Platinum Group Metals Ltd.
Interim Condensed Consolidated Financial Statements
(Expressed in thousands of United States Dollars unless otherwise noted)
For the six-month period ended February 29, 2024
Filed: April 15, 2024
PLATINUM GROUP METALS LTD.
Interim Consolidated Statements of Financial Position
(in thousands of United States Dollars)
| February 29, 2024 | August 31, 2023 | ||||
ASSETS | ||||||
Current | ||||||
Cash and cash equivalents | $ | 5,811 | $ | 6,989 | ||
Amounts receivable | 105 | 215 | ||||
Prepaid expenses | 228 | 348 | ||||
Total current assets | 6,144 | 7,552 | ||||
Performance bonds and other assets | 258 | 235 | ||||
Mineral properties (Note 3) | 42,529 | 41,614 | ||||
Property, equipment and other | 563 | 620 | ||||
Total assets | $ | 49,494 | $ | 50,021 | ||
LIABILITIES | ||||||
Current | ||||||
Accounts payable and accrued liabilities | $ | 398 | $ | 1,367 | ||
Total current liabilities | 398 | 1,367 | ||||
Asset retirement obligation | 90 | 91 | ||||
Share based liabilities (Note 5) | 773 | 872 | ||||
Lease liability | 292 | 317 | ||||
Total liabilities | $ | 1,553 | $ | 2,647 | ||
SHAREHOLDERS' EQUITY | ||||||
Share capital (Note 5) | $ | 939,837 | $ | 937,040 | ||
Contributed surplus | 34,079 | 33,761 | ||||
Accumulated other comprehensive loss | (171,121 | ) | (170,337 | ) | ||
Deficit | (777,320 | ) | (774,735 | ) | ||
Total shareholders' equity attributable to shareholders of Platinum Group Metals Ltd. | $ | 25,475 | $ | 25,729 | ||
Non-controlling interest | 22,466 | 21,645 | ||||
Total shareholders' equity | $ | 47,941 | $ | 47,374 | ||
Total liabilities and shareholders' equity | $ | 49,494 | $ | 50,021 | ||
Contingencies and Commitments (Note 7)
Approved by the Board of Directors and authorized for issue on April 15, 2024
/s/ Stuart Harshaw |
| /s/ Diana Walters |
Stuart Harshaw, Director |
| Diana Walters, Director |
PLATINUM GROUP METALS LTD.
Interim Consolidated Statements of Loss and Comprehensive Loss
(in thousands of United States Dollars except share and per share data))
Three months ended | Six months ended | ||||||||||||
February 29, 2024 | February 28, 2023 | February 29, 2024 | February 28, 2023 | ||||||||||
Expenses | |||||||||||||
General and administrative | $ | 726 | $ | 853 | $ | 1,816 | $ | 2,026 | |||||
Foreign exchange loss (gain) | 11 | (50 | ) | (26 | ) | (301 | ) | ||||||
Share of joint venture expenditures - Lion Battery (Note 4) | 52 | 295 | 233 | 295 | |||||||||
Stock based compensation expense | 135 | 284 | 594 | 1,114 | |||||||||
$ | 924 | $ | 1,382 | $ | 2,617 | $ | 3,134 | ||||||
Other Income | |||||||||||||
Interest income | $ | (111 | ) | $ | (183 | ) | $ | (246 | ) | $ | (321 | ) | |
Loss for the period | $ | 813 | $ | 1,199 | $ | 2,371 | $ | 2,813 | |||||
Items that may be subsequently reclassified to net loss: | |||||||||||||
Currency translation adjustment | $ | 692 | $ | 3,162 | $ | 784 | $ | 3,254 | |||||
Comprehensive loss for the period | $ | 1,505 | $ | 4,361 | $ | 3,155 | $ | 6,067 | |||||
Net loss attributable to: | |||||||||||||
Shareholders of Platinum Group Metals Ltd. | $ | 813 | $ | 1,199 | $ | 2,371 | $ | 2,813 | |||||
$ | 813 | $ | 1,199 | $ | 2,371 | $ | 2,813 | ||||||
Comprehensive loss attributable to: | |||||||||||||
Shareholders of Platinum Group Metals Ltd. | $ | 1,505 | $ | 4,361 | $ | 3,155 | $ | 6,067 | |||||
$ | 1,505 | $ | 4,361 | $ | 3,155 | $ | 6,067 | ||||||
Basic and diluted loss per common share | $ | 0.01 | $ | 0.01 | $ | 0.02 | $ | 0.03 | |||||
Weighted average number of common shares outstanding: | |||||||||||||
Basic and diluted | 102,459,681 | 100,149,428 | 102,208,642 | 99,634,171 |
PLATINUM GROUP METALS LTD.
