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The Waterberg Project

Platinum Group Metals Ltd. and its joint venture partners made the initial discovery of a completely new section of the Bushveld Complex in November 2011. The initial exploration was funded by JOGMEC (Japan Oil, Gas and Metals National Corporation). The Waterberg Project was a blind discovery, under cover rocks off the end of the known Bushveld Complex. It was targeted by some of the top academic and industry geologists working with experts from Platinum Group Metals Ltd. in a group formed specifically to generate new exploration ideas. JOGMEC’s technical team from Japan also contributed to the initial targeting work.

The ownership structure consists of Platinum Group (45.65% directly), JOGMEC (28.35%), and BEE partner Mnombo Wethu Consultants (26%). As a result of Platinum Group’s 49.90% ownership in Mnombo the Company has a direct and indirect 58.62% overall interest in the project. Platinum Group is the operator.

The Waterberg Project represents a large system containing multiple, thick mineralized layers between 3 and 70 metres in thickness that will likely be amenable to low cost mechanized mining methods. A pre-feasibility study was published on October 19, 2016 including updated reserves and resources. Highlights of the PFS include:

  • Validation of the 2014 Waterberg Preliminary Economic Assessment ("PEA") results for a large scale, shallow, decline accessible, mechanized platinum, palladium, rhodium and gold ("4E") mine.
  • Annual steady state production rate of 744,000 4E ounces in concentrate.
  • A 3.5 year construction period.
  • On site life-of-mine average cash cost of US$248 per 4E ounce including by-product credits and exclusive of smelter discounts.
  • After-tax Net Present Value ("NPV") of US$320 million, at an 8% discount rate, using three-year trailing average metal prices.
  • After-tax NPV of US$507 million, at an 8% discount rate, using investment bank consensus average metal prices.
  • Estimated capital to full production of approximately US$1.06 billion including US$67 million in contingencies. Peak project funding estimated at US$914 million.
  • After-tax Internal Rate of Return ("IRR") of 13.5% using three-year trailing average price deck.
  • After-tax IRR of 16.3% at investment bank consensus average metal prices.
  • Probable reserves of 12.3 million 4E ounces.
  • Indicated resources updated to 24.9 million 4E ounces (2.5 g/t 4E cut-off) and deposit remains open on strike to the north and below a 1,250 meter arbitrary depth cut-off.

The size and scale of the Waterberg Project represents a significant alternative to narrow width, conventional, deep Meresnky and UG2 mining on the Western and Eastern Limbs of the Bushveld Complex. A Preliminary Economic Assessment (PEA) on the original Waterberg JV was completed and announced in February, 2014.  A Pre-Feasibility Study on the Waterberg Project was announced on October 19, 2016

October 19, 2016 Independent Technical Report on the Waterberg Project Including Mineral Resource Update and Pre-Feasibility Study



Mineral Resources were completed by Charles Muller of CJM Consulting – see Technical Report dated October 19, 2016. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, marketing or other relevant issues. The quantity and grade of reported inferred mineral resources in this estimate are conceptual in nature. There is no guarantee that all or any part of the mineral resource will be converted to a mineral reserve.

Mineral Resource Update – October 19, 2016:


Total Mineral Resource:


4E = Platinum Group Elements (Pt+Pd+Rh+Au). The cut-offs for mineral resources have been established by a qualified person after a review of potential operating costs and other factors. The mineral resources stated above are shown on a 100% basis, that is, for the Waterberg Project as a whole entity. Conversion Factor used – kg to oz = 32.15076. Numbers may not add due to rounding. Resources do not have demonstrated economic viability. A 5% and 7% geological loss has been applied to the Indicated and Inferred categories respectively. Effective Date Oct 17, 2016. Metal prices used in the reserve estimate are as follows based on a 3-year trailing average (as at July 31/2016) in accordance with U.S. Securities and Exchange Commission ("SEC") guidance for the assessment of resources; US$1,212/oz Pt, US$710/oz Pd, US$1229/oz Au, US$984/oz Rh, US$6.10/lb Ni, US$2.56/lb Cu, US$/ZAR15.

