-----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, BH61ReplNVKrC/4t7KbNW8nA7h9HYwE9BRRKo30f+lAosZ5ew8V8/BPdwv29JX0w iM62XsrCZBlI6Adkmbf7RA== 0001137171-07-000993.txt : 20070719 0001137171-07-000993.hdr.sgml : 20070719 20070719151511 ACCESSION NUMBER: 0001137171-07-000993 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20070702 FILED AS OF DATE: 20070719 DATE AS OF CHANGE: 20070719 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: 07989110 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 platinum6k071907.htm PLATINUM GROUP METALS FORM 6-K CC Filed by Filing Services Canada Inc. 403-717-3898


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: July 2 - 16, 2007



Platinum Group Metals Ltd.

(SEC File No. 0-30306)


Suite 328 – 550 Burrard Street, Vancouver BC, V6C 2B5, CANADA

Address of Principal Executive Office


The registrant files annual reports under cover:  Form 20-F [X] Form 40-F  [   ]


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: July 17, 2007

Frank R. Hallam”

 

FRANK R. HALLAM

DIRECTOR & CFO


Exhibit List

 

32.1        CEO Certification

32.2        CFO Certification

99.1        Financial Statements

99.2        Management's Discussion & Analysis





EX-32.1 2 ceocert.htm CERTIFICATION CC Filed by Filing Services Canada Inc. 403-717-3898

Form 52-109F2 Certification of Interim Filings


I, R. Michael Jones, President & CEO 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 Ltd., (the “issuer”) for the interim period ending May 31, 2007;

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: July 13, 2007

“R. Michael Jones”

_______________________
R. Michael Jones
President & CEO



EX-32.2 3 cfocert.htm CERTIFICATION CC Filed by Filing Services Canada Inc. 403-717-3898

Form 52-109F2 Certification of Interim Filings


I, Frank 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 Ltd., (the “issuer”) for the interim period ending May 31, 2007;

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: July 13, 2007

”Frank Hallam”

_______________________
Frank Hallam
Chief Financial Officer



EX-99.1 4 financials.htm FINANCIALS CC Filed by Filing Services Canada Inc. 403-717-3898









Platinum Group Metals Ltd.

(Development Stage Company)

Consolidated Interim Financial Statements

For the nine month period ended May 31, 2007


Filed: July 16, 2007





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





Page 1




PLATINUM GROUP METALS LTD.
(An exploration stage company)

Consolidated Balance Sheets

May 31, 2007 and August 31, 2006

    May 31     August 31  
    2007     2006  
ASSETS         
CURRENT         
   Cash and cash equivalents  $  14,486,241   $  10,066,801  
   Marketable securities (market value - May 31/07 $1,555,000;         
   Aug. 31/06 - $564,000)    210,000     210,000  
   Amounts receivable (Note 3)    572,577     394,993  
   Prepaid expenses and other    65,288     64,148  
Total current assets    15,334,106     10,735,942  
PERFORMANCE BONDS    39,777     27,364  
INVESTMENT IN WESTERN BUSHVELD         
JOINT VENTURE (Note 5)    13,198,197     10,830,088  
MINERAL PROPERTIES (Note 6)    5,088,824     5,830,797  
FIXED ASSETS (Note 7)    311,547     240,250  
Total assets  $  33,972,451   $  27,664,441  
LIABILITIES         
CURRENT         
   Accounts payable and accrued liabilities  $  1,221,685   $  2,126,584  
   Unspent WBJV partners contribution (Note 5)    674,879     -  
   Current portion of capital lease obligation    1,738     6,658  
Total current liabilities    1,898,302     2,133,242  
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATION    15,911     15,911  
FUTURE INCOME TAXES (Note 11)    -     -  
Total liabilities    1,914,213     2,149,153  
SHAREHOLDERS' EQUITY         
Share capital (Note 8)    52,095,004     39,798,768  
Contributed Surplus (Note 9)    2,998,201     1,785,705  
Cumulative translation adjustment    (2,258,934 )    (658,381 ) 
Deficit accumulated during the exploration stage    (20,776,033 )    (15,410,804 ) 
Total shareholders' equity    32,058,238     25,515,288  
Total liabilities and shareholders' equity  $  33,972,451   $  27,664,441  

CONTINUING OPERATIONS (Note 1) CONTINGENCIES AND COMMITMENTS (NOTE 12)

APPROVED BY THE DIRECTORS:

"R. Michael Jones"

R. Michael Jones, Director

"Frank R. Hallam"

Frank Hallam, Director

See accompanying notes to the consolidated financial statements.

 



PLATINUM GROUP METALS LTD.
(An exploration stage company)

Consolidated Statements of Operations

  Three Months   Three Months     Nine Months     Nine Months  
  Ended   Ended     Ended     Ended  
    May 31, 2007     May 31, 2006     May 31, 2007     May 31, 2006  
EXPENSES             
 Amortization  $ 28,796   $ 20,642   $  67,321   $  51,519  
 Annual general meeting  -   -     82,697     50,563  
 Filing and transfer agent fees  19,711   5,099     64,457     45,168  
 Insurance  17,555   7,536     36,239     21,790  
 Mineral property costs written off  -   -     1,323,222     793,298  
 Management and consulting fees  196,701   50,021     453,773     313,084  
 News releases, print and mailout  14,735   15,073     79,526     33,045  
 Office and miscellaneous  115,903   25,036     176,360     89,447  
 Other taxes  -   -     3,294     110  
 Professional fees  99,582   32,295     212,710     149,694  
 Promotion  62,125   85,059     147,475     155,505  
 Property investigations  71,374   -     71,374     -  
 Rent  33,754   21,056     94,967     64,222  
 Salaries and benefits  293,009   216,294     875,405     652,669  
 Shareholder relations  51,277   31,687     167,408     108,072  
 Stock compensation expense  814,890   -     1,395,866     39,944  
 Telephone  17,218   11,526     49,251     32,555  
 Travel    159,511     64,995     500,754     191,532  
  (1,996,141 )  (586,319 )    (5,802,099 )    (2,792,217 ) 
Less interest and other income (Note 10 (b), (c))    165,873     55,062     436,870     134,245  
Loss before other items    (1,830,268 )    (531,257 )    (5,365,229 )    (2,657,972 ) 
Other items:             
 (Gain) loss on sale             
of marketable securities    -     (16,165 )    -     (5,050 ) 
    -     (16,165 )    -     (5,050 ) 
Loss for the period before income taxes  (1,830,268 )  (515,092 )    (5,365,229 )    (2,652,922 ) 
Future income tax recovery    -     -     -     -  
Loss for the period  $ (1,830,268 )  $ (515,092 )  $  (5,365,229 )  $  (2,652,922 ) 
Basic and diluted loss per share  $ (0.03 )  $ (0.01 )  $  (0.09 )  $  (0.06 ) 
Weighted-average number of             
 common shares outstanding    59,587,969     47,698,734     57,076,985     45,884,072  

See accompanying notes to the consolidated financial statements.




PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity
August 31, 2001, to May 31, 2007

                      Deficit    
          Flow-through         accumulated    
  Common shares    Obligation   special        Cumulative   during   Total  
  without par value    to issue   warrants    Contributed     translation   exploration   shareholders'  
  Shares  Amount    shares   Number     Amount     surplus     adjustment     stage     equity  
Balance, August 31, 2000  1,395,001  $ 89,000  $  20,000   2,605,000   $  521,000   $  -   $  -   $ (39,956 )  $ 590,044  
Issued for cash  3,195,391  1,356,532    -   2,383,090     1,107,771   -     -   -   2,464,303  
Issued upon exercise of share purchase warrants  2,000  1,100    -   -     -   -     -   -   1,100  
Issued for mineral properties  210,000  57,050    (17,400 )  -     -   -     -   -   39,650  
Issued upon exercise of special warrants  2,605,000  521,000    -   (2,605,000 )    (521,000 )  -     -   -   -  
Issued upon exercise of flow through                         
 special warrants  2,383,090  1,107,771    -   (2,383,090 )    (1,107,771 )  -     -   -   -  
Future income taxes relating to exploration                         
 expenditures applicable to flow-through shares  -  -    -   -     -   -     -   (310,000 )  (310,000 ) 
Net loss  -  -    -   -     -      -     -     (482,687 )    (482,687 ) 
Balance at August 31, 2001  9,790,482  3,132,453    2,600   -     -   -     -   (832,643 )  2,302,410  
Issued for cash  6,864,001  1,951,135    -   -     -   -     -   -   1,951,135  
Issued for mineral properties  102,728  36,509    (2,600 )  -     -   -     -   -   33,909  
Issued to acquire New Millennium Metals  5,468,421  1,310,385    -   -     -   -     -   -   1,310,385  
Future income taxes relating to exploration                         
 expenditures applicable to flow-through shares  -  -    -   -     -   -     -   (266,000 )  (266,000 ) 
Net loss  -  -    -   -     -     -     -     (1,501,620 )    (1,501,620 ) 
Balance, August 31, 2002  22,225,632  6,430,482    -   -     -   -     -   (2,600,263 )  3,830,219  
Issuance of flow-through common shares for cash  1,181,346  678,589    -   -     -   -     -   -   678,589  
Issuance of common shares for cash  3,062,500  1,411,342    -   -     -   -     -   -   1,411,342  
Issued on exercise of mineral property option  571,603  200,061    -   -     -   -     -   -   200,061  
Issued on exercise of warrants  645,990  233,389    -   -     -   -     -   -   233,389  
Issued on exercise of stock options  96,500  35,075    -   -     -   -     -   -   35,075  
Issued for mineral properties  47,696  16,140    -   -     -   -     -   -   16,140  
Future income taxes relating to exploration                         
 expenditures applicable to flow-through shares  -  -    -   -     -   -     -   (140,000 )  (140,000 ) 
Stock options granted to consultants  -  -    -   -     -   42,051     -   -   42,051  
Net loss  -  -    -   -     -     -     -     (1,748,993 )    (1,748,993 ) 
Balance, August 31, 2003  27,831,267  9,005,078    -   -     -   42,051     -   (4,489,256 )  4,557,873  
Issuance of flow-through common shares for cash  1,056,000  1,267,200    -   -     -   -     -   -   1,267,200  
Issuance of common shares for cash  3,810,207  3,226,590    -   -     -   -     -   -   3,226,590  
Issued on exercise of warrants  1,747,032  1,428,407    -   -     -   -     -   -   1,428,407  
Issued on exercise of stock options  132,000  59,200    -   -     -   -     -   -   59,200  
Issued for mineral properties  10,909  3,600    -   -     -   -     -   -   3,600  
Future income taxes relating to exploration                         
 expenditures applicable to flow-through shares  -  -    -   -     -   -     -   (346,000 )  (346,000 ) 
Stock options granted to consultants  -  -    -   -     -   92,881     -   -   92,881  
Net loss  -  -    -   -     -     -     -     (2,242,627 )    (2,242,627 ) 
Balance, August 31, 2004  34,587,415  14,990,075    -   -     -   134,932     -   (7,077,883 )  8,047,124  
Cumulative effect of change in accounting policy  -  -    -   -     -   318,000     -   (318,000 )  -  
Issuance of flow-through common shares for cash  173,267  259,901    -   -     -   -     -   -   259,901  
Issuance of common shares for cash  5,000,000  5,441,078    -   -     -   -     -   -   5,441,078  
Issued on exercise of warrants  2,469,949  2,272,462    -   -     -   -     -   -   2,272,462  
Issued on exercise of stock options  903,000  521,873    -   -     -   (13,023 )    -   -   508,850  
Issued for mineral properties  25,000  28,000    -   -     -   -     -   -   28,000  
Future income taxes relating to exploration                         
 expenditures applicable to flow-through shares  -  -    -   -     -   -     -   (366,000 )  (366,000 ) 
Stock options granted  -  -    -   -     -   1,283,289     -   -   1,283,289  
Net loss  -  -    -   -     -     -     -     (3,795,648 )    (3,795,648 ) 
Balance, August 31, 2005  43,158,631  23,513,389    -   -     -   1,723,198     -   (11,557,531 )  13,679,056  
Issuance of common shares for cash  9,500,000  14,898,656    -   -     -   -     -   -   14,898,656  
Issued on exercise of warrants  843,047  1,181,305    -   -     -   -     -   -   1,181,305  
Issued on exercise of stock options  164,500  165,418    -   -     -   (47,669 )    -   -   117,750  
Issued for mineral properties  25,000  40,000    -   -     -   -     -   -   40,000  
Stock options granted  -  -    -   -     -   110,176     -   -   110,176  
Translation adjustment  -  -    -   -     -   -     (658,381 )  -   (658,381 ) 
Net loss  -  -    -   -     -     -     -     (3,853,273 )    (3,853,273 ) 
Balance, August 31, 2006  53,691,178  39,798,768    -   -     -   1,785,705     (658,381 )  (15,410,804 )  25,515,288  
Issued on exercise of warrants  6,333,194  11,454,791    -   -     -   -     -   -   11,454,791  
Issued on exercise of stock options  651,875  611,445    -   -     -   (183,370 )    -   -   428,075  
Issued for mineral properties  50,000  230,000    -   -     -   -     -   -   230,000  
Stock options granted  -  -    -   -     -   1,395,866     -   -   1,395,866  
Translation adjustment  -  -    -   -     -   -     (1,600,553 )  -   (1,600,553 ) 
Net loss  -  -    -   -     -     -     -     (5,365,229 )    (5,365,229 ) 
Balance, May 31, 2007  60,726,247  $ 52,095,004  $  -   -   $  -   $ 2,998,201   $  (2,258,934 )  $ (20,776,033 )  $ 32,058,238  

