Platinum
Group Metals Ltd.


(Exploration
and Development Stage Company)




Consolidated
Financial Statements


For the
year ended August 31, 2008








Filed:
December 1, 2008



















A
copy of this report will be provided to any shareholder who requests
it.










Management’s
responsibility for the Financial Statements





The
preparation and presentation of the accompanying consolidated financial
statements, Management’s Discussion and Analysis (“MD&A”) and all financial
information in the Annual Report are the responsibility of management and have
been approved by the Board of Directors.





The
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles. Financial statements, by nature are
not precise since they include certain amounts based upon estimates and
judgments. When alternative methods exist, management has chosen those it deems
to be the most appropriate in the circumstances. The financial information
presented elsewhere in the Annual Report is consistent with that in the
consolidated financial statements.





Management,
under the supervision of and the participation of the Chief Executive Officer
and the Chief Financial Officer, have a process in place to evaluate disclosure
controls and procedures and internal control over financial reporting as
required by Canadian and U.S. securities regulations. We, as Chief Executive
Officer and Chief Financial Officer, will certify our annual filings with the
CSA and SEC as required in Canada by Multilateral Instrument 52-109 and in the
United States as required by the Securities Exchange Act of 1934.





The board
of Directors is responsible for ensuring that management fulfills its
responsibilities for financial reporting and is ultimately responsible for
reviewing and approving the consolidated financial statements. The Board carries
out this responsibility principally through its Audit Committee which is
independent from management.





The Audit
Committee is appointed by the Board of Directors and reviews the consolidated
financial statements and MD&A; considers the report of the external
auditors; assesses the adequacy of our internal controls, including management’s
assessment described below; examines and approves the fees and expenses for the
audit services; and recommends the independent auditors to the Board for the
appointment by the shareholders. The independent auditors have full and free
access to the Audit Committee and meet with it to discuss their audit work, our
internal control over financial reporting and financial reporting matters. The
Audit Committee reports its findings to the Board for consideration when
approving the consolidated financial statements for issuance to the shareholders
and management’s assessment of the internal control over financial
reporting.





Management’s
Report on Internal Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting.





Management
has assessed the effectiveness of our internal control over financial reporting
as of August 31, 2008 using criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that our
internal control over financial reporting was effective as of August 31,
2008.




//signed//
                R.
      Michael Jones
                Chief Executive
      Officer
            //signed//
              Frank
      Hallam
              Chief
      Financial Officer




November
21, 2008








Independent
Auditors’ Report





To
the Shareholders of Platinum Group Metals Ltd.





We have
completed integrated audits of Platinum Group Metals Ltd.’s
2008 and 2007 consolidated financial statements and of its internal control over
financial reporting as at August 31, 2008. Our opinions, based on our audits,
are presented below.





Consolidated
financial statements





We have
audited the accompanying consolidated balance sheets of Platinum Group Metals
Ltd. as at August 31, 2008 and 2007, and the related consolidated statements of
operations and comprehensive income, shareholders’ equity and cash flows for the
years then ended.  These financial statements are the responsibility
of the Company’s management.  Our responsibility is to express an
opinion on these financial statements based on our audits.





We
conducted our audits of the Company’s financial statements in accordance with
Canadian generally accepted auditing standards and the standards of the Public
Company Accounting Oversight Board (United States).  Those standards
require that we plan and perform an audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement.  An audit of financial statements includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements.  A financial statement audit also includes assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as at August 31,
2008 and 2007and
the results of its operations and its cash flows for each of the years then
ended in accordance with Canadian generally accepted accounting
principles.





The
consolidated financial statements as at August 31, 2006 and the results of its
operations and its cash flows for the year then ended were audited by other
auditors who expressed an opinion without reservation on those statements in
their report dated November 8, 2006.





Internal
control over financial reporting





We have
also audited Platinum Group Metals Ltd.'s internal control over financial
reporting as at August 31, 2008, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting
included in the accompanying Management’s Report on Internal Control over
Financial Reporting.  Our responsibility is to express an opinion on
the effectiveness of the Company’s internal control over financial reporting
based on our audit.





We
conducted our audit of internal control over financial reporting in accordance
with the standards of the Public Company Accounting Oversight Board (United
States).  Those standards require that we plan and perform the audit
to obtain reasonable assurance as to whether effective internal control over
financial reporting was maintained in all material respects.  An audit
of internal control over financial reporting includes obtaining an understanding
of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and  performing such
other procedures as we consider necessary in the circumstances.  We
believe that our audit provides a reasonable basis for our opinion.





A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.  A company’s internal
control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





In our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as at August 31, 2008based on criteria
established in Internal
Control — Integrated Framework issued by the
COSO.








“PricewaterhouseCoopers
LLP”





Chartered
Accountants


Vancouver,
British Columbia


November
21, 2008








Comments
by Auditors for U.S. readers on Canada – U.S. Reporting Difference





In the
United States, reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when there is a change
in accounting principles that has a material effect on the comparability of the
Company’s financial statements, such as the change in accounting policy for
financial instruments as described in note 2 to the consolidated financial
statements.  Our report to the shareholders dated November 21, 2008,
is expressed in accordance with Canadian reporting standards which do not
require a reference to such a change in accounting policy in the auditors’
report when it is properly accounted for and adequately disclosed in the
financial statements.








“PricewaterhouseCoopers
LLP”





Chartered
Accountants


Vancouver,
British Columbia


November
21, 2008


















REPORT OF
INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS




To the
Shareholders of Platinum Group Metals Ltd. (An exploration stage
company)




We have
audited the consolidated statement of operations of Platinum Group Metals Ltd.
(an exploration stage company) and cash flows for the year ended August 31,
2006. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.




We
conducted our audit in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States). These standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.




In our
opinion, these consolidated financial statements present fairly, in all material
respects, the results of its operations and its cash flows for the year ended
August 31, 2006 in accordance with Canadian generally accepted accounting
principles.




The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion.









