groups. To date, the Company has seen no adverse labour
action on its site at the Maseve Mine.
The primary union at the Maseve Mine, representing the workers
of the project’s underground mining contractor, is the National Union of
Mineworkers (“NUM”). The Company maintains an active dialogue with
contractors and NUM, as well as with its own employees. In October 2015, NUM
agreed to a labour contract with the underground mining contractor at the Maseve
Mine for a two-year period ending September 2017. In the future, should higher
salaries and wages occur across the industry, the Company will likely see
increased costs for labour.
Mill operating contractor TTL has reported to the Company that
AMCU was recently recognized by them with approximately a 58% membership
(approximately 62 people) amongst TTL’s workforce. AMCU has provided a set of
demands and TTL is in negotiations with AMCU. TTL and AMCU met with the South
African Commission for Conciliation, Mediation and Arbitration on March 31, 2017
for mediation but, unfortunately no agreement was reached. As a result, the
commission is reported to have issued a strike certificate on April 3, 2017. If
AMCU wishes to take strike action, they must provide 48 hours written notice.
TTL advises the Company that they are striving to find a solution and that they
remain confident they will be able to run the Maseve mill and limit any
potential disruptions if AMCU chooses to go on strike. However, the Company cannot provide any assurance as to
whether AMCU will strike or the consequences of a strike on the Company’s
operations.
13
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Maseve Mine (Project 1) and Project 3 - Mineral Resources
and Reserves
On July 15, 2015, the Company published an updated independent
resource estimate for the Maseve Mine and an updated independent reserve
estimate based on underground sampling and observations as well as recent infill
drilling from surface in the Project 1 Report, which was prepared by Charles J
Muller (B. Sc. (Hons) Geology) Pri. Sci. Nat., of CJM Consulting (Pty) Ltd.;
Gert Roets (B. Eng. Mining), Pr. Eng. (ECSA), of DRA Projects; and Gordon
Cunningham, B. Eng. (Chemical), Pr. Eng. (ECSA) of Turnberry Projects (Pty) Ltd.
The Project 1 Report is now the current technical report for the Maseve Mine. An
update to the 2015 resources and reserves based on the underground development
and further surface and underground sampling is in progress at time of
writing.
The 2015 updated reserve estimate in the Project 1 Report
considers various mining factors, including changes in mining widths, methods
and costs. Maseve Proven and Probable MR Reserves on a 100% project basis are
estimated at 2.585 million ounces 4E (17.525 million tonnes grading 4.59 g/t 4E
at a 2.50 g/t 4E cut-off grade and prill split of 2.94 g/t Pt, 1.24 g/t Pd, 0.18
g/t Rh, 0.23 g/t Au). Maseve Proven and Probable UG2 Reserves on a 100% project
basis are estimated at 1.532 million ounces 4E (14.914 million tonnes grading
3.19 g/t 4E at a 2.50 g/t 4E cut-off grade and prill split of 2.01 g/t Pt, 0.83
g/t Pd, 0.32 g/t Rh, 0.03 g/t Au).
Total Maseve Mine measured and indicated mineral resources are
3.9 million ounces 4E on the MR (21.82 M tonnes grading 5.51 g/t 4E) and 2.8
million ounces on the UG2 Reef (22.68 M tonnes grading 3.8 g/t 4E) (100% project
basis). These mineral resources have been calculated based on a resource cut of
146cm (versus 109cm in earlier estimates) and they incorporate recent detailed
drilling and underground work to date. The prill splits are as previously
announced at 64% Pt, 27% Pd, 4% Rh, 5% Au on the MR and 63% Pt, 26% Pd, 10% Rh,
1% Au on the UG2 Reef. The Company believes the thicker resource cut has better
potential for the use of mechanized mining.
Mineral reserves are a sub-set of measured and indicated
mineral resources and are not in addition to mineral resources. The total Maseve
Mine MR and UG2 Reserves are as detailed above and in the current mine plan are
sufficient for an updated annual production target of 250,000 ounces 4E at
steady state and an overall mine life of approximately 20 years.
Mineral reserves and mineral resources reported for the Maseve
Mine are from combined MR and UG2 reef tonnes. Information regarding grades,
prill splits, sampling, reserve and resource calculations and risk factors may
be found in the Project 1 Report, which was filed on August 28, 2015 on SEDAR at
www.sedar.com and also filed on EDGAR at
www.sec.gov.
A technical report dated August 31, 2010 entitled “Technical
Report on Project 3 Resource Cut Estimation of the Western Bushveld Joint
Venture (WBJV) Located on the Western Limb of the Bushveld Igneous Complex,
South Africa” (the “Project 3 Report”) remains the current technical
report with respect to Project 3. Project 3 hosts an estimated 1.939 million
indicated 4E ounces (11.104 million tonnes @ 5.43 g/t) and 0.076 million
inferred 4E ounces (0.443 million tonnes @ 1.47 g/t).
Maseve Mine (Project 1) and Project 3 - History of
Acquisition
On October 26, 2004, the Company entered into a joint venture
agreement (the “WBJV Agreement”) forming the WBJV among the Company (37%
interest held through PTM RSA), Amplats (37% interest held through its wholly
owned subsidiary, Rustenburg Platinum Mines Ltd. (“RPM”), and Africa Wide
(26% interest held directly) in relation to a platinum exploration and
development project on combined mineral rights covering approximately 67
km2 on the Western Bushveld Complex of South Africa. The WBJV was
divided into three distinct project areas, namely Projects 1, 2 and 3. In April
2007, Amplats contributed an additional 5 km2 area of prospecting
rights into the WBJV. This additional area was adjacent to the east of Projects
1 and 3 and became a part of Project 2 once contributed into the WBJV. Africa
Wide was subsequently 100% acquired by Wesizwe, a Johannesburg Stock
Exchange-listed company, in September 2007. PTM RSA was the operator of the
joint venture.
On December 8, 2008, the Company entered into certain
agreements to consolidate and rationalize the ownership of the WBJV (the
‘‘Consolidation Transaction’’). On April 22, 2010, the Consolidation
Transaction was completed and the WBJV dissolved. As a result, Projects 1 and 3 were transferred
into Maseve and Project 2 was transferred into Africa Wide. On April 22, 2010,
the Company also paid the equalization amount due under the WBJV Agreement to
Amplats of Rand 186.28 million (approximately $24.83 million at the time).
