FORM 51-901F QUARTERLY REPORT Incorporated as part of: X Schedule A Schedules B & C ISSUER DETAILS: NAME OF ISSUER ISSUER ADDRESS Platinum Group Metals Ltd. Suite 301 1110 Hamilton Street Vancouver, BC V6C 1X8 ISSUER TELEPHONE NUMBER 604-899-5450 CONTACT PERSON CONTACT S POSITION R. Michael Jones President CONTACT TELEPHONE NUMBER 604-899-5450 CONTACT E-MAIL ADDRESS WEBSITE ADDRESS rmjones@vastcapital.com www.platinumgroupmetals.net FOR QUARTER ENDED May 31, 2001 DATE OF REPORT July 30, 2001 CERTIFICATE THE SCHEDULE(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED AND THE DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A COPY OF THIS QUARTERLY REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS IT. PLEASE NOTE THIS FORM IS INCORPORATED AS PART OF BOTH THE REQUIRED FILING OF SCHEDULE A AND SCHEDULES B & C. R. Michael Jones R. Michael Jones 01/07/30 NAME OF DIRECTOR SIGN DATE SIGNED Barry W. Smee Barry W. Smee 01/07/30 NAME OF DIRECTOR SIGN DATE SIGNED
INTERIM FINANCIAL STATEMENTS (UNAUDITED - SEE NOTICE TO READER) DRIVER ANDERSON CHARTERED ACCOUNTANTS
DRIVER ANDERSON CHARTERED ACCOUNTANTS P.O. BOX 10123, PACIFIC CENTRE 1620-701 WEST GEORGIA STREET VANCOUVER, B.C. V7Y 1C6 TEL: (604) 689-2919 FAX: (604) 685-2900 CLARK ANDERSON INC. CYRUS DRIVER GARY V. ARCA INC. NOTICE TO READER We have compiled the interim balance sheet of Platinum Group Metals Ltd. as at May 31, 2001 and the interim statements of loss and deficit and cash flows for the nine months then ended from information provided by management. We have not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information. Readers are cautioned that these statements may not be appropriate for their purposes. Driver Anderson Vancouver, B.C. CHARTERED ACCOUNTANTS July 30, 2001
INTERIM BALANCE SHEET ASSETS 2001 2000 CURRENT ASSETS Cash $ 1,958,567 $ 70,566 Accounts receivable 60,296 901 Prepaid expenses 58,081 3,200 2,076,944 74,667 MINERAL PROPERTIES (Note 3) 1,093,202 167,580 CAPITAL ASSETS (Note 4) 17,483 13,022 $ 3,187,629 $ 255,269 LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities $ 92,594 $ 44,504 EXPLORATION ADVANCE RECEIVED (Note 3) 300,000-392,594 44,504 SHARE CAPITAL AND DEFICIT SHARE CAPITAL (Note 5) 3,342,773 89,000 SPECIAL WARRANTS - 114,000 OBLIGATION TO ISSUE SHARES (Note 5) - 17,000 DEFICIT (547,738) (9,235) 2,795,035 210,765 CONTINUING OPERATIONS (Note 1) $ 3,187,629 $ 255,269 COMMITMENTS (Note 8) APPROVED BY DIRECTORS: R. Michael Jones Barry W. Smee
INTERIM STATEMENT OF OPERATIONS AND DEFICIT FOR THE NINE MONTHS ENDED 2001 2000 EXPENSES Amortization $ 4,905 $ 746 Corporate finance fee 25,000 - Filing fees 25,530 - Insurance 6,825 - Management fees 60,719 5,000 Office and miscellaneous 46,255 1,400 Professional fees 120,728 1,177 Rent 6,168 800 Shareholder relations 30,350 - Telephone 4,475 - Travel and promotion 26,279 112 357,234 9,235 INTEREST INCOME 40,872 - LOSS FOR THE PERIOD (316,362) (9,235) DEFICIT, beginning of period (39,956) - SHARE ISSUE COSTS (191,420) - DEFICIT, end of period $ (547,738) $ (9,235) LOSS PER SHARE $ (0.07) $ (0.01)
INTERIM STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 2001 2000 Loss for the period $ (316,362) $ (9,235) Add items not affecting cash Amortization 4,905 746 Net change in non-cash working capital (133,980) 2,600 (445,437) (5,889) FINANCING ACTIVITIES Issuance of shares 3,216,723 89,000 Special warrants (521,000) 114,000 Obligation to issue shares (20,000) - Share issue costs (180,839) - 2,494,884 203,000 INVESTING ACTIVITIES Acquisition of capital assets (7,354) (13,768) Exploration advance received 300,000 - Acquisition cost of mineral properties (119,242) (108,578) Exploration and development expenditures (486,032) (4,199) (312,628) (126,545) INCREASE IN CASH AND EQUIVALENTS 1,736,819 70,566 CASH AND EQUIVALENTS, beginning of period 221,748 - CASH AND EQUIVALENTS, end of period $ 1,958,567 $ 70,566 SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES During the period, the Company issued 210,000 common shares with a value of $57,050 in connection with the acquisition of mineral properties. Included in accounts payable and accrued liabilities are $10,581 in unpaid share issue costs and $31,508 in unpaid exploration and development expenditures. SUPPLEMENTARY INFORMATION ON CASH FLOWS During the period no interest or income taxes were paid.