See accompanying notes to the consolidated financial statements.




PLATINUM GROUP METALS LTD.
(An exploration stage company)

Consolidated Statements of Cash Flows

  Three Months   Three Months   Nine Months   Nine Months  
  Ended   Ended   Ended   Ended  
    May 31, 2007     May 31, 2006     May 31, 2007     May 31, 2006  
OPERATING ACTIVITIES         
 Loss for the period  $ (1,830,268 )  $ (515,092 )  $ (5,365,229 )  $ (2,652,922 ) 
 Add items not affecting cash         
     Amortization  28,796   20,642   67,321   51,519  
     Loss on sale of capital assets  -   -   -   -  
     (Gain) loss on disposal         
of marketable securities  -   (16,165 )  -   (5,050 ) 
     Mineral property costs written off  -   -   1,323,222   793,298  
     Non-cash share compensation expense  814,890   -   1,395,866   39,944  
 Net change in non-cash working         
     capital (Note 13)    (729,585 )    (116,386 )    327,136     16,494  
    (1,716,167 )    (627,001 )    (2,251,684 )    (1,756,717 ) 
FINANCING ACTIVITIES         
 Performance Bonds  2,993   2,700   (12,413 )  2,833  
 Issuance of common shares  7,073,545   2,968,882   11,882,866   6,895,558  
 Allotted common shares pending    -     (2,465,000 )    -     -  
    7,076,538     506,582     11,870,453     6,898,391  
INVESTING ACTIVITIES         
 Acquisition of capital assets  (59,144 )  (29,964 )  (138,618 )  (66,934 ) 
 Sale of capital assets  -   -   -   -  
 Acquisition cost of mineral properties  (4,006 )  (22,505 )  (110,751 )  (825,757 ) 
 Exploration expenditures  (254,394 )  (2,339,220 )  (470,499 )  (5,778,795 ) 
 Investment in and advances to Joint Venture  (939,491 )  -   (4,479,461 )  -  
 Proceeds on sale of marketable securities    -     24,165     -     46,800  
    (1,257,035 )    (2,367,524 )    (5,199,329 )    (6,624,686 ) 
Net increase in cash and cash equivalents  4,103,336   (2,487,943 )  4,419,440   (1,483,012 ) 
Cash and cash equivalents, beginning of period    10,382,905     3,755,392     10,066,801     2,750,461  
Cash and cash equivalents, end of period  $ 14,486,241   $ 1,267,449   $ 14,486,241   $ 1,267,449  

SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES:

(i)      During the period ended May 31, 2007, the Company issued 50,000 common shares with a value of $230,000 in connection with the acquisition of mineral properties.
 
(ii)      During the year ended August 31, 2006, the Company issued 25,000 common shares with a value of $40,000 in connection with the acquisition of mineral properties.
 
(iii)      During the year ended August 31, 2005, the Company issued 25,000 common shares with a value of $28,000 in connection with the acquisition of mineral properties.
 
(iv)      During the year ended August 31, 2005 the Company acquired 1,407,069 shares of Active Gold Group Ltd. (Active Gold") from six of Active Gold's founding shareholders, all of whom are at arm's length to the Company, in exchange for 399,999 shares of Sydney Resource Corporation, paid from the Company's holdings of that security. In September 2006, Sydney Resource Corporation was reorganized and named West Timmins Mining Inc. As Active Gold was estimated to have nominal value, the tranaction was entered into for the purpose of preserving existing business relationships. The Company therefore recorded the exchange as an expense.
 

SUPPLEMENTARY INFORMATION ON CASH FLOWS:
No interest or income tax expenses were paid during the periods disclosed.

See accompanying notes to the consolidated financial statements.



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



1.

CONTINUING 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. (“Old Platinum”) and New Millennium Metals Corporation (“New Millennium”).  The Company is an exploration company conducting work on mineral properties it has staked or acquired by way of option agreements principally in Ontario, Canada and the Republic of South Africa. The Company has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The Company defers all acquisition, exploration and development costs related to mineral properties. The recoverability of these amounts is dependant upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of the property, a nd future profitable production, or alternatively, upon the Company’s ability to dispose of its interests on an advantageous basis.


These financial statements have been prepared in accordance with Canadian generally accepted accounting principles applicable to a going concern, which 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 in the future to achieve profitable operations and, in the meantime, to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. External financing, predominately by the issuance of equity to the public, will be sought to finance the operations of the Company; however, there is no assurance that sufficient funds can or will be raised.


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. If the going concern basis was not appropriate for these consolidated financial statements, then significant adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used.


2.

SIGNIFICANT ACCOUNTING POLICIES


These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and include the significant policies outlined below. These policies conform, in all material respects, with accounting principles generally accepted in the United States of America (“US GAAP”), except as described in Note 15 of the Company’s annual audited financial statements.


(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”



See accompanying notes to the consolidated financial statements.



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(a)

Basis of Presentation and principles of consolidation (continued)


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 Western Bushveld Joint Venture (Note 5) is recorded using the equity method.


(b)

Mineral properties and deferred exploration costs


Mineral properties consist of exploration and mining concessions, options and contracts.  Acquisition and leasehold costs and exploration costs are capitalized until such time as the property is put into production or disposed of either through sale or abandonment. The estimated values of all properties are assessed by management on a quarterly basis and if the carrying values exceed estimated recoverable values, then the properties are written down to fair value. If put into production, the costs of acquisition and exploration will be amortized 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.


(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.


(d)

Marketable securities and investments


Marketable securities are recorded at the lower of cost or market value.


Investments where the Company has the ability to exercise significant influence, generally where the Company has a 20% to 50% equity interest, are accounted for using the equity method.  Under this method, the Company’s share of the investee’s earnings or losses is included in operations and its investments therein are adjusted by a like amount.  Dividends received from these investments are credited to the investment accounts.

 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007




2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(d)

Marketable securities and investments (continued)


Other long-term investments are accounted for using the cost method, whereby income is included in operations when received or receivable.  


Provisions for impairment of long term investments are made, where necessary, to recognize other than temporary declines in value.  


(e)

Fixed assets


Fixed assets are recorded at cost and are amortized on the declining balance basis at the following annual rates:


Computer equipment

30%

Computer software

30%

Office furniture and equipment

20%


(f)

Stock-based compensation


Effective September 1, 2004, the Company adopted the amended recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments.  Under the amended standards of this section, the fair value of all stock-based awards granted are estimated using the Black-Scholes model and are recorded in operations over their vesting periods.  The compensation cost related to stock options granted is recorded in operations.


Please refer to Note 8 (c) for a summary of stock options granted in the current period and the related valuation assumptions.


(g)

Earnings (loss) per common share


Basic earnings per share are calculated using the weighted average number of common shares outstanding, excluding contingently returnable shares held in escrow.


The Company uses the treasury stock method for the calculation of diluted earnings per share. Diluted earnings per share are computed using the weighted average number of common and common equivalent shares outstanding during the year. Common equivalent shares consist of the incremental common shares arising upon the assumed exercise of stock options and warrants, or the return of contingently returnable shares, but are excluded from the computation if their effect is anti-dilutive.


 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007




2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)


(h)

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.



(i)

Financial instruments


The fair values of cash and cash equivalents, amounts receivable, accounts payable and capital lease obligation reflected in the balance sheet approximate their respective carrying values. The fair value of marketable securities is disclosed on the balance sheet.

Price risk is the risk that the value of the Company’s financial instruments will vary from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.


(j)

Measurement Uncertainty


The preparation of financial statements in conformity with 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 provisions for loss on and the estimated recoverable amount of assets, depreciation, income tax provisions, contingent liabilities, stock compensation and asset retirement obligations. Actual results could differ from those estimates.


(k)

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 depreciated 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.


 

 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007




3.

AMOUNTS RECEIVABLE

 

    May 31, 2007    Aug. 31, 2006 
Advances receivable  $  131,763  $  38,401 
Due from related parties (Note 10 (b) and (c ))    2,311    55,087 
Goods and services tax recoverable    44,333    22,519 
South African value added tax ("VAT") recoverable    289,600    241,462 
Interest receivable    104,570    37,524 
Other    -    - 
  $  572,577  $  394,993 


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.

INVESTMENTS


(a)

MAG Silver Corporation


In 2003 the Company earned a finders’ fee of 200,000 shares of MAG Silver Corporation (“MAG”), a company with one director and one officer in common with the Company, with an assigned value of $0.50 per share for introducing MAG to certain individuals and mineral properties located in Mexico. During 2003 the Company sold 100,000 of these shares for proceeds of $67,630. The remaining 100,000 MAG shares owned by the Company had a market value of $1,035,000 at May 31, 2007 and are included in marketable securities.


(b)

West Timmins Mining Inc.


In 2002 New Millennium granted Sydney Resource Corporation (“SYR”), a company with two directors in common with the Company, an option to earn a 50% interest in New Millennium’s 100% owned Simlock Creek gold project, located in the Cariboo Mining District of British Columbia.  On December 2, 2003 the Company and SYR agreed to terminate the Option and the Company then sold the property to SYR outright in exchange for 1,200,000 shares of SYR at a value of $0.20 per share.  At August 31, 2006 the Company held 800,001 SYR shares with an aggregate cost of $160,000. Market value for these 800,001 shares at May 31, 2007 was $520,001. The shares are included in marketable securities.  SYR was reorganized and named West Timmins Mining Inc. on September 14, 2006.





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


5.