14
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Following the Consolidation Transaction, the Company held a
54.75% interest in Maseve and Wesizwe held a 45.25% initial interest in Maseve.
Under the terms of the Consolidation Transaction, the Company subscribed for a
further 19.25% interest in Maseve, from treasury, in exchange for Rand 408.81
million (approximately $59 million at the time), thereby increasing its
effective shareholding in Maseve to 74%. The subscription funds were placed in
escrow for application towards Africa Wide’s 26% share of expenditures for
Projects 1 and 3. By mid-November 2013, the escrowed Maseve funds were fully
depleted.
Waterberg Project
Waterberg Project – Activities in the period ended
February 28, 2017
During the period ended February 28, 2017, approximately $2.65
million was spent at the Waterberg Project for engineering and exploration
activities.
At period end, $23 million in net costs had been capitalized to
the project. Since March 31, 2015, the budget for work at Waterberg has been
fully funded by joint venture partner, the Japan Oil, Gas and Metals National
Corporation ("JOGMEC") in accordance with the 2nd Amendment to
the JOGMEC Agreement (both as defined below). To March 31, 2015, the Company
funded the Company and Mnombo’s combined 63% share of the work on the Waterberg
Project with the remaining 37% funded by JOGMEC. To March 31, 2015, the Company
funded the Company and Mnombo’s combined 100% share of the work on the Waterberg
Extension Project. Exploration work on the Waterberg Extension Project began in
a material way in late 2013.
On April 19, 2016, the Company reported an updated independent
4E resource estimate for the Waterberg Project. Later, on October 19, 2016, the
Company reported positive results from an Independent Pre-Feasibility Study
(“PFS”) on the Waterberg Project and a further updated independent 4E
resource estimate for the Waterberg Project. See “Waterberg Project –
Pre-Feasibility Study and Mineral Resource and Reserve Details” below.
The Waterberg deposit is 13 km long so far, open along strike
and begins from 140 meters deep. 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. Minimum mineralized thickness is 3 meters and the maximum
is 70 meters. Drilling will continue at Waterberg and the deposit is still open
for expansion.
Based on a reinterpretation of airborne gravity surveys and
taking the latest drill hole results into consideration, additional drilling
northward along strike is planned.
Platinum Group plans to advance the project to completion of a
feasibility study and a construction decision. Drilling to increase the
confidence in certain areas of the known mineral resource to the measured
category is planned to resume in April 2017.
Important detailed infrastructure planning has commenced for
the Waterberg Project, including power line environmental and servitude work by
Eskom and detailed hydrogeological work to source ground water. Eskom has
progressed electrical power connection planning for a 65 km, 140MW line to the
project.
Detailed hydrological work is now underway to study the
possible utilization of known sources for significant volumes of ground water.
Another instance where groundwater sources currently supply a large scale mine
in the Limpopo region has stimulated this research. Several boreholes proximal
to Waterberg have already identified large volumes of ground water that because
of mineral content, is not potable or suitable for agriculture. Hydrological and
mill process specialists are investigating the use of this water as mine process
water. Hydrological work so far has also identified several large-scale water
basins that are likely able to provide potable and mine process water for the
Waterberg Project and local communities. The Waterberg Project team is examining
the possibility of assisting with regional infrastructure to source potable
water for municipal use while also sourcing and providing mine process water.
Meetings with local municipalities have been positive and co-operative in tone
and are encouraging for future development.
Planned feasibility engineering work on the Waterberg Project
includes resource modelling, metallurgical work, optimization of the metallurgical flow sheet using South
African and Japanese expertise, bulk services design and mechanized mine
planning. Optimization of the mine plan and working on reducing underground
sustaining development capital will be part of the upcoming feasibility study.
The Company also plans to file a mining right application, with Joint Venture
approval, based substantially on the results of the PFS.
15
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Waterberg Project – Pre-Feasibility Study and Mineral
Resource and Reserve Details
On October 19, 2016, the Company announced positive results
from a PFS on the Waterberg Project completed by international and South African
engineering firm WorleyParsons RSA (Pty) Ltd. trading as Advisian. Technical
information in this MD&A regarding the Waterberg Project is derived from the
NI 43-101 technical report filed entitled “Independent Technical Report on the
Waterberg Project Including Mineral Resource Update and Pre-Feasibility Study”
dated October 19, 2016, with an effective date of October 17, 2016 for the
estimate of mineral reserves and resources (the “October 2016 Waterberg
Report”), prepared by (i) Independent Engineering Qualified Person Mr.
Robert L Goosen (B.Eng. (Mining, Engineering)) Pr. Eng. (ECSA),
Advisian/WorleyParsons Group, (ii) Independent Geological Qualified Person Mr.
Charles J Muller (B.Sc. (Hons) Geology) Pri. Sci. Nat., CJM Consulting (Pty)
Ltd., and (iii) Independent Engineering Qualified Person Mr. Gordon I.
Cunningham, B. Eng. (Chemical), Pr. Eng. (ECSA), Professional association to
FSAIMM, Turnberry Projects (Pty) Ltd.
Readers are directed to review the full text of the October
2016 Waterberg 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 October 2016 Waterberg Report estimated that mineral
resources in the “T” and “F” zones (100% project basis) increased to an
estimated 24.886 million ounces 4E in the indicated category plus 10.802 million
ounces 4E in the inferred category:
| • |
Indicated 218.265 million tonnes grading 3.55
g/t 4E (1.06 g/t Pt, 2.18 g/t Pd, 0.26 g/t Au, 0.04 g/t Rh, 2.5 g/t
cut-off), plus 0.08% Cu and 0.15% Ni. |
| |
|
| • |
Inferred 97.212 million tonnes grading 3.46 g/t
4E (1.03 g/t Pt, 2.10 g/t Pd, 0.30 g/t Au, 0.03 g/t Rh, 2.5 g/t cut-off),
plus 0.06% Cu and 0.11% Ni. |
The October 2016 Waterberg Report also estimated probable
mineral reserves in the “T” and “F” zones (100% project basis) estimated at
12.32 million ounces 4E plus 191.18 million pounds of copper and 333.04 million
pounds of nickel:
| • |
102.7 million tonnes grading 3.73 g/t 4E (1.11
g/t Pt, 2.29 g/t Pd, 0.29 g/t Au, 0.04 g/t Rh, 2.5 g/t cut-off), plus
0.08% Cu and 0.15% Ni. |
Only Indicated resources have been incorporated into the mine
plan and financial model. The mineable reserve represents the portion of the
indicated resource that can be economically mined as delivered to the mill, and
as demonstrated in the PFS. The reader is cautioned to note that the mineral
reserves are included within the indicated mineral resources, and are not in
addition to them. As compared to earlier resource estimates, the increased F
zone grade in the latest updated resource estimate combined with improved
deposit definition allowed for the targeting of best grade thickness in early
mine scheduling for the PFS.
