-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LpVqKutxlPf+jhOhSPsTHuL8zC3Si5itHplHLd6U9yGdq3gWM8+Bj9e13sC+kiJw bOL9BHyJrmtQ2FK8fV4Rig== 0001095052-09-000002.txt : 20090121 0001095052-09-000002.hdr.sgml : 20090121 20090121140526 ACCESSION NUMBER: 0001095052-09-000002 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 23 CONFORMED PERIOD OF REPORT: 20090120 FILED AS OF DATE: 20090121 DATE AS OF CHANGE: 20090121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLATINUM GROUP METALS LTD CENTRAL INDEX KEY: 0001095052 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33562 FILM NUMBER: 09536440 BUSINESS ADDRESS: STREET 1: 328 - 550 BURRARD STREET STREET 2: SUITE 800 CITY: VANCOUVER STATE: A1 ZIP: V6C 2B5 BUSINESS PHONE: 6048995450 MAIL ADDRESS: STREET 1: 328 - 550 BURRARD STREET STREET 2: SUITE 800 CITY: VANCOUVER STATE: A1 ZIP: V6C 2B5 FORMER COMPANY: FORMER CONFORMED NAME: NEW MILLENNIUM METALS CORP DATE OF NAME CHANGE: 19990915 6-K 1 form6k_090120.htm FORM 6K FOR JAN 20 2009 form6k_090120.htm

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934



For the period of: December 23, 2008 to January 16, 2009


Platinum Group Metals Ltd.
(SEC File No. 0-30306)

Suite 328 – 550 Burrard Street, Vancouver BC, V6C 2B5, CANADA
Address of Principal Executive Office
 
Indicate by check mark whether the registrant files or will file annual reports under cover:  Form 20-F [  ] Form 40-F  [X]
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [   ]
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [   ]
 
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:  Yes  [   ]  No  [X]

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-___________

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

 
Date: January 21, 2009
“R. Michael Jones”
 
R. MICHAEL JONES
PRESIDENT & CEO

 
 
 
 
EX-99.01 2 financials090114.htm 2009 Q1 FINANCIALS financials090114.htm

 








PTM logo


Platinum Group Metals Ltd.
(Exploration and Development Stage Company)
 
Interim Consolidated Financial Statements
For the quarter ended November 30, 2008


Filed: January 14, 2009


The attached interim financial statements have not been reviewed by the Company’s auditor








A copy of this report will be provided to any shareholder who requests it.
 
 
 

 
 

 

2009 Q1 Balence Sheet
 

 

2009 Q1 Statement of Operations
 
2009 Q1 Shareholder Equity
 
2009 Q1 Cash Flow

 
1.           NATURE OF OPERATIONS
 
The Company is a British Columbia corporation incorporated on February 18, 2002 by an order of the Supreme Court of British Columbia approving an amalgamation between Platinum Group Metals Ltd. and New Millennium Metals Corporation (“New Millennium”). The Company is an exploration and development company conducting work on mineral properties it has staked or acquired by way of option agreements in Ontario, Canada and the Republic of South Africa.

These unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) on a going concern basis that presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future.  The Company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long-term. The Company’s ability to continue as a going concern is dependent upon its ability to attain future profitable operations and to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company not be able to continue as a going concern.  When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern, those uncertainties shall be disclosed

 
2.           SIGNIFICANT ACCOUNTING POLICIES
 

(a)           Basis of presentation and principles of consolidation
 
The financial statements of entities which are controlled by the Company through voting equity interest, referred to as subsidiaries, are consolidated. Variable interest entities (“VIEs”), which include, but are not limited to, special purpose entities, trusts, partnerships and other legal structures, as defined by the Accounting Standards Board in Accounting Guideline 15, “Consolidation of Variable Interest Entities”, are entities in which equity investors do not have the characteristics of a “controlling financial interest” or there is not sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. VIEs are subject to consolidation by the primary beneficiary who will absorb the majority of the entities’ expected losses and/or residual returns.

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Platinum Group Metals (RSA) (Pty) Ltd. (“PTM RSA”). PTM RSA holds mineral rights and conducts operations in the Republic of South Africa. All significant intercompany balances and transactions have been eliminated upon consolidation.

The Company’s 37% working interest in the WBJV (Note 5) is accounted for as an investment in the WBJV.



(b)           Mineral properties and deferred exploration costs
 
Mineral properties consist of exploration and mining concessions, options, contracts and surface rights. Acquisition and leasehold costs, exploration costs and surface rights are capitalized until such time as the property is put into production or disposed of either through sale or abandonment. If put into production, the costs of acquisition and exploration will be amortized on a straight line basis over the life of the property based on the estimated economic reserves. Proceeds received from the sale of any interest in a property will first be credited against the carrying value of the property, with any excess included in operations for the period. If a property is abandoned, the property and deferred exploration costs are written off to operations.

Management of the Company reviews and evaluates the carrying value of each mineral property for impairment when events or changes in circumstances indicate that the carrying amounts of the related asset may not be recoverable. Where estimates of future net cash flows are available and the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset, an impairment loss is recognized and assets are written down to fair value which is normally determined using the discounted value of future cash flows. Where estimates of future net cash flows are not available and where other conditions suggest impairment, management assesses whether the carrying value can be recovered by considering alternative methods of determining fair value. When it is determined that a mineral property is impaired it is written down to its estimated fair value.

(c)           Cash and cash equivalents
 
Cash and cash equivalents consist of cash and short-term money market instruments, which are readily convertible to cash and have original maturities of 90 days or less. The Company holds no asset-backed commercial paper.

(d)           Reclamation and closure costs
 
The Company recognizes the estimated fair value of liabilities for asset retirement obligations including reclamation and closure costs in the period in which they are incurred. A corresponding increase to the carrying amount of the related asset is recorded and amortized over the life of the asset. The amount of the liability is subject to re-measurement at each reporting period and is accreted over time to the estimated asset retirement obligation ultimately payable through charges to operations.

The estimates are based principally on legal and regulatory requirements. It is possible that the Company’s estimates of its ultimate reclamation and closure liabilities could change as a result of changes in regulations, the extent of environmental remediation required, changes in technology and the means and cost of reclamation. Based on management’s estimates, the Company has determined that there are no significant reclamation liabilities as at year end.


(e)           Income taxes
 
Future income taxes relate to the expected future tax consequences of differences between the carrying amount of balance sheet items and their corresponding tax values. Future tax assets, if any, are recognized only to the extent that, in the opinion of management, it is more likely than not that the future income tax assets will be realized. Future income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment or substantive enactment.

 (f)           Fixed assets
 
Fixed assets are recorded at cost and are amortized at the following annual rates:
 
                Computer equipment and software
30% declining balance
                Office furniture and equipment
20% declining balance
                Vehicles                                                                30% declining balance
           Leasehold improvements                                2 years straight line

(g)           Short-term investments
 
Short-term investments comprise guaranteed investment certificates with original maturities of more than 90 days and less than one year.

(h)           Earnings (loss) per common share
 
Basic earnings (loss) per common share are calculated using the weighted average number of common shares outstanding.

The Company uses the treasury stock method for the calculation of 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 potential issuances of shares under options and share purchase warrants would be anti-dilutive, and accordingly basic and diluted loss per share are the same.

(i)           Measurement uncertainty
 
The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenditures during the reporting period. Significant items where management’s judgement is applied include the assessment of impairment of long-lived assets, amortization, income tax provisions, contingent liabilities, stock-based compensation and asset retirement obligations. Actual results could differ from those estimates.
 
 
(j)
Translation of foreign currencies
 
These consolidated financial statements are expressed in Canadian dollars. For integrated foreign operations, monetary assets and liabilities are translated at year end exchange rates and other assets and liabilities are translated at historical rates. Revenues, expenses and cash flows are translated at average exchange rates. Gains and losses on translation of monetary assets and monetary liabilities are charged to operations.

The investment in the WBJV translated at year end exchange rates, and revenues and expenses are translated at average exchange rates. Differences arising from these foreign currency translations are recorded in shareholders’ equity in accumulated other comprehensive income until they are realized by a reduction in the investment.

(k)           Stock-based compensation
 
The fair values for all stock-based awards granted are estimated using the Black-Scholes model and are recorded in operations over the period of vesting. The compensation cost related to stock options granted is recorded in operations or capitalized to the investment in WBJV or mineral properties, as applicable.

Cash received on the exercise of stock options is credited to share capital and the amount previously recognized in contributed surplus is also transferred to share capital.

(l)  
Changes in accounting policies
 
On September 1, 2008, the Company adopted the following new presentation and disclosure standards that were issued by the Canadian Institute of Chartered Accountants.  These standards were adopted on a prospective basis without restatement of prior periods.

(i)           Section 1400, General Standards of Financial Statement Presentation,
outlines the premise that in the preparation of financial statements all information required for fair presentation in accordance with generally accepted accounting principles should be included.  It also specifies the requirements for assessing an entity’s ability to continue as a going concern and disclosing any material uncertainties that cast doubt on its ability to continue as a going concern.  The Company’s disclosure reflects such assessment.


 (ii)           Section 1535, Capital Disclosures, establishes disclosure requirements regarding an entity’s capital, including (i) an entity’s objectives, policies, and processes of managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any externally imposed capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The Company has included disclosures recommended by Section 1535 in these interim consolidated financial statements.
 
(iii)           Sections 3862, Financial Instruments - Disclosures and Section 3863 Financial Instruments - Presentation, replace Section 3861 Financial Instruments – Disclosure and Presentation. These new sections revise and enhance disclosure requirements while leaving presentation requirements unchanged. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks.  The Company has included the recommended disclosures in these interim consolidated financial statements.
 
(iv)           Section 3031, Inventories, provides for more guidance on the measurement and disclosure requirements for inventories. Specifically the new pronouncement requires inventories to be measured at the lower of cost or net realizable value, and provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. The new standard has had no impact on the consolidated financial position or results of operations for the period ended November 30, 2008.
 
(v)           Section 3064, Goodwill and Intangible Assets, replaces Section 3062, Goodwill and Other Intangible Assets and Section 3450, Research and Development Costs. In February 2008, the CICA issued the new pronouncement establishing revised standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets.  The new standard also provides guidance for  the  treatment  of  preproduction  and  startup  costs  and  requires  that  these  costs  be expensed  as  incurred. The new standard applies to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008.  Management is currently  assessing  the  impact  of  these  new  accounting standards  on  its  financial statements. Adoption of this standard will result in the withdrawal of EIC 27.

(vi)           Convergence with International Financial Reporting Standards (“IFRS”).  In February 2008, the Canadian Accounting Standards Board confirmed that publicly accountable enterprises will be required to adopt IFRS for fiscal years beginning on or after January 1, 2011, with earlier adoption permitted. Accordingly, the conversion to IFRS will be applicable to the Company no later than the quarter ended November 30, 2011, with restatement of comparative information presented. The conversion to IFRS will impact the Company’s accounting policies, information technology and data systems, internal control over financial reporting, and disclosure controls and procedures. The transition may also impact business activities, such as foreign currency activities, certain contractual arrangements, capital requirements and compensation arrangements. The Company is currently evaluating the future impact of IFRS on its financial statements and will continue to invest in training and additional resources to ensure a timely conversion.

(m)           Financial instruments
 
The Company’s financial instruments are comprised of cash and cash equivalents, short-term investments, marketable securities, amounts receivable, amounts due from WBJV partners, accounts payable and accrued liabilities and advances from WBJV partners.   Cash and cash equivalents are recognized at their fair value and the carrying value of all other financial instruments approximate their fair values due to their short-term maturity or their capacity of prompt liquidation. Marketable securities are recorded in the financial statements at fair value.

The Company’s financial instruments are comprised of cash and cash equivalents, short-term investments, marketable securities, amounts receivable, amounts due from WBJV partners, accounts payable and accrued liabilities and advances from WBJV partners. All financial instruments and derivatives are measured in the balance sheet at fair value except for loans and receivables, and held-to maturity investments and other financial liabilities which are measured at amortized cost. Investments classified as available-for-sale are reported at fair value based on quoted market bid prices with unrealized gains or losses excluded from earnings and reported as other comprehensive income or loss. Those instruments classified as held-for-trading, have gains or losses included in earnings in the period in which they arise.  All of the Company’s marketable securities have been designated as available-for-sale.

 
3.           AMOUNTS RECEIVABLE
 
2009 Q1 Amounts Receivable
 
Expenditure advances receivable consist of funds advanced to officers, directors and consulting geologists for exploration and corporate activities conducted in the normal course of business and bear no interest.

 
4.           MARKETABLE SECURITIES
 
At November 30, 2008, the Company has the following marketable securities recognized at fair value:

Available-for-sale securities
Number of
Shares
Cost ($)
Accumulated Unrealized
Gains ($)
Fair
Value ($)
 
         
MAG Silver Corp.
100,000
  50,000
   525,000
   575,000
West Timmins Mining Inc.
800,001
160,000
    (44,000)
   116,000
         
Total Marketable Securities
210,000
   481,000
   691,000



At August 31, 2008, the Company has the following marketable securities recognized at fair value:

Available-for-sale securities
Number of
Shares
Cost ($)
Accumulated Unrealized
Gains ($)
Fair
Value ($)
 
         
MAG Silver Corp.
100,000
  50,000
   740,000
   790,000
West Timmins Mining Inc.
800,001
160,000
   168,000
   328,000
         
Total Marketable Securities
210,000
   908,000
1,118,000
       


On September 1, 2007, pursuant to adoption of the new CICA Handbook Section 3855 Financial Instruments – Recognition and Measurement, the Company recorded an adjustment to increase the carrying value of marketable securities by $1,874,001 with a corresponding adjustment to accumulated other comprehensive income less the future income tax adjustment of $281,100. The adjustment represents the after-tax unrealized gain on available-for-sale marketable securities held by the Company at September 1, 2007.

