Letter to Shareholders

Dear Fellow Shareholders,

I start this year’s letter with safety, as it is our most important responsibility. Safety ties in to communication, leadership, how we operate and directly to performance.

Our mission is to safely find, develop and produce platinum group metals from shallow mines in the lower part of the industry cost curve. The defined mineral resources and reserves we have secured and confirmed, with drilling and pre-production, give us the opportunity to satisfy our mission in 2015 and for the next 20 years or more to come.

We have great deposits, and we are on the cusp of production in 2015. The world needs the platinum, palladium, rhodium and gold we plan to produce. Our job is to make our assets perform. We will be focused on successfully achieving production in 2015.

We have assembled an experienced and talented team and we believe that the Company has an excellent group of leaders who can take us into production successfully at a great time for platinum and palladium.

Safety

We begin every meeting at the operating and corporate level with a review of safety. During 2014 we achieved an excellent safety record and we remain focused and vigilant going forward. Our safety statistics in 2014 were impressive with a Lost Time Incidence Frequency (“LTIF”) record of 1.1 per million man hours worked. We have now worked over 5.5 million man hours during construction and development at the WBJV Project 1 mine site. The industry average LTIF for operating mines is approximately 3.0 per million man hours. Construction sites are generally more challenging in terms of safety than operating mines as a result of crew rotations and changing tasks and job assignments.

We continue to use the SafeMap training program at the WBJV Project 1, stressing team communication and risk competence.  We strive for an environment where each individual becomes capable and confident to assess risks and opportunities in the workplace. We want each person to feel comfortable communicating identified risks to their supervisors and other team members.

Our safety statistics are part of an overall work culture of caring about what we do and how each person performs at work. This culture is the main reason why we have done well on the ground and is a major part of how we plan to achieve continued strong performance.

People and Leadership

What your company is doing is not easy. Going from exploration, to mine development, to mine operations presents corporate and operating challenges. Our job as leaders of Platinum Group Metals is to attract strong, experienced and like-minded people who are confident in their abilities and enthusiastic to be part of a strong team. I am pleased to report that we have been able to attract the right local people with the expertise to do this job. How have we done this as a Canadian company working on the other side of the world in South Africa? Firstly, we have solid, competitive assets that attract good technical people who are confident in their abilities. Secondly, we provide a work environment that thrives on encouraging leadership, outspokenness and the offer of something new. We have provided a strong corporate culture and have set the management tone in the way our team thinks they should be right from the beginning.

As of January 2015 there are approximately 1,700 people working at WBJV Project 1, including the employees and sub-contractors of our underground mining contractor and our engineering, procurement, construction and management contractor. At full production there will be approximately 2,400 people working on site. To manage and direct this workforce we have added significantly to Platinum Group Metals’ team of full time managers and employees with experienced and qualified leaders in safety and operations. The buildup of this team is part of our budget and operational readiness plan. I am proud to stand shoulder to shoulder with this team as we head into production in 2015. In just over a year we have added a Mine General Manager, a Safety Health and Environment Manager, a Safety Manager, a Production Manager Underground, an Equipment Maintenance Specialist, a Mine Chief Geologist, a Head of Mine Engineering and a Training Manager, just to name a few. Our Social and Labour Plan and all government and legal relations are also run by full time personnel.

Our skill set as a Company is growing rapidly and is very different than it was even six months ago. This newly acquired operational knowledge will be very valuable as we look forward to a potential second mine at Waterberg.

WBJV Project 1: Conveyor Belt Construction

Performance

Our performance in the execution of our business plan and the discovery of new, competitive ounces of platinum group metals (“PGMs”) has been good. At WBJV Project 1 our management of construction, with DRA Mineral Projects (Pty) Ltd. (“DRA”) as our Engineering, Procurement, Construction and Management (“EPCM”) Engineer, has been well executed. The project has been steadily advanced and has been within the project budget as revised in 2013 in US dollar terms. We have accomplished a great deal of surface construction over the past year as well as development underground.