Highlights of the PFS
|
• |
Validation of the 2014 Waterberg Preliminary Economic
Assessment (“PEA”) results for a large scale, shallow, decline
accessible, mechanized platinum, palladium, rhodium and gold mine. |
|
|
|
|
• |
Annual steady state production rate of 744,000 4E ounces
in concentrate. |
|
|
|
|
• |
A 3.5-year construction period. |
|
|
|
|
• |
Onsite life-of-mine average cash cost of $248 per 4E
ounce including by-product credits and exclusive of smelter discounts. |
|
|
|
|
• |
After-tax Net Present Value (“NPV”) of $320
million, at an 8% discount rate, using three-year trailing average metal
prices. |
|
|
|
|
• |
After-tax NPV of $507 million, at an 8% discount rate,
using investment bank consensus average metal prices. |
|
|
|
|
• |
Estimated capital to full production of approximately
$1.06 billion including $67 million in contingencies. Peak
project funding estimated at $914 million.
Capital costs to full production and peak funding of the project are
estimated in Rand 2016 terms at 15R/1USD with a flat exchange rate.
Escalation of costs in Rand terms are estimated to be mostly offset over
time by future Rand devaluation. |
16
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
| • |
After-tax Internal Rate of Return
(“IRR”) of 13.5% using three-year trailing average price deck. |
|
|
| • |
After-tax IRR of 16.3% at investment bank
consensus average metal prices. |
|
|
| • |
Probable reserves of 12.3 million 4E ounces
(2.5 g/t 4E cut-off). |
|
|
| • |
Indicated resources updated to 24.9 million 4E
ounces (2.5 g/t 4E cut-off) and deposit remains open on strike to the
north and below a 1,250 meter arbitrary depth cut-off. |
As a result of the shallow depth, good grades and a fully
mechanized mining approach, the Waterberg Project has the opportunity to be a
safe mine within the lowest quartile of the Southern Africa 4E industry cost
curve. The project resources consist of 60% palladium and the PFS estimates that
Waterberg will produce approximately 744,000 4E ounces per year at full
production, of which 472,000 ounces would be palladium annually.
It is estimated that Waterberg will create approximately 3,361
new primary highly trained jobs with transferable skills. The increased safety,
improved working conditions, low costs and decline access for rapid development
all provide attractive features compared to traditional platinum and palladium
mines in South Africa. The project is in an area prioritized for economic
development. Relations with the small rural community in the area have been
business like and positive.
The estimates for the scope of work, within the given battery
limits, and subject to the qualifications, assumptions and exclusions contained
in the PFS, are considered to be within the accuracy range required for a PFS of
+25%. Monte Carlo simulation was used to provide a 12% contingency that
was used in the estimates. A minimum mining width has been set at three meters
so that all mining can be fully mechanized, safe and efficient
Waterberg Projects – History of Acquisition
The Waterberg JV Project is comprised of a contiguous granted
prospecting right area of approximately 255 km2 located on the
Northern Limb of the Bushveld Complex, approximately 70 km north of the town of
Mokopane (formerly Potgietersrus). The adjacent Waterberg Extension property
includes contiguous granted and applied-for prospecting rights with a combined
area of approximately 864 km2. The Company has the exclusive right to
apply for renewals of the prospecting rights for periods not exceeding three
years each and the exclusive right to apply for a mining right over these
prospecting right areas.
On September 28, 2009, PTM RSA, JOGMEC and Mnombo entered into
a joint venture agreement, as later amended on May 20, 2013 (the “JOGMEC
Agreement”) whereby JOGMEC could earn up to a 37% participating interest in
the Waterberg JV Project for an optional work commitment of $3.2 million over
four years, while at the same time Mnombo could earn a 26% participating
interest in exchange for matching JOGMEC’s expenditures on a 26/74 basis ($1.12
million).
On November 7, 2011, the Company entered into an agreement with
Mnombo whereby the Company acquired 49.9% of the issued and outstanding shares
of Mnombo in exchange for cash payments totaling R1.2 million and an agreement
that the Company would pay for Mnombo's 26% share of costs on the Waterberg JV
Project until the completion of a feasibility study.
On May 26, 2015, the Company announced a second amendment (the
“2nd Amendment”) to the JOGMEC Agreement. Under
the terms of the 2nd Amendment, the Waterberg JV Project and
Waterberg Extension Project are to be consolidated and contributed into a newly
created operating company named Waterberg JV Resources (Pty) Ltd. (“Waterberg
JV Co.”). The Company is to hold 45.65% of Waterberg JV Co. while JOGMEC is
to hold 28.35% and Mnombo is to hold 26%. Through its 49.9% share of Mnombo, the
Company will hold an effective 58.62% of Waterberg JV Co., post-closing. Under
the 2nd Amendment, JOGMEC has committed to fund $20 million in
expenditures over a three-year period ending March 31, 2018, of which
approximately $13.02 million was funded to November 30, 2016. The Company
remains the Project operator under the 2nd Amendment. Closing of this
transaction is subject to MPRDA Section 11 approval by the DMR to transfer title
of the prospecting rights. If Section 11 transfer approval is not obtained, the
parties will default to the pre-amendment JV arrangement, with any advances
received from JOGMEC to be used to offset its spending commitments on the
Waterberg JV Project.
The Company carried Mnombo’s 26% share of expenses in the
Waterberg project until March 31, 2015, after which time JOGMEC has been funding expenses under the terms of the
2nd Amendment.
