FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For: November 20 - 30, 2006

Platinum Group Metals Ltd.
(SEC File No. 0-30306)

Suite 328 – 550 Burrard Street, Vancouver BC, V6C 2B5, CANADA
Address of Principal Executive Office

 
The registrant files annual reports under cover:
Form 20-F [ X ]     Form 40-F [    ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [    ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [    ]

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:   Yes [    ]    No [ X ]
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
EXHIBIT LIST

32.1        CEO Certification
32.2        CFO Certification
99.1        Financial Statements
99.2        Management's Discussion & Analysis
99.3        Information Circular
99.4        Notice of Meeting
99.5        VIF
99.6        Financials Request Form
99.7        Proxy
99.8        Annual Report *

* Printer-friendly version of the Annual Report
 
Date: December 7, 2006
   “R. Michael Jones”       
R. MICHAEL JONES
President & CEO

 
Form 52-109F1
Certification of Annual Filings

I, R. Michael Jones, CEO of Platinum Group Metals Ltd. , certify that:
1.
I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings ) of Platinum Group Metals Ltd. (the issuer) for the period ending August 31, 2006;
2.
Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;
3.
Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the annual filings;
4.
The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the issuer, and we have:
(a)  designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared;
(b)  designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP; and
(c)  evaluated the effectiveness of the issuer’s disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the issuer to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation; and
5.   I have caused the issuer to disclose in the annual MD&A any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent interim period that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting.
Date: November 28, 2006

_______________________
R. Michael Jones
President & CEO

 
Form 52-109F1
Certification of Annual Filings

I, Frank Hallam, CFO of Platinum Group Metals Ltd. , certify that:
1.
I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings ) of Platinum Group Metals Ltd. (the issuer) for the period ending August 31, 2006;
2.
Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;
3.
Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the annual filings;
4.
The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the issuer, and we have:
(a)  designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared;
(b)  designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP; and
(c)  evaluated the effectiveness of the issuer’s disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the issuer to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation; and
5.   I have caused the issuer to disclose in the annual MD&A any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent interim period that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting.
Date: November 28, 2006

_______________________
Frank Hallam
Director & CFO

 
Independent auditors’ report

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

We have audited the consolidated balance sheets of Platinum Group Metals Ltd. (an exploration stage company) as at August 31, 2006 and 2005 and the consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three year period ended August 31, 2006 and the cumulative period from March 16, 2000 to August 31, 2006.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our 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).  These standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2006 and 2005 and the results of its operations and its cash flows for each of the years in the three year period ended August 31, 2006 and the cumulative period from March 16, 2000 to August 31, 2006 in accordance with Canadian generally accepted accounting principles.

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

Independent Registered Chartered Accountants
November 8, 2006

Comments by auditors on Canada - United States of America reporting differences

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

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

Independent Registered Chartered Accountants
November 8, 2006

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Balance Sheets
August 31

 	 	2006	 	 	2005	 	
ASSETS  	 		 	 		 	
CURRENT  	 		 	 		 	
    Cash and cash equivalents  	$  	10,066,801	 	$  	2,750,461	 	
    Marketable securities (market value-$564,000; 2005 - $272,375)  	 	210,000	 	 	251,750	 	
    Amounts receivable (Note 3)  	 	394,993	 	 	344,059	 	
    Prepaid expenses and other  	 	64,148	 	 	53,575	 	
Total current assets  	 	10,735,942	 	 	3,399,845	 	
PERFORMANCE BONDS  	 	27,364	 	 	24,685	 	
INVESTMENT IN WESTERN BUSHVELD  	 		 	 		 	
JOINT VENTURE (Note 5)  	 	10,830,088	 	 	5,770,020	 	
MINERAL PROPERTIES (Note 6)  	 	5,830,797	 	 	6,321,529	 	
FIXED ASSETS (Note 7)  	 	240,250	 	 	189,108	 	
Total assets  	$  	27,664,441	 	$  	15,705,187	 	
LIABILITIES  	 		 	 		 	
CURRENT  	 		 	 		 	
    Accounts payable and accrued liabilities  	$  	2,126,584	 	$  	1,997,633	 	
    Current portion of capital lease obligation  	 	6,658	 	 	5,929	 	
Total current liabilities  	 	2,133,242	 	 	2,003,562	 	
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATION  	15,911	 	 	22,569	 	
FUTURE INCOME TAXES (Note 11)  	 	-	 	 	-	 	
Total liabilities  	 	2,149,153	 	 	2,026,131	 	
SHAREHOLDERS' EQUITY  	 		 	 		 	
Share capital (Note 8)  	 	39,798,768	 	 	23,513,389	 	
Contributed Surplus (Note 2 (f) and Note 9)  	 	1,785,705	 	 	1,723,198	 	
Cumulative translation adjustment  	 	(658,381	)  	 	-	 	
Deficit accumulated during the exploration stage  	 	(15,410,804	)  	 	(11,557,531	)  	
Total shareholders' equity  	 	25,515,288	 	 	13,679,056	 	
Total liabilities and shareholders' equity  	$  	27,664,441	 	$  	15,705,187	 	

 	 	 	 	 	 	 	
CONTINUING OPERATIONS (Note 1)	
CONTINGENCIES AND COMMITMENTS (NOTE 12)	
 	 	 	 	 	 	 	
APPROVED BY THE DIRECTORS:	
 	 	 	 	 	 	 	
"R. Michael Jones"	
R. Michael Jones, Director	
 	 	 	 	 	 	 	
"Frank R. Hallam"	
Frank Hallam, Director	 	

See accompanying notes to the consolidated financial statements.

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Statements of Operations
 
 	 		 			 	 		 		Cumulative	 	
 	 		 			 	 		 		amount from	 	
 	 	Year ended	 		Year ended	 	 	Year ended	 		March 16, 2000	 	
 	 	August 31,	 		August 31,	 	 	August 31,	 		to August 31,	 	
 	 	2006	 		2005	 	 	2004	 		2006	 	
EXPENSES  	 		 			 	 		 			 	
    Amortization  	$  	93,906	 	$	75,760	 	$  	31,768	 	$	236,485	 	
    Annual general meeting  	 	50,563	 		33,199	 	 	32,125	 		146,664	 	
    Corporate finance fees  	 	-	 		-	 	 	100,000	 		125,000	 	
    Filing and transfer agent fees  	 	49,108	 		84,996	 	 	57,756	 		285,476	 	
    Insurance  	 	28,683	 		30,840	 	 	13,674	 		94,401	 	
    Mineral property costs written off  	 	1,174,325	 		974,294	 	 	1,044,542	 		5,107,071	 	
    Management and consulting fees  	 	367,891	 		326,167	 	 	322,996	 		1,495,745	 	
    News releases, print and mailout  	 	92,281	 		416,083	 	 	21,938	 		544,262	 	
    Office and miscellaneous  	 	268,707	 		102,220	 	 	84,368	 		600,054	 	
    Other taxes  	 	3,000	 		-	 	 	6,500	 		86,766	 	
    Professional fees  	 	266,223	 		193,765	 	 	130,383	 		1,070,419	 	
    Promotion  	 	112,721	 		130,897	 	 	126,464	 		429,457	 	
    Property investigations  	 	850	 		1,163	 	 	4,591	 		128,254	 	
    Rent  	 	100,685	 		88,090	 	 	76,619	 		339,570	 	
    Salaries and benefits  	 	904,385	 		604,260	 	 	404,936	 		2,168,481	 	
    Shareholder relations  	 	153,220	 		75,323	 	 	38,090	 		703,755	 	
    Stock compensation expense  	 	110,176	 		1,283,289	 	 	92,881	 		1,528,397	 	
    Telephone  	 	44,609	 		45,197	 	 	39,533	 		174,645	 	
    Travel  	 	271,883	 	 	258,125	 	 	231,507	 	 	893,856	 	
 	 	(4,093,216	)  		(4,723,668	)  	 	(2,860,671	)  		(16,158,758	)  	
Less interest and other income (Note 10(b))  	 	235,236	 	 	218,373	 	 	430,106	 	 	1,145,955	 	
Loss before other items  	 	(3,857,980	)  	 	(4,505,295	)  	 	(2,430,565	)  	 	(15,012,803	)  	
Other items:  	 		 			 	 		 			 	
    Write-down of investment in and  	 		 			 	 		 			 	
        advances to Active Gold Group Ltd.  	 		 			 	 		 			 	
        (Note 4)  	 	-	 		127,488	 	 	90,062	 		242,275	 	
    (Gain) loss on sale  	 		 			 	 		 			 	
        of marketable securities  	 	(5,050	)  		(51,200	)  	 	-	 		(47,682	)  	
        Loss on sale of furniture  	 	343	 		7,065	 	 	-	 		7,408	 	
    Equity in loss of Active Gold  	 		 			 	 		 			 	
        Group Ltd. (Note 4)  	 	-	 	 	-	 	 	-	 	 	187,000	 	
 	 	(4,707	)  		83,353	 	 	90,062	 		389,001	 	
Loss for the period before income taxes  	 	(3,853,273	)  		(4,588,648	)  	 	(2,520,627	)  		(15,401,804	)  	
Future income tax recovery  	 	-	 	 	793,000	 	 	278,000	 	 	1,737,000	 	
Loss for the period  	$  	(3,853,273	)  	$	(3,795,648	)  	$  	(2,242,627	)  	$	(13,664,804	)  	
Basic and diluted loss per share  	$  	(0.08	)  	$	(0.10	)  	$  	(0.07	)  	 	 	 	
Weighted-average number of  	 		 			 	 		 			 	
    common shares outstanding  	 	47,230,202	 	 	39,194,947	 	 	31,640,642	  	 	 	 	
 
See accompanying notes to the consolidated financial statements.

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity
From commencement of operations, March 16, 2000, to August 31, 2006

