---







Platinum Group Metals Ltd.(Exploration and
Development Stage Company)

Consolidated Financial Statements (Audited) For the year
ended August 31, 2011



Filed: November 22, 2011





---

November 21, 2011

Independent Auditors Report

To the Shareholders of Platinum Group Metals Ltd.

We have completed integrated audits of Platinum Group Metals
Ltd.s (the Company) 2011, 2010 and 2009 consolidated financial statements and
an audit of the effectiveness of the Companys internal control over financial
reporting as at August 31, 2011. Our opinions, based on our audits, are
presented below.

**Report on the consolidated financial statements**We have audited the accompanying consolidated financial statements
of Platinum Group Metals Ltd., which comprise the consolidated balance sheets as
at August 31, 2011 and August 31, 2010 and the consolidated statements of
operations and comprehensive (loss) income, shareholders equity and cash flows
for each of the three years in the period ended August 31, 2011, 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 Canadian generally accepted accounting principles 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 and the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform an audit
to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement. Canadian generally accepted
auditing standards require that we comply with ethical requirements.

An audit involves performing procedures to obtain audit
evidence, on a test basis, 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
Companys preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting principles and 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 on
the consolidated financial statements.



PricewaterhouseCoopers LLP Chartered AccountantsPricewaterhouseCoopers Place, 250 Howe Street, Suite
      700, Vancouver, British Columbia, Canada V6C 3S7T: 604 806 7000, F:604 806 7806, www.pwc.com/ca"PwC" refers to PricewaterhouseCoopers LLP, an
      Ontario limited liability partnership, which is a member firm of
      PricewaterhouseCoopers International Limited, each. member firm of which
      is a separate legal entity.


---

Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of Platinum Group
Metals Ltd. as at August 31, 2011 and August 31, 2010 and the results of its
operations and cash flows for each of the years in the three year period ended
August 31, 2011 in accordance with Canadian generally accepted accounting
principles.

**Report on internal control over financial reporting**We have also audited Platinum Group Metals Ltd.s internal control
over financial reporting as at August 31, 2011 based on criteria established in
Internal Control - Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

**Managements responsibility for internal control over
financial reporting**Management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in
Managements Report on Internal Control over Financial Reporting.

**Auditors responsibility**Our responsibility
is to express an opinion on Platinum Group Metals Ltd.s internal control over
financial reporting based on our audit. We conducted our audit of internal
control over financial reporting in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects.

An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control, based on the assessed
risk, and performing such other procedures as we consider necessary in the
circumstances.

We believe that our audit provides a reasonable basis for our
audit opinion on the Companys internal control over financial reporting.

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

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

---

OpinionIn our opinion, Platinum Group Metals Ltd.
maintained, in all material respects, effective internal control over financial
reporting as at August 31, 2011 based on criteria established in Internal
Control - Integrated Framework, issued by COSO.



Signed PricewaterhouseCoopers LLP

Chartered Accountants

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Managements responsibility for the Financial
Statements

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

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

Management, under the supervision of and the participation of
the Chief Executive Officer and the Chief Financial Officer, have a process in
place to evaluate disclosure controls and procedures and internal control over
financial reporting as required by Canadian and U.S. securities regulations. We,
as President and Chief Financial Officer, will certify our annual filings with
the CSA and SEC as required in Canada by National Instrument 52-109 and in the
United States as required by the Sarbanes-Oxley Act of 2002.

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

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

Managements Report on Internal Control over Financial
Reporting

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

Management has used the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) framework to evaluate the effectiveness of the
Companys internal control over financial reporting as at August 31, 2011. Based
on this evaluation, management has concluded that as at August 31, 2011, the
Companys internal control over financial reporting was effective.

PricewaterhouseCoopers LLP, our auditor, has audited the
effectiveness of our internal control over financial reporting as of August 31,
2011, as stated in their report which appears herein.

|/s/ R. Michael Jones    |                         | /s/ Frank Hallam | 
|----------------------- | ----------------------- | ---------------- | 
|R. Michael Jones        | Frank Hallam           
|Chief Executive Officer | Chief Financial Officer

November 21, 2011

---

|PLATINUM GROUP METALS LTD.                    
|----------------------------------------------
|(An exploration and development stage company)
|Consolidated
      Balance Sheets             

|(expressed in Canadian dollars)                  |   | Aug. 31, 2011 |   |   | Aug. 31, 2010 |  
|------------------------------------------------ | - | ------------- | - | - | ------------- | -
|ASSETS                                           |   |               |   |   |               |  
|                                                 |   |               |   |   |               |  
|CURRENT                                          |   |               |   |   |               |  
|Cash and cash equivalents                        | $ | 64,118,931    |   | $ | 2,366,136     |  
|Amounts receivable (Note 3
      (a))            |   | 1,845,114     |   |   | 1,270,548     |  
|Prepaid expenses and other assets (Note 3 (b))   |   | 109,595       |   |   | 69,382        |  
|Total current assets                             |   | 66,073,640    |   |   | 3,706,066     |  
|Restricted cash (Note 4 (a (iii)))               |   | 47,719,829    |   |   | -             |  
|Non-current prepaid expenses (Note 3 (b))        |   | 2,598,273     |   |   | -             |  
|Assets held for sale (Note 6)                    |   | 951,928       |   |   | 951,928       |  
|Performance bonds (Note 4 (a (iv)))              |   | 2,161,698     |   |   | 160,376       |  
|Mineral properties (Note 4)                      |   | 146,379,119   |   |   | 121,863,216   |  
|Property, plant and equipment (Note 5)           |   | 20,828,635    |   |   | 309,417       |  
|Total
      assets                               | $ | 286,713,122   |   | $ | 126,991,003   |  
|                                                 |   |               |   |   |               |  
|LIABILITIES                                      |   |               |   |   |               |  
|                                                 |   |               |   |   |               |  
|CURRENT                                          |   |               |   |   |               |  
|Accounts payable and accrued liabilities         | $ | 5,982,056     |   | $ | 2,270,008     |  
|Total current
      liabilities                  |   | 5,982,056     |   |   | 2,270,008     |  
|                                                 |   |               |   |   |               |  
|Future income taxes (Note 15)                    |   | 21,452,793    |   |   | 21,822,522    |  
|Asset retirement obligation (Note 7)             |   | 645,369       |   |   | -             |  
|Total
      liabilities                          |   | 28,080,218    |   |   | 24,092,530    |  
|Non-controlling interest (Note 4(a (ii)))        |   | 11,695,298    |   |   | 11,149,482    |  
|                                                 |   |               |   |   |               |  
|SHAREHOLDERS' EQUITY                             |   |               |   |   |               |  
|                                                 |   |               |   |   |               |  
|Share capital (Note 8)                           |   | 256,312,632   |   |   | 91,794,123    |  
|Contributed surplus                              |   | 13,816,234    |   |   | 10,929,202    |  
|Accumulated other comprehensive income           |   | (3,415,608    | ) |   | (3,415,608    | )
|Deficit                                          |   | (19,775,652   | ) |   | (7,558,726    | )
|Total shareholders' equity                       |   | 246,937,606   |   |   | 91,748,991    |  
|Total
      liabilities and shareholders' equity | $ | 286,713,122   |   | $ | 126,991,003   |  

CONTINGENCIES AND COMMITMENTS (NOTE 12)SUBSEQUENT EVENTS (NOTE 17)APPROVED BY THE DIRECTORS:"Iain
      McLean"Iain McLean, Director"Eric
      Carlson"Eric Carlson, Director


See accompanying notes to the consolidated financial
statements.

---

Platinum Group Metals Ltd.(An exploration and
development stage company)For the year ended August 31, 2011

|PLATINUM GROUP METALS LTD.                                                 
|---------------------------------------------------------------------------
|(An exploration and development stage company)                             
|Consolidated
      Statements of Operations and Comprehensive (loss) income

|(expressed in Canadian dollars)                                                   |   |                 |   |   |                 |   |   |                 |   |   | Cumulative     |  
|--------------------------------------------------------------------------------- | - | --------------- | - | - | --------------- | - | - | --------------- | - | - | -------------- | -
|                                                                                  |   |                 |   |   |                 |   |   |                 |   |   | amount from    |  
|                                                                                  |   |                 |   |   |                 |   |   |                 |   |   | March 16, 2000 |  
|                                                                                  |   |                 |   |   |                 |   |   |                 |   |   | to August 31,  |  
|                                                                                  |   | Year Ended      |   |   | Year ended      |   |   | Year ended      |   |   | 2011           |  
|                                                                                  |   | August 31, 2011 |   |   | August 31, 2010 |   |   | August 31, 2009 |   |   | (unaudited)    |  
|EXPENSES                                                                          |   |                 |   |   |                 |   |   |                 |   |   |                |  
|General and administrative                                                        | $ | 6,528,017       |   | $ | 6,537,109       |   | $ | 5,533,115       |   | $ | 35,964,552     |  
|Foreign exchange loss (gain)                                                      |   | 3,336,991       |   |   | 1,013,115       |   |   | (322,833        | ) |   | 4,245,805      |  
|Stock compensation expense                                                        |   | 6,910,305       |   |   | 137,600         |   |   | 2,100,736       |   |   | 12,744,827     |  
|Mineral property costs written off                                                |   | -               |   |   | -               |   |   | -               |   |   | 6,430,293      |  
|Amortization                                                                      |   | 262,245         |   |   | 104,622         |   |   | 117,221         |   |   | 977,791        |  
|                                                                                  |   | (17,037,557     | ) |   | (7,792,446      | ) |   | (7,428,239      | ) |   | (60,363,267    | )
|Less interest
      income                                                        |   | 3,785,298       |   |   | 442,142         |   |   | 139,548         |   |   | 5,299,687      |  
|Loss for the year before other items                                              |   | (13,252,260     | ) |   | (7,350,304      | ) |   | (7,288,691      | ) |   | (55,063,581    | )
|Other items:                                                                      |   |                 |   |   |                 |   |   |                 |   |   |                |  
|Write-down of and equity loss in investment                                       |   | -               |   |   | -               |   |   | -               |   |   | (429,275       | )
|Realized gain on sale of marketable securities                                    |   | -               |   |   | 2,796,738       |   |   | -               |   |   | 2,844,420      |  
|Gain on sale of Project #2 (Note 4)                                               |   | -               |   |   | 45,619,744      |   |   | -               |   |   | 45,619,744     |  
|Gain on sale of
      fixed assets                                                |   | -               |   |   | 177,284         |   |   | 7,297           |   |   | 175,651        |  
|(Loss) Income for the year before income taxes                                    |   | (13,252,260     | ) |   | 41,243,462      |   |   | (7,281,394      | ) |   | (6,853,041     | )
|                                                                                  |   |                 |   |   |                 |   |   |                 |   |   |                |  
|Income tax expense                                                                |   | (487,263        | ) |   | -               |   |   | -               |   |   | -              |  
|Future income tax
      recovery (expense)                                        |   | 2,068,413       |   |   | (14,583,288     | ) |   | 318,010         |   |   | (10,033,916    | )
|(Loss) Income for the year                                                        |   | (11,671,110     | ) |   | 26,660,174      |   |   | (6,963,384      | ) |   | (16,886,957    | )
|Income
      attributable to non-controlling interest                             |   | 545,816         |   |   | -               |   |   | -               |   |   | 545,816        |  
|Net (loss) income attributable to the stockholders of
      Platinum Group Metals | $ | (12,216,926     | ) | $ | 26,660,174      |   | $ | (6,963,384      | ) | $ | (17,432,773    | )
|                                                                                  |   |                 |   |   |                 |   |   |                 |   |   |                |  
|Other comprehensive (loss) income                                                 |   |                 |   |   |                 |   |   |                 |   |   |                |  
|Currency translation adjustment                                                   | $ | -               |   | $ | (803,781        | ) | $ | 428,820         |   | $ | (3,415,608     | )
|Realized gain on marketable
      securities                                      |   | -               |   |   | (1,636,252      | ) |   | -               |   |   | (1,636,252     | )
|Unrealized
      loss on marketable securites                                     |   | -               |   |   | -               |   |   | 864,452         |   |   | 43,351         |  
|Comprehensive (loss) income for the year                                          | $ | (12,216,926     | ) | $ | 24,220,141      |   | $ | (5,670,112      | ) | $ | (22,441,282    | )
|                                                                                  |   |                 |   |   |                 |   |   |                 |   |   |                |  
|Basic (loss) earnings per common share                                            | $ | (0.07           | ) | $ | 0.29            |   | $ | (0.10           | ) |   |                |  
|Diluted (loss)
      earnings per common share                                    | $ | (0.07           | ) | $ | 0.28            |   | $ | (0.10           | ) |   |                |  
|Weighted-average number of common shares outstanding -
      Basic                |   | 164,217,204     |   |   | 93,498,192      |   |   | 72,466,079      |   |   |                |  