17
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
NON-MATERIAL MINERAL PROPERTY INTERESTS
The non-material mineral property interests of the Company
include the War Springs and Tweespalk projects located in South Africa and
various Canadian mineral property interests in Ontario, the Northwest
Territories and Newfoundland and Labrador. These non-material property interests
are not, individually or collectively, material to the Company. All non-material
properties have been written off and are also described in the Company’s audited
annual consolidated financial statements for the year ended August 31, 2016 and
the AIF, copies of which may be obtained online on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
| 3. |
DISCUSSION OF OPERATIONS AND FINANCIAL
CONDITION |
| A) |
Liquidity and Capital
Resources |
Equity Financings
On November 1, 2016, the Company announced the closing of an
offering of 22,230,000 common shares at a price of $1.80 per share resulting in
gross proceeds of $40 million. Details of this offering may be found in the
Company’s October 25, 2016 Prospectus Supplement to a Short Form Base Shelf
Prospectus dated October 14, 2016. Net proceeds to the Company after fees,
commissions and costs were approximately $37 million.
On January 31, 2017, the Company announced the closing of an
offering of 19,693,750 common shares at a price of $1.46 per share resulting in
gross proceeds of $29 million. Details of this offering may be found in the
Company’s January 24, 2017 Prospectus Supplement to a Short Form Base Shelf
Prospectus dated October 14, 2016. Net proceeds to the Company after fees,
commissions and costs were approximately $26 million.
The following is a reconciliation for the use of proceeds from
the November 1, 2016 and January 31, 2017 offerings:
|
|
As Estimated in |
As Estimated in |
|
|
|
Use of Proceeds |
the October 25, |
the January 24, |
Aggregate |
Actual to |
|
(In millions of dollars) |
2016 Prospectus |
2017 Prospectus |
Amount |
February 28, |
|
|
Supplement |
Supplement |
|
2017(1) |
|
Project 1 underground development |
$ 22.0 |
$ 8.50 |
$ 30.5 |
$33.40 |
|
and production ramp-up costs |
|
|
|
|
|
(100% basis)(2) |
|
|
|
|
|
Working capital during start-up(3) |
$ 9.4 |
$ 4.0 |
$ 13.4 |
$2.44 |
|
Repayment of Second Sprott |
$ 5.0 |
$ - |
$ 5.0 |
$2.50 |
|
Advance(4) |
|
|
|
|
|
General corporate purposes |
$ 0.56 |
$ 13.88 |
$ 14.44 |
$ - |
|
Total |
$ 36.96 |
$ 26.38 |
$ 63.34 |
$38.34 |
Explanatory Notes:
| (1) |
This column shows only the portion of the net proceeds of
the November 1, 2016 and January 31, 2017 offerings that were spent during
the period of November 1, 2016 to February 28, 2017. |
| (2) |
Assumed that Africa Wide would elect not to contribute to
Maseve in order to match its pro rata share of Project 1 funding. Any
funding from Africa Wide or a new joint venture partner would reduce the
Company’s funding requirements. |
| (3) |
May be used for interest payable under the Sprott
Facility, wages and salaries and other estimated general and
administrative costs. |
| (4) |
The proceeds from the Second Sprott Advance (as defined
below) were used to fund underground development and production ramp-up at
Project 1. The Sprott Lenders (as defined below) elected for earlier
repayment of one half of the Second Sprott Advance from the proceeds of
the November 1, 2016 offering. The balance of the Second Sprott Advance is
to be repaid in six equal monthly instalments beginning July 31,
2017. |
18
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Sprott Facility
On February 13, 2015, the Company entered into a secured credit
agreement with a syndicate of lenders (the “Sprott Lenders”) led
by Sprott Resource Lending Partnership (“Sprott”) for a senior secured
loan facility (the “Original Sprott Facility”) of up to $40 million. On
November 20, 2015, the Company drew down $40 million under the Original Sprott
Facility. The Original Sprott Facility was amended on November 19, 2015, May 3,
2016, September 19, 2016 and January 13, 2017.
The Sprott Facility was amended and restated on October 11,
2016 (as so amended and restated and as further amended on January 13, 2017 and
April 13, 2017, the “Sprott Facility”) and a further $5 million (the
“Second Sprott Advance”) was drawn down October 12, 2016 with half of
this amount repaid at the request of Sprott in November 2016. The remaining $2.5
million principal balance of the Second Sprott Advance is to be repaid using the
net proceeds of equity or debt financings (excluding intercompany financings)
that close after April 13, 2017. The maturity date of the Sprott Facility is
December 31, 2018. The outstanding principal under the Sprott Facility is
payable in 12 monthly instalments during calendar 2018, subject to certain
mandatory prepayment provisions under the Sprott Facility. Interest is
compounded and payable monthly at an interest rate of LIBOR plus 8.50% . The
Sprott Lenders have a first priority lien on (i) the issued shares of PTM RSA
held by the Company (and such other claims and rights described in the
applicable pledge agreement) and (ii) all present and after-acquired personal
property of the Company. The Sprott Facility is also guaranteed by PTM RSA.
The Company has made certain payments to the Sprott Lenders in
connection with the Original Sprott Facility and the Sprott Facility, including
(a) the issuance of 348,584 common shares in connection with the November 2015
draw down of the Original Sprott Facility; (b) a structuring fee comprised of a
cash payment in the amount of $100,000, paid concurrently with the execution and
delivery of the term sheet for the Original Sprott Facility; (c) a bonus payment
in the amount of $1,500,000, payable in the form of 283,019 common shares issued
concurrently with the execution of the Original Sprott Facility, (d) a standby
fee in cash equal to 4% per annum of the daily unadvanced principal amount of
the Sprott Facility payable in monthly instalments until December 31, 2015; (e)
the issuance of 131,654 common shares in connection with the May 2016 amendment;
(f) the issuance of 801,314 common shares in connection with the September 2016
amendment (g) the issuance of 113,963 common shares in connection with the
Second Sprott Advance; and (h) the issuance of 275,202 shares in connection with
the January 2017 amendment.
LMM Facility
On November 20, 2015, the Company also drew down $40 million
from its secured loan facility (the “LMM Facility”) pursuant to the
second lien credit agreement entered into on November 2, 2015, which was later
amended on May 3, 2016, September 19, 2016, January 13, 2017 and April 13, 2017
(as so amended, the “LMM Credit Agreement”), with a major shareholder,
Liberty Metals & Mining Holdings, LLC (“LMM”).