 	 		 	 		 		 		 		 			 	 		 		Deficit	 			 	
 	 		 	 		 	Flow-through  		 			 	 		 		accumulated	 			 	
 	Common shares  	 	Obligation	 	special  		 			 	 	Cumulative	 		during	 		Total	 	
 	without par value  	 	to issue	 	warrants  		 		Contributed	 	 	translation	 		exploration	 		shareholders'	 	
 	Shares  		Amount  	 	shares	 	Number	 		Amount	 		surplus	 	 	adjustment	  		stage	 	 	equity	 	
Issued for cash  	1,395,001  	$	89,000  	$  	-	 	2,605,000	 	$	521,000	 		$ -	 	$  	-	 		$ -	 	$	610,000	 	
Issued for mineral properties  	-  		-  	 	20,000	 	-	 		 	-	 		-	 	 	-	 		-	 		20,000	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(39,956	)  	 	(39,956	)  	
Balance, August 31, 2000  	1,395,001  		89,000  	 	20,000	 	2,605,000	 		521,000	 		-	 	 	-	 		(39,956	)  		590,044	 	
Issued for cash  	3,195,391  		1,356,532  	 	-	 	2,383,090	 		1,107,771	 		-	 	 	-	 		-	 		2,464,303	 	
Issued upon exercise of share purchase warrants  	2,000  		1,100  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,100	 	
Issued for mineral properties  	210,000  		57,050  	 	(17,400	)  	-	 		 	-	 		-	 	 	-	 		-	 		39,650	 	
Issued upon exercise of special warrants  	2,605,000  		521,000  	 	-	 	(2,605,000	)  		(521,000	)  		-	 	 	-	 		-	 		-	 	
Issued upon exercise of flow through  	 		 	 		 		 		 		 			 	 		 			 			 	
  special warrants  	2,383,090  		1,107,771  	 	-	 	(2,383,090	)  		(1,107,771	)  		-	 	 	-	 		-	 		-	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(310,000	)  		(310,000	)  	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(482,687	)  	 	(482,687	)  	
Balance at August 31, 2001  	9,790,482  		3,132,453  	 	2,600	 	-	 		 	-	 		-	 	 	-	 		(832,643	)  		2,302,410	 	
Issued for cash  	6,864,001  		1,951,135  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,951,135	 	
Issued for mineral properties  	102,728  		36,509  	 	(2,600	)  	-	 		 	-	 		-	 	 	-	 		-	 		33,909	 	
Issued to acquire New Millennium Metals  	5,468,421  		1,310,385  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,310,385	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through  	 		 	 		 		 		 		 			 	 		 			 			 	
  shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(266,000	)  		(266,000	)  	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	 		(1,501,620	)  	 	(1,501,620	)  	
Balance, August 31, 2002  	22,225,632  		6,430,482  	 	-	 	-	 		 	-	 		-	 	 	-	 		(2,600,263	)  		3,830,219	 	
Issuance of flow-through common shares for cash  	1,181,346  		678,589  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		678,589	 	
Issuance of common shares for cash  	3,062,500  		1,411,342  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,411,342	 	
Issued on exercise of mineral property option (Note 7)  	571,603  		200,061  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		200,061	 	
Issued on exercise of warrants  	645,990  		233,389  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		233,389	 	
Issued on exercise of stock options  	96,500  		35,075  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		35,075	 	
Issued for mineral properties  	47,696  		16,140  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		16,140	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(140,000	)  		(140,000	)  	
Stock options granted to consultants  	-  		-  	 	-	 	-	 		 	-	 		42,051	 	 	-	 		-	 		42,051	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(1,748,993	)  	 	(1,748,993	)  	
Balance, August 31, 2003  	27,831,267  		9,005,078  	 	-	 	-	 		 	-	 		42,051	 	 	-	 		(4,489,256	)  		4,557,873	 	
Issuance of flow-through common shares for cash  	1,056,000  		1,267,200  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,267,200	 	
Issuance of common shares for cash  	3,810,207  		3,226,590  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		3,226,590	 	
Issued on exercise of warrants  	1,747,032  		1,428,407  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,428,407	 	
Issued on exercise of stock options  	132,000  		59,200  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		59,200	 	
Issued for mineral properties  	10,909  		3,600  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		3,600	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(346,000	)  		(346,000	)  	
Stock options granted to consultants  	-  		-  	 	-	 	-	 		 	-	 		92,881	 	 	-	 		-	 		92,881	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(2,242,627	)  	 	(2,242,627	)  	
Balance, August 31, 2004  	34,587,415  		14,990,075  	 	-	 	-	 		 	-	 		134,932	 	 	-	 		(7,077,883	)  		8,047,124	 	
Cumulative effect of change in accounting policy (Note 2 (f))  	-  		-  	 	-	 	-	 		 	-	 		318,000	 	 	-	 		(318,000	)  		-	 	
Issuance of flow-through common shares for cash  	173,267  		259,901  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		259,901	 	
Issuance of common shares for cash  	5,000,000  		5,441,078  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		5,441,078	 	
Issued on exercise of warrants  	2,469,949  		2,272,462  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		2,272,462	 	
Issued on exercise of stock options  	903,000  		521,873  	 	-	 	-	 		 	-	 		(13,023	)  	 	-	 		-	 		508,850	 	
Issued for mineral properties  	25,000  		28,000  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		28,000	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(366,000	)  		(366,000	)  	
Stock options granted  	-  		-  	 	-	 	-	 		 	-	 		1,283,289	 	 	-	 		-	 		1,283,289	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(3,795,648	)  	 	(3,795,648	)  	
Balance, August 31, 2005  	43,158,631  	$	23,513,389  	$  	-	 	-	 		$  	-	 	$	1,723,198	 	$  	-	 	$	(11,557,531	)  		13,679,056	 	
Issuance of common shares for cash  	9,500,000  		14,898,656  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		14,898,656	 	
Issued on exercise of warrants  	843,047  		1,181,305  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,181,305	 	
Issued on exercise of stock options  	164,500  		165,418  	 	-	 	-	 		 	-	 		(47,669	)  	 	-	 		-	 		117,750	 	
Issued for mineral properties  	25,000  		40,000  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		40,000	 	
Stock options granted  	-  		-  	 	-	 	-	 		 	-	 		110,176	 	 	-	 		-	 		110,176	 	
Translation adjustment  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	(658,381	)  		-	 		(658,381	)  	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(3,853,273	)  	 	(3,853,273	)  	
Balance, August 31, 2006  	53,691,178  	$	39,798,768  	$  	-	 	-	 	 	$  	-	 	$	1,785,705	 	$  	(658,381	)  	$	(15,410,804	)  	$	25,515,288	 	
 
See accompanying notes to the consolidated financial statements.

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Statements of Operations

 			 			 			 		Cumulative	 	
 			 			 			 		amount from	 	
 		Year ended	 		Year ended	 		Year ended	 		March 16, 2000	 	
 		August 31,	 		August 31,	 		August 31,	 		to August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 	 	2006	 	
OPERATING ACTIVITIES  			 			 			 			 	
    Loss for the year  	$	(3,853,273	)  	$	(3,795,648	)  	$	(2,242,627	)  	$	(13,664,804	)  	
    Add items not affecting cash  			 			 			 			 	
        Amortization  		93,906	 		75,760	 		31,768	 		236,485	 	
        Loss on sale of capital assets  		343	 		7,065	 		-	 		7,408	 	
        Equity in loss of Active Gold Group Ltd.  		-	 		-	 		-	 		187,000	 	
        Write-down of investment in and  			 			 			 			 	
advances to Active Gold Group Ltd.  		-	 		127,488	 		90,062	 		242,275	 	
        Future income tax recovery  		-	 		(793,000	)  		(278,000	)  		(1,737,000	)  	
        (Gain) loss on disposal  			 			 			 			 	
of marketable securities  		(5,050	)  		(51,200	)  		-	 		(47,682	)  	
        Mineral property costs written off  		1,174,325	 		974,294	 		1,044,542	 		5,107,071	 	
        Finders fee received in shares (Note 4.b)  		-	 		-	 		-	 		(100,000	)  	
        Gain on sale of mineral property  		-	 		-	 		(240,000	)  		(240,000	)  	
        Non-cash share compensation expense  		110,176	 		1,283,289	 		92,881	 		1,528,397	 	
    Net change in non-cash working  			 			 			 			 	
        capital (Note 13)  	 	123,312	 	 	(419,954	)  	 	333,541	 	 	54,456	 	
 	 	(2,356,261	)  	 	(2,591,906	)  	 	(1,167,833	)  	 	(8,426,394	)  	
FINANCING ACTIVITIES  			 			 			 			 	
    Performance Bonds  		(2,679	)  		(13,393	)  		(11,292	)  		(27,364	)  	
    Issuance of common shares  		16,197,711	 		8,482,291	 		5,981,397	 		36,349,948	 	
    Issuance of flow-through special warrants  		-	 		-	 		-	 		1,107,771	 	
    Issuance of special warrants  	 	-	 		-	 	 	-	 	 	521,000	 	
 	 	16,195,032	 	 	8,468,898	 	 	5,970,105	 	 	37,951,355	 	
INVESTING ACTIVITIES  			 			 			 			 	
    Costs to acquire New Millennium Metals  		-	 		-	 		-	 		(231,325	)  	
    Acquisition of capital assets  		(145,392	)  		(160,177	)  		(105,095	)  		(482,905	)  	
    Sale of capital assets  		-	 		2,456	 		-	 		2,456	 	
    Acquisition cost of mineral properties  		(167,561	)  		(219,988	)  		(174,697	)  		(1,425,366	)  	
    Exploration expenditures  		(476,032	)  		(2,286,734	)  		(1,769,443	)  		(7,428,154	)  	
    Investment in and advances to Joint Venture  		(5,780,246	)  		(2,888,976	)  		(1,234,449	)  		(9,903,671	)  	
    Investment in and advances to Active Gold Group Ltd.  		-	 		3,712	 		(90,062	)  		(246,677	)  	
    Proceeds on sale of marketable securities  	 	46,800	 	 	-	 	 	-	 	 	257,482	 	
 	 	(6,522,431	)  	 	(5,549,707	)  	 	(3,373,746	)  	 	(19,458,160	)  	
Net increase in cash and cash equivalents  		7,316,340	 		327,285	 		1,428,526	 		10,066,801	 	
Cash and cash equivalents, beginning of year  	 	2,750,461	 	 	2,423,176	 	 	994,650	 	 	-	 	
Cash and cash equivalents, end of year  	$	10,066,801	 	$	2,750,461	 	$	2,423,176	 	$	10,066,801	 	

 	 	
SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES:	
(i)	During the year ended August 31, 2006, the Company issued 25,000 common shares with a value of $40,000 in connection with	
 	the acquisition of mineral properties.	
(ii)	During the year ended August 31, 2005, the Company issued 25,000 common shares with a value of $28,000 in connection with	
 	the acquisition of mineral properties.	
(iii)	During the year ended August 31, 2005 the Company acquired 1,407,069 shares of Active Gold Group Ltd. (Active Gold")	
 	from six of Active Gold's founding shareholders, all of whom are at arm's length to the Company, in exchange for 399,999	
 	shares of Sydney Resource Corporation, paid from the Company's holdings of that security. Subsequent to year end, Sydney	
 	Resource Corporation was reorganized and named West Timmins Mining Inc. As Active Gold is estimated to have	
 	nominal value, the tranaction was entered into for the purpose of preserving existing business relationships. The	
 	Company therefore recorded the exchange as an expense.	
(iv)	During the year ended August 31, 2004, the Company issued 10,909 common shares with a value of $3,600 in connection with	
 	the acquisition of mineral properties.	
(v)	During the year ended August 31, 2004, the Company received marketable securities with a fair value of $33,750 relating to the	
 	recovery of mineral properties' costs.	
(vi)	During the year ended August 31, 2004, the Company received 1,200,000 shares of Sydney Resource Corp. with	
 	a value of $0.20 per share in exchange for sale of a 100-percent interest in the Company's Simlock Creek, British Columbia  	
 	gold project and the termination of the earn-in requirements under a related option agreement.	
 	 	 	 	 	 	 	 	 	 	 	 	 	
SUPPLEMENTARY INFORMATION ON CASH FLOWS:	
No interest or income tax expenses were paid during the periods disclosed.	 	

See accompanying notes to the consolidated financial statements.

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

1.
CONTINUING 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. (“Old Platinum”) and New Millennium Metals Corporation (“New Millennium”).  The Company is an exploration company conducting work on mineral properties it has staked or acquired by way of option agreements principally in Ontario, Canada and the Republic of South Africa. The Company has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The Company defers all acquisition, exploration and development costs related to mineral properties. The recoverability of these amounts is dependant upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of the property, and future profitable production, or alternatively, upon the Company’s ability to dispose of its interests on an advantageous basis.

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles applicable to a going concern, which presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. The Company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long-term. The Company’s ability to continue as a going concern is dependent upon its ability in the future to achieve profitable operations and, in the meantime, to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. External financing, predominately by the issuance of equity to the public, will be sought to finance the operations of the Company; however, there is no assurance that sufficient funds can or will be raised.

These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company not be able to continue as a going concern. If the going concern basis was not appropriate for these consolidated financial statements, then significant adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used.

2.
SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and include the significant policies outlined below. These policies conform, in all material respects, with accounting principles generally accepted in the United States of America (“US GAAP”), except as described in Note 15 to these consolidated financial statements.

(a)
Basis of Presentation and principles of consolidation
The financial statements of entities which are controlled by the Company through voting equity interest, referred to as subsidiaries, are consolidated. Variable interest entities (“VIEs”), which include, but are not limited to, special purpose entities, trusts, partnerships and other legal structures, as defined by the Accounting Standards Board in Accounting Guideline 15, “Consolidation of Variable Interest Entities”, are entities in which equity investors do not have the characteristics of a “controlling financial interest”

See accompanying notes to the consolidated financial statements.

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(a)
Basis of Presentation and principles of consolidation (continued)

or there is not sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. VIEs are subject to consolidation by the primary beneficiary who will absorb the majority of the entities’ expected losses and/or residual returns.

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

The Company’s 37% working interest in the Western Bushveld Joint Venture (Note 5) is recorded using the equity method.