"Deloitte
& Touche LLP"


Independent
Registered Chartered Accountants


November
8, 2006




COMMENTS
BY AUDITORS ON CANADA - UNITED STATES OF AMERICA REPORTING
DIFFERENCES




The
standards of the Public Company Accounting Oversight Board (United States)
require the addition of an explanatory paragraph when the financial statements
are affected by conditions and events that cast substantial doubt on the
Company’s ability to continue as a going concern, such as those described in
Note 1 to the 2006 consolidated financial statements. Although we conducted our
audits in accordance with both Canadian generally accepted auditing standards
and the standards of the Public Company Accounting Oversight Board (United
States), our report to the Shareholders dated November 8, 2006 is expressed in
accordance with Canadian reporting standards which do not permit a reference to
such conditions and events in the auditors’ report when these are adequately
disclosed in the consolidated financial statements.




The
standards of the Public Company Accounting Oversight Board (United States)
require the addition of an explanatory paragraph (following the opinion
paragraph) when there are changes in accounting principles that have a material
effect on the comparability of the Company’s consolidated financial statements,
such as the change described in Note 2 (f) to the 2006 consolidated financial
statements. Our report to the shareholders, dated November 8, 2006, is expressed
in accordance with Canadian reporting standards which do not require a reference
to such changes in accounting principles in the auditors’ report when the change
is properly accounted for and adequately disclosed in the consolidated financial
statements.









"Deloitte
& Touche LLP"


Independent
Registered Chartered Accountants


November
8, 2006











See
accompanying notes to the consolidated financial statements.





See
accompanying notes to the consolidated financial statements.





See
accompanying notes to the consolidated financial statements.





See
accompanying notes to the consolidated financial statements.
 
 Platinum
Group Metals Ltd.
 (An
exploration stage company)
 Notes to
the consolidated financial statements
 
 For the
year ended August 31, 2008







1.           NATURE
OF OPERATIONS




The
Company is a British Columbia corporation incorporated on February 18, 2002 by
an order of the Supreme Court of British Columbia approving an amalgamation
between Platinum Group Metals Ltd. and New Millennium Metals Corporation (“New
Millennium”). The Company is an exploration and development company conducting
work on mineral properties it has staked or acquired by way of option agreements
in Ontario, Canada and the Republic of South Africa.




2.           SIGNIFICANT
ACCOUNTING POLICIES




i)  These
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (“Canadian GAAP”) and include the
significant policies outlined below.





(a)           Basis
of presentation and principles of consolidation




The
financial statements of entities which are controlled by the Company through
voting equity interest, referred to as subsidiaries, are consolidated. Variable
interest entities (“VIEs”), which include, but are not limited to, special
purpose entities, trusts, partnerships and other legal structures, as defined by
the Accounting Standards Board in Accounting Guideline 15, “Consolidation of
Variable Interest Entities”, are entities in which equity investors do not have
the characteristics of a “controlling financial interest” or there is not
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support. VIEs are subject to consolidation by
the primary beneficiary who will absorb the majority of the entities’ expected
losses and/or residual returns.





These
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiary, Platinum Group Metals (RSA) (Pty) Ltd. (“PTM
RSA”). PTM RSA holds mineral rights and conducts operations in the Republic of
South Africa. All significant intercompany balances and transactions have been
eliminated upon consolidation.





The
Company’s 37% working interest in the WBJV (Note 5 and Note 15(a)) is accounted
for as an investment in the WBJV.





(b)           Mineral
properties and deferred exploration costs




Mineral
properties consist of exploration and mining concessions, options, contracts and
surface rights. Acquisition and leasehold costs, exploration costs and surface
rights are capitalized until such time as the property is put into production or
disposed of either through sale or abandonment. If put into production, the
costs of acquisition and exploration will be amortized on a straight line basis
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 are written off to operations.





Management
of the Company reviews and evaluates the carrying value of each mineral property
for impairment when events or changes in circumstances indicate that the
carrying amounts of the related asset may not be recoverable. Where estimates of
future net cash flows are available and the total estimated future cash flows on
an undiscounted basis are less than the carrying amount of the asset, an
impairment loss is recognized and assets are written down to fair value which is
normally determined using the discounted value of future cash flows. Where
estimates of future net cash flows are not available and where other conditions
suggest impairment, management assesses whether the carrying value can be
recovered by considering alternative methods of determining fair value. When it
is determined that a mineral property is impaired it is written down to its
estimated fair value.





(c)           Cash
and cash equivalents




Cash and
cash equivalents consist of cash and short-term money market instruments, which
are readily convertible to cash and have original maturities of 90 days or less.
The Company holds no asset-backed commercial paper.





(d)           Reclamation
and closure costs




The
Company recognizes the estimated fair value of liabilities for asset retirement
obligations including reclamation and closure costs in the period in which they
are incurred. A corresponding increase to the carrying amount of the related
asset is recorded and amortized over the life of the asset. The amount of the
liability is subject to re-measurement at each reporting period and is accreted
over time to the estimated asset retirement obligation ultimately payable
through charges to operations.





The
estimates are based principally on legal and regulatory requirements. It is
possible that the Company’s estimates of its ultimate reclamation and closure
liabilities could change as a result of changes in regulations, the extent of
environmental remediation required, changes in technology and the means and cost
of reclamation. Based on management’s estimates, the Company has determined that
there are no significant reclamation liabilities as at year end.





(e)           Income
taxes




Future
income taxes relate to the expected future tax consequences of differences
between the carrying amount of balance sheet items and their corresponding tax
values. Future tax assets, if any, are recognized only to the extent that, in
the opinion of management, it is more likely than not that the future income tax
assets will be realized. Future income tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment or
substantive enactment.





(f)           Fixed
assets




Fixed
assets are recorded at cost and are amortized at the following annual
rates:






`    Computer equipment
and sofware  30% declining
balance





Vehicles                                                         30%
declining balance


Leasehold
improvements                           2
years straight line







(g)           Short-term
investments




Short-term
investments comprise guaranteed investment certificates with original maturities
of more than 90 days and less than one year.





(h)           Earnings
(loss) per common share




Basic
earnings (loss) per common share is calculated using the weighted average number
of common shares outstanding.





The
Company uses the treasury stock method for the calculation of diluted earnings
per share. Diluted per share amounts reflect the potential dilution that could
occur if securities or other contracts to issue common shares were exercised or
converted to common shares. In periods when a loss is incurred, the effect of
potential issuances of shares under options and share purchase warrants would be
anti-dilutive, and accordingly basic and diluted loss per share are the
same.