The interest rate on the LMM Facility is LIBOR plus 9.5% .
Interest payments on the LMM Facility were to be accrued and capitalized until
December 31, 2016, and then paid to LMM quarterly thereafter. On September 19,
2016, the LMM Facility was amended so interest payments will now be due starting
December 31, 2017, while the first 20% of principal is to now be repaid on June
30, 2019 and then in tranches of 10% of the principal at the end of each
calendar quarter beginning on September 30, 2019 and for each of the next seven
quarters of the LMM Facility. Under the LMM Credit Agreement and subject to the
conditions therein, LMM has a right of first offer in the event the Company, PTM
RSA, or certain subsidiaries of the Company and PTM RSA wish to undertake a debt
financing.
LMM has a second priority lien on (i) the issued shares of PTM
RSA held by the Company (and such other claims and rights described in the
applicable pledge agreement) and (ii) all present and after-acquired personal
property of the Company. The LMM Facility is also guaranteed by PTM RSA. LMM and
Sprott entered into an intercreditor agreement under which, among other things,
LMM agreed to subordinate certain rights and to be bound by certain restrictions
in favor of Sprott.
Pursuant to the LMM Credit Agreement the Company entered into a
life of mine Production Payment Agreement (“PPA”) with LMM. Under the
PPA, the Company agreed to pay to LMM a production payment of 1.5% of net
proceeds received on concentrate sales or other minerals from the Maseve Mine
and Project 3 (the “Liberty Production Payment”). Under the
September 2016 amendment the Company no longer has the right to buy back 1% of
the 1.5% Liberty Production Payment.
19
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
An event of default under the PPA triggers the payment of a
termination fee based on a net present value of the Liberty Production Payments
to be made under the PPA at a 5% discount rate. An event of default under the
Sprott Facility or the LMM Facility is also treated as an event of default under
the PPA. The Company holds the right to terminate the PPA upon payment of the
termination fee.
The PPA is secured with the second lien position of the LMM
Facility until it is repaid. The PPA will be acknowledged in any subsequent debt
arrangement of the Company. The Company has a right to refinance the Sprott
Facility or the LMM Facility, subject to certain rights granted to LMM under the
PPA.
The Company has made certain payments to LMM in connection with
the LMM Facility, including (a) the issuance of 348,584 common shares in
connection with the November 2015 draw down of the LMM Facility; (b) the
issuance of 131,654 common shares in connection with the May 2016 amendments;
(c) the issuance of 801,314 common shares in connection with the September 2016
amendments; and (d) the issuance of 293,616 common shares in connection with the
January 2017 amendments.
Additional Terms of Facilities
Under the Sprott Facility and the LMM Facility the Company has
agreed to covenants that are customary and usual for facilities and agreements
of this nature, including:
|
- |
Subject to the April 2017 amendments to the Sprott
Facility and the LMM Facility, the maintenance of working capital in
excess of $5,000,000; |
| |
|
|
- |
Subject to the April 2017 amendments to the Sprott
Facility and the LMM Facility, maintaining a minimum of $5,000,000 in
unrestricted cash and cash equivalents; |
| |
|
|
- |
In the case of the LMM Facility, maintenance of a debt
service coverage ratio on a rolling four quarter basis of at least 1.20:1;
|
| |
|
|
- |
Compliance in all material respects with all applicable
securities legislation and continuous disclosure obligations; |
| |
|
|
- |
Compliance in all material respects with all applicable
law, including environmental laws; |
| |
|
|
- |
Diligent pursuit of construction completion of the Maseve
Mine and the achievement of production targets; |
| |
|
|
- |
Restrictions on the incurrence of debt and liens and the
making of investments and restricted payments, except as set forth in the
Sprott Facility and the LMM Facility; and |
| |
|
|
- |
In the case of the LMM Facility, an agreement to pay LMM
cash sweep amounts equal to 50% of excess cash flow on a quarterly basis.
|
January 2017 Amendments
Based on delays to the ramp up of production (as described
above), the Sprott Facility and the LMM Facility were amended in January 2017 to
revise certain production target provisions, to update the planned production
figures, and to waive the application of a working capital requirement. The
Sprott Facility was also amended in January 2017 to postpone the commencement of
the requirement to pay the Sprott Lenders 50% of the proceeds of equity and debt
financings (excluding intercompany financings) of the Company or its
subsidiaries having a value exceeding $1,000,000 in the aggregate, in partial
repayment of the Sprott Facility.
In consideration of the above amendments, the Company paid an
amount equal to $425,000 to the Sprott Lenders and an amount equal to $453,440
to LMM (collectively, the “Amendment Fee”), in each case representing 1%
of the outstanding principal amount of the applicable facility, payable by the
issuance of 275,202 Company common shares to the Sprott Lenders and 293,616
Company common shares to LMM (collectively, the “Amendment Fee Shares”).
The Amendment Fee Shares were issued at a deemed price of C$2.0277, equal to the
volume weighted average trading price of the Company’s common shares on the
Toronto Stock Exchange for the 10 trading days immediately prior to the date of
the amendments, less a 10% discount, converted into Canadian dollars using the
Bank of Canada noon spot rate for the purchase of Canadian dollars on the first
business day immediately preceding the date of the amendments.
April 2017 Amendments
20
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Based on delays to the ramp up of production (as described
above), the Sprott Facility and the LMM Facility were further amended, with no
amendment fee payable to Sprott or LMM, in April 2017 to:
|
• |
revise production target provisions, to require the
Maseve Mine to reach and maintain a three-month rolling average of (i) at
least 60% of planned production for a three-month period commencing March
31, 2017 (instead of January 31, 2017) and (ii) at least 70% of planned
production after June 30, 2017 (instead of April 30, 2017), and to update
the planned production figures; and |
|
|
|
|
• |
waive until May 31, 2017, the covenant to maintain at all
times a working capital in excess of $5,000,000 and a minimum of
$5,000,000 in unrestricted cash and cash equivalents.
|
The Sprott Facility was also amended to:
|
• |
postpone from March 31, 2017 to June 30, 2017 the
commencement of the requirement to pay the Sprott Lenders 50% of the
proceeds of equity and debt financings (excluding intercompany financings)
of the Company or its subsidiaries having a value exceeding $1,000,000 in
the aggregate, in partial repayment of the Sprott Facility; and |
|
|
|
|
• |
require repayment of the outstanding portion of the
Second Sprott Advance in full using the net proceeds of any equity or debt
financings (excluding intercompany financings) that close after April 13,
2017 (otherwise to be paid in six equal installments commencing July 31,
2017). |
Additional Commentary
Production to date is significantly behind plan due to delays
in underground development and other factors as discussed above at
“PROPERTIES - SOUTH AFRICAN PROPERTIES - Maseve Mine - Maseve –
Operations”. The Company’s engineers and mining personnel are working to
rectify these operational issues. The rate of underground development at the
Maseve Mine is an important factor with respect to mine ramp up and production
rates. Further delays in underground development, stoping rates and planned
tonnages may result in further production delays that will negatively impact on
working capital requirements until mine operations generate positive cash flow.