Investment in Western Bushveld Joint Venture (the “WBJV”)


    May 31, 2007     Aug. 31, 2006  
Opening Balance  $ 10,830,088   $ 5,770,020  
Additional investment and     
advances  3,968,662   5,718,449  
Translation adjustment  (1,600,553 )  (658,381 ) 
Share of net loss    -     -  
Ending Balance  $ 13,198,197   $ 10,830,088  


Details of the assets of the WBJV excluding the property rights contributed by the other ventures are as follows:

 

    May 31, 2007     Aug. 31, 2006  
Acquisition costs         
of mineral rights         
 Balance, beginning of year  $  1,785,792   $  1,804,926  
 Incurred during year    289,904     93,367  
 Translation adjustment    (430,082 )    (112,501 ) 
 Balance, end of period  $  1,645,614   $  1,785,792  
Deferred exploration costs         
 Balance, beginning of year  $  11,031,439   $  3,965,094  
 Assays and geochemical    447,699     756,770  
 Drilling    3,749,601     4,554,926  
 Geological    1,351,932     1,557,563  
 Geophysical    95,591     12,725  
 Site administration    392,542     661,430  
 Travel    88,362     68,811  
    17,157,165     11,577,319  
 Translation adjustment    (1,170,471 )    (545,880 ) 
 Balance, end of period  $  15,986,694   $  11,031,439  
 Less other venturer's interest    (6,459,819 )    (2,613,778 ) 
 Due from other venturer's  $  2,025,707   $  626,635  
  $  13,198,197   $  10,830,088  



From inception of the joint venture to May 31, 2007 there have been no material earnings or losses as all activities of the joint venture have been in connection with acquiring mineral rights and exploring the properties for minerals.


On October 26, 2004 the Company entered into a joint venture with Anglo American Platinum Corporation Limited and Africa Wide Mineral Prospecting and Exploration (Pty) Limited (the “WBJV”) to pursue platinum exploration and development on combined mineral rights covering 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 (see (ii) (1) and (ii) (2) below). Anglo Platinum contributed its interests in portions of the farms Koedoesfontein 94JQ, Elandsfontein 102JQ and Frischgewaagd 96JQ. The Company and Anglo Platinum will each own an initial 37% working interest in the WBJV, while Africa Wide will own an initial 26% working interest. Africa Wide will work with local community groups in order to facilitate their inclusion in the e conomic benefits of the WBJV in areas such as training, job creation and procurement.

 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


5.

Investment in Western Bushveld Joint Venture (the “WBJV”) (continued)


The Company was required to operate and fund an exploration program in the amount of Rand 35 million (Cdn$6.44 million at August 31, 2005) over five years in order to earn its 37% interest in WBJV. As of April 2006 this requirement had been completed. After Rand 35 million in expenditures were funded by PTM, the parties are required to fund their portion of further expenditures in excess of Rand 35 million pro-rata based on their working interest in the WBJV.


Once a bankable feasibility study has been completed, the respective deemed capital contribution of each party will be credited by adding their contribution of measured, indicated, and inferred PGE ounces from the contributed properties comprising the WBJV, determined in accordance with the South African SAMREC code.  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. Each party will then have the opportunity to contribute additional capital in order to catch up any resulting shortfall in their contributed capital and thereby maintain their respective working interest in the JV. Should a party not wish to participate, the JV agreement provides a mechanism whereby the parties may elect to become “non-contributory” to the JV and by doing so they would be subject to dilution.


The Company has concluded that it has significant influence over the operations of WBJV but not joint control and is therefore recording the investment using the equity method.


The initial exchange of the Company’s pre-existing interests in the Elandsfontein and Onderstepoort properties for the interest in WBJV has been recorded at cost as it represents a non-monetary exchange.  The balance paid to date under the Company’s commitment to spend up to Rand 35 million in exploration costs has also been recorded as a cost of the investment.


In September, 2006 the Company and WBJV participants Anglo Platinum Limited and Africa Wide Mining had approved a new cash budget for the WBJV totaling Rand 54,791,662 (approximately Cdn $8.39 million at September 30, 2006).  Each party is to fund their pro-rata share of the approved budget by way of three separate cash calls.  At May 31, 2007 Anglo Platinum had an unspent contribution balance of Rand 4,496,194 (C$674,879) which will be used to fund their pro-rata share of further expenditures on the WBJV.  At May 31, 2007 Africa Wide was due to contribute approximately Rand 16.6 million (C$2.5 million), which amount was still outstanding at the time of writing. This amount is not recorded as a receivable by the Company. Africa Wide is working to complete its own financing at the time of writing. The joint venture does not maintain separate records and all receipts, disbursements and net assets excluding property con tributed by other venturer’s are recorded in the records of and disbursed by the Company on behalf of the joint venture. Of the $1,221,685 in accounts payable at May 31, 2007, an amount of $962,000 (approximately Rand 6.4 million) was incurred on behalf of the WBJV.


In April 2007 Africa Wide accepted an offer for the purchase of their company from Wesizwe Platinum Ltd. (WEZJ.J). The consideration will be 62,022,901 new Wesizwe common shares at a price of Rand 10.48 per share for total proceeds of Rand 650 million (approximately C$103 million).  Closing of the transaction is expected in July 2007, subject to due diligence and shareholder approval (which was received on July 6, 2007).  If the transaction closes as expected, Wesizwe will become responsible for all of the rights and obligations of Africa Wide.




Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007

5.

Investment in Western Bushveld Joint Venture (the “WBJV”) (continued)


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 it’s share of net equity of WBJV using the current rate method with translation gains and losses included in cumulative translation adjustment as a separate component of shareholder 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. A dispute arose with the Vendors as to the purchase price and the matter was referred for Expert Determination as provided for in the option agreement.


In 2005 the Company and the Vendors reached agreement whereby the Company purchased all surface and mineral rights to the property in exchange for Rand 7.0 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 three option agreements to acquire mineral rights on seven portions comprising approximately 1085 hectares of the farm Onderstepoort 98 JQ located in the Western Bushveld. The Company could earn 100% of the mineral rights over 647 hectares and 50% of the mineral rights over the balance of 438 hectares. To earn its interests the Company was required to make aggregate prospecting and option payments over time to the vendors of Rand 12.44 million (approximately C$2.24 million) ending April 2008.  Of this amount Rand 834,000 was paid.  During 2004 the Company was granted Old Order prospecting permits on five portions of the farm.  In 2005 the Company was granted New Order prospecting permits on the remaining two farm portions.


During 2007 the Company negotiated and executed the buy-out and cancellation of the option agreement described above to acquire a 50% undivided interest in 438 hectares in exchange for 50,000 common shares of the Company valued at $230,000.  In doing so the Company has eliminated approximately Rand 5.5 million (C$840,000) in future option payments while keeping the property in question under its control with regard to the mineral rights as granted to it by the Government of South Africa under a New Order prospecting permit.





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



6.

MINERAL PROPERTIES


Nine month period ended May 31, 2007

 

     Tweespalk   War Springs    Lakemount     LDI River    Shelby Lake South Legris    Total  
Acquisition costs                         
of mineral rights                         
 Balance, beginning of year  $ 31,835  $  112,490  $ 221,573   $  545,532  $  307,345  $  10,000  $  1,228,775  
 Incurred during period  2,816    2,935  -     50,000    5,000    50,000    110,751  
 Less amounts written off    -    -    (221,573 )    -    -    -    (221,573 ) 
 Balance, end of period  $ 34,651  $  115,425  $  -   $  595,532  $  312,345  $  60,000  $  1,117,953  
Deferred exploration costs                         
 Assays and geochemical  $ 32,006  $  6,216  $  -   $  -  $  -  $  110  $  38,332  
 Drilling  156,754    -  -     43,383    39,848    80,996    320,981  
 Geological  19,000    67,335  -     1,482    899    626    89,342  
 Geophysical  -    -  -     -    -    -    -  
 Maps, fees and licenses  -    -  -     257    -    -    257  
 Site administration  5,618    4,350  3,000     -    -    -    12,968  
 Travel    3,395    4,254    -     131    256    583    8,619  
  216,773    82,155  3,000     45,253    41,003    82,315    470,499  
 Balance, beginning of year  814,109    2,079,559  1,098,649     215,944    391,971    1,789    4,602,021  
 Less amounts written off    -    -    (1,101,649 )    -    -    -    (1,101,649 ) 
 Balance, end of period  $ 1,030,882  $  2,161,714  $  -   $  261,197  $  432,974  $  84,104  $  3,970,871  
Total Mineral Properties  $ 1,065,533  $  2,277,139  $  -   $  856,729  $  745,319  $  144,104  $  5,088,824  


Three month period ended May 31, 2007

 

    Tweespalk  War Springs  Lakemount    LDI River    Shelby Lake South Legris    Total 
Acquisition costs                         
of mineral rights                         
 Balance, beginning of period  $ 31,835  $  114,235  $ -  $  595,532  $  312,345  $  60,000  $  1,113,947 
 Incurred during period  2,816    1,190  -    -    -    -    4,006 
 Less amounts written off    -    -  -    -    -    -    - 
 Balance, end of period  $ 34,651  $  115,425  $ -  $  595,532  $  312,345  $  60,000  $  1,117,953 
Deferred exploration costs                         
 Assays and geochemical  $ 32,006  $  -  $ -  $  -  $  -  $  110  $  32,116 
 Drilling  156,754    -  -    13,230    13,230    13,230    196,444 
 Geological  4,027    5,801  -    305    277    278    10,688 
 Geophysical  -    -  -    -    -    -    - 
 Maps, fees and licenses  -    -  -    257    -    -    257 
 Site administration  5,618    4,295  -    -    -    -    9,913 
 Travel    2,312    2,664  -    -    -    -    4,976 
  200,717    12,760  -    13,792    13,507    13,618    254,394 
 Balance, beginning of period  830,165    2,148,954  -    247,405    419,467    70,486    3,716,477 
 Less amounts written off    -    -  -    -    -    -    - 
 Balance, end of period  $ 1,030,882  $  2,161,714  $ -  $  261,197  $  432,974  $  84,104  $  3,970,871 
Total Mineral Properties  $ 1,065,533  $  2,277,139  $ -  $  856,729  $  745,319  $  144,104  $  5,088,824 






Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



6.

MINERAL PROPERTIES (continued)


(a)

Republic of South Africa


(i)

War Springs and Tweespalk


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 to May 31, 2007 total $3,342,672 (August 31, 2006 - $3,037,933).

 

The Company may purchase 100% of these mineral rights at any time within three years from the grant of a prospecting permit on each property for US$475 per hectare in year one, or US$570 per hectare in year two, or US$690 per hectare in year three. The Company must also pay prospecting fees to the vendors of US$2.50 per hectare in year one, US$2.75 per hectare in year two and US$3.25 per hectare in year three. Old Order prospecting permits were granted to the Company in August 2003 for the Tweespalk property and February 2004 for the War Springs property. 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 must 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 Mineral Prospecting and Exploration (Pty) Limited and Taung Minerals (Pty) Ltd. each have been granted 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.  The Company has not recorded a receivable for Africa Wide’s share of costs to date, which at May 31, 2007 are calculated to be $319,660 (August 31, 2006 - $253,783).  The Company expects that Africa Wide will be able to fund their share of costs in the future and amounts recovered from Africa Wide will be treated as a reduction of costs relating to the Tweespalk property.


 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


6.

MINERAL PROPERTIES (continued)


(b)

Ontario


(i)

Agnew Lake


The Company has earned a 99% interest in certain claims located near Sudbury, Ontario known as the Agnew Lake property subject to a 2% royalty interest payable to the original vendor. The Company optioned the Agnew Lake property to Pacific Northwest Capital Corporation (“PFN”) on June 18, 2000. On June 22, 2001, the Company and PFN optioned their property interests to Kaymin Resources Limited (“Kaymin”), a subsidiary of Anglo American Platinum Corporation Limited. At August 31, 2004, the Company had directly performed $512,265 worth of exploration work and caused further work of approximately $3,140,805 to be performed through the joint venture arrangement with PFN and Kaymin.  At August 31, 2005 the project was not active and the Company wrote off its remaining investment in the property amounting to $276,852. Kaymin has vested as to a 26.17% interest in the property in accordance with the terms of their option agreement.  PFN has terminated their option on the property and retains no working interest.