(i)           Measurement
uncertainty




The
preparation of financial statements in conformity with Canadian 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 expenditures during the reporting period.
Significant items where management’s judgement is applied include the assessment
of impairment of long-lived assets, amortization, income tax provisions,
contingent liabilities, stock-based compensation and asset retirement
obligations. Actual results could differ from those estimates.





(j)
            Translation of foreign
      currencies




These
consolidated financial statements are expressed in Canadian dollars. For
integrated foreign operations, monetary assets and liabilities are translated at
year end exchange rates and other assets and liabilities are translated at
historical rates. Revenues, expenses and cash flows are translated at average
exchange rates. Gains and losses on translation of monetary assets and monetary
liabilities are charged to operations.





The
investment in the WBJV translated at year end exchange rates, and revenues and
expenses are translated at average exchange rates. Differences arising from
these foreign currency translations are recorded in shareholders’ equity in
accumulated other comprehensive income until they are realized by a reduction in
the investment.





(k)           Stock-based
compensation




The fair
values for all stock-based awards granted are estimated using the Black-Scholes
model and are recorded in operations over the period of vesting. The
compensation cost related to stock options granted is recorded in operations or
capitalized to the investment in WBJV or mineral properties, as
applicable.





Cash
received on the exercise of stock options is credited to share capital and the
amount previously recognized in contributed surplus is also transferred to share
capital.


(l)
            Changes in accounting
      policies




Effective
September 1, 2007, the Company adopted CICA Handbook Sections 3855 Financial Instruments – Recognition
and Measurement; Section 3861 Financial Instruments – Disclosure
and Presentation; Section 3865 Hedges; Section 1530 Comprehensive Incomeand
Section 3251 Equity. As
the Company has not undertaken hedging activities, adoption of Section 3865
currently has no impact. Prior to September 1, 2007, the principal accounting
policies affecting financial instruments related to marketable securities that
were valued at the lower of original cost and fair market value.





CICA
Section 3855 requires that all financial assets, except those classified as held
to maturity, and loans and receivables, must be measured at fair value. All
financial liabilities are measured at fair value when they are classified as
held-for trading; otherwise, they are measured at amortized cost. Investments
classified as available-for-sale are reported at fair value based on quoted
market bid prices with unrealized gains or losses excluded from earnings and
reported as other comprehensive income or loss. Those instruments classified as
held-for-trading, have gains or losses included in earnings in the period in
which they arise.  All of the Company’s marketable securities have
been designated as available-for-sale.





Comprehensive
income is the change in a company’s net assets that results from transactions,
events and circumstances from sources other than its shareholders and includes
items that would not normally be included in net earnings or loss such as
unrealized gains or losses on available-for-sale investments.





(m)           Financial
instruments




The
Company’s financial instruments are comprised of cash and cash equivalents,
short-term investments, marketable securities, amounts due from WBJV partners,
accounts payable and accrued liabilities and advances from WBJV
partners.   Unless otherwise stated it is management’s opinion
that the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.





Cash and
cash equivalents are recognized at their fair value and the carrying value of
all other financial instruments approximate their fair values due to their
short-term maturity or their capacity of prompt liquidation. Marketable
securities are recorded in the financial statements at fair value.


(n)           New
accounting pronouncements





Canadian
GAAP





Capital
disclosures and financial instruments – disclosures and
presentation





On  December  1,  2006,  the  CICA  issued  three  new  accounting  standards:   Handbook
Section  1535,  “Capital  Disclosures”,  Handbook  Section  3862,
Financial  Instruments  –
Disclosures”,  and  Handbook  Section  3863,
“Financial  Instruments  –  Presentation”.  These  standards  are  effective  for  interim  and  annual  financial  statements  for  the
Company’s reporting period beginning on September 1, 2008.





Section  1535  specifies  the  disclosure  of  (i)  an  entity’s  objectives,  policies  and  processes
for managing capital; (ii) quantitative data about what the entity regards as
capital; (iii) whether  the  entity  has
complied  with  any  capital  requirements;  and  (iv)  if  it  has  not
complied, the consequences of such non-compliance.





The new
Sections 3862 and 3863 replace Handbook Section 3861, “Financial Instruments –
Disclosure and Presentation”, revising and enhancing its disclosure
requirements, and carrying forward unchanged its presentation
requirements.  These new sections
place  increased  emphasis  on  disclosures  about  the  nature  and  extent  of  risks  arising  from
financial instruments and how a company manages those risks.





The
Company is currently assessing the impact of these new accounting standards on
its financial statements.





General
standards on financial statement presentation





CICA
Handbook Section 1400, “General Standards on Financial Statement Presentation”,
has been amended to include requirements to assess and disclose an entity’s
ability to continue as a going concern.  The changes are effective for
interim and annual financial statements for the Company’s reporting period
beginning September 1, 2008.





Goodwill
and Intangible Assets





The  CICA  issued  the  new  Handbook  Section  3064,  “Goodwill   and  Intangible  Assets”,
which will  replace Section 3062, “Goodwill  and Intangible
Assets”.  The new standard establishes revised standards for the
recognition, measurement, presentation and disclosure of goodwill and intangible
assets.  The new standard also provides guidance
for  the  treatment  of  preproduction  and  startup  costs  and  requires  that  these  costs  be
expensed  as  incurred. The new standard applies to annual
and interim financial statements relating to fiscal years beginning on or after
October 1, 2008.  Management is
currently  assessing  the  impact  of  these  new  accounting
standards  on  its  financial statements. Adoption
of this standard will result in the withdrawal of EIC 27.







3.           AMOUNTS
RECEIVABLE







Expenditure
advances receivable consist of funds advanced to officers, directors and
consulting geologists for exploration and corporate activities conducted in the
normal course of business and bear no interest.