See accompanying notes to the consolidated financial
statements.

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|PLATINUM GROUP METALS LTD.                     
|-----------------------------------------------
|(An exploration and development stage company) 
|Consolidated Statements of Shareholders' Equity
|August 31,
      2008, to August 31, 2011      

(expressed in Canadian dollars)

|                                                                   |  |                   |  |   |             |  |   |               |   |   | Accumulated |   |   |               |   |   |             |  
|------------------------------------------------------------------ |  | ----------------- |  | - | ----------- |  | - | ------------- | - | - | ----------- | - | - | ------------- | - | - | ----------- | -
|                                                                   |  | Common shares     |  |   |             |  |   | other         |   |   |             |   |   | Total         |  
|                                                                   |  | without par value |  |   | Contributed |  |   | comprehensive |   |   |             |   |   | shareholders' |  
|                                                                   |  | Shares            |  |   | Amount      |  |   | surplus       |   |   | income      |   |   | Deficit       |   |   | equity      |  
|Balance, August 31, 2008                                           |  | 62,649,247        |  |   | 55,359,342  |  |   | 3,781,843     |   |   | (2,268,847  | ) |   | (27,255,516   | ) |   | 29,616,822  |  
|Issuance of common shares and warrants for cash                    |  | 29,969,770        |  |   | 34,174,382  |  |   | 5,288,917     |   |   | -           |   |   | -             |   |   | 39,463,299  |  
|Issued on exercise of stock options                                |  | 196,650           |  |   | 411,592     |  |   | (129,952      | ) |   | -           |   |   | -             |   |   | 281,640     |  
|Stock based compensation                                           |  | -                 |  |   | -           |  |   | 2,518,107     |   |   | -           |   |   | -             |   |   | 2,518,107   |  
|Translation adjustment                                             |  | -                 |  |   | -           |  |   | -             |   |   | 428,820     |   |   | -             |   |   | 428,820     |  
|Unrealized gain on marketable securities                           |  | -                 |  |   | -           |  |   | -             |   |   | 864,452     |   |   | -             |   |   | 864,452     |  
|Net loss                                                           |  | -                 |  |   | -           |  |   | -             |   |   | -           |   |   | (6,963,384    | ) |   | (6,963,384  | )
|Balance, August 31, 2009                                           |  | 92,815,667        |  |   | 89,945,316  |  |   | 11,458,915    |   |   | (975,575    | ) |   | (34,218,900   | ) |   | 66,209,756  |  
|Issued on exercise of stock options                                |  | 1,149,125         |  |   | 1,848,807   |  |   | (694,608      | ) |   | -           |   |   | -             |   |   | 1,154,199   |  
|Stock based compensation                                           |  | -                 |  |   | -           |  |   | 164,895       |   |   | -           |   |   | -             |   |   | 164,895     |  
|Translation adjustment                                             |  | -                 |  |   | -           |  |   | -             |   |   | (803,781    | ) |   | -             |   |   | (803,781    | )
|Realized gain on marketable securities transferred to
      income |  | -                 |  |   | -           |  |   | -             |   |   | (1,636,252  | ) |   | -             |   |   | (1,636,252  | )
|Net earnings                                                       |  | -                 |  |   | -           |  |   | -             |   |   | -           |   |   | 26,660,174    |   |   | 26,660,174  |  
|Balance, August 31, 2010                                           |  | 93,964,792        |  |   | 91,794,123  |  |   | 10,929,202    |   |   | (3,415,608  | ) |   | (7,558,726    | ) |   | 91,748,991  |  
|Issuance of common shares for cash                                 |  | 70,150,000        |  |   | 135,365,649 |  |   | -             |   |   | -           |   |   | -             |   |   | 135,365,649 |  
|Issued on exercise of stock options                                |  | 936,500           |  |   | 1,932,401   |  |   | (468,121      | ) |   | -           |   |   | -             |   |   | 1,464,280   |  
|Issued on exercise of warrants                                     |  | 12,533,250        |  |   | 27,220,459  |  |   | (5,287,273    | ) |   | -           |   |   | -             |   |   | 21,933,187  |  
|Stock based compensation                                           |  | -                 |  |   | -           |  |   | 8,642,425     |   |   | -           |   |   | -             |   |   | 8,642,425   |  
|Net loss                                                           |  | -                 |  |   | -           |  |   | -             |   |   | -           |   |   | (12,216,926   | ) |   | (12,216,926 | )
|Balance, August
      31, 2011                                     |  | 177,584,542       |  | $ | 256,312,632 |  | $ | 13,816,234    |   | $ | (3,415,608  | ) | $ | (19,775,652   | ) | $ | 246,937,606 |  

See accompanying notes to the consolidated financial
statements.

---

|PLATINUM GROUP METALS LTD.                    
|----------------------------------------------
|(An exploration and development stage company)
|Consolidated Statements of Cash Flows         
|August 31, 2009
      to August 31, 2011      

|(expressed in Canadian dollars)                            |   |             |   |   |             |   |   |            |   |   | Cumulative     |  
|---------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | - | - | -------------- | -
|                                                           |   |             |   |   |             |   |   |            |   |   | amount from    |  
|                                                           |   |             |   |   |             |   |   |            |   |   | March 16, 2000 |  
|                                                           |   | Year ended  |   |   | Year ended  |   |   | Year ended |   |   | to August 31,  |  
|                                                           |   | August 31,  |   |   | August 31,  |   |   | August 31, |   |   | 2011           |  
|                                                           |   | 2011        |   |   | 2010        |   |   | 2009       |   |   | (unaudited)    |  
|OPERATING ACTIVITIES                                       |   |             |   |   |             |   |   |            |   |   |                |  
|(Loss) Income for the year                                 | $ | (12,216,926 | ) | $ | 26,660,174  |   | $ | (6,963,384 | ) | $ | (18,029,652    | )
|Add items not affecting cash                               |   |             |   |   |             |   |   |            |   |   |                |  
|Amortization                                               |   | 261,375     |   |   | 104,622     |   |   | 117,221    |   |   | 976,921        |  
|Write-down and equity
      loss in investment             |   | -           |   |   | -           |   |   | -          |   |   | 429,275        |  
|Future income tax expense (recovery)                       |   | (2,068,413  | ) |   | 14,583,288  |   |   | (318,010   | ) |   | 10,033,916     |  
|Gain on sale of
      marketable securities                |   | -           |   |   | (2,796,738  | ) |   | -          |   |   | (2,844,420     | )
|Loss on sale or exchange of assets                         |   | -           |   |   | (175,623    | ) |   | -          |   |   | (166,693       | )
|Gain on sale of Project
      #2 (Note 4)                  |   | -           |   |   | (45,619,744 | ) |   | -          |   |   | (45,619,744    | )
|Mineral property costs written off                         |   | -           |   |   | -           |   |   | -          |   |   | 6,430,293      |  
|Finders fee received in
      shares                       |   | -           |   |   | -           |   |   | -          |   |   | (100,000       | )
|Gain on sale of mineral property                           |   | -           |   |   | -           |   |   | -          |   |   | (240,000       | )
|Unrealized foreign
      exchange loss                     |   | 869,679     |   |   | -           |   |   | -          |   |   | 869,679        |  
|Non-cash stock compensation expense                        |   | 6,910,305   |   |   | 137,600     |   |   | 2,100,736  |   |   | 12,744,827     |  
|Net change in non-cash
      working capital (Note 13)     |   | 348,844     |   |   | 394,181     |   |   | (355,301   | ) |   | 833,101        |  
|                                                           |   | (5,895,136  | ) |   | (6,712,240  | ) |   | (5,418,738 | ) |   | (34,682,497    | )
|                                                           |   |             |   |   |             |   |   |            |   |   |                |  
|FINANCING ACTIVITIES                                       |   |             |   |   |             |   |   |            |   |   |                |  
|Proceeds from financing                                    |   | 143,807,500 |   |   | -           |   |   | 39,463,299 |   |   | 219,618,489    |  
|Share issue costs                                          |   | (8,441,851  | ) |   | -           |   |   | -          |   |   | (8,441,851     | )
|Exercise of warrants                                       |   | 21,933,187  |   |   | -           |   |   | -          |   |   | 36,504,249     |  
|Exercise of stock options                                  |   | 1,464,280   |   |   | 1,154,199   |   |   | 281,640    |   |   | 4,347,518      |  
|                                                           |   | 158,763,116 |   |   | 1,154,199   |   |   | 39,744,939 |   |   | 252,028,405    |  
|                                                           |   |             |   |   |             |   |   |            |   |   |                |  
|INVESTING ACTIVITIES                                       |   |             |   |   |             |   |   |            |   |   |                |  
|Costs to acquire New Millennium Metals                     |   | -           |   |   | -           |   |   | -          |   |   | (231,325       | )
|Acquisition of property, plant and
      equipment         |   | (20,780,593 | ) |   | (48,960     | ) |   | (2,411     | ) |   | (21,810,792    | )
|Acquisition cost of mineral properties                     |   | (338,699    | ) |   | (28,342,052 | ) |   | (1,971,907 | ) |   | (33,519,446    | )
|Performance bonds                                          |   | (2,001,322  | ) |   | (22,527     | ) |   | (11,473    | ) |   | (2,161,698     | )
|Exploration expenditures, net of recoveries                |   | (18,666,455 | ) |   | (287,571    | ) |   | (231,797   | ) |   | (27,758,593    | )
|Accounts receivable (VAT)                                  |   | (726,243    | ) |   | -           |   |   | -          |   |   | (726,243       | )
|Investment in and advances to WBJV                         |   | -           |   |   | -           |   |   | (922,799   | ) |   | (22,087,414    | )
|Investment in and advances to Active
      Gold Group Ltd. |   | -           |   |   | -           |   |   | -          |   |   | (246,677       | )
|Proceeds on sale of assets held for sale                   |   | -           |   |   | 652,864     |   |   | -          |   |   | 652,864        |  
|Restricted cash                                            |   | (47,719,829 | ) |   | -           |   |   | -          |   |   | (47,719,829    | )
|Proceeds on
      sale of marketable securities            |   | -           |   |   | 3,006,738   |   |   | -          |   |   | 3,264,220      |  
|                                                           |   | (90,233,141 | ) |   | (25,041,508 | ) |   | (3,140,387 | ) |   | (152,344,933   | )
|Net increase (decrease) in cash and cash equivalents       |   | 62,634,839  |   |   | (30,599,549 | ) |   | 31,185,814 |   |   | 65,000,975     |  
|Effect of foreign exchange on cash                         |   | (882,044    | ) |   | -           |   |   | -          |   |   | (882,044       | )
|Cash and cash
      equivalents, beginning of year         |   | 2,366,136   |   |   | 32,965,685  |   |   | 1,779,871  |   |   | -              |  
|Cash and cash equivalents, end of year                     | $ | 64,118,931  |   | $ | 2,366,136   |   | $ | 32,965,685 |   | $ | 64,118,931     |  

See accompanying notes to the consolidated financial
statements.