As development reaches planned mine blocks, increased stoping is scheduled and
the successful execution of this stoping will be critical to meeting planned
production rates and ramp up. If the Company is not able to achieve its
aggressive ramp up of production targets in the months ahead, metals prices
deteriorate, or further delays are experienced in ramp up production the Company
may not have sufficient working capital for operations and planned debt
repayments. Current working capital is below planned levels until positive
cashflow is scheduled to be achieved.
Changes and improvements in mine operations planned in January
and February 2017 began taking effect during March 2017. This delay combined
with a strengthening Rand has resulted in lower than planned working capital
balances at the time of writing. In order to achieve positive cash flow and to
maintain its financial covenants under the Sprott Facility and the LMM Facility
the Company estimates that it will need to source $10 million to $15 million of
additional funding by way of refinancing its existing debt, the issuance of new
debt, private or public offerings of equity or the sale of project or property
interests. Metal prices and Rand exchange rates may have material effects on the
Company and its requirements for further financing. Recent credit rating agency
downgrades of South Africa's sovereign credit to junk status has weakened the
Rand and may continue to influence the Rand to US Dollar exchange rate in future
periods. Any failure by the Company to obtain required financing on acceptable
terms could cause the Company to delay development of its material projects or
could result in the Company being forced to sell some or all of its assets on an
untimely or unfavourable basis.
Contractual Obligations
The following table discloses the Company’s contractual
obligations as at February 28, 2017:
|
|
|
Payments Due By Period (In
thousands of dollars) |
|
|
|
|
< 1 |
|
|
1 – 3 |
|
|
4 – 5 |
|
|
> 5 |
|
|
Total |
|
|
|
|
Year |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
|
|
|
Lease
obligations |
$ |
510 |
|
$ |
1,435 |
|
$ |
- |
|
$ |
- |
|
$ |
1,847 |
|
|
ESKOM – power |
|
3,593 |
|
|
- |
|
|
- |
|
|
- |
|
|
3,593 |
|
|
Mining Development |
|
9,420 |
|
|
- |
|
|
- |
|
|
- |
|
|
9,420 |
|
|
Mining Indirect and Other |
|
596 |
|
|
- |
|
|
- |
|
|
- |
|
|
596 |
|
|
Sprott Facility |
|
13,446 |
|
|
34,925 |
|
|
- |
|
|
- |
|
|
48,371 |
|
|
Liberty Facility
|
|
- |
|
|
56,626 |
|
|
11,517 |
|
|
- |
|
|
68,143 |
|
|
Totals |
$ |
27,565 |
|
$ |
92,888 |
|
$ |
11,517 |
|
$ |
- |
|
$ |
131,970 |
|
21
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
Accounts Receivable and Payable
Accounts receivable at February 28, 2017 totaled $5.3 million
(August 31, 2016 - $6.1 million) being comprised mainly of pre-production
proceeds of $2.2 million in the current period ($2.8 million at August 31, 2016)
and value added taxes refundable in South Africa of $2.6 million ($1.8 million
at August 31, 2016). Accounts payable and accrued liabilities at February 28,
2017 totaled $15.2 million (August 31, 2016 - $16.9 million).
Six Months Ended February 28, 2017
For the six months ended February 28, 2017, the Company had a
net loss of $59 million (February 29, 2016 – net loss of $2.5 million). This
difference is predominantly due to an impairment of the Maseve property of $55
million during the period. Also, stock compensation expense of $1.1 million was
recognized in the current period (February 29, 2016 – $0.09 million) with the
difference due to more rapid vesting of share based compensation issued in the
current period. General and administrative costs dropped from $3.0 million in
the previous comparable period to $2.6 million in the current period. The
currency translation adjustment recognized in the period is a gain of $52
million (February 29, 2016 - $79 million loss) due to an 11% increase in value
of the Rand against the US Dollar in the current period as compared to a 20%
decrease in the value of the Rand in the previous comparable period.
Three Months Ended February 28, 2017
For the three months ended February 28, 2017, the Company had a
net loss of $56 million (February 29, 2016 – net loss of $1.8 million). This
difference is predominantly due to an impairment of the Maseve property of $55
million during the period. General and administrative costs dropped from $1.6
million in the previous quarter to $1.4 million in the current quarter.
Comprehensive loss for the quarter was $22 million (February 29, 2016 – $40
million loss) with the Maseve impairment being partially offset by a currency
translation gain of $34 million in the current quarter. During the current
quarter, the Rand increased in value relative to the US Dollar while in the
previous comparable quarter, the Rand decreased in value relative to the US
Dollar.