(b)
Mineral properties and deferred exploration costs

Mineral properties consist of exploration and mining concessions, options and contracts.  Acquisition and leasehold costs and exploration costs are capitalized until such time as the property is put into production or disposed of either through sale or abandonment. The estimated values of all properties are assessed by management on a quarterly basis and if the carrying values exceed estimated recoverable values, then the properties are written down to fair value. If put into production, the costs of acquisition and exploration will be amortized over the life of the property based on the estimated economic reserves. Proceeds received from the sale of any interest in a property will first be credited against the carrying value of the property, with any excess included in operations for the period. If a property is abandoned, the property and deferred exploration costs are written off to operations.

(c)
Cash and cash equivalents

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

(d)
Marketable securities and investments

Marketable securities are recorded at the lower of cost or market value.

Investments where the Company has the ability to exercise significant influence, generally where the Company has a 20% to 50% equity interest, are accounted for using the equity method.  Under this method, the Company’s share of the investee’s earnings or losses is included in operations and its investments therein are adjusted by a like amount.  Dividends received from these investments are credited to the investment accounts.

Page 4

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(d)
Marketable securities and investments (continued)

Other long-term investments are accounted for using the cost method, whereby income is included in operations when received or receivable.  

Provisions for impairment of long term investments are made, where necessary, to recognize other than temporary declines in value.  

(e)
Fixed assets

Fixed assets are recorded at cost and are amortized on the declining balance basis at the following annual rates:

Computer equipment
30%
Computer software
30%
Office furniture and equipment
20%

(f)
Stock-based compensation

Effective September 1, 2004, the Company adopted the amended recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments .  Under the amended standards of this section, the fair value of all stock-based awards granted are estimated using the Black-Scholes model and are recorded in operations over their vesting periods.  The compensation cost related to stock options granted after September 1, 2004 is recorded in operations.

Previously, the Company provided note disclosure of pro forma net earnings and pro forma earnings per share as if the fair value based method had been used to account for share purchase options granted to employees, directors and officers after September 1, 2002.  The amended recommendations have been applied retroactively from September 1, 2002 without restatement of prior periods.  As a result, as of September 1, 2004, the deficit was increased by $318,000, contributed surplus was increased by $304,977, and share capital was increased by $13,023 for share purchase options granted in prior years and exercised in Fiscal 2005.

The total compensation expense recognized in the statement of operations for share purchase options granted in Fiscal 2006 to employees and directors amounted to $110,176 (2005 - $1,283,289). Had the same basis been applied to share purchase options granted in 2004, net earnings would have been as follows:

Page 5

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(f)
Stock-based compensation (continued)
		
 	2004	
 	 	
Net loss	 $       2,242,627	
Additional compensation expense	         241,000	
Pro forma net loss	 $       2,483,627	
 	 	
Pro forma basic and diluted loss per share	 $             (0.08)	

For the year ended August 31, 2004, stock-based compensation expense was determined using an option pricing model assuming no dividends are to be paid, a weighted average volatility of the Company’s share price of 200%, an annual risk free interest rate of 3.97% and expected lives of 3.47 years.  The weighted average fair value of share purchase options granted in 2004 was $1.04 per share.

Please refer to Note 8 (c) for a summary of stock options granted in the current period and the related valuation assumptions.

(g)
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.

(h)
Earnings (loss) per common share

Basic earnings per share are calculated using the weighted average number of common shares outstanding, excluding contingently returnable shares held in escrow.

The Company uses the treasury stock method for the calculation of diluted earnings per share. Diluted earnings per share are computed using the weighted average number of common and common equivalent shares outstanding during the year. Common equivalent shares consist of the incremental common shares arising upon the assumed exercise of stock options and warrants, or the return of contingently returnable shares, but are excluded from the computation if their effect is anti-dilutive.

(i)
Financial instruments

The fair values of cash and cash equivalents, amounts receivable, accounts payable and capital lease obligation reflected in the balance sheet approximate their respective carrying values. The fair value of marketable securities is disclosed on the balance sheet.

Page 6

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i)
Financial instruments (continued)

Price risk is the risk that the value of the Company’s financial instruments will vary from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.

(j)
Measurement Uncertainty

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenditures during the reporting period. Significant items where management’s judgement is applied include provisions for loss on and the estimated recoverable amount of assets, depreciation, income tax provisions, contingent liabilities, stock compensation and asset retirement obligations. Actual results could differ from those estimates.

(k)
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 depreciated over the life of the asset. The amount of the liability is subject to re-measurement at each reporting period and is accreted over time to the estimated asset retirement obligation ultimately payable through charges to operations.

The estimates are based principally on legal and regulatory requirements. It is possible that the Company’s estimates of its ultimate reclamation and closure liabilities could change as a result of changes in regulations, the extent of environmental remediation required, changes in technology and the means and cost of reclamation.

3.
AMOUNTS RECEIVABLE
					
Aug 31, 2006	 	 Aug. 31, 2005	
Advances receivable	 $38,401 	 	 $15,786 	
Due from related parties (Note 10 (b) and (c ))	 55,087 	 	 53,300 	
Goods and services tax recoverable	 22,519 	 	 7,799 	
South African value added tax ("VAT") recoverable	 241,462 	 	 263,466 	
Interest receivable	 37,524 	 	 380 	
Other	 -   	 	 3,328 	
 	 	 $394,993 	 	 $344,059 	

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

Page 7

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

4.
INVESTMENTS

(a)
Active Gold Group Ltd.

At August 31, 2003 the Company held 1,461,905 shares (26.79%) of Active Gold Group Ltd. at a cost of $160,327. Active Gold was a private corporation founded by the Company that attempted to acquire and develop gold projects in South Africa.  Active Gold failed to achieve a prospecting license for its Rooderand Gold Project and the project was abandoned.  The Company is now defunct.  Advances by the Company to Active Gold in the normal course of business during 2003 amounted to $45,487 and in 2004 amounted to $90,062.  In 2003 the Company wrote off its investment in and advances to Active Gold after recognizing its equity in that company’s losses.  Advances in 2004 were written off in the year they occurred.

On September 30, 2004 the Company acquired 1,407,069 shares of Active Gold from six of its other founding shareholders, all of whom were at arm’s length to the Company, in exchange for 399,999 shares (market value $131,200) of Sydney Resource Corporation (now West Timmins Mining Inc. or “WTM”), paid from the Company’s holdings of that security (see Note 4 (c)). As Active Gold was of nominal value, the transaction was entered into for the purpose of preserving existing business relationships.  PTM, therefore, recorded the exchange as an expense of $131,200.

(b)
MAG Silver Corporation

In 2003 the Company earned a finders’ fee of 200,000 shares of MAG Silver Corporation (“MAG”), a company with one director and one officer in common with the Company, with an assigned value of $0.50 per share for introducing MAG to certain individuals and mineral properties located in Mexico. During 2003 the Company sold 100,000 of these shares for proceeds of $67,630. The remaining 100,000 MAG shares owned by the Company had a market value of $300,000 at August 31, 2006 and are included in marketable securities.

(c)
Sydney Resource Corporation

In 2002 New Millennium granted Sydney Resource Corporation (“SYR”), a company with two directors in common with the Company, an option to earn a 50% interest in New Millennium’s 100% owned Simlock Creek gold project, located in the Cariboo Mining District of British Columbia.  On December 2, 2003 the Company and SYR agreed to terminate the Option and the Company then sold the property to SYR outright in exchange for 1,200,000 shares of SYR at a value of $0.20 per share.  At August 31, 2006 the Company held 800,001 SYR shares with an aggregate cost of $160,000. Market value for these 800,001 shares at August 31, 2006 was $264,000. The shares are included in marketable securities.  Subsequent to year end SYR was reorganized and named West Timmins Mining Inc.

Page 8

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

5.
Investment in Western Bushveld Joint Venture (the “WBJV”)

 	2006	2005	
Opening Balance	$5,770,020	$1,234,449	
Additional investment and advances	
5,718,449	
4,535,571	
Translation adjustment	(658,381)	-	
Share of net loss	-	-	
Ending Balance	$10,830,088	$5,770,020	

Details of the assets of the WBJV excluding the property rights contributed by the other ventures are as follows:
					
Year ended August 31, 2006	
 	SOUTH AFRICA	
 	 	 	 	 	
 	2006	 	2005	 	
Acquisition costs	
of mineral rights	
   Balance, beginning of year	 $1,804,926 	 	 $292,480 	 	
   Incurred during year	 93,367 	 	 1,512,446 	 	
   Translation adjustment	 (112,501)	 	 -   	 	
   Balance, end of year	 $1,785,792 	 	 $1,804,926 	 	
Deferred exploration costs	
   Balance, beginning of year	 3,965,094 	 	 941,969 	 	
   Assays and geochemical	 $756,770 	 	 $121,495 	 	
   Drilling	 4,554,926 	 	 1,744,881 	 	
   Geological	 1,557,563 	 	 459,855 	 	
   Geolophysical	 12,725 	 	 11,529 	 	
   Site administration	 661,430 	 	 670,940 	 	
   Travel	 68,811 	 	 14,425 	 	
 	 11,577,319 	 	 3,965,094 	 	
   Less other venture's interest	 (2,613,778)	 	 -   	 	
   Translation adjustment	 (545,880)	 	 -   	 	
   Balance, end of year	 $8,417,661 	 	 $3,965,094 	 	
   Due from other venturer's	 $626,635 	 	 $-   	 	
 	 $10,830,088 	 	 $5,770,020 	 	

From inception of the joint venture to August 31, 2006 there have been no material earnings or losses as all activities of the joint venture have been in connection with acquiring mineral rights and exploring the properties for minerals.

On October 26, 2004 the Company entered into a joint venture with Anglo American Platinum Corporation Limited and Africa Wide Mineral Prospecting and Exploration (Pty) Limited (the “WBJV”) to pursue platinum exploration and development on combined mineral rights covering 67 square kilometres on the Western Bushveld Complex of South Africa.  The transaction closed effective January 26, 2005. The Company contributed all of its interests in portions of the farms Onderstepoort 98JQ and Elandsfontein 102JQ (see (ii) (1) and (ii) (2) below). Anglo Platinum contributed its interests in portions of the farms Koedoesfontein 94JQ, Elandsfontein 102JQ and Frischgewaagd 96JQ. The Company and Anglo Platinum will each own an initial 37% working interest in the WBJV, while Africa Wide will own an initial 26% working interest. Africa Wide will work with local community groups in order to facilitate their inclusion in the economic benefits of the WBJV in areas such as training, job creation and procurement.

Page 9

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

5.
Investment in Western Bushveld Joint Venture (the “WBJV”) (continued)

The Company was required to operate and fund an exploration program in the amount of Rand 35 million (Cdn$6.44 million at August 31, 2005) over five years in order to earn its 37% interest in WBJV. As of April 2006 this requirement had been completed. After Rand35 million in expenditures were funded by PTM, the parties are required to fund their portion of further expenditures in excess of Rand 35 million pro-rata based on their working interest in the WBJV.

Once a bankable feasibility study has been completed, the respective deemed capital contribution of each party will be credited by adding their contribution of measured, indicated, and inferred PGE ounces from the contributed properties comprising the WBJV, determined in accordance with the South African SAMREC code.  Inferred ounces will be credited at US$0.50 per ounce, indicated ounces will be credited at US$3.20 per ounce and measured ounces will be credited at US$6.20 per ounce. Each party will then have the opportunity to contribute additional capital in order to catch up any resulting shortfall in their contributed capital and thereby maintain their respective working interest in the JV. Should a party not wish to participate, the JV agreement provides a mechanism whereby the parties may elect to become “non-contributory” to the JV and by doing so they would be subject to dilution.

The Company has concluded that it has significant influence over the operations of WBJV but not joint control and is therefore recording the investment using the equity method.

The initial exchange of the Company’s pre-existing interests in the Elandsfontein and Onderstepoort properties for the interest in WBJV has been recorded at cost as it represents a non-monetary exchange.  The balance paid to date under the Company’s commitment to spend up to Rand 35 million in exploration costs has also been recorded as a cost of the investment.