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

|1. | NATURE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company is a British Columbia corporation
      incorporated on February 18, 2002 by an order of the Supreme Court of
      British Columbia approving an amalgamation between Platinum Group Metals
      Ltd. and New Millennium Metals Corporation (New Millennium). The Company
      is an exploration and development company conducting work on mineral
      properties it has staked or acquired by way of option agreements in
      Ontario, Canada and the Republic of South Africa.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These consolidated financial statements have been
      prepared in accordance with Canadian generally accepted accounting
      principles (Canadian GAAP) and include the significant policies outlined
      below.                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | (d) | Reclamation and closure costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company recognizes the estimated fair value of
      liabilities for asset retirement obligations including reclamation and
      closure costs in the period in which they are incurred. A corresponding
      increase to the carrying amount of the related asset is recorded and
      amortized over the life of the asset. The liability is adjusted for
      changes in estimate at each reporting period and is accreted over time to
      the estimated asset retirement obligation ultimately payable through
      charges to operations.  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The estimates are based on legal and regulatory
      requirements. It is possible that the Companys estimates of its ultimate
      reclamation and closure liabilities could change as a result of changes in
      regulations, the extent of environmental remediation required, changes in
      technology and the means and cost of reclamation.                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (e) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Future income taxes relate to the expected future tax
      consequences of differences between the carrying amount of balance sheet
      items and their corresponding tax values. Future tax assets, if any, are
      recognized only to the extent that, in the opinion of management, it is
      more likely than not that the future income tax assets will be realized.
      Future income tax assets and liabilities are adjusted for the effects of
      changes in tax laws and rates on the date of enactment or substantive
      enactment.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (f) | Earnings (loss) per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Basic earnings (loss) per common share are calculated
      using the weighted average number of common shares outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company uses the treasury stock method for the
      calculation of diluted earnings per share. Diluted per share amounts
      reflect the potential dilution that could occur if securities or other
      contracts to issue common shares were exercised or converted to common
      shares. In periods when a loss is incurred, the effect of potential
      issuances of shares under options and share purchase warrants would be
      anti-dilutive, and accordingly basic and diluted loss per share are the
      same.                    

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | (g) | Fixed assets                                                                         
| | --- | -------------------------------------------------------------------------------------
| |     |                                                                                      
| |     | Fixed assets are recorded at cost and are amortized over
      the following periods:

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

| |     | Construction work in-progress is not depreciated until
      the assets are ready for their intended use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (h) | Measurement uncertainty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The preparation of financial statements in conformity
      with Canadian generally accepted accounting principles requires management
      to make estimates and assumptions that affect the reported amount of
      assets and liabilities and disclosure of contingent liabilities at the
      date of the financial statements, and the reported amounts of expenditures
      during the reporting period. Significant items where managements
      judgement is applied include the assessment of impairment of long-lived
      assets, amortization, income tax provisions, contingent liabilities, and
      stock-based compensation, asset retirement obligations and fair value
      estimates. Actual results could differ from those estimates.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (i) | Translation of foreign currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | These consolidated financial statements are expressed in
      Canadian dollars. For integrated foreign operations, monetary assets and
      liabilities are translated at period end exchange rates and other assets
      and liabilities are translated at historical rates. Income, expenses and
      cash flows are translated at average exchange rates. Gains and losses on
      translation of monetary assets and monetary liabilities are charged to
      operations.                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (j) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The fair values for all stock-based awards are estimated
      using the Black- Scholes model and recorded in operations over the period
      of vesting. The compensation cost related to stock options granted is
      recorded in operations or capitalized to mineral properties, as
      applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Cash received on exercise of stock options is credited to
      share capital and the amount previously recognized in contributed surplus
      is reclassified to share capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (k) | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Companys financial instruments are comprised
      primarily of cash and cash equivalents, restricted cash, amounts
      receivable, amounts due to/from project partners, performance bonds, and
      accounts payable and accrued liabilities. All financial instruments are
      recognized initially at fair value. Held-for trading financial assets are
      measured at fair value with changes in fair value recognized in earnings.
      Available-for-sale financial assets are also measured at fair value with
      changes in fair value recognized in comprehensive
income until the investment is derecognized
or impaired, at which time the amounts in accumulated comprehensive income are
recorded in earnings.                      

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

Cash and cash equivalents and
restricted cash are accounted for as held for trading. Accounts receivable,
amounts due to/from project partners, performance bonds and accounts payable and
accrued liabilities are measured at amortized cost.

|3. | AMOUNTS RECEIVABLE AND
PREPAIDS
|-- | -------------------------------

| | a) | Amounts Receivable
| | -- | ------------------

| |                                                 |   | Aug. 31, 2011 |  |   | Aug.
      31, 2010 | 
| | ----------------------------------------------- | - | ------------- |  | - | ------------------- | 
| | South African value added tax ("VAT")           | $ | 1,170,979     |  | $ | 444,736             | 
| | Expenditure advances                            |   | 344,360       |  |   | 8,486               | 
| | Interest receivable                             |   | 115,646       |  |   | 1,570               | 
| | Sundown Ranch receivable                        |   | 87,023        |  |   | -                   | 
| | Goods and services tax                          |   | 79,828        |  |   | 126,803             | 
| | Due from related parties (Note 11 (d) and (e )) |   | 47,278        |  |   | 36,089              | 
| | Receivable from sale of assets                  |   | -             |  |   | 652,864             | 
| |                                                 | $ | 1,845,114     |  | $ | 1,270,548           | 

| | b) | Prepaid expenses and other
assets
| | -- | ---------------------------------

| |                                           |   | Aug. 31, 2011 |  |   | Aug.
      31, 2010 | 
| | ----------------------------------------- | - | ------------- |  | - | ------------------- | 
| | Current                                   |   |               |  |   |                     | 
| | Annual insurance premiums                 | $ | 86,705        |  | $ | 50,491              | 
| | Miscellaneous                             |   | 22,890        |  |   | 18,891              | 
| | Total current prepaids                    |   | 109,595       |  |   | 69,382              | 
| | Non-current                               |   |               |  |   |                     | 
| | Project 1 -
      Construction contractor |   | 2,598,273     |  |   | -                   | 
| | Total non-current prepaids                |   | 2,598,273     |  |   | -                   | 
| |                                           |   |               |  |   |                     | 
| | Total all prepaids                        | $ | 2,707,868     |  | $ | 69,382              | 

|4. | MINERAL PROPERTIES
|-- | ------------------

| |                              |   | Aug 31, 2011 |  |   | Aug
      31, 2010 | 
| | ---------------------------- | - | ------------ |  | - | ------------------ | 
| | Project 1 (a)                | $ | 134,355,019  |  | $ | 111,219,402        | 
| | Project 3 (a)                |   | 4,206,250    |  |   | 4,206,250          | 
| | Other mineral properties (b) |   | 7,817,850    |  |   | 6,437,564          | 
| |                              | $ | 146,379,119  |  | $ | 121,863,216        | 

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | a)  | Projects 1 & 3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | i.  | Initial Joint Venture Agreement  October 26, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | On October 26, 2004 the Company entered into the WBJV
      with a subsidiary of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Anglo Platinum Limited (Anglo) and Africa Wide Mineral
      Prospecting and Exploration (Pty) Limited (Africa Wide) to pursue
      platinum exploration and development on combined mineral rights that would
      eventually cover approximately 72 square kilometres on the Western
      Bushveld Complex of South Africa. The Company and Anglo Platinum each held
      a 37% working interest in the WBJV, while Africa Wide held a 26% working
      interest. The area of the WBJV was comprised of three functional areas
      described as Project 1 (100% WBJV), Project 2 (50% WBJV: 50% Wesizwe
      Platinum Ltd. (Wesizwe)) and Project 3 (100% WBJV). In April 2007 the
      shareholders of Africa Wide sold 100% of their company to Wesizwe.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The Company published a Feasibility Study for Project 1
      of the WBJV in July 2008 and later an Updated Feasibility Study in October
      2009. Based on the WBJV resource estimate contained in the July 2008
      Feasibility Study, in accordance with the requirements of the original
      WBJV agreement, each party was allocated an equalization amount due or
      payable based upon their contribution of measured, indicated, and inferred
      ounces of combined platinum, palladium, rhodium and gold (4E) from their
      contributed properties. On April 22, 2010 the Company paid an equalization
      amount due to Anglo in the amount of $ 24.83 million (R 186.26 million).                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ii. | Reorganization  April 22, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Also on April 22, 2010, the partners of the WBJV
      completed a transaction announced in August 2008 dissolving the WBJV and
      reorganizing its underlying assets (Consolidation Transaction.) Wesizwe
      acquired all of Anglos mineral interests underlying the WBJV, retained
      Anglos interests in Project 2, and then transferred all of Anglos
      interests underlying Projects 1 and 3 into the project operating company,
      Maseve. The Company transferred its interests in the mineral rights
      underlying Projects 1 and 3 into Maseve, and rescinded its interests in
      Project 2 to Wesizwe. As a result Wesizwe retained 100% of Project 2 and
      Maseve obtained 100% of Projects 1 and 3.                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The sale of the Companys 18.5% interest in Project 2 was
      recorded at an estimated fair value of $65.42 million on April 22, 2010,
      versus an historic cost of $19.80 million, for a gain of $45.62 million.
      The transfer of the Companys 37% interest in Projects 1 and 3 into Maseve
      was accounted for as a reorganization of existing business and was
      transferred into Maseve at book cost.                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | In exchange for its 18.5% of Project 2 the Company
      effectively received a 17.75% interest in Maseve. The Company also
      received a 37% interest in exchange for its share of Projects 1 and 3,
      bringing its holdings in Maseve to 54.75%. Wesizwe received a 45.25 %
      initial interest in Maseve.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | The Company consolidated the financial statements of
      Maseve from the effective date of the reorganization. The portion of
      Maseve not owned by the Company, calculated at $11.70 million at August
      31, 2011, is accounted for as a non-controlling interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | iii.                       | Exercise of Maseve Subscription Right                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                            | Under the terms of the Consolidation Agreements, the
      Company acquired the right to subscribe for a further 19.25% interest in
      Maseve for subscriptions in the amount of approx. $59 million (R 408.81
      million). The Company exercised this right in January 2011, thereby
      increasing its shareholding to 74%. The subscription funds are held in
      escrow for application towards Wesizwes capital requirements for Projects
      1 and 3. These funds are classified as restricted cash. As of August 31,
      2011, the balance of restricted cash is $47,719,829. For every $74 spent
      on project requirements in Maseve, $26 can be removed from restricted cash
      to cover Wesizwes share of costs.
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | iv.                        | Other financial information - Project 1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                            | Site preparations and excavations for twin decline access
      to the Project 1 ore                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                            | body commenced on May 3, 2011. At August 31, 2011 the
      Company recorded an asset retirement obligation of $645,369 based on the
      degree of surface disturbance. As of August 31, 2011 the Company has
      posted $2.16 million as performance bonds in South Africa against
      reclamation work, approximately $2.07 million of which is posted against
      work on Project 1.                                                                                                                                                                                                                                                                                                                                                  
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b)                         | Other mineral properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Year ended August 31, 2011

