Platinum Group Metals Ltd. (TSX:PTM) (NYSE American:PLG)
(“
Platinum Group”, “
PTM” or the
“
Company”) is pleased to announce that Impala
Platinum Holdings Ltd. (JSE:IMP) (“
Implats”) has
entered into definitive agreements (the “
Implats
Transaction”) with Platinum Group, the Japan Oil, Gas and
Metals National Corporation (“
JOGMEC”), Mnombo
Wethu Consultants (Pty) Ltd. (“
Mnombo”), and
Waterberg JV Resources Proprietary Ltd. (“
Waterberg
Resources”), whereby Implats will, subject to Reserve Bank
approval and other closing conditions:
- Immediately purchase a 15.0% interest in the Waterberg Project
for US$30.0 million (the “Initial Purchase”);
- Have the option to increase its stake to 50.01% through
additional purchases and earn-in arrangements totaling US $166.0
million following the completion of a Definitive Feasibility Study
(“DFS”); and
- Have a right of first refusal to smelt and refine Waterberg
concentrate.
JOGMEC will retain certain metal marketing
rights to final metal related to the project. Platinum Group
would retain a 31.96% direct and indirect interest in Waterberg
Resources if Implats were to exercise its full option.
The Waterberg Project has a number of highly
attractive characteristics as a low-cost, shallow, bulk mineable
project with significant scale and growth potential. The
participation of Implats, the world’s second largest platinum
producer with fully integrated mine to market operations,
represents a significant step in the advancement of the Waterberg
Project towards potential development and production.
R. Michael Jones, CEO of Platinum Group said,
"We are extremely excited about the participation of Implats in the
Waterberg Project. Implats will be fully involved in the Waterberg
DFS and the fully integrated nature of Implats’ business also
offers a clear potential roadmap to market for Waterberg
production. It is very satisfying to see the Waterberg
discovery recognized and advanced by Implats.”
Current Platinum Group Element
(“PGE”) probable reserves at the Waterberg Project
(100%) are 12.3 million ounces, comprising 61% palladium, 30%
platinum, 8% gold and 1% rhodium plus 191 and 333 million pounds of
copper and nickel respectively. (See the technical report dated
October 19, 2016 and filed on SEDAR titled “Independent Technical
Report on the Waterberg Project Including Mineral Resource Update
and Pre-Feasibility Study”.) Much of the Waterberg project
area remains to be drilled and assessed. The Waterberg
deposit remains open down dip and along strike.
Initial Purchase – 15% for US $30
Million Cash
Implats has agreed to purchase an aggregate
15.0% equity interest in Waterberg Resources. Platinum Group
is to sell an 8.6% interest for US $17.2 million and JOGMEC a 6.4%
interest for US $12.8 million. From its US $17.2 million in
proceeds, the Company will commit US $5.0 million towards its pro
rata share of remaining DFS costs. Implats will also
contribute an estimated US $1.5 million for its 15.0% pro rata
share of DFS costs. The Initial Purchase is subject to
several customary conditions precedent and is expected to close
within 10 business days. Following the Initial Purchase,
Platinum Group will hold a direct 37.05% equity interest, JOGMEC a
21.95% equity interest and Black Economic Empowerment partner
Mnombo will maintain a 26.0% equity interest. Platinum Group
holds a 49.9% interest in Mnombo, bringing its overall ownership in
the project directly and indirectly to 50.02% after the Initial
Purchase.
The Initial Purchase does not effect a change of
control of the Waterberg Project and an approval by the South
African Department of Mineral Resources under Section 11 of the
Mineral Resources and Petroleum Development Act is not required at
this time.
Purchase and Development
Option
Upon completion of the DFS, Implats will have an
option for 90 days to review the DFS and elect to exercise an
option to increase its interest to up to 50.01% in Waterberg
Resources (the “Purchase and Development Option”).
If Implats exercised the Purchase and Development Option to
increase its holding to 50.01%, this would be executed by
purchasing an additional 12.195% equity interest from JOGMEC for US
$34.8 million, and making a firm commitment to an expenditure of US
$130.0 million in development work.
Following an election to go to a 50.01% project
interest as described above, Implats will have another 90 days to
confirm the salient terms of a Development and Mining financing for
the Waterberg Project, including a signed financing term sheet,
subject only to final credit approval and documentation.
After exercising the Purchase and Development Option, Implats will
control Waterberg Resources.
