Platinum Metals .(PLG) - 2023 Q1 - Quarterly Report

Interim Condensed Consolidated Financial Statements Consolidated Statements of Financial Position As of November 30, 2022, the company's total assets increased slightly to $54.5 million from $53.7 million at August 31, 2022, primarily driven by additions to mineral properties, while total liabilities rose to $2.4 million and total shareholders' equity increased to $52.1 million Consolidated Statements of Financial Position (in thousands USD) | | November 30, 2022 | August 31, 2022 | | :--- | :--- | :--- | | Total current assets | $12,496 | $12,764 | | Mineral properties and exploration and evaluation assets | $41,507 | $40,373 | | Total assets | $54,545 | $53,679 | | Total current liabilities | $1,193 | $1,121 | | Total liabilities | $2,413 | $2,124 | | Total shareholders' equity | $52,132 | $51,555 | | Total liabilities and shareholders' equity | $54,545 | $53,679 | Interim Condensed Consolidated Statements of Loss and Comprehensive Loss For the three-month period ended November 30, 2022, the company reported a net loss of $1.61 million, a significant improvement from the $3.32 million loss in the same period of 2021, mainly due to the absence of interest expense and a foreign exchange gain, resulting in a basic and diluted loss per share of $0.02, down from $0.04 in the prior-year period Statement of Loss Highlights (in thousands USD, except per share data) | | Period Ended Nov 30, 2022 | Period Ended Nov 30, 2021 | | :--- | :--- | :--- | | General and administrative | $1,173 | $1,301 | | Interest | $0 | $1,066 | | Foreign exchange (gain) loss | ($251) | $144 | | Stock based compensation expense | $830 | $683 | | Loss for the period | $1,614 | $3,316 | | Comprehensive loss for the period | $1,706 | $7,039 | | Basic and diluted loss per common share | $0.02 | $0.04 | Consolidated Statements of Changes in Equity Total shareholders' equity increased from $51.56 million at August 31, 2022, to $52.13 million at November 30, 2022, primarily driven by proceeds from share issuance under financing activities, partially offset by the net loss for the period and a minor currency translation adjustment Changes in Equity for the period ended Nov 30, 2022 (in thousands USD) | Description | Amount | | :--- | :--- | | Balance August 31, 2022 | $51,555 | | Stock based compensation | $667 | | Share issuance - financing (net of costs) | $1,225 | | Contributions of Waterberg JV Co | $391 | | Currency translation adjustment | ($92) | | Net loss for the period | ($1,614) | | Balance November 30, 2022 | $52,132 | Consolidated Statements of Cash Flows For the period ended November 30, 2022, the company experienced a net decrease in cash of $0.91 million, compared to a $2.17 million increase in the prior-year period, with cash used in operating activities ($1.91 million) and investing activities ($0.57 million) primarily for the Waterberg Project, partially offset by cash generated from financing activities ($1.56 million) mainly from equity issuance, resulting in a cash balance of $11.57 million at period end Cash Flow Summary (in thousands USD) | | For the period ended Nov 30, 2022 | For the period ended Nov 30, 2021 | | :--- | :--- | :--- | | Net cash used in Operating Activities | ($1,906) | ($1,842) | | Net cash from Financing Activities | $1,561 | $5,892 | | Net cash used in Investing Activities | ($567) | ($1,881) | | Net (decrease) increase in cash | ($912) | $2,169 | | Cash, beginning of period | $12,330 | $6,059 | | Cash, end of period | $11,566 | $8,072 | Notes to the Condensed Consolidated Interim Financial Statements The notes provide detailed information supporting the financial statements, covering the company's nature as a development-stage entity focused on the Waterberg Project, basis of accounting (IFRS), specifics on mineral properties, joint ventures, share capital, financing activities, related party transactions, commitments, and segmented reporting Note 1. Nature of Operations The company is a development-stage entity based in British Columbia, Canada, with shares listed on the TSX and NYSE American, primarily focused on the exploration and development of mineral properties in South Africa, with key interests in platinum, palladium, rhodium, gold, copper, and nickel, consolidating its subsidiaries and using the equity method for its joint control of Lion Battery Technologies Inc - The Company is a development stage entity focused on mineral properties in South Africa, with key metals of interest being platinum, palladium, rhodium, gold, copper, and nickel[9] - The company holds a 37.05% direct interest in Waterberg JV Resources (Pty) Ltd and a 53.70% interest in Lion Battery Technologies Inc, the latter of which is accounted for using the equity method due to joint control[11] - COVID-19 related travel and work restrictions in South Africa and Canada were lifted in June and September 2022, respectively, though the company notes the potential for future pandemic-related impacts remains[13] Note 3. Mineral Properties and Exploration and Evaluation Assets The company's sole active mineral property is the Waterberg Project, with capitalized costs increasing to $41.5 million as of November 30, 2022, and the company holding a controlling 50.02% interest, a significant milestone being the dismissal of several appeals against the granted Waterberg Mining Right by the South African government in October 2022 - The Waterberg Project is the company's only active mineral property, with capitalized costs increasing from $40.4 million at Aug 31, 2022 to $41.5 million at Nov 30, 2022[17][18] - The company holds a controlling 50.02% interest in Waterberg JV Co, with other partners including Mnombo (26.0%), Implats (15.0%), JOGMEC (12.195%), and Hanwa (9.755%)[20] - The Waterberg Mining Right was granted and remains active, with the Minister of the DMRE dismissing several appeals filed against the grant in October 2022, confirming the company's compliance with BEE and community consultation requirements[21][23] - Implats elected not to exercise its option to increase its stake to 50.01% in June 2020, but retains its 15% interest and a right of first refusal for offtake[27] Note 4. Lion Battery Technologies Inc. Lion Battery Technologies Inc is a joint venture with Anglo American Platinum (Amplats) to research and develop lithium battery technology using platinum and palladium, with both partners having funded an aggregate of $3.0 million to date, and Lion holding exclusive rights to intellectual property developed under a research agreement with Florida International University (FIU), which has resulted in four U.S patents being issued for battery technology innovations - Lion Battery is a joint venture with Amplats to research battery technology using platinum and palladium, with the Company and Amplats having funded Lion with an aggregate of $3.0 million to date[31][32] - Lion has a Sponsored Research Agreement with Florida International University (FIU) and has provided $2.9 million in research funding as of November 30, 2022[33] - Four U.S patents have been issued to FIU related to battery cathodes and the use of palladium as an interlayer, with Lion having exclusive rights to this intellectual property[34] Note 5 & 6. Debt Repayment The company fully extinguished its major debt obligations in early 2022, with the $20 million Sprott Facility fully repaid in February 2022, releasing the pledge of its South African assets, and concurrently, the $20 million in Convertible Notes also settled in February 2022 through the issuance of 11.8 million common shares - The $20 million senior secured Sprott Facility was fully repaid in February 2022[35] - The $20 million aggregate principal of Convertible Notes were purchased and cancelled in February 2022, settled by issuing 11,793,509 common shares[36][37] Note 7. Share Capital As of November 30, 2022, the company had 99.7 million common shares outstanding, raising $1.3 million through its at-the-market (ATM) equity program during the quarter, and managing several equity-based compensation plans, including incentive stock options, Deferred Share Units (DSUs) for directors, and Restricted Share Units (RSUs) for employees, with new grants and expenses recorded during the period - In the three months ending Nov 30, 2022, the company sold 717,138 shares under its 2022 ATM program for net proceeds of $1.225 million[40] - As of Nov 30, 2022, there were 4,824,671 incentive stock options outstanding with a weighted average exercise price of C$3.19[45] - The company recorded expenses of $66k for DSUs and $155k for RSUs during the period ended Nov 30, 2022[50][52] Note 8. Related Party Transactions The company's primary related party transactions involve its major shareholder, Hosken Consolidated Investments Limited (HCI), through its subsidiary Deepkloof Limited, with HCI holding a 24.9% interest in the company as of November 30, 2022, and retaining the right to nominate a director and participate in future equity financings to maintain its pro-rata interest - Major shareholder Hosken Consolidated Investments Limited (HCI), via its subsidiary Deepkloof, held a 24.9% interest (24,837,349 common shares) in the Company as of November 30, 2022[55] - HCI has the right to nominate one person to the board of directors and to participate in future equity financings to maintain its pro-rata interest[54] Note 9. Contingencies and Commitments The company has total commitments of approximately $0.81 million, primarily for office leases, drilling, and environmental bonds, while a significant legal matter involving Africa Wide's challenge to the 2018 Maseve Mine sale has been fully resolved in the company's favor, with the South African Supreme Court of Appeal dismissing Africa Wide's final appeal in November 2022 Commitments Summary (in thousands USD) | | < 1 Year | 1 - 3 Years | 4 - 5 Years | Total | | :--- | :--- | :--- | :--- | :--- | | Lease Obligations | $101 | $22 | $ - | $123 | | Discovery Drilling | $399 | $ - | $ - | $399 | | Environmental Bonds | $48 | $143 | $95 | $286 | | Totals | $548 | $165 | $95 | $808 | - The legal challenge by Africa Wide regarding the Maseve Sale Transaction was dismissed by the High Court in June 2022, with Africa Wide's subsequent application for leave to appeal denied by the High Court in August 2022 and finally dismissed by the Supreme Court of Appeal in November 2022[61][62][63] - Costs were awarded to the defendants (including the Company) three times, but no accrual has been recorded due to uncertainty of recovery, and Africa Wide has no further avenue of appeal[63][64] Note 11. Segmented Reporting The company manages its business across two geographical segments: Canada and South Africa, with the majority of assets ($44.4 million) located in South Africa as of November 30, 2022, reflecting the Waterberg Project's location, while the majority of liabilities ($1.5 million) are held in Canada, and comprehensive loss for the period was primarily attributed to the Canadian segment Assets and Liabilities by Segment (in thousands USD) | At Nov 30, 2022 | Assets | Liabilities | | :--- | :--- | :--- | | Canada | $10,190 | $1,517 | | South Africa | $44,355 | $896 | | Total | $54,545 | $2,413 | Comprehensive Loss by Segment (in thousands USD) | For the period ended | Nov 30, 2022 | Nov 30, 2021 | | :--- | :--- | :--- | | Canada | $1,446 | $3,682 | | South Africa | $260 | $3,357 | | Total | $1,706 | $7,039 |