|                                          |   | **South Africa** |  |   | **Canada**  |   |   |            |  
|----------------------------------------- | - | ---------------- |  | - | ----------- | - | - | ---------- | -
|                                          |   | Tweespalk        |  |   | War Springs |   |   | Other      |  
|Acquisition costs of mineral
      rights |   |                  |  |   |             |   |   |            |  
|Balance, beginning of year                | $ | 83,741           |  | $ | 164,953     |   | $ | 20,111     |  
|Incurred during year                      |   | 575              |  |   | 607         |   |   | 7,303      |  
|Balance, end of year                      | $ | 84,316           |  | $ | 165,560     |   | $ | 27,414     |  
|Deferred exploration costs                |   |                  |  |   |             |   |   |            |  
|Balance, beginning of year                | $ | 893,106          |  | $ | 2,271,260   |   | $ | 679,853    |  
|Incurred during year                      |   | 1,927            |  |   | 624,192     |   |   | 1,054,414  |  
|Subtotal                                  |   | 895,033          |  |   | 2,895,452   |   |   | 1,734,267  |  
|Recoveries                                |   | -                |  |   | (631,951    | ) |   | (1,062,465 | )
|Balance, end of year                      | $ | 895,033          |  | $ | 2,263,501   |   | $ | 671,802    |  
|Total Other Mineral Properties            | $ | 979,349          |  | $ | 2,429,061   |   | $ | 699,216    |  

Year ended August 31, 2010

|                                              |   | **South Africa** |  |   | **Canada**      |   |   |           |  
|--------------------------------------------- | - | ---------------- |  | - | --------------- | - | - | --------- | -
|                                              |   | **Tweespalk**    |  |   | **War Springs** |   |   | **Other** |  
|**Acquisition costs** of mineral
      rights |   |                  |  |   |                 |   |   |           |  
|Balance, beginning of year                    | $ | 59,995           |  | $ | 144,498         |   | $ | 3,321     |  
|Incurred during year                          |   | 23,746           |  |   | 20,455          |   |   | 16,790    |  
|Balance, end of year                          | $ | 83,741           |  | $ | 164,953         |   | $ | 20,111    |  
|Deferred exploration costs                    |   |                  |  |   |                 |   |   |           |  
|Balance, beginning of year                    | $ | 892,135          |  | $ | 2,271,260       |   | $ | 632,011   |  
|Incurred during the year:                     |   | 971              |  |   | 1,388,752       |   |   | 603,094   |  
|Sub-total                                     |   | 893,106          |  |   | 3,660,012       |   |   | 1,235,105 |  
|Recoveries                                    |   | -                |  |   | (1,388,752      | ) |   | (555,252  | )
|Balance, end of year                          | $ | 893,106          |  | $ | 2,271,260       |   | $ | 679,853   |  
|Total Other Mineral Properties                | $ | 976,847          |  | $ | 2,436,213       |   | $ | 699,964   |  

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | (1) | Republic of South Africa
| | --- | ------------------------
| |     |                         
| |     | (i)                     
| |     |                         
| |     |                         
| |     |                         
| |     |                         
| |     |                         
| |     |                         
| |     |                         
| |     | (ii)                    
| |     |                         
| |     |                         
| |     |                         
| |     |                         

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| |     | The Sable Joint Venture project, also acquired in 2009,
      is west of Pretoria along the trend of the south eastern part of the
      Western Limb. The project is under agreement to a black economic
      empowerment group for a 26% interest and Sable Platinum Mining (Pty)
      Limited (Sable Platinum) as to a 51% interest in exchange for Sable
      Platinum funding approximately $6.0 million (R 42.0 million) in work on
      the project. The Company is the operator of the project. Total
      expenditures incurred by Sable Platinum to August 31, 2011 amounted to
      approximately $800,000. (August 31, 2010  approx. $12,000)                                            
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (2) | Ontario, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Company maintains a large mineral rights position in
      the Lac des Iles area north of Thunder Bay as a strategic holding against
      increasing prices for palladium and platinum. These holdings include 100%
      interests in the Lac Des Iles River and Shelby Lake properties and are all
      subject to a 2.0% NSR royalty. In most cases, the Company may buy back one
      half of the NSR.                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Lac des Isle New Staking                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | During the year ended August 31, 2011, the Company
      incurred $324,910 in staking costs for new properties in the Lac des Isle
      camp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Bark Lake                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | On February 10, 2011 the Company acquired a right to earn
      up to a 75% interest in Benton Resources Corps ("Benton") Bark Lake
      platinum-palladium project, comprised of 19 mineral claims totaling 3,884
      hectares located approximately 120 km west of Thunder Bay, Ontario. To
      earn a 70% interest the Company must make staged option payments of
      $145,000 in cash ($35,000 paid) and 215,000 shares (nil issued to date)
      and complete $1,625,000 in exploration over a 7 year period. As of August
      31, 2011, the Company has spent $260,570 towards exploration. The Company
      may earn a further 5% (75% total) by completing a pre-feasibility
      study.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (3) | Title to mineral properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Although the Company has taken steps to verify title to
      mineral properties in which it has an interest, in accordance with
      industry standards for the current stage of exploration of such
      properties, these procedures do not guarantee the Companys title.
      Property title may be subject to unregistered prior agreements and
      non-compliance with regulatory requirements.                                                                                                                                                                                                                                                                                                   

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

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

| |                                 |   |            |  |   | August 31, 2011 |  |   |            | 
| | ------------------------------- | - | ---------- |  | - | --------------- |  | - | ---------- | 
| |                                 |   |            |  |   | Accumulated     |  |   | Net Book   | 
| |                                 |   | Cost       |  |   | Amortization    |  |   | Value      | 
| | Land                            | $ | 14,051,553 |  | $ | -               |  | $ | 14,051,553 | 
| | Buildings                       |   | 4,610,167  |  |   | 116,242         |  |   | 4,493,924  | 
| | Mining Equipment                |   | 1,686,010  |  |   | 20,509          |  |   | 1,665,501  | 
| | Computer equipment and software |   | 939,845    |  |   | 537,739         |  |   | 402,106    | 
| | Furniture and fixtures          |   | 230,193    |  |   | 125,545         |  |   | 104,648    | 
| | Vehicles                        |   | 218,907    |  |   | 108,004         |  |   | 110,903    | 
| |                                 | $ | 21,736,675 |  | $ | 908,040         |  | $ | 20,828,635 | 

| |                                 |   |         |  |   | August 31, 2010 |  |   |          | 
| | ------------------------------- | - | ------- |  | - | --------------- |  | - | -------- | 
| |                                 |   |         |  |   | Accumulated     |  |   | Net Book | 
| |                                 |   | Cost    |  |   | Amortization    |  |   | Value    | 
| | Computer equipment and software | $ | 512,682 |  | $ | 387,025         |  | $ | 125,657  | 
| | Buildings                       |   | 38,641  |  |   | 31,457          |  |   | 7,184    | 
| | Furniture and fixtures          |   | 266,643 |  |   | 137,140         |  |   | 129,503  | 
| | Vehicles                        |   | 82,447  |  |   | 35,374          |  |   | 47,073   | 
| |                                 | $ | 900,413 |  | $ | 590,996         |  | $ | 309,417  | 

In August 2010 the Company purchased surface rights covering
1,713 hectares overlaying the area of Project 1, including accommodation
facilities, for R 130.0 million ($18.8 million). This purchase has been recorded
as property, plant and equipment in the land and building classes. The buildings
will be amortized over their useful life.

|6. | ASSET HELD FOR
SALE
|-- | -------------------

During 2008, the Company acquired two rock winders at a cost of
R 16.6 million (approx. $2.3 million). After the purchase, mine designs excluded
the use of shafts and winders. During the year ended August 31, 2010 the Company
sold one winder for US $1.28 million (approx. $1.3 million). The second winder
continues to be held for sale.

|**7.** | ASSET RETIREMENT
OBLIGATION
|------ | ---------------------------

The Company has estimated the net present value of its total
asset retirement obligations at August 31, 2011 to be $645,369 (August 31, 2010
 $Nil), based on a total future liability of approximately R 8.0 million
(August 31, 2010  $Nil). These payments are expected to be made at the end of
the mine life. A discount rate of 7.96% and an inflation rate of 5.3% were used
to calculate the present value of the asset retirement obligation.