4.           MARKETABLE
SECURITIES




At August
31, 2008, the Company has the following marketable securities recognized at fair
value:





Available-for-sale
      securities
            Number
      of
              Shares
            Cost
      ($)
            Accumulated
      Unrealized
              Gains
      ($)
            Fair
              Value
      ($)MAG
      Silver Corp.
            100,000
            50,000
            740,000
            790,000West
      Timmins Mining Inc.
            800,001
            160,000
            168,000
            328,000Total
      Marketable Securities
            210,000
            908,000
            1,118,000








At August
31, 2007, the Company has the following marketable securities recognized at
cost:





Number
      of
              Shares
            Cost
      ($)
            Fair
              Value
      ($)MAG
      Silver Corp.
            100,000
            50,000
            1,300,000West
      Timmins Mining Inc.
            800,001
            160,000
            784,001Total
      Marketable Securities
            210,000
            2,084,001








On
September 1, 2007, pursuant to adoption of the new CICA Handbook Section 3855
Financial Instruments –
Recognition and Measurement, the Company recorded an adjustment to
increase the carrying value of marketable securities by $1,874,001 with a
corresponding adjustment to accumulated other comprehensive income less the
future income tax adjustment of $281,100. The adjustment represents the
after-tax unrealized gain on available-for-sale marketable securities held by
the Company at September 1, 2007.





During
the year ended August 31, 2008 after an adjustment of a future income tax
recovery of $144,900 the Company recognized an unrealized loss of $821,101 (2007
- $nil) on marketable securities designated as available-for-sale instruments in
other comprehensive income.





Both of
the above marketable securities are related parties of the Company, as discussed
in Note 9.







5.  INVESTMENT
IN WESTERN BUSHVELD JOINT VENTURE (THE “WBJV”)




Aug.
      31, 2008
            Aug.
      31, 2007Opening
      Balance
            $14,779,302
            $10,861,834Additional
      investment
            7,155,970
            3,917,468Balance
      before translation
            21,935,272
            14,779,302Translation
      adjustment
            (3,040,647)
            (2,365,876)Ending
      Balance
            $18,894,625
            $12,413,426





Details
of the assets of the WBJV, excluding the property rights contributed by the
other venture partners, are as follows:











On
October 26, 2004 the Company entered into the Western Bushveld Joint Venture
(the “WBJV”) with a subsidiary of Anglo Platinum Limited (“Anglo Platinum”) and
Africa Wide Mineral Prospecting and Exploration (Pty) Limited (“Africa Wide”) to
pursue platinum exploration and development on combined mineral rights covering
approximately 67 square kilometres on the Western Bushveld Complex of South
Africa. The transaction closed effective January 26, 2005. The Company
contributed all of its interests in portions of the farms Onderstepoort 98JQ and
Elandsfontein 102JQ. Anglo Platinum contributed its interests in portions of the
farms Koedoesfontein 94JQ, Elandsfontein 102JQ and Frischgewaagd 96JQ. Later, in
2007, Anglo Platinum contributed its 50% interest in Portion 11 of the farm
Frischgewaagd bringing the total area of the WBJV to approximately 72 square
kilometres. The Company and Anglo Platinum each hold a 37% working interest in
the WBJV, while Africa Wide holds a 26% working interest.





In April
2007 the shareholders of Africa Wide sold 100% of their company to Wesizwe
Platinum Ltd (“Wesizwe”). The transaction closed in September 2007 and since
then Wesizwe has become responsible for all of the rights and obligations of
Africa Wide.





The
Company is the operator of the WBJV. From October 2004 to April 2006 the Company
funded an earn-in exploration program in the amount of Rand 35 million (at
August 31, 2005 approx. C$6.44 million). Since then the partners of the WBJV
have funded expenditures pro-rata based upon their working interest in the Joint
Venture. From April 2006 to April 2008 the partners to the WBJV approved budgets
in the amount of Rand 124 million (approximately C$16.5 million). At August 31,
2008 total contributions of $720,958 were owing to from Anglo Platinum
(approximately $420,000 or Rand 3.042 Million) and Africa Wide (approximately
$301,000 or Rand 2.182 million).  These balances were recorded as
receivables by the Company and payment was received subsequent to the end of the
year. At August 31, 2007 Anglo Platinum had an unspent contribution balance
of Rand 24,517,766 (C$3,613,919) which was used to fund their pro-rata share of
further expenditures on the WBJV. At August 31, 2007 Africa Wide owed
approximately Rand 20,296,777 (C$2,991,745) in outstanding contributions. This
amount was recorded as a receivable by the Company at August 31, 2007 and was
received in the year ended August 31, 2008 from Wesizwe.





The
Company published a Feasibility Study for Project 1 of the WBJV on July 7,
2008.  Based on the WBJV resource estimate prepared for this document
the respective deemed capital contribution of each party will be credited by
adding their contribution of measured, indicated, and inferred platinum group
element ounces from the original contributed properties comprising the WBJV,
determined in accordance with the South African Mineral Resource Committee
(“SAMREC”) code. Inferred ounces will be credited at US$0.50 per ounce,
indicated ounces will be credited at US$3.20 per ounce and measured ounces will
be credited at US$6.20 per ounce. Ounces contributed to the WBJV by Anglo
Platinum in 2007 from a 50% interest in Portion 11 of the Farm Frischgewaagd 96
JQ will receive an equalization credit of US$0.62 per inferred ounce, US$10.37
per indicated ounce and US$39.55 per measured four element or “4E” ounce of
combined platinum, palladium, rhodium and gold.  Each party will then have
the opportunity to make a one-time equalizing payment or contribute additional
capital in order to catch up any resulting shortfall in their contributed
capital and thereby maintain their respective working interest in the JV. At
August 31, 2008 the Company’s equalization payment due to Anglo Platinum was
calculated at approximately US $20.0 million. Under the terms of the WBJV
agreement the equalization payment will become payable subsequent to a decision
to mine by the WBJV. Should a party not wish to participate, the JV agreement
provides a mechanism whereby the parties may elect to become “non-contributory”
parties to the JV and by doing so they would be subject to
dilution.





The
initial exchange of the Company’s pre-existing interests in the Elandsfontein
and Onderstepoort properties for the interest in WBJV was recorded at cost as it
represents a non-monetary exchange. The Company’s earn-in expenditure of Rand 35
million was also recorded as a cost of the investment.





Effective
May 31, 2006 the Company concluded that the functional currency of WBJV was the
South African Rand as expenditures in the WBJV were principally being incurred
in Rand and funded by advances from the venturers which were denominated in
Rand. The Company therefore considers its equity investment in the WBJV to be
self sustaining and it translates its share of net equity of WBJV using the
current rate method with translation gains and losses included in accumulated
other comprehensive income as a separate component of shareholders’
equity.







