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September 02,
2008
Platinum Group Metals to Increase its Interest in Project 1
Platinum Mine from 37% to 74%
(Vancouver/Johannesburg) Platinum Group Metals Ltd.
("Platinum Group") (PTM-TSX; PLG-AMEX) announces that
it has agreed to a term sheet with Anglo Platinum Limited ("Anglo
Platinum") and Wesizwe Platinum Limited ("Wesizwe") to
consolidate and rationalize the Western Bushveld Joint Venture
("WBJV"). Under the terms Platinum Group will control 74% of
the WBJV Projects 1 and 3 and Wesizwe will control 100% of Project 2 and
26% of Projects 1 and 3. The term sheet is subject to regulatory and
other approvals and the completion of definitive agreements.
Anglo Platinum will
convert its direct WBJV holdings to shares in Wesizwe (WEZ-JSE) in an
empowerment transaction. As a result of the proposed transaction,
Platinum Group pays no new cash or shares until up to six months after
closing. Projects 1 and 3 will be operated by Platinum Group and Wesizwe
will operate their core project.
In the transaction
Anglo Platinum will vend its 37% interest in the WBJV to Wesizwe for
common shares representing a 26.5% interest in Wesizwe. Platinum Group
will concurrently acquire a 37% interest in Projects 1 and 3 from Wesizwe
in consideration of Platinum Group's interest in Project 2 and R408
million in cash. The cash payment to Wesizwe has been deferred until six
months after closing the proposed transaction and will be held in escrow
to be applied towards its capital contribution for the Projects 1 and 3.
As a result of the
proposed transaction Platinum Group will:
- Double its attributable planned production
from Project 1 from approximately 92,500 ounces platinum, palladium,
rhodium and gold ("4E") per year to 185,000 ounces per
annum*;
- Double its share of Reserves by 1.63
million ounces "4Es" to 3.26 million ounces;
- Increase attributable Measured and
Indicated Resources by 1.75 million ounces 4E (Reserves are a subset
of Resources) to 5.4 million ounces;
- Increase Inferred Resources by 0.44 million
ounces 4E to 2.34 million ounces 4E.
* based on the
Independent definitive Feasibility Study mine plans release July 7, 2008.
Platinum Group and
Wesizwe will work together to maximize the value of the projects in the
local communities and the two project teams are looking at engineering
synergies for costs savings, power savings and reduced environmental
impacts of the projects' mine plans.
R. Michael Jones,
President and CEO of Platinum Group said, "We are very pleased with
the proposed transaction as it doubles our stake and control of our core
platinum project without issuing any shares or cash at this time. The
base case in the Feasibility Study on Project 1 was done at US$1,295 per
ounce platinum and provided robust returns with a pre-tax IRR of 20% so
the next steps are to complete the detailed documentation as quickly as
possible for this transaction and arrange an overall project construction
financing."
Michael Solomon,
President of Wesizwe said, "The transaction results in Wesizwe
holding 100% of our core project as well as having an interest in
Projects 1 and 3. Platinum Group Metals Ltd. and our company can now each
focus on the capital-raising for our core areas of business. The
community stands to benefit both as a shareholder of Wesizwe and in our
combined cooperative efforts in training and community development."
Details of the Transaction
- Wesizwe will purchase Anglo Platinum's 37%
interest in the WBJV, comprised of 37% of Projects 1 and 3 and 18.5%
of Project 2 (part of the Wesizwe Frischgewaagd-Ledig main project),
for 211,850,125 Wesizwe common shares.
- In a concurrent transaction Platinum Group
will purchase the 37% interest in Projects 1 and 3 from Wesizwe for
785.5M Rand (approximately US$100.7M), offset by the sale to Wesizwe
of Platinum Group's 18.5 % of Project 2 for 376.9M Rand
(approximately US$48.2M).
- The balance, due by Platinum Group, of
408.6M Rand (approximately US$52.4M) is to be paid by Platinum Group
into an escrow account within 6 months of the formal closing of this
transaction. The escrow account will then be drawn down to satisfy
Wesizwe's obligations for the capital account of Projects 1 and 3.
If the payment for the balance due is not made by Platinum Group
then Wesizwe shall be entitled to claw back up to 19% in the
Projects.