1. CONTINUING OPERATIONS The company was incorporated on January 10, 2000 as 599141 B.C. Ltd., and changed its name to Platinum Group Metals Ltd., on March 16, 2000 at which time it commenced operations. It is in the business of acquiring, exploring and evaluating mineral properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. At May 31, 2001, the company was in the exploration stage and has options to acquire properties in Ontario and Northwest Territories. The financial statements have been prepared in accordance with generally accepted accounting principles on a going concern basis which presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. The company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long-term. The company s ability to continue as a going concern is dependent upon its ability to attain future profitable operations and to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. External financing, predominately by the issuance of common stock to the public, will be sought to finance exploration of the company s properties; however, there can be no assurance that sufficient funds will be raised. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the company not be able to continue as a going concern. The recoverability of amounts shown as mineral properties and deferred exploration costs is dependent upon the confirmation of economically recoverable reserves, the ability of the company to obtain necessary financing to complete their development, and future profitable production or disposition thereof. Although the company has taken steps to verify title to mineral properties in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the company s title. Property title may be subject to unregistered prior agreements and noncompliance with regulatory requirements. Comparative figures are for the period from commencement of operations, March 16, 2000 to May 31, 2000. 2. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include the following significant policies: a) Mineral properties and deferred exploration costs Mineral properties consist of exploration and mining concessions, options and contracts. Acquisition and leasehold costs and exploration costs are capitalized and deferred until such time as the property is put into production or the properties are disposed of either through sale or abandonment. The estimated values of all properties are assessed by management on a continual basis and if the carrying values exceed estimated recoverable values, then these costs are written down to the estimated recoverable values. If put into production, the costs of acquisition and exploration will be amortized over the life of the property, based on the estimated economic reserves. Proceeds received from the sale of any interest in a property will first be credited against the carrying value of the property, with any excess included in operations for the period. If a property is abandoned, the property and deferred exploration costs will be written off to operations
2. SIGNIFICANT ACCOUNTING POLICIES (continued) b) Capital assets Capital assets are recorded at cost and are amortized on the declining balance basis at the following annual rates: c) Loss per share Computer hardware 30% Computer software 30% Office furniture and equipment 20% The loss per share figure is calculated using the weighted average number of shares outstanding during the period. d) Financial instruments The carrying values of cash and cash equivalents, accounts receivable and accounts payable reflected in the balance sheet approximate their respective fair values. All significant assets, financial liabilities and equity instruments of the company are either recognized or disclosed in the financial statements together with available information for a reasonable assessment of future cash flows, interest rate risk and credit risk. e) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those reported. f) Income taxes The company follows the liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current period. Future income tax assets and liabilities are recognized in the current period for temporary differences between the tax and accounting bases of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes. Future income tax assets and liabilities are measured using tax rates and laws expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on future income tax assets and liabilities is recognized in operations in the period of the change. A valuation allowance is recognized to the extent it is more likely than not that future income tax assets will not be realized.