(a)
            Elandsfontein
      interest




In
December 2002 the Company acquired an option to purchase 100% of the surface and
mineral rights to 365.64 hectares of the farm Elandsfontein 102 JQ located in
the Western Bushveld area. The Company made an initial payment to the Vendors of
Rand 150,000 (approx. C$29,500) and agreed to terms for the purchase of
both mineral and surface rights.





The
Company exercised its option to purchase the Elandsfontein property by way of
written notice on June 26, 2003. In 2005 the Company purchased all surface and
mineral rights to the property in exchange for Rand 7.0 million (approximately
C$1.4 million). In September 2005 the Company was granted a “New Order”
prospecting permit under the new Mineral and Petroleum Resources Development Act
(2002) over the Elandsfontein property.





(b)
            Onderstepoort
      interest




During
2003 the Company entered into option agreements to acquire mineral rights on
seven portions of the farm Onderstepoort 98 JQ located in the Western Bushveld.
The Company could earn 100% of the mineral rights over certain portions and 50%
of the mineral rights over the balance. The Company now holds New Order
prospecting permits on all of these farm portions.  Since 2003 the
Company has paid Rand 834,000 in option payments for the
properties.





During
fiscal 2007 the Company negotiated and executed the buy-out and cancellation of
one of the option agreements to acquire a 50% undivided interest in two farm
portions in exchange for 50,000 common shares of the Company valued at
$230,000.   During fiscal 2008 the Company negotiated and
executed the buy-out and cancellation of the remaining option agreements for all
remaining farm portions for one additional payment of 50,000 shares of the
Company valued at $165,500.







6.           MINERAL
PROPERTIES







Year
ended August 31, 2008














Year
ended August 31, 2007







(a)           Republic
of South Africa




(i)           War
Springs and Tweespalk




On June
3, 2002, the Company acquired an option to earn a 100% interest in the 2,396
hectare War Springs property and the 2,177 hectare Tweespalk property both
located in the Northern Limb or Platreef area of the Bushveld Complex north of
Johannesburg. Acquisition and exploration costs on these properties to August
31, 2008 total $3,524,754 (August 31, 2007 - $3,394,062).




Under the
Old Order permits, the Company could purchase 100% of these mineral rights at
any time for US$690 per hectare. The Company had also agreed to pay prospecting
fees to the vendors of US$3.25 per hectare. The vendors retain a 1% NSR Royalty
on the property, subject to the Company’s right to purchase the NSR at any time
for US$1.4 million. A 5% finders’ fee applies to vendor
payments.





Under the
new Mineral and Petroleum Resources Development Act (2002), which became
effective in May 2004, Old Order permits were to be converted into New Order
permits during a transition period. This process is now complete for the War
Springs and Tweespalk properties. The June 3, 2002 option agreement
provides for amendments as may be needed to maintain the parties in the same
commercial position as they were in under the preceding mineral legislation and
such amendments are yet to be completed.





Black
Economic Empowerment groups Africa Wide, a subsidiary of Wesizwe Platinum Ltd.
and Taung Minerals (Pty) Ltd., a subsidiary of Platmin Limited, have each
acquired a 15% interest in the War Springs project carried to bankable
feasibility. The Company retains a net 70% project interest.





Africa
Wide has a 30% participating interest in the Tweespalk property. During the
year, the Company received payment in full from Wesizwe Platinum Ltd. for Africa
Wide’s share of costs to August 31, 2007, which amounted to Rand 1,549,673
(C$211,840 at August 31, 2008). The payment was treated as a recovery of costs
relating to the Tweespalk property.





(b)           Ontario,
Canada




(i)           Lac
des Iles (“LDI”) River




On
May 5, 2000, New Millennium entered into an option agreement to acquire a
50% interest in the Lac des Iles River property located near Thunder Bay,
Ontario in exchange for cash payments ($43,500 paid in total) and the completion
of exploration expenditures. On October 6, 2006, the Company and the property
vendors entered into a termination and sale agreement whereby the option
agreement was cancelled and the Company purchased an undivided 100% interest in
the property subject only to underlying 2.0% Net Smelter Return Royalties. In
settlement the Company made a one-time payment to the vendors of $50,000 in lieu
of past and future exploration expenditure commitments not
incurred.





(ii)           South
Legris




In April
2000, and later as amended in January 2005, the Company acquired an option to
earn a 50% interest in the South Legris property located near Thunder Bay,
Ontario in exchange for cash payments ($105,000 paid in total) and the
completion of certain exploration expenditures. On October 13, 2006, the Company
and the property vendors entered into a termination and sale agreement whereby
the option agreement was cancelled and the Company purchased an undivided 100%
interest in the property subject only to underlying 2.0% Net Smelter Return
Royalties. In settlement the Company made a one-time payment of $50,000 in lieu
of past and future exploration expenditure commitments not
incurred.





(iii)
            Shelby
      Lake




On June
28, 2000, New Millennium entered into an option agreement to earn up to 60%
interest in the Shelby Lake property, located near Thunder Bay, Ontario in
exchange for cash payments of $15,000 (paid), issue 30,303 shares (issued) and
complete $500,000 in exploration expenditures over a four-year period. On
October 18, 2006, the Company and the property vendor entered into a termination
and sale agreement whereby the option agreement was cancelled and the Company
purchased an undivided 100% interest in the property for a one-time payment of
$5,000 subject only to an underlying 2.0% Net Smelter Return Royalty, of which
the Company may buy back one half for $500,000.





(v)           Lakemount




On
November 6, 2003 the Company acquired an option to earn up to a 62% interest in
the Lakemount property located near Wawa, Ontario. Exploration results on the
project to date have been of interest, but in light of certain title
deficiencies and a complex title chain, the Company has abandoned the project.
During fiscal 2007, deferred acquisition and exploration costs relating to the
project in the amount of $1,323,222 were written off.





(c)           Title
to mineral properties




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
non-compliance with regulatory requirements.










