---

| | Platinum Group Metals Ltd.                                                      
| | --------------------------------------------------------------------------------
| | (An Exploration and Development Stage
      Company)                            
| |                                                                                 
| | Consolidated Financial Statements                                               
| | (all amounts in thousands of United States
      Dollars unless otherwise noted)
| | For the year ended August 31, 2016                                              
| |                                                                                 
| |                                                                                 
| | Filed: November 29, 2016                                                        

---



November 29, 2016

Independent Auditor’s Report

To the Shareholders of Platinum Group Metals Ltd.

We have audited the accompanying consolidated financial statements of Platinum Group Metals Ltd. and its subsidiaries, which comprise the consolidated statements of financial position as at August 31, 2016, August 31, 2015 and September 1, 2014 and
the consolidated statement of loss and comprehensive loss, changes in equity and cash flows for the years ended August 31, 2016 and August 31, 2015, and the related notes, which comprise a summary of significant accounting policies and other
explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such
internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.



---



Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Platinum Metals Group and its subsidiaries as at August 31, 2016, August 31, 2015 and September 1, 2014 and their financial
performance and their cash flows for the years ended August 31, 2016 and August 31, 2015 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

signed “PricewaterhouseCoopers LLP”

Chartered Professional AccountantsVancouver, British Columbia

2

---

|PLATINUM GROUP METALS LTD.                    
|----------------------------------------------
|(An exploration and development stage company)
|Consolidated Statements of Financial Position 
|(in thousands of United States Dollars)       
|                                              

|                                                                                            |   |            |   |   | Restated (see Note 2b | )
|------------------------------------------------------------------------------------------- | - | ---------- | - | - | --------------------- | -
|                                                                                            |   | August 31, |   |   | August 31,            |  
|                                                                                            |   | 2016       |   |   | 2015                  |  
|ASSETS                                                                                      |   |            |   |   |                       |  
|                                                                                            |   |            |   |   |                       |  
|Current                                                                                     |   |            |   |   |                       |  
|Cash and
      cash equivalents                                                             | $ | 16,450     |   | $ | 39,082                |  
|Amounts receivable (Note 4)                                                                 |   | 6,087      |   |   | 10,056                |  
|Prepaid expenses                                                                            |   | 367        |   |   | 346                   |  
|Total current assets                                                                        |   | 22,904     |   |   | 49,484                |  
|                                                                                            |   |            |   |   |                       |  
|Deferred financing fees (Note
      7)                                                      |   | -          |   |   | 2,663                 |  
|Performance bonds                                                                           |   | 4,912      |   |   | 4,389                 |  
|Exploration and evaluation
      assets (Note 6)                                            |   | 22,346     |   |   | 24,629                |  
|Property, plant and equipment (Note 5)                                                      |   | 469,696    |   |   | 417,177               |  
|Total assets                                                                                | $ | 519,858    |   | $ | 498,342               |  
|                                                                                            |   |            |   |   |                       |  
|LIABILITIES                                                                                 |   |            |   |   |                       |  
|                                                                                            |   |            |   |   |                       |  
|Current                                                                                     |   |            |   |   |                       |  
|Accounts
      payable and other liabilities                                                | $ | 16,920     |   | $ | 16,370                |  
|Loan payable (Note 7)                                                                       |   | 26,667     |   |   | -                     |  
|Total current liabilities                                                                   |   | 43,587     |   |   | 16,370                |  
|                                                                                            |   |            |   |   |                       |  
|Loans payable (Note 7)                                                                      |   | 54,586     |   |   | -                     |  
|Deferred income taxes (Note
      18)                                                       |   | -          |   |   | 6,317                 |  
|Asset retirement obligation (Note 8)                                                        |   | 2,237      |   |   | 2,309                 |  
|Total liabilities                                                                           |   | 100,410    |   |   | 24,996                |  
|                                                                                            |   |            |   |   |                       |  
|SHAREHOLDERS EQUITY                                                                        |   |            |   |   |                       |  
|Share capital (Note 9)                                                                      |   | 714,190    |   |   | 681,762               |  
|Contributed surplus                                                                         |   | 24,003     |   |   | 23,646                |  
|Accumulated other comprehensive loss                                                        |   | (232,179   | ) |   | (185,872              | )
|Deficit                                                                                     |   | (125,245   | ) |   | (104,570              | )
|Total shareholders equity attributable to
      shareholders of Platinum Group Metals Ltd. |   | 380,769    |   |   | 414,966               |  
|                                                                                            |   |            |   |   |                       |  
|Non-controlling interest (Note 10)                                                          |   | 38,679     |   |   | 58,380                |  
|Total shareholders equity                                                                  |   | 419,448    |   |   | 473,346               |  
|Total liabilities and shareholders equity                                                  | $ | 519,858    |   | $ | 498,342               |  
|                                                                                            |   |            |   |   |                       |  

CONTINGENCIES AND COMMITMENTS (NOTE 12) SUBSEQUENT EVENTS
(NOTE 17)

Approved by the Board of Directors and authorized for issue on
November 29, 2016

|Iain
      McLean   |  | Eric Carlson         | 
|--------------------- |  | ---------------------- | 
|Iain McLean, Director |  | Eric Carlson, Director | 

|The accompanying notes are an integral part of the
      consolidated financial statements. | 2
|------------------------------------------------------------------------------------------- | -

---

|PLATINUM GROUP METALS LTD.                                                    
|------------------------------------------------------------------------------
|(An exploration and development stage company)                                
|Consolidated Statements of Income (Loss) and Comprehensive
      Income (Loss)
|(in thousands of United States Dollars)                                       
|                                                                              

|                                                               |   | Year Ended |   |   | Year ended    |  
|-------------------------------------------------------------- | - | ---------- | - | - | ------------- | -
|                                                               |   | August 31, |   |   | August 31,    |  
|                                                               |   | 2016       |   |   | 2015          |  
|                                                               |   |            |   |   | (restated see |  
|                                                               |   |            |   |   | Note 2j       | )
|                                                               |   |            |   |   |               |  
|Expenses                                                       |   |            |   |   |               |  
|General and
      administrative (Note 15)                     | $ | 5,421      |   | $ | 6,888         |  
|Foreign exchange gain                                          |   | (1,664     | ) |   | (8,876        | )
|Stock compensation
      expense                               |   | 150        |   |   | 1,155         |  
|Impairment charge (Note 5)                                     |   | 41,371     |   |   | -             |  
|Termination and
      finance fees (Note 7)                    |   | -          |   |   | 1,653         |  
|Write-down of deferred financing fees (Note 7)                 |   | -          |   |   | 3,515         |  
|Write-down of exploration and
      evaluation assets (Note 6) |   | -          |   |   | 2,331         |  
|                                                               |   | 45,278     |   |   | 6,666         |  
|                                                               |   |            |   |   |               |  
|Other loss (income)                                            |   |            |   |   |               |  
|Net Finance income                                             |   | (1,133     | ) |   | (3,781        | )
|Loss for the year before
      income taxes                    |   | 44,145     |   |   | 2,885         |  
|                                                               |   |            |   |   |               |  
|Deferred income tax (recovery) expense (Note 18)               |   | (7,494     | ) |   | 1,087         |  
|                                                               |   |            |   |   |               |  
|Loss for the year                                              |   | 36,651     |   |   | 3,972         |  
|                                                               |   |            |   |   |               |  
|Items that may be
      subsequently reclassified to net loss: |   |            |   |   |               |  
|Currency translation adjustment                                |   | 50,030     |   |   | 100,401       |  
|                                                               |   |            |   |   |               |  
|Comprehensive loss for the year                                |   | 86,681     |   |   | 104,373       |  
|                                                               |   |            |   |   |               |  
|Loss attributable to:                                          |   |            |   |   |               |  
|Shareholders of Platinum Group Metals Ltd.                     |   | 20,675     |   |   | 3,139         |  
|Non-controlling interests                                      |   | 15,976     |   |   | 833           |  
|                                                               | $ | 36,651     |   | $ | 3,972         |  
|                                                               |   |            |   |   |               |  
|Comprehensive loss
      attributable to:                      |   |            |   |   |               |  
|Shareholders of
      Platinum Group Metals Ltd                |   | 66,984     |   |   | 93,875        |  
|Non-controlling interests                                      |   | 19,697     |   |   | 10,496        |  
|                                                               | $ | 86,681     |   | $ | 104,371       |  
|                                                               |   |            |   |   |               |  
|Basic and diluted loss per common share                        | $ | 0.26       |   | $ | 0.05          |  
|                                                               |   |            |   |   |               |  
|Weighted average number of common shares
      outstanding     |   |            |   |   |               |  
|Basic and diluted                                              |   | 80,438,434 |   |   | 69,583,645    |  

|See accompanying notes to the consolidated financial
      statements | 3
|--------------------------------------------------------------------- | -

---

|PLATINUM GROUP METALS LTD.                                              
|------------------------------------------------------------------------
|(An exploration and development stage company)                          
|Consolidated Statements of Changes in Equity                            
|(in thousands of United States Dollars, except # of
      Common Shares)
|                                                                        

|                                                          |  | # of       |  |   | Share   |   |   | Contributed |  |   | Accumulated   |   |   | Deficit  |   |   | Attributable to |   |   | Non-        |   |   | Total    |  
|--------------------------------------------------------- |  | ---------- |  | - | ------- | - | - | ----------- |  | - | ------------- | - | - | -------- | - | - | --------------- | - | - | ----------- | - | - | -------- | -
|                                                          |  | Common     |  |   | Capital |   |   | Surplus     |  |   | Other         |   |   |          |   |   | Shareholders    |   |   | Controlling |   |   |          |  
|                                                          |  | Shares     |  |   |         |   |   |             |  |   | Comprehensive |   |   |          |   |   | of the Parent   |   |   | Interest    |   |   |          |  
|                                                          |  |            |  |   |         |   |   |             |  |   | Income (loss) |   |   |          |   |   | Company         |   |   |             |   |   |          |  
|Balance, August 31,
      2014                            |  | 55,131,283 |  | $ | 573,800 |   | $ | 21,506      |  | $ | (93,055       | ) | $ | (109,791 | ) | $ | 392,460         |   | $ | 75,157      |   | $ | 467,617  |  
|Stock based
      compensation                            |  | -          |  |   | -       |   |   | 2,140       |  |   | -             |   |   | -        |   |   | 2,140           |   |   | -           |   |   | 2,140    |  
|Share issuance  financing                                |  | 21,480,000 |  |   | 113,844 |   |   | -           |  |   | -             |   |   | -        |   |   | 113,844         |   |   | -           |   |   | 113,844  |  
|Share
      issuance costs                                |  | -          |  |   | (7,384  | ) |   | -           |  |   | -             |   |   | -        |   |   | (7,384          | ) |   | -           |   |   | (7,384   | )
|Shares issued for loan facility (Note 7)                  |  | 283,019    |  |   | 1,502   |   |   | -           |  |   | -             |   |   | -        |   |   | 1,502           |   |   | -           |   |   | 1,502    |  
|Transactions
      with non-controlling interest (Note 5) |  | -          |  |   | -       |   |   | -           |  |   | (2,079        | ) |   | 8,360    |   |   | 6,281           |   |   | (6,281      | ) |   | -        |  
|Foreign currency translation                              |  | -          |  |   | -       |   |   | -           |  |   | (90,738       | ) |   | -        |   |   | (90,738         | ) |   | (9,663      | ) |   | (100,401 | )
|Net (loss) income for the
      year                      |  | -          |  |   | -       |   |   | -           |  |   | -             |   |   | (3,139   | ) |   | (3,139          | ) |   | (833        | ) |   | (3,972   | )
|Balance, August 31,
      2015                            |  | 76,894,302 |  | $ | 681,762 |   | $ | 23,646      |  | $ | (185,872      | ) | $ | (104,570 | ) | $ | 414,966         |   | $ | 58,380      |   | $ | 473,346  |  
|Stock based
      compensation                            |  | -          |  |   | -       |   |   | 357         |  |   | -             |   |   | -        |   |   | 357             |   |   | -           |   |   | 357      |  
|Share issuance  financing                                |  | 11,000,000 |  |   | 33,000  |   |   | -           |  |   | -             |   |   | -        |   |   | 33,000          |   |   | -           |   |   | 33,000   |  
|Share
      issuance costs                                |  | -          |  |   | (2,959  | ) |   | -           |  |   | -             |   |   | -        |   |   | (2,959          | ) |   | -           |   |   | (2,959   | )
|Shares issued for loan facility (Note 7)                  |  | 960,476    |  |   | 2,384   |   |   | -           |  |   | -             |   |   | -        |   |   | 2,384           |   |   | -           |   |   | 2,384    |  
|Shares
      issued upon the exercise of options          |  | 2,250      |  |   | 3       |   |   | -           |  |   | -             |   |   | -        |   |   | 3               |   |   | -           |   |   | 3        |  
|Foreign currency translation adjustment                   |  | -          |  |   | -       |   |   | -           |  |   | (46,307       | ) |   | -        |   |   | (46,307         | ) |   | (3,725      | ) |   | (50,030  | )
|Net loss for the year                                     |  | -          |  |   | -       |   |   | -           |  |   | -             |   |   | (20,675  | ) |   | (20,675         | ) |   | (15,976     | ) |   | (36,651  | )
|Balance, August 31,
      2016                            |  | 88,857,028 |  | $ | 714,190 |   | $ | 24,003      |  | $ | (232,179      | ) | $ | (125,245 | ) | $ | 380,769         |   | $ | 38,679      |   | $ | 419,448  |  
|                                                          |  |            |  |   |         |   |   |             |  |   |               |   |   |          |   |   |                 |   |   |             |   |   |          |  