Should Implats complete the increase of its
interest in Waterberg Resources to 50.01% pursuant to the Purchase
and Development Option, Platinum Group would retain a 31.96% direct
and indirect interest in Waterberg Resources and all of the project
partners would be required to participate pro-rata.
The transaction agreements also provide for the
transfer of equity and the issuance of additional equity to one or
more broad based black empowerment partners, at fair value.
If Implats does not elect to complete the
Purchase and Development Option and the Development and Mining
Financing, Implats will retain a 15.0% project interest and
Platinum Group will retain a 50.02% direct and indirect interest in
the project.
Implats Offtake Right and JOGMEC
Marketing Rights
Upon completion of the Initial Purchase, Implats
will also have acquired a right of first refusal to enter into an
offtake agreement, on commercial arms-length terms, for the
smelting and refining of mineral products from the Waterberg
Project. JOGMEC will retain a right to receive platinum,
palladium, rhodium, gold, ruthenium, iridium, copper and nickel in
refined mineral products at the volume produced from the Waterberg
Project.
JOGMEC Director Shuichi Miyatake said, “We are
very pleased to move Waterberg from exploration forward with
Implats and retain the potential for security of supply of a
significant volume of strategic PGEs for Japan.”
Definitive Feasibility Study Scope
Agreed
Following a technical review of the October,
2016 Pre-Feasibility Study (“PFS”) and DFS scope
documentation, along with tendering documents, Implats, JOGMEC,
Mnombo and Platinum Group (as operator of the Waterberg Project)
have agreed to the detailed scope of work for the DFS. The
DFS will investigate two options - a 600,000 tonne per month mine
(744,000 ounces PGEs per year) as outlined in the PFS, and a second
lower capital option at 250,000 to 350,000 tonnes per month.
The selection of the DFS team has also been agreed and tenders will
be confirmed for the engineering groups following the closing of
the Initial Purchase.
Transaction Rationale
Platinum Group believes that Implats’
participation in the Waterberg Project offers a mine to market
solution. Implats has decades of mining experience in Southern
Africa as well as corporate expertise for integrated mining,
smelting and refining operations, community development and
government relations. Implats’ participation at Waterberg will
materially reduce the capital commitment for JOGMEC and Platinum
Group. In addition, Implats’ participation and structuring of
financing for the project should assist in more efficient capital
raising during project construction. Platinum Group believes
that Implats’ participation in the Waterberg Project and its
integrated business model, including smelting, refining and metal
marketing, provides good potential for an efficient and complete
mine to market solution for the Waterberg Project.
Macquarie Capital and BMO Capital
Markets are acting as the Company's financial advisors with
regard to the Implats Transaction.
Lender Approvals and Credit Update
The secured lenders to Platinum Group, Sprott
Resource Lending Partnership, among other lenders
(“Sprott”) and Liberty Metals & Mining
Holdings, LLC (“LMM”), have provided their consent
to the Implats Transaction, which consent is conditional on the
satisfaction of certain conditions by the Company.
Sprott and LMM have also agreed to terms and
conditions, upon completion of which, they will provide their
consent to the sale of the Maseve Mine to Royal Bafokeng Platinum
Limited (“RBPlat”) (see news release dated September 6,
2017). The Company and RBPlat are in process to complete
required regulatory filings, legal agreements, procedures, etc.
which are required for closing and which will also satisfy Sprott
and LMM’s requirements. RBPlat paid a deposit of Rand
41.37 million (US $3.0 million) into escrow on October 9, 2017.
Sprott has also agreed to provide the Company up
to a US $5.0 million bridge loan (the “Bridge
Loan”) to provide working capital as may be required up
until the closing of the Initial Purchase.
The Company has agreed with Sprott and LMM to a
specific use of the Company’s US $17.2 million in proceeds from the
Initial Purchase, including: (i) repayment of any principal or fees
related to the Bridge Loan, (ii) payment of certain outstanding
payables and general administrative expenses (including certain
transaction fees related to the Implats Transaction), (iii) care
and maintenance costs of the Maseve Mine during the sale closing
period, and (iv) the Company’s US $5.0 million share of planned DFS
costs. The Company is to place approximately US $7.0 million
in a reserve account for dedication to the costs described at items
(ii) and (iii) above. Proceeds from the Maseve Sale
Transaction are to be used first to repay Sprott (US $40.0 million)
and second to partially repay LMM (approximately US $33.0
million).
