Positive prefeasibility on Platinum Group Metals’ Western Bushveld JV (January 12, 2007)

Vancouver – With positive prefeasibility study in hand for its Western Bushveld joint venture in South Africa, partners Platinum Group Metals’ (PTM-T, PTMQF-O), Anglo Platinum (AGPPY-O, ANP-L, ANANP-J) and local black economic empowerment (BEE) company Africa Wide Mineral Prospecting & Exploration like the economic outlook of the proposed underground platinum mine and have approved advancing the project to the bankable feasibility stage.

The study reviews a modeled underground operation in the Project 1 area of the joint venture with annual platinum output of 155,000 oz. (total of 250,000 oz. per annum combined platinum, palladium, rhodium and gold) and a more than 18-year mine-life.

Two types of underground access will be reviewed in the final feasibility: a vertical access shaft and an early access decline-vertical shaft combination.

Running the numbers on a vertical access shaft scenario gives a 17.7% pre-tax internal rate of return (IRR) and a US$339-million net present value (NPV) while the decline-shaft combination delivers an estimated IRR of 17% and US$325-million NPV, both assuming average industry long-term metal price estimates (US$900 per oz. platinum, US$330 per oz. palladium, US$2,000 per oz. rhodium and US$500 per oz. gold) and a 5% discount rate.

When recent spot prices for the metals (US$1,204 per oz. platinum, US$322 per oz. palladium, US$4,800 per oz. rhodium and US$627 per oz. gold) are used, project economics are significantly enhanced with IRRs of 28.9% and 29% and NPVs of US$884 million and US$881 million forecast for the two access methods respectively.

Total capital expenditures (including sustaining costs) of US$328 million and US$355 million are estimated for the vertical access shaft and decline-shaft combination options respectively.

“The project is attractive because of its platinum grade and shallow depth. The study indicates that the deposit can support a robust mine development with a life of over 18 years,” stated John Gould, Managing Director of Platinum Group Metals South Africa.

Platinum group metal resources on the Western Bushveld JV are primarily hosted in three distinct units. In the Merensky Reef, mineralization occurs both in a pegmatoidal feldspathic pyroxenite unit and in the contact reef. PGMs also occur in the Upper Group No. 2 (UG2) chromitite seam.

Total measured resources of 4.45 million tonnes grading 5.2 grams of combined platinum, palladium, rhodium plus gold (4Es) were reviewed in the study. An additional 40.9 million tonnes of indicated resource was also tabled averaging 4.3 grams of the combined 4E.

Prefeasibility results also provide the joint venture partners with the comfort to continue drilling along strike on the Merensky Reef and UG2 structures, in its Project Areas 2 and 3.

Project operator Platinum Group Metals and Anglo Platinum each hold a 37% interest in the joint venture with Africa Wide Mineral holding the remainder. Africa Wide’s 26% interest satisfies South Africa’s 10-year targeted BEE ownership levels under the country’s new Mining Charter and Mineral Resources and Petroleum Development Act.

The project covers about 67 sq. km in the platinum-rich western limb of the Bushveld complex, host to a majority of the world’s PGM production. It adjoins Anglo Platinum’s Bafokeng Rasimone (BRPM) mine with refined platinum output of about 200,000 oz. per year and its Styldrift project.