Interim Consolidated Statements of Changes in Equity
(in thousands of United States Dollars, except # of Common Shares)
| # of Common Shares | Share Capital | Contributed Surplus | Accumulated Other Comprehensive Income (loss) | Deficit | Attributable to Shareholders of the Parent Company | Non- Controlling Interest | Total | ||||||||||||||||
Balance August 31, 2022 | 98,952,372 | $ | 934,976 | $ | 32,077 | $ | (166,155 | ) | $ | (768,397 | ) | $ | 32,501 | $ | 19,054 | $ | 51,555 | |||||||
Stock based compensation | - | - | 1,217 | - | - | 1,217 | - | 1,217 | ||||||||||||||||
Restricted share units redeemed | 149,438 | 377 | (417 | ) | - | - | (40 | ) | - | (40 | ) | |||||||||||||
Share options exercised | 60,667 | 128 | (46 | ) | - | - | 82 | - | 82 | |||||||||||||||
Share issuance - financing | 1,043,569 | 1,895 | - | - | - | 1,895 | - | 1,895 | ||||||||||||||||
Share issuance costs | - | (256 | ) | - | - | - | (256 | ) | - | (256 | ) | |||||||||||||
Contributions of Waterberg JV Co. | - | - | - | - | (306 | ) | (306 | ) | 1,162 | 856 | ||||||||||||||
Currency translation adjustment | - | - | - | (3,254 | ) | - | (3,254 | ) | - | (3,254 | ) | |||||||||||||
Net loss for the period | - | - | - | - | (2,813 | ) | (2,813 | ) | - | (2,813 | ) | |||||||||||||
Balance February 28, 2023 | 100,206,046 | $ | 937,120 | $ | 32,831 | $ | (169,409 | ) | $ | (771,516 | ) | $ | 29,026 | $ | 20,216 | $ | 49,242 | |||||||
Stock based compensation | - | - | 962 | - | - | 962 | - | 962 | ||||||||||||||||
Restricted share units redeemed | 6,050 | 32 | (32 | ) | - | - | - | - | - | |||||||||||||||
Share issuance - financing | 45,934 | 80 | - | - | - | 80 | - | 80 | ||||||||||||||||
Share issuance costs | - | (192 | ) | - | - | - | (192 | ) | - | (192 | ) | |||||||||||||
Contributions of Waterberg JV Co. | - | - | - | - | (369 | ) | (369 | ) | 1,429 | 1,060 | ||||||||||||||
Currency translation adjustment | - | - | - | (928 | ) | - | (928 | ) | - | (928 | ) | |||||||||||||
Net loss for the period | - | - | - | - | (2,850 | ) | (2,850 | ) | - | (2,850 | ) | |||||||||||||
Balance August 31, 2023 | 100,258,030 | $ | 937,040 | $ | 33,761 | $ | (170,337 | ) | $ | (774,735 | ) | $ | 25,729 | $ | 21,645 | $ | 47,374 | |||||||
Stock based compensation | - | - | 811 | - | - | 811 | - | 811 | ||||||||||||||||
Restricted share units redeemed | 103,473 | 386 | (493 | ) | - | - | (107 | ) | - | (107 | ) | |||||||||||||
Share issuance - financing | 2,118,645 | 2,500 | - | - | - | 2,500 | - | 2,500 | ||||||||||||||||
Share issuance costs | (89 | ) | - | - | - | (89 | ) | - | (89 | ) | ||||||||||||||
Contributions of Waterberg JV Co. | - | - | - | - | (214 | ) | (214 | ) | 821 | 607 | ||||||||||||||
Currency translation adjustment | - | - | - | (784 | ) | - | (784 | ) | - | (784 | ) | |||||||||||||
Net loss for the period | - | - | - | - | (2,371 | ) | (2,371 | ) | - | (2,371 | ) | |||||||||||||
Balance February 29, 2024 | 102,480,148 | $ | 939,837 | $ | 34,079 | $ | (171,121 | ) | $ | (777,320 | ) | $ | $25,475 | $ | 22,466 | $ | 47,941 |
PLATINUM GROUP METALS LTD.