(ii)

Lakemount


On November 6, 2003 the Company acquired an option to earn up to a 62% interest in the 3,017 hectare Lakemount property located near Wawa, Ontario. The Company could earn up to a 51% undivided property interest by completing $2.5 million in exploration and development expenditures ($1,098,649 incurred to August 31, 2006) and by making staged payments totalling $150,000 ($75,000 paid) and 150,000 common shares (50,000 issued) by December 31, 2008. The Company could also purchase an additional 11% interest in the property by making a payment of $3.3 million to an underlying holder from whom the property vendor had acquired their rights.


During the period the Company requested that the underlying holder to the property correct several title or contractual deficiencies relating to the Company’s right to acquire certain properties adjacent to the main Lakemount property.  The underlying holder was unwilling or unable to correct these deficiencies.  By agreement with the vendor the Company chose to suspend any further option payments to the vendor until the matter was resolved to its satisfaction.  The vendor then chose to withhold their required payments to the underlying holder, who then chose to provide termination notice to the vendor who had optioned the project to the Company.  Exploration results on the project to date have been of interest, but in light of the deficiencies and complex title chain, the Company has chosen not to pursue the matter and has abandoned the project.  Deferred acquisition and exploratio n costs relating to the project in the amount of $1,323,222 have been written off.


 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


6.

MINERAL PROPERTIES (Continued)

(b)

Ontario (continued)


(iii)

Lac des Iles River


On May 5, 2000, New Millennium entered into an option agreement to acquire a 50% interest in the Lac des Iles River property in exchange for payments of $38,500 over three years (paid) and the completion of exploration expenditures in the amount of $1,000,000 over five years, $548,952 of which has been incurred to August 31, 2006. The option agreement was amended January 27, 2005 to allow the Company an additional three years, to May 5, 2008, to meet its exploration commitments in exchange for making annual cash payments of $5,000 to May 5, 2008 and undertaking a minimum of $50,000 in annual exploration expenditures.


On October 6, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.


 (iv)

South Legris


In April 2000 the Company acquired an option to earn a 50% interest in 261 mineral claims located near Thunder Bay, Ontario known as the South Legris property in exchange for cash payments of $98,300 (paid) and the expenditure of $1,000,000 ($492,330 incurred) in exploration expenditures within 5 years of the date of the agreement. The Company terminated the option in 2004 and $587,369 in deferred costs related to the property were written off at August 31, 2004. The South Legris Option Agreement was later amended on January 27th, 2005 to allow the Company an additional three years to meet its exploration commitments in exchange for making annual cash payments of $5,000 to April 10, 2008 and undertaking a minimum of $50,000 in annual exploration expenditures.


On October 13, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007

6.

MINERAL PROPERTIES (Continued)


(b)

Ontario (continued)


(v)

Moss Lake


On August 5, 2004 the Company optioned a 100% property interest in the Moss Lake property for optional cash payments of $85,000 over 3 years ($25,000 paid) and optional share payments of 40,000 common shares over 3 years. The property is subject to an underlying 3% NSR Royalty, from which the Company may buy-back 2.0% at a price of $500,000 per one-half percentage point bought back. The Company terminated the Moss Lake option as of August 31, 2006 resulting in a write-off of $158,855.


(vi)

Seagull


On September 24, 2004 the Company acquired an option to earn up to a 70% interest in the Seagull property located in the Nipigon region of Ontario. The Company could earn an initial 50% property interest by completing certain exploration expenditures and cash payments over 5 years.  The Company could earn an additional 20% property interest by completing a bankable feasibility study and providing or arranging production financing. The Company terminated the Seagull option as of February 28, 2006 resulting in a write-off of $785,288.


(vii)

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 in the Lac des Iles area. To earn a 50% interest the Company was required to make cash payments of $10,000 (paid), issue 30,303 shares (issued) and complete $500,000 in exploration expenditures over a four-year period. To August 31, 2006 the Company had incurred costs of $565,869 and elected under the option agreement to form a 50/50 joint venture with the property vendor.  Amounts already spent by the Company in excess of $500,000 where repayable to the Company by the property vendor, or would be applied to dilute the vendor’s working interest in the property.


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)

Write-down of mineral properties


During the period the carrying value of the Lakemount property was determined to be impaired, resulting in a write-off in the amount of $1,323,222 (2006 - $793,298 with the majority of this amount for the Seagull property).

 





Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


6.

MINERAL PROPERTIES (continued)


(d)

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


 

 May 31, 2007

        Accumulated    Net Book 
    Cost    Amortization    Value 
Computer equipment and software  $  396,624  $  209,777  $  186,847 
Leasehold improvements    36,975    22,707    14,268 
Office furniture and equipment    171,782    61,350    110,432 
  $  605,381  $  293,834  $  311,547 
 
 

 August 31, 2006

        Accumulated    Net Book 
    Cost    Amortization    Value 
Computer equipment and software  $  316,385  $  164,931  $  151,454 
Leasehold improvements  $  29,907  $  15,894    14,013 
Office furniture and equipment    120,471    45,688    74,783 
  $  466,763  $  226,513  $  240,250 


8.

SHARE CAPITAL


(a)

Authorized


Unlimited common shares without par value


(b)

Issued and outstanding


At May 31, 2007 there were 60,726,247 shares outstanding.


During the period May 31, 2007:


(i)

6,333,194 share purchase warrants were exercised for proceeds of $11,454,791 and 651,875 stock options were exercised for proceeds of $428,075.


During the year ended August 31, 2006:


(ii)

the Company issued 25,000 common shares in connection with the acquisition of mineral properties at a fair value of $40,000.

 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



8.

SHARE CAPITAL (Continued)


(b)

Issued and outstanding (continued)


(iii)

843,047 share purchase warrants were exercised for proceeds of $1,181,305 and 164,500 stock options were exercised for proceeds of $117,750.


(iv)

the Company closed non-brokered private placements for 2.2 million units at a price of $1.45 per unit. Each unit consisted of one common share and one half a common share purchase warrant, with each whole warrant exercisable into a common share at a price of $1.75 for a period of 18 months until April 13-21, 2007.  Filing fees of $7,000 and a finder’s fee of $45,704 related to this financing were paid by the Company in cash.


(v)

The Company closed a non-brokered private placement for 1.7 million units at a price of $1.45 per unit. Each unit consisted of one common share and one half a common share purchase warrant, with each whole warrant exercisable into a common share at a price of $1.75 for a period of two years until March 6, 2008. Filing fees of $7,532 related to this financing were paid by the Company in cash.


(vi)

The Company closed a brokered private placement for 5.6 million units at a price of $1.80 per unit. Each unit consisted of one common share and one half a common share purchase warrant. Each whole warrant is exercisable to purchase an additional common share until March 31, 2007 at a price of $2.10 per share.  Agent’s fees amounted to 7.0% of gross proceeds, which totalled $705,600, which was paid in cash. The Agents’ legal and other costs totalling $56,000 were paid by the Company. The Company also paid $23,498 as a filing fee.


During the year ended August 31, 2005:


(vii)

the Company issued 25,000 common shares in connection with the acquisition of mineral properties at a fair value of $28,000.


(viii)

2,469,949 share purchase warrants were exercised for proceeds of $2,272,462 and 903,000 stock options were exercised for proceeds of $508,850.


(ix)

the Company closed brokered private placements for gross proceeds of $6,259,900 on April 14, 2005. Proceeds of $259,901 were from the sale of 173,267 flow-through shares at $1.50 per share and $6,000,000 was from the sale of 5,000,000 non-flow-through units at $1.20 per unit. Each non-flow-through unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to purchase an additional common share until October 14, 2006 at a price of $1.50 per share. Agent’s fees amounted to 7.0% of gross proceeds, which totalled $438,193, which was paid in cash. The Agents’ legal and other costs totalling $24,229 were paid by the Company. The Company paid $47,000 to its lawyers for legal costs relating to


 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



8.

SHARE CAPITAL (Continued)


the private placement, $20,000 for consulting services, and $29,500 as a filing fee. The Agents also received 517,327 compensation options exercisable into common shares of the Company at a price of $1.50 per share until October 14, 2006.


(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 the fair value of the common shares at the date of grant. Stock options granted to certain employees of the Company vest on average at an amount of 25% per six month period, while stock options granted to other employees, directors and officers are subject only to a four month initial hold period.


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


    Number  Average  Number 
    Outstanding at  Remaining  Exercisable at 
  Exercise  May 31,  Contractual  May 31, 
  Price  2007  Life (Years)  2007 
$  0.50  185,000  1.05  185,000 
  0.70  132,000  1.30  132,000 
  0.75  75,000  0.12  75,000 
  1.00  1,582,875  2.72  1,582,875 
  1.05  50,000  3.17  50,000 
  1.10  182,500  2.15  182,500 
  1.15  90,000  2.25  90,000 
  1.18  50,000  2.46  50,000 
  1.44  50,000  1.53  50,000 
  1.45  14,000  3.65  14,000 
  1.50  16,500  3.61  16,500 
  1.85  305,000  4.26  76,250 
  1.92  60,000  4.09  15,000 
  2.57  1,015,000  4.63  935,000 
     3,807,875  3.15  3,454,125 


 

 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


8.

SHARE CAPITAL (Continued)


(c)

Incentive stock option agreement (continued)


      Weighted 
      Average 
  Number     Exercise 
  of Shares     Price 
Options outstanding at August 31, 2004  2,425,000     0.65 
   Granted  2,046,000     1.02 
   Exercised  (903,000 )    0.56 
   Cancelled  (155,000 )    1.05 
Options outstanding at August 31, 2005  3,413,000     0.88 
   Granted  220,000     1.79 
   Exercised  (164,500 )    0.72 
   Cancelled  (183,125 )    0.97 
Options outstanding at August 31, 2006  3,285,375     0.94 
   Granted  1,225,000     2.45 
   Exercised  (651,875 )    0.65 
   Cancelled  (50,625 )    0.49 
Options outstanding at May 31, 2007  3,807,875   $  1.48 



(i)

During the period ended May 31, 2007 the Company granted 1,225,000 stock options to employees. The Company has recorded $1,395,866 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:


  May 31, 2007  
Risk-free interest rate  4.03  
Expected life of options  3.50  
Annualized volatility  81.46  
Dividend rate  0.00 % 



(ii)

During the year ended August 30, 2006 the Company granted 220,000 stock options to employees. The Company has recorded $110,176 of compensation expense relating to stock options granted in the year ended August 30, 2006. The stock-based compensation expense was determined using the Black-Scholes option pricing model and the following weighted average assumptions:


  Aug. 31, 2006  
Risk-free interest rate  4.26  
Expected life of options  3.50  
Annualized volatility  85.21  
Dividend rate  0.00 % 


 

 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



8.

SHARE CAPITAL (Continued)


(iii)

During the year ended August 31, 2005 the Company granted 2,046,000 stock options to directors, officers, employees and consultants, (30,000 of which were cancelled during the same period). The Company has recorded $1,283,289 of compensation expense relating to stock options granted during the year ended August 31, 2005. The stock-based compensation expense was determined using the Black-Scholes option pricing model and the following weighted average assumptions:

 

  Aug. 31, 2005  
Risk-free interest rate  2.93  
Expected life of options  3.50  
Annualized volatility  94.00  
Dividend rate  0.00 % 


(d)

Share purchase warrants


      Weighted 
      Average 
  Number of     Exercise 
  Warrants     Price 
Balance at August 31, 2004  3,416,162     1.03 
Issued to private placement placees (Note 8 (b) (ix))  2,500,000     1.50 
Issued to agents on brokered financing (Note 8 (b) (ix))  517,327     1.50 
Expired during the period  (241,110 )    1.20 
Exercised and converted to common shares  (2,469,949 )    0.92 
Balance at August 31, 2005  3,722,430   $  1.47 
Issued to private placement placees (Note 8 (b) (iv, v and vi))  4,750,000     1.96 
Expired during the period  (150,000 )    1.35 
Exercised and converted to common shares  (843,047 )    1.40 
Balance at August 31, 2006  7,479,383     1.79 
Expired during the period  (296,189 )    1.50 
Exercised and converted to common shares  (6,333,194 )    1.81 
Balance at May 31, 2007  850,000   $  1.75 



 

 

 

 

Warrant expiry date:

March 6, 2008

850,000

1.75


 

 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007




9.