During the year ended August 31, 2008 after an adjustment of a future income tax recovery of $144,900 the Company recognized an unrealized loss of $821,101 (2007 - - $nil) on marketable securities designated as available-for-sale instruments in other comprehensive income.

During the period ended November 30, 2008 after an adjustment of a future income tax recovery of $64,050 the Company recognized an unrealized loss of $362,950 on marketable securities designated as available-for-sale instruments in other comprehensive income.

Both of the above marketable securities are related parties of the Company, as discussed in Note 11.

 
5. INVESTMENT IN WESTERN BUSHVELD JOINT VENTURE (THE “WBJV”)
 
 
 
Nov. 30, 2008
Aug. 31, 2008
Opening Balance
$21,935,272
$14,779,302
Additional investment
      465,216
   7,155,970
Balance before translation
  22,400,488
 21,935,272
Translation adjustment
(5,068,150)
(3,040,647)
Ending Balance
$17,332,338
$18,894,625

 
 
Details of the assets of the WBJV, excluding the property rights contributed by the other venture partners, are as follows:

2009 Q1 WBJV Assets


On October 26, 2004 the Company entered into the Western Bushveld Joint Venture (the “WBJV”) with a subsidiary of Anglo Platinum Limited (“Anglo Platinum”) and Africa Wide Mineral Prospecting and Exploration (Pty) Limited (“Africa Wide”) to pursue platinum exploration and development on combined mineral rights covering approximately 67 square kilometres on the Western Bushveld Complex of South Africa. The transaction closed effective January 26, 2005. The Company contributed all of its interests in portions of the farms Onderstepoort 98JQ and Elandsfontein 102JQ. Anglo Platinum contributed its interests in portions of the farms Koedoesfontein 94JQ, Elandsfontein 102JQ and Frischgewaagd 96JQ. Later, in 2007, Anglo Platinum contributed its 50% interest in Portion 11 of the farm Frischgewaagd bringing the total area of the WBJV to approximately 72 square kilometres. The Company and Anglo Platinum each hold a 37% working interest in the WBJV, while Africa Wide holds a 26% working interest.  The area of the WBJV is operated in three functional areas described as Project 1 (100% WBJV), Project 2 (50% WBJV: 50% Wesizwe Platinum Ltd.) and Project 3 (100% WBJV).

In April 2007 the shareholders of Africa Wide sold 100% of their company to Wesizwe Platinum Ltd (“Wesizwe”). The transaction closed in September 2007 and since then Wesizwe has become responsible for all of the rights and obligations of Africa Wide.

The Company is the operator of the WBJV. From October 2004 to April 2006 the Company funded an earn-in exploration program in the amount of Rand 35 million (at August 31, 2005 approx. C$6.44 million). Since then the partners of the WBJV have funded expenditures pro-rata based upon their working interest in the Joint Venture. From April 2006 to April 2008 the partners to the WBJV approved budgets in the amount of Rand 124 million (approximately C$16.5 million). At August 31, 2008 total contributions of $720,958 were owing from Anglo Platinum (approximately $420,000 or Rand 3.042 Million) and Africa Wide (approximately $301,000 or Rand 2.182 million).  These balances were recorded as receivables by the Company and payment was received subsequent to August 31, 2008. At November 30, 2008 total contributions of $43,330 (Rand 354,000) were owing from Africa Wide. These balances were recorded as receivables by the Company.

The Company published a Feasibility Study for Project 1 of the WBJV on July 7, 2008.  Based on the WBJV resource estimate prepared for the Feasibility Study the respective deemed capital contribution of each party was to be credited by adding their contribution of measured, indicated, and inferred ounces of combined platinum, palladium, rhodium and gold (“4E”) from the contributed properties comprising the WBJV, determined in accordance with the South African Mineral Resource Committee (“SAMREC”) code. Inferred ounces were to be credited at US$0.50 per ounce, indicated ounces at US$3.20 per ounce and measured ounces at US$6.20 per ounce. Ounces contributed to the WBJV by Anglo Platinum in 2007 from a 50% interest in Portion 11 of the Farm Frischgewaagd 96 JQ were to receive an equalization credit of US$0.62 per inferred ounce, US$10.37 per indicated ounce and US$39.55 per measured ounce.  At November 30, 2008 the Company’s equalization payment due to Anglo Platinum was calculated at approximately US $20.0 million.

On September 2, 2008 the Company announced an agreement in principle to consolidate and rationalize the ownership of the WBJV.  On December 8, 2008 the Company announced the execution of definitive agreements formalizing the earlier announcement.  In the transaction Anglo Platinum will vend its entire 37% interest in the WBJV to Wesizwe for common shares representing approximately a 26.5% interest in Wesizwe. The Company will concurrently acquire a 37% interest in Projects 1 and 3 from Wesizwe in consideration of its 18.5% interest in Project 2 and Rand 408 million in cash (approximately $51.0 million at September 2, 2008). This will bring the Company’s interest in Projects 1 and 3 to 74% while at the same time eliminating its holdings in Project 2.  The cash payment to Wesizwe will be deferred until nine months after the effective date of the transaction and will then be held in escrow to be applied towards Wesizwe’s capital requirements for the Projects 1 and 3. The final agreement will become effective subject to outstanding regulatory approvals and the approval of the Department of Minerals and Energy in South Africa.

Under the terms of the December 8th transaction the equalization amount due to Anglo Platinum by the Company under the terms of the original WBJV agreement will become payable on the effective date of the final agreement.  The effective date will occur once all conditions precedent have been fulfilled.  It is anticipated this date will be several months after the execution of definitive agreements.  In the event the Company does not make the equalization payment on the date required, Anglo Platinum may elect to extend the payment deadline for six months, with interest, or they may elect to take payment in common shares of Wesizwe, at which point the right to accept the equalization payment would transfer to Wesizwe.

The initial exchange of the Company’s pre-existing interests in the Elandsfontein and Onderstepoort properties for the interest in WBJV was recorded at cost as it represents a non-monetary exchange. The Company’s earn-in expenditure of Rand 35 million was also recorded as a cost of the investment.

Effective May 31, 2006 the Company concluded that the functional currency of WBJV was the South African Rand as expenditures in the WBJV were principally being incurred in Rand and funded by advances from the venturers which were denominated in Rand. The Company therefore considers its equity investment in the WBJV to be self sustaining and it translates its share of net equity of WBJV using the current rate method with translation gains and losses included in accumulated other comprehensive income as a separate component of shareholders’ equity.
 
 (a)
Elandsfontein interest
 
In December 2002 the Company acquired an option to purchase 100% of the surface and mineral rights to 365.64 hectares of the farm Elandsfontein 102 JQ located in the Western Bushveld area. The Company made an initial payment to the Vendors of Rand 150,000 (approx. C$29,500) and agreed to terms for the purchase of both mineral and surface rights.

The Company exercised its option to purchase the Elandsfontein property by way of written notice on June 26, 2003. In 2005 the Company purchased all surface and mineral rights to the property in exchange for Rand 7.0 million (approximately C$1.4 million). In September 2005 the Company was granted a “New Order” prospecting permit under the new Mineral and Petroleum Resources Development Act (2002) over the Elandsfontein property.

(b)
Onderstepoort interest
 
During 2003 the Company entered into option agreements to acquire mineral rights on seven portions of the farm Onderstepoort 98 JQ located in the Western Bushveld. The Company could earn 100% of the mineral rights over certain portions and 50% of the mineral rights over the balance. The Company now holds New Order prospecting permits on all of these farm portions.  Since 2003 the Company has paid Rand 834,000 in option payments for the properties.

During fiscal 2007 the Company negotiated and executed the buy-out and cancellation of one of the option agreements to acquire a 50% undivided interest in two farm portions in exchange for 50,000 common shares of the Company valued at $230,000.   During fiscal 2008 the Company negotiated and executed the buy-out and cancellation of the remaining option agreements for all remaining farm portions for one additional payment of 50,000 shares of the Company valued at $165,500.

 
6.           MINERAL PROPERTIES
 

Period ended November 30, 2008
2009 Q1 Mineral Properties Table 01



Year ended August 31, 2008
2009 Q1 Mineral Properties Table 02
 
(a)           Republic of South Africa
 
(i)           War Springs and Tweespalk
 
On June 3, 2002, the Company acquired an option to earn a 100% interest in the 2,396 hectare War Springs property and the 2,177 hectare Tweespalk property both located in the Northern Limb or Platreef area of the Bushveld Complex north of Johannesburg. Acquisition and exploration costs on these properties to August 31, 2008 total $3,568,032 (August 31, 2008 - $3,524,754).
 
Under the Old Order permits, the Company could purchase 100% of these mineral rights at any time for US$690 per hectare. The Company had also agreed to pay prospecting fees to the vendors of US$3.25 per hectare. The vendors retain a 1% NSR Royalty on the property, subject to the Company’s right to purchase the NSR at any time for US$1.4 million. A 5% finders’ fee applies to vendor payments.

Under the new Mineral and Petroleum Resources Development Act (2002), which became effective in May 2004, Old Order permits were to be converted into New Order permits during a transition period. This process is now complete for the War Springs and Tweespalk properties. The June 3, 2002 option agreement provides for amendments as may be needed to maintain the parties in the same commercial position as they were in under the preceding mineral legislation and such amendments are yet to be completed.

Black Economic Empowerment groups Africa Wide, a subsidiary of Wesizwe Platinum Ltd. and Taung Minerals (Pty) Ltd., a subsidiary of Platmin Limited, have each acquired a 15% interest in the War Springs project carried to bankable feasibility. The Company retains a net 70% project interest.

Africa Wide has a 30% participating interest in the Tweespalk property. During the year, the Company received payment in full from Wesizwe Platinum Ltd. for Africa Wide’s share of costs to August 31, 2007, which amounted to Rand 1,549,673 (C$211,840 at August 31, 2008). The payment was treated as a recovery of costs relating to the Tweespalk property.

 (b)           Ontario, Canada
 
 (i)           Lac des Iles (“LDI”) River
 
On May 5, 2000, New Millennium entered into an option agreement to acquire a 50% interest in the Lac des Iles River property located near Thunder Bay, Ontario in exchange for cash payments ($43,500 paid in total) and the completion of exploration expenditures. On October 6, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property subject only to underlying 2.0% Net Smelter Return Royalties. In settlement the Company made a one-time payment to the vendors of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

(ii)           South Legris
 
In April 2000, and later as amended in January 2005, the Company acquired an option to earn a 50% interest in the South Legris property located near Thunder Bay, Ontario in exchange for cash payments ($105,000 paid in total) and the completion of certain exploration expenditures. On October 13, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property subject only to underlying 2.0% Net Smelter Return Royalties. In settlement the Company made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

(iii)  
Shelby Lake
 
On June 28, 2000, New Millennium entered into an option agreement to earn up to 60% interest in the Shelby Lake property, located near Thunder Bay, Ontario in exchange for cash payments of $15,000 (paid), issue 30,303 shares (issued) and complete $500,000 in exploration expenditures over a four-year period. On October 18, 2006, the Company and the property vendor entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property for a one-time payment of $5,000 subject only to an underlying 2.0% Net Smelter Return Royalty, of which the Company may buy back one half for $500,000.


 (c)           Title to mineral properties
 
Although the Company has taken steps to verify title to mineral properties in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.


 
7.           FIXED ASSETS
 
 
(a)           Equipment, Leaseholds and Vehicles
 
 
2009 Q1 Fixed Assets Table 01

2009 Q1 Fixed Assets Table 02
(b)           Surface Rights

During the year ended August 31, 2008 the Company purchased surface rights adjacent to the WBJV Project 1 deposit area measuring 216.27 hectares for an amount of Rand 8.0 million (approx. C$1.0 million).  During the year the Company also entered into a legally binding agreement for the purchase of surface rights directly over a portion of the WBJV Project 1 deposit area measuring 358.79 hectares for an amount of Rand 15.07 million (approx. C$1.9 million).  Prior to August 31, 2008 the Company paid a 10% deposit of Rand 1.507 million (approx. C$0.19 million) for this property, leaving the balance due upon statutory registration of the surface rights in the Company’s name, expected to occur before January 31, 2009. The balance of Rand 13.562 (approx. C$1.7 million) is recorded in accounts payable at November 30, 2008. The rights to these two properties are to the benefit of the Company only and are distinct from the 365.64 hectare Elandsfontein Farm held for the benefit of the WBJV (Note 5(a)).


 
8.           SHARE CAPITAL
 
(a)           Authorized
 
Unlimited common shares without par value

(b)           Issued and outstanding
 
At November 30, 2008 there were 67,624,717 shares outstanding.

During the period ended November 30, 2008:

 
(i)
the Company closed a non-brokered private placement on October 3 and October 7, 2008 for $7,611,229 upon the issue of 4,910,470 common shares at a price of $1.55 per share.  A finders’ fee of $186,000 in cash and a further 60,000 shares at the offering price was paid in respect of certain of the subscriptions. Other issue costs which included filing fees to the TSX and NYSE Alternext, and legal fees to lawyers totaled $117,148. Net proceeds for the financing totaled $7,308,081.

(ii)            5,000 stock options were exercised for proceeds of $12,850.