Prior to August 31, 2006 the Company and WBJV participants Anglo Platinum Limited and Africa Wide Mining had approved a 2006 cash budget for the WBJV totalling Rand 29,712,200 (approximately Cdn $4.59 million at August 31, 2006).  Each party is to fund their pro-rata share of the approved budget by way of three separate cash calls.  At August 31, 2006 Anglo Platinum was due to contribute Rand 975,276, which was subsequently contributed.  At August 31, 2006 Africa Wide was due to contribute Rand 3,101,731, (Cdn $498,798) which amount was still outstanding at October 24, 2006. The joint venture does not maintain separate records and all receipts, disbursements and net assets excluding property contributed by other venturers are recorded in the records of and disbursed by the Company on behalf of the joint venture. Of the $2,126,584 in accounts payable at August 31, 2006, an amount of $1,850,000 (approximately Rand 12 million) was incurred on behalf of the WBJV.

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

Page 10

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

5.
Investment in Western Bushveld Joint Venture (the “WBJV”) (continued)

(a)
Elandsfontein interest

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

The Company exercised its option to purchase the Elandsfontein property by way of written notice on June 26, 2003. A dispute arose with the Vendors as to the purchase price and the matter was referred for Expert Determination as provided for in the option agreement.

In 2005 the Company and the Vendors reached agreement whereby the Company purchased all surface and mineral rights to the property in exchange for Rand 7.0 million. In September 2005 the Company was granted a “New Order” prospecting permit under the new Mineral and Petroleum Resources Development Act (2002) over the Elandsfontein property.

(b)
Onderstepoort interest

During 2003 the Company entered into three option agreements to acquire mineral rights on seven portions comprising approximately 1085 hectares of the farm Onderstepoort 98 JQ located in the Western Bushveld. The Company may earn 100% of the mineral rights over 647 hectares and 50% of the mineral rights over the balance of 438 hectares. To earn its interests the Company must make aggregate prospecting and option payments over time to the vendors of Rand 12.44 million (approximately C$2.24 million) ending April 2008.  Of this amount Rand 834,000 has been paid.  During 2004 the Company was granted Old Order prospecting permits on five portions of the farm.  In 2005 the Company was granted New Order prospecting permits on the remaining two farm portions. Certain portions covering 569 ha are subject to the vendors right to participate as to a 7.5% working interest, or to convert 1% NSR royalty, which the Company may buy-back for Rand 5,000,000 (approximately C $900,000).

Page 11

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES

Year ended August 31, 2006	

 	 	Tweespalk	 	War Springs	 	Lakemount	 	LDI River	 	Shelby Lake	 	 Other	 	Total	
Acquisition costs	
of mineral rights	
   Balance, beginning of year	 $23,213 	 	 $103,832 	 	 $136,773 	 	 $540,532 	 	 $307,345 	 	 $248,858 	 	 $1,360,553 	
   Incurred during year	 8,622 	 	 8,658 	 	 84,800 	 	 5,000 	 	 -   	 	 100,481 	 	 207,561 	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (339,339)	 	 (339,339)	
   Balance, end of year	 $31,835 	 	 $112,490 	 	 $221,573 	 	 $545,532 	 	 $307,345 	 	 $10,000 	 	 $1,228,775 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred exploration costs	
   Assays and geochemical	 $-   	 	 $63,788 	 	 $301 	 	 $-   	 	 $-   	 	 $-   	 	 $64,089 	
   Drilling	 -   	 	 150,334 	 	 -   	 	 -   	 	 -   	 	 -   	 	 150,334 	
   Geological	 675 	 	 215,444 	 	 6,767 	 	 425 	 	 425 	 	 5,001 	 	 228,738 	
   Geophysical	 -   	 	 995 	 	 -   	 	 -   	 	 -   	 	 2,210 	 	 3,205 	
   Maps, fees and licenses	 -   	 	 -   	 	 -   	 	 128 	 	 -   	 	 128 	 	 256 	
   Site administration	 -   	 	 4,973 	 	 10,468 	 	 -   	 	 -   	 	 195 	 	 15,636 	
   Travel	 -   	 	 11,265 	 	 1,502 	 	 -   	 	 -   	 	 1,007 	 	 13,774 	
 	 	 675 	 	 446,799 	 	 19,038 	 	 553 	 	 425 	 	 8,541 	 	 476,032 	
   Balance, beginning of year	 813,434 	 	 1,632,760 	 	 1,079,611 	 	 215,391 	 	 391,546 	 	 828,234 	 	 4,960,976 	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (834,986)	 	 (834,986)	
   Balance, end of year	 $814,109 	 	 $2,079,559 	 	 $1,098,649 	 	 $215,944 	 	 $391,971 	 	 $1,789 	 	 $4,602,022 	
Total Mineral Properties	 $845,944 	 	 $2,192,049 	 	 $1,320,222 	 	 $761,476 	 	 $699,316 	 	 $11,789 	 	 $5,830,797 	

															
Year ended August 31, 2005	

 	 	Tweespalk	 	War Springs	 	Lakemount	 	LDI River	 	Shelby Lake	 	 Other	 	Total	
Acquisition costs	
of mineral rights	
   Balance, beginning of year	 $13,054 	 	 $86,986 	 	 $65,188 	 	 $540,532 	 	 $307,345 	 	 $594,120 	 	 $1,607,225 	
   Incurred during year	 10,159 	 	 16,846 	 	 71,585 	 	 -   	 	 -   	 	 204,398 	 	 302,988 	
   Less recoveries	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (55,000)	 	 (55,000)	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (494,660)	 	 (494,660)	
   Balance, end of year	 $23,213 	 	 $103,832 	 	 $136,773 	 	 $540,532 	 	 $307,345 	 	 $248,858 	 	 $1,360,553 	
Deferred exploration costs	
   Assays and geochemical	 $14,230 	 	 $306,401 	 	 $20,108 	 	 $-   	 	 $-   	 	 $113,024 	 	 $453,763 	
   Drilling	 -   	 	 458,680 	 	 1,300 	 	 -   	 	 -   	 	 519,886 	 	 979,866 	
   Geological	 91,147 	 	 283,859 	 	 119,241 	 	 39 	 	 885 	 	 94,221 	 	 589,392 	
   Geophysical	 2,551 	 	 9,352 	 	 5,678 	 	 -   	 	 -   	 	 134,942 	 	 152,523 	
   Maps, fees and licenses	 -   	 	 187 	 	 8,752 	 	 -   	 	 -   	 	 3,022 	 	 11,961 	
   Site administration	 98 	 	 17,496 	 	 13,873 	 	 -   	 	 -   	 	 10,637 	 	 42,104 	
   Travel	 2,328 	 	 9,584 	 	 16,055 	 	 44 	 	 -   	 	 29,114 	 	 57,125 	
 	 	 110,354 	 	 1,085,559 	 	 185,007 	 	 83 	 	 885 	 	 904,846 	 	 2,286,734 	
   Balance, beginning of year	 703,080 	 	 546,895 	 	 894,604 	 	 215,308 	 	 390,661 	 	 403,328 	 	 3,153,876 	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (479,634)	 	 (479,634)	
   Balance, end of year	 $813,434 	 	 $1,632,454 	 	 $1,079,611 	 	 $215,391 	 	 $391,546 	 	 $828,540 	 	 $4,960,976 	
Total Mineral Properties	 $836,647 	 	 $1,736,286 	 	 $1,216,384 	 	 $755,923 	 	 $698,891 	 	 $1,077,398 	 	 $6,321,529 	

Page 12

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES (continued)

(a)
Republic of South Africa

(i)
War Springs and Tweespalk

On June 3, 2002, the Company entered an option agreement whereby it may earn a 100% interest in the 2,396 hectare War Springs property and the 2,177 hectare Tweespalk property both located in the Northern Limb or Platreef area of the Bushveld Complex north of Johannesburg. Acquisition and exploration costs on these properties to August 31, 2006 total $3,037,933 (August 31, 2005 - $2,572,933).
 
The Company may purchase 100% of these mineral rights at any time within three years from the grant of a prospecting permit on each property for US$475 per hectare in year one, or US$570 per hectare in year two, or US$690 per hectare in year three. The Company must also pay prospecting fees to the vendors of US$2.50 per hectare in year one, US$2.75 per hectare in year two and US$3.25 per hectare in year three. Old Order prospecting permits were granted to the Company in August 2003 for the Tweespalk property and February 2004 for the War Springs property. The vendors retain a 1% NSR Royalty on the property, subject to the Company’s right to purchase the NSR at any time for US$1.4 million. A 5% finders’ fee applies to vendor payments.

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

Black Economic Empowerment groups Africa Wide Mineral Prospecting and Exploration (Pty) Limited and Taung Minerals (Pty) Ltd. each have been granted a 15% interest in the War Springs project carried to bankable feasibility.  The Company’s retains a net 70% project interest.

Africa Wide also has a 30% participating interest in the Tweespalk property.  The Company has not recorded a receivable for Africa Wide’s share of costs to date, which at August 31, 2006 are calculated to be $253,783 (August 31, 2005 - $250,994).  The Company expects that Africa Wide will be able to fund their share of costs in the future and amounts recovered from Africa Wide will be treated as a reduction of costs relating to the Tweespalk property.

Page 13

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES (continued)

(b)
Ontario

(i)
Agnew Lake

The Company has earned a 99% interest in certain claims located near Sudbury, Ontario known as the Agnew Lake property subject to a 2% royalty interest payable to the original vendor. The Company optioned the Agnew Lake property to Pacific Northwest Capital Corporation (“PFN”) on June 18, 2000. On June 22, 2001, the Company and PFN optioned their property interests to Kaymin Resources Limited (“Kaymin”), a subsidiary of Anglo American Platinum Corporation Limited. At August 31, 2004, the Company had directly performed $512,265 worth of exploration work and caused further work of approximately $3,140,805 to be performed through the joint venture arrangement with PFN and Kaymin.  At August 31, 2005 the project was not active and the Company wrote off its remaining investment in the property amounting to $276,852. Kaymin has vested as to a 26.17% interest in the property in accordance with the terms of their option agreement.  PFN has terminated their option on the property and retains no working interest.

(ii)
Lakemount

On November 6, 2003 the Company acquired an option to earn up to a 62% interest in the 3,017 hectare Lakemount property located near Wawa, Ontario. The Company may earn up to a 51% undivided property interest by completing $2.5 million in exploration and development expenditures ($1,098,649 incurred to August 31, 2006) and by making staged payments totalling $150,000 ($75,000 paid) and 150,000 common shares (50,000 issued) by December 31, 2008. The Company may acquire an additional 11% interest in the property by making a payment of $3.3 million to an underlying holder. The property is subject to NSR royalties ranging from 1.5% to 3.0% and a net sales royalty on precious stones of 1.5%, subject to buy-out and buy-down provisions.

(iii)
Lac des Iles River

On May 5, 2000, New Millennium entered into an option agreement to acquire a 50% interest in the Lac des Iles River property in exchange for payments of $38,500 over three years (paid) and the completion of exploration expenditures in the amount of $1,000,000 over five years, $548,952 of which has been incurred to August 31, 2006. The option agreement was amended January 27, 2005 to allow the Company an additional three years, to May 5, 2008, to meet its exploration commitments in exchange for making annual cash payments of $5,000 to May 5, 2008 and undertaking a minimum of $50,000 in annual exploration expenditures.

After year end, on October 6, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement as

Page 14

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

 
6.
MINERAL PROPERTIES (Continued)

(b)
Ontario (continued)

(iii)
Lac des Iles River (continued)

amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

(iv)
Moss Lake

On August 5, 2004 the Company optioned a 100% property interest in the Moss Lake property for optional cash payments of $85,000 over 3 years ($25,000 paid) and optional share payments of 40,000 common shares over 3 years. The property is subject to an underlying 3% NSR Royalty, from which the Company may buy-back 2.0% at a price of $500,000 per one-half percentage point bought back. The Company terminated the Moss Lake option as of August 31, 2006 resulting in a write-off of $158,855.

