Western Bushveld JV - Agreements & Funding

In addition to its mineral rights contribution to the joint venture, Platinum Group operated the WBJV and funded a R35 million (approximately US$5.7 million) exploration and development program over 5 years to earn its original 37% interest. Subsequently, until the April 22, 2010 reorganization, all joint venture members funded their own working interests on a pro-rata basis.

The original joint venture agreement provided for an equalization adjustment to the required capital contribution of each joint venture member based on the ounces contributed to the joint venture from their original land positions.  On April 22, 2010, just as the WBJV was dissolved and then reorganized, Platinum Group paid an equalization amount to Anglo platinum of approximately $25.5 million.  See news release dated April 22, 2010 for details.

Through the April 22, 2010 reorganization with former joint venture partner Anglo Platinum Limited, and past and present joint venture partner Wesizwe Platinum Limited, project holding company Maseve Investments was created to hold 100% of the mineral rights to former Projects 1 and 3 of the original WBJV.  Through the reorganization Platinum Group retained its original 37% interest in Projects 1 and 3 through a 37% interest in Maseve.  Platinum Group also acquired a further 17.75% in Maseve in exchange for its 18.5% interest in Project 2 sold to Wesizwe Platinum.  Platinum group then gained a right to take a further 19.25% interest in Maseve, to go to a 74% interest, by making a subscription into Maseve of R 408.6 million (approximately $60.1 million on October 5, 2010) by January 17, 2011.  Wesizwe Platinum will then hold the remaining 26% interest in Maseve.  Proceeds of this subscription are to be held in escrow by Maseve against Wesizwe’s 26% of ongoing Project 1 and 3 costs.

Project 1 total capital cost are estimated at approximately US $443 million at an exchange rate of 8 Rand to the U.S. dollar in the October 2009 Updated Feasibility Study.  It is envisaged that mine construction and funding would involve both equity and debt.  The partners are permitted to use their share of the Joint Venture as security for potential lending arrangements.  In a news release dated October 1, 2010 Platinum Group announced a bought deal financing for $125 million as a first tranche towards project development.  See the Company’s preliminary Short Form Prospectus filed on SEDAR October 7, 2010.

Anglo Platinum retains a 60 day right of first refusal to match smelter off take terms for Projects 1 and 3 of the WBJV.