7.           FIXED
ASSETS






(a)           Equipment,
Leaseholds and Vehicles
















(b)           Surface
Rights





During
the year ended August 31, 2008 the Company purchased surface rights adjacent to
the WBJV Project 1 deposit area measuring 216.27 hectares for an amount of Rand
8.0 million (approx. C$1.09 million).  During the year the Company
also entered into a legally binding agreement for the purchase of surface rights
directly over a portion of the WBJV Project 1 deposit area measuring 358.79
hectares for an amount of Rand 15.07 million (approx. C$2.07
million).  Prior to year end the Company paid a 10% deposit of Rand
1.507 million (approx. C$0.20 million) for this property, leaving the balance
due upon statutory registration of the surface rights in the Company’s name,
expected to occur before December 31, 2008. The balance of Rand 13.562 (approx.
C$1.87 million) is recorded in accounts payable at August 31, 2008. The rights
to these two properties are to the benefit of the Company only and are distinct
from the 365.64 hectare Elandsfontein Farm held for the benefit of the WBJV
(Note 5(a)).




8.           SHARE
CAPITAL




(a)           Authorized




Unlimited
common shares without par value





(b)           Issued
and outstanding




At August
31, 2008 there were 62,649,247 shares outstanding.





During
the year ended August 31, 2008:





(i)
            850,000
      share purchase warrants were exercised for proceeds of $1,487,500 and
      760,500 stock options were exercised for proceeds of
    $821,824.





(ii)
            the
      Company issued 50,000 common shares in connection with the acquisition of
      mineral properties at a fair value of $165,500. A filing fee of $2,264
      related to this issue of shares was paid by the
  Company.





During
the year ended August 31, 2007:





(iii)
            6,333,194
      share purchase warrants were exercised for proceeds of $11,454,791 and
      914,375 stock options were exercised for proceeds of
    $625,575.





(iv)
            the
      Company issued 50,000 common shares in connection with the acquisition of
      mineral properties at a fair value of $230,000. A filing fee of $2,258
      related to this issue of shares was paid by the
  Company.





During
the year ended August 31, 2006:





(v)
            the
      Company issued 25,000 common shares in connection with the acquisition of
      mineral properties at a fair value of
$40,000.





(vi)
            843,047
      share purchase warrants were exercised for proceeds of $1,181,305 and
      164,500 stock options were exercised for proceeds of
    $117,750.





(vii)
            the
      Company closed non-brokered private placements for 2.2 million units at a
      price of $1.45 per unit. Each unit consisted of one common share and one
      half a common share purchase warrant, with each whole warrant exercisable
      into a common share at a price of $1.75 for a period of 18 months until
      April 13-21, 2007. Filing fees of $7,000 and a finder’s fee of $45,704
      related to this financing were paid by the Company in
  cash.





(viii)
            the
      Company closed a non-brokered private placement for 1.7 million units at a
      price of $1.45 per unit. Each unit consisted of one common share and one
      half a common share purchase warrant, with each whole warrant exercisable
      into a common share at a price of $1.75 for a period of two years until
      March 6, 2008. Filing fees of $7,532 related to this financing were paid
      by the Company in cash.





(vii)
            the
      Company closed a brokered private placement for 5.6 million units at a
      price of $1.80 per unit. Each unit consisted of one common share and one
      half a common share purchase warrant. Each whole warrant is exercisable to
      purchase an additional common share until March 31, 2007 at a price of
      $2.10 per share. Agent’s fees amounted to 7.0% of gross proceeds, which
      totalled $705,600, which was paid in cash. The Agents’ legal and other
      costs totalling $56,000 were paid by the Company. The Company also paid
      $23,498 as a filing fee.







(c)
            Incentive
      stock options





The
Company has entered into Incentive Stock Option Agreements (“Agreements”) with
directors, officers and employees. Under the terms of the Agreements, the
exercise price of each option is set at a minimum, at the fair value of the
common shares at the date of grant. Certain stock options granted to employees,
directors and officers of the Company vest on average at an amount of 25% per
six month period.





The
following tables summarize the Company’s outstanding stock options:











The
weighted average exercise price of the exercisable options at year end was
$2.00.











(i)
            During
      the year ended August 31, 2008 the Company granted 1,367,500 stock options
      to employees. The Company has recorded $1,288,383 ($580,128 expensed and
      $708,255 capitalized to the WBJV) of compensation expense relating to
      stock options granted or vested in this
year.





The
following weighted average assumptions were used in valuing stock options
granted during the year:











(ii)
            During
      the year ended August 31, 2007 the Company granted 1,265,000 stock options
      to employees. The Company has recorded $1,487,661 of compensation expense
      relating to stock options granted or vested in this
  year.





The
following weighted average assumptions were used in valuing stock options
granted during the year:














(d)
            Share
      purchase warrants









9.           RELATED
PARTY TRANSACTIONS







Transactions
with related parties are as follows:





(a)
            Management,
      salary, consulting fees, and Director’s fees of $524,807 (2007 - $500,821,
      2006 - $354,710) were incurred with directors during the year. At August
      31, 2008, $75,000 was included in accounts payable (2007 -
      $21,869).





(b)
            The
      Company received $135,895 (2007 - $138,210, 2006 - $135,340) during the
      year from MAG Silver Corp. (“MAG”), a company with two directors in common
      and a officer in common, under the terms of a 2003 service agreement for
      administrative services. Amounts receivable at the end of the year
      includes an amount of $1,819 due from MAG for other trade receivables
      (2007 - $267).





(c)
            During
      the year the Company accrued or received payments of $108,000 (2007 –
      $67,200, 2006 – 27,300) from West Timmins Mining Inc. (“WTM”), a company
      with three directors in common and a officer in common, for administrative
      services. Amounts receivable at the end of the year includes an amount of
      $997 due from WTM for other trade receivables (2007 - $16,895 for both
      administration fees due ($9,540) and other trade receivables
      ($7,355)).





(d)
            The
      Company entered into an office lease agreement with Anthem Works Ltd.
      (“Anthem”), a company with a director in common in 2005. During the year
      ended August 31, 2008 the Company accrued or paid Anthem $88,382 under the
      office lease agreement (2007 - $66,684, 2006 -
  $62,333).





All
amounts in Amounts receivable and Accounts payable owing to or from related
parties are non-interest bearing with no specific terms of
repayment.





These
transactions are in the normal course of business and are measured at the
exchange amount, which is the consideration established and agreed to by the
noted parties.







10.           CONTINGENCIES
AND COMMITMENTS







The
Company’s remaining minimum payments under its office and equipment lease
agreements, which it has entered into for the years ending on August 31, as well
as PTM RSA’s commitments, are as follows, as at August 31, 2008.










