Platinum Metals .(PLG) - 2025 Q1 - Quarterly Report

Preliminary Notes This section provides disclaimers on forward-looking statements, legal compliance, and mineral reserve estimations Forward-Looking Statements This section outlines the forward-looking statements within the report, which are subject to numerous risks and uncertainties - Forward-looking statements cover expectations regarding the 2025 At-The-Market (ATM) offering, project financing, smelting arrangements, and projections from the Waterberg Definitive Feasibility Study (DFS) Update[5] - Key risk factors that could affect future results include the adequacy of capital, ability of partners to fund their share, future metal prices, power supply from ESKOM, South African political developments, and potential litigation outcomes[8] - Additional risks include labor disruptions, community relations, foreign exchange controls, and the potential for the Company's shares to be delisted[14] Legislation and Mining Charter 2018 The report notes legal requirements in South Africa under the MPRDA and Mining Charter 2018 for BEE shareholding - South African regulations require Waterberg JV Co. to have a 26% BEE shareholding for the grant of a mining right, which must increase to 30% within five years of the right's effective date[15] Mineral Reserves and Resources Mineral resource and reserve figures are estimates, with differences noted between NI 43-101 and SEC S-K 1300 standards - Mineral resource and reserve estimates are expressions of judgment and may change as new information becomes available[17] - The technical information is prepared under Canadian NI 43-101 and SEC S-K 1300 standards, and has been reviewed by a Qualified Person, Robert van Egmond, P.Geo[18][19] Description of Business This section details the company's core business, focusing on the Waterberg Project and its strategic partnerships Overview Platinum Group Metals Ltd. focuses on the Waterberg Project in South Africa, holding a 50.16% interest - The Company's primary focus is the development of the Waterberg Project, a PGE and base metal deposit on the Northern Limb of the Bushveld Igneous Complex in South Africa[23] - As of November 30, 2024, the Company holds a 50.16% controlling beneficial interest in the Waterberg Project and serves as its operator[24] - An updated Definitive Feasibility Study (Waterberg DFS Update) was published on September 16, 2024, and the company is exploring concentrate offtake arrangements or the possibility of constructing its own smelter[25][26] Lion Battery Technologies Inc. Lion Battery Technologies Inc. is a joint venture developing next-generation battery technology using platinum and palladium - Lion Battery Technologies is a joint venture with Amplats to develop next-generation battery technology using platinum and palladium[27] - Lion has exclusive rights to five U.S. patents issued to Florida International University for battery technology involving PGMs and has engaged The Battery Innovation Center (BIC) to help drive commercialization[30][31] Funding to Lion Battery Technologies Inc. (in thousands) | Date | Gross Funding to Lion | | :--- | :--- | | July 2019 | $1,100 | | June 2020 | $700 | | February 2021 | $700 | | February 2022 | $500 | | February 2023 | $590 | | June 2023 | $560 | | November 2023 | $362 | | December 2023 | $100 | | October 2024 | $80 | | Total | $4,692 | Personnel The Waterberg Project is operated by the Company's staff, supplemented by contract services and consultants - The Company's personnel includes 8 individuals in South Africa and 5 in Canada, supported by contractors and consultants[32] Properties This section details the company's key asset, the Waterberg Project, including its development status and strategic plans Waterberg Project This section provides a comprehensive update on the Waterberg Project, detailing recent activities, financing, and strategic alternatives - During the period ended November 30, 2024, $0.6 million in expenditures were capitalized for the Waterberg Project[35] - As of November 30, 2024, accumulated net capitalized costs for the project totaled $46.9 million, with approximately $89.7 million spent since inception from all funding sources[36] Recent Activities Work on the Waterberg Project is progressing through staged budgets, with Implats' interest diluted due to non-funding - Waterberg JV Co. approved a Stage Three Budget of R29.8 million (~$1.65M) and a Stage Four Budget of R24.4 million (~$1.35M)[39][40] - Implats did not fund its share of the Stage Three and Four budgets, resulting in its interest being diluted to approximately 14.86%, with Platinum Group funding the shortfall[39][40][41] - A new Waterberg Stage Five budget is planned for introduction in early calendar 2025[42] Concentrate Offtake and Processing The Company is exploring commercial alternatives for concentrate offtake, including a potential smelter in Saudi Arabia - The company is pursuing three main options for concentrate processing: offtake agreements with existing South African smelters, building a new smelter in South Africa, or building a new smelter outside South Africa[43][44][45] - A Cooperation Agreement was signed with Ajlan & Bros Mining to study building a PGM smelter and BMR in Saudi Arabia, with a market study concluding its viability by combining Waterberg concentrate with recycled catalysts from the Gulf Region[46][48] - The next step is a potential $4.0 million Smelter DFS for the Saudi Arabian facility, to be split 50:50 with Ajlan, requiring long-term approval for unrefined concentrate export from South