The basis of
valuation for the negotiations was the 10% discount rate NPVs of the
Projects with platinum at US$1,199 per ounce for all projects and a
Rand-to-Dollar exchange rate set at 8. The project models included the
Feasibility Study results for Projects 1 and 2 and preliminary
engineering on Project 3. The proposed acquisition by Platinum Group
represents US$32.75 per 4E oz of Proven and Probable Reserves and
US$29.94 per 4E oz of Measured and Indicated resources.
Platinum Group was
advised by RBC Capital Markets, Wesizwe was advised by Qinisele Resources
and Anglo Platinum was advised by Rand Merchant Bank.
The settlement of the
"equalization payments" currently due to Anglo Platinum under
the terms of the WBJV shall be settled by Wesizwe in common shares and by
Platinum Group in cash by December 31, 2008. At present, equalization
payments due are approximately US$18 million payable by Wesizwe and US$20
million payable by Platinum Group. If Platinum Group does not pay Anglo
Platinum by December 31, 2008, Anglo Platinum can elect to provide a 6
month extension with interest. A total make up of approximately US$2.0M
is also payable by Platinum Group to Wesizwe for past exploration costs
incurred on Project 2.
The transaction is
subject to;
- The obtaining of all necessary approvals
from the South African Competition authorities under the Competition
Act, 1998;
- The obtaining of
all required consents of the JSE Limited, TSX and the AMEX and other
regulators
- Section 11
transfer of title for the transfer of Anglo Platinum, Platinum Group
and Wesizwe rights in terms of the disposal set out in this term
sheet to a company or companies nominated by Wesizwe and Platinum
Group for purposes of transfers in terms of the Mineral Petroleum
Resources Development Act and Ministerial Approval;
- Shareholder
approval by Wesizwe;
- South African
Reserve Bank approval if required and other regulatory bodies;
- The Parties
entering into definitive agreements on the transaction materially on
the terms as are set out herein within 60 days of signature of the
term sheet.
The parties have agreed to suspend the 90 day deadline for a Decision
to Mine under the terms of the WBJV until the transaction is completed or
a condition precedent is not able to be fulfilled. Anglo Platinum will
hold a 60 day first right of refusal on the sale of ore or concentrate
over the original WBJV mineral rights.
Revised Attributable Reserves and Resources in the Proposed
Transaction; WBJV Project 1, July 7, 2007 Effective Date - Feasibility
Study (filed on SEDAR August 21, 2008). Pending Detailed Agreements and
Conditions Precedents - See Cautionary Statements on Resources.
|
Merensky
Reserves Project 1
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Tonnes
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4E
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Content
4E
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Platinum
Group
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Platinum
Group Mozs
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t
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g/t
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Moz
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Interest
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Merensky
Proved
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6,706,482
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5.55
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1.198
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74%
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0.886
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Merensky
Probable
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11,382,035
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5.39
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1.971
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74%
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1.459
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Total
Merensky Mineral Reserves
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18,088,517
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5.45
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3.169
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74%
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2.345
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UG2
Reserves Project1
|
|
Tonnes
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4E
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Content
4E
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Platinum
Group
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Platinum
Group Mozs
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|
t
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g/t
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Moz
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Interest
|
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UG2
Proved
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4,245,280
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3.38
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0.461
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74%
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0.341
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UG2
Probable
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7,051,016
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3.42
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0.775
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74%
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0.574
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Total
UG2 Mineral Reserves
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11,296,296
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3.40
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1.236
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74%
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0.915
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Proposed Transaction Results
Resources - Pending Detailed Agreements and Conditions Precedents - See
Cautionary Statements on Resources, see table:
http://www.platinumgroupmetals.net/userfiles/image/NR161_Table(1).jpg
Proposed Ownership structure of
the WBJV, see:
http://www.platinumgroupmetals.net/userfiles/image/NR161_Image01.jpg
Proposed
map of the WBJV, see:
http://www.platinumgroupmetals.net/userfiles/image/NR161_Image02.jpg
The Qualified Person, ("QP") for this press release is R.
Michael Jones, P.Eng. He is non-independent as he is the President and a
significant shareholder in Platinum Group. He has verified the data by
reviewing the Independent QP reports. Resources and Reserves are quoted
from published reports by Platinum Group by Charles Muller and Gordon
Cunningham Independent Qualified Persons as at the effective dates in the
table. (Reports dated April 25, 2008 - filed June 11, 2008 and July 7,
2008 - filed Aug 21, 2008 on www.sedar.com).