During the year ended August 31, 2008:

(iii)  
850,000 share purchase warrants were exercised for proceeds of $1,487,500 and 760,500 stock options were exercised for proceeds of $821,824.

(iv)  
the Company issued 50,000 common shares in connection with the acquisition of mineral properties at a fair value of $165,500. A filing fee of $2,264 related to this issue of shares was paid by the Company.

During the year ended August 31, 2007:

(v)  
6,333,194 share purchase warrants were exercised for proceeds of $11,454,791 and 914,375 stock options were exercised for proceeds of $625,575.

(vi)  
the Company issued 50,000 common shares in connection with the acquisition of mineral properties at a fair value of $230,000. A filing fee of $2,258 related to this issue of shares was paid by the Company.


(c)  
Incentive stock options

The Company has entered into Incentive Stock Option Agreements (“Agreements”) with directors, officers and employees. Under the terms of the Agreements, the exercise price of each option is set at a minimum, at the fair value of the common shares at the date of grant. Certain stock options granted to employees, directors and officers of the Company vest on average at an amount of 25% per six month period.



The following tables summarize the Company’s outstanding stock options:

2009 Q1 Stock Option Table 01
The weighted average exercise price of the exercisable options at year end was $1.98.

2009 Q1 Stock Option Table 02
 
(i)
During the period ended November 30, 2008 the Company granted 1,727,000 stock options to employees. The Company has recorded $939,477 ($802,409 expensed and $137,068 capitalized to the WBJV) of compensation expense relating to stock options granted or vested in this period.


The following weighted average assumptions were used in valuing stock options granted during the period:

Risk-free interest rate
 
2.73
Expected life of options
 
3.5
Annualized volatility
 
73.73
Dividend rate
 
0.00%
     
 

 
 
(ii)
During the year ended August 31, 2008 the Company granted 1,367,500 stock options to employees. The Company has recorded $1,288,383 ($580,128 expensed and $708,255 capitalized to the WBJV) of compensation expense relating to stock options granted or vested in this year.

The following weighted average assumptions were used in valuing stock options granted during the year:

Risk-free interest rate
 
4.08
Expected life of options
 
3.32
Annualized volatility
 
64.04
Dividend rate
 
0.00%



 
9.           CAPITAL RISK MANAGEMENT
 

The Company’s objectives in managing its liquidity and capital are to safeguard the Company’s ability to continue as a going concern and provide financial capacity to meets its strategic objectives. The capital structure of the Company consists of equity attributable to common shareholders, contributed surplus, accumulated other comprehensive income and accumulated deficit.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets.

In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary based on various factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors. The Company does not pay out dividends.

As at November 30, 2008, the Company does not have any long-term debt and is not subject to any externally imposed capital requirements.

 
10.           FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
 

The Company’s financial instruments are comprised of cash and cash equivalents, short-term investments, marketable securities, amounts receivable, amounts due from WBJV partners, accounts payable and accrued liabilities and advances from WBJV partners. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.  The Company holds no asset backed commercial paper and has no derivative financial instruments.

The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks. Where material, these risks are reviewed and monitored by the Board of Directors.

(a)           Credit risk

Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Company by those counterparties, less any amounts owed to the counterparty by the Company where a legal right of set-off exists and also includes the fair values of contracts with individual counterparties which are recorded in the financial statements.

(i)           Trade credit risk

The Company is an exploration and development company, and has not yet commenced commercial production or sales. Therefore, the Company is not exposed to significant credit risk and overall the Company’s credit risk has not changed significantly from the prior year.

(ii)           Cash and cash equivalents

In order to manage credit and liquidity risk we invest only in highly rated investment grade instruments that have maturities of three months or less. Limits are also established based on the type of investment, the counterparty and the credit rating.

Overall the Company’s credit risk has not changed significantly from the prior year.

(b)           Liquidity risk

The Company has in place a planning and budgeting process to help determine the funds required to support the Company's normal operating requirements and its exploration and development plans. The annual budget is approved by the Board of Directors. The Company ensures that there are sufficient cash balances to meet its short-term business requirements.

Future exploration, development, mining, and processing of minerals from the Company’s properties will require additional financing.  The Company has no credit facilities in place at this time, although it is currently evaluating possible debt financing.  The only other current source of funds available to the Company is the issuance of additional equity capital, which if available, may result in substantial dilution to existing shareholders. There is no assurance that such funding will be available to the Company, or that it will be obtained on terms favourable to the Company.  Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration, development, or production on any or all of the Company’s properties, or even a loss of property interests.
The global economic environment has deteriorated significantly in recent months.  Lower commodity prices, currency fluctuations, banking and institutional failures, restricted credit availability and a general reduction in the availability of equity financing create a more uncertain environment for the Company’s securities and have negatively impacted the Company’s overall liquidity risks.

(c)           Currency risk

The Company’s functional currency is the Canadian dollar, while its operations are in both Canada and South Africa; therefore the Company's net earnings and other comprehensive earnings are impacted by fluctuations in the value of foreign currencies in relation to the Canadian dollar. The Company's foreign currency exposures comprise cash, value added taxes receivable, and accounts payable and accrued liabilities denominated in South African Rand and United States dollars. In addition, several of the Company’s options to acquire properties may result in option payments by the Company denominated in Rand or in United States dollars. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.

The sensitivity of the Company's net loss and other comprehensive loss is affected by changes in the exchange rate between its operating currencies and the Canadian dollar.  The Company has concluded that the functional currency of the WBJV is the South African Rand. The Company therefore considers its equity investment in the WBJV to be self sustaining and it translates its share of net equity of WBJV using the current rate method with translation gains and losses included in accumulated other comprehensive income. The Company's translation adjustment on other comprehensive income is also affected by changes in the exchange rate between the Rand and the Canadian dollar.

(d)           Interest rate risk

The Company’s interest revenue earned on cash and cash equivalents and on short term investments is exposed to interest rate risk. For the period ended November 30, 2008, the fluctuation in interest rates was seen to have a minimal impact on net loss and comprehensive loss.

The Company's overall interest rate risk has not changed significantly from the prior year.

(e)           Other price risks

The Company is exposed to equity price risk as a result of holding marketable securities in other exploration and mining companies (see Note 4).  These available for sale equities are valued at their fair market values as at the balance sheet date, with any unrealized gain or loss recorded in other comprehensive income or loss for the period.  The Company’s sensitivity to equity prices has not changed significantly from the prior year.
 
11.           RELATED PARTY TRANSACTIONS
 

Transactions with related parties are as follows:

 
(a)  
Management, salary, consulting fees, and Director’s fees of $102,135 (2007 - $90,930) were incurred with directors during the period. At November 30, 2008, $10,284 was included in accounts payable (2007 - $5,760).

(b) 
The Company received $33,923 (2007 - $33,951) during the period from MAG Silver Corp. (“MAG”), a company with two directors in common and a officer in common, under the terms of a 2003 service agreement for administrative services. Amounts receivable at the end of the period includes an amount of $37,206 for both administration fees due $22,704 and $14,502 due from MAG for other trade receivables (2007 - $2,509).

 (c)
During the period the Company accrued or received payments of $27,000 (2007 – $27,000) from West Timmins Mining Inc. (“WTM”), a company with three directors in common and an officer in common, for administrative services. Amounts receivable at the end of the period includes an amount of $31,287 for both administration fees due $18,000 and $13,287 due from WTM for other trade receivables (2007 - other trade receivables $3,025).

 (d)  
The Company entered into an office lease agreement with Anthem Works Ltd. (“Anthem”), a company with a director in common in 2005. During the period ended November 30, 2008 the Company accrued or paid Anthem $21,367 under the office lease agreement (2007 - $17,215).

All amounts in Amounts receivable and Accounts payable owing to or from related parties are non-interest bearing with no specific terms of repayment.

These transactions are in the normal course of business and are measured at the exchange amount, which is the consideration established and agreed to by the noted parties.

 
12.           CONTINGENCIES AND COMMITMENTS
 

The Company’s remaining minimum payments under its office and equipment lease agreements, which it has entered into for the years ending on August 31, as well as PTM RSA’s commitments, are as follows, as at November 30, 2008.


August 31, 2009
 
 $       144,935
August 31, 2010
 
            71,032
August 31, 2011
 
              9,953
August 31, 2012
 
              1,659
   
 $       227,579
 
 
13.           SUPPLEMENTARY CASH FLOW INFORMATION
 
(a)           Net change in non-cash working capital
 
2009 Q1 Sup Cash Flow Table 01

Of the $2,561,754 in accounts payable at November 30, 2008 an amount of $54,000 (approximately Rand 434,000) was incurred on behalf of the WBJV, and $1,872,000 (approximately Rand 15 million) was accrued for Surface rights.

(b)           Cash and cash equivalents
 
Cash and cash equivalents consist of the following:

2009 Q1 Sup Cash Flow Table 02
14.           SEGMENTED INFORMATION
 

The Company operates in one operating segment, that being exploration on mineral properties. Segmented information presented on a geographic basis follows:

Assets

Assets relate to properties situated as follows:

2009 Q1 Segmented Info Table 01
Results of Operations

2009 Q1 Segmented Info Table 02

EX-99.02 3 mda090114.htm 2009 Q1 MDA mda090114.htm
 
 

 

















PTM logo




Platinum Group Metals Ltd.
(Exploration Stage Company)
Supplementary Information and MD&A
For the period ended November 30, 2008

Dated: January 14, 2009




A copy of this report will be provided to any shareholder who requests it.



 
 

 




Management Discussion and Analysis
 
1.        DESCRIPTION OF BUSINESS
 
Platinum Group Metals Ltd. (the “Company” or “Platinum Group”) is a British Columbia corporation incorporated on February 18, 2002 by 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 an exploration and development company conducting work primarily on mineral properties it has staked or acquired by way of option agreement in Ontario, Canada and the Republic of South Africa. The Company has completed a definitive Feasibility Study with respect to its Western Bushveld Joint Venture (“WBJV”) and included in this Study dated July 7, 2008 is the declaration of reserves at that time. 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 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.

This management discussion and analysis (“MD&A”) of the Company focuses on the financial condition and results of operations of the Company for the period ended November 30, 2008. It is prepared as of January 14, 2009 and should be read in conjunction with the unaudited consolidated financial statements of the Company for the period ended November 30, 2008 together with the notes thereto.

 
All references herein to “dollars” or “$” refer to Canadian dollars unless otherwise stated.

2.        DISCUSSION OF OPERATIONS AND FINANCIAL CONDITIONS
 
a) Results of Operations
 
Any reference to “period” refers to the three month period ended November 30, 2008.

At November 30, 2008 the Company had cash, cash equivalents and short term investments on hand of $7,903,077 as compared to $13,428,947 on November 30, 2007. Of this amount approximately $Nil (November 30, 2007 – $1,169,354) relates to amounts advanced from the partners of the WBJV to fund their share of the remaining portion of approved work programs. The Company was owed $43,330 by the WBJV partners for WBJV expenditures. Accounts payable at period end totaled $2,561,754 (November 30, 2007 - $5,810,257) and of this ($1,872,000) was payable against Surface rights. $54,000 was payable against technical and exploration work completed for the WBJV. The Company also held marketable securities at period end with a fair value of $691,000 (November 30, 2007 – $2,251,001).

During the period the Company incurred a net loss before taxes of $2,090,443 (November 30, 2007 - $1,205,755). Before a non-cash charge for stock based compensation of $802,409 (November 30, 2007 - $141,367) general and administrative expenses totaled $1,288,136 (November 30, 2007 - $1,168,967). Interest earned amounted to $102 (November 30, 2007 - $104,579) after netting $37,781in interest payable as a transaction cost on a pending on surface rights purchase in South Africa.  The $119,169 increase in administrative expenses over the comparative period is explained for the most part by a $95,131 increase in professional fees from $181,455 in 2007 to $276,586 in 2008, an increase of $52,825 in shareholder relations from $49,444 in the first quarter of 2007 to $102,269 in the first quarter of 2008, and an increase in management and consulting fees by $246,762 from $74,963 in 2007 to $321,725 in 2008. Professional fees increased in the period as a result of the Company’s use of legal assistance during negotiations to execute definitive agreements with Anglo Platinum and Wesizwe Platinum.  Management and consulting fees increased due to the cost of strategic advisors during the period.  These costs were offset by a decrease in travel expenses of $72,144 from $196,497 in 2007 to $124,353 in 2008, a $41,528 decrease in salaries and benefits from $406,419 in 2007 to $364,891 in 2008, and a $133,303 increase in foreign exchange gains from $3,203 in 2007 to $136,506 in the first quarter of 2008.

Apart from interest of $102 (2007 - $104,579) earned on cash deposits during the period the Company had no significant revenues to report.  In October 2008 the Company closed a non-brokered private placement for net cash proceeds of $7,308,081.

Total global exploration and engineering expenditures for the Company’s account, including the Company’s share of WBJV expenditures during the period totaled $517,337 (November 30, 2007 - $3,067,788). Of this amount $439,572 was for the WBJV (November 30, 2007 - $2,890,027) and $77,765 was for other exploration (November 30, 2007 - $177,761). Total WBJV expenditures during the period by all WBJV partners amounted to $747,694 (November 30, 2007: $7,830,935). 

Work programs totaling Rand 201 million (approximately $28.7 million) were approved by the partners of the WBJV since 2006 have been completed at the time of writing.  The partners shared the cost of work programs pro-rata to their interest in the WBJV.  The work was completed on budget including scope changes approved by the partners.  During April 2008 the participants of the WBJV also approved and funded a budget for the acquisition of long lead capital items in the amount of Rand 21.086 million (approximately $2.74 million). Activities for the WBJV have included research and data review, prospecting, mapping, detailed engineering, drilling of project areas, geophysical studies, geotechnical work, metallurgical studies and mine plan and scheduling work.