(v)
South Legris

In April 2000 the Company acquired an option to earn a 50% interest in 261 mineral claims located near Thunder Bay, Ontario known as the South Legris property in exchange for cash payments of $98,300 (paid) and the expenditure of $1,000,000 ($492,330 incurred) in exploration expenditures within 5 years of the date of the agreement. The Company terminated the option in 2004 and $587,369 in deferred costs related to the property were written off at August 31, 2004. The South Legris Option Agreement was later amended on January 27th, 2005 to allow the Company an additional three years to meet its exploration commitments in exchange for making annual cash payments of $5,000 to April 10, 2008 and undertaking a minimum of $50,000 in annual exploration expenditures.

After year end, on October 13, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

Page 15

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES (Continued)

(b)
Ontario (continued)

(vi)
Seagull

On September 24, 2004 the Company acquired an option to earn up to a 70% interest in the Seagull property located in the Nipigon region of Ontario. The Company could earn an initial 50% property interest by completing certain exploration expenditures and cash payments over 5 years.  The Company could earn an additional 20% property interest by completing a bankable feasibility study and providing or arranging production financing. The Company terminated the Seagull option as of February 28, 2006 resulting in a write-off of $785,288.

(vii)
Shelby Lake

On June 28, 2000, New Millennium entered into an option agreement to earn up to 60% interest in the Shelby Lake property, located in the Lac des Iles area. To earn a 50% interest the Company was required to make cash payments of $10,000 (paid), issue 30,303 shares (issued) and complete $500,000 in exploration expenditures over a four-year period. To August 31, 2006 the Company had incurred costs of $565,869 and elected under the option agreement to form a 50/50 joint venture with the property vendor.  Amounts already spent by the Company in excess of $500,000 where repayable to the Company by the property vendor, or would be applied to dilute the vendor’s working interest in the property.

After year end, on October 18, 2006, the Company and the property vendor entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property for a one-time payment of $5,000 subject only to an underlying 2.0% Net Smelter Return Royalty, of which the Company may buy back one half for $500,000.

(c)
Write-down of mineral properties

During the year the carrying values of certain mineral properties of the Company were determined to be impaired, resulting in a write-off in the amount of $1,174,325 (2005 - $974,294)

(d)
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.

Page 16

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

7.
FIXED ASSETS

 	  August 31, 2006  	
 	 	 	 	Accumulated  	 	Net Book  	
 	 	Cost  	 	Amortization  	 	Value  	
Computer equipment and software  	$  	316,385  	$  	164,931  	$  	151,454  	
Leasehold improvements  	 	29,907  	 	15,894  	 	14,013  	
Office furniture and equipment  	 	120,471  	 	45,688  	 	74,783  	
 	$  	466,763  	$  	226,513  	$  	240,250  	
  		
 	  August 31, 2005  	
 	 	 	 	Accumulated  	 	Net Book  	
 	 	Cost  	 	Amortization  	 	Value  	
Computer equipment and software  	$  	223,983  	$  	103,650  	$  	120,333  	
Leasehold improvements  	$  	22,970  	$  	7,345  	$  	15,625  	
Office furniture and equipment  	 	75,418  	 	22,268  	 	53,150  	
 	$  	322,371  	$  	133,263  	$  	189,108  	

 
8.
SHARE CAPITAL

(a)
Authorized

Unlimited common shares without par value

(b)
Issued and outstanding

At August 31, 2006 there were 53,691,178 shares outstanding.

During the year ended August 31, 2006:

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

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

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

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

Page 17

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

 

8.
SHARE CAPITAL (Continued)

(b)
Issued and outstanding (continued)

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

During the year ended August 31, 2005:

(vi)
the Company issued 25,000 common shares in connection with the acquisition of mineral properties at a fair value of $28,000.

(vii)
2,469,949 share purchase warrants were exercised for proceeds of $2,272,462 and 903,000 stock options were exercised for proceeds of $508,850.

(viii)
the Company closed brokered private placements for gross proceeds of $6,259,900 on April 14, 2005. Proceeds of $259,901 were from the sale of 173,267 flow-through shares at $1.50 per share and $6,000,000 was from the sale of 5,000,000 non-flow-through units at $1.20 per unit. Each non-flow-through unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to purchase an additional common share until October 14, 2006 at a price of $1.50 per share. Agent’s fees amounted to 7.0% of gross proceeds, which totalled $438,193, which was paid in cash. The Agents’ legal and other costs totalling $24,229 were paid by the Company. The Company paid $47,000 to its lawyers for legal costs relating to the private placement, $20,000 for consulting services, and $29,500 as a filing fee. The Agents also received 517,327 compensation options exercisable into common shares of the Company at a price of $1.50 per share until October 14, 2006.

During the year ended August 31, 2004:

(ix)
The Company issued 10,909 common shares in connection with the acquisition of mineral properties at a fair value of $3,600.

(x)
1,747,032 share purchase warrants were exercised for proceeds of $1,428,407 and 132,000 stock options were exercised for proceeds of $59,200.

(xi)
the Company completed a private placement for total proceeds of $2,040,000 through the issuance of 2,400,000 units at a price of $0.85 per unit. Each unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable into one common share of the Company at a price of $1.10 until October 31, 2004.

Page 18

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

8.
SHARE CAPITAL (Continued)

(b)
Issued and outstanding (continued)

(xii)
the Company closed brokered private placements for gross proceeds of $2,721,555 on July 14, 2004. Proceeds of $1,267,200 were from the sale of 1,056,000 flow-through shares at $1.20 per share and $1,454,355 was from the sale of 1,385,100 non-flow-through units at $1.05 per unit. Each non-flow-through unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to purchase an additional common share until January 14, 2006 at a price of $1.35 per share. Agent’s fees amounted to 8.0% of gross proceeds. Of this amount $188,842 was paid in cash and $26,362 was paid by way of 25,107 non-flow-through units of the offering at the issue price of $1.05 per unit. The Agents’ legal and other costs totalling $42,535 were paid by the Company. The Company paid $36,409 in legal costs relating to the private placement. The Agents also received 241,110 compensation options exercisable into common shares of the Company at a price of $1.20 per share until July 14, 2005.

(c)
Incentive stock options

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

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

Page 19

 
Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

 		 	 	Weighted  	
 		 	 	Average  	
 	Number	 	 	Exercise  	
 	of Shares	 	 	Price  	
Options outstanding at August 31, 2003  	2,267,000	 	 	0.53  	
    Granted  	590,000	 	 	1.04  	
    Exercised  	(132,000	)  	 	0.45  	
    Cancelled  	(300,000	)  	 	0.60  	
Options outstanding at August 31, 2004  	2,425,000	 	 	0.65  	
    Granted  	2,046,000	 	 	1.02  	
    Exercised  	(903,000	)  	 	0.56  	
    Cancelled  	(155,000	)  	 	1.05  	
Options outstanding at August 31, 2005  	3,413,000	 	 	0.88  	
    Granted  	220,000	 	 	1.79  	
    Exercised  	(164,500	)  	 	0.72  	
    Cancelled  	(183,125	)  	 	0.97  	
Options outstanding at August 31, 2006  	3,285,375	 	$  	0.94  	

Page 20

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

8.
SHARE CAPITAL (Continued)

(c)
Incentive stock option agreement (continued)

 	 	Number  	Average  	Number  	
 	 	Outstanding at  	Remaining  	Exercisable at  	
 	Exercise  	August 31,  	Contractual  	August 31,  	
 	Price  	2006  	Life (Years)  	2006  	
$  	0.35  	335,000  	0.52  	335,000  	
 	0.50  	295,000  	1.75  	295,000  	
 	0.55  	30,000  	0.52  	30,000  	
 	0.70  	132,000  	2.05  	132,000  	
 	0.75  	75,000  	0.87  	75,000  	
 	1.00  	1,635,375  	3.47  	1,590,375  	
 	1.05  	50,000  	3.92  	50,000  	
 	1.10  	332,500  	3.28  	332,500  	
 	1.15  	90,000  	3.99  	90,000  	
 	1.18  	50,000  	3.21  	50,000  	
 	1.44  	50,000  	2.28  	50,000  	
 	1.45  	15,000  	4.40  	15,000  	
 	1.50  	20,500  	4.36  	20,500  	
 	1.85  	115,000  	4.80  	-  	
 	1.92  	60,000  	4.84  	-  	
 	 	3,285,375  	2.93  	3,065,375  	

(i)
During the year ended August 31, 2006 the Company granted 220,000 stock options to employees. The Company has recorded $110,176 of compensation expense relating to stock options granted in this year.

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

 	Aug. 31, 2006	 	
Risk-free interest rate  	4.26	 	
Expected life of options  	3.50	 	
Annualized volatility  	85.21	 	
Dividend rate  	0.00	%  	

Page 21

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

8.
SHARE CAPITAL (Continued)

(ii)
During the year ended August 31, 2005 the Company granted 2,046,000 stock options to directors, officers, employees and consultants, (30,000 of which were cancelled during the same period). The Company has recorded $1,283,289 of compensation expense relating to stock options granted during the year. The stock-based compensation expense was determined using the Black-Scholes option pricing model and the following weighted average assumptions:

 	August 31, 2005	 	
Risk-free interest rate  	2.93	 	
Expected life of options  	3.50	 	
Annualized volatility  	94	%  	
Dividend rate  	0.00	%  	

(iii)
During the year ended August 31, 2004, the Company granted 75,000 stock options to consultants and 515,000 stock options to employees. The Company recorded compensation expense of $92,881 relating to the stock options granted to consultants.  No compensation expense was recorded for those granted to employees.  (Note 2.(f))

(d)
Share purchase warrants
 
 		 	 	Weighted  	
 		 	 	Average  	
 	Number of	 	 	Exercise  	
 	Warrants	 	 	Price  	
Balance at August 31, 2003  	3,016,981	 	$  	0.79  	
Issued to private placement placees (Note 7 (b) (x) and (xi))  	1,892,550	 	 	1.19  	
Issued to agents on brokered financing (Note 7 (b) (xi))  	253,663	 	 	1.21  	
Exercised and converted to common shares  	(1,747,032	)  	 	0.82  	
Balance at August 31, 2004  	3,416,162	 	 	1.03  	
Issued to private placement placees (Note 7 (b) (vii))  	2,500,000	 	 	1.50  	
Issued to agents on brokered financing (Note 7 (b) (vii))  	517,327	 	 	1.50  	
Expired during the period  	(241,110	)  	 	1.20  	
Exercised and converted to common shares  	(2,469,949	)  	 	0.92  	
Balance at August 31, 2005  	3,722,430	 	$  	1.47  	
Issued to private placement placees (Note 7 (b) (iii, iv and v))  	4,750,000	 	 	1.96  	
Expired during the period  	(150,000	)  	 	1.35  	
Exercised and converted to common shares  	(843,047	)  	 	1.40  	
Balance at August 31, 2006  	7,479,383	 	$  	1.79  	

				
Warrant expiry dates:	October 14, 2006	2,729,383	$1.50	
 	March 31, 2007	2,800,000	2.10	
 	April 13, 2007	747,000	1.75	
 	April 14, 2007	203,000	1.75	
 	April 21, 2007	150,000	1.75	
 	March 6, 2008	850,000	1.75	

Page 22

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

9.
CONTRIBUTED SURPLUS

The following table summarizes the Company’s Contributed Surplus:

 	 	 	
 	 	 	
 	 	Contributed	
 	 	Surplus	
Balance at August 31, 2004	$134,932 	
Retroactive accounting change for stock options	 318,000 	
Stock options granted during the year	 1,283,289 	
Stock options exercised during the year	 (13,023)	
Balance at August 31, 2005	 1,723,198 	
Stock options granted during the year	 110,176 	
Stock options exercised during the year	 (47,669)	
Balance at August 31, 2006	$1,785,705 	

10.
RELATED PARTY TRANSACTIONS

Transactions with related parties are as follows:

(a)
Management, salary and consulting fees of $354,710 (2005 - $278,401, 2004 - $249,253) were incurred with directors during the year. At August 31, 2006, $7,600 was included in accounts payable (2005 - $Nil).