|See accompanying notes to the consolidated financial
      statements | 4
|--------------------------------------------------------------------- | -

---

|PLATINUM GROUP METALS LTD.                    
|----------------------------------------------
|(An exploration and development stage company)
|Consolidated Statements of Cash Flows         
|(in thousands of United States Dollars)       
|                                              

|                                                              |   | For the year ended |  
|------------------------------------------------------------- | - | ------------------ | -
|                                                              |   |                    |  
|                                                              |   |                    |  
|                                                              |   | August 31,         |  
|                                                              |   | 2016               |  
|                                                              |   |                    |  
|OPERATING ACTIVITIES                                          |   |                    |  
|Loss
      for the year                                       | $ | (36,651            | )
|                                                              |   |                    |  
|Add
      items not affecting cash:                           |   |                    |  
|Depreciation                                                  |   | 446                |  
|Unrealized foreign exchange gain                              |   | (46                | )
|Write-down of deferred finance fees                           |   | -                  |  
|Write-down of exploration properties                          |   | -                  |  
|Impairment Charge                                             |   | 41,371             |  
|Deferred income tax (recovery) expense                        |   | (7,494             | )
|Stock compensation expense                                    |   | 150                |  
|Net
      change in non-cash working capital (Note 13)        |   | (574               | )
|                                                              |   | (2,798             | )
|                                                              |   |                    |  
|FINANCING ACTIVITIES                                          |   |                    |  
|Share issuance                                                |   | 33,000             |  
|Share issuance costs                                          |   | (2,958             | )
|Share issuance  stock options                                |   | 3                  |  
|Interest paid on debt (Note 7)                                |   | (3,049             | )
|Interest capitalized on debt proceeds                         |   | 927                |  
|Cash proceeds from debt (Note 7)                              |   | 80,000             |  
|Costs associated with
      the debt (Note 7)                 |   | (1,240             | )
|                                                              |   | 106,683            |  
|                                                              |   |                    |  
|INVESTING ACTIVITIES                                          |   |                    |  
|Acquisition of property, plant and equipment                  |   | (133,350           | )
|Proceeds from the sale of concentrate                         |   | 6,645              |  
|Exploration expenditures, net of recoveries                   |   | -                  |  
|South African VAT                                             |   | 4,443              |  
|Performance bonds                                             |   | (974               | )
|                                                              |   | (123,236           | )
|                                                              |   |                    |  
|Net (decrease) increase in
      cash and cash equivalents    |   | (19,351            | )
|Effect of foreign exchange on cash and cash
      equivalents |   | (3,281             | )
|Cash and cash equivalents, beginning of year                  |   | 39,082             |  
|                                                              |   |                    |  
|Cash and cash equivalents,
      end of year                  | $ | 16,450             |  
|                                                              |   |                    |  

|See accompanying notes to the consolidated financial
      statements | 5
|--------------------------------------------------------------------- | -

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|1. | NATURE OF OPERATIONS
|-- | --------------------

Platinum Group Metals Ltd. (the Company) is a British
Columbia, Canada, company formed by amalgamation on February 18, 2002. The
Companys shares are publicly listed on the Toronto Stock Exchange in Canada and
the NYSE MKT LLC in the United States. The Companys address is Suite 788-550
Burrard Street, Vancouver, British Columbia, V6C 2B5.

The Company is an exploration and development company
conducting work on mineral properties it has staked or acquired by way of option
agreements in the Republic of South Africa. The Company is currently developing
and operating the Maseve platinum and palladium mine (the Maseve Mine),
formerly Project 1 of Western Bushveld Joint Venture (WBJV), located on
the Western Limb of the Bushveld Complex in South Africa. The Maseve Mine is
owned through the operating company Maseve Investments 11 (Pty.) Ltd.
(Maseve), in which the Company held an 82.9% working interest as of
August 31, 2016 and the Companys Black Economic Empowerment (BEE)
partner, Africa Wide Mineral Prospecting and Exploration (Pty) Ltd. (Africa
Wide), a wholly owned subsidiary of Wesizwe Platinum Ltd., owned 17.1% . A
formal mining right was granted for the Maseve Mine on April 4, 2012 by the
Government of South Africa (the Mining Right).

The Maseve Mine surface infrastructure is fully constructed and
the mill was commissioned in February and March of 2016. Maseve is now in the
ramp up phase of production. First concentrate was produced in February 2016
with commercial production levels expected in calendar 2017. Any revenues from
concentrate sales realized before commercial production is achieved are expected
to be treated as a reduction in project capital cost.

On May 26, 2015, the Company announced an agreement whereby the
Waterberg JV property and Waterberg Extension property, both located on the
Northern Limb of the Bushveld Complex in South Africa, are to be combined. See
details at Note 6 below. The Company published a pre-feasibility study for the
combined Waterberg Project in October, 2016.

These financial statements include the accounts of the Company
and its subsidiaries. The Companys subsidiaries are as follows:

|                                               |  |                    |  |  | Place of      |  |  | Proportion of ownership interest | 
|---------------------------------------------- |  | ------------------ |  |  | ------------- |  |  | -------------------------------- | 
|                                               |  |                    |  |  | incorporation |  |  | and voting power held            | 
|                                               |  |                    |  |  | and           |  |  | August 31,                       | 
|Name
      of subsidiary                       |  | Principal activity |  |  | operation     |  |  | 2016                             | 
|                                               |  |                    |  |  |               |  |  |                                  | 
|Platinum Group Metals (RSA)
      (Pty) Ltd.1  |  | Exploration        |  |  | South Africa  |  |  | 100%                             | 
|Maseve Investments 11 (Pty) Ltd2               |  | Mining             |  |  | South Africa  |  |  | 82.9%                            | 
|Mnombo Wethu Consultants
      (Pty) Limited.3 |  | Exploration        |  |  | South Africa  |  |  | 49.9%                            | 
|                                               |  |                    |  |  |               |  |  |                                  | 

1Holds the Waterberg Project until approval to
transfer rights to JV Company is received (see Note 6 below) 2See
Note 5 Ownership of Maseve Mine. 3The Company controls Mnombo
Wethu Consultants (Pty) Limited (Mnombo) for accounting purposes.

|2. | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
      POLICIES
|-- | ---------------------------------------------------------------

Basis of Presentation

These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB). The
consolidated financial statements have been prepared under the historical cost
convention.

Liquidity

The Company reported a net loss of $36.6 million ($2.7 million
excluding non-cash write-downs of $41.4 million and deferred tax recoveries of
$7.5 million) for the year ended August 31, 2016 (year ended August 31, 2015  net loss of $4.0 million) and as at August
31, 2016 had working capital of $6.0 million (August 31, 2015 - $33.1) excluding
short-term debt that was reclassified to long-term debt after year end. At
August 31, 2016, the Company was indebted for a principal amount of $80 million
pursuant to the Sprott Facility and the LMM Facility (both as defined below) to
fund the development, construction and start-up working capital needs of the
Maseve Mine. See subsequent events (Note 19) for further details on financing
transactions which took place after year end.

6

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

The Company currently has limited financial resources. The
Companys ability to continue operations in the normal course of business in the
foreseeable future is dependent upon, among other things, the Company
establishing positive cash flow from production at the Maseve Mine. The Company
has experienced delays in the rate of underground development and stoping into
key mining areas at the Maseve Mine due to delayed infrastructure and poor
contractor performance. Subsequent to August 31, 2016 year end the Companys
engineers and mining personnel are working to mitigate and correct these issues.
Under performing contractors are being replaced. Focus is being applied to
achieve planned production and reduce costs. In addition, current global market
prices for the metals to be produced at the Maseve Mine have been highly
volatile. Unexpected costs, problems, lower metal prices or further delays could
severely impact the Companys production revenue and its ability to produce the
tonnage at the Maseve Mine required to maintain positive working capital and
meet its production covenants under the Sprott Facility and the LMM Facility
(both as defined below). The Maseve Mine is behind on its planned ounce ramp-up
profile at this time.

There is uncertainty related to the Companys ability to secure
additional funding. The Companys ability to continue operations in the normal
course of business may depend upon its ability to secure additional funding by
methods which could include, debt refinancing, equity financing, forward sale
agreements, sale of assets and strategic partnerships. However, management
believes the Company will be able to secure further financing if deemed
necessary.

Significant Accounting Policies

The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below.

|a. | Consolidation
|-- | -------------

The consolidated financial statements include those of Platinum
Group Metals Ltd., its subsidiaries, associates, joint ventures and structured
entities that it controls, using uniform accounting policies. Control exists
when the Company has (i) power over the investee, (ii) exposure, or rights, to
variable returns from its involvement with the investee, and (iii) the ability
to use its power to affect its returns.

Non-controlling interest in the net assets of consolidated
subsidiaries are identified separately from the Companys equity.

Subsidiaries are all entities (including structured entities)
over which the Company has control. Subsidiaries are fully consolidated from the
date on which control is transferred to the group. They are de-consolidated from
the date that control ceases.

A joint arrangement is an arrangement of which two or more
parties have joint control. Investments in joint arrangements are classified as
either joint operations or joint ventures depending on the contractual rights
and obligations of each of the investors.

Inter-company transactions, balances and unrealized gains on
transactions between Group companies are eliminated on consolidation. Unrealized
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred.

Both Waterberg exploration properties are fully consolidated
with third party contributions treated as recoveries.

|b. | Translation of foreign
  currencies
|-- | -----------------------------------

7

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Functional currency

Items included in the financial statements of the Company and
each of the Companys subsidiaries are measured using the currency of the
primary economic environment in which the entity operates (the functional
currency) as follows:

|Platinum Group Metals Ltd.             | Canadian Dollars  
|-------------------------------------- | ------------------
|Platinum Group Metals (RSA) (Pty) Ltd. | South African Rand
|Maseve Investments 11 (Pty) Ltd.       | South African Rand
|Mnombo Wethu Consultants (Pty) Limited | South African Rand

Presentation Currency

On September 1, 2015, the Company changed its presentation
currency from the Canadian Dollar to the United States Dollar ($). The
change in presentation currency is to better reflect the Companys business
activities and to improve investors ability to compare the Companys financial
results with other publicly traded businesses in the mining industry. In making
this change to the United States Dollar presentation currency, the Company
followed the guidance in IAS 21 The Effects of Changes in Foreign Exchange
Rates and has applied the change retrospectively as if the new presentation
currency had always been the Companys presentation currency.

