Western Bushveld JV

The Western Bushveld Joint Venture ("WBJV") is Platinum Group Metals Ltd.’s (“PTM”) main asset. In October 2009, an Updated Feasibility Study (“UFS”) was completed covering Project 1 of the WBJV.  The adjoining Project 3 also hosts additional platinum resources for possible future development.

The WBJV is held within project holding company Maseve Investments 11 Pty Ltd, (“Maseve”), which is owned 74% by Platinum Group Metals RSA Pty Ltd and 26% by Black Economic Empowerment company, Africa Wide Mineral Prospecting and Exploration (Pty) Limited (“Africa Wide”), which in turn is a wholly owned subsidiary of JSE listed Wesizwe Platinum Limited (“Wesizwe”).

On April 22, 2010, the partners of the WBJV completed a restructuring transaction to dissolve the WBJV and reorganize its underlying assets.  Post transaction Wesizwe retained 100% of Project 2 and Maseve obtained 100% of Projects 1 and 3.  Anglo received an approximate 26% interest in the equity, at that time, of Wesizwe.

The WBJV Project 1

In October 2009 the Project 1 UFS was completed by independent engineers, Turnberry Projects of South Africa and Wardrop Engineering, PTM’s own engineering staff and a team of specialist firms. The UFS includes factors and design aspects gained through input from Anglo Platinum’s engineering department.  Anglo was investing in the project as a 37% participant at the time and as a result we believe the project has a solid and conservative design.  At full production the Project 1 Platinum mine is modelled to produce up to 275,000 4E (platinum, palladium, rhodium and gold) element ounces per year.  

The South African Rand exchange rate and the platinum price are two key economic variables we carefully monitor. The Rand is currently at approximately eight Rand to one US Dollar, which matches the rate estimated two years ago in the UFS. Platinum is currently priced at approximately USD$1525 per ounce which exceeds the long-term price assumption of USD$1,343 per ounce based on the three year trailing average used in the UFS.  In January 2012 the basket price of a 4E ounce is approximately 9% higher than the base case modelled in the UFS.

Phase 1

Based on the UFS, the Company is investing USD $100 million in Phase 1 development on the project.  The basics elements of the USD $100 million investment are the purchase of all surface rights in the area of the mine, including the Sundown Ranch and Hotel, site establishment, water and power connections, the box cut and twin underground tunnel development to access the Merensky and UG-2 reefs approximately 140 meters below the surface.  We are completing this work under a Bulk Sample Permit issued by the Department of Mineral Resources in April 2011. We expect to intersect the ore in the fourth calendar quarter of 2012.  The full peak funding for the Project 1 mine, including mill, concentrator and tailings facilities, was estimated at USD$443 million in the UFS.  Phase 1 costs are a reduction to that funding requirement.

WBJV Project 3

In late 2010, the 2.0 million ounces of resources 4E (platinum, palladium, rhodium and gold) at Project 3 were upgraded to the indicated category. Project 3 is also owned by Maseve and 74% of these resources are attributable to Platinum Group.  Project 3 is located along strike to the north of Project 1, some two or three kilometres away from the main Project 1 mining area.  The resources on Project 3 are geologically located within the same Merensky and UG2 reef layers as on Project 1.  On Project 3 the reefs are flat lying and are approximately 450 metres from surface. Internal scoping level engineering has indicated that the Project 3 resources could be reached for production from a surface ramp or from the Project 1 underground workings. Engineering is continuing on how this resource may be brought into production as an expansion to Project 1 in the years ahead, potentially adding to the Company's production profile.