| C) |
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)
22
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
| Quarter ended |
|
Feb. 28, |
|
|
Nov. 30, |
|
|
Aug. 31 |
|
|
May 31, |
|
| ($000's, except per share data) |
|
2017 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
| Interest income(1) |
|
349 |
|
|
300 |
|
$ |
316 |
|
$ |
294 |
|
| Net income (loss)(2) |
|
(56,288 |
) |
|
(2,450 |
) |
|
(35,021 |
) |
|
892 |
|
| Basic earnings(loss) per
share(3) |
|
(0.39 |
) |
|
(0.03 |
) |
|
(0.21 |
) |
|
0.01 |
|
| Total
assets(4) |
|
587,326 |
|
|
576,842 |
|
|
519,858 |
|
|
517,799 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Feb. 29, |
|
|
Nov. 30, |
|
|
Aug 31, |
|
|
May 31, |
|
| Quarter ended |
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
| ($000’s, except share data) |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income(1) |
|
240 |
|
|
283 |
|
$ |
763 |
|
$ |
1,074 |
|
| Net income (loss)(2) |
|
(1,810 |
) |
|
(712 |
) |
|
(191 |
) |
|
(2,661 |
) |
| Basic earnings(loss) per share(3) |
|
(0.02 |
) |
|
(0.01 |
) |
|
(0.00 |
) |
|
(0.03 |
) |
| Total assets(4) |
|
482,264 |
|
|
525,864 |
|
|
498,342 |
|
|
531,606 |
|
Explanatory Notes:
| (1) |
The Company earns income from interest bearing accounts
and deposits. Rand balances earn significantly 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) |
Net (loss) income by quarter is affected by the timing
and recognition of large non-cash items. In the quarters ended February
28, 2017 and August 31, 2016 impairment charges of $55 million and $41.4
million respectively were recognized relating to the Maseve Mine. In the
quarter ended February 28, 2015 and February 28, 2017 there were material
share-based compensation expenses. Net (loss) income can also be impacted
by the value of the Rand and the U.S. Dollar relative to the Canadian
Dollar as the Company currently and in the past has held significant
portions of its cash in each currency. At the end of each reporting period
Rand and U.S. Dollar cash balances are translated to Canadian Dollars at
period end exchange rates. |
| (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. |
| (4) |
At February 28, 2017, November 30, 2016 and May 31, 2016
the Company’s assets increased compared to prior periods as a result of
equity offerings. |
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 all available funds will be invested to finance
its business.
| E) |
Related Party Transactions |
Transactions with related parties are as follows (in
thousands of dollars):
|
i. |
During the six months ended February 28, 2017, $117 ($119
– February 29, 2016) was paid to independent directors for directors’ fees
and services. |
|
|
|
|
ii. |
During the Second Quarter, the Company accrued or
received payments of $27 ($38 – February 29, 2016) from West Kirkland
Mining Inc. (“West Kirkland”), a company with two directors in
common, for administrative services. Amounts receivable at the end of the
year include an amount of $28 ($15 – February 29, 2016) due from West
Kirkland. |
|
|
|
|
iii. |
In fiscal 2016, the Company entered into a loan facility
agreement with LMM, a significant shareholder. The loan was negotiated and
entered into on commercial terms. For full details on this transaction
please see note 6 in the Company’s condensed consolidated interim
financial statements. |
All amounts receivable and accounts payable owing to or from
related parties (excluding the LMM Facility) are non-interest bearing with no
specific terms of repayment. These transactions are in the normal course of
business and are recorded at consideration established and agreed to by the
parties.
| F) |
Off-Balance Sheet
Arrangements |
The Company does not have any special purpose entities nor is
it party to any off-balance sheet arrangements.
23
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
| G) |
Outstanding Share Data |
The Company has an unlimited number of common shares authorized
for issuance without par value. At February 28, 2017, there were 133,066,187
common shares outstanding and 4,726,875 incentive stock options outstanding at
exercise prices of C$2.00 to C$14.00. At April 17, 2017, there were 133,066,187
common shares issued and outstanding and 4,726,875 incentive stock options
outstanding. During the Second Quarter, the Company made no changes to the
exercise price of outstanding options through cancellation and re-grant.
Outstanding options were adjusted to conform with the Company’s announced
consolidation of its common shares effective January 2016.
| H) |
Annual General Meeting |
At the Company’s Annual General Meeting held on February 23,
2017 in Vancouver, BC, shareholders representing over 75% of its issued shares
voted. The number of directors was fixed at seven and the shareholders elected
management’s seven nominees for directors. The Board of Directors is unchanged
from the previous year.
Shareholders voted 98.56% in favour of re-appointing
PricewaterhouseCoopers LLP as auditors, and to authorize the directors to fix
the auditor’s remuneration for the ensuing year.
Shareholders voted 80.07% in favour of a new Share Compensation
Plan. The plan was closely modelled on another approved plan for a major mining
company. Subsequent to approval, the Company made an administrative amendment to
the Share Compensation Plan to add a “Claw Back” provision. Under the Claw Back
provision, if there is a restatement of the financial results of the Company,
other than due to a change in applicable accounting methods, rules, or
interpretations, and the result of such restatement is that any
performance-based compensation issued, paid, granted, or awarded to any
executive officer of the Company would have been lower had it been calculated
based on such restated results, then the Company may, in certain circumstances,
cancel, rescind, or otherwise seek to recover from such executive officer the
excess performance-based compensation paid, for the benefit of the Company.
The Company’s key business objectives are to improve
operational efficiency and advance underground development and production ramp
up at the Maseve Mine with the objective of achieving positive cash flow in
calendar 2017 and to advance the Waterberg Project. Twelve-month aggregate
production guidance at the Maseve Mine for calendar 2017 is now modelled at
approximately 85,000 4E ounces. Prior production guidance should not be relied
upon.
In the near term, the Company’s liquidity will be constrained
as development at the Maseve Mine will continue to utilize a majority of the
Company’s cash on hand until production increases and positive cash flow is
achieved. Lower metal prices, delays in production ramp up or a stronger Rand
could all result in requirements for further financing. Development work in
Blocks 12, 11, 10 and 9 in the north mine and Block 16 in the south mine are
critical to the underground mining plans and ramp up profile of production for
the Maseve Mine. The Company commenced production largely with low grade
stockpile material to hot commission and balance the mill and flotation
circuits. Milling has continued since then primarily with low grade stockpile
material and muck from primary access headings developed on reef. The volume of
stoping material at improved grades in accordance with the mine plan must
increase as planned by operating management to meet the production ramp-up rates
and production covenants per the Sprott Facility and LMM Facility. To meet
production targets at the Maseve Mine, a significant performance improvement is
required in development and stoping rates. The Company has a history over the
past year of not achieving its plan and further delays in the planned production
will increase the Company’s working capital needs which are further described
above. Adverse developments such as contractor under-performance, Section 54
delays or labour disputes could have a negative impact on planned production and
working capital. As described above at “PROPERTIES - SOUTH AFRICAN PROPERTIES
- Maseve Mine - Maseve – Operations”, changes
are being made to operations, contracts and contractors to achieve these
improvements. The execution of these changes may also create a risk of
disruption to operations.
