VANCOUVER, BRITISH COLUMBIA AND JOHANNESBURG, SOUTH AFRICA, Dec 09, 2008 (MARKET WIRE via COMTEX) -- Platinum Group Metals Ltd. ("Platinum Group" or the "Company") (
CA:PTM:
news,
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profile) (NYSE-A: PLG) announces that the Company, Anglo Platinum Limited and Wesizwe Platinum Limited have executed definitive agreements to consolidate and rationalize the Western Bushveld Joint Venture ("WBJV"). Under the terms (See the Company's September 2, 2008 announcement) Platinum Group will have the right to acquire effective ownership of 74% of WBJV Projects 1 and 3 and Wesizwe will acquire 100% of Project 2 and 26% of Projects 1 and 3. The transactions will become effective upon fulfillment of certain conditions precedent and regulatory approvals including the approval of the Department of Minerals and Energy, Republic of South Africa, for Section 11 transfer of mineral rights pursuant to the Mineral and Petroleum Resources Development Act.
Anglo Platinum will vend its 37% interest in the WBJV to Wesizwe for common shares representing a 26.5% interest in Wesizwe. Platinum Group will concurrently acquire a 37% interest in Projects 1 and 3 from Wesizwe in exchange for Platinum Group's interest in Project 2 valued at R376.9 million (approx. CAD $46 million) and a cash payment of R408.6 million (approx. CAD $50 million). The R408.6 million cash payment to Wesizwe will be due 270 days after the effective date of the transactions and will then be held in escrow to be applied towards Wesizwe's 26% share of funding for Projects 1 and 3. Should the Company not make all of the required cash payment, its interest in the projects would be reduced by up to approximately 19.2% proportionately to the unpaid balance versus R408.6 million, unless Wesizwe and the Company agree upon an alternative arrangement.
R. Michael Jones, President and CEO of Platinum Group, said, "These agreements allow us to move forward immediately and consider our strategic alternatives. We now control a shallow, high grade platinum deposit at a time when margins are being squeezed and both capital and electricity are scarce. Compared to deeper deposits our projects are highly competitive."
Platinum Group and Wesizwe will work together to maximize the value of their respective projects in the local communities and the two project teams are looking at engineering synergies for costs savings, power savings and reduced environmental impacts of the projects' mine plans.
Platinum Group was advised for this transaction by RBC Capital Markets, Wesizwe was advised by Qinisele Resources and Anglo Platinum was advised by Rand Merchant Bank.
The settlement of the "equalization payments" currently due to Anglo Platinum under the terms of the WBJV shall be settled by Wesizwe in common shares and by Platinum Group in cash. At present, equalization payments due are approximately US$18 million payable by Wesizwe and US$20 million payable by the Company. If the Company does not pay Anglo Platinum upon the effective date of the agreements, Anglo Platinum can elect to provide up to a 6 month extension with interest or cede the amount due to Wesizwe in exchange for further common shares of Wesizwe and/or an assignment of debt due from Wesizwe to Anglo Platinum. The Company would then be liable to settle with Wesizwe for any unpaid balance due. A total make up of approximately US$2.0M is also payable by Platinum Group to Wesizwe for past exploration costs incurred on Project 2.
The parties have agreed to suspend the 90 day deadline for a Decision to Mine under the terms of the WBJV until the transaction is effective or a condition precedent is not able to be fulfilled. Upon the effective date of the transactions Anglo Platinum will hold a 60 day first right of refusal on the sale of ore or concentrate over the original WBJV mineral rights.
About Platinum Group Metals Ltd.
Platinum Group is based in Vancouver, BC, Canada and Johannesburg, South Africa. Platinum Group has a management team in both Canada and South Africa, which have successful track records of more than 20 years in exploration, mine discovery, mine construction and mine operations. The Company was formed in 2000 and is focused on the development of platinum operations. It holds significant mineral rights in the Northern and Western Bushveld Igneous Complex of South Africa.
Platinum Group is also a significant mineral rights holder in the area surrounding Canada's only primary platinum and palladium mine near Thunder Bay, Ontario Canada.
On behalf of the Board of Platinum Group Metals Ltd.
R. Michael Jones, President and Director