In accordance with IAS 21, the financial statements for all
periods presented have been translated to the new US Dollar presentation
currency at the rate of exchange prevailing at the reporting date. The
statements of comprehensive loss were translated at the average exchange rates
for the reporting period, or at the exchange rates prevailing at the date of
transactions. Exchange differences arising on translation have been recognized
in other comprehensive loss and accumulated as a separate component of equity.

Foreign Exchange Rates Used

The following exchange rates were used when preparing these
consolidated financial statements:

|Rand/USD           |                         
|------------------ | ------------------------
|Year-end rate:     | R14.6958 (2015 R13.1846)
|Year average rate: | R14.6911 (2015 R11.7930)
|                   |                         
|CAD/USD            |                         
|Year-end rate:     | C$1.3116 (2015 C$1.3157)
|Year average rate: | C$1.3261 (2015 C$1.2097)

Transactions and balances

Foreign currency transactions are translated into the relevant
entitys functional currency using the exchange rates prevailing at the date of
the transaction. Foreign currency gains and losses resulting from the settlement
of such transactions and from the translation at period-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognized
in the income statement.

Subsidiaries

The results and financial position of subsidiaries that have a
functional currency different from the presentation currency are translated into
the presentation currency as follows:

| |  | Assets and liabilities are translated at the closing rate
      at the reporting date;                                  
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | Income and expenses are translated at average exchange
      rates for the period; and                                  
| |  | All resulting exchange differences are recognized in
  other comprehensive income as cumulative translation adjustments.

8

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

When a foreign operation is sold, such exchange differences are
recognized in the income statement to the extent of the portion sold as part of
the gain or loss on sale.

|c. | Cash and cash
equivalents
|-- | -------------------------

Cash and cash equivalents consist of cash and short-term
deposits, which are readily convertible to cash and have original maturities of
90 days or less.

|d. | Exploration and evaluation
  assets
|-- | -----------------------------------

Exploration and evaluation activity involves the search for
mineral resources, the determination of technical feasibility and the assessment
of commercial viability of an identified resource.

Exploration and evaluation activity includes:

| | - acquiring the rights to explore;                                                            
| | ----------------------------------------------------------------------------------------------
| | - researching and analyzing historical exploration
      data;                                
| | - gathering exploration data through topographical,
      geochemical and geophysical studies;
| | - exploratory drilling, trenching and sampling;                                               
| | - determining and examining the volume and grade of
      the resource;                       
| | - surveying transportation and infrastructure
      requirements; and                         
| | - compiling pre-feasibility and feasibility studies.                                          

Exploration and evaluation expenditures on identifiable
properties are capitalized. Exploration and evaluation assets are shown
separately until technical feasibility and commercial viability is achieved at
which point the relevant asset is transferred to development assets under
property, plant and equipment. Capitalized costs are all considered to be
tangible assets as they form part of the underlying mineral property.

Capitalized exploration and evaluation assets are reviewed for
impairment when facts or circumstances suggest an assets carrying amount may
exceed its recoverable amount. If impairment is considered to exist, the related
asset is written down to the greater of its value in use and its fair value less
costs to sell.

|e. | Property, plant and
  equipment
|-- | -------------------------------

Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. The cost of an item
of property, plant and equipment includes the purchase price or construction
cost, any costs directly attributable to bringing the asset to the location and
condition necessary for its intended use, an initial estimate of the costs of
dismantling and removing the item and restoring the site on which it is located,
and for qualifying assets, the associated borrowing costs.

Where an item of property, plant and equipment is comprised of
major components with different useful lives, the components are accounted for
as separate items of property, plant and equipment.

Costs incurred for new construction, mine development, and
major overhauls of existing equipment are capitalized as property, plant and
equipment and are subject to depreciation once they are put into use. The costs
of routine maintenance and repairs are expensed as incurred.

Once a mining project has been established as technically
feasible and commercially viable, expenditure other than on land, buildings,
plant and equipment is capitalised as part of development assets together with
any related amount transferred from exploration and evaluation assets.
Capitalization of costs incurred and revenue received during commissioning
ceases when the property is capable of operating at levels intended by
management.

9

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

The present value of the decommissioning cost, which is the
dismantling and removal of the asset included in the environmental
rehabilitation obligation, is included in the cost of the related preproduction
assets. These assets are depreciated over their useful lives.

Subsequent costs are included in the assets carrying amount
only when it is probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be reliably measured. All
repairs and maintenance are expensed to profit or loss during the financial
period in which they are incurred.

An item of property, plant and equipment is derecognized upon
disposal or when no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on the disposal, retirement
or scrapping of an item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognized in profit or loss.

Where an item of property, plant and equipment is comprised of
major components with different useful lives, the components are accounted for
as separate items of property, plant and equipment. Property, plant and
equipment are recorded at cost and are depreciated on a straight-line basis over
the following periods:

| | Buildings                       | 20 years    
| | ------------------------------- | ------------
| | Mining equipment                | 2  22 years
| | Vehicles                        | 3  5 years 
| | Computer equipment and software | 3  5 years 
| | Furniture and fixtures          | 5 years     

Development costs are depreciated on a unit of production
basis.

|f. | Impairment
|-- | ----------

Long-lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable.

The Company conducts internal reviews of asset values which are
used to assess for any indications of impairment. External factors such as
changes in expected future prices, costs and other market factors including
market capitalization are also monitored to assess for indications of
impairment.

If any such indication exists an estimate of the recoverable
amount is undertaken, being the higher of an assets fair value less costs to
sell and its value in use. If the assets carrying amount exceeds its
recoverable amount, then an impairment loss is recognized.

Fair value is determined as the amount that would be obtained
from the sale of the asset in an arms length transaction between knowledgeable
and willing parties. Fair value of mineral assets is generally determined as the
present value of the estimated future cash flows expected to arise from the use
of the asset, including any expansion prospects.

Value in use is determined as the present value of the
estimated future cash flows expected to arise from the continued use of the
asset in its present form and from its ultimate disposal.

Impairment is assessed at the level of cash-generating units
(CGUs), which are identified as the smallest identifiable group of
assets that generates cash inflows that are largely independent of the cash
inflows from other assets. The Companys CGUs are based on geographic location.
The Companys two CGUs at present are the Maseve Mine and the Waterberg
Project.

Long-lived assets that have been impaired are tested for
possible reversal of the impairment whenever events or changes in circumstances
indicate that the impairment may have reversed. When a reversal of a previous
impairment is recorded, the reversal amount is adjusted for depreciation that
would have been recorded had the impairment not taken place.

10

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|g. | Trade payables
|-- | --------------

Trade payables are obligations to pay for goods or services
that have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is due within
one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and
subsequently measured at amortized cost using the effective interest method.

|h. | Asset retirement
  obligations
|-- | ------------------------------

Provisions for asset retirement obligations are made in respect
of the estimated future costs of closure and restoration and for environmental
rehabilitation costs (which include the dismantling and demolition of
infrastructure, removal of residual materials and remediation of disturbed
areas) in the accounting period when the related disturbance occurs. The
provision is discounted using a risk-free pre-tax rate, and the unwinding of the
discount is included in finance costs. At the time of establishing the
provision, a corresponding asset is recognized and is depreciated over the
future life of the asset to which it relates. The provision is adjusted on an
annual basis for changes in cost estimates, discount rates and inflation.

|i. | Share Capital
|-- | -------------

Common shares are classified as equity. Incremental costs
directly attributable to the issue of common shares and share options are
recognized as a deduction from equity, net of any tax effect.

|j. | Stock-based
compensation
|-- | ------------------------

The fair values for stock-based awards have been estimated
using the Black-Scholes model and recorded as compensation cost over the period
of vesting. The compensation cost related to stock options granted is expensed
or capitalized to mineral properties, as applicable. Cash received on exercise
of stock options is credited to share capital and the related amount previously
recognized in contributed surplus is reclassified to share capital.

|k. | Income taxes
|-- | ------------

Income tax expense represents the sum of the tax currently
payable and deferred tax.

Current tax

Current tax expense is based on taxable profit for the year.
Taxable profit differs from 'profit before tax' as reported in the consolidated
statement of loss and other comprehensive loss because of items of income or
expense that are taxable or deductible in other years and items that are never
taxable or deductible. The Company's current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the reporting
period.

Deferred tax

Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are generally recognised for all
deductible temporary differences to the extent that it is probable that taxable
profits will be available against which those deductible temporary differences
can be utilised. Such deferred tax assets and liabilities are not recognised if
the temporary difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.

11

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part
of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the period in which the liability is settled
or the asset realised, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the Group
expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.

|l. | Loss per common
share
|-- | ---------------------

Basic 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 in incurred, the effect of the potential issuances of
shares is anti-dilutive, and accordingly basic and diluted loss per share are
the same.

|m. | Financial
instruments
|-- | ---------------------

IFRS establishes a fair value hierarchy that categorizes the
inputs to valuation techniques used to measure fair value into three levels:

| |  | Level 1  Quoted prices in active markets for the same
      instrument.                                    
| | - | ------------------------------------------------------------------------------------------------------------
| |  | Level 2  Valuation techniques for which significant
      inputs are based on observable market data.      
| |  | Level 3  Valuation techniques for which any significant
      input is not based on observable market data.

(i) Financial assets and liabilities

Loans and receivables  Loans
and receivables comprise cash and cash equivalents, amounts receivable and
performance bonds. Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an active market.
They are classified as current assets or non-current assets based on their
maturity date. Loans and receivables are initially recognized at fair value and
subsequently carried at amortized cost less any impairment.

Other financial liabilities -
Other financial liabilities comprise accounts payable, accrued liabilities and
the Liberty Production Payment. They are recognized initially at fair value, net
of transaction costs incurred and are subsequently stated at amortized cost. Any
difference between the initial cost and the redemption value is recognized in
the income statement over the period to maturity using the effective interest
method.

(ii) Impairment of financial assets

The Company assesses at each reporting
date whether there is objective evidence that a financial asset or a group of
financial assets is impaired. Impairment losses on financial assets carried at
amortized cost are reversed in subsequent periods if the amount of the loss
decreases and the decrease can be related objectively to an event occurring
after the impairment was recognized.

|n. | Future accounting
changes
|-- | -------------------------

The following new accounting standards, amendments and
interpretations, that have not been early adopted in these consolidated
financial statements, will or may have an effect on the Companys future results
and financial position:



12

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

(i)IFRS 15Revenue from Contracts with Customers

IFRS 15, Revenue from Contracts with
Customers, which will replace IAS 18, Revenue, is effective for
fiscal years ending on or after January 1, 2018 and is available for early
adoption. The standard contains a single model that applies to contracts with
customers. Revenue is recognized as control is passed to the customer, either at
a point in time or over time. New estimates and judgmental thresholds have been
introduced, which may affect the amount and/or timing of revenue recognized. The
Company is still in the process of assessing the impact, if any, on the
financial statements of this new standard.

(ii)IFRS 9, Financial Instruments

In July 2014, the IASB issued IFRS 9,
Financial Instruments, which addresses classification and measurement of
financial assets and replaces the multiple category and measurement models for
debt instruments in IAS 39, Financial Instruments: Recognition and
Measurement. Debt instruments will be measured with a new mixed measurement
model having only two categories: amortized cost and fair value through profit
and loss. The new standard also addresses financial liabilities which largely
carries forward existing requirements in IAS 39, with the exception of fair
value changes to credit risk for liabilities designated at fair value through
profit and loss which are generally to be recorded in other comprehensive
income. In addition, the new standard introduces a new hedge accounting model
more closely aligned with risk management activities undertaken by entities. The
new standard is effective for annual periods beginning on or after January 1,
2018, with an early adoption permitted. The Company is still in the process of
assessing the impact, if any, on the financial statements of the new standard.