Interim Consolidated Statements of Cash Flows
(in thousands of United States Dollars)
For the six-month period ended | ||||||
February 29, 2024 | February 28, 2023 | |||||
OPERATING ACTIVITIES | ||||||
Loss for the period | $ | (2,371 | ) | $ | (2,813 | ) |
Add items not affecting cash / adjustments: | ||||||
Depreciation | 36 | 43 | ||||
Unrealized foreign exchange gain | (42 | ) | (423 | ) | ||
Stock compensation expense | 594 | 1,114 | ||||
Share of joint venture expenditures | 233 | 295 | ||||
Directors' fees paid in deferred share units | 90 | 88 | ||||
Net change in non-cash working capital (Note 8) | 98 | (805 | ) | |||
$ | (1,362 | ) | $ | (2,501 | ) | |
FINANCING ACTIVITIES | ||||||
Proceeds from issuance of equity | $ | 2,500 | $ | 1,895 | ||
Equity issuance costs | (89 | ) | (255 | ) | ||
Share unit cash settlement | (107 | ) | (40 | ) | ||
Cash received from option exercises | - | 81 | ||||
Lease payments made | (46 | ) | (42 | ) | ||
Costs related to RSU redemption | (107 | ) | - | |||
Cash received from Waterberg partners | 162 | 923 | ||||
$ | 2,420 | $ | 2,562 | |||
INVESTING ACTIVITIES | ||||||
Performance bonds | $ | (27 | ) | $ | (27 | ) |
Investment in Lion | (233 | ) | (295 | ) | ||
Expenditures incurred on Waterberg Project | (1,907 | ) | (1,983 | ) | ||
$ | (2,167 | ) | $ | (2,305 | ) | |
Net decrease in cash | (1,109 | ) | (2,242 | ) | ||
Effect of foreign exchange on cash | (69 | ) | (64 | ) | ||
Cash, beginning of period | 6,989 | 12,330 | ||||
Cash, end of period | $ | 5,811 | $ | 10,022 | ||
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
1. NATURE OF OPERATIONS
Platinum Group Metals Ltd. (the "Company") is a British Columbia, Canada company formed by amalgamation on February 18, 2002. The Company's shares are publicly listed on the Toronto Stock Exchange in Canada and the NYSE American, LLC ("NYSE American") in the United States of America. The Company is a development stage company conducting work on mineral properties it has staked or acquired by way of option agreements in the Republic of South Africa. Key metals of economic interest on the Company's mineral properties include platinum, palladium, rhodium, gold, copper, and nickel.
The Company's head office and principal place of business is located at Suite 838-1100 Melville Street, Vancouver, British Columbia, Canada, V6E 4A6. The Company's registered and records office is located at Suite 2300, 550 Burrard Street, Vancouver, British Columbia, Canada V6C 2B5.
These financial statements consolidate the accounts of the Company and its subsidiaries. Lion Battery Technologies Inc. ("Lion") is accounted for using the equity method as the Company jointly controls Lion despite owning a majority of Lion's shares. The Company's subsidiaries, associates and joint ventures as at February 29, 2024 are as follows:
|
| Place of | Proportion of ownership | |
Name of subsidiary | Principal activity | February 29, | August 31, | |
|
|
|
|
|
Platinum Group Metals (RSA) (Pty) Ltd. | Development | South Africa | 100.00% | 100.00% |
Mnombo Wethu Consultants (Pty) Limited(1) | Development | South Africa | 49.95% | 49.95% |
Waterberg JV Resources (Pty) Ltd.(1),(2) | Development | South Africa | 37.05% | 37.05% |
Lion Battery Technologies Inc. | Research | Canada | 52.08% | 52.30% |
| ||||
Notes: (1) The Company controls and consolidates Mnombo Wethu Consultants (Pty) Limited ("Mnombo") and Waterberg JV Resources (Pty) Ltd. ("Waterberg JV Co.") for accounting purposes. (2) Effective ownership of Waterberg JV Co is 63.05% when Mnombo's ownership portion is combined with Platinum Group Metals (RSA) (Pty) Ltd. ("PTM RSA") ownership portion. |
2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES
These interim condensed consolidated financial statements have been prepared in accordance with IFRS Accounting Standards (as issued by the International Accounting Standards Board) applicable to preparation of interim financial statements under IAS 34 Interim Financial Reporting. The Company's material accounting policies and critical accounting estimates applied in these interim financial statements are the same as those applied in Note 2 of the Company's annual consolidated financial statements as at and for the year ended August 31, 2023.
Presentation Currency
The Company's presentation currency is the United States Dollar ("USD").
Foreign Exchange Rates Used
Rand/USD
Period-end rate: R19.1992 (August 31, 2023 - R18.8507)
Period-average rate: R18.8330 (February 28, 2023 - R17.5714)
CAD/USD
Period-end rate: C$1.3570 (August 31, 2023 - C$1.3531)
Period-average rate: C$1.3553 (February 28, 2023 - C$1.3488)
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
3. MINERAL PROPERTIES
Since mid-2017, the Company's only active mineral property has been the Waterberg Project located on the Northern Limb of the Bushveld Igneous Complex.
