VANCOUVER, BRITISH COLUMBIA and JOHANNESBURG, SOUTH AFRICA--(Marketwired - Sept. 6, 2017) - Platinum Group Metals Ltd. (TSX:PTM) (NYSE American:PLG) (NYSE MKT:PLG) ("Platinum Group" "PTM" or the "Company") announces that it has entered into a term sheet (the "Term Sheet") to sell Maseve Investments 11 Proprietary Limited ("Maseve") to Royal Bafokeng Platinum Limited ("RBPlat") in a transaction valued at approximately US$74.0 million, payable as to US$62.0 million in cash and US$12.0 million in RBPlat common shares.
RBPlat has today published its own news release regarding this transaction. Maseve is the operating and holding company for the Maseve Mine, located on the Western Limb of the Bushveld Complex near Rustenburg, South Africa. The Company owns an indirect 82.9% equity interest in Maseve. The cash proceeds of the sale will be used to repay debt. Looking forward the Company plans to focus on its large-scale Waterberg project, a palladium dominant development asset where the majority of the Company's mineral reserves and resources are located.
The Maseve sale transaction is to occur in two stages:
- RBPlat is to pay Maseve US$58.0 million in cash to acquire the concentrator plant and certain surface assets of the Maseve Mine, including an appropriate allocation for power and water (the "Plant Sale Transaction"). Maseve will retain ownership of the mining rights, power and water rights as well as certain surface rights and improvements. The payment to be received by Maseve will be remitted to the Company's South African subsidiary, Platinum Group Metals (RSA) (Pty) Ltd. ("PTM RSA"), in partial settlement of loans due to PTM RSA. This first payment due from RBPlat is conditional upon the satisfaction or waiver of certain conditions precedent, including but not limited to the negotiation and execution of definitive agreements, the approval, or confirmed obligation, of the holder of the remaining 17.1% equity interest in Maseve, Africa Wide Mineral Prospecting and Exploration Proprietary Limited, the approval of PTM's secured lenders, the approval of the South African Competition Commission ("Competition Approval") and completion of due diligence which may result in additional conditions. Closing of the Plant Sale Transaction is anticipated in two to three months.
- RBPlat is to pay PTM RSA US$7.0 million in common shares of RBPlat plus approximately US$4.0 million in cash to acquire PTM RSA's remaining loans due from Maseve, and is to pay PTM RSA and Africa Wide, in proportion to their respective equity interests in Maseve, a further US$5.0 million by way of issuance of common shares of RBPlat to acquire 100% of the equity in Maseve (the "Share Transaction" and collectively with the Plant Sale Transaction, the "Maseve Sale Transaction"). The second stage of the transaction is conditional upon implementation of the Plant Sale Transaction and, among other conditions, obtaining all requisite regulatory approvals including but not limited to the Minister of Mineral Resources granting consent to the transfer of the Maseve mining right to RBPlat in terms of section 11 of the Mineral and Petroleum Resources Development Act ("Ministerial Consent"). The Company estimates Ministerial Consent may be obtained during calendar 2018.
The RBPlat common shares to be issued pursuant to the Share Transaction will be priced at their 30-day volume weighted average price of the RBPlat common shares on the Johannesburg Stock Exchange calculated on market close on the day preceding this announcement.
RBPlat will be granted a management contract for the Maseve Mine and for carrying out care and maintenance services during the period between the date of grant of the Competition Approval and the date of Ministerial Consent. The Company will be responsible for 50% of care and maintenance costs after Competition Approval until the earlier of the date of Ministerial Consent and the date upon which RBPlat utilizes the surface infrastructure of the Maseve Mine for its own purposes. It is estimated that the Company will require approximately US$10.0 million in additional working capital to provide for its share of Maseve Mine costs until the Plant Sale Transaction is closed. The Company is working with its strategic advisors and current secured lenders on debt, equity and other strategic transactions for this financing.
R. Michael Jones, President and Chief Executive Officer of Platinum Group, stated, "The sale of Maseve will allow Platinum Group to settle a substantial portion of its outstanding debt and focus on the advancement of its large-scale Waterberg Project. We do believe we have settled upon terms which will benefit both companies and all stakeholders. RBPlat owns and operates the adjoining Bafokeng Rasimone Platinum Mine and is the logical buyer for the Maseve Mine. The future integration of the Maseve Mine into RBPlat's operations is expected to bring benefits to local communities, both directly in terms of job creation and corporate social investment, and indirectly through the associated benefits of economic activity in the region."
PTM's proceeds from the sale of Maseve and the Maseve Mine are to be repaid to secured lenders who are collectively owed approximately US$89.0 million in principal and accrued interest. Negotiations to settle or restructure the balance of amounts due and a termination fee are ongoing. The Company's secured lenders are working closely with the Company.
In reaching its decision to sell the Maseve Mine, the Company considered the capital required to implement a revised Maseve Mine plan, the metal prices required to deliver an appropriate risk-adjusted return to investment of further capital and the alternative investment or use of capital propositions available to the Company. Management's view is that the sale of the Maseve Mine delivers the most attractive realization of value from the Maseve Mine assets at this time. As reported in a news release dated July 17, 2017, active mining had been suspended at Maseve. Lender and investor support for further investment at Maseve in restructuring a more conventional mining format was subsequently not available. The Company believes that its resources are better utilized advancing the bulk mineable, large-scale project at Waterberg, a project that represents a significant shift in South African platinum mining away from narrow reef underground mining. The recent rising palladium price is also a significant factor as it is the dominant metal at Waterberg.
BMO Capital Markets and Macquarie Capital are acting as the Company's financial advisors with regard to the Maseve Sale Transaction. As previously disclosed, Platinum Group and its advisors have been evaluating various strategic alternatives and the Company continues in active discussions with various parties with regard to assets other than the Maseve Mine. Further updates will be provided to shareholders as appropriate.
About Platinum Group Metals Ltd.
Platinum Group, based in Johannesburg, South Africa and Vancouver, Canada, has a successful track record with more than 20 years of experience in exploration, mine discovery, mine construction and mining operations.
Formed in 2002, Platinum Group holds significant mineral rights and large-scale reserves of platinum and palladium in the Bushveld Igneous Complex of South Africa, which is host to over 70% of the world's primary platinum production.
Qualified Person
R. Michael Jones, P.Eng., the Company's President, Chief Executive Officer and a shareholder of the Company, is a non-independent qualified person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") and is responsible for preparing technical information contained in this news release. He has verified the data by reviewing the detailed information of the geological and engineering staff and the Independent Qualified Person reports as well as visiting the site regularly.
