Being developed to

exploit one of the last

large, near surface

sections of the famous

Merensky Reef

Western Bushveld Joint Venture Project 1

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The WBJV Project 1 platinum mine is held in subsidiary operating Company Maseve 11 Investments (Pty) Ltd. At August 31, 2013 Maseve was owned 74% by Platinum Group Metals and 26% by Africa Wide, a subsidiary of Wesizwe Platinum. Wesizwe is building a platinum mine adjacent to our Project 1 site and is 45% controlled by Jinchuan of China. 

 

On October 18, 2013, Wesizwe, through its subsidiary Africa Wide, informed us that it would not be funding its approximate US$21.8 million share of a project budget and cash call for WBJV Project 1 that had been unanimously approved by the Maseve board of directors. As a result of the failure to fund its share of the cash call, Africa Wide’s interest in Maseve, and therefore WBJV Project 1 and Project 3, will be diluted in accordance with the terms of the Maseve Shareholders’ Agreement. Based on the dilution formula contained in the Maseve Shareholders’ Agreement we have calculated that once we have paid our 74% share of the approved cash call into Maseve, Africa Wide will be diluted by 4.98%, to a holding in Maseve of 21.02%. However, Africa Wide has calculated its dilution at 3.55%, reducing its shareholding, in its opinion, to 22.45%. At meetings of the shareholders of Maseve and the board of directors of Maseve held on November 11, 2013, resolutions were passed to unanimously approve the issuance of shares in Maseve to Platinum Group Metals (RSA) (Pty) Ltd. once we have paid our 74% share of the approved cash call into Maseve, which would dilute Africa Wide by 3.55%, with the possible further dilution of another 1.43% sent to arbitration for determination according to the terms of the Maseve Shareholders’ Agreement. Platinum Group plans to enter into a transaction for the purchase of Wesizwe’s diluted points of interest in Maseve by a qualified empowerment company in South Africa. 

 

The WBJV Project 1 platinum mine site is located on the western side of the Bushveld Complex approximately 35km north west of the town of Rustenburg. The mine is currently being constructed and is to be commissioned to extract and process platinum group metals and associated minerals from the Merensky Reef for an initial period of approximately 8 years. The following 2 to 3 years will see a blend of Merensky and UG2 reefs being extracted and treated and thereafter the UG2 reef alone will be mined and processed for the rest of the life of the mine. 

 

The WBJV Project 1 platinum mine is being developed to exploit one of the last large, near surface sections of the famous Merensky Reef above 1,000 meters deep. Shallow depth means lower capital costs and better working conditions as compared to the older, deeper platinum mines operating nearby.

 


1,500

meters of twin underground development

The planned concentrator currently under construction utilizes a series of component designs and specifications from other plants recently built and operated for ores from the Bushveld Complex. The largest part of the design comes from the Mototolo plant also completed and erected by our contracted Engineering, Procurement, Construction and Management (“EPCM”) firm DRA. DRA is well experienced in platinum with 44 other projects completed to date. 

 

Procurement for the concentrator equipment and mining has focused on long lead items such as the mill shells and a filter press for the concentrate. The erection of the structural steel for the mill has been delayed as part of our procurement freeze to mitigate risk pending the completion of project financing. The equity financing announced and closed in December 2013 will allow for project construction pace to resume. A significant amount of mining equipment has already been purchased even during the procurement freeze so that underground development can continue on multiple headings. Critical items for the plant ordered so far have been found to be available at budgeted cost and on time. Construction of the WBJV Project 1 platinum mine is progressing along plan with a solid safety record other than one tragic surface accident that resulted in a fatality.

 

Underground development completed to date includes 1,500 meters of twin decline development at the North Mine to the planned intersection with the Merensky Reef. A reef drive has been developed along strike for over 250 meters and Merensky Reef exposed. Initial raise lines on the reef position have been started and underground development is continuing into the initial mining blocks.

 

At the South Mine, surface oxidized conditions have been difficult and resulted in a delay in overall production ramp-up to first concentrate in May 2015. At the time of writing, the twin decline developments have advanced into solid rock and conditions have improved.

 

During 2013, a life of mine Offtake Agreement with Anglo Platinum, the largest producer of platinum in the world was completed. The concentrate from the WBJV Project 1 platinum mine is planned to be trucked approximately 40 kilometers to the Anglo Platinum smelter in Rustenburg. The contract is for the life of the mine and is a take and pay contract with good terms.