(b)
The Company received $135,340 (2005 - $134,757, 2004 - $152,353) during the year from MAG Silver Corp. (“MAG”), a company with certain common directors and a common officer, under the terms of a 2003 service agreement for administrative services.  Accounts receivable at the end of the year include an amount of $39,738 due from MAG.

(c)
During the period the Company accrued or received payments of $27,300 (2005 - $39,000, 2004 - $Nil) from Sydney Resource Corporation, a company with certain common directors and a common officer, for administrative services.  Subsequent to year end SYR was reorganized and named West Timmins Mining Inc. (“WTM”).  The amount received was net of a credit adjustment of $19,500 in recognition of WTM’s relative inactivity in the first three quarters of calendar 2005.  Accounts receivable at the end of the year include an amount of $15,349 due from WTM.

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.

Page 23

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

11.
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:

 	 	2006	 	 	2005	 	
Statutory tax rates  	 	36	%  	 	36	%  	
Recovery of income taxes computed at statutory rates  	$  	1,391,802	 	$  	1,657,420	 	
Effect of lower tax rates in foreign jurisdictions  	 	(55,932	)  	 	(34,701	)  	
Tax losses not recognized in the period that the  	 		 	 		 	
benefit arose  	 	(1,335,870	)  	 	(829,719	)  	
Future income tax recovery  	$  	-	 	$  	793,000	 	

The approximate tax effect of the temporary differences that gives rise to the Company’s future income tax assets and liability are as follows:
 
 	 	2006	 	 	2005	 	
Future income tax assets  	 		 	 		 	
    Operating loss carryforwards  	$  	2,834,397	 	$  	2,599,980	 	
    Fixed assets  	 	34,143	 	 	12,875	 	
    Mineral properties  	 	783,875	 	 	72,993	 	
    Share issuance costs  	 	386,483	 	 	287,579	 	
Valuation allowance on future income tax assets  	 	(4,038,898	)  	 	(2,973,427	)  	
 	$  	-	 	$  	-	 	

The Company has Canadian non-capital loss carryforwards available to offset future taxable income in the amount of approximately $7.2 million, which expire at various dates from 2006 to 2026.

The Company has South African non-capital loss carryforwards available to offset future taxable income in the amount of approximately $1.5 million, which do not expire, subject to business continuity.

12.
CONTINGENCIES AND COMMITMENTS

The Company’s minimum payments under its office and equipment lease agreements, which it has entered into for the years ending on August 31, as well as its South African subsidiary commitments, are as follows as at August 31, 2006.
 
2007  	 	149,372  	
2008  	 	84,101  	
2009  	 	92,730  	
2010  	 	51,620  	
 	$  	377,823  	

Page 24

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

13.
SUPPLEMENTARY CASH FLOW INFORMATION

(a)
Net change in non-cash working capital

 	 	Year ended	 	 	Year ended	 	 	Year ended	 	
 	 	August 31,	 	 	August 31,	 	 	August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 	
Amounts receivable  	$  	(50,934	)  	$  	(102,923	)  	$  	(164,724	)  	
Prepaid expenses and other  	 	(10,573	)  	 	(36,673	)  	 	7,918	 	
Accounts payable  	 	184,819	 	 	(280,358	)  	 	490,347	 	
 	$  	123,312	 	$  	(419,954	)  	$  	333,541	 	

(b)
Cash and cash equivalents

Cash and cash equivalents consist of the following:

 	 	Aug. 31, 2006  	 	Aug. 31, 2005  	 	Aug. 31, 2004  	
Cash  	$  	1,666,801  	$  	693,661  	$  	273,176  	
Short-term deposits  	 	8,400,000  	 	2,056,800  	 	2,150,000  	
 	$  	10,066,801  	$  	2,750,461  	$  	2,423,176  	

14.
SEGMENTED INFORMATION

The Company operates in one operating segment, that being exploration on mineral properties. Investment in joint ventures, fixed assets, capitalized costs for mineral rights and deferred exploration relate to properties situated as follows:

 	 	August 31,  	 	August 31,  	
 	 	2006  	 	2005  	
Canada  	$  	2,872,433  	$  	3,717,075  	
South Africa  	 	14,028,702  	 	8,563,582  	
 	$  	16,901,135  	$  	12,280,657  	

Page 25

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
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 material differences between Canadian and US GAAP affecting the Company’s consolidated financial statements are summarized as follows:

Consolidated Balance Sheet

 	 	2006	 	 	2005	 	
Total assets under Canadian GAAP  	$  	27,664,441	 	$  	15,705,187	 	
Decrease in mineral properties due to expensing  	 		 	 		 	
    of exploration costs (a)  	 	(4,602,022	)  	 	(4,960,976	)  	
Decrease due to lower equity interest in WBJV (b)  	 	(9,044,296	)  	 	(3,965,094	)  	
Marketable securities (e)  	 	354,000	 	 	20,625	 	
Total assets under US GAAP  	$  	14,372,123	 	$  	6,799,742	 	
Total liabilities under Canadian GAAP  	$  	2,149,153	 	$  	2,026,131	 	
Liability relating to issuance of flow-through shares (c)  	 	24,758	 	 	30,264	 	
 	 	2,173,911	 	 	2,056,395	 	
Shareholders' equity under Canadian GAAP  	 	25,515,288	 	 	13,679,056	 	
Cumulative mineral properties adjustment (a), (c)  	 	(4,602,022	)  	 	(4,960,976	)  	
Cumulative equity adjustment for WBJV (b)  	 	(9,590,176	)  	 	(3,965,094	)  	
Liability recorded upon issuance of flow-through shares (c)  	 	(24,758	)  	 	(30,264	)  	
Cumulative translation adjustment (b)  	 	545,880	 	 	-	 	
Marketable securities (e)  	 	354,000	 	 	20,625	 	
Shareholders' equity under US GAAP  	 	12,198,212	 	 	4,743,347	 	
Total liabilities and shareholders' equity under US GAAP  	$  	14,372,123	 	$  	6,799,742	 	

Page 26

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Consolidated Statement of Loss and Deficit

 	 		 	 		 	 		 		Cumulative	 	
 	 		 	 		 	 		 		from	 	
 	 		 	 		 	 		 		March 16,	 	
 	 	Year ended	 	 	Year ended	 	 	Year ended	 		2000	to  	
 	 	August 31,	 	 	August 31,	 	 	August 31,	 		August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 		2006	 	
Net loss under Canadian GAAP  	$  	(3,853,273	)  	$  	(3,795,648	)  	$  	(2,242,627	)  	$	(13,664,804	)  	
Mineral property costs  	 		 	 		 	 		 			 	
    written off (a)  	 	1,174,325	 	 	974,294	 	 	1,044,542	 		5,099,746	 	
Acquisition costs included  	 		 	 		 	 		 			 	
    in write off (a)  	 	(339,339	)  	 	(494,660	)  	 	(450,217	)  		(2,099,839	)  	
Adjustment for equity loss on WBJV (b)  	 	(4,998,447	)  	 	(3,023,125	)  	 	-	 		(8,021,572	)  	
Mineral property exploration  	 		 	 		 	 		 			 	
    expenditures (a)  	 	(476,032	)  	 	(2,286,735	)  	 	(2,711,412	)  		(8,543,900	)  	
Future income taxes (c)  	 	5,506	 	 	(660,574	)  	 	(190,242	)  		(1,138,095	)  	
Consulting (d)  	 	-	 	 	-	 	 	-	 		(287,250	)  	
Variable Stock based compensation (d)  	 	(50,200	)  	 	37,800	 	 	(125,510	)  		(175,200	)  	
Stock based compensation for  	 		 	 		 	 		 			 	
    employees and directors (d)  	 	-	 	 	1,136,055	 	 	-	 		1,136,055	 	
Write-down of "available for  	 		 	 		 	 		 			 	
    sale" securities (e)  	 	-	 	 	-	 	 	-	 	 	18,450	 	
Net loss under US GAAP  	$  	(8,537,460	)  	$  	(8,112,593	)  	$  	(4,675,466	)  	$	(27,676,409	)  	
Basic loss per share  	 		 	 		 	 		 			 	
    under US GAAP  	$  	(0.18	)  	$  	(0.21	)  	$  	(0.15	)  	 	 	 	

Page 27

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Consolidated Statement of Cash Flows

 	 		 	 		 	 		 		Cumulative	 	
 	 		 	 		 	 		 		from	 	
 	 		 	 		 	 		 		March 16,	 	
 	 	Year ended	 	 	Year ended	 	 	Year ended	 		2000 to		
 	 	August 31,	 	 	August 31,	 	 	August 31,	 		August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 		2006	 	
Operating activities  	 		 	 		 	 		 			 	
    Operating activities under  	 		 	 		 	 		 			 	
        Canadian GAAP  	$  	(2,356,261	)  	$  	(2,591,906	)  	$  	(1,179,125	)  	$	(8,426,394	)  	
    Deferred exploration (a)  	 	(4,979,915	)  	 	(4,219,624	)  	 	(2,711,412	)  	 	(14,846,896	)  	
Operating activities  	 		 	 		 	 		 			 	
    under US GAAP  	$  	(7,336,176	)  	$  	(6,811,530	)  	$  	(3,890,537	)  	$	(23,273,290	)  	
Financing activity  	 		 	 		 	 		 			 	
    Financing activities under  	 		 	 		 	 		 			 	
    Canadian and US GAAP  	$  	16,195,032	 	$  	8,468,898	 	$  	5,981,397	 	$	37,951,355	 	
Investing activities  	 		 	 		 	 		 			 	
    Investing activities under  	 		 	 		 	 		 			 	
        Canadian GAAP  	$  	(6,522,431	)  	$  	(5,549,707	)  	$  	(3,373,746	)  	$	(19,458,160	)  	
    Deferred exploration (a)  	 	4,979,915	 	 	4,219,624	 	 	2,711,412	 	 	14,846,896	 	
Investing activities  	 		 	 		 	 		 			 	
    under US GAAP  	$  	(1,542,516	)  	$  	(1,330,083	)  	$  	(662,334	)  	$	(4,611,264	)  	

(a)
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 capital assets.  Under US GAAP, exploration expenditures on mineral property costs can only be deferred subsequent to the establishment of mining reserves.  For US GAAP purposes the Company has expensed exploration expenditures in the period incurred. During the year ended August 31, 2006 and 2005 the Company incurred $4,998,447 and $3,023,125 respectively in exploration expenditures on behalf of the WBJV and recorded a share of equity loss from the WBJV of a corresponding amount (Note 15.b). The Company believes that these cash expenditures under U.S. GAAP are also more appropriately classified as cash operating activities as they were funded by the Company in the respective periods.

(b)
Investment in WBJV

Under Canadian and U.S. GAAP the Company accounts for this investment using the equity method. Under U.S. GAAP the equity loss from the investment is higher as WBJV expenses exploration expenses under U.S. GAAP, whereas under Canadian GAAP these expenditures are capitalized in WBJV.

Page 28

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(c)
Flow-through shares

Under Canadian GAAP, flow-through shares are recorded at their face value, net of related issuance costs.  When eligible expenditures are made, the carrying value of these expenditures may exceed their tax value due to the renunciation of the tax benefit by the Company.  The tax effect of this temporary difference is recorded as a cost of issuing the shares.

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

Furthermore, under US GAAP, the amounts received through the issuance of flow-through shares and not yet expended on the related mineral exploration costs are separately classified as restricted cash.  Such amounts unexpended at August 31, 2006 and 2005 totalled approximately $123,790 and $150,917, respectively.

(d)
Accounting for stock-based compensation

On September 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123 (R)), which requires the recognition of compensation expense for all share-based payment awards. SFAS 123 (R) requires the Company to measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award will be recognized over the period during which services are provided in exchange for the award, generally the vesting period. The Company adopted SFAS 123 (R) using the modified prospective transition method. Under this method, compensation expense recognition provisions are applicable to new awards and to any awards modified, repurchased or cancelled after the adoption date. Additionally, for any unvested awards outstanding at the adoption date, compensation cost is recognized over the remaining service period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Prior periods are not restated for comparative purposes.