The July 2008 Feasibility Study recommends a series of three simultaneous declines accessing the Project 1 deposit with a mining rate of 140,000 tonnes per month.  First ore is reached by development 13 months from the commencement of underground work. Mining is only scheduled on reserves. There are a further 1.26 million ounces of inferred resources in the Project 1 area which may represent some additional production potential. The lower grade UG2 resources also provide some future opportunities. The mining and development plan includes conventional hand held drilling utilizing electrical drills and scraper winch cleaning similar to the successful conventional mining at the adjacent producing Bafokeng Rasimone Platinum Mine. Declines and primary access to the deposit is designed for development with mechanized equipment. Ore is initially to be hauled out of the mine with mechanized equipment and assisted then by conveyor from year 4 of mine life to end of mine life.

The Merensky Reef is planned to be mined at widths between 93cm and 176cm at an average of 115cm and the UG2 Reef is planned to be mined at widths between 105cm and 205cm at an average of 153cm.

At the recommended mining rate and modifying factors the mine plan generates approximately 235,000 – 271,000 platinum, palladium, rhodium and gold, (“4E”) ounces in concentrate per year, of which approximately 160,000 ounces are platinum at full steady state ounce production for 9 years from the Merensky Reef horizon with a 22 year mine life.

The results of the Feasibility Study estimate a 20.08% Internal Rate of Return (“IRR”) (pre-tax) Base Case, using 3 year trailing metal prices to June 2008, calculated on the monthly averages including US$1,295 per ounce for platinum.  The Feasibility Study model does not include escalation due to inflation of costs or metal prices.  At January 12, 2009 the spot prices of all metals included in the basket price calculation were below the three year trailing metal prices as at June 2008.  Platinum was quoted at US$952 on January 12, 2009.

Average life-of-mine cash operating costs to produce concentrate were estimated at R451 per tonne (US$56.38 at July 7, 2008) of ore or R3,504 (US$438 at July 7, 2008) per 4E ounce on a life of mine basis. The Merensky Reef layer represents the first 15 years of production and the basket price per 4E ounce is modeled at US$1,168 (3 year trailing prices). The UG2 layer represents the balance of the production. The model includes a subsequent average of 15.16% discount from the metal price to estimate the smelter pay discount. Operating margin life of mine on three year trailing 4E metal prices to June 2008 was approximately US$739 per ounce.

The project has an estimated life of 22 years with 9 years at a steady state of production of 235,000 to 271,000 ounces per year. The capital cost for the mine and concentrator complex are estimated at R4.055 billion (US$417 million at January 12, 2009) for peak funding and R5.474 billion (US$563 million at January 12, 2009) for life of mine funding. The capital cost estimate includes R506 million (US$52 million at January 12, 2009) for the capital costs for self-generation of the electrical requirements of the project to the end of 2012 at full production levels. This includes the entire infrastructure for power including diesel storage.  If grid power becomes available it will significantly reduce electricity costs. Eskom has indicated that an allocation of 2 mega watts should be available for the construction phase of the project, and this has been assumed in the Feasibility Study. A contingency of R467 million (US$48 million at November January 12, 2009) is included in the overall capital estimate.

Based on the three year trailing average metals prices, current exchange rates and probable lowering of input costs at the current time no change has been made to the Feasibility Study information and reserves and resources. The agreement of the WBJV calls for a “decision to mine” to be made within 90 days of the Feasibility Study. However, due to events detailed below, this has been deferred by mutual consent of the partners.

On September 2, 2008 the Company announced an agreement in principle to consolidate and rationalize the ownership of the WBJV.  On December 8, 2008 the Company announced the execution of definitive agreements formalizing the earlier announcement.  In the transaction Anglo Platinum will vend its entire 37% interest in the WBJV to Wesizwe for common shares representing approximately a 26.5% interest in Wesizwe. Platinum Group will concurrently acquire a 37% interest in Projects 1 and 3 from Wesizwe in consideration of its 18.5% interest in Project 2 and Rand 408.6 million in cash (approximately $50.3 million at January 12, 2009). This will bring the Company’s interest in Projects 1 and 3 to 74% while at the same time eliminating its holdings in Project 2.  The cash payment to Wesizwe will be deferred until nine months after the effective date of the transaction and will then be held in escrow to be applied towards Wesizwe’s capital requirements for the Projects 1 and 3. The final agreement will become effective subject to outstanding regulatory approvals and the approval of the Department of Minerals and Energy in South Africa.

Steps to the transaction are as follows:

1.  
Wesizwe will purchase Anglo Platinum’s 37% interest in the WBJV, comprised of 37% of Projects 1 and 3 and 18.5% of Project 2 (part of the Wesizwe Frischgewaagd-Ledig main project), for 211,850,125 Wesizwe common shares.

2.  
In a concurrent transaction Platinum Group will purchase the 37% interest in Projects 1 and 3 from Wesizwe for 785.5M Rand (approx. $97.7 million at January 12, 2009), offset by the sale to Wesizwe of Platinum Group’s 18.5 % of Project 2 for 376.9M Rand (approx. $46.4 million at January 12, 2009).

3.  
The balance, due by Platinum Group, of Rand 408.6M is to be paid into an escrow account within 9 months of the formal closing of this transaction. The escrow account will then be drawn down to satisfy Wesizwe’s obligations for the capital account of Projects 1 and 3. If the payment for the balance due is not made by Platinum Group then Wesizwe shall be entitled to claw back approximately 19% in the Projects.

The basis of valuation for the negotiations was the 10% discount rate NPVs of the Projects with platinum at US$1,199 per ounce for all projects and a Rand-to-Dollar exchange rate set at 8. The project models included the Feasibility Study results for Projects 1 and 2 and preliminary engineering on Project 3.

The settlement of the “equalization payments” currently due to Anglo Platinum under the terms of the WBJV are to be settled by Wesizwe in common shares and by Platinum Group in cash by the effective date of the transaction expected in mid 2009. At present, equalization payments due are approximately US$18 million payable by Wesizwe and US$20 million payable by Platinum Group. If Platinum Group does not pay Anglo Platinum by the due date, Anglo Platinum shall elect to provide up to a 6 month extension with interest or elect to take Wesizwe shares for the amount due and the obligation of Platinum Group will pass to Wesizwe. A total make up of approximately US$2.0M is also payable by Platinum Group to Wesizwe for past exploration costs incurred on Project 2.

The parties have agreed to suspend the 90 day deadline for a Decision to Mine under the terms of the WBJV until the transaction is completed or a condition precedent is not able to be fulfilled. Anglo Platinum will hold a 60 day first right of refusal on the sale of ore or concentrate over the original WBJV mineral rights.

The effective date of the agreements will be upon the closing of the transaction pending the completion of regulatory and governmental approvals.

Details of the Company’s Revised Attributable Reserves and Resources in the proposed transaction are shown below at Item 2d. “Exploration Programs and Expenditures”.  A technical report titled “WBJV Project 1, July 7, 2007 Effective Date – Feasibility Study” was filed on SEDAR August 21, 2008.

The Company also maintains two other projects in South Africa on the North Limb of the Bushveld Complex. The Tweespalk and War Springs projects are currently the subject of renewed consideration. During 2008 the Company conducted new soil and geological surveys on the War Springs project.  On March 17, 2008 the Company published a revised and updated resource calculation for the War Springs property based on drilling and exploration work conducted in the last three years.  (See Item 2d. “Exploration Programs and Expenditures” below).  Further work programs for the War Springs project in 2009 are currently being planned.

During the period the Company has conducted a new business generative program.  Research and implementation, including the staking of several new license areas on or near to the Bushveld Complex, has cost approximately $51,029. The Company has received the grant of several new prospecting permits as a result of this work and several more are expected in the months ahead.

The Company conducted work on its Canadian projects during the previous year, but has been idle during the current period. A 1,125 metre drill program was completed on the Company’s Lac Des Iles projects in the first quarter of 2008.  The Company maintains a large mineral rights position in the Lac des Iles area north of Thunder Bay as a strategic holding against potentially increasing prices for palladium and platinum. Encouraging exploration results for palladium, platinum, nickel and copper continue to be returned and the Company plans to invest further in this area in the future.

For more information about the WBJV and the Company’s other mineral properties please refer to Notes 5. and 6. of the Company’s November 30, 2008 financial statements and below for further discussion regarding the WBJV.

Since 2005 the Company’s compliment of staff, consultants and casual workers increased from approximately 20 to approximately 50 individuals at present. Office space and support services requirements in Canada and South Africa also increased to accommodate these people. As the WBJV has matured there has been a need for more administration and management oversight from Canada with a corresponding increase in travel and communication expenses. The Company’s listing on the American Stock Exchange in 2007 and the costs of compliance with Sarbanes-Oxley legislation in the USA and Multilateral Instrument 52-109 in Canada have resulted in increased professional fees in general.  At the time of writing the global economic situation and capital markets have become uncertain and the Company will review its ongoing plans, use of outside professional staff, use of consultants and internal staffing requirements on a regular basis.

The Company still actively reviews many potential property acquisitions in the normal course of business. The Company also makes efforts to raise its profile and liquidity in the capital markets.


The following tables set forth selected financial data from the Company’s annual audited financial statements and should be read in conjunction with those financial statements:

 
Year ended
Aug 31, 2008
Year ended
Aug. 31, 2007
Interest
$243,339 (1)
$434,949
Net Loss
($5,086,5890(2)
($6,758,123)
Net Loss per Share
($0.08)
($0.12)
Total Assets
$32,492,583(3)
$36,764,203
Long Term Debt
Nil
Nil
Dividends
Nil
Nil

Explanatory Notes:

(1)The Company’s only significant source of revenue during the year ending August 31, 2008 was interest revenue from GIC’s held by the Company. The amount of interest earned correlates directly to the amount of cash on hand during the period referenced.

(2)The Company’s net loss during the year ending August 31, 2007 was lower than in 2008 due to several factors. Compensation expense totalled $580,128 in 2008 as opposed to $1,487,661 in 2007. Another factor is the write off of deferred mineral property costs of $Nil in 2008, and $1,323,222 in 2007. If one removes the effect of these two factors from each fiscal year the recorded annual loss becomes modified to $4,506,461 for 2008, and $3,947,240 for 2007. The remaining general and administrative costs are then seen to be higher in 2008 than in 2007.  During fiscal 2007 the Company completed a listing on the American Stock Exchange and since then has been required to certify its internal and disclosure controls under Sarbanes-Oxley legislation in the USA as well as Multilateral Instrument 52-109 in Canada. Professional fees increased by $556,480 from 2007 to 2008 due to continuing compliance costs for Sarbanes-Oxley, the use of external engineers to review the Feasibility Study for Project 1 of the WBJV and the Company using legal advisors during negotiations for the reorganization of the WBJV. This reorganization resulted in additional travel by management to South Africa and Europe which increased travel expenses by $202,174 in 2008 over 2007.  Management and consulting fees increased by an aggregate $153,254 in 2008 as a result of the engagement of a strategic advisor during the 2008 fiscal year.

(3)Total assets had been increasing year-on-year primarily as a result of the Company’s cash balance and continued investment in mineral properties funded by completion of private placement equity financings. However during the year ended August 31, 2008 the Company did not complete any equity financings, and the South African Rand, depreciated against the Canadian dollar, resulting in total assets decreasing. At August 31, 2008 the Company held $1,779,871 (2007 -$14,669,067) in cash and cash equivalents and short term investments.

The following table sets forth selected quarterly financial information for each of the last eight (8) quarters.

Quarter Ending
Interest & Other Income1
Net Loss2
Net Loss
per Share
November 30, 2008
$102
($2,100,438)
($0.03)
August 31, 2008
$22,396
($1,143,001)
($0.02)
May 31, 2008
$38,027
($1,307,784)
($0.02)
February 29, 2008
$78,337
($1,430,050)
($0.02)
November 30, 2007
$104,579
($1,205,754)
($0.02)
August 31, 2007
$137,331
($1,392,894)
($0.03)
May 31, 2007
$119,764
($1,027,268)
($0.02)
February 28, 2007
$92,799
($2,158,649)
($0.03)

1 The Company’s primary source of revenue during the quarters listed above was interest revenue from GIC’s held by the Company. The amount of interest revenue earned correlates directly to the amount of cash on hand during the period referenced.

2 Net losses by quarter are often materially affected by the timing and recognition of large non-cash expenses or write-offs. For example, the quarter ended November 30, 2008 includes a non-cash charge for stock based compensation in the amount of $802,409, the quarter ended August 31, 2008 includes a non-cash charge for stock based compensation in the amount of $Nil, and  the quarter ended May 31, 2008 includes a non-cash charge for stock based compensation in the amount of $187,931. The quarter ended February 29, 2008 includes a non-cash charge for stock based compensation in the amount of $250,830. The quarter ended November 30, 2007 includes a non-cash charge for stock based compensation in the amount of $141,367. The Quarter ended August 31, 2007 includes a non-cash charge for stock based compensation in the amount of $91,795. The May 31, 2007 quarter includes a non-cash charge for stock based compensation in the amount of $11,890. The February 28, 2007 quarter includes a non-cash charge for stock based compensation in the amount of $1,171,517. When adjusting these non-cash charges the results for the quarters listed show a more consistent trend, with a general growth in expenses over time that is consistent with the Company’s increased exploration and corporate activities over the past two years as described above at “Discussion of Operations and Financial Condition”.