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

|8. | SHARE CAPITAL
|-- | -------------
|   |              
|   | (a)          
|   |              
|   |              
|   |              
|   | (b)          
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   |              
|   | (c)          
|   |              
|   |              

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011



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

| |          |  |                |  | Weighted           |  |               
| | -------- |  | -------------- |  | ------------------ |  | --------------
| |          |  | Number         |  | Average            |  | Number        
| |          |  | Outstanding at |  | Remaining          |  | Exercisable at
| | Exercise |  | August 31,     |  | Contractual        |  | August 31     
| | Price    |  | 2011           |  | Life
      (Years) |  | 2011          
| | 1.40     |  | 972,000        |  | 2.95               |  | 972,000       
| | 1.60     |  | 1,037,000      |  | 2.13               |  | 1,037,000     
| | 1.85     |  | 100,000        |  | 0.03               |  | 100,000       
| | 2.05     |  | 4,154,000      |  | 4.71               |  | 4,054,000     
| | 2.10     |  | 2,777,500      |  | 4.24               |  | 2,777,500     
| | 2.20     |  | 50,000         |  | 4.27               |  | 50,000        
| | 2.30     |  | 100,000        |  | 2.42               |  | -             
| | 2.36     |  | 250,000        |  | 2.36               |  | 100,000       
| | 2.41     |  | 100,000        |  | 4.46               |  | 100,000       
| | 2.57     |  | 840,000        |  | 0.68               |  | 840,000       
| | 4.15     |  | 150,000        |  | 1.15               |  | 150,000       
| | 4.40     |  | 720,000        |  | 1.15               |  | 720,000       
| |          |  | 11,250,500     |  | 3.51               |  | 10,900,500    

The weighted average exercise price of
the exercisable options at year end was $2.19.

| |                                        |  | Number          |   |   | Exercise | 
| | -------------------------------------- |  | --------------- | - | - | -------- | 
| |                                        |  | of
      Shares |   |   | Price    | 
| | Options outstanding at August 31, 2009 |  | 6,149,625       |   | $ | 2.04     | 
| | Exercised                              |  | (1,149,125      | ) |   | 1.00     | 
| | Options outstanding at August 31, 2010 |  | 5,000,500       |   |   | 2.28     | 
| | Granted                                |  | 7,691,500       |   |   | 2.04     | 
| | Exercised                              |  | (936,500        | ) |   | 1.56     | 
| | Forfeited                              |  | (505,000        | ) |   | 2.71     | 
| | Options outstanding at August 31, 2011 |  | 11,250,500      |   | $ | 2.19     | 

During the year ended August 31, 2011
the Company granted 7,691,500 stock options (August 31, 2010  Nil). The Company
recorded $8,642,425 ($6,910,305 expensed and $1,740,315 capitalized to mineral
properties), of compensation expense relating to stock options vested in this
period (August 31, 2010 - $164,895 ($137,600 expensed and $27,295 capitalized to
mineral properties).

The Company uses the Black-Scholes
model to determine the grant date fair value of stock options granted. The
following weighted average assumptions were used in valuing stock options
granted during the year ended August 31, 2011:

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | Risk-free interest rate  | 2.19 
| | ------------------------ | -----
| | Expected life of options | 3.54 
| | Annualized volatility    | 84%  
| | Dividend rate            | 0.00%

|    | (d)                                                                                                                                                                                                                                                                                                                                                                                                                   | Share purchase warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       | During the year ended August 31, 2009, 12,537,150
      purchase warrants were issued at $1.75 as a part of the placement on June
      16, 2009 as described above. These warrants had an expiry date of December
      16, 2010. All 4,419,900 of the warrants had been exercised as of August
      31, 2011. There are no other warrants outstanding.                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|9.  | 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 income 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 prepares annual expenditure budgets that are
      updated as necessary based on various factors, including successful
      capital deployment and general industry conditions. The annual and updated
      budgets are approved by the Board of Directors. The Company does not
      currently declare or pay out dividends.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | As at August 31, 2011, the Company does not have any
      long-term debt and is not subject to any externally imposed capital
      requirements.                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10. | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       | Total credit risk is limited to the carrying amount of
      amounts receivable.                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                       | In order to manage credit and liquidity risk we invest
      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 controlled entirely by the Company. Deposit limits are also
      established based on the type of investment, the counterparty and the
      credit rating.

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

|    | (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
      annual budget is approved by the Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
|    | Future exploration, development, mining, and processing
      of minerals from the Companys properties will require additional
      financing. The Company has no credit facilities in place at this time,
      although it is currently evaluating possible debt financing. The only
      other current source of funds available to the Company is the issuance of
      additional equity capital, which if available, may result in substantial
      dilution to existing shareholders. There is no assurance that such funding
      will be available to the Company, or that it will be obtained on terms
      favourable to the Company. Failure to obtain sufficient financing may
      result in delaying or indefinite postponement of exploration, development,
      or production on any or all of the Companys properties, or even a loss of
      property interests.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Currency risk                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
|    | The Companys functional currency is the Canadian dollar,
      while its operations are in both Canada and South Africa; therefore the
      Company's net earnings (losses) and other comprehensive earnings (losses)
      are impacted by fluctuations in the value of foreign currencies in
      relation to the Canadian dollar. The Company's significant foreign
      currency exposures on financial instruments comprise cash and cash
      equivalents, performance bonds, accounts receivable, amounts due to
      Wesizwe, and 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's net loss and other comprehensive loss are
      affected by changes in the exchange rate between its operating currencies
      and the Canadian dollar. At August 31, 2011, based on this exposure a 10%
      strengthening/weakening in the Canadian dollar versus Rand foreign
      exchange rate would give rise to an increase/decrease in income for the
      year presented of approximately $6.2 million. At August 31, 2011, the
      company held approximately R 594.0 million cash.                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
|    | (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, 2011, based on this exposure a 1% change in the
      average interest rate would give rise to an increase/decrease in the
      earnings for the year of approximately $1.12 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
|11. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
|    | Transactions with related parties are as
  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | During the year, $855,228 (2010 - $679,121, 2009 -
      $385,967) was paid to non- independent directors for salary, consulting
      and bonus. At August 31, 2011, $37,081 was included in accounts payable
      (2010 - $8,000, 2009 - $45,308) and $15,739 was included in accounts
      receivable (2010 - Nil, 2009 - Nil).

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | (b) | During the year, $91,000 (2010 - $88,000, 2009 - $75,000)
      was paid to independent directors for directors fees and services. At
      August 31, 2011, $15,000 was included in accounts payable (2010 - Nil,
      2009 - Nil).                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                        
| | (c) | The Company received $Nil (2010 - $64,347, 2009 -
      $135,895) during the year from MAG Silver Corp. (MAG), a company with
      three directors in common. Amounts receivable at the end of the year
      include an amount of $Nil (2010 - $Nil, 2009 - $4,408) due from MAG. MAG
      terminated its service agreement with the Company on December 31,
    2009.            
| |     |                                                                                                                                                                                                                                                                                                                                                                                        
| | (d) | During the year the Company accrued or received payments
      of $102,000(2010 - $46,750, 2009 - $Nil) from West Kirkland Mining Inc.
      (WKM), a company with three directors in common, for administrative
      services. Amounts receivable at the end of the year includes an amount of
      $ 18,852 (2010 - $12,235, 2009 - $Nil).                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                        
| | (e) | During the year the Company accrued or received payments
      of $126,000 (2010 - $59,500, 2009 - $Nil) from Nextraction Energy Corp.
      (NE), a company with three directors in common, for administrative
      services. Amounts receivable at the end of the period includes an amount
      of $65,107 (2010  $23,854, 2009 - $Nil).                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                        
| | (f) | The Company has an office lease agreement with Anthem
      Works Ltd. (Anthem), a company with a director in common. During the
      year ended August 31, 2011 the Company accrued or paid Anthem $86,844
      under the office lease agreement (2010 - $86,879, 2009 - $86,849). At
      August 31, 2011, $339 was included in accounts payable (2010 - Nil, 2009 
      Nil.)

|    | All amounts in amounts receivable and accounts payable
      owing to or from related parties are non-interest bearing with no specific
      terms of repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | These transactions are in the normal course of business
      and are measured at the exchange amount, which is the consideration
      established and agreed to by the noted parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|12. | CONTINGENCIES AND COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Companys remaining minimum payments under its office
      and equipment lease agreements in Canada and South Africa total
      approximately $400,000 to August 31, 2015. The Company also has
      commitments for Project 1 related insurance coverage totaling
      approximately $436,000 over the next 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Companys project operating subsidiary Maseve has
      entered into a long term electricity supply agreement with South African
      power utility, Eskom. Under the agreement the Company was provided with a
      1.5MVA temporary power supply in July 2011 and is to be provided with a 10
      MVA construction power supply in mid calendar 2012 and a total 40 MVA
      production power supply in late calendar 2013 in exchange for connection
      fees and guarantees totaling Rand 142.22 million ($19.87 million at August
      31, 2011) to fiscal 2014. The Company has paid R 51.71 million ($7.22
      million at August 31, 2011), therefore R 90.51 million ($12.65 million at
      August 31, 2011) of the commitment remains
outstanding.

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

For the fiscal years ending on August
31, the aggregate commitments are as follows:

August 31, 2012
    $
    9,010,813August 31, 2013
    
    4,384,472August 31, 2014
    
    182,679August 31, 2015
    
    73,718August 31, 2016
    
    14,584$
    13,666,266


|13. | SUPPLEMENTARY CASH FLOW INFORMATION     
|--- | ----------------------------------------
|    |                                         
|    | Net change in non-cash working
  capital

| |                                  |   | Year Ended          |   |   | Year Ended          |   |   | Year Ended          |  
| | -------------------------------- | - | ------------------- | - | - | ------------------- | - | - | ------------------- | -
| |                                  |   | Aug.
      31, 2011 |   |   | Aug.
      31, 2010 |   |   | Aug.
      31, 2009 |  
| | Amounts receivable               | $ | 574,565             |   | $ | (273,146            | ) | $ | (253,844            | )
| | Accounts payable
      and other |   | (225,721            | ) |   | 667,327             |   |   | (101,457            | )
| |                                  | $ | 348,844             |   | $ | 394,181             |   | $ | (355,301            | )

|14. | SEGMENTED INFORMATION                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                        
|    | The Company operates in one operating segment, that being
      exploration and development on mineral properties. Segmented information
      presented on a geographic basis follows:
|    |                                                                                                                                                                                        
|    | Assets                                                                                                                                                                                 

| |              |   | August 31,  |  |   | August 31,  | 
| | ------------ | - | ----------- |  | - | ----------- | 
| |              |   | 2011        |  |   | 2010        | 
| | Canada       | $ | 37,190,343  |  | $ | 5,592,110   | 
| | South Africa |   | 249,522,779 |  |   | 121,398,893 | 
| |              | $ | 286,713,122 |  | $ | 126,991,003 | 

Substantially all of the Companys
capital expenditures are made in the South African geographical segment, however
the Company also has exploration properties in Canada.