Total capitalized costs for the Waterberg Project are as follows:
Balance August 31, 2022 | $ | 40,373 | |
Additions | 4,900 | ||
Foreign currency translation adjustment | (3,659 | ) | |
Balance August 31, 2023 | $ | 41,614 | |
Additions | 1,634 | ||
Foreign currency translation adjustment | (719 | ) | |
Balance February 29, 2024 | $ | 42,529 |
Waterberg Project
Mining Right
On January 28, 2021, the South African Department of Mineral Resources and Energy ("DMRE") issued a letter to Waterberg JV Co. notifying the Company that a mining right (the "Waterberg Mining Right") had been granted over the Waterberg Project area as applied for in 2018. The Waterberg Mining Right was notarially executed on April 13, 2021, was registered at the Mineral and Petroleum Titles Registration Office on July 6, 2021 and currently remains active.
Project Area and Location
At February 29, 2024, the Waterberg Project consisted of an active prospecting right and the Waterberg Mining Right with a combined active project area of 29,161 hectares, located on the Northern Limb of the Bushveld Igneous Complex, approximately 85 km north of the town of Mokopane. Of the total project area, 20,482 hectares are covered by the Waterberg Mining Right. On March 9, 2022, Waterberg JV Co. passed a resolution to apply for closure on 50,951 gross hectares of prospecting rights, of which 14,209 hectares are now held within the granted mining right, leaving a net 36,742 hectares of uneconomic prospecting rights closed or in process of being closed. In addition, application has been made for the incorporation of two adjacent farms into the Waterberg Mining Right.
Acquisition of the Waterberg Project
In October 2009, PTM RSA, Japan Organization for Metals and Energy Security ("JOGMEC") and Mnombo entered into a joint venture agreement regarding the Waterberg Project (the "JOGMEC Agreement"). Under the terms of the JOGMEC Agreement JOGMEC completed a $3.2 million work requirement to earn a 37% interest in the Waterberg JV property, leaving the Company with a 37% interest and Mnombo with a 26% interest. Following JOGMEC's earn-in, the Company funded Mnombo's 26% share of costs, totalling $1.12 million, until the earn-in phase of the joint venture ended in May 2012.
On November 7, 2011, the Company entered an agreement with Mnombo to acquire 49.9% of the issued and outstanding shares of Mnombo in exchange for a cash payment of R1.2 million and the Company's agreement to pay for Mnombo's 26% share of costs on the Waterberg JV property until the completion of a feasibility study. Mnombo's share of expenditures prior to this agreement, and Mnombo's share of expenditures post DFS, are still owed to the Company ($9.0 million at February 29, 2024, including accrued interest). The portion of Mnombo not owned by the Company is accounted for as a non-controlling interest, calculated at $8.7 million at February 29, 2024 ($8.5 million - August 31, 2023).
To February 29, 2024, an aggregate total of $87.2 million has been funded by all parties for exploration and engineering on the Waterberg Project. Until the Waterberg prospecting rights were transferred to Waterberg JV Co., all costs incurred by other parties were treated as cost recoveries by the Company.
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
Current Ownership
On September 21, 2017, Waterberg JV Co. issued shares to acquire all existing Waterberg partner joint venture interests, resulting in 100% of the Waterberg prospecting rights being owned by Waterberg JV Co. Impala Platinum Holdings Ltd. ("Implats") then acquired a 15% interest in Waterberg JV Co. on November 6, 2017 by way of the Implats Transaction (as defined below). Later, in March 2019 JOGMEC completed the sale of a 9.755% interest in Waterberg JV Co. to Hanwa Co., Ltd ("Hanwa"). In June 2023 JOGMEC and Hanwa reported the establishment of a special purpose company, HJ Platinum Metals Ltd. ("HJM"), to hold and fund their future equity interests in the Waterberg Project. The combined interests of JOGMEC and Hanwa have been consolidated into a 21.95% interest for HJM going forward, with JOGMEC to fund 75% of future equity investments into HJM and Hanwa the remaining 25%.
The Company currently holds a controlling 50.02% interest in Waterberg JV Co., comprised of a direct 37.05% interest and an indirect 12.97% interest by way of its 49.9% shareholding in Black Economic Empowerment ("BEE") partner Mnombo. Mnombo owns a 26.0% direct interest in Waterberg JV Co., Implats a 15.0% direct interest, and HJM a 21.95% direct interest.
On December 11, 2023, the Waterberg JV Co. board of directors unanimously approved a six month interim budget in the amount of US $1.65 million. Waterberg JV Co. shareholders also approved the Stage Three Budget, with Implats abstaining. On December 12, 2023, Implats advised that in the current operating environment and following their approach to capital allocation across their portfolio, Implats could not fund their pro rata share of the interim budget. As a result, Implats' interest in Waterberg JV Co. will be diluted to approximately 14.951% during the third fiscal quarter of 2024.