CONTRIBUTED SURPLUS


The following table summarizes the Company’s Contributed Surplus:


 

 

 

 

 

 

 

 

Contributed

 

 

Surplus

Balance at August 31, 2004

$134,932 

Retroactive accounting change for stock options

 318,000 

Stock options granted during the year

 1,283,289 

Stock options exercised during the year

 (13,023)

Balance at August 31, 2005

 1,723,198 

Stock options granted during the year

 110,176 

Stock options exercised during the year

 (47,669)

Balance at August 31, 2006

 1,785,705 

Stock options granted during the period

 1,395,866 

Stock options exercised during the period

 (183,370)

Balance at May 31, 2007

$2,998,201 




10.

RELATED PARTY TRANSACTIONS


Transactions with related parties are as follows:


(a)

Management, salary and consulting fees of $338,131 (2006 - $280,623, 2005 - $210,891) were incurred with directors during the period. At May 31, 2007, $Nil was included in accounts payable (2006 - $3,815).


(b)

The Company received $104,152 (2006 - $101,081, 2005 - $101,590) during the period from MAG Silver Corp. (“MAG”), a company with certain common directors and a common officer, under the terms of a 2003 service agreement for administrative services.  Accounts receivable at the end of the period include an amount of $1,869 due from MAG for both administration fees due ($Nil) and other trade payables ($1,869).


(c)

During the period the Company accrued or received payments of $35,100 (2006 – $15,600) from West Timmins Mining Inc. (“WTM”), a company with certain common directors and a common officer, for administrative services. The amount received in 2006 was net of a credit adjustment of $19,500 in recognition of WTM’s relative inactivity in the first three quarters of calendar 2005.  Accounts receivable at the end of the period include an amount of $442 due from WTM for both administration fees due ($Nil) and other trade payables ($442).


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.


 

 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


 


11.

INCOME TAXES


The provision for income taxes reported differs from the amounts computed by applying statutory Canadian federal and provincial tax rates to the loss before tax provision due to the following:

 

    2006     2005  
Statutory tax rates    36 %    36 % 
Recovery of income taxes computed at statutory rates  $  1,391,802   $  1,657,420  
Effect of lower tax rates in foreign jurisdictions    (55,932 )    (34,701 ) 
Tax losses not recognized in the period that the         
benefit arose    (1,335,870 )    (829,719 ) 
Future income tax recovery  $  -   $  793,000  



The approximate tax effect of the temporary differences that gives rise to the Company’s future income tax assets and liability are as follows:

 

    2006     2005  
Future income tax assets         
   Operating loss carryforwards  $  2,834,397   $  2,599,980  
   Fixed assets    34,143     12,875  
   Mineral properties    783,875     72,993  
   Share issuance costs    386,483     287,579  
Valuation allowance on future income tax assets    (4,038,898 )    (2,973,427 ) 
  $  -   $  -  


The Company has Canadian non-capital loss carryforwards available to offset future taxable income in the amount of approximately $7.2 million, which expire at various dates from 2006 to 2026.


At August 31, 2006 the Company has South African non-capital loss carryforwards available to offset future taxable income in the amount of approximately $1.5 million, which do not expire, subject to business continuity.


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 its South African subsidiary commitments, are as follows as at May 31, 2007.


August 31, 2007    37,343 
August 31, 2008    84,101 
August 31, 2009    92,730 
August 31, 2010    51,620 
      $  265,794 


 

 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007


13.

SUPPLEMENTARY CASH FLOW INFORMATION


(a)

Net change in non-cash working capital


  Period ended     Year ended     Year ended  
    May 31,     August 31,     August 31,  
    2007     2006     2005  
Amounts receivable  $  (177,584 )  $  (50,934 )  $  (102,923 ) 
Prepaid expenses and other    (1,139 )    (10,573 )    (36,673 ) 
Accounts payable    505,859     184,819     (280,358 ) 
  $  327,136   $  123,312   $  (419,954 ) 


(b)

Cash and cash equivalents


Cash and cash equivalents consist of the following:


    May 31, 2007    Aug. 31, 2006    Aug. 31, 2005 
Cash  $  2,286,241  $  1,666,801  $  693,661 
Short-term deposits    12,200,000    8,400,000    2,056,800 
  $  14,486,241  $  10,066,801  $  2,750,461 



14.

SEGMENTED INFORMATION


The Company operates in one operating segment, that being exploration on mineral properties. Investment in joint ventures, fixed assets, capitalized costs for mineral rights and deferred exploration relate to properties situated as follows:

 

    May 31,    August 31, 
    2007    2006 
Canada  $  1,813,651  $  2,872,433 
South Africa    16,784,917    14,028,702 
  $  18,598,568  $  16,901,135 

 


 

 



Platinum Group Metals Ltd.

(An exploration stage company)

Notes to the consolidated financial statements

May 31, 2007



15.

SUBSEQUENT EVENTS


Subsequent to May 31, 2007, 100,000 common shares were issued pursuant to the exercise of 100,000 stock options at a price of $0.50 per share and 75,000 common shares were issued pursuant to the exercise of 75,000 stock options at a price of $0.75 per share for aggregate proceeds of $106,250.  As well, 40,000 stock options were granted to an employee at a price of $4.20 per share.


There are other subsequent events disclosed elsewhere in the notes to the consolidated financial statements.

EX-99.2 5 mda.htm MD&A CC Filed by Filing Services Canada Inc. 403-717-3898





Platinum Group Metals Ltd.

(Development Stage Company)

Supplementary Information and MD&A

For the period ended May 31, 2007


Filed: July 16, 2007






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



1




MANAGEMENT DISCUSSION AND ANALYSIS

1.

DESCRIPTION OF BUSINESS


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. (“Old Platinum”) and New Millennium Metals Corporation (“New Millennium”). 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 not yet determined whether its mineral properties contain ore reserves that are economically recoverable. 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.

2.

DISCUSSION OF OPERATIONS AND FINANCIAL CONDITIONS


a)

Results of Operations

The Company has been very active on projects in South Africa during the period. The Company’s Canadian projects were also active during the period, with a 1,090 metre drill program conducted on the Company’s Lac Des Iles projects.  During the period the Company incurred a net loss of $5,365,229 (2006 - $2,652,922). Before a non-cash charge for stock based compensation of $1,395,866 (2006 - $39,944) and mineral property costs written off of $1,323,222 (2006 - $793,298), general and administrative expenses totaled $3,083,011 (2006 - $1,958,975). Interest, other income and recoveries amounted to $436,870 (2006 - $134,245). Total global exploration expenditures for the Company’s account, including the Company’s share of WBJV expenditures during the period totaled $2,737,018 (2006 - $5,424,559), of this $2,266,519 was for the WBJV (2006 - $4,937,632) and $470,499 for other exploration (2006 - $486,927). After meeting its earn in requirements in May 2006, Platinum Group Metals Ltd. is currently only responsible for it’s 37% pro-rata share of expenditures for the WBJV.  Total WBJV expenditures during the period by all joint venture partners totaled $6,125,726.


On October 27, 2004, the Company announced the formation of the Western Bushveld Joint Venture (“WBJV”) with Anglo Platinum Limited and Africa Wide Mineral Prospecting and Exploration (Pty) Limited. Work commenced immediately thereafter on the project and the rate of work has accelerated since then. Activities consist of research and data review, prospecting, mapping, engineering and drilling of the project area. At the time of writing there are 4 high speed diamond drills turning on WBJV properties.  On January 10, 2007, the Company completed a pre-feasibility study for the Project 1 area of the WBJV, which included a revised resource calculation (See Item 2 d. “Exploration Programs and Expenditures” below)


The Company has increased its general level of activity in the past three years in South Africa. Activities in Canada have been reduced, as the more advanced nature of the WBJV project has caused it to become an investment focus for the Company. 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 Audited Financial Statements and should be read in conjunction with these financial statements.

 

Period ended

May 31, 2007

Year ended

Aug. 31, 2006

Year ended

Aug. 31, 2005

Interest & other income

$436,870

$235,236

$218,373

Net Income (Loss)

($5,365,229)

($3,853,273)

($3,795,648)

Net Income (Loss) per Share

($0.09)

($0.08)

($0.10)

Total Assets

$33,972,451

$27,664,441

$15,705,187

Long Term Debt

Nil

Nil

Nil

Dividends

Nil

Nil

Nil

 

2


 

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

Quarter Ending

Revenue (interest & other income)

Net Loss

Net Loss per share

May 31, 2007

$165,873

($1,830,268)

($0.03)

February 28, 2007

$138,384

($1,355,649)

($0.02)

November 30, 2006

$132,613

($2,179,312)

($0.04)

August 31, 2006

$100,991

($1,200,351)

($0.02)

May 31, 2006

$55,062

($515,092)

($0.01)

February 28, 2006

$53,234

($1,447,883)

($0.03)

November 30, 2005

$25,949

($689,947)

($0.02)

August 31, 2005

$87,850

($62,634)

($0.00)


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 5 below, there are no identifiable trends, demands, commitments, events or uncertainties 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 sufficient capital in the future to meet its acquisition payments and other obligations under mineral property option agreements for those properties it considers worthy to incur continued holding and exploration costs upon. The need to make such payments is a trend as it is unlikely that all such obligations will be eliminated from the Company’s future business activities. The Company intends to utilize its cash on hand in order to meet its obligations under mineral property option agreements. It is unlikely that the Company will generate sufficient operating cash flow to meet all of these ongoing obligations in the foreseeable future. Accordingly, the Company will likely need to raise additional capital by issuance of equity within the next year. At this time the Company has no plan or intention to issue any debt in order to raise capital for future requirements; however, the Company is working to complete a bankable feasibility study for the Project 1 area of the WBJV in 2007. If a production decision is taken by the WBJV upon completion of that study, the Company will likely pursue debt financing for a portion of its share of the capital requirements for that project.


At the time of writing there is a noted favourable macro-trend with regard to the market for metal commodities and related products, however, it is the opinion of the Company that its own liquidity will be most affected by the results of its own acquisition, exploration and development activities. The acquisition or discovery of an economic mineral deposit on one of its mineral properties may have a favourable effect on the Company’s liquidity, and conversely, the failure to acquire or find one may have a negative effect.


c)

Risk Factors

The following is a brief discussion of those distinctive or special characteristics of the Company’s operations and industry that may have a material impact on, or constitute risk factors in respect of, the Company’s future financial performance.


The Company, and thus the securities of the Company, should be considered a highly speculative investment and investors should carefully consider all of the information disclosed in the Annual Report prior to making an investment in the Company. In addition to the other information presented in this management discussion and analysis, the following risk factors should be given special consideration when evaluating an investment in the Company’s securities.


 

3


 


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 quality to return a profit from production.


The Company’s business is subject to exploration and development risks


All of the Company’s properties are in the exploration stage and no known reserves have been discovered on such properties. At this stage, favorable drilling 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; and

·

the likelihood of cost estimates increasing in the future.

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 o f 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.


Political and economic instability may affect the Company’s business


The Company’s activities in Canada and South Africa are subject to risks common to operations in the mining industry. South Africa has recently undergone significant change in its government since the free elections in 1994. At present, Mining Legislation in South Africa is undergoing 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, all laws 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 not 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, extreme fluctuations in currency exchange rates and inflation.