Results of Operations

| |              |   | Year Ended    |   |   | Year Ended          |   |   | Year Ended          |  
| | ------------ | - | ------------- | - | - | ------------------- | - | - | ------------------- | -
| |              |   | Aug. 31, 2011 |   |   | Aug.
      31, 2010 |   |   | Aug.
      31, 2009 |  
| | Canada       | $ | (10,848,560   | ) | $ | (1,980,397          | ) | $ | (5,478,509          | )
| | South Africa |   | (1,368,366    | ) |   | 28,640,571          |   |   | (1,484,875          | )
| |              | $ | (12,216,926   | ) | $ | 26,660,174          |   | $ | (6,963,384          | )

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

|15. | INCOME TAXES                                                                                                                                                                                                  
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                               
|    | The provision for income taxes reported differs from the
      amounts computed by applying statutory Canadian federal and provincial tax
      rates to the loss before tax provision due to the
  following:

| |                                                            |   | **2011**   |   |   | 2010        |  
| | ---------------------------------------------------------- | - | ---------- | - | - | ----------- | -
| | Statutory tax rates                                        |   | 27.17%     |   |   | 29.00%      |  
| |                                                            |   |            |   |   |             |  
| | Recovery of income taxes
      computed at statutory rates | $ | 3,600,639  |   | $ | (11,960,605 | )
| | Non-deductible expenses                                    |   | (1,903,023 | ) |   | (334,692    | )
| | Change in valuation allowance and other                    |   | (116,466   | ) |   | (2,267,991  | )
| | Income
      tax recovery (expense)                        |   | 1,581,150  |   |   | (14,563,288 | )
| | Comprising:                                                |   |            |   |   |             |  
| | Current income tax expense                                 |   | (487,263   | ) |   | -           |  
| | Future income tax recovery (expense)                       |   | 2,068,413  |   |   | (14,563,288 | )

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

| |                                                       |   | 2011        |   |   | 2010        |  
| | ----------------------------------------------------- | - | ----------- | - | - | ----------- | -
| | Future income tax assets                              |   |             |   |   |             |  
| | Operating loss carryforwards                          | $ | 6,384,063   |   | $ | 4,850,326   |  
| | Property, plant and equipment                         |   | 75,975      |   |   | 59,274      |  
| | Mineral properties                                    |   | 674,606     |   |   | 270,235     |  
| | Share issuance costs                                  |   | 2,012,779   |   |   | 486,782     |  
| |                                                       |   | 9,147,423   |   |   | 5,666,617   |  
| |                                                       |   |             |   |   |             |  
| | Valuation
      allowance on future income tax assets |   | (9,147,423  | ) |   | (5,666,617  | )
| |                                                       | $ | -           |   | $ | -           |  
| |                                                       |   |             |   |   |             |  
| | Future income tax liability                           |   |             |   |   |             |  
| | Mineral properties                                    |   | (21,452,782 | ) |   | (21,822,522 | )
| |                                                       | $ | (21,452,782 | ) | $ | (21,822,522 | )

At August 31, 2011, the Company has
unrecognized non-capital loss carry forwards available to offset future taxable
income in Canada of $25 million, which expire at various dates from 2011 to
2031.

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                   
|    | These consolidated financial statements have been
      prepared in accordance with Canadian GAAP, which differs in certain
      respects from US GAAP. The significant differences between Canadian and US
      GAAP affecting the Companys consolidated financial statements are
      summarized as follows:
|    |                                                                                                                                                                                                                                                                                                                   
|    | Consolidated Balance
Sheets                                                                                                                                                                                                                                                                                       

| |                                                                                        |   | Aug.
      31, 2011 |   |   | Aug.
      31, 2010 |  
| | -------------------------------------------------------------------------------------- | - | ------------------- | - | - | ------------------- | -
| | Total assets under Canadian GAAP                                                       | $ | 286,713,122         |   | $ | 126,991,003         |  
| | Decrease in mineral properties due to expensing of
      exploration costs in WBJV (a) |   | (13,841,701         | ) |   | (13,841,701         | )
| | Decrease in mineral properties due to
      expensing of exploration costs (b)         |   | (6,235,420          | ) |   | (5,164,356          | )
| | Decrease in
      mineral properties on reorganization of WBJV (c)                     |   | (8,088,816          | ) |   | (8,088,816          | )
| | Total assets under US GAAP                                                             | $ | 258,547,185         |   | $ | 99,896,130          |  
| |                                                                                        |   |                     |   |   |                     |  
| | Total liabilities under Canadian GAAP                                                  | $ | 28,080,218          |   | $ | 24,092,530          |  
| | Decrease in future
      income taxes on reorganization of WBJV (c)                    |   | (6,688,168          | ) |   | (6,688,168          | )
| | Total liabilities under US GAAP                                                        | $ | 21,392,050          |   | $ | 17,404,362          |  
| |                                                                                        |   |                     |   |   |                     |  
| | Non controlling interest under Canadian
      GAAP                                     | $ | 11,695,298          |   | $ | 11,149,482          |  
| | Decrease in non
      controlling interest on reorganization of the WBJV (c)           |   | (5,823,079          | ) |   | (5,823,079          | )
| | Non controlling interest under US GAAP                                                 |   | 5,872,219           |   |   | 5,326,403           |  
| |                                                                                        |   |                     |   |   |                     |  
| | Shareholders' equity under Canadian GAAP                                               |   | 246,937,606         |   |   | 91,748,991          |  
| | Cumulative mineral properties adjustment for WBJV (a)                                  |   | (16,885,686         | ) |   | (16,885,686         | )
| | Cumulative mineral properties adjustment
      (b)                                     |   | (6,235,420          | ) |   | (5,164,356          | )
| | Cumulative translation adjustment (a)                                                  |   | 3,043,985           |   |   | 3,043,985           |  
| | Cumulative changes on reorganization of WBJV (c)                                       |   | 4,422,431           |   |   | 4,422,431           |  
| | Shareholders'
      equity under US GAAP                                               |   | 231,282,916         |   |   | 77,165,365          |  
| | Total liabilities and shareholders' equity under US GAAP                               | $ | 258,547,185         |   | $ | 99,896,130          |  

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

Consolidated Statements of
Operations

| |                                                                           |   |             |   |   |            |   |   |            |   |   | Cumulative  |  
| | ------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | - | - | ----------- | -
| |                                                                           |   |             |   |   |            |   |   |            |   |   | from        |  
| |                                                                           |   |             |   |   |            |   |   |            |   |   | March 16,   |  
| |                                                                           |   |             |   |   |            |   |   |            |   |   | 2000 to     |  
| |                                                                           |   | Year ended  |   |   | Year ended |   |   | Year ended |   |   | August 31,  |  
| |                                                                           |   | August 31,  |   |   | August 31, |   |   | August 31, |   |   | 2011        |  
| |                                                                           |   | 2011        |   |   | 2010       |   |   | 2009       |   |   | (unaudited) |  
| | Net income (loss) under Canadian GAAP                                     | $ | (12,216,926 | ) | $ | 26,660,174 |   | $ | (6,963,384 | ) | $ | (19,878,667 | )
| | Mineral property costs written off                                        |   | -           |   |   | -          |   |   | -          |   |   | 4,101,556   |  
| | Adjustment for exploration expenditures
      incurred in WBJV (a)        |   | -           |   |   | -          |   |   | -          |   |   | (18,470,466 | )
| | Increase in gain on sale of WBJV Project #2 (c)                           |   | -           |   |   | 1,874,529  |   |   | -          |   |   | 1,874,529   |  
| | Exploration expenditures (b)                                              |   | (1,041,562  | ) |   | (287,571   | ) |   | (231,797   | ) |   | (10,307,474 | )
| | Future income taxes - marketable securities (d)                           |   | -           |   |   | 288,750    |   |   | (152,550   | ) |   | -           |  
| | Future income taxes - stock based
      compensation (e)                  |   | (29,502     | ) |   | -          |   |   | -          |   |   | (1,457,345  | )
| | Difference in future income taxes due to reorganization of
      WBJV (c) |   | -           |   |   | 4,422,431  |   |   |            |   |   | (9,754,733  | )
| | Other historical differences                                              |   | -           |   |   | -          |   |   | -          |   |   | 673,605     |  
| | Net income (loss)
      under US GAAP                                     | $ | (13,287,990 | ) | $ | 32,958,313 |   | $ | (7,347,731 | ) | $ | (53,218,995 | )
| | Basic income (loss) per common share under US GAAP                        | $ | (0.08       | ) | $ | 0.35       |   | $ | (0.10      | ) |   |             |  
| | Diluted income
      (loss) per common share under US GAAP                | $ | (0.08       | ) | $ | 0.35       |   | $ | (0.10      | ) |   |             |  

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

Consolidated Statements of Cash
Flows

| |                                                       |   |             |   |   |             |   |   |            |   |   | Cumulative   |  
| | ----------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | - | - | ------------ | -
| |                                                       |   |             |   |   |             |   |   |            |   |   | from         |  
| |                                                       |   |             |   |   |             |   |   |            |   |   | March 16,    |  
| |                                                       |   |             |   |   |             |   |   |            |   |   | 2000 to      |  
| |                                                       |   | Year ended  |   |   | Year ended  |   |   | Year ended |   |   | August 31,   |  
| |                                                       |   | August 31,  |   |   | August 31,  |   |   | August 31, |   |   | 2011         |  
| |                                                       |   | 2011        |   |   | 2010        |   |   | 2009       |   |   | (unaudited)  |  
| | Operating activities                                  |   |             |   |   |             |   |   |            |   |   |              |  
| | Operating activities under Canadian GAAP              | $ | (5,895,136  | ) | $ | (6,712,240  | ) | $ | (5,418,738 | ) | $ | (33,488,464  | )
| | Deferred exploration (a)(b)                           |   | (1,041,562  | ) |   | (287,571    | ) |   | (231,797   | ) |   | (28,724,090  | )
| | Operating
      activities under US GAAP              | $ | (6,936,698  | ) | $ | (6,999,811  | ) | $ | (5,650,535 | ) | $ | (62,212,554  | )
| | Financing activities                                  |   |             |   |   |             |   |   |            |   |   |              |  
| | Financing activities under Canadian and US
      GAAP | $ | 158,763,116 |   | $ | 1,154,199   |   | $ | 39,744,939 |   | $ | 251,868,029  |  
| | Investing activities                                  |   |             |   |   |             |   |   |            |   |   |              |  
| | Investing activities under Canadian GAAP              | $ | (90,233,141 | ) | $ | (25,041,508 | ) | $ | (3,140,387 | ) | $ | (152,184,557 | )
| | Deferred exploration (a)(b)                           |   | 1,041,562   |   |   | 287,571     |   |   | 231,797    |   |   | 28,724,090   |  
| | Investing
      activities under US GAAP              | $ | (89,191,579 | ) | $ | (24,753,937 | ) | $ | (2,908,590 | ) | $ | (123,460,467 | )

| | (a) | Investment in WBJV                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Under Canadian and US GAAP the Company accounted for its
      working interest in the WBJV as an investment in the WBJV. Under Canadian
      GAAP these expenditures were capitalized to the investment in WBJV. Under
      US GAAP, exploration expenditures on mineral property costs can only be
      deferred subsequent to the establishment of mining reserves as defined
      under SEC regulations.                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | As disclosed in Note 5 the Company published a
      Feasibility Study for the WBJV late in the 2008 fiscal year. The study
      defined mining reserves and, as a consequence, exploration and development
      costs relating to this investment were deferred under US GAAP, subsequent
      to September 1, 2008.                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (b) | Exploration expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Canadian GAAP allows exploration costs to be capitalized
      during the search for a commercially mineable body of ore if the Company
      considers such costs to have the characteristics of fixed assets. Under US
      GAAP, exploration expenditures on mineral properties can only be deferred
      subsequent to the establishment of mining reserves as defined under SEC
      regulations. For US GAAP purposes, the Company has expensed exploration
      expenditures in the period incurred. The Company believes these cash
      expenditures under US GAAP are also more appropriately classified as cash
      operating activities as they were funded by the Company in the respective
      periods.