Appeals and Legal Matters
On and following March 5, 2021, three notices of appeal were filed by individual appellants against the January 28, 2021 granting of the Waterberg Mining Right. Waterberg JV Co. filed formal rebuttals to each action. On October 13, 2022, the Minister of the DMRE ruled to dismiss all these appeals. In his ruling the Minister provided the regulatory reasons why each appeal was denied and also confirmed the DMRE's assessment that Waterberg JV Co. has complied with BEE requirements and social and labour plan community consultation procedures.
On May 7, 2021, an opposition group filed an application for an order in the High Court of South Africa to review and set aside the decision by the Minister of the Department of Forestry, Fisheries and the Environment to refuse condonation for the late filing of that group's appeal against the grant of an EA for the Waterberg Mine in November 2020. The attorneys acting for Waterberg JV Co. filed a notice to oppose the application and required the group's legal counsel to file proof of the mandate to represent the appellant group. Since filing their review application, the appellants have done nothing to progress their action and their legal counsel has not filed a proof of mandate.
On July 30, 2021, a group located near planned surface infrastructure filed an urgent interdict application. Waterberg JV Co. promptly filed an answering affidavit denying urgency and arguing that the application was without merit. The applicants did not respond and were obliged to remove their application from the urgent court roll. Host community Ketting applied to join as an interested party to the application and another host community submitted a confirmatory affidavit, both communities being in support of the Waterberg Mine. In July 2022 Waterberg JV Co. filed a Notice of Set Down with the High Court in Limpopo and a hearing to rule on the interdict application occurred on May 22, 2023, at which hearing the court dismissed the urgent interdict application and ordered the applicants to pay costs to the defendants.
Subsequent to the end of the period, on March 7, 2024, a group claiming to be the rightful leadership of two host communities filed an application in the High Court seeking to set aside the January 28, 2021 grant of the Waterberg Mining Right by the DMRE. Many of the applicants participated in the earlier appeals and court actions described above. The applicants have requested condonation for the late filing of this appeal, claim informal rights to two farms overlaying a portion of the mining right area, object to the grant of the Waterberg mining right, and object to the DMRE dismissing their appeals on or about October 13, 2023. The two farms in question are not expected to host any significant mine infrastructure. Attorneys acting on behalf of Waterberg JV Co. have filed a notice of opposition and will prepare and file an answering affidavit in due course.
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
Implats Transaction
On November 6, 2017, the Company and JOGMEC closed a transaction (the "Implats Transaction"), whereby Implats purchased an aggregate 15% equity interest in Waterberg JV Co. for $30 million. The Company sold an 8.6% interest for $17.2 million and JOGMEC sold a 6.4% interest for $12.8 million. As part of the transaction, Implats also acquired an option to increase its holdings in Waterberg JV Co. to 50.01% (the "Purchase and Development Option") in exchange for certain payments and project funding, and a right of first refusal to enter into an offtake agreement, on commercial arm's-length terms, for the smelting and refining of mineral products from the Waterberg Project ("Offtake ROFR") if Waterberg JV Co. proposes an offtake agreement with a third party. JOGMEC or its nominee retains a right to direct the marketing of Waterberg concentrate and to receive, at market prices, platinum, palladium, rhodium, gold, ruthenium, iridium, copper and nickel in refined mineral products at the volumes produced from the Waterberg Project.
On June 15, 2020, Implats delivered a formal notice of their election not to exercise their Purchase and Development Option due to increased economic uncertainty and reduced risk appetite in the short, medium and long-term as a result of the COVID-19 pandemic. At February 29, 2024 Implats retains a 15.0% direct participating interest in Waterberg JV Co. and the Offtake ROFR. As described above, Implats' direct participating interest is expected to dilute to 14.951% during the third fiscal quarter of 2024.
4. LION BATTERY TECHNOLOGIES INC.
Lion was incorporated on June 17, 2019, with the objective to research new lithium battery technology utilizing platinum and palladium. The Company received 400,000 common shares of Lion, valued at a price of $0.01 per share, as the original founder of Lion. On July 12, 2019, the Company and Anglo American Platinum Limited ("Amplats") entered investment, shareholder and research agreements to facilitate Lion's objectives. Initially the Company and Amplats agreed to equally invest up to an aggregate of $4.0 million into Lion and on July 6, 2021 the Company and Amplats agreed to increase the planned funding to Lion by a further $2.73 million, to a total of up to $6.73 million, in order to allow the acceleration of certain research and commercialization activities (see below). All agreed funding into Lion by the Company and Amplats is to be exchanged for preferred shares of Lion at a price of $0.50 per share over an approximate three to five year period. Amplats and the Company have funded Lion equally for an aggregate $4.612 million as of February 29, 2024 as follows:
Date | Gross Funding to Lion |
July 2019 | $1,100 |
June 2020 | $700 |
February 2021 | $700 |
February 2022 | $500 |
February 2023 | $590 |
June 2023 | $560 |
November 2023 | $362 |
December 2023 | $100 |
Total | $4,612 |
The Company accounts for Lion using equity accounting as Lion is jointly controlled with Amplats. Lion pays a fee of $3 per month to the Company for general and administrative services.
