Platinum Group Metals (TSX:PTM) released its financial results for the quarter ended February 29 2016, reporting a net loss of $2.5 million for the first six months of the year. As quoted in the press release: Results for the Six Months Ended February 29, 2016 During the six months ended February 29, 2016, the Company incurred …
Platinum Group Metals (TSX:PTM) released its financial results for the quarter ended February 29 2016, reporting a net loss of $2.5 million for the first six months of the year.
As quoted in the press release:
Results for the Six Months Ended February 29, 2016
During the six months ended February 29, 2016, the Company incurred a net loss of $2.5 million (February 28, 2015 – net loss of $1.1 million). Results for the comparative period in 2015 included the write off of deferred finance fees and finance termination fees amounting to $5.34 million in addition to a foreign exchange gain of $7.6 million. General and administrative expenses during the current period were $3.0 million (February 28, 2015 – $4.1 million), gains on foreign exchange were $0.72 million (February 28, 2015 – $7.6 million) while stock based compensation expense, a non-cash item, totalled $0.88 million (February 28, 2015 – $1.2 million). Finance income consisting of interest earned and property rental fees in the period amounted to $0.5 million (February 28, 2015- $1.9 million). Loss per share for the period amounted to $0.03 as compared to a loss of $0.00 per share for the six month period ending February 28, 2015. During the period the Company completed a share consolidation on the basis of ten old shares for each one new share and all per share amounts have been retrospectively restated.
The Company’s cash position at February 29, 2016 was $48.2 million (August 31, 2015 – $39.1 million). Accounts receivable at February 29, 2016 totalled $5.6 million (August 31, 2015 – $10.1 million) while accounts payable and other liabilities amounted to $5.1 million (August 31, 2015 – $16.4 million). Accounts receivable were comprised primarily of value added taxes repayable to the Company in South Africa and amounts receivable from partners. Accounts payable included contract construction fees, drilling expenses, engineering fees, accrued professional fees and regular trade payables for ongoing exploration, development and administration costs.
During the six month period ending February 29, 2016, total expenditures by the Company for development, construction, equipment and other costs for the Maseve Mine totaled approximately $60.7 million. Total expenditures on the Waterberg projects were approximately $3.4 million, all of which was funded by joint venture partner the Japan Oil, Gas and Metals National Corporation (“JOGMEC”).
The Maseve Mine, also known as Project 1 of the former Western Bushveld Joint Venture, is fully constructed and is now in the initial ramp up phase of production. First concentrate was produced in February, 2016 with commercial production expected late in calendar 2016. Initial monthly revenue from concentrate sales before commercial production will be treated as a reduction in project capital cost.
The Company’s key business objectives for calendar 2016 will be to continue with underground development and production ramp up at the Maseve Mine and to advance the Waterberg Project. Development at the Maseve Mine will continue to utilize a majority of the Company’s cash on hand until production increases and positive cash flow is achieved. Commissioning of the Maseve mill is now complete and initial production of concentrate has begun. The Company commenced production in February 2016 largely with low grade stockpile material to hot commission and balance the mill and flotation circuits. Milling in March of 2016 continued primarily with low grade stockpile material. Mill feed in April 2016 is scheduled to include a higher proportion of ore mined from planned mining blocks.
Development work in blocks 12, 11, 10 and 9 in the north mine and block 16 in the south mine are critical to the underground mining plans and ramp up profile of production for the Maseve Mine. Underground development at Maseve is behind schedule and Company engineers and third party specialists are working to improve development rates. The volume of stoping material must increase in accordance with the mine plan to meet production ramp-up plans and covenants according to existing loan facilities. Continued performance behind the mine plan schedule, lower metal prices, delays in production ramp up or a stronger South African Rand could all result in requirements for further financing.
The Company plans to continue work on the Waterberg Project with its joint venture partners. Twelve drill rigs were mobilized to the Waterberg site in January 2016 for an expanded drill program which was completed in late March 2016, with a further two holes later approved for deep drilling on the T zone, which are currently in progress.
An updated resource calculation for Waterberg is now due for publication. Publication of the update was delayed due to assay laboratory backlogs. The updated resource calculation will be published imminently and will then be incorporated into pre-feasibility study work already in progress. The pre-feasibility study is planned to be complete in mid-calendar 2016. The scope of the pre-feasibility study now includes portions of the Waterberg Extension Project, due to the May 2015 2nd Amendment to the JOGMEC Agreement. Funding for drilling and engineering at Waterberg is in place from JOGMEC, allowing the project to advance and grow without a significant draw on the Company’s working capital.