In consideration for LMM’s consent to the
Implats Transaction, the Company has agreed to, among other things,
do the following:
- Deliver an amendment to the second lien LMM facility agreement
prior to the closing of the Implats Transaction which will, among
other things,: (a) amend the term of the LMM Facility to mature the
later of September 30, 2018 and four months after the closing of
the first stage of the Maseve Sale Transaction (closing expected
before December 31, 2017); (b) require that 60% of net proceeds
raised by the Company in an equity financing of over US $500,000 be
used for repayment of outstanding loan facilities; and (c) add
additional events of default for failing to be listed on the TSX,
material breaches under material agreements and a decrease in its
equity ownership in Waterberg Resources beyond the decrease to
occur as a result of the Implats Transaction.
- Raise US $20.0 million in debt and or equity within 30 days of
the first lien facility due to Sprott being repaid (expected to be
repaid before December 31, 2017) and raise a further US $10.0
million in debt and or equity by June 30, 2018. Proceeds in
each instance are to repay and discharge amounts due firstly to
Sprott and secondly to LMM.
- Deliver an amendment to the production payment agreement
between LMM and the Company by October 17, 2017 pursuant to which a
termination fee for the Maseve Mine production payment obligation
due to LMM can be settled by payment of US $15.0 million by March
31, 2018 or US $25.0 million thereafter.
In consideration for Sprott providing the Bridge
Loan and Sprott’s consent to the Implats Transaction and the Maseve
Sale Transaction, the Company has delivered an amendment to the
first lien Sprott facility agreement which: (a) amends the term of
the loan to mature on earlier of (i) January 31, 2018 and (ii) ten
days after the closing of the Maseve Sale Transaction; (b) requires
that 60% of net proceeds raised by the Company in an equity
financing of over US $500,000 be used for repayment of outstanding
loan facilities; and (c) adds events of default for failing to be
listed on the TSX, material breaches under material agreements and
a decrease in equity ownership in Waterberg Resources beyond the
decrease to occur as a result of the Implats Transaction.
About Impala Platinum Holdings Limited
Impala Platinum Holdings Limited is one of the
world’s foremost fully integrated producers of platinum and
associated PGEs. The group produces approximately a quarter of the
world's supply of primary platinum. Implats produced 1.44
million ounces of platinum and 2.91 million ounces of PGEs in
FY2016. Implats’ operations are located on the Bushveld
Complex in South Africa and the Great Dyke in Zimbabwe, the two
most significant PGE-bearing ore bodies in the world. In Southern
Africa Implats is structured around five main operations namely
Impala, Zimplats, Marula, Mimosa and Two Rivers with headquarters
based in Johannesburg, South Africa.
About the Waterberg PGM
Project
The 2016 independent PFS outlined Waterberg as
one of the largest, lowest cost undeveloped PGM assets globally. In
the PFS, Waterberg is designed to be a low cost, multi-decline,
fully mechanized, mining complex along an initial 13 km deposit
strike length with two 300,000 tonne per month mills built in close
sequence. Steady state production is modelled at 744,000 ounces 4E
with an 18-year mine life. The DFS underway will study the PFS
mining scale and a potentially smaller scale, lower capital option
for development. Probable reserves at Waterberg (details below) are
12.3 million ounces of palladium, platinum rhodium and gold). The
deposit starts at approximately 150m from surface, to be developed
with decline ramps and remains open for expansion with significant
resources yet to be converted to reserves.
Sixty one percent of Waterberg reserves and
resources of PGMs are palladium. Auto preferences recently have
supported a robust palladium market.