Research Program - Florida International University
On July 12, 2019, Lion entered into a Sponsored Research Agreement ("SRA") with Florida International University ("FIU") to fund a $3.0 million research program over approximately three years. On July 6, 2021 Lion agreed to increase the planned amount of research funding to FIU by a further amount of $1.0 million, for a total of up to $4.0 million. As the research developed and milestones were achieved further tranches have been forwarded to FIU with a seventh tranche of funding of $116,667 advanced in December 2023. Lion has provided aggregate research funding and patent filing fees to FIU in the amount of $3.85 million as of February 29, 2024.
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
On August 4, 2020, the U.S. Patent and Trademark Office issued Patent No. 10,734,636 B2 entitled "Battery Cathodes for Improved Stability" to FIU. The patent includes the use of platinum group metals and carbon nanotubes and other innovations in a lithium battery. A second patent related to this technology was issued in December 2020 and a third was issued in June 2021. On October 4, 2022, a fourth patent No. 11,462,743 B2 was issued under the title "Battery comprising a metal interlayer" to FIU. This fourth patent involves the use of palladium as interlayer in batteries to stabilize and enable lithium metal anodes in various existing and emerging lithium battery technologies. On February 21, 2023, a fifth patent No. 11,588,144 B2 entitled "Battery Cathodes for Improved Stability" was issued to FIU. The patent involves the fabrication of cathodes using palladium as a catalyst in carbon nanotubes. Further patents are currently applied for. Under the SRA, Lion has exclusive rights to all intellectual property being developed by FIU including patents granted. Lion is also reviewing several additional and complementary opportunities focused on developing next-generation battery technology using platinum and palladium.
On June 21, 2023, the Company reported that Lion had engaged The Battery Innovation Center ("BIC") in Newberry, Indiana to help drive commercialization of its next generation lithium-sulfur and enhanced lithium-ion (NMC) technology using the unique catalytic properties of platinum and palladium. Under an agreed scope of work (the "SOW"), during late calendar 2023 and early 2024 BIC is to conduct independent small scale and large scale trials to validate Lion's proprietary platinum and palladium based electrode composition, slurry, and films in both lithium-sulfur and lithium-ion (NMC811) coin and pouch cells. The SOW also includes additional research and development focused on improving performance and scale-up with the goal of creating prototypes for commercialization consideration.
5. SHARE CAPITAL
(a) Authorized
Unlimited common shares without par value.
(b) Shares Issued
Fiscal 2024
On September 18, 2023, the Company closed a non-brokered private placement with Deepkloof Limited ("Deepkloof"), a subsidiary of existing major shareholder Hosken Consolidated Investments Limited ("HCI") for 2,118,645 common shares at a price of $1.18 each for gross proceeds of $2.5 million returning HCI's ownership in the Company to approximately 27%.
Fiscal 2023
On July 27, 2022, the Company entered into an equity distribution agreement with BMO Nesbitt Burns Inc. as Canadian Agent, and BMO as U.S. Agent, for a new at-the-market equity program (the "2022 ATM") to distribute up to $50 million of common shares. No common shares were sold pursuant to the 2022 ATM prior to August 31, 2022. In the year ended August 31, 2023 the Company sold 1,089,503 shares at an average price of $1.81 for gross proceeds of $1.975 million and net proceeds of $1.527 million after share issuance costs of $0.448 million were deducted.
(c) Incentive stock options
The Company has entered into Incentive share purchase option agreements under the terms of its share compensation plan with directors, officers, consultants and employees. Under the terms of the share purchase option agreements, the exercise price of each option is set, at a minimum, at the fair value of the common shares at the date of grant. Options of the Company are subject to vesting provisions. All exercise prices are denominated in Canadian Dollars.