During the year ended August 31, 2006, the Company recognized $110,176 in stock-based compensation expense or $0.01 per share.

Page 29

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(d)
Accounting for stock-based compensation (continued)

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

 	Aug. 31, 2006	 	
Risk-free interest rate  	4.26	 	
Expected life of options  	3.50	 	
Annualized volatility  	85.21	 	
Dividend rate  	0.00	%  	

Prior to the adoption of SFAS 123 (R), the Company recognized stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 (APB 25) “Accounting for Stock Issued to Employees” and applied the disclosure provisions of SFAS 123, “Accounting for Stock-Based Compensation” as if the Company had applied the fair value method to measuring stock- based compensation expense. If the Company had accounted for stock-based compensation in accordance with the fair value method as prescribed by SFAS 123, net loss per share for the years ended August 31, 2005 and 2004 would have been:    

 	 	Year ended	 	 	Year ended	 	
 	 	August 31,	 	 	August 31,	 	
 	 	2005	 	 	2004	 	
Net loss, as originally reported  	$  	(8,112,593	)  	$  	(4,675,466	)  	
Adjustments:  	 		 	 		 	
    Additional stock-based employee compensation expense  	 		 	 		 	
    under fair value based method for all awards  	 	(1,136,055	)  	 	(250,000	)  	
Net loss, adjusted  	$  	(9,248,648	)  	$  	(4,925,466	)  	
Basic and diluted net income per share, as reported  	$  	(0.21	)  	$  	(0.15	)  	
Basic and diluted net loss per share, adjusted  	$  	(0.23	)  	$  	(0.16	)  	

FASB Interpretation 44 states that when fixed stock option awards to employees and directors are modified, the stock options must be accounted for as variable from the date of modification to the date the stock options are exercised, forfeited or expire unexercised.

Consequently, 65,000 stock options issued to employees and directors that were repriced on March 6, 2002 are now considered to be variable and any increase in the market price over the reduced exercise price must be recognized as compensation cost.  As at August 31, 2006, the market price of the Company’s common shares was $1.80 per share (2005 - $1.15) resulting in compensation (recovery) expense of $50,200 (2005 - $(37,800); 2004 - $125,510).

Page 30

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(e)
Comprehensive income

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, Reporting Comprehensive Income , which 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,	 	
 	 	2006	 	 	2005	 	 	2004	 	
Net loss under US GAAP  	$  	(8,537,460	)  	$  	(8,112,593	)  	$  	(4,675,466	)  	
Other comprehensive income:  	 		 	 		 	 		 	
    Unrealized gain (loss) on  	 		 	 		 	 		 	
marketable securities  	 	333,375	 	 	(289,000	)  	 	243,625	 	
    Translation adjustment  	 	(112,501	)  	 	-	 	 	-	 	
    Other  	 	-	 	 	-	 	 	(87,999	)  	
Comprehensive net loss  	 		 	 		 	 		 	
    under US GAAP  	$  	(8,316,586	)  	$  	(8,401,593	)  	$  	(4,519,840	)  	
Comprehensive loss per share  	$  	(0.18	)  	$  	(0.21	)  	$  	(0.14	)  	

(f)
Accounting for derivative instruments and hedging activities

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities , which standardizes the accounting for derivative instruments.  SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999.  The Company does not engage in hedging activities or invest in derivative instruments.  Therefore, adoption of SFAS No. 133 has no significant financial impact.

(g)
Recent accounting pronouncements

In March 2004, the Emerging Issues Task Force (“EITF”) issued EITF 04-3, Mining Assets: Impairment and Business Combinations .  EITF 04-3 requires mining companies to consider cash flows related to the economic value of mining assets (including mineral properties and rights) beyond those assets proven and probable reserves, as well as anticipated market price fluctuations, when assigning value in a business combination in accordance with SFAS 141 and when testing the mining assets for impairment in accordance with SFAS 144.  The consensus is effective for fiscal periods beginning after March 31, 2004. The adoption of EITF 04-3 did not have a material impact on the Company’s financial position, results of operations or cash flows.

Page 31

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(g)
Recent accounting pronouncements (continued)

On March 30, 2005, the FASB ratified the consensus of the Emerging Issues Task Force (“EITF”) of the FASB Issue 04-6 that stripping costs incurred during the production phase of a mine are variable production costs that should be included in the costs of the inventory produced during the period that the stripping costs are incurred.  This consensus is effective for the first reporting period in fiscal years beginning after December 15, 2005, with early adoption permitted.  The consensus can be adopted either prospectively through a cumulative-effect adjustment or retrospectively by restating prior period financial statements.  The Company will apply this consensus on its results of operations, financial position and cash flows if and when commercial production commences.

In September 2005, the EITF reached a consensus on Issue No. 04-13, Accounting for Purchases and Sales of Inventory with the Same Counterparty (EITF 04-13). The EITF concluded that entities that enter into inventory purchase and sales transactions with the same counterparty, in contemplation of one another, should combine the transactions and treat them as non-monetary exchanges involving inventory. The consensus is effective for new inventory arrangements entered into, or modifications or renewals of existing inventory arrangements occurring, in interim or annual reporting periods beginning after March 15, 2006. The adoption of EITF 04-13 did not have any impact on the Company’s operating results or financial positions.

In February 2006, the FASB issued Statement of Financial Accounting Standard No. 155, Accounting for Certain Hybrid Financial Instrument (SFAS 155), an amendment of SFAS 140 and SFAS 133. SFAS 155 permits the Company to elect to measure any hybrid financial instrument at fair value (with changes in fair value recognized in earnings) if the hybrid instrument contains an embedded derivative that would otherwise be required to be bifurcated and accounted for separately under SFAS 133. The election to measure the hybrid instrument at fair value is made on an instrument-by-instrument basis and is irreversible. This Statement will be effective for all instruments acquired, issued, or subject to a remeasurement event occurring after the beginning of the Company’s first fiscal year that begins after September 15, 2006. The Company expects that the adoption of SFAS 155 will have no impact on its operating results or financial position.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). This interpretation clarifies the recognition threshold and measurement of a tax position taken on a tax return, and requires expanded disclosure with respect to the uncertainty in income taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact that adoption of FIN 48 will have on its financial condition or results of operations.

Page 32

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(g)
Recent accounting pronouncements (continued)

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157). This statement defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements.  SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company expects that adoption of SFAS 157 will not have a material effect on its financial condition or results of operation.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statement No. 87, 88, 106 and 132R” (SFAS 158). This Statement requires an employer to recognize in its statement of financial position an asset of a plan’s over funded status or a liability for a plan’s under funded status, measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions), and recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. The Company expects that adoption of SFAS 158 will have no impact on its financial condition or results of operations.

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 permits existing public companies to record the cumulative effect of initially applying this approach in the fiscal year ending after November 15, 2006 by recording necessary correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings.  The Company expects that adoption of SAB 108 will not have a material impact on its financial condition and results of operations.

16.
SUBSEQUENT EVENTS

Subsequent to August 31, 2006, 2,515,069 common shares were issued pursuant to the exercise of 2,433,194 warrants at a price of $1.50 per share, 50,000 stock options at a price of $1.10 per share, and 31,875 stock options at a price of $1.00 per share, for aggregate proceeds of $3,736,665.

There are other subsequent events disclosed elsewhere in the notes to the consolidated financial statements.

Page 33

 

 

Platinum Group Metals Ltd.
(Development Stage Company)
Supplementary Information and MD&A
For the year ended August 31, 2006

Filed: November 29, 2006

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

MANAGEMENT DISCUSSION AND ANALYSIS
1.
DESCRIPTION OF BUSINESS

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. (“Old Platinum”) and New Millennium Metals Corporation (“New Millennium”). The Company is an exploration and development company conducting work primarily on mineral properties it has staked or acquired by way of option agreement in Ontario, Canada and the Republic of South Africa. The Company has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The Company defers all acquisition, exploration and development costs related to mineral properties. The recoverability of these amounts is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of the property, and any future profitable production, or alternatively upon the Company’s ability to dispose of its interests on an advantageous basis.

2.
DISCUSSION OF OPERATIONS AND FINANCIAL CONDITIONS

a)
Results of Operations
The Company has been very active on projects in South Africa during the year. The Company’s Canadian projects were not active. During the year the Company incurred a net loss of $3,853,273 (2005 - $3,795,648). Before a non-cash charge for stock based compensation of $110,176 (2005 - $1,283,289) and mineral property costs written off of $1,174,325 (2005 - $974,294), general and administrative expenses totaled $2,808,715 (2005 - $2,466,085). Interest, other income and recoveries amounted to $235,236 (2005 - $218,373). Global exploration expenditures during the period totaled $5,474,479 (2005 - $5,309,859), of this $4,998,447 was for the WBJV project (2005 - $3,023,125) and $476,032 for other exploration (2005 - $2,286,734).

On October 27, 2004, the Company announced the formation of the Western Bushveld Joint Venture (“WBJV”) with Anglo Platinum Limited and Africa Wide Mineral Prospecting and Exploration (Pty) Limited. Work commenced immediately thereafter on the project and the rate of work has accelerated since then. Activities consist of research and data review, prospecting, mapping, engineering and drilling of the project area. At the time of writing there are 5 diamond drills turning on WBJV properties.  The Company is in the process of completing a pre-feasibility study for the Project 1 area of the WBJV. In August of 2005 the Company completed an engineering review, a statement of inferred resources, and Preliminary Assessment for the Project 1 area on the WBJV in compliance with Canadian National Instrument 43-101. Later, on December 12, 2005, again on March 2, 2006, and finally on September 15, 2006 the Company published updated resource estimates for the WBJV (see the September 15, 2006 resource statement below).

During the fourth quarter the Company incurred a loss of $1,200,351 (2005 - $62,634). General and administrative expenses totaled $849,740 (2005 - $637,195) while interest, other income and recoveries was $100,991 (2005 - $87,850). Global exploration expenditures during the quarter totaled $676,555 (2005 - $1,462,287)

The Company has increased its general level of activity in the past three years in South Africa. Activities in Canada have been reduced, as the more advanced nature of the WBJV project has caused it to become an investment focus for the Company. The Company still actively reviews many potential property acquisitions in the normal course of business. The Company also makes efforts to raise its profile and liquidity in the capital markets.

The following tables set forth selected financial data from the Company’s Audited Financial Statements and should be read in conjunction with these financial statements.

 	Year ended
Aug. 31, 2006	Year ended
Aug. 31, 2005	Year ended
Aug. 31, 2004	
Interest & other income	$235,236	$218,373	$430,106	
Net Income (Loss)	($3,853,273)	($3,795,648)	($2,242,627)	
Net Income (Loss) per Share	($0.08)	($0.10)	($0.07)	
Total Assets	$27,664,441	$15,705,187	$9,134,019	
Long Term Debt	Nil	Nil	Nil	
Dividends	Nil	Nil	Nil	
The following table sets forth selected quarterly financial information for each of the last eight (8) quarters.

Quarter Ending	Revenue (interest & other income)	Net Loss	Net Loss per share	
August 31, 2006	$100,991	($1,200,351)	($0.02)	
May 31, 2006	$55,062	($515,092)	($0.01)	
February 28, 2006	$53,234	($1,447,883)	($0.03)	
November 30, 2005	$25,949	($689,947)	($0.02)	
August 31, 2005	$87,850	($62,634)	($0.00)	
May 31, 2005	$44,993	($975,865)	($0.03)	
February 28, 2005	$47,089	($2,157,952)	($0.05)	
November 30, 2004	$38,441	($599,197)	($0.02)	

The Company has not declared nor paid dividends on its common shares. The Company has no present intention of paying dividends on its common shares, as it anticipates that all available funds will be invested to finance the growth of its business.

b)
Trend Information
Other than the financial obligations as set out in the table provided at item 5 below, there are no identifiable trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, the Company’s liquidity either increasing or decreasing at present or in the foreseeable future. The Company will require sufficient capital in the future to meet its acquisition payments and other obligations under mineral property option agreements for those properties it considers worthy to incur continued holding and exploration costs upon. The need to make such payments is a trend as it is unlikely that all such obligations will be eliminated from the Company’s future business activities. The Company intends to utilize its cash on hand in order to meet its obligations under mineral property option agreements. It is unlikely that the Company will generate sufficient operating cash flow to meet all of these ongoing obligations in the foreseeable future. Accordingly, the Company will likely need to raise additional capital by issuance of equity within the next year. At this time the Company has no plan or intention to issue any debt in order to raise capital for future requirements; however, the Company is working to complete a bankable feasibility study for the Project 1 area of the WBJV in 2007. If a production decision is taken by the WBJV upon completion of that study, the Company will likely pursue debt financing for a portion of its share of the capital requirements for that project.