11.           SUPPLEMENTARY
CASH FLOW INFORMATION




(a)           Net
change in non-cash working capital







Of the
$2,875,761 in accounts payable at August 31, 2008 an amount of $54,000
(approximately Rand 391,000) was incurred on behalf of the WBJV, and $1,872,000
(approximately Rand 13.6 million) was accrued for Surface rights. The Company
also issued shares to the value of $165,500 during the year for property
acquisitions.





(b)           Cash
and cash equivalents




Cash and
cash equivalents consist of the following:













12.           SEGMENTED
INFORMATION







The
Company operates in one operating segment, that being exploration on mineral
properties. Segmented information presented on a geographic basis
follows:





Assets







Assets
relate to properties situated as follows:













Results
of Operations















13.
            INCOME
      TAXES




The
provision for income taxes reported differs from the amounts computed by
applying statutory Canadian federal and provincial tax rates to the loss before
tax provision due to the following:









The
approximate tax effect of the temporary differences that gives rise to the
Company’s future income tax assets and liability are as follows:










At August
31, 2008, the Company has non-capital loss carry forwards available to offset
future taxable income in Canada of $13 million, which expire at various dates
from 2009 to 2028.









14.
            DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES







These
consolidated financial statements have been prepared in accordance with Canadian
GAAP, which differs in certain respects from US GAAP. The significant
differences between Canadian and US GAAP affecting the Company’s consolidated
financial statements are summarized as follows:





Consolidated
Balance Sheets

















Consolidated
Statements of Operations












Consolidated
Statements of Cash Flows














(a)           Investment
in WBJV




Under
Canadian and US GAAP the Company accounts for its working interest in the WBJV
as an investment in the WBJV. Under US GAAP exploration costs are expensed,
whereas under Canadian GAAP these expenditures are capitalized to the investment
in WBJV.





Under US
GAAP, during the year ended August 31, 2008 the Company incurred $5,881,821
(2007 - $3,625,104; 2006 - $4,998,447) in exploration expenditures on behalf of
the WBJV and recorded a corresponding amount in the consolidated statement of
operations.





In
addition, under Canadian GAAP the Company capitalized costs to the investment in
WBJV that do not have an associated tax basis and which resulted in a future
income tax liability of $289,749. Under Canadian GAAP, the Company adjusted the
valuation allowance for future income tax assets by $289,749 and recorded a
future income tax recovery of $289,749. Under US GAAP, the costs are not
capitalized and a future income tax liability is not recorded. Accordingly,
under US GAAP the Company has recorded an adjustment to decrease the future
income tax recovery in the statement of operations by $289,749.







(b)           Exploration
expenses




Canadian
GAAP allows exploration costs to be capitalized during the search for a
commercially mineable body of ore if the Company considers such costs to have
the characteristics of fixed assets. Under US GAAP, exploration expenditures on
mineral property costs can only be deferred subsequent to the establishment of
mining reserves as defined under SEC regulations. For US GAAP purposes the
Company has expensed exploration expenditures in the period incurred. The
Company believes that these cash expenditures under US GAAP are also more
appropriately classified as cash operating activities as they were funded by the
Company in the respective periods.








(c)
            Marketable
      securities





Prior to
September 1, 2007, the accounting for the Company’s marketable securities was
different under US GAAP compared with the accounting under Canadian GAAP.
Effective September 1, 2007, the Company adopted CICA Section 3855, Financial Instruments, which
requires financial instruments to be carried in the financial statements at fair
value. Accordingly, under Canadian GAAP the Company increased the carrying value
on implementation of Section 3855 by $1,874,001 which is equal to the adjustment
recorded for US GAAP purposes at August 31, 2007. However, the accounting for
future income taxes with respect to his adjustment is different under Canadian
and US GAAP. Under Canadian GAAP, the Company recorded a future income tax
liability of $281,100 with a corresponding amount recorded to accumulated other
comprehensive income. In addition, under Canadian GAAP the Company adjusted the
valuation allowance for future income tax assets by $281,100 and recorded a
future income tax recovery of $281,100 in the statement of operations. Under US
GAAP, the adjustment to the valuation allowance would have been recorded to
accumulated other comprehensive income. Therefore under US GAAP the Company has
recorded an adjustment to decrease future income tax recovery by $281,100 and
increase the transitional adjustment to accumulated other comprehensive income
by $281,100, resulting in a nil impact for US GAAP purposes on the statement of
operations.




During
the year ended August 31, 2008, decreases in the fair value of the Company’s
marketable securities resulted in decreases in the future tax liability of
$144,900 and required the Company to increase its valuation allowance for future
income tax assets and accordingly the Company recorded income tax expense of
$144,900 for Canadian GAAP purposes in the statement of operations. For US GAAP
purposes the Company recorded an adjustment to decrease future tax expense by
$144,900 with a corresponding increase to other comprehensive income. The net
amount of $136,200 is reflected as a GAAP difference for the year ended August
31, 2008 in the statement of operations.




SFAS No.
130, Reporting Comprehensive
Income, requires that an enterprise report, by major components and as a
single total, the change in its net assets during the period from non-owner
sources. The impact of SFAS No. 130 on the Company’s financial statements is as
follows:










(d)           Future
income taxes




During
the year ended August 31, 2006 a future income tax recovery of $5,506 was
recorded under US GAAP relating to flow-through shares previously issued. Under
Canadian GAAP, flow-through shares are recorded at their face value, net of
related issuance costs. When eligible expenditures are made, the carrying value
of these expenditures may exceed their tax value due to the renunciation of the
tax benefit by the Company. The tax effect of this temporary difference is
recorded as a cost of issuing the shares.




The
Financial Accounting Standards Board (“FASB”) staff has taken the view that
under SFAS No. 109, Accounting for Income Taxes, the proceeds from issuance
should be allocated between the offering of shares and the sale of tax benefits.
The allocation is made based on the difference between the quoted price of the
existing shares and the amount the investor pays for the shares. A liability is
recognized for this difference. The liability is reversed when tax benefits are
renounced and a deferred tax liability is recognized at that time. Income tax
expense is the difference between the amount of deferred tax liability and the
liability recognized on issuance.