The Company has not 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 the growth of its business.

 
b) Trend Information
 
Other than the financial obligations as set out in the table provided at Item 6. below, there are no demands or commitments that will result in, or that are reasonably likely to result in, the Company’s liquidity either increasing or decreasing at present or in the foreseeable future. The Company will require additional capital in the future to meet both its contractual and non-contractual project related expenditures as set out in the table at Item 6.  It is unlikely that the Company will generate sufficient operating cash flow to meet all of these expenditures in the foreseeable future. Accordingly, the Company will need to raise additional capital by issuance of securities or by a sale or partnering of project interests in order to meet the payment requirements of the transaction announced September 2, 2008.  See discussions at item 2. a) "Results of Operations" above and at item 6. "Liquidity and Capital Resources" below. The Company has completed a Feasibility Study for the Project 1 area of the WBJV. If a production decision is taken the Company will most likely pursue both equity and debt financing for its share of the capital requirements for that project.

Since mid calendar 2008 there has been a negative trend with regard to the market for metal commodities and related products. See “Economic and Political instability may affect the Company’s business” under Item 2c. “Risk Factors” below.
 

c) Risk Factors
 
The Company’s securities should be considered a highly speculative investment and investors should carefully consider all of the information disclosed in the Company’s Canadian and U.S. regulatory filings prior to making an investment in the Company. For a discussion of risk factors applicable to the Company, see the section entitled “Risk Factors” in the Company’s most recent annual information form filed with Canadian provincial securities regulators, which was also filed as part of the Company’s most recent annual report on Form 40-F with the U.S. Securities & Exchange Commission Without limiting the foregoing, the following risk factors should be given special consideration when evaluating an investment in the Company’s securities.

General
 
Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits, which, though present, are insufficient in quantity and/or quality to return a profit from production.

The Company’s business is subject to exploration and development risks
 
All but one of the Company’s properties are in the exploration stage and no known reserves have been discovered on such properties, the exception being the development stage Project 1 of the WBJV (see Item 2d. “Exploration Programs and Expenditures” below). At this stage, favorable results, estimates and studies are subject to a number of risks, including:
 

·  
the limited amount of drilling and testing completed to date;
 
·  
the preliminary nature of any operating and capital cost estimates;
 
·  
the difficulties inherent in scaling up operations and achieving expected metallurgical recoveries;
 
·  
the likelihood of cost estimates increasing in the future; and
 
·  
the possibility of difficulties procuring needed supplies of electrical power and water.

There is no certainty that the expenditures to be made by us or by our joint venture partners in the exploration of the properties described herein will result in discoveries of precious metals in commercial quantities or that any of our properties will be developed. Most exploration projects do not result in the discovery of precious metals and no assurance can be given that any particular level of recovery of precious metals will in fact be realized or that any identified resource will ever qualify as a commercially mineable (or viable) resource which can be legally and economically exploited. Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permit regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of precious metals ultimately discovered may differ from that indicated by drilling results. There can be no assurance that precious metals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale.

 
Economic and Political instability may affect the Company’s business
 
Since mid calendar 2008 there has been a negative trend with regard to the market for metal commodities and related products as a result of global economic uncertainty, reduced confidence in financial markets, bank failures and credit availability concerns.  These macro-economic events have negatively affected the mining and minerals sectors in general.  The Company’s market capitalization has been significantly reduced.  Although these circumstances may improve over the longer term, the short term impact upon the Company’s liquidity and its ability to raise the capital required to execute its business plans going forward will be negative.  As a result the Company will consider its business plans and options carefully going forward into 2009.  The Company’s intends to preserve its cash balances to the greatest extent possible by curtailing capital and operational expenditures where possible.

The Company has assessed the carrying values of its mineral properties as a result of the market downturn.  Based on current and expected metal prices and cost structures, management has determined that the values of the Company’s mineral properties have not been impaired at this time. However, should current market conditions and commodity prices worsen and/or persist for a prolonged period of time, an impairment of mineral properties may be required.

South Africa has undergone significant change in its government and laws since the free elections in 1994. At present, Mining Legislation in South Africa is continuing to undergo change. The new Mineral and Petroleum Resources Development Act became law on May 1, 2004. The regulation and operation of this new law is still being implemented. In association with the new Act, the Mining Charter sets out a target of 26% ownership and participation in the mineral industry by “Historically Disadvantaged Persons” within ten years, but the mechanisms to fully affect this objective are still evolving. Accordingly, the South African legal regime may be considered relatively new, resulting in risks related to the possible misinterpretation of new laws, unilateral modification of mining or exploration rights, operating restrictions, increased taxes, environmental regulation, mine safety and other risks arising out of new sovereignty over mining, any or all of which could have an adverse affect on the Company. There is no certainty that the Company will be able to convert its existing exploration rights into mining rights. The Company’s operations in general may also be affected in varying degrees by political and economic instability, terrorism, crime, fluctuations in currency exchange rates and inflation.

The Company is subject to risk of fluctuations in the relative values of the Canadian Dollar as compared to the South African Rand and the U.S. Dollar
 
The Company may be adversely affected by foreign currency fluctuations. The Company is primarily funded through equity investments into the Company denominated in Canadian Dollars.  In the normal course of business the Company enters into transactions for the purchase of supplies and services denominated in South African Rand.  The Company also has cash and certain liabilities denominated in South African Rand.  Several of the Company’s options to acquire properties or surface rights in the Republic of South Africa may result in payments by the Company denominated in South African Rand or in U.S. Dollars. Exploration, development and administrative costs to be funded by the Company in South Africa will also be denominated in South African Rand.  Fluctuations in the exchange rates between the Canadian Dollar and the South African Rand or U.S. Dollar may have an adverse or positive affect on the Company.  In the past year to November 10, 2008 the South African Rand has devalued by approximately 16% to the Canadian dollar and the Canadian dollar has devalued by approximately 19% to the U.S. dollar.

The Company’s properties are subject to title risks
 
The Company’s properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects. These defects could adversely affect the Company’s title to such properties or delay or increase the cost of the development of such properties. In addition, the Company’s properties may be subject to aboriginal or other historical rights that may be claimed on Crown properties or other types of tenure with respect to which mineral rights have been conferred. The Company is not aware of any aboriginal land claims having been asserted or any legal actions relating to native issues having been instituted with respect to any of the mineral properties in which the Company has an interest. The Company is aware of the mutual benefits afforded by co-operative relationships with indigenous people in conducting exploration activity and is supportive of measures established to achieve such co-operation.

Environmental risk
 
Environmental legislation on a global basis is evolving in a manner that will ensure stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessment of proposed development and a higher level of responsibility for companies and their officers, directors and employees. There is no assurance that future changes to environmental legislation in Canada or South Africa will not adversely affect the Company’s operations. Environmental risks may exist on properties in which the Company holds interests which are unknown at present and which have been caused by previous or existing owners or operators. Furthermore, future compliance with environmental reclamation, closure and other requirements may involve significant costs and other liabilities. In particular, the Company’s operations and exploration activities are subject to Canadian and South African national and provincial laws and regulations governing protection of the environment. Such laws are continually changing, and in general are becoming more restrictive.

The mineral exploration industry is extremely competitive
 
The resource industry is intensely competitive in all of its phases, and the Company competes with many companies that possess greater financial resources and technical facilities. Competition could adversely affect the Company’s ability to acquire suitable new producing properties or prospects for exploration in the future. Competition could also affect the Company’s ability to raise financing to fund the exploration and development of its properties or to hire qualified personnel.

Metal prices affect the success of the Company’s business
 
Metal prices have historically been subject to significant price fluctuation. No assurance may be given that metal prices will remain stable. Significant price fluctuations over short periods of time may be generated by numerous factors beyond the control of the Company, including domestic and international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increases or decreases in production due to improved mining and production methods. Significant reductions or volatility in metal prices may have an adverse effect on the Company’s business, including the economic attractiveness of the Company’s projects, the Company’s ability to obtain financing and, if the Company’s projects enter the production phase, the amount of the Company’s revenue or profit or loss. The current spot metals prices are significantly below the three year trailing average prices used to asses the Company’s Project 1 Feasibility in July 2008. Long term and short term prices are currently volatile.

 
d) Exploration Programs and Expenditures
 
General
 
The Company continues to be active in the Republic of South Africa (“RSA”). In 2003 the Company acquired a 100% South African subsidiary named Platinum Group Metals RSA (Pty.) Ltd. (“PTM RSA”) for the purposes of holding mineral rights and conducting operations on behalf of the Company. The Company conducts all of its South African exploration and development work through PTM RSA.

Mineral property acquisition and capital costs deferred during the period totaled $42,186 (November 30, 2007 - $8,625). Of this amount acquisition costs relating to the Company’s 37% pro-rata share of the WBJV amounted to $25,644 (November 30, 2007 - $7,419). The balance $16,542 (November 30, 2007 - $1,206) was spent on other mineral property costs in Canada and South Africa. Exploration costs incurred globally in the period for the Company’s interests totaled $517,337 (November 30, 2007 - $3,067,788). Of that amount $Nil (November 30, 2007 - $23,488) was incurred on the Company’s Canadian properties and $517,337 (November 30, 2007 - $3,044,300) was incurred on the Company’s South African properties. Of the South African amount, $439,572 was for the Company’s 37% share of WBJV expenditures (November 30, 2007 - $2,890,027). The total amount (100%) of exploration expenditures by all Joint Venture partners for the period for the WBJV came to $747,694 which was lower than the 100% amount spent for the same period last year (November 30, 2007 - $7,810,883).

During the period there were no write-offs in deferred costs relating to South African or Canadian projects, there were no write-offs in the same period last year. For more information on mineral properties see Note 5 and 6 of the Company’s November 30, 3008 Financial Statements.

Western Bushveld Joint Venture
 
On October 26, 2004 the Company (37%) entered into a Joint Venture with Anglo Platinum Limited (“Anglo Platinum”) (37%) and Africa Wide Mineral Prospecting and Exploration (Pty) Limited ( “Africa Wide” ) (26%) to pursue platinum exploration and development on combined mineral rights covering approximately 67 square kilometres on the Western Bushveld Complex of South Africa. The Company contributed all of its interests in portions of the farms Onderstepoort 98 JQ and Elandsfontein 102 JQ. Anglo Platinum contributed its interests in portions of the farms Koedoesfontein 94 JQ, Elandsfontein 102 JQ and Frischgewaagd 96 JQ.

The Company is the operator of the WBJV. From October 2004 to April 2006 the Company funded a required exploration program in the amount of Rand 35 million (at August 31, 2005 approx. $6.44 million). Since then the partners of the WBJV have funded their portion of further expenditures pro-rata based upon their working interest in the Joint Venture. Work programs approved by the partners totaling Rand 201 million (approximately $28.7 million) since 2006 have been completed to October 2008.  During April 2008 the participants of the WBJV also approved and funded a budget for the acquisition of long lead capital items (mine shaft hoists) in the amount of Rand 21.086 million (approximately $2.74 million). Activities for the WBJV have included research and data review, prospecting, mapping, detailed engineering, drilling of project areas, geophysical studies, geotechnical work, metallurgical studies, pre-feasibility and feasibility studies, and mine plan and scheduling work.

In April 2007 Africa Wide accepted an offer for the purchase of 100% their company from Wesizwe Platinum Ltd. (WEZ:JSE). The transaction closed in September 2007 and Wesizwe paid consideration of 57.4 million new shares of Wesizwe at a deemed price of Rand 10.48 per share for total consideration of Rand 601.5 million (approximately $90 million). Since September 2007 Wesizwe has become responsible for all of the rights and obligations of Africa Wide.

On April 9, 2007 the Company announced the formal contribution to the WBJV of a 50% interest in the mineral rights to the 494 hectare Portion 11 of the Farm Frischgewaagd 96 JQ (“Portion 11”) by Rustenburg Platinum Mines Ltd., a subsidiary of Anglo Platinum. With this addition the geographic area of the WBJV now covers approximately 72 square kilometres of territory.

Under the terms of the original WBJV agreement, once a final Feasibility Study has been completed and a decision to mine has been taken the respective deemed capital contribution of each party will be credited based on their contribution of measured, indicated, and inferred PGM ounces from the contributed properties comprising the WBJV, determined in accordance with the South African SAMREC code. Under the terms of the original WBJV Agreement, inferred ounces will be credited at US$0.50 per ounce, indicated ounces will be credited at US$3.20 per ounce and measured ounces will be credited at US$6.20 per ounce. The Company will also be credited for its Rand 35 million expenditure as described above.  For the later contribution of Portion 11 to the WBJV the original credit rates for equalization as described above have been amended to US$0.62 per inferred ounce, US$10.37 per indicated ounce and US$39.55 per measured ounce in order to adjust for market conditions at the time.  At the time of writing the estimated equalization payment due to Anglo Platinum by the Company is approximately US$20 million.

A Feasibility Study for Project 1 of the WBJV was delivered to the partners on June 30, 2008 and results thereof were published by the Company in a news release dated July 7, 2008.

Further drilling is planned to investigate additional areas with reef potential along strike on Project 3 within the Joint Venture area. Since January 2005 Platinum Group has drilled more than 178,000 metres of core in 274 boreholes, including 37 geotechnical holes.