Reserve Details (100% Project Basis)
Prill Split |
Grade |
Zone |
Pt |
Pd |
Au |
Rh |
Cu |
Ni |
% |
% |
% |
% |
% |
% |
T-Zone |
29 |
49 |
21 |
1 |
0.16 |
0.08 |
F-Zone |
30 |
64 |
5 |
1 |
0.07 |
0.16 |
Probable Mineral Reserve at 2.5 g/t 4E Cut-off– Tonnage
and Grades
Waterberg Probable Mineral Reserve – Tonnage
and Grades |
Zone |
Mt |
Cut-offgrade(g/t) |
Pt (g/t) |
Pd(g/t) |
Au(g/t) |
Rh(g/t) |
4E(g/t) |
Cu(%) |
Ni(%) |
T-Zone |
16.5 |
2.5 |
1.14 |
1.93 |
0.83 |
0.04 |
3.94 |
0.16 |
0.08 |
F-Zone |
86.2 |
2.5 |
1.11 |
2.36 |
0.18 |
0.04 |
3.69 |
0.07 |
0.16 |
Total |
102.7 |
2.5 |
1.11 |
2.29 |
0.29 |
0.04 |
3.73 |
0.08 |
0.15 |
Probable Mineral Reserve at 2.5 g/t 4E Cut-off–
Contained Metal
Waterberg Probable Mineral Reserve – Contained
Metal |
Zone |
Mt |
Pt(Moz) |
Pd(Moz) |
Au(Moz) |
Rh(Moz) |
4E(Moz) |
4E content(kg) |
Cu(Mlb) |
Ni(Mlb) |
T-Zone |
16.5 |
0.61 |
1.03 |
0.44 |
0.02 |
2.09 |
65,097 |
58.21 |
29.10 |
F-Zone |
86.2 |
3.07 |
6.54 |
0.51 |
0.10 |
10.22 |
318,007 |
132.97 |
303.94 |
Total |
102.7 |
3.67 |
7.57 |
0.95 |
0.12 |
12.32 |
383,103 |
191.18 |
333.04 |
Reasonable prospects of economic extraction were
determined with the following assumptions: Metal prices used in the
reserve estimate are as follows based on a 3-year trailing average
(as at July 31/2016) in accordance with U.S. Securities and
Exchange Commission ("SEC") guidance for the assessment of
resources and reserves; US$1,212/oz Pt, US$710/oz Pd, US$1229/oz
Au, US$984/oz Rh, US$6.10/lb Ni, US$2.56/lb Cu, US$/ZAR15.
Smelter payability of 85% was estimated for 4E and 73% for Cu and
68% for Ni. The effective date is October 17, 2016. A 2.5 g/t
Cut-off was used and checked against a pay-limit calculation.
Independent Qualified Person for the Statement of Reserves is Mr.
RL Goosen (WorleyParsons RSA (Pty) Ltd Trading as Advisian). The
mineral reserves may be materially affected by changes in metals
prices, exchange rates, labor costs, electricity supply issues or
many other factors. See Risk Factors in Independent Technical
Report 43-101 Effective Date: October 17, 2016 on www.sedar.com and
the Company’s Annual Information Form. The reserves are estimated
under SAMREC with no material difference to the CIM 2014
definitions in this case.
The estimation of mineral reserves has taken
into account environmental, permitting and legal, title, taxation,
socio-economic, marketing and political factors. Based on the
cut-off grade and a maximum depth cut-off of 1,250 meters the
Probable reserve will support an 18-year mine life.
About Platinum Group Metals
Ltd.
Platinum Group, based in Johannesburg, South
Africa and Vancouver, Canada. Platinum Group and its partners
JOGMEC and Mnombo originated the grass-roots exploration that
discovered the Waterberg deposit and a new portion of the Bushveld
PGM complex in 2011.
Formed in 2002, Platinum Group holds significant
mineral rights and large-scale reserves of platinum and palladium
in the Bushveld Igneous Complex of South Africa, which is host to
over seventy percent of the world's primary platinum
production.
Qualified Person
R. Michael Jones, P.Eng., the Company’s
President, Chief Executive Officer and a shareholder of the
Company, is a non-independent qualified person as defined in
National Instrument 43-101 Standards of Disclosure for Mineral
Projects (“NI 43-101”) and is responsible for
preparing technical information contained in this news release. He
has verified the data by reviewing the detailed information of the
geological and engineering staff and the Independent Qualified
Person reports as well as visiting the site regularly.
On behalf of the Board ofPlatinum Group
Metals Ltd.
For further information contact:R. Michael Jones, Presidentor
Kris Begic, VP, Corporate DevelopmentPlatinum Group Metals Ltd.,
VancouverTel: (604) 899-5450 / Toll Free: (866)
899-5450www.platinumgroupmetals.net
Disclosure
The Toronto Stock Exchange and the NYSE American
LLC have not reviewed and do not accept responsibility for the
accuracy or adequacy of this news release, which has been prepared
by management.