The following tables summarize the Company's outstanding share purchase options:
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
Number of Share Options | Average Exercise Price in CAD | |||||
Options outstanding at August 31, 2022 | 3,666,671 | $ | 3.45 | |||
Granted | 1,358,000 | $ | 2.36 | |||
Forfeited | (170,167 | ) | $ | 3.20 | ||
Exercised | (60,667 | ) | $ | 1.81 | ||
Options outstanding at August 31, 2023 | 4,793,837 | $ | 3.17 | |||
Granted | 589,950 | $ | 1.52 | |||
Cancelled | (1,004,000 | ) | $ | 6.25 | ||
Options outstanding at February 29, 2024 | 4,379,787 | $ | 2.24 |
In fiscal 2023, the weighted average share price when options were exercised was $2.31.
Number Outstanding at February 29, 2024 | Number Exercisable at February 29, 2024 | Exercise Price in CAD | Average Remaining Contractual Life (Years) | ||||||||
99,000 | 66,000 | $ | 3.90 | 2.44 | |||||||
42,000 | 28,000 | $ | 3.40 | 2.56 | |||||||
580,169 | 580,169 | $ | 2.61 | 0.11 | |||||||
21,000 | 14,000 | $ | 2.52 | 3.00 | |||||||
1,113,000 | 371,000 | $ | 2.37 | 3.59 | |||||||
1,120,000 | 746,667 | $ | 2.32 | 2.79 | |||||||
200,000 | 50,000 | $ | 2.28 | 4.19 | |||||||
614,668 | 614,668 | $ | 1.81 | 0.76 | |||||||
589,950 | - | $ | 1.52 | 4.59 | |||||||
4,379,787 | 2,470,504 | 2.65 |
During the period ended February 29, 2024, the Company granted 589,950 share purchase options, which will vest in three tranches on the first, second and third anniversary of the grant.
During the year ended August 31, 2023, the Company granted 1,158,000 share purchase options, which will vest in three tranches on the first, second and third anniversary of the grant. A further 200,000 share purchase options were issued with 50,000 vesting September 8, 2023 and 150,000 vesting when certain performance conditions are met.
During the period ended February 29, 2024, the Company recorded $0.59 million of stock compensation expense (February 28, 2023 - $0.93 million) related to share purchase options, of which $0.57 million was expensed (February 28, 2023 - $0.86 million) and $19 was capitalized to mineral properties (February 28, 2023 - $68).
The Company used the Black-Scholes model to determine the grant date fair value of share purchase options granted. The following assumptions were used in valuing share purchase options granted during the periods ended February 29, 2024 and August 31, 2023:
Period ended | February 29, 2024 | August 31, 2023 |
Risk-free interest rate | 4.48% | 3.45% |
Expected life of options | 4.1 years | 3.9 years |
Annualized volatility1 | 79% | 89% |
Forfeiture rate | 0.9% | 0.6% |
Dividend rate | 0.0% | 0.0% |
1The Company uses its historical volatility as the basis for the expected volatility assumption in the Black Scholes option pricing model. |
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
(d) Deferred Share Units
The Company has established a deferred share unit ("DSU") plan for non-executive directors. Each DSU has the same value as one Company common share. DSUs must be retained until each director leaves the board, at which time the DSUs are redeemed.
During the period ended February 29, 2024, director fees of $90 (February 28, 2023 - $108) were paid by the issuance of DSUs. A recovery of $186 (February 28, 2023, 2022 - $23 recovery) was recorded in share based compensation for the revaluation of fully vested DSUs.
At February 29, 2024 a total of 794,568 DSUs were issued and outstanding.
(e) Restricted Share Units
The Company has established a restricted share unit ("RSU") plan for officers and certain employees of the Company. Each RSU represents the right to receive one Company common share following the attainment of vesting criteria determined at the time of the award. RSUs vest over a three-year period.
During the period ended February 29, 2024, a stock compensation expense of $223 was recorded (February 28, 2023 - $286) of which $210 was expensed (February 28, 2023 - $254) and $13 was capitalized (February 28, 2023 - $32). During the six-month period ended February 29, 2024 the Company issued 297,099 RSUs which vest evenly on the first, second and third anniversary of issuance. At February 29, 2024, 533,327 RSUs were issued and outstanding, with Nil being vested.
6. RELATED PARTY TRANSACTIONS
All amounts receivable and amounts payable owing to or from related parties are non-interest bearing with no specific terms of repayment. Transactions with related parties are in the normal course of business and are recorded at consideration established and agreed to by the parties. Transactions with related parties are as follows:
(a) During the period ended February 29, 2024 $160 (February 28, 2023 - $155) was paid or accrued to independent directors for directors' fees and services.
(b) During the period ended February 29, 2024, the Company paid or accrued payments of $27 (February 28, 2023 - $27) from West Vault Mining Inc., for accounting and administrative services. The Company and West Vault Mining have one officer in common.