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | (c) | Reorganization of WBJV On April 22, 2010, the
      partner of the WBJV completed a reorganization of the WBJV (refer to Note
      4). Under U.S GAAP, the Company expensed exploration costs until September
      1, 2008, resulting in cumulative differences between the carrying amount
      of the investment in WBJV between Canadian GAAP and U.S. GAAP. As a result
      of these differences, the accounting for the reorganization of the WBJV
      resulted in the following adjustments to reconcile from Canadian GAAP to
      U.S. GAAP:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Gain on sale of WBJV Project #2Deferred income taxes arising on taxable temporary differencesNon-controlling interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (d) | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Prior to September 1, 2007, the accounting for the
      Companys marketable securities was different under US GAAP compared with
      the accounting under Canadian GAAP. Effective September 1, 2007, the
      Company adopted CICA Section 3855, Financial Instruments,which
      requires financial instruments to be carried in the financial statements
      at fair value. The Company accounted for marketable securities as
      available for sale financial instruments and carried them at fair value
      which is consistent with US GAAP. However, the accounting for future
      income taxes with respect to the fair value adjustments is different under
      Canadian and US GAAP. Under Canadian GAAP, the Company recorded a future
      income tax liability of $288,750 with a corresponding amount recorded to
      accumulated other comprehensive income. Offsetting this, under Canadian
      GAAP the Company adjusted the valuation allowance for future income tax
      assets by $288,750 and recorded a future income tax recovery of $288,750
      in the statement of operations. Under US GAAP, the adjustment to the
      valuation allowance would have been recorded to accumulated other
      comprehensive income. This amount was reversed in 2010 as the marketable
      securities were sold.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | SFAS No. 130, Reporting Comprehensive Income,
      requires that an enterprise report, by major components and as a single
      total, the change in its net assets during the period from non-owner
      sources. The impact of SFAS No. 130 on the Companys financial statements
      is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |                                                     |   | Year ended  |   |   | Year ended |   |   | Year ended |  
| | --------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                                                     |   | August 31,  |   |   | August 31, |   |   | August 31, |  
| |                                                     |   | 2011        |   |   | 2010       |   |   | 2009       |  
| | Net income (loss) under US GAAP                     | $ | (13,287,990 | ) | $ | 32,958,313 |   | $ | (7,347,731 | )
| | Other comprehensive income (loss):                  |   |             |   |   |            |   |   |            |  
| | Unrealized gain on
      marketable securities      |   | -           |   |   | -          |   |   | 1,017,002  |  
| | Realized gain on marketable securities              |   | -           |   |   | (1,925,002 | ) |   | -          |  
| | Translation adjustment                              |   | -           |   |   | 58,378     |   |   | 108,145    |  
| | Comprehensive net
      income (loss) under US GAAP | $ | (13,287,990 | ) | $ | 31,091,689 |   | $ | (6,222,584 | )

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

| | (e) | Future income taxes on stock based
    compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | Under Canadian GAAP an income tax recovery is recorded in
      the statement of operations when eligible stock based compensation is
      capitalized against an asset, with the corresponding entry recorded
      against the asset. However, under US GAAP, the Company expenses all
      exploration expenditure prior to establishing mining reserves, including
      stock based compensation (refer to note 16(a) above for further
      discussion). Therefore, any income tax recovery recorded under Canadian
      GAAP is derecognized for US GAAP purposes until mining reserves are
      established.                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (f) | Impact of Recent United States Accounting
      Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | The amended ASC 820 requires entities to provide new
      disclosures and clarify existing disclosures relating to fair value
      measurements. The new disclosures and clarifications of existing
      disclosures are effective for interim and annual reporting periods
      beginning after December 15, 2009, except for the disclosures about
      purchases, sales, issuances, and settlements in Level 3 fair value
      measurements, which are effective for fiscal years beginning after
      December 15, 2010 and for interim periods within those fiscal years. The
      adoption of ASU 2010-06 is not expected to have a material impact on the
      Companys financial position or results of operations.                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | ASU 2010-13 addresses the classification of a share-based
      payment award with an exercise price denominated in the currency of a
      market in which the underlying equity security trades. Topic 718 is
      amended to clarify that a share-based payment award with an exercise price
      denominated in the currency of a market in which a substantial portion of
      the entitys equity securities trades shall not be considered to contain a
      market, performance, or service condition. Therefore, such an award is not
      to be classified as a liability if it otherwise qualifies as equity
      classification. The amendments in this update would be effective for
      fiscal years, and interim periods within those fiscal years, beginning on
      or after December 15, 2010. The adoption of ASU 2010-13 is not expected to
      have a material impact on the Companys financial position or results in
      operations.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (g) | Development stage enterprise                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | The Company meets the definition of a development stage
      enterprise under Statement of Financial Accounting Standards (SFAS) No. 7,
      Accounting and Reporting by Development Stage Enterprises. The following
      additional disclosures are required under U.S. GAAP:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | Consolidated summarized statements of operations and cash
      flows since March 16, 2000, the date the Company commenced
    operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

Consolidated operations:

| |                                            |   | (Unaudited)    |  
| | ------------------------------------------ | - | -------------- | -
| |                                            |   | Period from    |  
| |                                            |   | March 16, 2000 |  
| |                                            |   | (inception)    |  
| |                                            |   | to August 31,  |  
| |                                            |   | 2011           |  
| | Exploration expenditures incurred in WBJV  | $ | 18,470,466     |  
| | Exploration expenditures                   |   | 10,307,474     |  
| | Gain on sale of WBJV Project #2            |   | (47,494,273    | )
| | Change in FIT                              |   | 9,060,857      |  
| | General administrative, salaries and other |   | 46,848,293     |  
| |                                            |   |                |  
| | Ending deficit, August 31, 2011            | $ | 37,192,817     |  
| |                                            |   |                |  

Consolidated cash flows:

| | Operating activities                        | $ | (63,406,587  | )
| | ------------------------------------------- | - | ------------ | -
| | Investing activities                        |   | (123,460,467 | )
| | Financing activities                        |   | 251,868,029  |  
| | Effect of foreign exchange on cash          |   | (882,044     | )
| |                                             |   |              |  
| | Cash and cash equivalents - August 31, 2011 | $ | 64,118,931   |  

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

|                                                      |   |                   |  |   |            |   |   |              |   |   |             |   |   |               |   |   | Deficit       |   |   |               |  
|----------------------------------------------------- | - | ----------------- |  | - | ---------- | - | - | ------------ | - | - | ----------- | - | - | ------------- | - | - | ------------- | - | - | ------------- | -
|                                                      |   |                   |  |   |            |   |   |              |   |   |             |   |   |               |   |   | accumulated   |   |   |               |  
|Unaudited                                             |   |                   |  |   |            |   |   | Flow-through |   |   |             |   |   | Accumulated   |   |   | during        |   |   |               |  
|                                                      |   | Common shares     |  |   | Obligation |   |   | special      |   |   |             |   |   | other         |   |   | exploration & |   |   | Total         |  
|                                                      |   | without par value |  |   | to issue   |   |   | warrants     |   |   | Contributed |   |   | comprehensive |   |   | development   |   |   | shareholders' |  
|                                                      |   | Amount            |  |   | shares     |   |   | Amount       |   |   | surplus     |   |   | income        |   |   | stage         |   |   | equity        |  
|Issued for cash                                       | $ | 89,000            |  | $ | -          |   | $ | 521,000      |   | $ | -           |   | $ | -             |   | $ | -             |   | $ | 610,000       |  
|Issued for mineral properties                         |   | -                 |  |   | 20,000     |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 20,000        |  
|Net Loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | (270,435      | ) |   | (270,435      | )
|Balance, August 31, 2000                              |   | 89,000            |  |   | 20,000     |   |   | 521,000      |   |   | -           |   |   | -             |   |   | (270,435      | ) |   | 359,565       |  
|Issued for cash                                       |   | 1,356,532         |  |   | -          |   |   | 1,107,771    |   |   | -           |   |   | -             |   |   | -             |   |   | 2,464,303     |  
|Issued upon exercise of share purchase warrants       |   | 1,100             |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 1,100         |  
|Issued for mineral properties                         |   | 57,050            |  |   | (17,400    | ) |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 39,650        |  
|Issued upon exercise of special warrants              |   | 521,000           |  |   | -          |   |   | (521,000     | ) |   | -           |   |   | -             |   |   | -             |   |   | -             |  
|                                                      |   |                   |  |   |            |   |   |              |   |   |             |   |   |               |   |   |               |   |   |               |  
|Issued upon exercise of flow through special warrants |   | 1,107,771         |  |   | -          |   |   | (1,107,771   | ) |   | -           |   |   | -             |   |   | -             |   |   | -             |  
|Stock options granted                                 |   | -                 |  |   | -          |   |   | -            |   |   | 1,250       |   |   | -             |   |   | -             |   |   | 1,250         |  
|Net loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | (960,202      | ) |   | (960,202      | )
|Balance at August 31, 2001                            |   | 3,132,453         |  |   | 2,600      |   |   | -            |   |   | 1,250       |   |   | -             |   |   | (1,230,637    | ) |   | 1,905,666     |  
|Issuance of common shares for cash                    |   | 1,951,135         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 1,951,135     |  
|Issued for mineral properties                         |   | 36,509            |  |   | (2,600     | ) |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 33,909        |  
|Issued to acquire New Millennium Metals               |   | 1,310,385         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 1,310,385     |  
|Unrealized loss on marketable securities              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | (18,450       | ) |   | -             |   |   | (18,450       | )
|Stock options granted                                 |   | -                 |  |   | -          |   |   | -            |   |   | 428,747     |   |   | -             |   |   | -             |   |   | 428,747       |  
|Net loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | (2,466,754    | ) |   | (2,466,754    | )
|Balance at August 31, 2002                            |   | 6,430,482         |  |   | -          |   |   | -            |   |   | 429,997     |   |   | (18,450       | ) |   | (3,697,391    | ) |   | 3,144,638     |  
|Issuance of flow-through common shares for
      cash |   | 678,589           |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 678,589       |  
|Issuance of common shares for cash                    |   | 1,411,342         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 1,411,342     |  
|Issued on exercise of mineral property
      option   |   | 200,062           |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 200,062       |  
|Issued on exercise of warrants                        |   | 233,389           |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 233,389       |  
|Issued on exercise of stock options                   |   | 35,075            |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 35,075        |  
|Issued for mineral properties                         |   | 16,140            |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 16,140        |  
|Unrealized gain (loss) on marketable
      securities |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | 66,000        |   |   | -             |   |   | 66,000        |  
|Stock options granted                                 |   | -                 |  |   | -          |   |   | -            |   |   | (63,406     | ) |   | -             |   |   | -             |   |   | (63,406       | )
|Tax effect of flow-through shares issued              |   | -                 |  |   | -          |   |   | (177,203     | ) |   | -           |   |   | -             |   |   | -             |   |   | (177,203      | )
|Net loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | (2,580,499    | ) |   | (2,580,499    | )
|Balance at August 31, 2003                            |   | 9,005,079         |  |   | -          |   |   | (177,203     | ) |   | 366,591     |   |   | 47,550        |   |   | (6,277,890    | ) |   | 2,964,127     |  
|Issuance of flow-through common shares for cash       |   | 1,267,200         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 1,267,200     |  
|Issuance of common shares for cash                    |   | 3,226,590         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 3,226,590     |  
|Issued on exercise of warrants                        |   | 1,428,406         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 1,428,406     |  
|Issued on exercise of stock options                   |   | 59,200            |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 59,200        |  
|Issued for mineral properties                         |   | 3,600             |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 3,600         |  
|Unrealized gain (loss) on marketable
      securities |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | 262,072       |   |   | -             |   |   | 262,072       |  
|Stock options granted                                 |   | -                 |  |   | -          |   |   | -            |   |   | 218,391     |   |   | -             |   |   | -             |   |   | 218,391       |  
|Tax effect of flow-through shares issued              |   | -                 |  |   | -          |   |   | (85,398      | ) |   | -           |   |   | -             |   |   | -             |   |   | (85,398       | )
|Net loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | (4,766,913    | ) |   | (4,766,913    | )
|Balance at August 31, 2004                            |   | 14,990,075        |  |   | -          |   |   | (262,601     | ) |   | 584,982     |   |   | 309,622       |   |   | (11,044,803   | ) |   | 4,577,275     |  
|Issuance of flow-through common shares for cash       |   | 259,901           |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 259,901       |  
|Issuance of common shares for cash                    |   | 5,441,078         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 5,441,078     |  
|Issued on exercise of warrants                        |   | 2,272,462         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 2,272,462     |  
|Issued on exercise of stock options                   |   | 521,873           |  |   | -          |   |   | -            |   |   | (13,022     | ) |   | -             |   |   | -             |   |   | 508,851       |  
|Issued for mineral properties                         |   | 28,000            |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 28,000        |  
|Unrealized gain (loss) on marketable
      securities |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | (289,000      | ) |   | -             |   |   | (289,000      | )
|Stock options granted                                 |   | -                 |  |   | -          |   |   | -            |   |   | 109,434     |   |   | -             |   |   | -             |   |   | 109,434       |  
|Tax effect of flow-through shares issued              |   | -                 |  |   | -          |   |   | (52,061      | ) |   | -           |   |   | -             |   |   | -             |   |   | (52,061       | )
|Net loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   |               |   |   | (8,112,593    | ) |   | (8,112,593    | )
|Balance at August 31, 2005                            |   | 23,513,389        |  |   | -          |   |   | (314,662     | ) |   | 681,394     |   |   | 20,622        |   |   | (19,157,396   | ) |   | 4,743,347     |  
|Issuance of common shares for cash                    |   | 14,898,656        |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 14,898,656    |  
|Issued on exercise of warrants                        |   | 1,181,305         |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 1,181,305     |  
|Issued on exercise of stock options                   |   | 165,418           |  |   | -          |   |   | -            |   |   | (47,670     | ) |   | -             |   |   | -             |   |   | 117,748       |  
|Issued for mineral properties                         |   | 40,000            |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 40,000        |  
|Translation adjustment                                |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | (658,380      | ) |   |               |   |   | (658,380      | )
|Unrealized gain (loss) on marketable
      securities |   | -                 |  |   | -          |   |   | -            |   |   |             |   |   | 333,375       |   |   | -             |   |   | 333,375       |  
|Stock options granted                                 |   | -                 |  |   | -          |   |   | -            |   |   | 160,376     |   |   | -             |   |   | -             |   |   | 160,376       |  
|Tax effect of flow-through shares issued              |   | -                 |  |   | -          |   |   | (80,755      | ) |   | -           |   |   | -             |   |   | -             |   |   | (80,755       | )
|Net loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | (8,537,460    | ) |   | (8,537,460    | )
|Balance, August 31, 2006                              |   | 39,798,768        |  |   | -          |   |   | (395,417     | ) |   | 794,100     |   |   | (304,383      | ) |   | (27,694,856   | ) |   | 12,198,212    |  
|Issued on exercise of warrants                        |   | 11,454,791        |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 11,454,791    |  
|Issued on exercise of stock options                   |   | 892,557           |  |   | -          |   |   | -            |   |   | (266,982    | ) |   | -             |   |   | -             |   |   | 625,575       |  
|Issued for mineral properties net of costs            |   | 227,742           |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | -             |   |   | 227,742       |  
|Unrealized loss on marketable securities              |   |                   |  |   |            |   |   |              |   |   |             |   |   | 1,520,001     |   |   |               |   |   | 1,520,001     |  
|Stock options granted                                 |   | -                 |  |   | -          |   |   | -            |   |   | 1,487,660   |   |   | -             |   |   | -             |   |   | 1,487,660     |  
|Translation adjustment                                |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | 196,444       |   |   |               |   |   | 196,444       |  
|Tax effect of flow-through shares issued              |   | -                 |  |   | -          |   |   | 105,514      |   |   | -           |   |   | -             |   |   | -             |   |   | 105,514       |  
|Net loss                                              |   | -                 |  |   | -          |   |   | -            |   |   | -           |   |   | -             |   |   | (10,037,221   | ) |   | (10,037,221   | )
|Balance, August 31, 2007                              |   | 52,373,858        |  |   | -          |   |   | (289,903     | ) |   | 2,014,778   |   |   | 1,412,062     |   |   | (37,732,077   | ) |   | 17,778,718    |  