This press release contains forward-looking
information within the meaning of Canadian securities laws and
forward-looking statements within the meaning of U.S. securities
laws (collectively “forward-looking statements”). Forward-looking
statements are typically identified by words such as: believe,
expect, anticipate, intend, estimate, plans, postulate and similar
expressions, or are those, which, by their nature, refer to future
events. All statements that are not statements of historical fact
are forward-looking statements. Forward-looking statements in this
press release include, without limitation, statements regarding the
Implats Transaction, the Maseve Sale Transaction and amendments to
the Company’s agreements with its lenders, including the potential
to satisfy conditions precedent and consummate all or any part of
such transactions as described herein; [changes to black economic
empowerment participation in the Waterberg Project;] the
anticipated benefits of the Implats Transaction and Implats’
participation in the Waterberg Project; the Company’s intended use
of proceeds derived from the Implats Transaction; the projections
contained in the PFS; the anticipated timing and potential contents
of the DFS; potential offtake agreements; the Company’s plans
following the Implats Transaction; cost estimates; potential
settlement or restructure of the Company’s debts; the Company’s
ability to obtain further funding; the potential economics of the
Waterberg Project, if developed; the Company’s key objectives; and
the Company’s plans and estimates regarding exploration, studies,
development, construction, production, cash flows and other
activities and developments. Statements of mineral resources and
mineral reserves also constitute forward-looking statements to the
extent they represent estimates of mineralization that will be
encountered on a property and/or estimates regarding future costs,
revenues and other matters. Although the Company believes the
forward-looking statements in this press release are reasonable, it
can give no assurance that the expectations and assumptions in such
statements will prove to be correct. The Company cautions investors
that any forward-looking statements by the Company are not
guarantees of future results or performance and that actual results
may differ materially from those in forward-looking statements as a
result of various factors, including risks related to indebtedness;
risks related to the nature of the Implats Transaction agreements
and the completion of conditions precedent to closing of the
Implats Transaction; the risks that the terms of the Implats
Transaction may change, that the transaction will not close or that
the anticipated benefits thereof will not be realized; equivalent
risks relating to the Maseve Sale Transaction, together with the
risk that the Company may be unsuccessful in negotiating definitive
agreements for the Maseve Sale Transaction on favorable terms;
Implats may not exercise the Implats Option; the Company’s capital
requirements may exceed its current expectations; the uncertainty
of cost, operational and economic projections; the ability of the
Company to negotiate and complete future funding transactions and
successfully settlement or restructure of debt; variations in
market conditions; the nature, quality and quantity of any mineral
deposits that may be located; metal prices; other prices and costs;
currency exchange rates; the Company’s ability to obtain any
necessary permits, consents or authorizations required for its
activities and to effect the relevant transactions and to otherwise
comply with all applicable regulatory requirements; the Company’s
ability to produce minerals from its properties successfully or
profitably, to continue its projected growth, or to be fully able
to implement its business strategies; risks related to contractor
performance and labor disruptions; and other risk factors described
in the Company’s Form 40-F annual report, annual information form
and other filings with the Securities and Exchange Commission and
Canadian securities regulators, which may be viewed at www.sec.gov
and www.sedar.com, respectively. Proposed changes in the mineral
law in South Africa if implemented as proposed would have a
material adverse effect on the Company business and potential
interest in projects.
Cautionary Note to U.S. and other Investors
Estimates of mineralization and other technical
information included or referenced in this press release have been
prepared in accordance with NI 43-101. The definitions of proven
and probable reserves used in NI 43-101 differ from the definitions
in SEC Industry Guide 7. Under SEC Industry Guide 7 standards, a
"final" or "bankable" feasibility study is required to report
reserves, the three-year historical average price is used in any
reserve or cash-flow analysis to designate reserves and the primary
environmental analysis or the report must be filed with the
appropriate governmental authority. As a result, the reserves
reported by the Company in accordance with NI 43-101 may not
qualify as "reserves" under SEC standards. In addition, the terms
"mineral resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource" are defined in and
required to be disclosed by NI 43-101; however, these terms are not
defined terms under SEC Industry Guide 7 and normally are not
permitted to be used in reports and registration statements filed
with the SEC. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. Investors are cautioned
not to assume that any part or all of the mineral deposits in these
categories will ever be converted into reserves; "inferred mineral
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian securities laws, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Additionally,
disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian securities laws; however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measurements. Accordingly,
information contained or referenced in this press release
containing descriptions of the Company's mineral deposits may not
be comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements of United
States federal securities laws and the rules and regulations
thereunder.
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