The Company provided a statement of Reserves and Resources with the Feasibility Study.  Resources in the Measured and Indicated categories can be included in a financial model under SAMREC and NI-43-101 guidelines. Summary resource details from published reports for Project 1 and Project 3 follow in the table below. Platinum Group holds a 74% interest in the 4E ounces attributable to Projects 1 and 3 of the WBJV under the terms of the transaction announced on September 2, 2008.  See Item 2. a) “Results of Operations” above for more detail.  The prill splits and 4E estimates for Project 1 and 3 have been tested for reasonableness by kriging on the individual elements. Copper and nickel as well as the minor platinum group elements have also been estimated with a statistical process of Simple Kriging for Project 1. Absent values for copper, nickel and the minor platinum group elements have been derived from regressed values.

The Company has internally tested the resource assessment against the spot prices in October 2008 and the three year trailing prices at that time and have not amended their resource and resource assessment.

The following is a statement of Revised Attributable Reserves and Resources taking in to account the transaction announced September 2, 2008 based on the WBJV Project 1 July 7, 2008  Feasibility Study (filed on SEDAR August 21, 2008). Reserves here are a sub-set of measured and indicated resources including mining factors and are not in addition to the resources.

 
MR = Merensky Reef              UG2 = Upper Group 2 Reef
 

Merensky Reserves Project 1   (74% Company Interest Pending)
Tonnes
4E
Content 4E
Platinum Group
Platinum Group Mozs
t
g/t
Moz
Interest
Merensky Proved
6,706,482
5.55
1.198
74%
0.886
Merensky Probable
11,382,035
5.39
1.971
74%
1.459
Total Merensky Mineral Reserves
18,088,517
5.45
3.169
74%
2.345


UG2 Reserves Project1 (74% Company Interest Pending)
Tonnes
4E
Content 4E
Platinum Group
Platinum Group Mozs
t
g/t
Moz
Interest
UG2 Proved
4,245,280
3.38
0.461
74%
0.341
UG2 Probable
7,051,016
3.42
0.775
74%
0.574
Total UG2 Mineral Reserves
11,296,296
3.40
1.236
74%
0.915

See Caution Notes on previous page with respect to Company interest.

C. Muller QP PTM - Platinum Group Metals Ltd.

The Qualified Persons, (“QP”) for the above information are Charles Muller and Gordon Cunningham Independent Qualified Persons as at the effective dates in the table. (Reports dated April 25, 2008 – filed June 11, 2008 and July 7, 2008 – filed Aug 21, 2008 on www.sedar.com).

Cautionary Note to U.S. Investors: The U.S. Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this document, such as “measured,” “indicated,” and “inferred,” “reserves,” “resources,” that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. “Resources” are not “Reserves” and so do not have demonstrated economic viability. U.S. investors are urged to consider closely the disclosure in our U.S. regulatory filings, File No. 0-033562, which may be secured from us, or from the SEC’s website at:  http://sec.gov



Project 1 Resource Calculation Detail

A 39% and 41% total geological loss for the Merensky Reef and UG2 Reef respectively was applied to the resource area to accommodate for areas of potentially un-mineable structural and geological conditions. This geological loss considers losses for faults, dykes, potholes and areas of iron replacement pegmatite. Structural loss estimates are based on drilling, field mapping and remote sense data which include a high resolution aeromagnetic survey. The Merensky mineral resource estimate is based on 158 boreholes with 178 intercepts and the UG2 is based on 192 intercepts within the 1,087 hectare area. The prill split has been calculated by weighted averages as a proportion of the total 4E and the grades have been estimated with a more rigorous statistical process of Simple Kriging. The cut-off was determined on a practical mining width and the known costs and mining methods regionally. Platinum Group’s independent consulting Qualified Person has provided the resource estimate according to the SAMREC code. The reconciliation to the CIM codes is that the categories are the same. The resources are located on New Order prospecting permits that provide for the right to be converted to mining rights. Charles Muller of Minxcon is the Qualified Person (“QP”) for this report. He is registered with the SACNASP (South African Council for Natural Scientific Professions) (Registration No. 400201/04). Mr. Muller is an independent consultant with 18 years experience as a geologist, and resource evaluator. Samples were analyzed under Platinum Group’s and Anglo Platinum’s protocols including insertion of blanks, duplicates and certified reference materials in the assay stream once in every 24 or fewer samples. This is in addition to internal quality control measures undertaken by the contracted analytical facilities. Internal tests by the Company’s non-independent qualified persons at October 2008 have not resulted in resource changes but prolonged negative markets will result in resource changes.

Project 3 Resource Calculation Detail
 
A 14% geological loss for the Merensky Reef and UG2 Reef respectively was applied to the area to accommodate for areas of potentially un-mineable structural and geological conditions. This geological loss considers losses for faults, dykes, potholes and areas of iron replacement pegmatite. Structural loss estimates are based on drilling, field mapping and remote sense data which include a high resolution aeromagnetic survey and a 3D seismic survey.  The Merensky mineral resource estimate is based on 24 boreholes with 27 intercepts and the UG2 is based on 15 intercepts within the 224.28 hectare area. The prill split has been calculated by weighted averages as a proportion of the total 4E and the grades have been estimated with a more rigorous statistical process of Simple Kriging. (The prill splits and 4E estimates have been tested for reasonableness by kriging on the individual elements).   Copper and nickel as well as the minor platinum group elements have also been estimated with a statistical process of Simple kriging. Absent values for copper, nickel and the minor platinum group elements have been derived from regressed values. The cut-off was determined on a practical mining width and the known costs and mining methods regionally. Platinum Group’s independent consulting Qualified Person has provided the mineral resource estimate according to the SAMREC code. The reconciliation to the CIM codes is that the categories are the same. The resources are located on new order prospecting permits that provide for the right to be converted to mining rights.  Charles Muller of Minxcon is the Qualified Person for this report. He is registered with the South African Council for Natural Scientific Professions (“SACNASP”) (Registration No. 400201/04).

Northern Limb, Bushveld - War Springs and Tweespalk Properties
 
On June 3, 2002, the Company entered an option agreement whereby it may earn a 100% interest in the 2,396 hectare War Springs property and the 2,177 hectare Tweespalk property both located in the Northern Limb or Platreef area of the Bushveld Complex north of Johannesburg. Acquisition and exploration costs on these properties for the period ending November 30, 2008 total $3,568,032 (November 30, 2007 - $3,419,425).

By prior agreement with the holders of the Old Order mineral rights the Company had an option to purchase 100% of these mineral rights for US$690 per hectare. The Company also agreed to pay prospecting fees to the vendors of US$3.25 per hectare. The vendors retain a 1% NSR Royalty on the property, subject to the Company’s right to purchase the NSR at any time for US$1.4 million. A 5% finders’ fee applies to vendor payments.

Under the new Mineral and Petroleum Resources Development Act (2002), which became effective in May 2004, Old Order permits were to be converted into New Order permits during a transition period. This process is now complete for the War Springs and Tweespalk properties. The June 3, 2002 option agreement provides for amendments as may be needed to maintain the parties in the same commercial position as they were under the preceding mineral legislation and such amendments are yet to be completed.

Black Economic Empowerment groups Africa Wide and Taung Minerals (Pty) Ltd. have each acquired a 15% interest in the War Springs project carried to bankable feasibility. The Company’s retains a net 70% project interest.

Africa Wide also has a 30% participating interest in the Tweespalk property. Last year the Company received payment in full from Wesizwe Platinum Ltd. for Africa Wide’s share of costs to August 31, 2007, which amounted to Rand 1,549,673 ($211,840 at August 31, 2008). The payment was treated as a recovery of costs relating to the Tweespalk property.

On March 17, 2008 the Company published a revised and updated resource calculation for the War Springs property based on drilling and exploration work conducted in the last three years.  Details are as follow:
 
Reef
Cut-off 3E
Tonnage
3E
Ni
Cu
Channel Width
 
cmg/t
T
g/t
G
Moz
%
t
%
t
cm
B Reef
300
20,934,894
0.95
19,947,131
0.641
0.18
35,870
0.14
27,863
657
C Reef
300
26,030,561
1.24
32,192,522
1.035
0.08
25,812
0.06
19,388
875
Total
300
46,965,455
1.11
52,139,652
1.676
0.13
64,965
0.10
49,868
734
 

 
 Reef
Prill Splits
Pt
Pd
Au
g/t
%
g/t
%
g/t
%
B Reef
0.32
34
0.55
58
0.08
8
C Reef
0.20
16
0.97
78
0.07
6

 
The War Springs Mineral Resource is characterised by two distinct reef layers, termed the "B" and "C" reefs. Both reefs are typically greater than 6 metres thick. The reefs outcrop on surface and extend down dip in parallel sheets at a 65 degree angle to a depth of 400 metres, remaining open at depth. A 5% geological loss has been applied.  Eighteen holes had been completed by the end of May 2005, relating to 7,433 metres of drilling. A total of 8,188 samples were collected for the determination of elements Platinum, Palladium, Gold, Copper and Nickel. Four additional boreholes were drilled (1,646m) during the period November 2005 to early February 2006, on high priority soil targets (Phase 2 Drilling Program). An additional 1,738 samples were collected for analysis.  Of the 22 boreholes drilled, 15 boreholes intersected the “B” Reef and 8 boreholes intersected the “C” Reef.  Drilling results from Phase 1 and 2 covering approximately 2,200 metres of strike length on a 250 metre spacing, combined with a review of the cut-off, form the basis of the updated Inferred Mineral Resource estimation reported in a NI43-101 document, compiled by Minxcon (Pty) Ltd, dated March, 2008.  Mr. Charles Muller of Minxcon is the Qualified Person for the War Springs resource estimate. Samples were analyzed under Platinum Group’s previously published protocols for the project including insertion of blanks, duplicates and certified reference materials in the assay stream once in every 24 or fewer samples. This is in addition to internal quality control measures undertaken by the contracted certified analytical facilities. Assays were completed by standard fire assay procedures with preparation at the Setpoint facility at Mokopane and final assays at Genalysis Laboratories Services Pty Ltd. in Perth Australia or Anglo Research Laboratories.
 

The Tweespalk and War Springs projects are currently the subject of only modest work efforts as the Company is focused on the WBJV. The Tweespalk and War Springs projects are being considered for more active exploration work in 2009.

Lac Des Iles Area Properties, Ontario
 
On May 5, 2000, New Millennium entered into an option agreement to acquire a 50% interest in the Lac des Iles River property located near Thunder Bay, Ontario in exchange for cash payments ($43,500 paid in total) and the completion of exploration expenditures. On October 6, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 2.0% Net Smelter Return Royalty. In settlement the Company made a one-time payment to the vendors of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

In April 2000, and later as amended in January 2005, the Company acquired an option to earn a 50% interest in the South Legris property located near Thunder Bay, Ontario in exchange for cash payments ($105,000 paid in total) and the completion of certain exploration expenditures. On October 13, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property subject only to underlying 2.0% Net Smelter Return Royalties. In settlement the Company made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

On June 28, 2000, New Millennium entered into an option agreement to earn up to 60% interest in the Shelby Lake property, located near Thunder Bay, Ontario in exchange for cash payments of $15,000 (paid), the issue of 30,303 shares (issued) and the completion of exploration expenditures. On October 18, 2006, the Company and the property vendor entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property for a one-time payment of $5,000 subject only to an underlying 2.0% Net Smelter Return Royalty.

In late 2006 a 1,090 metre drill program was conducted on the Company’s Lac Des Iles area projects. A further drill program planned for 1,125 metres was completed in December 2007. Costs for the program for 2008 amounted to $166,042. Results of exploration for the current program and those over the last few years for palladium, platinum, nickel and copper have been encouraging and the Company plans to invest further in this area in the future. A 2009 exploration budget for the area is under consideration.

e) Administration Expenses
 
Before a non-cash charge for stock based compensation of $802,409 (November 30, 2007 - 141,367), and not including interest in the year of $102 (November 30, 2007 - $104,579), general and administrative expenses totaled $1,288,136 (November 30, 2007 - $1,168,967).  Since 2002 the Company has grown substantially through its amalgamation with New Millennium Metals Corporation and its expansion into the Republic of South Africa. This growth is reflected in the costs for the period described herein. During 2004 the Company opened and staffed a permanent office in Johannesburg and commenced active exploration on the ground. The costs described above include management and consulting fees of $321,725 (November 30, 2007 - $74,963); office and miscellaneous expenses of $51,777 (November 30, 2007 - $58,238); professional fees of $276,586 (November 30, 2007 - $181,455); salaries and benefits of $364,891 (November 30, 2007 - $406,419); shareholder relations expense of $102,269 (November 30, 2007 - $49,444); travel expenses of $124,353 (November 30, 2007 - $196,497); news release, print and mailout expenses of $17,504 (November 30, 2007 - $31,981) and promotion expenses of $39,943 (November 30, 2007 - $48,641).

f) Related Party Transactions
 
Management, consulting fees, salaries and directors’ fees for the period amounted to $102,135 (November 30, 2007 - $90,930). Of this amount approximately $55,885 (November 30, 2007 - $49,680) is related to fees for the Company’s President, an amount of $46,250 (November 30, 2007 - $41,250) relates to salary for the Company’s CFO.  At November 30, 2008 there were $10,284 in fees (November 30, 2007 - $5,760) owed and included in accounts payable.

The Company received $33,923 (November 30, 2007 - $33,951) during the period from MAG Silver Corp. (“MAG”), a company with two common directors and a common officer under an administrative services agreement. The services provided include day-to-day administration and accounting and are provided at market rates. There are no long term obligations or commitments for either party with relation to the services agreement. Amounts receivable at the end of the period includes an amount of $37,206 for both administration fees due $22,704 and $14,502 due from MAG for other trade receivables (November 30, 2007 - $2,509).