The Company is subject to the risk of fluctuations in the relative values of the Canadian Dollar as compared to the South African Rand and the United States Dollar

The Company may be adversely or favorably affected by foreign currency fluctuations. The Company is primarily funded through equity investments into the Company denominated in Canadian Dollars. Several of the Company’s options to acquire properties in the Republic of South Africa may result in option payments by the Company denominated in South African Rand or in U.S. Dollars over the next three years. Exploration and development programs to be conducted by the Company in South Africa will also be funded in South African Rand. Fluctuations in the exchange rate between the Canadian Dollar and the South African Rand or U.S. Dollar may have an adverse or favorable affect on the Company.

 

4


 

The Company’s properties are subject to title risks

The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties, and properties that it has the right to acquire or earn an interest in, are in good standing. However, 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.


The Company’s properties may also 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 hazards 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 possessing greater financial resources and technical facilities than it. 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

The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the sale of such product. Factors beyond the control of the Company may affect the marketability of any minerals discovered. 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. The effect of these factors on the price of minerals and therefore the economic viability of any of the Company’s exploration projects cannot accurately be predicted. As the Company is in the exploration stage, the above factors have had no material impact on present operations or income.


Off-balance sheet arrangements

The Company has no off-balance sheet arrangements.


 

5


 


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 costs deferred during the period totaled $362,915 (2006 - $309,397). Of this amount Platinum Group Metals Ltd.’s 37% pro-rata share of $22,164 (2006 - $100,750) was for WBJV property acquisition costs and payments. Exploration and development costs incurred in the period totaled $2,737,018 (2006 - $5,424,559). Of that amount $171,571 (2006 - $190,482) was incurred on the Company’s Canadian properties and $2,565,447 (2006 - $5,234,077) was incurred on the Company’s South African properties. Of the South African amount, $2,266,519 was for the Company’s 37% share of WBJV expenditures (2006 - $4,937,632).  The South African expenditures are much less than in the previous year as the Company met its earn in requirements for the WBJV in May 2006.  The total amount (100%) of expenditures by all joint venture partners for the nine month period for the WBJV came to $6,125,726 which was higher than the 100% amount spent in the same period last year (2006 - $4,937,632).


During the period $1,323,222 (2006 - $793,298) in deferred costs relating to mineral properties were written off. An amount of $1,323,222 (2006 - $793,298) was written off for Ontario projects, while no write offs (2006 - $Nil) were related to South African properties. For more information on mineral properties see Note 5 and 6 of the Company’s May 31, 2007 quarterly Financial Statements or Note 5 and 6 of the Company’s August 31, 2006 Audited Financial Statements.


Western Bushveld Joint Venture


On October 26, 2004 the Company (37%) entered into a joint venture with Anglo Platinum Limited (37%) and Africa Wide Mineral Prospecting and Exploration (Pty) Limited (26%) to pursue platinum exploration and development on combined mineral rights covering 67 square kilometres on the Western Bushveld Complex of South Africa. 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. The Western Bushveld Joint Venture (“WBJV”) immediately provides for a 26% Black Economic Empowerment interest to Africa Wide in satisfaction of the 10-year target set by the Mining Charter and newly enacted Mineral and Petroleum Resources Development Act. Africa Wide will also work with local community groups in orde r to facilitate their inclusion in the economic benefits of the JV in areas such as training, job creation and procurement.


From October 2004 to April 2006 PTM operated and funded an exploration program in the amount of Rand 35 million (at August 31, 2005 approx. US$5.4 million; C$6.44 million). According to the terms of the WBJV agreement this work was only due over five years to January 26, 2010. As of April 2006 this requirement had been completed and the partners are now required to fund their portion of further expenditures pro-rata based upon their working interest in the Joint Venture. In March 2006 the Company and partners Anglo Platinum Limited and Africa Wide Mining approved a 2006 cash budget for the WBJV totaling R 29,712,200 (approx. Cdn $4.59 million at August 31, 2006). Later, in September 2006 this budget was increased to a cumulative total of R 76,393,208 (approx. Cdn. $11.75 million at September 2006). Each party is to fund their pro-rata share of the approved budget by way of several separate cash calls. To the time of writing Anglo Platinum has funded R 28,255,487 towards the approved budget and Africa Wide has funded R 3,200,000. The Company has funded approximately R 42,644,154 to the time of writing.  The Company expects to see its contribution level fall in line pro-rata with the other partners once Africa Wide is able to fund its shortfall and a new budget is approved in the months ahead.  Of the $1,221,685 in accounts payable at May 31, 2007, an amount of $962,000 (approx. R 6.4 million) was incurred on behalf of the WBJV.


In April 2007 WBJV partner Africa Wide accepted an offer for the purchase of their company from Wesizwe Platinum Ltd. (WEZJ.J). The consideration will be 62,022,901 new Wesizwe common shares at a price of Rand 10.48 per share for total proceeds of Rand 650 million (approximately C$103 million).  Closing of the transaction is expected in July 2007, subject to due diligence and shareholder approval (which was received on July 6, 2007).  If the transaction closes as expected, Wesizwe will become responsible for all of the rights and obligations of Africa Wide.

 

6


 


On April 9, 2007 the Company announced that the WBJV had expanded with the formal contribution to the WBJV of a 50% interest in the mineral rights to the adjacent 494 hectare Portion 11 of the Farm Frischgewaagd 96 JQ (“Portion 11”) by Rustenburg Platinum Mines Ltd., a subsidiary of Anglo Platinum Limited. Portion 11 forms part of the Project 2 area of the WBJV and this area creates a contiguous shared mineral rights package. This expanded Project 2 area is adjacent to the WBJV “Project 1” area.  Anglo Platinum’s 50% interest in Portion 11 relates to Old Order mineral rights that are in the conversion process to New Order rights.  All of the parties to the shared mineral rights on Portion 11 and RE 4 are working toward a detailed co-operation agreement. Current drilling, being conducted under initial co-operation agreements, is expected to continue.


Once a bankable feasibility study has been completed the respective deemed capital contribution of each party will be credited by adding 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. Each party will be credited with their contribution to approved budgets and PTM will also be credited for its Rand 35 million expenditure as described above. Each party will then have the opportunity to make an equalizing cash payment, or contribute forward going capital in order to catch up any resulting shortfall in their contributed capital and thereby maintai n their respective working interest in the JV. Should a party not wish to participate, the JV agreement provides a mechanism whereby the parties may elect to become “non-contributory” to the JV and by doing so they would be subject to dilution.


Portion 11 was contributed to the WBJV as originally planned under the existing terms of the October 2004 WBJV agreement.  For the contribution of Portion 11 the original credit rates for equalization have been amended to US$0.62 per Inferred ounce, $10.37 per Indicated ounce and $39.55 per Measured ounce (4E) contributed by Anglo Platinum to adjust for current market conditions.


Primary exploration targets for the WBJV are the Merensky and UG2 Reefs. The exploration areas on the properties are adjacent to the separate BRPM joint venture, which incorporates the existing Bafokeng Rasimone Platinum Mine, and the Styldrift property, contributed to the BRPM JV by the Royal Bafokeng Nation. At the time of writing the Company has four diamond drilling rigs deployed onto the WBJV in project areas. On January 10, 2007 the Company completed a pre-feasibility study for the Project 1 area of the WBJV.  The partners of the WBJV have approved a plan to complete a bankable feasibility study in 2007.


On January 10, 2007 the Company published a Pre-Feasibility Report and a further updated Independent Resource Estimate which shows Measured, Indicated and Inferred 4E (platinum, palladium, rhodium and gold) resources for the Project 1 area of the WBJV.  Later, on February 7, 2007 the Company published an initial Independent Resource Estimate for the Project 2 area of the WBJV.  About 40% of the prospective project area has now been classified as a resource by the drilling to date.  


The Project 1 resources are estimated under SAMREC categories by the kriging statistical method and the Measured and Indicated Resources have drill spacing of approximately 250 metres or less. In keeping with best practice in resource estimation, an allowance for known and anticipated geological losses is made. These are estimated at 18% for the Merensky Reef and 19% for the UG2 Reef and the resource estimate has taken this into account.


The Project 2 resources are estimated under SAMREC categories by the kriging statistical method. An iron replacement area that was delineated by drilling and detail aeromagnetics was subtracted from the resource area.  In keeping with best practice in resource estimation, a further 18% deduction from the resource area was applied for known and anticipated geological losses.

 

7


 


The Portion 11 resources are estimated under SAMREC categories by the kriging statistical method.  A 20%-30% total geological loss 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 an area of iron replacement pegmatite.  Structural loss estimates are based on drilling, field mapping and remote sense data which includes a high resolution aeromagnetic survey.  The Merensky mineral resource estimate is based on 15 boreholes with 39 intercepts within the 494 ha area and 13 boreholes with 35 intercepts for the UG2 mineral resource estimate.  The cut-off was determined on a practical mining width and the known costs and mining methods regionally.


The prill split estimates of the platinum, palladium, rhodium, and gold (4E) are estimated in the resource detail below. While a rigorous statistical process of resource estimates has been completed on the combined 4E grades consistent with South African platinum industry best practice for estimation, caution must be exercised with respect to the prill-split-estimates as they have been calculated using the arithmetic mean of the assay information.


Summary resource details for Project 1, Project 2 and Portion 11 are as follows:


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 press release, such as “measured,” “indicated,” and “inferred,” “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 Form 20-F, File No. 0-30306, which may be secured from us, or from the SEC’s website at:  http://sec.gov/edgar.shtml.

This press release refers to an adjacent property and mineralization on an adjacent property does not provide any indication of the potential on the Company’s properties.

Updated 10 January, 2007 Independent Estimate, WBJV Project 1:


Measured Resource Base


Merensky Reef

2.187 Million Tonnes

7.11 gm/tonne 4E

500,000 ozs.

4E = 4.42 g/t (62%) Platinum, 1.85 g/t (26%) Palladium, 0.36 g/t (5%) Rhodium, 0.48 g/t (7%) Gold


UG2 Reef

2.266 Million Tonnes

3.35 gm/tonne 4E

244,000 ozs.

4E = 2.15 g/t (64%) Platinum, 0.80 g/t (24%) Palladium, 0.35 g/t (10%) Rhodium, 0.05 (1%) Gold


Indicated Resource Base


Merensky Reef

15.758 Million Tonnes

6.45 gm/tonne 4E

3.268 Million ozs.

4E = 4.0 g/t (62%) Platinum, 1.68 g/t (26%) Palladium, 0.32 g/t (5%) Rhodium, 0.45 g/t (7%) Gold


UG2 Reef

25.168 Million Tonnes

2.98 gm/tonne 4E

2.408 Million ozs.

4E = 1.91 g/t (64%) Platinum, 0.72 g/t (24%) Palladium, 0.31 (10%) Rhodium, 0.04 g/t (1%) Gold


Inferred Resource Base


Merensky Reef

2.571 Million Tonnes

6.56 gm/tonne 4E

545,200 ozs.

4E = 4.09 g/t (62%) Platinum, 1.71 g/t (26%) Palladium, 0.34 (5%) Rhodium, 0.46 (7%) Gold


UG2 Reef

11.792 Million Tonnes

3.48 gm/tonne 4E

1.318 Million ozs.

4E = 2.23 g/t (64%) Platinum, 0.84 g/t (24%) Palladium, 0.36 (10%) Rhodium, 0.05 g/t (1%) Gold


Charles Muller is the Independent Qualified Person, “QP”, for the above resource assessment. He is registered with SACNASP (South African Council for Natural Scientific Professions) (Registration No. 400201/04).  Please refer to the Company’s NI 43-101 Technical Report as filed on www.sedar.com entitled “Technical Report Western Bushveld Joint Venture Project 1 (Elandsfontein and Frischgewaagd)” dated January 15, 2007.