3. MINERAL PROPERTIES a) Northwest Territories Pursuant to an agreement dated June 1, 2000, the company has an option to acquire a 100% interest in 12 mineral claims located in the Rutledge Lake area, Northwest Territories. Under the terms of the agreement, the company is required to make cash payments of $100,000 (of which $5,000 has been paid) and issue 100,000 shares in specified annual installments to June 1, 2004. The company is required to pay a further $15,000 and issue 30,000 common shares prior to June 1, 2001 to keep the option in good standing. The agreement was amended requiring the company to pay $7,500 and issue 10,000 shares by June 1, 2001 (issued) and defer the balance to June 1, 2002. The company must also incur $1,000,000 in exploration expenditures within 60 months of the agreement of which $50,000 must be spent on or prior to June 1, 2001. The optionors retain a 2% net smelter royalty, with a minimum advance royalty payment of $5,000 every 6 months commencing in the 48 th month. The company also has an option to acquire a 1% net smelter royalty for $1,000,000 up to the time of commercial production. On October 18, 2000 the company entered into an agreement with Impala Platinum Holdings Ltd. (Impala) of South Africa whereby the company granted a right of first offer on the Rutledge Lake Property (property). Impala has paid the company $300,000 as an advance against exploration costs on the property for an exclusive right to receive an offer from the company for the option, joint venture or sale of the property. The company is obligated to make an offer to Impala within one year of completing $300,000 of exploration expenditures on the property. However, the terms of such an offer are not fixed. During the period, the company staked an additional 11 claims in the Rutledge Lake area. b) Ontario Projects i) Thunder Bay The company entered into an option agreement on March 30, 2000 whereby it can acquire a 51% interest in 96 mineral claims located in the Right Angle and Circle Lake area, known as the Pebble Property, Thunder Bay mining district, Ontario. In order to acquire the interests, the company must pay $34,000 (of which $14,000 has been paid) and incur $500,000 in exploration expenditures within 5 years of the date of the agreement. The company was obligated to pay $5,000 and incur $100,000 in exploration expenditures prior to March 30, 2001 in order to keep the option in good standing. The company has been granted an extension to November 30, 2001. The company can earn an additional 9% interest in the property by completing a feasibility study within 36 months of earning the 51% interest. In April 2000, the company obtained an option to acquire a 50% interest in 261 mineral claims known as the South Legris property, in the Thunder Bay mining district, Ontario. In order to acquire the interest the company must pay cash of $48,300 (of which $28,300 has been paid) and incur $1,000,000 in exploration program expenditures within 5 years of the date of the agreement. The company is obligated to pay $9,300 and incur exploration expenditures of $100,000 within one year of the date of the agreement in order to keep the option in good standing. The company has been granted an extension to November 30, 2001. The company also has an option to acquire an additional 10% interest by completing a feasibility study within 36 months of earning the 50% interest.
3. MINERAL PROPERTIES (continued) ii) Sudbury Pursuant to an agreement dated March 29, 2000, the company has an option to acquire a 100% interest in 29 units known as the Davis property. In order to acquire the interests the company must pay cash of $60,000 (of which $20,000 has been paid) over 36 months and issue 100,000 common shares of the company within 24 months of the date of the agreement. The company must pay a further $10,000 (paid) and issue a total of 70,000 common shares (issued) prior to March 29, 2001 in order to keep the option in good standing until March 29, 2002. The optionors retain a 2% net smelter royalty with advance royalty payments of $5,000 payable every 6 months commencing in the 48 th month. The company can acquire a 1% net smelter royalty for $1,000,000 up to date of commencement of commercial production. Pursuant to an agreement dated May 12, 2000, the company has an option to acquire a 100% interest in 23 units in the Janes-Loughrin-Henry property for $75,000 cash (of which $35,000 has been paid) and the issuance of 80,000 shares of the company in specified annual instalments to May 12, 2003. The company must pay $20,000 (paid) and issue 40,000 common shares (issued) within one year of the date of the agreement in order to keep the option in good standing. The optionors retain a 2% net smelter royalty with a minimum advance royalty payment of $5,000 every 6 months commencing in the 48 th month. The company can acquire a 1% net smelter royalty for $1,000,000 up to time of commercial production. Pursuant to an agreement dated May 18, 2000, the company has an option to acquire a 100% interest in 34.4 units located in the Henry township (Positano option). In order to acquire the interests the company must pay cash of $85,000 (of which $30,000 has been paid), issue 70,000 common shares of the company, spend $90,000 on an exploration program and make a final cash payment of $1,500,000 prior to commencement of commercial production. The company must pay $15,000 (paid), issue 20,000 common shares (issued) and incur $15,000 in exploration expenditures within one year of the date of the agreement in order to keep the option in good standing. The optionors retain a 5% net profits interest royalty. Pursuant to an agreement dated June 14, 2000, the company has an option to acquire a 100% interest in 24.5 units located in the Henry township district (Dubeau option), Ontario by making cash payments of $38,000 (of which $7,000 has been paid) and issuing 30,000 common shares of the company in specified annual instalments within four years of the date of the agreement. The company must pay $7,000 and issue 10,000 shares (issued) prior to June 14, 2001 in order to keep the option in good standing. The optionor retains a 5% net profits interest royalty. Pursuant to an agreement dated April 5, 2000, the company acquired a 40% interest in a joint venture with Norcal Resources Ltd. ( Norcal ), for the purpose of a joint exploration program on the 372.5 units staked in the McWilliams, Notman, Gladman, Hammel and Crerar townships located in the Sudbury mining district, Ontario. Pursuant to an agreement dated October 1, 2000, the company has an option to acquire a 100% interest in 30 mineral claim units in Loughrin Township, Sudbury Property area, from Frank Racicot, (the Racicot Property ) for $62,500 cash payable over 4 years ($7,500 has been paid) and the issue of 80,000 common shares over 3 years. In order to keep the option agreement in good standing for one year from October 1, 2000 the company must pay $10,000 and issue 40,000 shares (of which 20,000 shares have been issued). The property adjoins the company s Davis township claims and will form part of the Sudbury Project. The optionor retains a 2% net smelter return royalty which can be reduced at any time to a 1% net smelter return royalty by the company paying $1,000,000.