During the period the Company accrued or received payments of $27,000 (November 30, 2007 – $27,000) from West Timmins Mining Inc. (“WTM”), a company with three common directors and a common officer, for administrative services. The services provided include day-to-day administration and are provided at market rates. There are no long term obligations or commitments for either party with relation to the provision of services. Amounts receivable at the end of the period includes an amount of $31,287 for both administration fees due $18,000 and $13,287 due from WTM for other trade receivables (November 30, 2007 – other trade receivables $3,025).

During the year ended August 31, 2005, the Company entered into an office lease agreement with Anthem Works Ltd. (“Anthem”), a company with a common director. During the period ended November 30, 2008 the Company accrued or paid Anthem $21,367 under the office lease agreement (November 30, 2007 - $17,215). The space occupied approximates one third of 6,050 square feet in a first tier building located in downtown Vancouver, British Columbia. The rental rate was negotiated on an “arm’s length basis”. The Company has an obligation to rent the premises until September 30, 2009 at a rate of $7,213 per month.

All of the above transactions are in the normal course of business and are measured at the exchange amount which is the consideration established and agreed to by the noted parties.

g) Shareholder Relations’ Expenses
 
Shareholder relations’ expense during the period totaled $102,269 (November 30, 2007 - $49,444). The Company manages its shareholder relations as an internal function. The Company has been active in raising its profile with both retail and institutional investors.  From June 2005 to present Mr. Tony Mahalski of LM Associates in London, U.K., was engaged for a fee of GBP 1,000 per month for the purpose of general business development and the raising of the Company’s profile in Europe.

h) Travel and Promotion Expenses
 
Travel expenses for the period amounted to $124,353 (November 30, 2007 - $196,497).  These activities relate to the supervision of ongoing operations in South Africa and Canada, new property investigations and meetings with potential and current institutional and sophisticated investors. Travel related to all of these activities was lower during the period than in the same period in 2007.  Promotional expenses in the period amounted to $39,943 (November 30, 2007 - $48,641) and these costs relate to design work, media relations, printed material, postage and trade show attendance.

i) Property Acquisition Expenses
 
Property acquisition expenditures during the period totaled $42,186 (November 30, 2007 - $8,625). These expenditures were incurred to acquire or maintain option rights to South African mineral properties.

The Company evaluates its property interests on an ongoing basis and intends to abandon properties that fail to remain prospective. Apart from a possible buy-out of the War Springs and Tweespalk properties, the Company has no other required property acquisition payments due to vendors under mineral property option agreements.  At the time of writing the Company was incurring further property acquisition expenses, such as research and staking expenses, through its activities in Ontario, Canada and South Africa.

j) Off-Balance Sheet Arrangements
 
The Company has no off-balance sheet arrangements.


3.        CRITICAL ACCOUNTING ESTIMATES
 
The preparation of financial statements in conformity with Canadian GAAP requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Management has identified (i) mineral property acquisition and exploration deferred costs (ii) provision for reclamation and closure, (iii) future income tax provision (iv) stock based compensation and (v) recoverability of its interest in the WBJV as the main estimates for the following discussion. Please refer to Note 2 of the Company’s Audited consolidated financial statements for a description of all of the significant accounting policies.

 
Under Canadian GAAP, the Company defers all costs relating to the acquisition and exploration of its mineral properties. Any revenues received from such properties are credited against the costs of the property. When commercial production commences on any of the Company’s properties, any previously capitalized costs would be charged to operations using a unit-of-production method. The Company reviews when events or changes in circumstances indicate the carrying values of its properties to assess their recoverability and when the carrying value of a property exceeds the estimated net recoverable amount, provision is made for impairment in value.
 
The existence of uncertainties during the exploration stage and the lack of definitive empirical evidence with respect to the feasibility of successful commercial development of any exploration property does create measurement uncertainty concerning the estimate of the amount of impairment to the value of any mineral property. The Company relies on its own or independent estimates of further geological prospects of a particular property and also considers the likely proceeds from a sale or assignment of the rights before determining whether or not impairment in value has occurred.

Reclamation and closure costs have been estimated based on the Company’s interpretation of current regulatory requirements, however changes in regulatory requirements and new information may result in revisions to estimates. The Company recognizes the fair value of liabilities for reclamation and closure costs in the period in which they are incurred. A corresponding increase to the carrying amount of the related assets is generally recorded and depreciated over the life of the asset.

The future income tax provision is based on the liability method. Future taxes arise from the recognition of the tax consequences of temporary differences by applying enacted or substantively enacted tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of certain assets and liabilities. The Company records a valuation allowance against any portion of those future income tax assets that it believes will, more likely than not, fail to be realized.

For its 2005 fiscal year, The Company adopted CICA Handbook Section 3870 – Stock-Based Compensation and other Stock-Based Payments, which requires the fair value method of accounting for stock options. Under this method, the Company is required to recognize a charge to the income statement based on an option-pricing model based on certain assumptions. For the period ended November 30, 2008 the assumptions were as follows; no dividends were paid, a weighted average volatility of the Company’s share price of 73.73%, a weighted average annual risk free rate of 2.73 per cent and an expected life of 3.5 years. The resulting weighted average option pricing resulted in an expense for stock options in the year ended August 31, 2008 of $1,288,383 (2007 - $1,487,661). Of the $1,288,383 in cost calculated for August 31, 2008 an amount of $580,128 was expensed while $708,255 was capitalized to deferred mineral property exploration costs in the Company’s WBJV interest.

4.        SIGNIFICANT ACCOUNTING POLICIES
 
The Company’s significant accounting policies are set out in Note 2 of its Financial Statements for the period ended November 30, 2008. There are several policies that are significant to the financial results of the Company.

Under Canadian GAAP, the Company defers all costs relating to the acquisition and exploration of its mineral properties. Any revenues received from such properties are credited against the costs of the property. When commercial production commences on any of the Company’s properties, any previously capitalized costs would be charged to operations over the life of the property using a unit-of-production method. The Company regularly reviews deferred exploration costs to assess their recoverability when facts and circumstances indicate that the carrying value of a property exceeds the estimated net recoverable amount, provision is made for impairment in value.

The existence of uncertainties during the exploration stage and the lack of definitive empirical evidence with respect to the feasibility of successful commercial development of any exploration property do create measurement uncertainty concerning the calculation of the amount of impairment to the value of any mineral property. The Company relies on its own or independent estimates of further geological prospects of a particular property and also considers the likely proceeds from a sale or assignment of the rights before determining whether or not impairment in value has occurred.

Future income taxes are calculated based on the liability method. Future income taxes arise from the recognition of the tax consequences of temporary differences by applying enacted or substantively enacted tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of certain assets and liabilities. The Company records a valuation allowance against any portion of those future income tax assets that it believes will, more likely than not, fail to be realized.

5.        ADOPTION OF NEW ACCOUNTING STANDARDS
 
Effective September 1, 2008, the Company adopted the following new presentation and disclosure standards that were issued by the Canadian Institute of Chartered Accountants.  These standards were adopted on a prospective basis without restatement of prior periods.

CICA Section 1400, General Standards of Financial Statement Presentation,
outlines the premise that in the preparation of financial statements all information required for fair presentation in accordance with generally accepted accounting principles should be included.  It also specifies the requirements for assessing an entity’s ability to continue as a going concern and disclosing any material uncertainties that cast doubt on its ability to continue as a going concern.  The Company’s disclosure reflects such assessment.

CICA Section 1535, Capital Disclosures, establishes disclosure requirements regarding an entity’s capital, including (i) an entity’s objectives, policies, and processes of managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any externally imposed capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The Company has included disclosures recommended by Section 1535 in these interim consolidated financial statements.
CICA Sections 3862, Financial Instruments - Disclosures and Section 3863 Financial Instruments - Presentation, replace Section 3861 Financial Instruments – Disclosure and Presentation. These new sections revise and enhance disclosure requirements while leaving presentation requirements unchanged. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks.  The Company has included the recommended disclosures in these interim consolidated financial statements.

CICA Section 3031, Inventories, provides for more guidance on the measurement and disclosure requirements for inventories. Specifically the new pronouncement requires inventories to be measured at the lower of cost or net realizable value, and provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. The new standard has had no impact on the consolidated financial position or results of operations for the period ended November 30, 2008.

RECENT ACCOUNTING PRONOUNCEMENTS
 
The Canadian Institute of Chartered Accountants (“CICA”) has issued new standards which may affect the financial disclosures and results of operations of the Company for interim and annual periods beginning September 1, 2009.  The Company is currently considering the impact this will have on the Company’s financial statements.

CICA Section 3064, Goodwill and Intangible Assets, replaces Section 3062, Goodwill and Other Intangible Assets and Section 3450, Research and Development Costs. In February 2008, the CICA issued the new pronouncement establishing revised standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets.  The new standard also provides guidance for  the  treatment  of  preproduction  and  startup  costs  and  requires  that  these  costs  be expensed  as  incurred. The new standard applies to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008.  Management is currently  assessing  the  impact  of  these  new  accounting standards  on  its  financial statements. Adoption of this standard will result in the withdrawal of EIC 27.

Convergence with International Financial Reporting Standards (“IFRS”). In February 2008, the Canadian Accounting Standards Board confirmed that publicly accountable enterprises will be required to adopt IFRS for fiscal years beginning on or after January 1, 2011, with earlier adoption permitted. Accordingly, the conversion to IFRS will be applicable to the Company no later than the quarter ended November 30, 2011, with restatement of comparative information presented. The conversion to IFRS will impact the Company’s accounting policies, information technology and data systems, internal control over financial reporting, and disclosure controls and procedures. The transition may also impact business activities, such as foreign currency activities, certain contractual arrangements, capital requirements and compensation arrangements. The Company is currently evaluating the future impact of IFRS on its financial statements and will continue to invest in training and additional resources to ensure a timely conversion.

 
6.        LIQUIDITY AND CAPITAL RESOURCES
 
Since mid calendar 2008 there has been a negative trend with regard to the market for metal commodities and related products as a result of global economic uncertainty, reduced confidence in financial markets, bank failures and credit availability concerns.  These macro-economic events have negatively affected the mining and minerals sectors in general.  The Company’s market capitalization has been significantly reduced.  Although these circumstances may improve over the longer term, the short term impact upon the Company’s liquidity and its ability to raise the capital required to execute its business plans going forward will be negative.  As a result the Company will consider its business plans and options carefully going forward into 2009.  The Company intends to preserve its cash balances to the greatest extent possible by curtailing capital and operational expenditures where possible.

During the period the Company issued a total of 4,975,470 (November 30, 2007 – 485,500) common shares for cash proceeds of $7,320,931 (November 30, 2007 - $568,750). Cash proceeds are net of share issuances to be spent on mineral property acquisitions, exploration and development as well as for general working capital purposes. The Company’s primary source of capital has been from the sale of equity. At November 30, 2008 the Company had cash, cash equivalents and short-term investments on hand of $7,903,077 compared to $13,428,947 at November 30, 2007.

The Company receives lump sum cash advances at various times as laid out in agreed budgets from its joint venture partners to cover the costs of the WBJV. The balance of cash outflows is made up of management fees and expenses of $321,725 (November 30, 2007 - $74,963) and other general and administrative expenses of $966,411 (November 30, 2007 - $1,094,004).

The following Table discloses the Company’s continual obligations for optional mineral property acquisition payments and contracted office and equipment lease obligations. Apart from a possible buy-out of the War Springs and Tweespalk properties, (which optional acquisition payment is included in the following table) the Company has no other property acquisition payments due to vendors under mineral property option agreements.  The Company has no long term debt or loan obligations. Under the terms of several of the Company’s mineral property option and purchase agreements, the Company is required to make certain scheduled acquisition payments as summarized in the table below in order to preserve the Company’s interests in the related mineral properties. In the event the Company is unable or unwilling to make these payments, it is likely that the Company would forfeit our rights to acquire the related properties.

 
Payments by period
Total
< 1
Year
1 – 3
Years
3 – 5
Years
> 5
Years
Equalization amount due Anglo Platinum 1
$ 23,200,000
$ 23,200,000
$ 0
$ 0
$ 0
Purchase price due Wesizwe Platinum 1
 
$ 49,000,000
 
$ 49,000,000
 
$ 0
 
$ 0
 
$ 0
Past Exploration Costs due Wesizwe Platinum 1
 
$ 2,320,000
 
$ 2,320,000
 
$ 0
 
$ 0
 
$ 0
Optional Acquisition Payments (War Springs & Tweespalk)
 
 
$ 3,978,000
 
 
$ 3,978,000
 
 
$ 0
 
 
$ 0
 
 
$ 0
Lease Obligations
$ 227,579
$ 144,935
$ 80,985
$ 1,659
$ 0
Totals
$ 78,725,579
$ 78,642,935
$80,985
$ 1,659
$ 0

1 The requirement to pay and the due date of these items is dependent upon the proposed transaction announced September 2, 2008.  See discussions at item 2. a) "Results of Operations" above and below in this section.

As detailed in the table above, the Company will be required to pay an equalizing amount under the terms of the WBJV agreement based on the measured, indicated and inferred 4E PGE ounces reported in a Feasibility Study. Under the original terms of the WBJV this equalization amount would be due to Anglo Platinum only after a decision to mine is taken by the partners of the WBJV, or as detailed below.  See item 2. d) “Exploration Programs and Expenditures” above for details of how the equalizing payment will be calculated.