(e)           Accounting
for stock-based compensation






Under US
GAAP, the Company follows FASB Interpretation 44 which states that when fixed
stock option awards to employees and directors are modified, the stock options
must be accounted for as variable from the date of modification to the date the
stock options are exercised, forfeited or expire unexercised. The Company
re-priced 65,000 stock options issued to employees and directors on March 6,
2002 and accounts for these options as variable with any increase in the market
price over the reduced exercise price must be recognized as compensation cost.
During the year ended August 31, 2006 changes in the market price of the
Company’s common shares resulted in additional compensation expense of $50,200.
At August 31, 2008 and 2007 none of these options remained
outstanding.





(f)            Adopted
accounting pronouncements




Effective
September 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes” (FIN 48). This interpretation clarifies the
recognition threshold and measurement of a tax position taken on a tax return,
and requires expanded disclosure with respect to the uncertainty in income
taxes. The adoption of FIN 48 on September 1, 2007 did not impact the Company’s
financial condition or results of operations.




(g)            Recent
accounting pronouncements




In
September 2006, the FASB issued SFAS 157, Fair Value Measurements (“SFAS 157”),
which is effective for fiscal years beginning after November 15, 2007 and for
interim periods within those years. During 2008, the FASB issued FASB Staff
Position No. FAS 157-2 (“FSP FAS 157-2”), which delays the effective date of
SFAS 157 to fiscal years beginning after November 15, 2008 for all nonrecurring
fair value measurements of non financial assets and non financial liabilities
that are recognized or disclosed at fair value in the financial statements on a
nonrecurring basis including those measured at fair value in goodwill impairment
testing, asset retirement obligations initially measured at fair value, exit and
disposal costs initially measured at fair value, and those initially measured at
fair value in a business combination. SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. The Company is currently evaluating the impact that SFAS 157 and
FSP FAS 157-2 will have on its financial statements.





In
February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159 “The Fair Value Option for Financial Assets and Financial
Liabilities” (“SFAS 159”) including an amendment of FASB Statement No. 115.
This Statement permits entities to choose to measure many financial instruments
and certain other items at fair value. Most of the provisions of this Statement
apply only to entities that elect the fair value option. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years, and is applicable beginning in the Company’s
first quarter ended November 30, 2008. The Company is currently evaluating the
impact that FAS 159 will have on its financial statements.








In
December 2007, the FASB issued Statement No. 141 (revised 2007), “Business
Combinations” (SFAS No. 141(R)). This Statement replaces SFAS No. 141, “Business
Combinations” and requires an acquirer to recognize the assets acquired, the
liabilities assumed, including those arising from contingent considerations and
contractual contingencies based on their fair values as measured on the
acquisition date. In addition, SFAS No. 141(R) requires the acquirer to measure
the non-controlling interest in the acquiree at fair value, which will result in
recognizing the goodwill attributable to the non-controlling interest in
addition to the goodwill attributable to the acquirer. SFAS No. 141(R) applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. Since Statement 141(R) will only be applicable to future
business combinations, it will not have a significant effect on the Company’s
financial position, results of operations or cash flows prior to such
acquisitions.




In
December 2007, the FASB issued Statement No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (SFAS No. 160). SFAS No. 160 amends
Accounting Research Bulletin 51, “Consolidated Financial Statements,” to
establish accounting and reporting standards for the non-controlling interest in
a subsidiary and for the deconsolidation of a subsidiary. This Statement
clarifies that a non-controlling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS No. 160 changes the way the consolidated
earnings (loss) statement is presented by requiring consolidated net earnings
(loss) to be reported including the amounts attributable to both the parent
interest and the non-controlling interest. The Statement requires disclosure on
the face of the consolidated statement of operations of the amounts of
consolidated net earnings (loss) attributable to the parent interest and to the
non-controlling interest. SFAS No. 160 is effective for fiscal periods, and
interim periods within those fiscal years, beginning on or after December 15,
2008. The Company expects that the adoption of SFAS 160 will not have
significant effect on the Company’s financial position, results of operations or
cash flows.






In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities – an amendment of FASB Statement No. 133” (SFAS No. 161).
SFAS No. 161 expands quarterly disclosure requirements in SFAS No. 133 about an
entity’s derivative instruments and hedging activities. SFAS No. 161 is
effective for fiscal years beginning after November 15, 2008. The Company is
currently assessing the impact of SFAS No. 161 on its future
disclosures.




15.
SUBSEQUENT EVENTS




(a)
            On
      September 2, 2008 the Company announced the signing of a term sheet with
      Anglo Platinum and Wesizwe Platinum to consolidate and rationalize the
      ownership of the WBJV.  In the proposed transaction Anglo
      Platinum will vend its entire 37% interest in the WBJV to Wesizwe for
      common shares representing a 26.5% interest in Wesizwe. The Company will
      concurrently acquire a 37% interest in Projects 1 and 3 from Wesizwe in
      consideration of its 18.5% interest in Project 2 and Rand 408 million in
      cash (approximately $51.0 million at September 2, 2008). This will bring
      the Company’s interest in Projects 1 and 3 to 74% while at the same time
      eliminating its holdings in Project 2.  The cash payment to
      Wesizwe will be deferred until six months after closing the proposed
      transaction and will then be held in escrow to be applied towards
      Wesizwe’s capital requirements for the Projects 1 and 3. The final
      agreement is still to be finalized and executed by all
      parties.





Under the
terms of the proposed transaction equalization amount due to Anglo Platinum
under the terms of the original WBJV agreement (See Note 5) will become payable
on the later of December 31, 2008 or the effective date of the final
agreement.  The effective date will occur once all conditions
precedent have been fulfilled.  It is anticipated this date will be
several months after the execution of definitive agreements, which at November
12, 2008 are in process of being finalized.  In the event the Company
does not make the equalization payment on the date required, Anglo Platinum may
elect to extend the payment deadline for six months, with interest, or they may
elect to take payment in common shares of Wesizwe, at which point the right to
accept the equalization payment would transfer to Wesizwe.








(b)
            On
      October 3 and October 7, 2008 the Company closed a non-brokered private
      placement for $7,611,229 upon the issue of 4,910,470 common shares at a
      price of $1.55 per share.  A finders’ fee of $186,000 in cash
      and a further 60,000 shares at the offering price was paid in respect of
      certain of the subscriptions.





(c)
            On
      October 15, 2008 the Company granted 1,727,000 incentive stock options at
      a price of $1.60 per share to Directors, Officers, and
      employees.