(iii)IFRS 16, Leases

The IASB has replaced IAS 17, Leases in
its entirety with IFRS 16, Leases (IFRS 16), which will require lessees to
recognize nearly all leases on the balance sheet to reflect their right to use
an asset for a period of time and the associated liability to pay rentals. IFRS
16 is effective for annual periods commencing on or after January 1, 2019. The
Company is in the process of evaluating the impact the standard is expected to
have on our consolidated financial statements.

|3. | Significant accounting judgments and
    estimates
|-- | --------------------------------------------------

The preparation of the financial statements in conformity with
IFRS requires the use of judgments and estimates that affect the amount reported
and disclosed in the consolidated financial statements and related notes. These
judgments and estimates are based on managements best knowledge of the relevant
facts and circumstances, having regard to previous experience, but actual
results may differ materially from the amounts included in the financial
statements. Information about such judgments and estimation is contained in the
accounting policies and notes to the financial statements, and the key areas are
summarized below.

Areas of judgment and key sources of estimation uncertainty
that have the most significant effect on the amounts recognized in these
consolidated financial statements are:

| |  | Review of asset carrying values and impairment
      assessment (see Note 5)
| | - | ----------------------------------------------------------------------------
| |  | Asset retirement obligations (see Note 8)                                   
| |  | Determination of ore reserves and mineral
      resource estimates          
| |  | Deferred tax assets and liabilities and
      resource taxes; and           
| |  | Achievement of commercial production                                        
| |  | Classification of the Production Payment                                    
| |  | Fair value of the Production Payment                                        

13

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Each of these judgments and estimates is considered in their
respective notes or in more detail below.

Determination of ore reserve and mineral resource estimates

The Company estimates its ore reserves and mineral resources
based on information compiled by Qualified Persons as defined by NI 43-101.
Reserves determined in this way are used in the calculation of depreciation,
amortization and impairment charges, and for forecasting the timing of the
payment of close down and restoration costs. In assessing the life of a mine for
accounting purposes, mineral resources are only taken into account where there
is a high degree of confidence of economic extraction. There are numerous
uncertainties inherent in estimating ore reserves, and assumptions that are
valid at the time of estimation and they may change significantly when new
information becomes available. Changes in the forecast prices of commodities,
exchange rates, production costs or recovery rates may change the economic
status of reserves and may, ultimately, result in reserves being restated. Such
changes in reserves could impact depreciation and amortization rates, asset
carrying values and provisions for close down and restoration costs.

Deferred tax assets and liabilities and resource taxes

The determination of our future tax liabilities and assets
involves significant management estimation and judgment involving a number of
assumptions. In determining these amounts the Company interprets tax legislation
in a variety of jurisdictions and makes estimates of the expected timing of the
reversal of future tax assets and liabilities. We also make estimates of our
future earnings which affect the extent to which potential future tax benefits
may be used. We are subject to assessment by various taxation authorities, which
may interpret tax legislation in a manner different from our view. These
differences may affect the final amount or the timing of the payment of taxes.
When such differences arise, we make provision for such items based on our best
estimate of the final outcome of these matters.

Achievement of commercial production

Once a mine reaches the operating levels intended by
management, the recognition of mining revenues as well as depreciation of
capitalized costs begins. Significant judgement is required to determine when
the Companys mine assets reach this level; management considers several factors
including:

| |  | completion of a reasonable period of commissioning;                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consistent operating results are being achieved at a
      pre-determined level of design capacity and indications exist that this
      level will continue;
| |  | mineral recoveries are at or near expected production
      level, and;                                                                                      
| |  | the transfer of operations from development personnel to
      operational personnel has been completed.                                                     

Commercial production will commence on the first day of the
calendar month following achievement of the above milestones. Once in commercial
production, the capitalization of certain mine development and construction
costs cease. Subsequent costs are either regarded as forming part of the costs
of inventory or expensed. Any costs relating to mining asset additions or
improvements or mineable reserve development are assessed to determine whether
capitalization is appropriate.

Classification of Liberty Production Payment

Significant judgement is required in determining the
appropriate accounting for the Liberty Production Payment. Based on the specific
facts and circumstances, judgement is required to assess whether the arrangement
is a commodity agreement, a financial liability or a sale of a mineral interest.
Management has determined that based on covenants that connect the LPP to the
Liberty Loan management has not transferred the risk of ownership of the ounces
to Liberty and the LPP will be treated as part of the loan.

14

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Valuation of the Production Payment

Management has assessed the fair value of the Production
Payment on day one and the subsequent carrying value as the net present value of
future Production Payments over the life of the Maseve mine. The Company will
continue to evaluate on an ongoing basis whether there are material changes to
the inputs in the valuation and adjust the future estimated cash flows as part
of the Production Payment accordingly.

|4. | AMOUNTS RECEIVABLE
|-- | ------------------

|                                         |   | August 31, 2016 |  |   | August 31, 2015 | 
|---------------------------------------- | - | --------------- |  | - | --------------- | 
|Receivable from concentrate
      sales  | $ | 2,854           |  | $ | -               | 
|South African value added tax            |   | 1,776           |  |   | 6,218           | 
|Due from JOGMEC1                         |   | 15              |  |   | 816             | 
|Tax receivable2                          |   | 981             |  |   | 1,154           | 
|Other receivables                        |   | 412             |  |   | 1,679           | 
|Due
      from related parties (Note 11) |   | 49              |  |   | 189             | 
|                                         | $ | 6,087           |  | $ | 10,056          | 

1An amount of $15 is owed from JOGMEC against
expenditures made on the Waterberg Projects post March 31, 2015. See Note 6.
2$107 (August 31, 2015 - $180) due from Canada Revenue Agency,
$874 ($974 August 31, 2015) due from the South African Revenue Service.

15

---

|Platinum Group Metals Ltd.                                    
|--------------------------------------------------------------
|(An exploration and development stage company)                
|Notes to the consolidated financial statements                
|For the year ended August 31, 2016                            
|(In thousands of United States Dollars unless otherwise
noted)

|5. | PROPERTY, PLANT AND
EQUIPMENT
|-- | -----------------------------

|                                     |   | Development |   |   | Construction     |   |   |        |   |   |           |   |   | Office    |   |   | Mining    |   |   |         |  
|------------------------------------ | - | ----------- | - | - | ---------------- | - | - | ------ | - | - | --------- | - | - | --------- | - | - | --------- | - | - | ------- | -
|                                     |   | Assets      |   |   | work-in-progress |   |   | Land   |   |   | Buildings |   |   | Equipment |   |   | Equipment |   |   | Total   |  
|COST                                 |   |             |   |   |                  |   |   |        |   |   |           |   |   |           |   |   |           |   |   |         |  
|Balance, August 31, 2014             | $ | 231,692     |   | $ | 79,796           |   | $ | 11,771 |   | $ | 4,621     |   | $ | 1,866     |   | $ | 35,686    |   | $ | 365,432 |  
|Additions                            |   | 77,179      |   |   | 39,278           |   |   | -      |   |   | 6,912     |   |   | 530       |   |   | 10,667    |   |   | 134,566 |  
|Foreign exchange
      movement      |   | (44,072     | ) |   | (15,213          | ) |   | (2,244 | ) |   | (881      | ) |   | (261      | ) |   | (6,748    | ) |   | (69,419 | )
|Balance, August 31, 2015             | $ | 264,799     |   | $ | 103,861          |   | $ | 9,527  |   | $ | 10,652    |   | $ | 2,135     |   | $ | 39,605    |   | $ | 430,579 |  
|Additions                            |   | 100,4151    |   |   | 31,478           |   |   | -      |   |   | 943       |   |   | 418       |   |   | 9,701     |   |   | 142,955 |  
|Transfer to
      Development Assets |   | 135,339     |   |   | (135,339         | ) |   | -      |   |   | -         |   |   | -         |   |   | -         |   |   | -       |  
|Impairment Charge                    |   | (41,371     | ) |   | -                |   |   | -      |   |   | -         |   |   | -         |   |   | -         |   |   | (41,371 | )
|Foreign exchange movement            |   | (36,524     | ) |   | -                |   |   | (980   | ) |   | (1,095    | ) |   | (142      | ) |   | (4,072    | ) |   | (42,813 | )
|Balance, August 31, 2016             | $ | 422,658     |   | $ | -                |   | $ | 8,547  |   | $ | 10,500    |   | $ | 2,411     |   | $ | 45,234    |   | $ | 489,350 |  
|                                     |   |             |   |   |                  |   |   |        |   |   |           |   |   |           |   |   |           |   |   |         |  
|ACCUMULATED
      DEPRECIATION       |   |             |   |   |                  |   |   |        |   |   |           |   |   |           |   |   |           |   |   |         |  
|Balance, August 31, 2014             | $ | -           |   | $ | -                |   | $ | -      |   | $ | 555       |   | $ | 973       |   | $ | 7,421     |   | $ | 8,949   |  
|Additions                            |   | -           |   |   | -                |   |   | -      |   |   | 340       |   |   | 268       |   |   | 5,542     |   |   | 6,150   |  
|Foreign exchange movement            |   | -           |   |   | -                |   |   | -      |   |   | (106      | ) |   | (176      | ) |   | (1,415    | ) |   | (1,697  | )
|Balance, August 31, 2015             |   | -           |   |   | -                |   |   | -      |   |   | 789       |   |   | 1,065     |   |   | 11,548    |   |   | 13,402  |  
|Additions                            |   | -           |   |   | -                |   |   | -      |   |   | 879       |   |   | 397       |   |   | 6,299     |   |   | 7,575   |  
|Foreign exchange
      movement      |   | -           |   |   | -                |   |   | -      |   |   | (81       | ) |   | (55       | ) |   | (1,187    | ) |   | (1,323  | )
|Balance, August 31, 2016             | $ | -           |   | $ | -                |   | $ | -      |   | $ | 1,587     |   | $ | 1,407     |   | $ | 16,660    |   | $ | 19,654  |  
|                                     |   |             |   |   |                  |   |   |        |   |   |           |   |   |           |   |   |           |   |   |         |  
|Net book value, August 31, 2015      | $ | 264,799     |   | $ | 103,861          |   | $ | 9,527  |   | $ | 9,863     |   | $ | 1,070     |   | $ | 28,057    |   | $ | 417,177 |  
|                                     |   |             |   |   |                  |   |   |        |   |   |           |   |   |           |   |   |           |   |   |         |  
|Net book value, August 31, 2016      | $ | 422,658     |   | $ | -                |   | $ | 8,547  |   | $ | 8,913     |   | $ | 1,004     |   | $ | 28,574    |   | $ | 469,696 |  

Note: Items previously classified as Construction
work-in-progress have now been reclassified to Development Assets as
commissioning of surface infrastructure is complete. The development asset is
not yet depreciated as its not yet considered ready for intended
use.1Includes pre-production revenue credited of $9.3 million
(see below) and $8.7 million of interest expense capitalized (see Note 7).

16

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Maseve Mine

The Maseve Mine is located in the Western Bushveld region of
South Africa. Costs for the Maseve Mine are capitalized and classified as
development assets in Property, Plant and Equipment. The local name for what was
formerly the Project 1 of the WBJV is the Maseve Mine based on the holding
company named Maseve Investments 11 (Pty) Ltd. that holds the legal right to the
mine.