 

8


 


07 February, 2007 Independent Estimate, WBJV Project 2:


Inferred Resource Base (Note that only 50% of the below ozs. attributable to the WBJV)


Merensky Reef

6.54 Million Tonnes

5.84 gm/tonne 4E

1.228 Million ozs.

4E = 3.95 g/t (68%) Platinum, 1.41 g/t (24%) Palladium, 0.27 g/t (5%) Rhodium, 0.19 g/t (3%) Gold


UG2 Reef

11.95 Million Tonnes

4.63 gm/tonne 4E

1.779 Million ozs.

4E = 2.69 g/t (59%) Platinum, 1.32 g/t (29%) Palladium, 0.48 g/t (11%) Rhodium, 0.05 (1%) Gold


Inferred Resource Base (Note that 100% of the below ozs. attributable to the WBJV)


Merensky Reef

1.47 Million Tonnes

7.03 gm/tonne 4E

333,000 ozs.

4E = 4.78 g/t (68%) Platinum, 1.69 g/t (24%) Palladium, 0.35 (5%) Rhodium, 0.21 (3%) Gold


UG2 Reef

1.24 Million Tonnes

5.18 gm/tonne 4E

207,000 ozs.

4E = 3.06 g/t (59%) Platinum, 1.50 (29%) Palladium, 0.57 g/t (11%) Rhodium, 0.05 g/t (1%) Gold


Charles Muller is the Independent Qualified Person, “QP”, for the above resource assessment. He is registered with SACNASP (South African Council for Natural Scientific Professions) (Registration No. 400201/04).  Please refer to the Company’s NI 43-101 Technical Report as filed on www.sedar.com entitled “Inferred Mineral Resource Estimation on Project 2 Area of the Western Bushveld Joint Venture” dated March 20, 2007.


30 April, 2007 Independent Estimate,  Portion 11:


Indicated Resource Base (Note that only 50% of the below ozs. attributable to the WBJV)


Merensky Reef

0.22 Million Tonnes

7.38 gm/tonne 4E

0.05 Million ozs.

4E = 4.57 g/t (62%) Platinum, 2.07 g/t (28%) Palladium, 0.37 g/t (5%) Rhodium, 0.37 g/t (5%) Gold


UG2 Reef

0.05 Million Tonnes

4.32 gm/tonne 4E

0.007 Million ozs.

4E = 2.55 g/t (59%) Platinum, 1.25 g/t (29%) Palladium, 0.47 (11%) Rhodium, 0.04 g/t (1%) Gold


Inferred Resource Base (Note that only 50% of the below ozs. attributable to the WBJV)


Merensky Reef

16.10 Million Tonnes

6.00 gm/tonne 4E

3.11 Million ozs.

4E = 3.72 g/t (62%) Platinum, 1.68 g/t (28%) Palladium, 0.30 (5%) Rhodium, 0.30 (5%) Gold


UG2 Reef

16.24 Million Tonnes

4.62 gm/tonne 4E

2.41 Million ozs.

4E = 2.72 g/t (59%) Platinum, 1.34 g/t (29%) Palladium, 0.51 (11%) Rhodium, 0.05 g/t (1%) Gold


David Gray, of Snowden, is the Independent Qualified Person, “QP”, for the above resource assessment. He is registered with SACNASP (South African Council for Natural Scientific Professions) (Registration No. 400018/04).  Please refer to the Company’s NI 43-101 Technical Report as filed on www.sedar.com entitled “Mineral Resource Estimate, Frischgewaagd 96JQ Portion 11 North West Province, Republic of South Africa” dated June, 2007.

 

9


 


The properties comprising the WBJV were originally operated under either Old Order or New Order prospecting permits. New Order prospecting permits are granted under the new Mineral and Petroleum Resources Development Act. Old Order rights under prior legislation must be converted into New Order rights within a transitional period and this conversion process is now complete for all of the WBJV’s Old Order rights.  Any future production from the WBJV will be subject to the grant of a Mining Authorization from the Government of South Africa.


The resources outlined have not taken into account sufficient engineering, legal, permitting, financial and other considerations to be considered or classified as “Reserves”. They may never be converted to reserves and may not be viable economically.

 

Resources in the Measured and Indicated categories can be included in the pre-feasibility financial model under SAMREC and NI-43101 guidelines. Future drilling will now investigate further areas with reef potential along strike on Project areas 2 and 3 within the joint venture area. The WBJV property includes the untested projected surface trace of the Merensky and UG2 reefs which have been intercepted in a number of drill holes outside of areas where resources have been defined to date.  To the time of writing PTM has completed more than 100,000 metres of drilling in almost 200 boreholes.  


PTM as operator of the Joint Venture engaged a multi-discipline team of independent engineers to commence a detailed Pre-feasibility Study in early January 2006. The Pre-Feasibility Study and revised resource estimation for the Project 1 area of the WBJV was completed and dated January 15, 2007.  The report is titled “Technical Report Western Bushveld Joint Venture Project 1 (Elandsfontein and Frischgewaagd)” and was filed by the Company on www.sedar.com on January 30, 2007.  The Pre-feasibility Study considers the opportunities presented as the result of drilling up until October of 2006. The Pre-feasibility Study considers and outlines the details and possible mitigation of several considered projects risks, not yet assessed in full detail, including metallurgical recoveries, smelt and refining costs, surface and mining rights, permits and involvement of communities in compliance with the Minerals and Petroleum Resources Development Act (2002).


The Pre-feasibility Study’s findings were positive for a platinum mine in the Project 1 area of the Western Bushveld Joint Venture (“WBJV”)  in South Africa.  The partners of the WBJV gave their approval to advance towards a bankable feasibility study for an underground mine producing 155,000 ounces per annum platinum or 250,000 ounces per annum platinum, palladium, rhodium and gold (4E’s), in concentrate.  In addition, drilling will continue along strike from the Project 1 area to further define additional potential resources on the Project 2 and Project 3 areas of the WBJV.  For more details see the Company’s press release dated January 10, 2007 or the Pre-Feasibilty Study itself at www.sedar.com.


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 R 150,000 (approx. C$29,500) and agreed to terms for the purchase of both mineral and surface rights. In 2005 the Company and the Vendors reached agreement whereby the Company would purchase all surface and mineral rights to the property in exchange for 7.0 million Rand. On September 16, 2005, the Company made a final payment to close the purchase. In September 2005 the Company was granted a “New Order” prospecting permit under the new Mineral and Petroleum Resources Development Act over the Elandsfontein property.  This property now forms a part of the Western Bushveld Joint Venture.


The Company’s interests in portions of the farm Onderstepoort have been contributed to the WBJV.  During 2007 the Company negotiated and executed the buy-out and cancellation of the original option agreement to acquire a 50% undivided interest in 438 hectares of the farm Onderstepoort in exchange for 50,000 common shares of the Company valued at $230,000.  In doing so the Company eliminated approximately Rand 5.5 million (C$840,000) in future option payments while keeping the property in question under its control with regard to the mineral rights as granted to it by the Government of South Africa under a New Order prospecting permit.


 

10


 

Northern Limb, Bushveld


On June 3, 2002, the Company acquired a right to earn a 100% interest in two properties located in the Northern Limb of the Bushveld Complex. The properties are comprised of the 2,396 hectare War Springs Property and the 2,177 hectare Tweespalk Property, both located on the postulated extension of the Platreef near the PPRust Platinum Mine operated by Anglo Platinum Limited. The Company may purchase 100% of these mineral rights at any time within three years from the date of grant of a prospecting permit on each property for US$475 per hectare in year one, or US$570 per hectare in year two, or US$690 per hectare in year three. The Company was granted Old Order prospecting permits on both properties during the 2004 fiscal year. The Company has agreed to pay prospecting fees to the mineral rights holders of US$2.50 per hectare in year one, US$2.75 per hectare in year two and US$3.25 per hectar e in year three. The mineral rights holders retain a 1% Net Smelter Return Royalty (“NSR”) on the property, subject to the Company’s right to purchase the NSR at any time for US$1.4 million. A 5% finder’s fee on payments made to the mineral rights holders is payable to a South African consulting group retained by the Company in 2002. The Company incurred exploration costs of $216,773 (2006 - $710) on Tweespalk and $82,155 (2006 - $461,488) on War Springs during the period. Combined acquisition costs to May 31, 2007 on the War Springs and Tweespalk properties amounted to $150,076 (Aug 31, 2006 - $144,325).


Old Order rights under prior legislation must be converted into New Order rights within a transitional period.  The War Springs and Tweespalk prospecting permits were converted to a New Order right during the period. The underlying acquisition agreement for these properties is also subject to amendment in order to re-define the original terms and conditions of the agreement under the new Mineral and Petroleum Resources Development Act.


In early 2004 the Company acquired detailed airborne magnetic data covering the War Springs property from a third party corporation. Interpretation of the airborne and later mapping and soil geochemistry surveys provided drill targets. Drilling commenced on the property in May 2004 and continued until April 2005. To the time of writing approximately 8,000 metres in 18 boreholes has been drilled.


During 2004 the Company conducted approximately 2,300 metres of drilling on the Tweespalk property. In March 2005 the Company received an NI 43-101 compliant technical report for the War Springs and Tweespalk properties. No work was recommended for the Tweespalk property in 2005 or 2006. The technical report did recommend an amount of $583,139 in continued diamond drilling work, analysis and modeling for War Springs with the objective of delineating a resource on the project in compliance with SAMREC, JORC and NI 43-101 standards. This work was completed in 2006.  Further limited drilling and exploration programs were conducted on the Tweespalk property in early 2007.  A total of 1,595 metres of drilling was completed in two boreholes.  Assessment of results and consideration of future plans for the project are in process at the time of writing.


In October 2005 the Company announced an independent resource calculation on the War Springs property, including information on a new deposit type with potential for low cost bulk mining. The independent report confirms an NI 43-101 compliant inferred resource of 980,000 ounces of platinum, palladium, and gold (29.6 M tonnes grading 1.03 g/t 2PGM+Au (0.31 g/t Pt, 0.63 g/t Pd, 0.09 g/t Au), 0.13% Nickel, 0.11% Copper) with strong evidence of resource continuity. This new resource is found in two distinct reef layers 5-10 metres thick named the “B” and “C” reefs, starting at surface and dipping in parallel sheets at a 65 degree angle to a depth of 400 metres and remaining open. The Qualified Person (Charles Muller; SACNASP (South African Council for Natural Scientific Professions) Registration No. 400201/04) has assessed the resource cut-off on a gross metal value of Rand 1 09 per tonne, based on a preliminary low cost decline, block cave mining model. There is potential for resource expansion.


Black Economic Empowerment groups Africa Wide Mineral Prospecting and Exploration (Pty) Limited and Taung Minerals (Pty) Ltd. each have been granted a 15% interest in the War Springs project carried to bankable feasibility. The Company’s retains a net 70% project interest. Africa Wide has also been granted a 30% participating interest in the Tweespalk property. The Company has not recorded a receivable for Africa Wide’s share of costs to date, which at February 28, 2007 are calculated to be $258,600 (August 31, 2006 - $253,783). The Company expects that Africa Wide will be able to fund their share of costs in the future and amounts recovered from Africa Wide will be treated as a reduction of costs relating to the Tweespalk property.


 

11


 


Lakemount, Ontario


On November 6, 2003 the Company acquired an option to earn up to a 62% interest in the 3,017 hectare Lakemount property located near Wawa, Ontario. The Company could earn up to a 51% undivided property interest by completing $2.5 million in exploration and development expenditures ($1,098,649 incurred to August 31, 2006) and by making staged payments totalling $150,000 ($75,000 paid) and 150,000 common shares (50,000 issued) by December 31, 2008. The Company could also purchase an additional 11% interest in the property by making a payment of $3.3 million to an underlying holder from whom the property vendor had acquired their rights.