Africa[49][50] Waterberg DFS Update The September 2024 Waterberg DFS Update shows significant improvements, including increased reserves and an extended mine life Waterberg DFS Update Highlights (Sept 2024) | Metric | Value | | :--- | :--- | | Proven & Probable Reserves | 23.41 million 4E oz (20% increase) | | Measured & Indicated Resources | 33.76 million 4E oz (9.5% increase) | | Life of Mine (LOM) | 54 years | | Peak Annual Production | 432,950 4E oz | | After-Tax NPV (8%) | $569 million | | After-Tax IRR | 14.2% | | LOM Average Cash Cost | $658 per 4E oz | | All-in Sustaining Cost (AISC) | $761 per 4E oz | | Total Project Capital | $946 million | Waterberg Mineral Reserves (Proven & Probable, Aug 31, 2024) | Zone | Tonnes (M) | 4E Grade (g/t) | 4E Metal (Moz) | | :--- | :--- | :--- | :--- | | T-Zone | 19.23 | 3.84 | 2.371 | | F-Zone Total | 226.97 | 2.88 | 21.034 | | Waterberg Total | 246.20 | 2.96 | 23.406 | DFS Update Long-Term Real Price Deck Assumptions | Commodity | Unit | Price (USD) | | :--- | :--- | :--- | | Platinum (Pt) | oz | $1,605 | | Palladium (Pd) | oz | $1,062 | | Gold (Au) | oz | $1,812 | | Rhodium (Rh) | oz | $6,209 | | Copper (Cu) | lb | $4.53 | | Nickel (Ni) | lb | $9.73 | | Exchange Rate (Long Term) | USD/ZAR | 20.07 | Mining Right and Community Considerations The Waterberg Mining Right is active but faces a legal challenge, while community relations and infrastructure planning advance - The Waterberg Mining Right was granted on January 28, 2021, and remains active[70] - A legal application was filed in March 2024 to set aside the mining right grant; the company has filed a notice of opposition and believes the grant was correctly issued[71][72] - A final settlement agreement with the principal host community was executed in April 2024, and work on long-term surface lease agreements is underway[73] - Planning for water supply, power infrastructure (including a potential solar farm), and workforce training is advancing in collaboration with local communities and ESKOM[76][77][78] Social and Labour Plan (SLP) The Waterberg SLP outlines a R428.9 million (approx. $23.77 million) budget over five years for community development - The Waterberg SLP has a budgeted expenditure of R428.9 million (approx. $23.77 million) over a five-year period to support local communities[81] - The SLP includes R13.3 million for Human Resource Development, focusing on skills training, learnerships, and bursary programs[82] - A budget of R405.6 million is allocated for Local Economic Development projects, including infrastructure, school and clinic support, and water projects[83] Environmental, Social and Governance (ESG) The Company emphasizes its commitment to responsible and sustainable business practices, guided by core ESG values and independent assessment - The Company engaged Digbee Ltd. for an independent ESG assessment, achieving an overall score of BBB in September 2024[88][90] - Environmental initiatives in the Waterberg DFS Update include using dry stack tailings, which reduces steady-state water requirements by 36%[94] - Social initiatives include creating community trusts, providing legal representation for communities, granting bursaries, and implementing a formal grievance mechanism[97][98][99] - Governance is managed through several board committees, including the Environmental, Health, Safety and Technical Advisory Committee, and policies covering human rights, anti-bribery, and business conduct[101][102][103] Discussion of Operations and Financial Condition This section analyzes the company's financial performance, liquidity, capital resources, and going concern status Liquidity, Capital Resources and Going Concern The Company is managing liquidity through equity financing, but faces substantial doubt about its ability to continue as a going concern - The Company established a new At-The-Market (ATM) program in December 2024, allowing it to sell up to $50 million in common shares[108] Financial Position as of Nov 30, 2024 | Metric | Value (USD) | | :--- | :--- | | Working Capital | $1.6 million | | Cash Balance | $2.1 million | | Comprehensive Loss (Q1 2025) | $2.7 million | | Cash Outflows from Operations | $0.8 million | - Management has identified material uncertainties that raise substantial doubt about the Company's ability to continue as a going concern, as additional financing is required to fund operations for the next year[115][116] Contractual Obligations as of Nov 30, 2024 (in thousands) | Payments Due by Year | < 1 Year | 1 - 3 Years | 4 - 5 Years | > 5 Years | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Lease Obligations | $101 | $266 | $24 | $ - | $391 | | Environmental Bonds | $47 | $140 | $93 | $ - | $280 | | Totals | $148 | $406 | $117 | $ - | $671 | Results of Operations For Q1 2025, the Company reported an increased net loss of $1.8 million, primarily due to higher share-based compensation Q1 2025 vs Q1 2024 Results (in millions USD) | Metric | Q1 2025 (ended Nov 30, 2024) | Q1 2024 (ended Nov 30, 2023) | | :--- | :--- | :--- | | Net Loss | $1.8 | $1.6 | | General & Admin Expenses | $1.2 | $1.1 | | Share Based Compensation | $0.7 | $0.5 | | Waterberg Project Spend | $0.6 | $1.0 | Quarterly Financial Information (in thousands USD, except per share) | Quarter ended | Nov. 30, 2024 | Aug. 31, 2024 | May 31, 2024 | Feb. 29, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $1,835 | $590 | $1,646 | $813 | | Basic loss per share | $0.02 | $0.01 | $0.02 | $0.01 | | Total assets | $50,170 | $52,093 | $49,850 | $49,494 | Dividends This section outlines the company's dividend