3. MINERAL PROPERTIES (continued) b) Ontario Projects (continued) ii) Sudbury (continued) Pursuant to an agreement dated October 4, 2000, the company has an option to acquire a 100% interest in 67 mineral claim units in Loughrin Township, Sudbury Property area, from ECS Exploration and Construction Services (the ECS property ) for $51,000 cash payable over 4 years ($5,000 has been paid) and the issue of 60,000 common shares over 4 years. In order to keep the option agreement in good standing for one year from October 4, 2000 the company must pay $10,000 and issue 20,000 shares (of which 10,000 shares have been issued) and incur a minimum of $30,000 in exploration expenditures. The property adjoins the company s Davis township claims and the Racicot Property and will form part of the Sudbury Project. The optionor retains a 5% net profit royalty. Pursuant to an agreement dated March 22, 2001, the company has an option to acquire 100% in the South Street property consisting of 77 units located in the Sudbury Mining District, Ontario from Jobin Bevans & Co. for $49,400 cash ($9,400 paid) and issue 60,000 shares (15,000 shares have been issued) over two years. During the period the company has staked an additional claim in the Sudbury Property area. c) Summary of mineral properties Northwest Territories Thunder Bay Ontario Sudbury Ontario Total Acquisition Costs Balance, beginning $ 7,000 $ 45,498 $ 136,393 $ 188,891 Cash 7,805 21,000 90,437 119,242 Shares to be issued - - 37,050 37,050 Balance, ending 14,805 66,498 263,880 345,183 Expenditures Balance, beginning 64,078 57,886 108,515 230,479 Assays 228-7,428 7,656 Drilling 341,065 - - 341,065 Engineering 4,000-975 4,975 Geological 49,687 13,809 59,407 122,903 Geophysical 20,365 - - 20,365 Maps 1,315 3,848 2,353 7,516 Research 975 650 2,600 4,225 Surveys 8,835 - - 8,835 Balance, ending 490,548 76,193 181,278 748,019 $ 505,353 $ 142,691 $ 445,158 $ 1,093,202
4. CAPITAL ASSETS Cost Accumulated Amortization Net Book Value Computer hardware $ 18,453 $ 5,039 $ 13,414 Computer software 3,879 1,313 2,566 Office furniture and equipment 2,316 813 1,503 $ 24,648 $ 7,165 $ 17,483 5. SHARE CAPITAL a) Authorized 1,000,000,000 common shares without par value b) Issued Number of Shares Amount Balance at beginning of period 1,395,001 $ 89,000 Issued during the period Initial public offering 3,195,391 1,469,880 Mineral properties 210,000 57,050 Conversion of special warrants to common shares 4,988,090 1,726,843 Balance at end of period 9,788,482 $ 3,342,773 c) As at May 31, 2001, there were 775,000 stock options outstanding, exercisable at $0.55 per share, expiring on January 31, 2005. d) As at May 31, 2001, there were 238,309 common share purchase warrants outstanding exercisable at $0.55 per share expiring December 22, 2002 and 319,539 common share purchase warrants exercisable at $ 0.50 per share expiring March 2, 2003 6. RELATED PARTY TRANSACTIONS During the period, transactions with related parties were recorded as follows: a) Management and consulting fees of $61,627 were incurred by a director and officer. b) Accounting services of $29,500 were incurred to a partnership in which an officer has an interest. As at May 31, 2001 an amount of $10,000 owing was included in accounts payable. c) Geological and administration fees of $52,750 were incurred to an officer. As at May 31, 2001 an amount of $5,525 owing was included in accounts payable.
7. INCOME TAXES The company has approximately $358,000 of non-capital losses available for income tax purposes that may be applied against taxable income in future years. 8. COMMITMENTS a) The company has entered into an investor relations letter agreement dated March 12, 2001 with Roth Investor Relations, Inc. ( Roth ) of New Jersey, USA. The term of the agreement is for one year, which is renewable in one-year increments. Roth will be paid US $4,000 per month plus expenses. b) The company has entered into an investor relations agreement dated May 16, 2001 with Victory Corporate Consulting Inc. ( Victory ). The agreement is for six months, renewable by mutual agreement. Victory will be paid $3,000 per month plus expenses. The company has paid a one-time initiation fee of $6,000.