The scale of the mine we are building is impressive. We are providing infrastructure for up to 2,400 people to arrive at access control, change and prepare for work. At steady state approximately 1,700 of these people will travel underground to and from the mine’s working faces, with all of the equipment, power and water they will need to mine 5,400 tonnes of rock per day. The facilities need to be safe, robust, efficient and well laid out for a planned 22 year or more mine life. At a steady state production rate of 275,000 ounces per year the mine has large scale exposure to the platinum and palladium market.

At Waterberg, we believe we have discovered a globally competitive and large scale deposit. We discovered this deposit utilizing our scientific expertise and target generation skills. Platinum Group Metals’ 17 million ounce share of current estimated resources at Waterberg translates into an acquisition, exploration and evaluation cost to date of approximately $1.47 per ounce.

In South Africa we see a generally tight electrical power supply situation in 2015, with improvement beyond this as new generating capacity begins to come on line. For WBJV Project 1 we expect further power requirements to be met as needed. Water for construction and development at WBJV Project 1 has been supplied as required and the construction of pipelines for water at production quantities is also well in hand. We expect to see continued orderly pressure on labour costs, which in our view will tighten the platinum market and accentuate the competitive advantage of shallow, low cost deposits.

During the last two years we have worked hard on a number of alternatives to complete the construction and development financing for WBJV Project 1. Our objective during most of 2014 was to find a competitive alternative to conventional project loan financing in order to avoid the prohibitive security restrictions, costly hedging requirements and expensive fees associated with such a facility. Supported by some of our key shareholders, during late 2014 we sought to complete a unit offering of notes and warrants as an alternative to a project loan facility. Unfortunately, the bond market moved against us in late calendar 2014 and we were forced to finance with equity, once again with the support of major shareholders. The slumping energy market had an indirect effect on our efforts, driving up the cost of high yield debt and pricing us out of the market.

Part of our job as management is to drive value for stock holders. We are shareholders too. Looking forward we believe that successful construction and start-up at WBJV Project 1 combined with more value recognition at Waterberg will reflect favourably on the valuation of the Company. The successful start-up of the WBJV Project 1 mine will be our financial and management focus in 2015.

During 2015 we will be speaking with our partners and other third parties interested to become involved at Waterberg to consider transactions that may provide funding for additional work at Waterberg. Our objective will be to keep the Waterberg projects advancing and on track through to and beyond a planned pre-feasibility study for the Waterberg Joint Venture, while keeping our share of Waterberg expenditures modest. We will also be exploring financing alternatives for the Black Economic Empowerment (“BEE”) interest to become fully funded at both the WBJV Project 1 mine and at Waterberg.

As we prepare for first production from the WBJV Project 1 mine in 2015, we know it will be a pivotal year for the Company. We thank our shareholders, stakeholders, employees and contractors for their support and dedication and we look forward to the year ahead.

Screen Shot 2013-12-12 at 11.33.22 PM'site

R. Michael Jones

CEO and Co-Founder

Platinum Group Metals Ltd.

Mine workers underground WBJV Project 1

Our Platinum mine is in the final stages of construction and a second deposit is in pre-feasibility. 2015 will be a pivotal year for Platinum Group Metals Ltd.

We are legally responsible for over 1,700 people working at WBJV Project 1

Platinum Group Metals’ 17 million ounce share of current estimated resources at Waterberg translates into an acquisition, exploration and evaluation cost to date of approximately $1.47 per ounce.

Calendar 2015 Milestones

We have an important year ahead for the Company (in calendar date order):

Q1 – Closing of the WBJV Project 1 operating facility agreement with Sprott Resource Lending Partnership by January 30, 2015.

Q1 – Resource Update on the Waterberg Joint Venture and Waterberg Extension Projects.

Q1 – Waterberg metallurgical work and down-stream option study.

Q2 – Pre-feasibility study on Waterberg Joint Venture with consideration of Extension opportunities.

Q2 – Surface and underground updates on WBJV Project 1.

Q3 – Completion of Primary Construction at WBJV Project 1.

Q3 – Initial mill testing.

Q4 – Delivery of first WBJV Project 1 concentrate to Smelter for Sale.

Q4 – Potential first draw down of the WBJV Project 1 operating facility.