policy, indicating no current intention to pay dividends Dividend Policy The Company has never paid dividends and anticipates reinvesting all available funds to finance its business - The Company has never declared or paid a dividend and does not intend to in the foreseeable future[121] Related Party Transactions This section summarizes transactions with related parties, including director fees and a private placement with a major shareholder Summary of Transactions Related party transactions include director fees and a private placement with Deepkloof Limited, a subsidiary of HCI - During the period, $86,000 was paid or accrued to independent directors for fees and services[123] - Deepkloof Limited, a subsidiary of HCI, subscribed to a private placement of 2,118,645 common shares for gross proceeds of $2.5 million in September 2023, with HCI holding a 26.3% interest as of August 31, 2024[123] Off-Balance Sheet Arrangements This section confirms the absence of any special purpose entities or off-balance sheet arrangements Status of Arrangements The Company confirms that it does not have any special purpose entities and is not a party to any off-balance sheet arrangements - The Company has no off-balance sheet arrangements[124] Outstanding Share Data This section provides a snapshot of the Company's outstanding securities, including common shares and options Share Capital Summary This section provides a snapshot of the Company's outstanding securities, including common shares, incentive stock options, and restricted share units Outstanding Securities | Security Type | As of Nov 30, 2024 | As of MD&A Date (Jan 14, 2025) | | :--- | :--- | :--- | | Common Shares | 102,687,546 | 102,732,914 | | Incentive Stock Options | 3,656,520 | 3,644,520 | | Restricted Share Units | 790,927 | 726,998 | Risk Factors This section highlights key risks, including the impact of international conflicts on commodity prices and supply chains Key Risk Disclosures The Company is subject to numerous risks detailed in its 2024 AIF and 40-F filings, including international conflicts - The Company directs readers to its 2024 AIF and 2024 40-F for a comprehensive list of business risks[126] - International conflicts, like the Russian-Ukrainian war, are highlighted as a specific risk that can cause volatility in commodity prices and supply chains, potentially having an adverse effect on the Company[127][128] Outlook This section outlines the company's future objectives, focusing on the Waterberg Project and long-term market trends Company Outlook The Company's primary objective is to advance the Waterberg Project to a construction decision, contingent on financing and offtake - The key business objective is to advance the Waterberg Project to a construction decision, which requires securing project financing and concentrate offtake[129] - The company is evaluating the feasibility of establishing its own smelter and BMR as an alternative to traditional offtake agreements[130] - While PGM prices have been volatile and declining since 2021/22, the long-term demand for platinum, copper, and nickel is projected to be strong, partly due to their use in battery electric vehicles and the hydrogen economy[132][133] - The investment in Lion Battery Technologies represents a potential vertical integration opportunity in the high-profile battery research field[134] Significant Accounting Judgements and Estimates This section details key areas where management applies significant judgment and estimates in financial reporting Key Judgements and Estimates Management applies significant judgment in assessing impairment indicators for mineral properties and assuming control over Waterberg JV Co - Management applies significant judgment in assessing impairment indicators for its mineral properties, considering factors like metal prices and business climate[137] - The Company has judged that it controls Waterberg JV Co. based on its direct and indirect ownership interest (effective 63.19%) and its role as project manager[138] Disclosure Controls and Internal Control Over Financial Reporting This section confirms the Company's maintenance of disclosure controls and internal controls over financial reporting Controls and Procedures The Company maintains disclosure controls and procedures, with no material changes to internal control over financial reporting - The Company maintains disclosure controls and procedures to ensure compliance with SEC and Canadian Securities Administrators requirements[139] - There were no material changes to the Company's internal control over financial reporting during the period ending November 30, 2024[140] Other Information This section directs readers to other public filings for additional information about the Company Additional Information This section directs readers to other public filings for additional information about the Company on SEDAR+ and EDGAR - Additional information about the Company can be found on SEDAR+ (www.sedarplus.ca) and EDGAR (www.sec.gov)[141](index=141&type=chunk) List of Directors and Officers This section provides a list of the Company's directors and officers as of the reporting date Directors and Officers The report concludes with a list of the Company's directors and officers as of the reporting date Directors and Officers | Role | Name(s) | | :--- | :--- | | Directors | Diana Walters, Frank R. Hallam, Timothy Marlow, John Copelyn, Mpho Makwana | | Officers | Frank R. Hallam (President & CEO), Greg Blair (CFO), Kris Begic (VP, Corporate Development), Mimy Fernandez-Maldonado (Corporate Secretary), Stuart Harshaw |