Maseve is now in the production ramp up phase with first
concentrate having been produced in February 2016. Initial proceeds from
concentrate sales before commercial production is treated as a reduction in
project capital cost with $9.3 million being recognized to development costs in
the year ended August 31, 2016.

|i. | Ownership of the Maseve
Mine
|-- | ----------------------------

Under the terms of a consolidation
transaction completed on April 22, 2010, the Company acquired a 74% interest in
Projects 1 and 3 of the former Western Bushveld Joint Venture through its
holdings in Maseve, while the remaining 26% was acquired by Africa Wide.

The Company has consolidated the
results of Maseve from the effective date of the reorganization. The portion of
Maseve not owned by the Company, calculated at $34,124 at August 31, 2016
($53,825  August 31, 2015), is accounted for as a non-controlling interest,
(see Note 10 for further details).

On October 18, 2013, Africa Wide
elected not to fund its $21.8 million share of a project budget and cash call
unanimously approved by the board of directors of Maseve. On March 3, 2014,
Africa Wide elected not to fund its $21.52 million share of a second cash call.
As a result of the missed cash calls, Africa Wides interest in Maseve was
diluted to a 17.1% holding.

Legislation and regulations in South
Africa specify a 26% equity interest by a BEE entity as a prerequisite to the
grant of a Mining Right. A past sale by Platinum Group Metals (RSA) (Pty) Ltd.
(PTM RSA) of an 18.5% interest in the project that has become Wesizwes
platinum mine is a component of the Companys BEE profile. Because Africa Wide
is the Companys BEE partner for the Maseve Mine, the Company advised the
Department of Mineral Resources (the DMR) on October 19, 2013 of Africa
Wides decision to not fund an approved cash call and the associated dilution
implications.

In June 2016, the DMR requested an
update regarding the Companys efforts to increase the BEE equity ownership
percentage in Maseve following the dilution of Africa Wides interest in Maseve.
The Company met with the DMR in early June 2016 and the DMR requested a further
update by August 7, 2016. The Company made several attempts to schedule a
meeting with the DMR as requested. The Company has been advised by the DMR that
the matter will be discussed at a later date. The DMR has not issued a notice of
non-compliance.

All funding provided by PTM RSA to
Maseve for development and construction of the Maseve Mine since the March 3,
2014 second cash call has been, and is planned to be, provided by way of an
intercompany loan. At August 31, 2016 Maseve owed PTM RSA approximately R3.537
billion ($241 million). All amounts due to PTM RSA are planned to be repaid by
Maseve before any distribution of dividends to shareholders.

|ii. | Valuation
|--- | ---------

Management is required to make
significant judgements concerning the identification of potential impairment
indicators. In considering whether any potential impairment indicators occurred
in respect of the Company's long lived assets as at August 31, 2016, management
took into account a number of factors such as changes in the pricing of
platinum, palladium, rhodium and gold prices (the four elements being produced
together as a basket 4E Ounce), foreign exchange rates, capital expenditures,
operating costs, increased costs of capital, market capitalization and required
ownership by historically disadvantaged South Africans and other factors that
may indicate impairment. The decline in platinum prices and the decrease in the
Companys market capitalization in fiscal 2016 were considered to be indicators
of potential impairment and the Company assessed the recoverable amount of the
Maseve Mine which has been identified as a CGU.

17

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

The recoverable amount of the Maseve
assets is based on estimates of future discounted cash flows (DCFs) of the
latest business forecasts regarding production volumes, costs of production,
capital expenditure, metal prices and market forecasts for foreign exchange
rates. The discount rate is a risk adjusted discount rate, taking into account
specific risks where the cash flows have not been adjusted for the risk. After
the DCF performed as of year end the Company determined an impairment of $41
million was necessary. This impairment was recognized as an impairment charge
against Development Assets in the Maseve Mine.

The assumptions used by the Company in
the DCF are subject to risk and uncertainty relating to among other factors,
metal prices and exchange rates. It is therefore possible that changes such as
those indicated in the sensitivity analysis below can occur which may affect the
recoverability of the of the Maseve asset.

The key financial assumptions used in
the recoverable amount calculations are:

| |  | The future price per 4E Ounce was a market consensus
      based on price projections of international banks and brokerages. A long
      term price of US$1,195 per 4E Ounce was used in the valuation model.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A long-term real Rand/$USD exchange rate of 13.65:1 was
      used                                                                                                                                            
| |  | A long-term real discount rate of 10.70% for the project
      was used.                                                                                                                                      

The recoverable amount was derived from
the Companys financial model which is categorised as a level 3 valuation of the
fair value hierarchy. The recoverable amount for Maseve is most sensitive to
exchange rates, metal prices, discount rates and to a lesser extent operating
costs. Sensitivity has been conducted for Maseve for metal prices, exchange
rates and discount rates. Lower metal prices and/or lower head grades both
negatively affect the recoverable amount for Maseve. Maseve is not significantly
sensitive to capital cost increases as the majority of life of mine capital is
sunken as at the date of these financial statements. If the US Dollar
strengthens in real terms by 5% against the Rand the recoverable amount for
Maseve increases by $51 million. If there is a 5% reduction in the life of mine
4E ounce basket price the estimated recoverable amount for Maseve is reduced by
$48 million. If an 11.7% discount rate is used the estimated recoverable amount
for Maseve is reduced by $25 million.

|6. | EXPLORATION AND EVALUATION
ASSETS
|-- | ---------------------------------

Since mid-2015 the Companys only active exploration project is
the Waterberg Project located on the North Limb of the Western Bushveld Complex.
The Company continues to hold other immaterial mineral or prospecting rights in
South Africa and Canada. Total capitalized exploration and evaluation
expenditures for all exploration properties held by the Company are as follows:

Balance, August 31, 2014
    $
    28,154Additions
    
    10,245Recoveries
    
    (6,123
    )Write-downs1
    
    (2,331
    )Foreign exchange movement
    
    (5,316
    )Balance, August 31,
      2015
    $
    24,629Additions
    
    7,630Recoveries
    
    (7,321
    )Foreign exchange movement
    
    (2,592
    )Balance, August 31, 2016
    $
    22,346


1The Company wrote off its
Canadian exploration properties in 2015

18

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|                       |  |                                        |  |       | August 31, 2016 |   |   | August 31, 2015 |  
|---------------------- |  | -------------------------------------- |  | ----- | --------------- | - | - | --------------- | -
|Project 3  see Note 5 |  |                                        |  | **$** | **2,111**       |   | $ | 2,353           |  
|                       |  |                                        |  |       |                 |   |   |                 |  
|Waterberg JV           |  | Acquisition costs                      |  |       | 19              |   |   | 21              |  
|                       |  | Exploration and evaluation costs       |  |       | 29,462          |   |   | 27,659          |  
|                       |  | Recoveries                             |  |       | (20,518         | ) |   | (14,725         | )
|                       |  |                                        |  |       | 8,963           |   |   | 12,955          |  
|Waterberg Extension    |  | Acquisition costs                      |  |       | 17              |   |   | 19              |  
|                       |  | Exploration and evaluation costs       |  |       | 11,221          |   |   | 9,297           |  
|                       |  |                                        |  |       | 11,238          |   |   | 9,316           |  
|Other                  |  | Acquisition costs                      |  |       | 23              |   |   | 25              |  
|                       |  | Exploration and
      evaluation costs |  |       | 691             |   |   | 720             |  
|                       |  | Recoveries                             |  |       | (680            | ) |   | (740            | )
|                       |  |                                        |  |       | 34              |   |   | 5               |  
|                       |  |                                        |  |       |                 |   |   |                 |  
|Total                  |  |                                        |  | **$** | **22,346**      |   |   | 24,629          |  

Waterberg Project

The Waterberg Project is comprised of the Waterberg JV
property, a contiguous granted prospecting right area of approximately 255
km2, and the Waterberg Extension property, an area of granted and
applied-for prospecting rights with a combined area of approximately 864
km2, located adjacent and to the north of the Waterberg JV property
and both located on the Northern Limb of the Bushveld Complex, approximately 85
km north of the town of Mokopane (formerly Potgietersrus).

PTM RSA holds legal title to the prospecting rights underlying
the Waterberg Project with Mnombo identified as the Companys 26% BEE partner
for all the Companys Waterberg properties. The Company holds the Waterberg
Project prospecting permits in trust for the joint venture and subject to the
ownership terms and conditions of the JOGMEC Agreement and the 2nd
Amendment thereto, as defined below.

In October 2009, PTM RSA, the Japan Oil, Gas and Metals
National Corporation (JOGMEC) and Mnombo entered into a joint venture
agreement with regard to the Waterberg Project (the JOGMEC Agreement).
Under the terms of the JOGMEC Agreement, in April 2012, JOGMEC completed a $3.2
million work requirement to earn a 37% interest in the Waterberg JV property,
leaving the Company with a 37% interest and Mnombo with a 26% interest.
Following JOGMECs earn-in, the Company funded Mnombos 26% share of costs,
totalling $1.12 million, until the earn-in phase of the joint venture ended in
May 2012.

On November 7, 2011, the Company entered an agreement with
Mnombo to acquire 49.9% of the issued and outstanding shares of Mnombo in
exchange for cash payments totalling R1.2 million and the Companys agreement to
pay for Mnombo's 26% share of costs on the Waterberg JV property until the
completion of a feasibility study.

For accounting purposes, the Company consolidates Mnombo. The
portion of Mnombo not owned by the Company, calculated at $4,555 at August 31,
2016 ($4,555  August 31, 2015), is accounted for as a non-controlling
interest.

On May 26, 2015, the Company announced a second amendment (the
2ndAmendment) to the existing JOGMEC
Agreement. Under the terms of the 2nd Amendment the Waterberg JV and
Waterberg Extension properties, as described below, are to be combined and
contributed into a newly created operating company named Waterberg JV Resources
(Pty) Ltd. (Waterberg JV Co.). The Company is to hold 45.65% of
Waterberg JV Co. while JOGMEC is to own 28.35% . Mnombo will hold 26%. Through
its 49.9% share of Mnombo, the Company will hold an effective 58.62% of
Waterberg JV Co., post-closing. Under the 2nd Amendment, JOGMEC has
committed to fund $20 million in expenditures over a three-year period ending
March 31, 2018. An amount of $8 million was funded by JOGMEC to March 31, 2016,
which is being followed by two $6 million tranches to be spent in each of the
following two 12 month periods. Any amount in excess of $6 million to be spent in
either of years two or three is to be funded by the JV partners pro-rata to
their holdings. Closing of this transaction is subject to Section 11 approval by
the DMR for the transfer of title to the Waterberg prospecting rights and other
project assets into the new Waterberg JV Co. The Company will continue its
current accounting treatment for the Waterberg JV and Waterberg Extension
properties until closing. If Section 11 approval for the transfer is not
obtained the parties will default to the pre 2nd amendment JV
arrangement, with any advances received from JOGMEC to be used to offset its
spending commitments on the Waterberg JV property.

19

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Since the JOGMEC earn-in period ended in May 2012, up to March
2015 (when the 2nd Amendment became effective) $39.9 million was
spent on the combined Waterberg JV and Waterberg Extension properties. JOGMEC
contributed $11.4 million while the Company contributed the remaining $28.5
million which included Mnombos share of expenditures on the Waterberg Extension
($2.4 million) which are still owed to the Company.

Post March 2015, $12.0 million has been spent on the Waterberg
JV and Waterberg Extension properties all of which has been funded by JOGMEC per
the 2nd Amendment agreement outlined above. In fiscal 2016 $7.2
million was spent on the combined Waterberg JV and Waterberg Extension.

|7. | LOANS PAYABLE
|-- | -------------

On February 16, 2015 the Company announced it had entered a
credit agreement with a syndicate of lenders (the Lenders) led by
Sprott Resource Lending Partnership (Sprott) for a senior secured loan
facility (theSprott Facility) of $40 million. The Sprott Facility was
drawn on November 20, 2015.