Total aggregate mineral resources at Waterberg on a 100% project basis have increased slightly since those reported in April 2016. Inferred category resources have decreased to an estimated 10.8 million 4E ounces from 11.71 million ounces 4E Inferred in April, 2016. Indicated category resources have increased to an estimated 24.9 million 4E ounces, from 23.9 million 4E ounces Indicated in April 2016:

  1. The mineral resources are classified in accordance with the SAMREC standards. There are certain differences with the "CIM Standards on Mineral Resources and Reserves"; however, in this case the QP believes the differences are not material and the standards may be considered the same. Mineral resources that are not mineral reserves do not have demonstrated economic viability and Inferred resources have a high degree of uncertainty.
  2. The mineral resources are provided on a 100% project basis and Inferred and Indicated categories are separate and the estimates have an effective date of 17 October 2016.
  3. A cut-off grade of 2.5 g/t 4E for both the T and the F-Zones is applied to the selected base case mineral resources.
  4. Cut off for the T and the F-Zones considered costs, smelter discounts, concentrator recoveries from previous engineering work completed on the property by the Company. The resource model was cut-off at an arbitrary depth of 1,250 meters, although intercepts of the deposit do occur below this depth.
  5. Mineral resources were completed by Mr. CJ Muller of CJM Consulting.
  6. Mineral resources were estimated using kriging methods for geological domains created in Datamine from 303 original holes and 483 deflections. A process of geological modelling and creation of grade shells using indicating kriging was completed in the estimation process.
  7. The estimation of mineral resources has taken into account environmental, permitting and legal, title, and taxation, socio-economic, marketing and political factors.
  8. The mineral resources may be materially affected by metals prices, exchange rates, labor costs, electricity supply issues or many other factors detailed in the Company's Annual Information Form.
  9. The data that formed the basis of the estimate are the drill holes drilled by Platinum Group, which consist of geological logs, the drill hole collars surveys, the downhole surveys and the assay data. The area where each layer was present was delineated after examination of the intersections in the various drill holes.
  10. There is no guarantee that all or any part of the mineral resource not included in the current reserves will be upgraded and converted to a mineral reserve.

Reserves

Reserves are stated on a 100% Project Basis. Reserves are a subset of the Indicated resources and the mine plan was developed from the October 2016 resource model above and includes mine modifying factors such as geological losses, dilution, development overbreak, mine design factors, in stope losses and the extraction ratio from the mining methods applied to the T and F-Zones.

The independent Qualified Person for the Statement of Reserves is Mr. RL Goosen (WorleyParsons RSA (Pty) Ltd Trading as Advisian). The table below shows the prill splits, which are calculated using the individual metal grades reported as a percentage of the total 4E grade. There are no Inferred mineral resources included in the reserves.

Prill Splits


Probable Mineral Reserve at 2.5 g/t 4E Cut-off– Tonnage and Grades


Probable Mineral Reserve at 2.5 g/t 4E Cut-off– Contained Metal


Reasonable prospects of economic extraction were determined with the following assumptions: Metal prices used in the reserve estimate are as follows based on a 3-year trailing average (as at July 31/2016) in accordance with U.S. Securities and Exchange Commission ("SEC") guidance for the assessment of resources and reserves; US$1,212/oz Pt, US$710/oz Pd, US$1229/oz Au, US$984/oz Rh, US$6.10/lb Ni, US$2.56/lb Cu, US$/ZAR15. Smelter payability of 85% was estimated for 4E and 73% for Cu and 68% for Ni. The effective date is October 17, 2016. A 2.5 g/t Cut-off was used and checked against a pay-limit calculation. Independent Qualified Person for the Statement of Reserves is Mr. RL Goosen (WorleyParsons RSA (Pty) Ltd Trading as Advisian). The mineral reserves may be materially affected by changes in metals prices, exchange rates, labor costs, electricity supply issues or many other factors. See Risk Factors in 43-101 report on www.sedar.com and the Company’s Annual Information Form. The reserves are estimated under SAMREC with no material difference to the CIM 2014 definitions in this case.

The estimation of mineral reserves has taken into account environmental, permitting and legal, title, taxation, socio-economic, marketing and political factors. Based on the cut-off grade and a maximum depth cut-off of 1,250 meters the Probable reserve will support an 18 year mine life.