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Waterberg project slated for development, construction decision

16th July 2020

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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TSX- and NYSE-listed Platinum Group Metals’ (PTM’s) key business objective in the months ahead is to advance the palladium-dominant Waterberg project, in South Africa's Limpopo province, to a development and construction decision following the positive results of a definitive feasibility study (DFS), which provided a solid value assessment for the project.

The Waterberg DFS projects a fully mechanised, shallow, decline access palladium, platinum, gold and rhodium (4E) mine, with steady state production of 420 000 oz/y of 4E and a 45-year mine life on current reserves.

Peak project funding is estimated at $617-million.

The Waterberg DFS concluded that the project will be one of the largest and potentially lowest cash cost underground 4E mines globally.

Currently, the long-term market outlook for the metals to be produced at Waterberg remains positive, and the company has received interest from other potential strategic partners in the Waterberg project following Impala Platinum’s (Implats’) decision not to exercise its purchase and development option.

The work programme, paid for substantially by Implats, is now under way and will focus on project optimisation, operational readiness and risk mitigation.

The work programme is currently being carried out in compliance with South African health orders aimed at halting the spread of the Covid-19 virus, PTM said on July 16.

PTM is expecting the granting of a mining right for the Waterberg project as the next major milestone, with the expected grant of the right delayed owing to the current stay-at-home order and possible future restrictions in South Africa amid the spread of Covid-19.

Concentrate offtake negotiations with Implats are also currently in progress and PTM and the Waterberg JV Co have begun a process to assess commercial alternatives for mine development financing and concentrate offtake, subject to Implats' right to match offtake proposals.

Several parties are currently in discussions with the company.

Additionally, the company's battery technology initiative through Lion Battery Technologies, a new venture launched in July 2019 with an affiliate of Anglo American Platinum (Amplats), represents a research, innovation and commercialisation opportunity in the high-profile lithium battery field using palladium and platinum.

Recent laboratory work by Lion has discovered innovations that are in line with PTM’s technical objectives and are now covered in patent applications filed by Lion.

According to PTM, the investment in Lion creates a potential vertical integration with electric vehicles, which may otherwise be a potential threat to the platinum and palladium market.

FINANCIAL RESULTS

PTM has taken steps to cut costs and reduce debt during the last 12 months, and during the nine months ended May 31, 2020, the company realised a net loss of $5.9-million, down $13.1-million from the same period in 2019.

General and administrative expenses during the nine-month period were $2.7-million, and losses on foreign exchange were $4.1-million, primarily owing to variance in the dollar to Canadian dollar exchange rate.

A gain on fair value of financial instruments of $3.1-million was recognised in the period owing predominantly to a decrease in the value of unexercised common share purchase warrants that expired on November 22, 2019.

Total expenditures on the Waterberg project, before partner reimbursements, for the nine months ended May 31 were about $2.1-million, down from $6.4-million in the same period during 2019.

At period-end, $34-million in accumulated net costs had been capitalised to the Waterberg project.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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