During the period the Company requested that the underlying holder to the property correct several title or contractual deficiencies relating to the Company’s right to acquire certain properties adjacent to the main Lakemount property.  The underlying holder was unwilling or unable to correct these deficiencies.  By agreement with the vendor the Company chose to suspend any further option payments to the vendor until the matter was resolved to its satisfaction.  The vendor then chose to withhold their required payments to the underlying holder, who then chose to provide termination notice to the vendor who had optioned the project to the Company.  To date the Company has completed more than 3,300 metres of drilling on the property, as well as airborne, ground based and down-hole geophysical surveys.  Roscoe Postle Associates Inc. of Toronto completed an NI 43-101 compliant pr eliminary resource assessment and scoping study for the project in early 2005.  Exploration results on the project to date have been of interest, but in light of the deficiencies and complex title chain, the Company has chosen not to pursue the matter and has abandoned the project.  Deferred acquisition and exploration costs relating to the project in the amount of $1,323,222 have been written off.


Lac Des Iles, Ontario


The Company has negotiated the consolidation of three of its property interests in the Lac Des Iles area of Ontario. On October 6, 2006, the Company and the property vendors for the Lac Des Iles River property entered into a termination and sale agreement whereby the existing option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.


On October 13, 2006, the Company and the property vendors for the South Legris property entered into a termination and sale agreement whereby the existing option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.


On October 18, 2006, the Company and the property vendor for the Shelby Lake property entered into a termination and sale agreement whereby the existing 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. To August 31, 2006 the Company had incurred costs of $565,869 on the property and elected under the option agreement to form a 50/50 joint venture with the property vendor. Amounts already spent by the Company in excess of $500,000 where repayable to the Company by the property vendor, or would be applied to dilute the vendor’s working interest in the property.


In late 2006 a 1,090 metre drill program was conducted on the Company’s Lac Des Iles projects.  Further work is under consideration.

 

12


 


Seagull, Ontario


In September 2004 the Company acquired an option to earn an initial 50% interest in the Seagull property located in the Nipigon region of Ontario by completing $7.5 million of exploration work ($702,234 completed to November 30, 2005) and making cash payments of $750,000 ($75,000 paid) over a five-year period to September 24, 2009. PTM could earn an additional 20% property interest by completing a bankable feasibility study for the property and arranging production financing. During the year the Company’s exploration work on this property consisted of drilling, geochemistry, geophysics, mapping and modeling. The Company has now taken a decision to focus its resources on its South African projects and as a result the Seagull property was abandoned as of February 28, 2006, resulting in a write-off in the amount of $785,288.


Agnew Lake, Ontario


The Company’s Agnew Lake property was not active during the period. The Company has directly performed $512,265 worth of exploration work and caused further work of approximately $3,140,805 to be performed through the joint venture arrangement with PFN and Kaymin to August 31, 2005. Occurrences of PGMs have been located on the property, but no resource has been delineated to date. At August 31, 2005 the Company wrote off its remaining investment in the property of $276,852. Subsequent to year end Kaymin advised the Company that it would cease further funding of the project. Kaymin also notified the Company that they would vest as to a 26.17% interest in the property in accordance the terms of their option agreement. PFN has now terminated its option and retains no working interest.


e)

Administration Expenses

Before a non-cash charge for stock based compensation of $1,395,866 (2006 - $39,944), and mineral property costs written off of $1,323,222 (2006 - $793,298), and not including interest, other income and recoveries in the period of $436,870 (2006 - $134,245), general and administrative expenses totaled $3,083,011 (2006 - $1,958,975). 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 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 $453,773 (2006 - $313,084); office and miscellaneous expenses of $176,360 (2006 - $89,447); professional fees of $212,710 (2006 - $149,694); salaries a nd benefits of $875,405 (2006 - $652,669); shareholder relations expense of $167,408 (2006 - $108,072); travel expenses of $500,754 (2006 - $191,532); mail, news releases and printing expense of $79,526 (2006 - $33,045) and promotion expenses of $147,475 (2006 - $155,505).


f)

Related Party Transactions

Management and consulting fees expense and salaries in the period of $338,131 (2006 - $280,623) were incurred with directors of the Company. Of this amount approximately $174,151 (2006 - $159,273) is related to fees for the Company’s President. At May 31, 2007 there were $Nil fees (2006 - $Nil) owed and included in accounts payable.


The Company received $104,152 (2006 - $101,081) during the period from MAG Silver Corp. (“MAG”), a company with common directors and a common officer, under the terms of a 2003 service agreement for administrative services. Accounts receivable at the end of the period include an amount of $1,869 due from MAG.


During the period the Company accrued or received payments of $35,100 (2006 – $15,600) from West Timmins Mining Inc. (“WTM”) formerly Sydney Resource Corporation, a company with common directors and a common officer, for administrative services. The amount received in 2006 was net of a credit adjustment of $19,500 in recognition of WTM’s relative inactivity in the first three quarters of calendar 2005. Accounts receivable at the end of the period include an amount of $442 due from WTM.


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.


 

13


 


g)

Shareholder Relations’ Expenses

Shareholder relations’ expense during the period totaled $167,408 (2006 - $108,072). 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. Since May 2005 Roth Investor Relations has been contracted at a rate of US $5,000 per month to provide distribution of the Company’s information to US institutions and other international analysts and money managers. Prior to May 2005 Roth was contracted by the Company to provide services, on an invoice basis, as needed from time to time. Roth has offices in New Jersey, USA and affiliated offices in London and Johannesburg. Mr. Larry Roth is the Company’s primary contact with the firm. Since June 2005 Mr. Tony Mahalski of LM Associates in London, U.K., has been engaged for a fee of GBP 1,000 per month for the purpose of gene ral business development and the raising of the Company’s profile in Europe.


h) Travel and Promotion Expenses

Travel expenses for the period amounted to $500,754 (2006 - $191,532). These activities relate to the supervision of ongoing operations, new property investigations and meetings with potential institutional and sophisticated investors. Since early 2004 the Company’s increased activity level in South Africa has increased these costs. Promotion expenses in the period amounted to $147,475 (2006 - $155,505) 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 $362,915 (2006 - $309,397) in cash and shares. This includes $105,000 for properties in Ontario, and $257,915 to acquire or maintain option rights to the South African properties. Cash payments or accruals totaled $132,915 (2006 - $269,397) and share issuances for property acquisitions totaled $230,000 (2006 - $40,000).


The sum of all payments required to perfect all of the Company’s mineral rights are greater than its currently available working capital. The Company evaluates its property interests on an ongoing basis and intends to abandon properties that fail to remain prospective. The Company is confident that it will be able to meet its earn-in obligations on those properties which management considers to be of merit. At the time of writing the Company was incurring further property acquisition expenses through its activities in Ontario, Canada and the Republic of South Africa.


3.

CRITICAL ACCOUNTING POLICIES


The Company’s accounting policies are set out in Note 2 of its Consolidated Financial Statements for the period ended May 31, 2007.


There are two policies that, due to the nature of the mining business, are significant to the financial results of the Company. These policies relate to the capitalization of mineral exploration expenditures and the use of estimates:


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 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 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.

 

14


 


4.

CHANGE IN ACCOUNTING POLICY


Effective September 1, 2004, the Company adopted the amended recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments. Under the amended standards of this section, the fair value of all stock-based awards granted are estimated using the Black-Scholes model and recorded over their vesting periods. The compensation cost related to stock options granted after September 1, 2004 is recorded in operations.


Previously, the Company provided note disclosure of pro forma net earnings and pro forma earnings per share as if the fair value based method had been used to account for share purchase options granted to employees, directors and officers after September 1, 2002. The amended recommendations have been applied retroactively from September 1, 2002 without restatement of prior periods. As a result, as of September 1, 2004, the deficit was increased by $318,000, contributed surplus was increased by $304,977, and share capital was increased by $13,023 for share purchase options granted in prior years and exercised in 2005. The total compensation expense recognized in the statement of operations for share purchase options granted in 2006 amounts to $110,176 (2005 - $1,283,289). Had the same basis been applied to share purchase options granted in 2004 the stock compensation expense recognized would have been $241,000.


5.

LIQUIDITY AND CAPITAL RESOURCES


The Company issued a total of 7,035,069 (2006 – 4,927,547) common shares during the period. Of this 6,985,069 shares (2006 – 4,902,547) were issued for cash proceeds of $11,882,866 (2006 - $6,895,558). During the period 230,000 shares (2006 – 25,000) were issued for mineral properties for a value of 230,000 (2006 - $40,000). Cash proceeds are to be spent on mineral property acquisitions, exploration and development as well as for general working capital purposes. See Subsequent Events for further equity issuances. The Company’s primary source of capital has been from the sale of equity. At May 31, 2007 the Company had cash and cash equivalents on hand of $14,486,241 compared to cash and cash equivalents of $1,267,449 at May 31, 2006. The primary use of cash during the period was for acquisition of mineral properties, exploration expenditures, and investment in and adv ances to Joint Venture being approximately $5,060,711, which includes $4,479,461 for the WBJV project (2006 - $6,604,552 which includes $5,038,382 for the WBJV project), management fees and expenses of $453,773 (2006 - $313,084) and other general and administrative expenses of $2,561,917 (2006 - $1,594,322).


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. As a result the Company is subject to foreign exchange risk from fluctuations in foreign exchange rates. In the past year to the time of writing this report, the South African Rand has fallen in value against the Canadian Dollar by approximately 14%.


The following Table discloses the contractual obligations of the Company for optional mineral property acquisition payments, optional exploration work and committed lease obligations for office rent and equipment:


Contractual Obligations

Payments due by period

Total

< 1 Year

1 – 3 Years

3 – 5 Years

> 5 Years

Acquisition Payments

$  5,178,000

$ 5,178,000

$                 0

$                0

$              0

Exploration Costs

0

0

0

0

0

Lease Obligations

265,794

37,343

176,831

51,620

0

Totals

$ 5,443,794

$ 5,215,343

$       176,831  

$       51,620

$              0


 

15


 

6.

CORPORATE GOVERNANCE


The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to Multilateral Instrument 52-109 is recorded, processed, summarized and reported in the manner specified by the relevant securities laws applicable to the Company. The consolidated 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 August 31, 2006 through inquiry, review, and testing, as well as by drawing upon their own relevant experience. The Company retained an independent third party specialist in 2006 to assist in the assessment of its disclosure control pro cedures. The Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure control procedures are 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 in order to provide reasonable assurance that assets are safeguarded and financial information is accurate and reliable and in accordance with Canadian GAAP. The Company retained an independent third party specialist in 2006 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 compe nsation. From time to time the board may also form special sub-committees, which must investigate and report to the Board on specific topics.


7.

SUBSEQUENT EVENTS


Subsequent to May 31, 2007, 100,000 common shares were issued pursuant to the exercise of 100,000 stock options at a price of $0.50 per share and 75,000 common shares were issued pursuant to the exercise of 75,000 stock options at a price of $0.75 per share for aggregate proceeds of $106,250.  As well, 40,000 stock options were granted an employee at a price of $4.20 per share.


On June 28, 2007 the common shares of the Company were listed for trading on the American Stock Exchange under the symbol “PLG”.


Other subsequent events are disclosed elsewhere within this document.


8.

LIST OF DIRECTORS AND OFFICERS


a)

Directors:

Eric Carlson
Frank R. Hallam
R. Michael Jones
Iain McLean
Barry W. Smee


b)

Officers:

R. Michael Jones (President)
Frank R. Hallam (Chief Financial Officer, Secretary)


c)

Officers of Subsidiary:

John A. Gould

(Managing Director Platinum Group Metals RSA (Pty) Ltd.)


 

16

 

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-----END PRIVACY-ENHANCED MESSAGE-----