---

Platinum Group Metals Ltd.(An exploration and
development stage company)Notes to the audited consolidated financial
statements For the year ended August 31, 2011

|Issued on exercise of warrants             |  | 1,487,500   |  |  | - |  |  | -        |   |  | -          |   |  | -          |   |  | -           |   |  | 1,487,500   |  
|------------------------------------------ |  | ----------- |  |  | - |  |  | -------- | - |  | ---------- | - |  | ---------- | - |  | ----------- | - |  | ----------- | -
|Issued on exercise of stock options        |  | 1,334,748   |  |  | - |  |  | -        |   |  | (512,924   | ) |  | -          |   |  | -           |   |  | 821,824     |  
|Issued for mineral properties net of costs |  | 163,236     |  |  | - |  |  | -        |   |  | -          |   |  | -          |   |  | -           |   |  | 163,236     |  
|Translation adjustment                     |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | (76,208    | ) |  |             |   |  | (76,208     | )
|Unrealized loss on marketable securities   |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | (966,001   | ) |  | -           |   |  | (966,001    | )
|Stock options granted                      |  | -           |  |  | - |  |  | -        |   |  | 1,288,383  |   |  | -          |   |  | -           |   |  | 1,288,383   |  
|Net loss                                   |  | -           |  |  | - |  |  | -        |   |  | -          |   |  |            |   |  | (11,783,332 | ) |  | (11,783,332 | )
|Balance, August 31, 2008                   |  | 55,359,342  |  |  | - |  |  | (289,903 | ) |  | 2,790,237  |   |  | 369,853    |   |  | (49,515,409 | ) |  | 8,714,120   |  
|Issuance of common shares for cash         |  | 34,174,382  |  |  | - |  |  | -        |   |  | 5,288,917  |   |  | -          |   |  | -           |   |  | 39,463,299  |  
|Issued on exercise of stock options        |  | 411,592     |  |  | - |  |  | -        |   |  | (129,952   | ) |  | -          |   |  | -           |   |  | 281,640     |  
|Translation adjustment                     |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | 108,145    |   |  |             |   |  | 108,145     |  
|Unrealized gain on marketable securities   |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | 1,017,002  |   |  | -           |   |  | 1,017,002   |  
|Stock options granted                      |  | -           |  |  | - |  |  | -        |   |  | 2,518,107  |   |  | -          |   |  | -           |   |  | 2,518,107   |  
|Net loss                                   |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | -          |   |  | (7,347,731  | ) |  | (7,347,731  | )
|Balance, August 31, 2009                   |  | 89,945,316  |  |  | - |  |  | (289,903 | ) |  | 10,467,309 |   |  | 1,495,000  |   |  | (56,863,140 | ) |  | 44,754,582  |  
|Issued on exercise of stock options        |  | 1,848,807   |  |  | - |  |  | -        |   |  | (694,608   | ) |  | -          |   |  | -           |   |  | 1,154,199   |  
|Stock options granted                      |  | -           |  |  | - |  |  | -        |   |  | 164,895    |   |  | -          |   |  | -           |   |  | 164,895     |  
|Translation adjustment                     |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | 58,378     |   |  | -           |   |  | 58,378      |  
|Realized gain on AFS securities            |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | (1,925,002 | ) |  | -           |   |  | (1,925,002  | )
|Net Income                                 |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | -          |   |  | 32,958,313  |   |  | 32,958,313  |  
|Balance, August 31, 2010                   |  | 91,794,123  |  |  | - |  |  | (289,903 | ) |  | 9,937,596  |   |  | (371,624   | ) |  | (23,904,827 | ) |  | 77,165,365  |  
|Issuance of common shares for cash         |  | 135,365,649 |  |  |   |  |  |          |   |  |            |   |  |            |   |  |             |   |  | 135,365,649 |  
|Issued on exercise of stock options        |  | 1,932,401   |  |  |   |  |  |          |   |  | (468,121   | ) |  |            |   |  |             |   |  | 1,464,280   |  
|Issued on exercise of warrants             |  | 27,220,459  |  |  |   |  |  |          |   |  | (5,287,273 | ) |  |            |   |  |             |   |  | 21,933,186  |  
|Stock options granted                      |  |             |  |  |   |  |  |          |   |  | 8,642,425  |   |  |            |   |  |             |   |  | 8,642,425   |  
|Net Income                                 |  | -           |  |  | - |  |  | -        |   |  | -          |   |  | -          |   |  | (13,287,990 | ) |  | (13,287,990 | )
|Balance, August 31, 2011                   |  | 256,312,632 |  |  | - |  |  | (289,903 | ) |  | 12,824,627 |   |  | (371,624   | ) |  | (37,192,817 | ) |  | 231,282,915 |  

|**17.** | SUBSEQUENT EVENTS
|------- | -----------------

The following events occurred subsequent to year end. These
events and other non-material subsequent events may be mentioned elsewhere in
these financial statements:

| | a) | In September 2011, the Company purchased the Providence
      Nickel, Copper, Cobalt and Platinum Group Metals Property from Arctic Star
      Exploration (Arctic Star) for a payment of $50,000 and a 1.0% NSR royalty.
      The claims that comprise the Providence property will be brought to lease
      once a crown survey has been completed in 2012 at an estimated cost of
      $100,000. To date the first year lease payment and application fees have
      been paid. Total acquisition costs were $78,216.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The camp and associated Land Use Permit will be purchased
      for an additional $20,000 once The Company has re-activated the corporate
      registration in the Northwest Territories. An extension has been granted
      by the Northwest Territories Mining Recorder for the completion of the
      survey of the claims to lease until September 28, 2012.                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | b) | Subsequent to year end, JOGMEC completed the 2011
      drilling program at Warsprings. JOGMEC indicated they do not plan to fund
      further work on this project.                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c) | The Company has agreed to acquire 49.9% of Mnombo. The
      Company will pay Mnombo R 1.2 million (US$150,000) and has agreed to fund
      Mnombos 26% share of costs on the Project to feasibility. The Company
      will therefore hold 37% of Waterberg directly and a further 12.97 %
      indirectly, through Mnombo, for a total of 49.97%.                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d) | On November 15, 2011, the Company granted 4,154,000
      incentive stock options to its employees at a price of $1.30 per
    share.                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | e) | On October 31, 2011, 50,000 incentive stock options were
      forfeited.                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---