Name of the Project
Maseve platinum mine (formerly Western Bushveld Joint Venture Project 1).

Location
The Maseve platinum mine is located about 35 km from Rustenburg, in North West, South Africa.

Client
Development of the project has been conducted through Maseve Investments 11. As of August 31, 2015, Platinum Group Metals (PTM) subsidiary PTM RSA majority-owns this company, with 82.9%. Africa Wide Mineral Prospecting and Exploration, 100% owned by JSE-listed Wesizwe Platinum, holds the remaining 17.1%.

Project Description
Maseve comprises projects 1, 2 and 3.

The mine plan for Project 1 was revised in July 2015. The new plan envisages the construction of a platinum mine and a concentrator to produce between 234 000 oz/y and 300 000 oz/y of combined platinum, palladium, rhodium and gold (4E) in concentrate over a 22-year mine life.

The project will use a twin decline system to access the underground workings. Men, material and rock will initially be transported by trackless mobile machinery during the development phase. At steady-state production, men and rock will be transported by chairlift and conveyor systems respectively.

Mining methods have been adapted from the updated feasibility study to include geological, geotechnical, engineering and timing modifications. Maseve will be operated as a trackless development (access development is off-reef and production development is on-reef) and a partially conventional, hybrid and bord-and-pillar mechanised mine using diesel mobile mining equipment. The overall on-reef/hand-held methods applied in the conventional and hybrid mining methods have not changed significantly from the conventional methods described in the previous study. The thicker reef (partially owing to the lower cutoff grade and additional drilling information) and a deliberate drive towards a higher degree of mechanisation allows for a bord-and-pillar mining method to be applied in the deeper, shallower-dipping areas of the mine.

The mine design is focused on reducing waste footwall development by replacing most of the previously footwall-located off-reef production development in the earlier design with on-reef production development. This accommodates the trackless mining method approach and delivers a faster run-of-mine production build-up.

The concentrator has been designed and recosted, based on treating the optimal 140 000 t/m. The revised mine plan has increased this treatment rate to 165 000 t/m and for the concentrator to treat the increased quantity of reef.

The design offers flexibility to treat a blend of Merensky and upper group two reefs at a predetermined ratio. The Merensky reef is the target of initial mining. The mining ramp-up to steady-state production of 165 000 t/m is over a three-year period.

Construction of the concentrator will be undertaken in two phases, initially with a mill float (MF1) circuit during the ramp-up period. The completion of the mill-float-mill float circuit will be decided only after reviewing the mining production ramp-up in 2017.

The MF1 circuit will treat between 80 000 t/m and 115 000 t/m at a grind of just over 60% passing 75 μm.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The project's independent feasibility model developed a post-tax net present value of $431-million at a 5% discount rate.

Value
Not stated.

Duration
Formal construction of Maseve began in 2011 and the mine was officially commissioned in 2016; it is now in the ramp-up phase.

Latest Developments
PTM is considering a transition to a hybrid mining method at its Maseve mine, as it embarks on a restructure to create a more sustainable operating future.

The proposed change in the primary mining method will result in moving away from the current higher-volume, mechanised bord-and-pillar mining method to a process involving mechanised access drives using the mine's current equipment, as well as conventional manual methods for stoping.

A new production guidance will be assessed as PTM develops and implements the new hybrid mining ramp-up plan and restructure.

The operationally driven restructure aims to align costs with a more gradual ramp-up of production using more selective mining methods and to reduce ongoing costs while working to achieve positive, sustainable cash flows “as soon as possible”, using already established infrastructure, PTM CEO R Michael Jones has said.

“Face grades at the Maseve mine have generally met estimates, but the fully mechanised mining method has resulted in excess dilution and, therefore, lower grades to the plant,” he has said, adding that the Maseve concentrator plant has performed in excess of design criteria.

“Completed underground conveyor infrastructure will help reduce the trucking fleet required for mining from Block 11, the target for immediate mining.”

Bord-and-pillar and hybrid methods were included in the mine's feasibility study.

The transition could, in the long term, make up for the short-term restructuring and potential job cuts, as new opportunities for contractors and employees will be created as the newly planned mining method ramps up.

The restructuring process is expected to affect a large number of employees and independent contractors.

“In the long term, the hybrid method is more labour intensive, offset with a better planned grade compared with bord-and-pillar mining,” Jones has noted.

PTM has said that it will work closely with organised labour and all its contractors to minimise job losses while making the operation self-sustainable, with its largest on-site contractor, Redpath Mining South Africa likely to remain the main contractor at the mine.

“Contractors will be paid in the normal course and the company will honour obligations to its employees. Severance, job planning and other support will be provided,” he has assured.

Meanwhile, PTM has received waivers from its lenders related to working capital and production covenants to October 31, 2017.

The company, which may require further financing in debt or equity, or from asset sales, will assess the new plan's ability to meet the lending covenants and loan requirements in the months ahead.

PTM continues to work with BMO Capital Markets and Macquarie Capital to review and assess corporate and asset-level strategic alternatives.

Key Contracts and Suppliers
Société Generale, Barclays Bank, Absa Capital, Standard Bank of South Africa and Caterpillar Financial (lead finance arrangers); Turnberry Projects (prefeasibility study and overall feasibility study); Wardrop Engineering (decline access); GRD Minproc (concentrator design); Grinaker-LTA Mining (vertical shaft design); Golder Associates Africa and Oryx Environmental (public consultation and environmental permitting work); DRA Mining (engineering, procurement and construction management) and JIC Mining Services (underground decline tunnels).

On Budget and on Time?
Output at Maseve is behind schedule, owing to challenges related to the ramp-up of stoping tonnes, resulting in a loss of planned revenue from operations.

Contact Details for Project Information
PTM investor and media enquiries, tel +1 604 899 5450, fax +1 604 484 4710 or email info@platinumgroupmetals.net.
Wesizwe Platinum, Sirkien van Schalkwyk, tel +27 11 994 4600, fax +27 11 994 4601 or email Sirkien@wesizwe.com.