(c) In May 2018, Deepkloof made a strategic investment in the Company by way of participation in a public offering and a private placement. Through the terms of the May 2018 private placement, HCI acquired a right to nominate one person to the board of directors of the Company and a right to participate in future equity financings of the Company to maintain its pro-rata interest. HCI has exercised its right to nominate one person to the board of directors. As of February 29, 2024, HCI's ownership of the Company was reported at 26,955,994 common shares, representing a 26.3% interest in the Company. In September 2023, HCI subscribed to a private placement of 2,118,645 common shares at US$1.18 per share for gross proceeds to the Company of $2.5 million, (see Share Capital (Note 5) for further details).
7. CONTINGENCIES AND COMMITMENTS
The Company's remaining minimum payments under its office and equipment lease agreements in Canada and South Africa total approximately $0.7 million to February 2029.
From period end the Company's aggregate commitments are as follows:
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
Payments Due by Year | |||||||||||||||
< 1 Year | 1 - 3 Years | 4 - 5 Years | > 5 Years | Total | |||||||||||
Lease Obligations | $ | 104 | $ | 287 | $ | 100 | $ | - | $ | 491 | |||||
Environmental Bonds | 42 | 127 | 84 | - | 253 | ||||||||||
Totals | $ | 146 | $ | 414 | $ | 184 | $ | - | $ | 744 |
Africa Wide Legal Action - Dismissed
On April 26, 2018 a transaction was completed selling 100% of the share interests in Maseve Investments 11 (Pty) Ltd. ("Maseve") to Royal Bafokeng Platinum Limited ("RBPlat") in a transaction valued at approximately US $74.0 million. Maseve owned and operated the Maseve Mine. Africa Wide Mineral Prospecting and Exploration Proprietary Limited ("Africa Wide") was required to simultaneously sell its 17.1% interest together with the Company's 82.9% interest in Maseve.
In September 2018, Africa Wide instituted legal proceedings in South Africa against PTM RSA, RBPlat and Maseve seeking to set aside the sale of Maseve. A trial to hear evidence occurred in the High Court of South Africa in October, 2021. On June 14, 2022, the High Court dismissed Africa Wide's challenge. Africa Wide appealed the ruling, which was ultimately dismissed by the South Africa Supreme Court of Appeal on November 10, 2022. Africa Wide was ordered to make payment of the defendants' costs.
On July 10, 2023, Africa Wide applied to the President of the Supreme Court of Appeal for a reconsideration of the November 10, 2022 ruling of the Supreme Court of Appeal. On October 6, 2023, the South African Supreme Court of Appeal dismissed Africa Wide's application. Africa Wide was again ordered to pay costs. On November 23, 2023, the High Court determined that Africa Wide owed the Company a total of R2.99 million in costs. On November 29, 2023, the Company served Africa Wide by sheriff a demand for payment. On January 30, 2024, at the offices of Africa Wide's parent company Wesizwe Platinum Ltd. ("Wesizwe"), the Company attempted to serve Africa Wide with a writ of execution. Wesizwe refused to accept delivery. On February 4, 2024 Africa Wide paid the Company R2.99 million (approximately $159 on that date), which was credited against legal fees in general and administration expenses for the period.
8. SUPPLEMENTARY CASH FLOW INFORMATION
Net change in non-cash working capital:
Year ended | February 29, 2024 | February 28, 2023 | ||||
Amounts receivable, prepaid expenses and other assets | $ | 225 | $ | (514 | ) | |
Accounts payable and other liabilities | (127 | ) | (291 | ) | ||
$ | 98 | $ | (805 | ) |
9. SEGMENTED REPORTING
Segmented information is provided on the basis of geographical segments as the Company manages its business through two geographical regions - Canada and South Africa. The Chief Operating Decision Maker ("CODM") reviews information from the below segments separately so the below segments are separated.
The Company evaluates performance of its operating and reportable segments as noted in the following table:
PLATINUM GROUP METALS LTD. Notes to the Condensed Consolidated Interim Financial Statements For the period ended February 29, 2024 (in thousands of United States Dollars unless otherwise specified except share and per share data) |
At February 29, 2024 | Assets | Liabilities | ||||
Canada | $ | 5,950 | $ | 1,319 | ||
South Africa | 43,544 | 234 | ||||
$ | 49,494 | $ | 1,553 |
At August 31, 2023 | Assets | Liabilities | ||||
Canada | $ | 5,787 | $ | 2,213 | ||
South Africa | 44,234 | 434 | ||||
$ | 50,021 | $ | 2,647 |
Loss for the period ended | February 29, 2024 | February 28, 2023 | ||||
Canada | $ | 2,215 | $ | 5,685 | ||
South Africa | 156 | 382 | ||||
$ | 2,371 | $ | 6,067 |