The Company plans to advance the Waterberg Project to
completion of a feasibility study and a construction decision. Drilling to
increase the confidence in certain areas of the known mineral resource to the
measured category is planned to resume with JOGMEC funding in April 2017.
Engagement with utilities for the delivery of bulk services is in process.
Engineering work on the Waterberg Project includes resource modelling,
metallurgical work, optimization of the metallurgical flow sheet using South
African and Japanese expertise, bulk services design and mechanized mine
planning. Optimization of the mine plan and working on reducing underground
sustaining development capital will be part of the upcoming feasibility study. The Company also plans to
file a mining right application, with joint venture approval, based
substantially on the results of the PFS. At the time of writing approximately
$5.3 million in committed funding for further drilling and engineering at
Waterberg remains to be paid by JOGMEC pursuant to the 2nd Amendment.
This funding will allow the project to advance in 2017.
24
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
The Company is currently working with BMO Capital Markets and
Macquarie Capital to review and assess corporate and asset level strategic
alternatives.
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 AIF.
| 5. |
CRITICAL ACCOUNTING
ESTIMATES |
The preparation of the Company’s condensed consolidated interim
financial statements in conformity with IFRS requires 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 annual consolidated financial
statements for the year ended August 31, 2016.
Review of asset carrying values and impairment
In accordance with the Company’s accounting policy, each asset
or cash generating unit is evaluated every reporting period to determine whether
there are any indications of impairment. If any such indication exists, a formal
estimate of recoverable amount is performed and an impairment loss is recognised
to the extent that the carrying amount exceeds the recoverable amount. The
recoverable amount of an asset or cash generating group of assets is measured at
the higher of fair value less costs to sell and value in use.
The determination of fair value less costs to sell and value in
use requires management to make estimates and assumptions about expected
production, commodity prices, reserves, operating costs, closure and
rehabilitation costs and future capital expenditures. The estimates and
assumptions are subject to risk and uncertainty; hence there is the possibility
that changes in circumstances will alter these projections, which may impact the
recoverable amount of the assets. In such circumstances, some or all of the
carrying value of the assets may be further impaired or the impairment charge
reduced with the impact recorded in the income statement.
Asset Retirement Obligations
The amounts recorded for asset retirement costs are based on
estimates included in closure and remediation plans. These estimates are based
on engineering studies of the work that is required by environmental laws. These
estimates include an assumption on the rate at which costs may inflate in future
periods. Actual costs and the timing of expenditures could differ from these
estimates.
Deferred tax assets, liabilities and resource taxes
The determination of the Company’s future tax liabilities and
assets involves significant management estimation and judgment involving a
number of assumptions. In determining these amounts the Company interprets tax
legislation in a variety of jurisdictions and make estimates of the expected
timing of the reversal of future tax assets and liabilities. The Company also
makes estimates of the Company’s future earnings which affect the extent to
which potential future tax benefits may be used. The Company is subject to
assessment by various taxation authorities, which may interpret tax legislation
in a manner different from the Company’s view. These differences may affect the
final amount or the timing of the payment of taxes. When such differences arise,
the Company makes provision for such items based on the Company’s best estimate
of the outcome of these matters.
Achievement of commercial production
Once a mine reaches the operating levels intended by
management, the recognition of mining revenues as well as depreciation of
capitalized costs begins. Significant judgement is required to determine when
certain of the Company’s assets reach this level; management must consider
several factors including:
25
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
|
• |
completion of a reasonable period of commissioning;
|
|
|
|
|
• |
consistent operating results are being achieved at a
pre-determined level of design capacity and indications exist that this
level will continue; |
|
|
|
|
• |
mineral recoveries are at or near expected production
level, and; |
|
|
|
|
• |
the transfer of operations from development personnel to
operational personnel has been completed. |
Commercial production will be declared on the first day of the
month following achievement of the above milestones. Once in commercial
production, the capitalization of certain mine development and construction
costs cease. Subsequent costs are either regarded as forming part of the costs
of inventory or expensed. Any costs relating to mining asset additions or
improvements or mineable reserve development will be assessed to determine
whether capitalization is appropriate.
Classification of Liberty Production Payment
Significant judgement is required in determining the
appropriate accounting for the Liberty Production Payment. Based on the specific
facts and circumstances, judgement is required to assess whether the arrangement
is a commodity agreement, a financial liability or a sale of a mineral interest.
Management has determined that based on covenants that connect the Liberty
Production Payment to the LMM Credit Agreement, management has not transferred
the risk of ownership of the ounces to LMM and the Liberty Production Payment
will be treated as a financial liability at fair value through profit or loss.
This treatment will be re-visited in the future if terms of the loan or
production payment are changed or if the loan is extinguished.
Fair Value of the Liberty Production Payment
Management has assessed the value of the Liberty Production
Payment at the net present value of future production payments over the life of
the Maseve Mine. The Company will continue to evaluate on an ongoing basis
whether there are material changes to the inputs in the valuation and adjust the
valuation of the Liberty Production Payment accordingly.
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 closing 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. Assumptions that are valid at
the time of estimation 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 on depreciation and amortization rates, asset carrying values and
provisions for closure and restoration costs.
| 6. |
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 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
26
Platinum Group Metals Ltd.
(An Exploration and Development
Stage Company)
Supplementary Information and MD&A
For the period
ended February 28, 2017
No change in the Company’s internal control over financial
reporting occurred during the period ended February 28, 2017 that has, or is
reasonably likely to, materially affect the Company’s internal control over
financial reporting.
Additional information relating to the Company for the Second
Quarter 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 annual consolidated financial statements for the year ended August 31,
2016 together with the notes thereto as well as the AIF.
| 8. |
LIST OF DIRECTORS AND
OFFICERS |
| a) Directors: |
|
b) Officers: |
| |
|
|
| R. Michael Jones |
Barry W. Smee |
R. Michael Jones (CEO) |
| Frank R. Hallam |
Timothy Marlow |
Frank R. Hallam (CFO & Corporate Secretary)
|
| Iain McLean |
Diana Walters |
Kris Begic (VP, Corporate Development) |
| Eric Carlson |
|
|
27