Should the transaction announced September 2, 2008 become effective the equalization amount will become due to Anglo Platinum on the effective date of the final agreement.  The effective date will occur once all conditions precedent have been fulfilled.  It is anticipated this date will be several months after the execution of definitive agreements, which was announced December 8, 2008.  In the event the Company does not make the equalization payment on the date required, Anglo Platinum can elect to extend the payment deadline for up to six months, with interest, or may elect to take payment in common shares of Wesizwe, at which point the right to accept the equalization payment would transfer to Wesizwe.

Also as detailed in the table above, under the terms of the proposed transaction announced September 2, 2008 to rationalize the WBJV ownership structure, the Company would be required to make both a purchase payment and past exploration cost payment to Wesizwe.  The purchase payment would be due six months after the effective date of the final agreement.  See Item 2. a) “Results of Operations” for more detail.  In the event the Company does not make the required Wesizwe purchase payment, Wesizwe would have the right to dilute the Company for up to a 19% reduction in its 74% interest in Projects 1 and 3, taking the Company to a 55% interest position.

Since mid calendar 2008 there has been a negative trend with regard to the market for metal commodities and related products. See “Economic and Political instability may affect the Company’s business” under Item 2c. “Risk Factors” above.  Current market conditions will affect the Company’s ability to make the payments described above under the proposed transaction announced September 2, 2008.  The Company will consider its business plans and options carefully going forward into 2009.  Cash at August 31, 2008 plus subsequent financings is sufficient to fund general operation costs through fiscal 2009, but will be insufficient to cover the payments envisioned should the proposed transaction announced September 2, 2008 become effective.

The Company is considering and analyzing various strategies to maximize shareholder value going forward in a challenging environment.  These strategies include simply conserving working capital and looking toward potential traditional construction financing in 2009.  The Company continues to discuss financing possibilities with several large banks who have expressed interest to be involved in the financing of Project 1.  A second option would be to consider a strategic partner who has the financial ability to finance Project 1 construction costs, possibly with a metal price instrument or hedge.  A third option would be to sell some or all of the South African projects at the most favorable price for shareholders.  All three options will be pursued during 2009.

 
7.        OUTSTANDING SHARE DATA
 
The Company has an unlimited number of common shares authorized for issuance without par value. At November 30, 2008 there were 67,624,717 shares outstanding, 5,464,875 incentive stock options outstanding and no common share purchase warrants outstanding. During the period ending November 30, 2008, the Company made no changes to the exercise price of outstanding options through cancellation and reissuance or otherwise.

8.
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 U.S. Securities and Exchange Commission and Canadian Securities Administrators requirements are recorded, processed, summarized and reported in the manner specified by the relevant securities laws applicable to the Company. The Company operates in both Canada and the Republic of South Africa and work is ongoing to improve and modernize these controls and to ensure that they remain consistently applied in both jurisdictions. The Chief Executive Officer and the Chief Financial Officer have evaluated the Company’s disclosure control procedures as of November 30, 2008 through inquiry, review, and testing, as well as by drawing upon their own relevant experience. The Company retained an independent third party specialist in 2008 to assist in the assessment of its disclosure control procedures. The Chief Executive Officer and the Chief Financial Officer have concluded that, as at November 30, 2008, the Company’s disclosure control procedures were effective. Management is also developing and implementing a plan to address disclosure controls and procedures on a forward looking basis as the Company continues to grow.

The Company also maintains a system of internal controls over financial reporting designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. The Company retained an independent third party specialist in 2008 to assist in the assessment of its internal control procedures. The Board of Directors approves the financial statements and ensures that management discharges its financial responsibilities. The Board’s review is accomplished principally through the audit committee, which is composed of independent non-executive directors.

The audit committee meets periodically with management and auditors to review financial reporting and control matters. The Board of Directors has also appointed a compensation committee composed of non-executive directors whose recommendations are followed with regard to executive compensation.

From time to time the board may also form special sub-committees, which must investigate and report to the Board on specific topics.

During the year ended August 31, 2007, the Company effected the changes in internal control over financial reporting that have materially affected, or may materially affect, the Company’s internal control over financial reporting. The Company has (i) taken steps to improve segregation of duties and the authorization process through the addition of accounting personnel; and (ii) reviewed and refined internal control processes; and (iii) adopted and published new corporate governance policies; and (iv) reviewed and improved general controls over information technology; and (v) enhanced financial control over period close processes. During the period ended November 30, 2008 there were no significant changes with regard to internal controls.

The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, and evaluating the effectiveness of the Company’s internal control over financial reporting as at each fiscal year end. Management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework to evaluate the effectiveness of the Company’s internal control over financial reporting as at August 31, 2008. Based on this evaluation, management has concluded that as at August 31, 2008, the Company’s internal control over financial reporting was effective.

Management’s effectiveness of internal control over financial reporting has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, who have expressed their opinion in their report included with the Company’s annual consolidated financial statements.

9.        NYSE Alternext US LLC CORPORATE GOVERNANCE
 
The Company’s common shares are listed on the NYSE Alternext US LLC (formerly the American Stock Exchange) (“AMEX”). Section 110 of the AMEX company guide permits AMEX to consider the laws, customs and practices of foreign issuers in relaxing certain AMEX listing criteria, and to grant exemptions from AMEX listing criteria based on these considerations. A company seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law. A description of the significant ways in which the Company’s governance practices differ from those followed by domestic companies pursuant to AMEX standards is posted on the Company’s website at www.platinumgroupmetals.net and a copy of such description is available by written request made to the Company.

10.           OTHER INFORMATION

Additional information relating to the Company, including the Company’s Annual Information Form for the year ended August 31, 2008 may be found on SEDAR at www.sedar.com. and on EDGAR at www.sec.gov.

 
11.           SUBSEQUENT EVENTS
 
None
 
12.           LIST OF DIRECTORS AND OFFICERS
 
a) Directors:
 
R. Michael Jones
Frank R. Hallam (Secretary)
Iain McLean
 
Eric Carlson
 
Barry W. Smee
 
 
b) Officers:
 
R. Michael Jones (Chief Executive Officer)
 
Frank R. Hallam (Chief Financial Officer)
 
Peter C. Busse (Chief Operating Officer)
 


EX-99.03 4 ceo_cert090114.htm CEO CERTIFICATION FOR 2009 Q1 ceo_cert090114.htm
Form 52-109F2
Certification of Interim Filings

 
I, R. Michael Jones, Chief Executive Officer of Platinum Group Metals Ltd., certify that:
 
 
1.
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of Platinum Group Metals, (the issuer) for the interim period ending November 30, 2008;
 
 
2.
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;
 
 
3.
Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings;
 
 
4.
The issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the issuer, and we have:
 
 
 
(a)
designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; and
 
 
 
(b)
designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP; and
 
 
5. 
I have caused the issuer to disclose in the interim MD&A any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent interim period that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting.
 
 
Date: January 14, 2009
 
“R. Michael Jones”
_______________________
R. Michael Jones, CEO

EX-99.04 5 cfo_cert090114.htm CFO CERTIFICATION FOR 2009 Q1 cfo_cert090114.htm

 
Form 52-109F2
Certification of Interim Filings

 
I, Frank R. Hallam, Chief Financial Officer of Platinum Group Metals Ltd., certify that:
 
 
1.
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of Platinum Group Metals, (the issuer) for the interim period ending November 30, 2008;
 
 
2.
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;
 
 
3.
Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings;
 
 
4.
The issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the issuer, and we have:
 
 
 
(a)
designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; and
 
 
 
(b)
designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP; and
 
 
5. 
I have caused the issuer to disclose in the interim MD&A any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent interim period that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting.
 
 
Date: January 14, 2009
 
“Frank Hallam”
_______________________
Frank Hallam, CFO

EX-99.05 6 nr090114.htm NEWS RELEASE FROM JAN 14 2009 nr090114.htm


News Release
No. 09-169
January 14, 2009


Platinum Group Reports First Quarter Financial Results

(Vancouver/Johannesburg) Platinum Group Metals Ltd. (PTM-TSX; PLG-NYSE.A US) (“Platinum Group”) announces the publication of the Company’s financial results for the period ending November 30, 2008. For complete details of the November 30, 2008 financial statements and Management’s Discussion and Analysis please see the Company’s filings on SEDAR (www.sedar.com) or on EDGAR (www.sec.gov).

The Company’s cash position at November 30, 2008 was $7.9 million. The Company’s cash is invested with the Royal Bank of Canada in guaranteed investment certificates or in a current account. All amounts herein are reported in Canadian dollars unless otherwise specified. The Company also held marketable securities at the period end with a market value of $691,000.

Accounts receivable at year end totalled $305,154 while accounts payable amounted to $2,561,754. Accounts receivable were comprised primarily of value added taxes repayable to the Company in Canada and in South Africa. Accounts payable were comprised of approximately $1,872,000 for surface rights acquisitions in South Africa while the balance was due for drilling, sampling, geophysical and engineering work conducted on the Western Bushveld Joint Venture (“WBJV”), and head office administrative costs.

Total global exploration and engineering expenditures for the Company’s account in the first quarter ending November 30, 2008 totaled $517,337 (November 30, 2007 - $3,067,788), and of this $439,572 was for the WBJV (November 30, 2007 - $2,890,027) and $77,765 was for other exploration (November 30, 2007 - $177,761). Total WBJV expenditures during the first quarter by all Joint Venture partners totaled $747,694 (November 30, 2007: $7,830,935).

The Company’s loss for the period ended November 30, 2008 amounted to $2.1 million or $0.03 per share as compared to $1.2 million or $0.02 per share for the comparative period in fiscal 2008. The loss includes $802,409 as a non-cash charge for Stock Based Compensation ($141,367 for November 30, 2007). Before the non-cash charge for Stock Based Compensation general overhead and administration costs for the period amounted to $1.3 million ($1.2 million for November 30, 2007).  Interest income earned amounted to $102 ($104,579 for November 30, 2007) after netting out $37,781 in interest payable as a transaction cost on a pending surface rights purchase in South Africa.

As Operator the Company delivered a Positive Feasibility Study for Project 1 of the WBJV to the partners on July 1, 2008. Summary results of the study were published in a news release by the Company dated July 7, 2008. The feasibility study will be used for a project build decision and if implemented the Company will need to complete project financing for its share of capital costs and expand its capabilities as operator. Permit applications are in process.
 
In October 2008 the Company closed a non-brokered private placement and raised net proceeds of $7,308,081 by issuance of 4,910,470 common shares at a price of $1.55 per share. A further 60,000 shares were issued at the offering price as part of a finders fee.

The Company’s key project is its interest in the WBJV, a platinum exploration and development project on combined mineral rights covering approximately 72 square kilometres on the Western Bushveld Complex of South Africa. On September 2, 2008 the Company announced in a news release its agreement to a term sheet with Anglo Platinum and Wesizwe Platinum to consolidate and rationalize the WBJV. Under the terms Platinum Group will control 74% of the WBJV Projects 1 and 3 and Wesizwe will control 100% of Project 2 and 26% of Projects 1 and 3. On December 8, 2008 the Company announced the execution of definitive agreements formalizing the earlier announcement.

The Company is considering and analyzing various strategies to maximize shareholder value going forward in a challenging environment.  These strategies include simply conserving working capital and looking toward potential traditional construction financing in 2009.  The Company continues to discuss financing possibilities with several large banks who have expressed interest to be involved in the financing of Project 1.  A second option would be to consider a strategic partner who has the financial ability to finance Project 1 construction costs, possibly with a metal price instrument or hedge.  A third option would be to sell some or all of the South African projects at the most favorable price for shareholders.  All three options will be pursued during 2009.

About Platinum Group Metals Ltd.
 
Platinum Group is based in Vancouver BC, Canada and Johannesburg, South Africa. Platinum Group has a management team in both Canada and South Africa, which have successful track records of more than 20 years in exploration, mine discovery, mine construction and mine operations. The Company was formed in 2000 and is focused on the development of platinum operations. It holds significant mineral rights in the Northern and Western Bushveld Igneous Complex of South Africa.

Platinum Group is also a significant mineral rights holder in the area surrounding Canada’s only primary platinum and palladium mine near Thunder Bay, Ontario Canada.

On behalf of the Board of
Platinum Group Metals Ltd.
 
“Frank R. Hallam”
Chief Financial Officer and Director
 
- 30 -
 
For further information contact:
R. Michael Jones, President
or Michael Pound, Investor Relations
Platinum Group Metals Ltd., Vancouver
Tel: (604) 899-5450 / Toll Free: (866) 899-5450
www.platinumgroupmetals.net


The Toronto Stock Exchange and the New York Stock Exchange - Alternext U.S. LLC have not reviewed and do not accept responsibility for the accuracy or adequacy of this news release, which has been prepared by management.

This press release contains forward-looking statements within the meaning of Canadian and U.S. securities laws. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. All statements that are not statements of historical fact are forward-looking statements. Forward-looking statements in this press release include, without limitation, statements regarding the timing, size and use of proceeds of the proposed private placement and the potential to increase the Company’s interest in certain of its projects.  In addition, the results of the feasibility study may constitute forward-looking statements to the extent that they reflect estimates of mineralization, capital and operating expenses, metal prices and other factors.  Although the Company believes the forward-looking statements in this press release are reasonable, it can give no assurance that the expectations and assumptions in such statements will prove to be correct. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in market conditions, the nature, quality and quantity of any mineral deposits that may be located, the Company’s ability to obtain any necessary permits, consents or authorizations required for its activities, the Company’s ability to produce minerals from its properties successfully or profitably, to continue its projected growth, or to be fully able to implement its business strategies and other risk factors described in he Company’s Form 40-F annual report, annual information form and other filings with the SEC and Canadian securities regulators, which may be viewed at www.sec.gov and www.sedar.com, respectively.
 

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