On November 20, 2015, the Company also drew down a $40 million
from a loan facility (the LMM Facility) pursuant to a credit agreement
(the LMM Credit Agreement) entered into on November 2, 2015 with its
largest shareholder, Liberty Metals & Mining Holdings, LLC (LMM), a
subsidiary of Boston based Liberty Mutual Insurance. Pursuant to the LMM Credit
Agreement the Company also entered into a life of mine Production Payment
Agreement (PPA) with LMM.

The Company announced that effective May 3, 2016 that both the
Sprott Facility and the LMM Facility had been amended. Under the amendments, the
provision whereby Maseve must reach and maintain a three-month rolling average
of at least 60% of planned production for a three-month period was extended from
commencing three months post construction completion to commencing six months
post construction completion. (These amendments were modified again after year
end  see subsequent events (Note 19) for further details). In consideration for
the May amendments, the Company issued 131,654 common shares to each of Sprott
and LMM which, using a 5-day volume weighted average share price less a 7.5%
discount, resulted in $400,000 in consideration to each of Sprott and LMM, (or
one percent of the initial principal balance of each loan).

In total the Company borrowed $80 million by way of the Sprott
Facility and the LMM facility, which are reconciled to the August 31, 2016
balance sheet as follows:

20

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Sprott Facility drawn down
    
    $
    40,000Value of shares issued at drawdown
    
    
    (2,300
    )Standby, Structuring, Legal
      and other fees
    
    
    (1,752
    )Value of shares issued for amendment
    
    
    (400
    )Interest paid on loan
      balance
    
    
    (3,049
    )Interest finance cost at effective interest rate
    
    
    5,064Carrying value - Sprott
      Facility
    
    $
    37,563LMM Facility drawn down
    
    $
    40,000Value of shares issued at drawdown
    
    
    (800
    )Legal and Other Fees
    
    
    (583
    )Value of shares issued for amendment
    
    
    (400
    )Interest finance cost at
      effective interest rate
    
    
    4,806Adjustment to amortized cost of royalty
      obligation
    
    
    523LMM Production Payment Payable
    
    
    144Carrying value - LMM Facility
    
    $
    43,690LMM Production Payment Liability
    
    $
    11,795LMM Production Payment
      Payable
    
    
    144LMM
      Loan Facility
    
    
    31,751Total LMM Facility
    
    $
    43,690Carrying value - Loans Payable
    
    $
    81,253Current portion of loan
      payable
    
    $
    26,667Non-current portion loans payable
    
    
    54,586Carrying value - Loans Payable
    
    $
    81,253


At August 31, 2016 the principal payable in the next twelve
months on the Sprott Facility of $26,667 has been classified as a current. The
Sprott loan was amended post year end and principal repayments have been
deferred to commence in January 2018. See subsequent events for further details
(Note 19).

Both loans are carried at amortized cost with the Sprott
Facility having an effective interest rate of 19% and the LMM Facility having an
effective interest rate of 25%. The LMM Facility has a higher effective interest
rate due to the existence of the related Production Payment liability and its
subordination to the Sprott Facility. Net interest expense of $8.7 million from
both loans has been capitalized against development assets in the Maseve mine
until the asset is ready for its intended use which is expected to be aligned
with the date commercial production is achieved. Adjustments to the Production
Payment liability are also capitalized against the development assets in the
Maseve mine until commercial production is achieved.

Sprott Facility

Pursuant to the terms of the Sprott facility, the Company has
made certain payments to the Lenders, including (a) a bonus payment made in
February 2015 concurrently with execution and delivery of the credit agreement
in the amount of $1,500, being 3.75% of the principal amount of the Sprott
Facility, paid by issuance of 283,019 common shares of the Company; (b) a draw
down payment to the Lenders equal to 2% of the amount being drawn down under the
Sprott Facility, or $800 which was paid by issuance of 348,584 common shares of
the Company on November 20, 2015; (c) a structuring fee comprised of a cash
payment in the amount of $100, paid concurrently with the execution and delivery
of the term sheet for the Sprott Facility; and (d) a standby fee paid in cash
equal to 4% per annum of the un-advanced principal amount of the Sprott Facility
paid in monthly instalments until draw down on November 20, 2015 totalling
$1,244. The Sprott Facility originally matured on December 31, 2017 with the
repayment of principal due in monthly instalments during calendar 2017, however
subsequent to year end these terms have been amended. Please see subsequent
events for further details (Note 19).

21

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Upon drawdown, all deferred fees of $4.0 million ($1.8 million
in cash) were netted against gross proceeds and will be recognized over the term
of the agreement on an effective interest rate basis. Total interest of $5.1
million was recognized during the year with $3.049 million in cash interest
paid. The Company classified $26,667 as the current portion representing
principal payments due to Sprott over the next 12 months although these terms
were modified after year end. Please see subsequent events for further details.
The Company will be required to comply with certain covenants now that
production ramp-up has commenced.

The Sprott Facility is in the first lien position on (i) the
shares of PTM (RSA) held by PTM and (ii) all current and future assets of PTM.
Interest on the Sprott Facility is compounded and payable monthly at a nominal
interest rate of LIBOR plus 8.50% .

LMM Facility

Loan

Pursuant to the terms of the LMM Credit Agreement, the Company
paid a draw down fee of $800 to LMM, being 2% of the amount being drawn down
under the LMM Facility, paid in 348,584 common shares of the Company.

The nominal interest rate on the LMM Facility is 9.5% over
LIBOR. At year end, interest payments on the LMM Facility were accrued and added
to the loan balance until December 31, 2016 and then paid to LMM quarterly
thereafter. Also, the first 20% of principal was to be repaid on December 31,
2018 and then in tranches of 10% of the principal at the end of each calendar
quarter beginning on March 31, 2019 and for each of the next 7 quarters of the
LMM Facility. These payment schedules have been modified subsequent to year end.
Please see subsequent events for further details (Note 19).

Production Payment

Under the PPA, the Company agreed to pay to LMM a Production
Payment of 1.5% of net proceeds received on concentrate sales or other minerals
from the Maseve Mine (the Production Payment). The terms of the PPA
were modified post year end. Please see subsequent events for further details.

The initial fair value of the Production Payment liability was
valued at $11.3 million using Level 3 valuation assumptions and bifurcated from
the LMM Facilitys loan payable and will be amortized over the expected life of
mine as production payments are made. The carrying value was updated at year end
to $11.8 million with the difference recognized as interest expense. The key
valuation assumptions for the Production Payment valuation are production
profile, discount rate and timing of cash flows.

LMM holds the second lien position on (i) the shares of PTM
(RSA) held by PTM and (ii) all current and future assets of PTM. The PPA is
secured with the second lien position of the LMM Facility until it is repaid.
The PPA will be acknowledged in any subsequent debt arrangement of the Company.
The Company has a right to refinance the Sprott Facility or the LMM Facility,
subject to certain rights granted to LMM under the PPA. The Company will be
required to comply with certain covenants once first production commences (see
above and subsequent events for details of the amended covenants).

A reconciliation of the $40 million drawdown to the amount
outstanding on the balance sheet is provided above.

|8. | ASSET RETIREMENT
OBLIGATION
|-- | ---------------------------

The amounts recorded for asset retirement costs are based on
estimates included in mine closure, demobilization, rehabilitation and
remediation plans. These estimates are based on engineering studies of the work
that is required by environmental laws. These estimates include an assumption on
the rate at which costs may inflate in future periods. Actual costs and the
timing of expenditures could differ from these estimates.

22

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

At August 31, 2016, the ARO is estimated based on a total
future liability of approximately R 52.0 million (August 31, 2015  R 33.4
million). A discount rate of 8.96% and an inflation rate of 6.3%, which
represents South Africas expected inflation rate, were used to calculate the
ARO.

Balance August 31, 2014
    $
    1,505Additional obligation
      incurred
    
    955Accretion expense
    
    136Foreign exchange gain
    
    (287
    )Balance August 31, 2015
    $
    2,309Accretion expense
    
    165Foreign exchange gain
    
    (237
    )Balance August 31, 2016
    $
    2,237


|9. | SHARE CAPITAL
|-- | -------------

|(a) | Authorized
|--- | ----------

Unlimited common shares without par value.

|(b) | Issued and outstanding
|--- | ----------------------

On January 26, 2016, the Company announced that effective
January 28, 2016 its common shares would be consolidated on the basis of one new
share for ten old shares (1:10). All information regarding the issued and
outstanding common shares, options and weighted average number and per share
information has been retrospectively restated to reflect the ten to one
consolidation.

At August, 2016, the Company had 88,857,028 shares outstanding.

On May 26, 2016 the Company announced the closing of an
offering of 11,000,000 common shares at a price of US$3.00 per share resulting
in gross proceeds of $33.0 million. Net proceeds to the Company after fees,
commissions and costs were approximately $30.1 million.

On May 3, 2016, both Sprott and Liberty were each granted
131,654 shares for total consideration of US$400,000 each based on the five-day
volume weighted average price on the TSX of C$4.18 per share (less a seven and
one half percent discount), converted to US dollars in consideration for the
amendment to the outstanding working capital facilities.

On November 20, 2015 upon drawdown of both the Sprott and
Liberty Facilities, each party was issued 348,584 shares as a drawdown fee.

|(c) | Incentive stock options
|--- | -----------------------

The Company has entered into Incentive Stock Option Agreements
(Agreements) under the terms of its stock option plan with directors,
officers, consultants 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. Stock options granted to certain employees,
directors and officers of the Company are subject to vesting provisions, while
others vest immediately. All exercise prices are denominated in Canadian Dollars
(C$).

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

23

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

| |                                              |  |                  |   |  | Average        | 
| | -------------------------------------------- |  | ---------------- | - |  | -------------- | 
| |                                              |  | Number of Shares |   |  | Exercise Price | 
| | Options outstanding at August 31, 2014       |  | 1,974,450        |   |  | C$ 14.80       | 
| | Granted                                      |  | 943,000          |   |  | 6.50           | 
| | Cancelled                                    |  | (85,000          | ) |  | 13.30          | 
| | Options outstanding at August
      31, 2015 |  | 2,832,450        |   |  | 12.10          | 
| | Granted                                      |  | 1,014,675        |   |  | 2.00           | 
| | Exercised                                    |  | (2,250           | ) |  | 2.00           | 
| | Cancelled                                    |  | (867,600         | ) |  | 16.67          | 
| | Options outstanding at August 31, 2016       |  | 2,977,275        |   |  | C$ 7.31        | 

| | Number          |  | Number          |  |  |                    |  |  | Average Remaining | 
| | --------------- |  | --------------- |  |  | ------------------ |  |  | ----------------- | 
| | Outstanding at  |  | Exercisable at  |  |  |                    |  |  | Contractual Life  | 
| | August 31, 2016 |  | August 31, 2016 |  |  | **Exercise Price** |  |  | (Years)           | 
| | 951,675         |  | 235,669         |  |  | C$ 2.00            |  |  | 4.31              | 
| | 839,000         |  | 839,000         |  |  | 6.50               |  |  | 3.46              | 
| | 292,200         |  | 292,200         |  |  | 9.60               |  |  | 1.02              | 
| | 10,000          |  | 10,000          |  |  | 10.50              |  |  | 1.75              | 
| | 2,500           |  | 2,500           |  |  | 12.00              |  |  | 3.04              | 
| | 870,900         |  | 870,900         |  |  | 13.00              |  |  | 2.41              | 
| | 7,500           |  | 7,500           |  |  | 13.80              |  |  | 0.46              | 
| | 3,500           |  | 3,500           |  |  | 14.00              |  |  | 1.55              | 
| | 2,977,275       |  | 2,261,269       |  |  |                    |  |  | 2.81              | 

During the year ended August 31, 2016 the Company granted
1,014,675 stock options (August 31, 2015  943,000). The stock options granted
in the current year vest in four equal annual stages commencing on the date of
the grant on December 22, 2015. The Company recorded $356 ($150 expensed and
$206 capitalized to property, plant and equipment and mineral properties) of
compensation expense for the year ended August 31, 2016 (August 31, 2015 -
$2,140 ($1,178 expensed and $962 capitalized to property plant and equipment and
mineral properties)).