About Platinum Group Metals Ltd.
Platinum Group Metals Ltd. is based in Vancouver BC, Canada and
Johannesburg, South Africa. Platinum Group Metals Ltd. has a management
team in both Canada and South Africa, which have successful track records
of more than 20 years in exploration, mine discovery, mine construction
and mine operations. The Company was formed in 2000 and is focused on the
development of platinum operations.
On behalf of the Board of
Platinum Group Metals Ltd.
"R. Michael Jones"
President and Director
- 30 -
For further information contact:
R. Michael Jones, President
or John Foulkes, Manager Corporate Development
Platinum Group Metals Ltd., Vancouver
Tel: (604) 899-5450 / Toll Free: (866) 899-5450
The following note is mandated under SEC
Guidelines:
Cautionary Note to U.S. Investors concerning
estimates of Inferred Resources. This section uses the term
"inferred resources". We advise U.S. investors that while that
term is recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize it. "Inferred
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 rules,
estimates of Inferred Mineral Resources may not form the basis of
feasibility or pre-feasibility studies, except in rare cases. U.S.
investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally mineable.
The following note is mandated under SEC
Guidelines:
Cautionary Note to U.S. Investors concerning
estimates of Measured and Indicated Resources. This section uses the
terms "measured" and "indicated resources". We advise
U.S. investors that while those terms are recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission does
not recognize them. U.S. investors are cautioned not to assume that any
part or all of mineral deposits in these categories will ever be
converted into reserves.
The TSX Exchange and the American Stock Exchange have not reviewed
and do not accept responsibility for the accuracy or adequacy of this
news release, which has been prepared by management.
This press release contains forward-looking
statements within the meaning of Canadian and U.S. securities laws. Such
statements include, without limitation, statements regarding the timing
of future activities by the Company, future anticipated exploration and
development programs, the review of technical information, the discovery
and delineation of mineral deposit and resources, business plans,
potential mining scenarios, business trends and future operating factors.
Although the Company believes that such statements are reasonable, it can
give no assurance that such expectations will prove to be correct. Forward-looking
statements are typically identified by words such as: believe, expect,
anticipate, intend, estimate, postulate and similar expressions, or are
those, which, by their nature, refer to future events. All statements
that are not statements of historical fact are forward-looking
statements. The Company cautions investors that any forward-looking
statements by the Company are not guarantees of future results or
performance, and that actual results may differ materially from those in
forward looking statements as a result of various factors, including, but
not limited to, variations in the nature, quality and quantity of any
mineral deposits that may be located, the Company's ability to obtain any
necessary permits, consents or authorizations required for its
activities, the Company's ability to produce minerals from its properties
successfully or profitably, to continue its projected growth, or to be
fully able to implement its business strategies. In addition,
forward-looking statements are subject to various risks, including that
data is incomplete and considerable additional work will be required to
complete further evaluation, including but not limited to drilling,
engineering and socio-economic studies and investment; no firm quotes for
costs have been received; the legal right to mine the project discussed
has not been confirmed or applied for and the process for such
application is new in South Africa; the potential capital cost of the
project is beyond the current means of the Company and there can be no
assurance that financing for further work will be available. There are
significant risks with respect to grade estimation, metallurgical
recovery and mining plans that may result in over estimation or failure
to meet targets. Availability of grid electrical power is completely
outside the company control. Any estimates, plans or studies prepared by
or on behalf of other companies with respect to the project have not been
prepared or reviewed by the Company or the Company's QPs and such
disclosure can't and should not be in any way be attributed to the
Company or the Company's QPs, independent or non-independent. Any
reference to Project 2 does not imply that this is a stand alone area for
any potential mine plan. The reader is referred to the Company's filings
with the SEC and Canadian securities regulators for disclosure regarding
other risk factors. There is no certainty that any forward looking
statement will come to pass and investors should not place undue reliance
upon forward-looking statements. 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.
U.S. investors are urged to consider closely the disclosure in our
Form 40-F, File No. 0-30306, which may be secured from us, or from the
SEC's website at: http://sec.gov/edgar.shtml. Mineral resources that are
not mineral reserves do not have demonstrated economic viability.
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