The Company used the Black-Scholes model to determine the grant
date fair value of stock options granted. The following assumptions were used in
valuing stock options granted during the years ended August 31, 2016 and August
31, 2015:

Year ended
    
    August 31, 2016
    
    
    August 31, 2015Risk-free interest rate
    
    0.65%
    
    
    0.60%Expected life of options
    
    3.9 years
    
    
    3.8 yearsAnnualized volatility
    
    64%
    
    
    60%Forfeiture rate
    
    2.1% per year
    
    
    0%Dividend rate
    
    0.00%
    
    
    0.00%


|10. | NON-CONTROLLING INTEREST
|--- | ------------------------

The table below shows details of non-wholly owned subsidiaries
of the Group that have material non-controlling interests:

24

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|Company                                |  | Proportion of |  |  | Loss allocated to |  |   | Accumulated     | 
|-------------------------------------- |  | ------------- |  |  | ----------------- |  | - | --------------- | 
|                                       |  | ownership and |  |  | non-controlling   |  |   | non-controlling | 
|                                       |  | voting rights |  |  | interests         |  |   | interests       | 
|                                       |  | held          |  |  |                   |  |   |                 | 
|                                       |  | by non-       |  |  |                   |  |   |                 | 
|                                       |  | controlling   |  |  |                   |  |   |                 | 
|                                       |  | interests     |  |  |                   |  |   |                 | 
|                                       |  | 2016          |  |  | 2015              |  |   | 2016            | 
|Maseve Investments 11 (Pty) Ltd        |  | 17.1%         |  |  | 17.1%             |  | $ | 15,976          | 
|                                       |  |               |  |  |                   |  |   |                 | 
|Mnombo Wethu Consultants (Pty) Limited |  | 50.1%         |  |  | 50.1%             |  |   | -               | 
|                                       |  |               |  |  |                   |  |   |                 | 
|                                       |  |               |  |  |                   |  |   |                 | 

The following table presents the financial information of the
Companys 82.9% owned subsidiary Maseve:

|                                                                  |   | 2016     |   |   | 2015     |  
|----------------------------------------------------------------- | - | -------- | - | - | -------- | -
|Maseve Assets                                                     | $ | 586,062  |   | $ | 548,265  |  
|Maseve Liabilities                                                |   | (260,835 | ) |   | (129,584 | )
|Maseve net assets                                                 | $ | 325,227  |   | $ | 418,681  |  
|Net assets attributable to non-controlling
      interest (17.1%) |   | 55,614   |   |   | 71,594   |  
|Cumulative translation adjustment attributable to the NCI         |   | (21,490  | ) |   | (17,769  | )
|Non-controlling interest attributable to Maseve                   | $ | 34,124   |   | $ | 53,825   |  

|11. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

Transactions with related parties are as follows:

|(a) | During the year ended August 31, 2016, $235 ($245 
      August 31, 2015) was paid to independent directors for directors fees and
      services.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(b) | During the year ended August 31, 2016, the Company
      accrued or received payments of $62 ($84  August 31, 2015) from West
      Kirkland Mining Inc. (West Kirkland), a company with two
      directors in common, for administrative services. Amounts receivable at
      the end of the year include an amount of $21 ($20  August 31, 2015) due
      from West Kirkland.                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(c) | Nextraction Energy Corp. (Nextraction), has
      three directors in common with the Company. Amounts receivable at August
      31, 2016 include an amount of $16 ($157  August 31, 2015) due from
      Nextraction, which is currently going through a credit restructuring.
      Non-conflicted directors of the Company have accepted a proposed
      settlement of $16 offered by Nextraction and a write down to amounts
      receivable of $141 was recognized in the current year. Nextraction has not
      incurred further indebtedness to the Company for services since fiscal
      2014.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(d) | During the year the Company entered into a loan facility
      agreement with a significant shareholder LMM. The loan was negotiated and
      entered into at commercial terms. For full details on this transaction
      please refer to Note 7 above.                                                                                                                                                                                                                                                                                                                                                     

Except for amounts due to LMM, all 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 recorded at consideration established and agreed to by the
parties.

25

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

Key Management Compensation

The remuneration of directors, the CFO, CEO, COO and other key
management personnel during the years ended August 31, 2016 and 2015 is as
follows:

Year ended
    
    August 31, 2016
    
    
    August 31, 2015Salaries
    $
    1,510
    
    $
    2,060Share-based payments
    
    133
    
    
    1,119Total
    $
    1,643
    
    $
    3,179


|12. | CONTINGENCIES AND
COMMITMENTS
|--- | -----------------------------

The Companys remaining minimum payments under its office and
equipment lease agreements in Canada and South Africa total approximately $1,866
to August 31, 2020.

Maseve is party to a long term 40MVA electricity supply
agreement with South African power utility, Eskom. In consideration Maseve is to
pay connection fees and guarantees totaling R147 million ($10.0 million at
August 31, 2016) of which R100 million ($6.80 million at August 31, 2016), has
been paid, leaving R47 million ($3.20 million) of the commitment outstanding.
These fees are subject to possible change based on Eskoms cost to install.
Eskoms schedule to deliver power is also subject to potential for change.

In November 2012, Maseve entered a water supply agreement with
Magalies Water, a body corporate constituted in terms of the provisions of the
Water Services Act, 1997 (Act 108 of 1997). In terms of the agreement Maseve is
required to contribute to the Pilanesberg Water Scheme to the amount of R142
million ($9.66 million). Contributions to the scheme can be in the form of cash
contributions or via infrastructural builds jointly managed by Maseve and
Magalies. As at August 31, 2016, Maseve has contributed R103 million ($7.01
million) to the scheme, leaving R39 million ($2.65 million at August 31, 2016)
of the commitment outstanding.

From year end the Companys aggregate commitments are as
follows:

|                          |   | < 1    |  |   | 1  3  |  |   | 4  5  |  |   | > 5   |  |   | Total   | 
|------------------------- | - | ------ |  | - | ------ |  | - | ------ |  | - | ----- |  | - | ------- | 
|                          |   | Year   |  |   | Years  |  |   | Years  |  |   | Years |  |   |         | 
|                          |   |        |  |   |        |  |   |        |  |   |       |  |   |         | 
|Lease obligations         | $ | 362    |  | $ | 1,504  |  | $ | -      |  | $ | -     |  | $ | 1,866   | 
|ESKOM
       power       |   | 3,212  |  |   | -      |  |   | -      |  |   | -     |  |   | 3,212   | 
|Magalies water            |   | 2,676  |  |   | -      |  |   | -      |  |   | -     |  |   | 2,676   | 
|Mining Development        |   | 7,647  |  |   | -      |  |   | -      |  |   | -     |  |   | 7,647   | 
|Mining Indirect and Other |   | 2,589  |  |   | -      |  |   | -      |  |   | -     |  |   | 2,589   | 
|Sprott Loan Facility1     |   | 29,707 |  |   | 13,595 |  |   | -      |  |   | -     |  |   | 43,302  | 
|Liberty Loan Facility1    |   | 3,670  |  |   | 31,271 |  |   | 24,407 |  |   | -     |  |   | 59,348  | 
|Totals                    | $ | 49,863 |  | $ | 46,370 |  | $ | 24,407 |  | $ | -     |  | $ | 120,640 | 

1Both the Sprott and Liberty loan facilities were
amended and extended subsequent to year end. (See subsequent events for further
details)

As at August 31, 2016, the above contracts were subject to
total estimated break fees of $16,123 in the event of cancellation. Break fees
are estimated by means of contractual notice periods, work progress costs and
normal costs associated with the unwinding and disestablishment of certain
contractors.

26

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|13. | SUPPLEMENTARY CASH FLOW
  INFORMATION
|--- | -------------------------------------

Net change in non-cash working capital:

|Years ended                                                 |   | August 31, 2016 |   |   | August 31, 2015 |  
|----------------------------------------------------------- | - | --------------- | - | - | --------------- | -
|Amounts receivable, prepaid
      expenses and other assets | $ | 2,124           |   | $ | 2,550           |  
|Accounts payable and accrued liabilities                    |   | (1,550          | ) |   | (573            | )
|                                                            | $ | 574             |   | $ | 1,977           |  

|14. | SEGMENTED REPORTING
|--- | -------------------

The Company operates in one operating segment, that being
exploration and development of mineral properties. Information presented on a
geographic basis are as follows:

Assets

|             |   | August 31, 2016 |  |   | August 31, 2015 | 
|------------ | - | --------------- |  | - | --------------- | 
|Canada       | $ | 10,572          |  | $ | 35,091          | 
|South Africa |   | 509,286         |  |   | 463,251         | 
|             | $ | 519,858         |  | $ | 498,342         | 
|             |   |                 |  |   |                 | 

Substantially all of the Companys capital expenditures are
made in South Africa.

Income (Loss) attributable to the shareholders of Platinum
Group Metals Ltd.

|Year ended   |   | August 31, 2016 |   |   | August 31, 2015 |  
|------------ | - | --------------- | - | - | --------------- | -
|             |   |                 |   |   |                 |  
|Canada       | $ | 6,787           |   | $ | 967             |  
|South Africa |   | (27,462         | ) |   | (4,106          | )
|             | $ | (20,675         | ) | $ | (3,139          | )

|15. | GENERAL AND ADMINISTRATIVE
  EXPENSES
|--- | -------------------------------------

|GENERAL AND ADMINISTRATIVE EXPENSES                         |       | Year Ending |  |       | Year Ending | 
|----------------------------------------------------------- | ----- | ----------- |  | ----- | ----------- | 
|                                                            |       | August 31,  |  |       | August 31,  | 
|                                                            |       | 2016        |  |       | 2015        | 
|Salaries and benefits                                       | $     | 1,979       |  | $     | 2,949       | 
|Professional/consulting fees                                |       | 1,040       |  |       | 1,537       | 
|Depreciation                                                |       | 441         |  |       | 518         | 
|Travel                                                      |       | 399         |  |       | 490         | 
|Regulatory Fees                                             |       | 325         |  |       | 338         | 
|Rent                                                        |       | 244         |  |       | 244         | 
|Accretion                                                   |       | 165         |  |       | 148         | 
|Insurance                                                   |       | 163         |  |       | 298         | 
|Write-down of receivable from
      related party (Note 11) |       | 141         |  |       | -           | 
|Other                                                       |       | 524         |  |       | 366         | 
|**Total**                                                   | **$** | **5,421**   |  | **$** | **6,888**   | 

27

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|16. | CAPITAL RISK MANAGEMENT
|--- | -----------------------

The Companys objectives in managing its liquidity and capital
are to safeguard the Companys ability to continue as a going concern and
provide financial capacity to meet its strategic objectives. The capital
structure of the Company consists of share capital, contributed surplus,
accumulated other comprehensive loss and accumulated deficit.

The Company manages the capital structure and makes adjustments
to it in light of changes in economic conditions and the risk characteristics of
the underlying assets. To maintain or adjust the capital structure, the Company
may issue new shares, issue new debt, acquire or dispose of assets.

In order to facilitate the management of its capital
requirements, the Company regularly updates the Board of Directors with regard
to budgets, forecasts, results of capital deployment and general industry
conditions. The Company does not currently declare or pay out dividends.

As at August 31, 2016, the Company is subject to externally
imposed capital requirements under the Sprott and LMM facilities. Please see
Note 7 for further details.

|17. | FINANCIAL INSTRUMENTS AND RISK
  MANAGEMENT
|--- | -------------------------------------------

The Company examines the various financial risks to which it is
exposed and assesses the impact and likelihood of occurrence. These risks may
include credit risk, liquidity risk, currency risk, interest rate risk and other
price risks.

|(a) | Credit risk
|--- | -----------

Credit risk arises from the risk that the financial asset
counterparty, may default or not meet its obligations timeously. The Company
minimizes credit risk by monitoring the reliability of counterparties to settle
assets. The maximum exposure to the credit risk is represented by the carrying
amount of all the financial assets. There is no material concentration of credit
risk in cash and cash equivalents, trade and other receivables and loans.

|(i) | Amounts receivable
|--- | ------------------

Total credit risk is limited to the
carrying amount of amounts receivable.

| | (ii) | Cash and cash equivalents and restricted
    cash
| | ---- | -------------------------------------------------

In order to manage credit and liquidity
risk the Company invests only in term deposits with Canadian Chartered and South
African banks that have maturities of three months or less. A South African Bank
Rand account held in the United Kingdom is used for holding Rand denominations
only, and is not restricted. Deposit limits are also established based on the
type of investment, the counterparty and the credit rating.

| | (iii) | Performance Bonds
| | ----- | -----------------

In order to explore and develop its
properties in South Africa, the Company was required to post performance bonds
as financial guarantees against future reclamation work. These funds are held
with Standard Bank of South Africa Limited with the Department of Mineral
Resources in South Africa as beneficiary in accordance with the MPRDA and the
Companys environmental management programme.

|(b) | Liquidity risk
|--- | --------------

The Company has in place a planning and budgeting process to
help determine the funds required to support the Company's normal operating
requirements and its exploration and development plans. The Company regularly updates the Board of Directors with regard to
budgets, forecasts, results of capital deployment and general industry
conditions.

28

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

The Company may be required to source additional financing by
way of private or public offerings of equity or debt or the sale of project or
property interests in order to have sufficient working capital for continued
exploration on the Waterberg Projects, as well as for general working capital
purposes.

Any failure by the Company to obtain additional required
financing on acceptable terms could cause the Company to delay development of
its material projects or could result in the Company being forced to sell some
of its assets on an untimely or unfavourable basis. Any such delay or sale could
have a material and adverse effect on the Companys financial condition, results
of operations and liquidity.

|(c) | Currency risk
|--- | -------------

PTM Canadas functional currency is the Canadian dollar, while
the consolidated presentation currency is the United States Dollar. The
functional currency of all South African subsidiaries is the Rand. The Companys
operations are in both Canada and South Africa; therefore the Company's results
are impacted by fluctuations in the value of foreign currencies in relation to
the Canadian and United States dollar. The Company also held material USD
denominated cash balances. The Company's significant foreign currency exposures
on financial instruments comprise cash and cash equivalents, loans payable,
accounts payable and accrued liabilities. The Company has not entered into any
agreements or purchased any instruments to hedge possible currency risks at this
time.

The Company is exposed to foreign exchange risk through the
following financial instruments denominated in a currency other than Canadian
dollars:

Year ended
    
    August 31, 2016
    
    
    August 31, 2015Cash (Rand)
    $
    6,334
    
    $
    7,196Cash (USD)
    
    9,941
    
    
    20,638Accounts payable (Rand)
    
    16,297
    
    
    15,980Loan Payable (USD)
    
    81,253
    
    
    -Accounts receivable (Rand)
    
    2,955
    
    
    8,826


The Company's comprehensive loss is affected by changes in the
exchange rate between its operating currencies and the United States dollar. At
August 31, 2016, based on this exposure a 10% strengthening/weakening in the
United States dollar versus Rand foreign exchange rate and Canadian dollar would
give rise to a decrease/increase in net loss for the year presented of
approximately $3.66 million.

|(d) | Interest rate risk
|--- | ------------------

The Companys interest income earned on cash and cash
equivalents and on short term investments is exposed to interest rate risk. At
August 31, 2016, based on this exposure a 1% change in the average interest rate
would give rise to an increase/decrease in the net loss for the year of
approximately $460.

At August 31, 2016, the carrying amounts of cash and cash
equivalents, amounts receivable, performance bonds and accounts payable and
accrued liabilities are considered to be reasonable approximations of their fair
values due to the short-term nature of these instruments.

29

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|18. | INCOME TAXES
|--- | ------------

The income taxes shown in the consolidated earnings differ from
the amounts obtained by applying statutory rates to the earnings before
provision for income taxes due to the following:

|                                                      |   | 2016    |   |   | 2015  |  
|----------------------------------------------------- | - | ------- | - | - | ----- | -
|                                                      |   |         |   |   |       |  
|Loss before income taxes                              | $ | 44,145  |   | $ | 2,885 |  
|                                                      |   |         |   |   |       |  
|Income tax recovery at
      statutory rates          |   | (11,478 | ) |   | (749  | )
|Difference of foreign tax rates                       |   | (766    | ) |   | (44   | )
|Non-deductible expenses                               |   | 44      |   |   | (472  | )
|Changes in unrecognized deferred tax assets and other |   | 4,706   |   |   | 4,421 |  
|Income tax expense (recovery)                         |   | (7,494  | ) |   | 3,156 |  
|                                                      |   |         |   |   |       |  
|Income tax expense (recovery)
      consists of:      |   |         |   |   |       |  
|Current
      income taxes                            | $ | -       |   | $ | 192   |  
|Deferred income
      taxes                           |   | (7,494  | ) |   | 895   |  
|                                                      | $ | (7,494  | ) | $ | 1,087 |  

The gross movement on the net deferred income tax account is as
follows:

|                                                                                  |   | 2016   |   |   | 2015    |  
|--------------------------------------------------------------------------------- | - | ------ | - | - | ------- | -
|Deferred tax liability at the beginning of
      the year                         | $ | (6,317 | ) | $ | (10,654 | )
|Tax recovery relating to the
      loss from continuing                           |   | 7,494  |   |   | 895     |  
|operations                                                                        |   |        |   |   |         |  
|Tax (expense) recovery relating to components of other
      comprehensive income |   | (1,177 | ) |   | 3,442   |  
|Deferred tax liability at the end of the year                                     | $ | -      |   | $ | (6,317  | )

The significant components of the Companys net deferred income
tax liabilities are as follows:

|                    |   | 2016    |   |   | 2015    |  
|------------------- | - | ------- | - | - | ------- | -
|Mineral properties  | $ | (19,692 | ) | $ | (17,729 | )
|Loss carry forwards |   | 19,692  |   |   | 11,413  |  
|                    | $ | -       |   | $ | (6,316  | )

Unrecognized deductible temporary differences, unused tax
losses and unused tax credits are attributed to the following:

|                                             |   | 2016    |  |   | 2015   | 
|-------------------------------------------- | - | ------- |  | - | ------ | 
|Tax Losses:                                  |   |         |  |   |        | 
|Operating loss carry forwards
       Canada | $ | 60,950  |  | $ | 58,335 | 
|Operating loss carry forwards  South Africa |   | 77,069  |  |   | -      | 
|Net capital loss carry forwards              |   | 1,559   |  |   | 1,484  | 
|                                             | $ | 139,578 |  | $ | 59,819 | 
|                                             |   |         |  |   |        | 
|Temporary Differences:                       |   |         |  |   |        | 
|Mineral properties                           |   | 7,628   |  |   | 7,647  | 
|Financing Costs                              |   | 13,930  |  |   | 11,955 | 
|Property, plant and equipment                |   | 594     |  |   | 531    | 
|Other                                        |   | 329     |  |   | 471    | 
|                                             | $ | 22,481  |  | $ | 20,604 | 
|                                             |   |         |  |   |        | 
|                                             |   |         |  |   |        | 
|Investment Tax Credits:                      | $ | 317     |  | $ | 285    | 

The Companys Canadian operating loss carry-forwards expire
between 2026 and 2036. The Companys South African operating loss carry-forwards
do not expire. The Companys Canadian unused investment tax credit carry-forwards expire between 2029 and 2035. The
Companys Canadian net capital loss carry-forwards do not expire.

30

---

|Platinum Group Metals Ltd.                                          
|--------------------------------------------------------------------
|(An exploration and development stage company)                      
|Notes to the consolidated financial statements                      
|For the year ended August 31, 2016                                  
|(In thousands of United States Dollars unless otherwise
      noted)

|19. | SUBSEQUENT EVENTS
|--- | -----------------

| |  | On September 19, 2016, the Company announced that Sprott
      and LMM had agreed to amend certain terms to their existing loan
      facilities with the Company. Sprott agreed to defer 12 planned monthly
      repayments of the original US $40 million Sprott Facility from commencing
      on January 31, 2017 to commencing on January 31, 2018. LMM agreed to defer
      9 planned quarterly repayments of the original US $40 million LMM Facility
      plus capitalized interest from commencing December 31, 2018 until June 30,
      2019. LMM agreed to defer the quarterly payment of interest due to LMM
      from commencing December 31, 2016 until December 31, 2017. Sprott and LMM
      both agreed to reset agreed monthly production covenants so that month one
      of production will be October, 2016. Pursuant to the LMM Credit Agreement
      the Company entered a life of mine PPA with LMM whereby LMM was granted a
      Production Payment right to 1.5% of net proceeds received on concentrate
      sales from the Maseve Mine. LMM and the Company agreed to extinguish the
      Companys right to buy back 1% of LMMs 1.5% Production Payment right for
      US$17.5 million until January 1, 2019 or for US$20 million until December
      31, 2021. In consideration of the amendments, the Company issued 801,314
      common shares to Sprott and 801,314 common shares to LMM. The
      consideration was based on the value of five percent of the initial
      principal balance of the LMM loan facility and the Sprott facility, in
      each case, such amount being US $2.0 million. The shares were priced at
      the five-day volume weighted average price on the TSX of $3.66 per share,
      less a ten percent discount, converted to US dollars using the Bank of
      Canada noon spot rate.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | On October 5, 2016 the Company filed a preliminary base
      shelf prospectus. The base shelf prospectus will enable the Company to
      make offerings of up to $250 million of common shares, debt securities,
      warrants, units subscription receipts or a combination thereof of the
      Company from time to time for a period of 25 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | On October 12, 2016, the Company announced that Sprott
      had provided a $5.0 million second advance (the Second Advance) to the
      Company. The original $40.0 million Sprott Facility was amended and
      restated effective October 11, 2016 to reflect the Second Advance and an
      increase to US$45.0 million (the Amended and Restated Sprott Facility).
      Interest will accrue and become payable to Sprott monthly on any
      outstanding principal related to the Second Advance at a rate of LIBOR
      plus 8.5%, the same rate as for the original Sprott Facility. Other terms,
      conditions and covenants related to the Amended and Restated Sprott
      Facility are substantially the same as for the original Sprott Facility.
      Under the terms of the Amended and Restated Sprott Facility, Sprott had a
      right to elect for earlier repayment of the Second Advance the from the
      proceeds of an equity or debt financing by the Company prior to December
      31, 2017. On November 2, 2016 Sprott elected for early repayment of $2.5
      million of the Second Advance from the proceeds of an offering completed
      on November 1, 2016 (see below). The remaining $2.5 million principal
      balance of the Second Advance is to be repaid in six equal, monthly
      instalments commencing on July 31, 2017. In consideration of the Second
      Advance, as a fee, the Company issued 113,963 common shares of the Company
      at a price of $3.2428 per share, less a ten percent discount.                                                                                                                                                                                                                                                                                             
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| |  | On October 19, 2016, the Company released the results of
      the Waterberg prefeasibility study (PFS). Highlights included updated
      reserves and resources, an after-tax net present value (NPV) of $320
      million using a 3-year trailing average price deck and an after-tax IRR of
      13.5%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | On October 24, 2016, the Company announced a $40 million
      bought deal equity financing. This offering closed November 1, 2016 with
      the Company issuing 22.230 million shares at price of US$1.80 per share
      resulting in gross proceeds of $40.014 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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