At the time of writing there is a noted favourable trend with regard to the market for metal commodities and related products, however, it is the opinion of the Company that its own liquidity will be most affected by the results of its own acquisition, exploration and development activities. The acquisition or discovery of an economic mineral deposit on one of its mineral properties may have a favourable effect on the Company’s liquidity, and conversely, the failure to acquire or find one may have a negative effect.

c)
Risk Factors
The following is a brief discussion of those distinctive or special characteristics of the Company’s operations and industry that may have a material impact on, or constitute risk factors in respect of, the Company’s future financial performance.

The Company, and thus the securities of the Company, should be considered a highly speculative investment and investors should carefully consider all of the information disclosed in this Annual Report prior to making an investment in the Company. In addition to the other information presented in this management discussion and analysis, the following risk factors should be given special consideration when evaluating an investment in the Company’s securities.

General
Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits, which, though present, are insufficient in quantity and quality to return a profit from production.

The Company’s business is subject to exploration and development risks
All of the Company’s properties are in the exploration stage of development and no known reserves have been discovered on such properties. There is no certainty that the expenditures to be made by the Company or its joint venture partners in the exploration of its properties described herein will result in discoveries of precious metals in commercial quantities, or that any of the Company’s properties will be developed. Most exploration projects do not result in the discovery of precious metals and no assurance can be given that any particular level of recovery of precious metals will in fact be realized or that any identified resource will ever qualify as a commercially mineable (or viable) resource which can be legally and economically exploited. Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permit regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of precious metals ultimately discovered may differ from that indicated by drilling results. There can be no assurance that precious metals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale.

Political and economic instability may affect the Company’s business
The Company’s activities in Canada and South Africa are subject to risks common to operations in the mining industry. South Africa has recently undergone significant change in its government since the free elections in 1994. At present, Mining Legislation in South Africa is undergoing change. The new Mineral and Petroleum Resources Development Act became law on May 1, 2004. The regulation and operation of this new law is still being implemented. In association with the new Act, the Mining Charter sets out a target of 26% ownership and participation in the mineral industry by “Historically Disadvantaged Persons” within ten years, but the mechanisms to fully affect this objective are still evolving. Accordingly, all laws may be considered relatively new, resulting in risks related to the possible misinterpretation of new laws, unilateral modification of mining or exploration rights, operating restrictions, increased taxes, environmental regulation, mine safety and other risks arising out of new sovereignty over mining, any or all of which could have an adverse affect on the Company. There is not certainty that the Company will be able to convert its existing exploration rights into mining rights. The Company’s operations in general may also be affected in varying degrees by political and economic instability, terrorism, crime, extreme fluctuations in currency exchange rates and inflation.

The Company is subject to the risk of fluctuations in the relative values of the Canadian Dollar as compared to the South African Rand and the United States Dollar
The Company may be adversely or favorably affected by foreign currency fluctuations. The Company is primarily funded through equity investments into the Company denominated in Canadian Dollars. Several of the Company’s options to acquire properties in the Republic of South Africa may result in option payments by the Company denominated in South African Rand or in U.S. Dollars over the next three years. Exploration and development programs to be conducted by the Company in South Africa will also be funded in South African Rand. Fluctuations in the exchange rate between the Canadian Dollar and the South African Rand or U.S. Dollar may have an adverse or favorable affect on the Company.

The Company’s properties are subject to title risks
The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties, and properties that it has the right to acquire or earn an interest in, are in good standing. However, the Company’s properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects. These defects could adversely affect the Company’s title to such properties or delay or increase the cost of the development of such properties.

The Company’s properties may also be subject to aboriginal or other historical rights that may be claimed on Crown properties or other types of tenure with respect to which mineral rights have been conferred. The Company is not aware of any aboriginal land claims having been asserted or any legal actions relating to native issues having been instituted with respect to any of the mineral properties in which the Company has an interest. The Company is aware of the mutual benefits afforded by co-operative relationships with indigenous people in conducting exploration activity and is supportive of measures established to achieve such co-operation.

Environmental risk
Environmental legislation on a global basis is evolving in a manner that will ensure stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessment of proposed development and a higher level of responsibility for companies and their officers, directors and employees. There is no assurance that future changes to environmental legislation in Canada or South Africa will not adversely affect the Company’s operations. Environmental hazards may exist on properties in which the Company holds interests which are unknown at present and which have been caused by previous or existing owners or operators. Furthermore, future compliance with environmental reclamation, closure and other requirements may involve significant costs and other liabilities. In particular, the Company’s operations and exploration activities are subject to Canadian and South African national and provincial laws and regulations governing protection of the environment. Such laws are continually changing and, in general, are becoming more restrictive.

The mineral exploration industry is extremely competitive
The resource industry is intensely competitive in all of its phases, and the Company competes with many companies possessing greater financial resources and technical facilities than it. Competition could adversely affect the Company’s ability to acquire suitable new producing properties or prospects for exploration in the future. Competition could also affect the Company’s ability to raise financing to fund the exploration and development of its properties or to hire qualified personnel.

Metal prices affect the success of the Company’s business
The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the sale of such product. Factors beyond the control of the Company may affect the marketability of any minerals discovered. No assurance may be given that metal prices will remain stable. Significant price fluctuations over short periods of time may be generated by numerous factors beyond the control of the Company, including domestic and international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increases or decreases in production due to improved mining and production methods. The effect of these factors on the price of minerals and therefore the economic viability of any of the Company’s exploration projects cannot accurately be predicted. As the Company is in the exploration stage, the above factors have had no material impact on present operations or income.

Off-balance sheet arrangements
The Company has no off-balance sheet arrangements.

d)
Exploration Programs and Expenditures
Mineral property acquisition costs deferred during the year totaled $300,928 (2005 - $1,815,434). Of this amount $93,367 (2005 - $1,512,446) was for WBJV property acquisition costs and payments. Exploration and development costs deferred in the year totaled $5,474,479 (2005 - $5,309,860). Of that amount $27,422 (2005 - $1,079,938) was incurred on the Company’s Canadian properties and $5,447,057 (2005 - $4,229,922) was incurred on the Company’s South African properties. Of the South African amount $4,998,447 was for the WBJV project (2005 - $3,023,125).

Cost recoveries on Canadian mineral properties during the period amounted to $Nil (2005 - $55,000). During the year $1,174,325 (2005 - $974,294) in deferred costs relating to mineral properties were written off. An amount of $964,847 (2005 - $958,844) was written off for Ontario projects while the balance of $209,478 (2005 - $15,450) related to South African write offs. For more information on mineral properties see Note 5. of the Company’s August 31, 2006 Audited Financial Statements.

The Company continues to be active in the Republic of South Africa (“RSA”). In 2003 the Company acquired a 100% South African subsidiary named Platinum Group Metals RSA (Pty.) Ltd. (“PTM RSA”) for the purposes of holding mineral rights and conducting operations on behalf of the Company. The Company conducts all of its South African exploration and development work through PTM RSA.

On October 26, 2004 the Company (37%) entered into a joint venture with Anglo Platinum Limited (37%) and Africa Wide Mineral Prospecting and Exploration (Pty) Limited (26%) to pursue platinum exploration and development on combined mineral rights covering 67 square kilometres on the Western Bushveld Complex of South Africa. The Company contributed all of its interests in portions of the farms Onderstepoort 98JQ and Elandsfontein 102JQ. Anglo Platinum contributed its interests in portions of the farms Koedoesfontein 94JQ, Elandsfontein 102JQ and Frischgewaagd 96JQ. The Western Bushveld Joint Venture (“WBJV”) immediately provides for a 26% Black Economic Empowerment interest to Africa Wide in satisfaction of the 10-year target set by the Mining Charter and newly enacted Mineral and Petroleum Resources Development Act. Africa Wide will also work with local community groups in order to facilitate their inclusion in the economic benefits of the JV in areas such as training, job creation and procurement.

From October 2004 to April 2006 PTM operated and funded an exploration program in the amount of Rand 35 million (at August 31, 2005 approx. US$5.4 million; C$6.44 million). According to the terms of the WBJV agreement this work was only due over five years to January 26, 2010. As of April 2006 this requirement had been completed and the partners are now required to fund their portion of further expenditures pro-rata based upon their working interest in the Joint Venture. In March 2006 the Company and partners Anglo Platinum Limited and Africa Wide Mining approved a 2006 cash budget for the WBJV totaling R 29,712,200 (approx. Cdn $4.59 million at August 31, 2006). Later, in September 2006 this budget was increased to a cumulative total of R 76,393,208 (approx. Cdn. $11.75 million at September 2006). Each party is to fund their pro-rata share of the approved budget by way of several separate cash calls. To the time of writing both Anglo Platinum and the Company have funded R 21,370,075 towards the approved budget and Africa Wide has funded R 3,200,000. Of the $2,126,584 in accounts payable at August 31, 2006, an amount of $1,850,000 (approx. R 12 million) was incurred on behalf of the WBJV.

Once a bankable feasibility study has been completed the respective deemed capital contribution of each party will be credited by adding their contribution of measured, indicated, and inferred PGM ounces from the contributed properties comprising the WBJV, determined in accordance with the South African SAMREC code. Inferred ounces will be credited at US$0.50 per ounce, indicated ounces will be credited at US$3.20 per ounce and measured ounces will be credited at US$6.20 per ounce. Each party will be credited with their contribution to approved budgets and PTM will also be credited for its Rand 35 million expenditure as described above. Each party will then have the opportunity to make an equalizing cash payment, or contribute forward going capital in order to catch up any resulting shortfall in their contributed capital and thereby maintain their respective working interest in the JV. Should a party not wish to participate, the JV agreement provides a mechanism whereby the parties may elect to become “non-contributory” to the JV and by doing so they would be subject to dilution.
Primary exploration targets for the WBJV are the Merensky and UG2 Reefs. The exploration areas on the properties are

adjacent to the separate BRPM joint venture, which incorporates an existing platinum mine, and the Styldrift property, contributed to the BRPM JV by the Royal Bafokeng Nation. At the time of writing the Company has five diamond drilling rigs deployed onto the WBJV in project areas 2 and 3. The Company is simultaneously in the process of completing a pre-feasibility study for the Project 1 area of the WBJV. Following the completion of this work the Company plans to complete a bankable feasibility study in 2007, with partner approval.

On September 21, 2006 the Company published a further updated Independent Resource Estimate dated September 15, 2006, which shows Measured, Indicated and Inferred 4E (platinum, palladium, rhodium and gold) resources for the project. See tables below. About 40% of the prospective project area has now been classified as a resource by the drilling to date.

Measured Resources WBJV
Updated 15 September, 2006 Independent Estimate:

The following note is mandated under SEC Guidelines to appear before the resource table. Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources. This section uses the terms “measured” and “indicated resources”. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part of all of mineral deposits in these categories will ever be converted into reserves.

 	Cut-Off (cm g/t)	Million Tonnes	Grade g/t  (4E)	Mining Width (metre)	Tonnes PGM (4E)	Million Ounces PGMs (4E)	
MR FPP (*1)	100	2.186	7.11	1.24	15.542	0.500	
UG2 (*3)	100	2.266	3.35	1.47	7.591	0.244	
Total Measured	 	4.452	5.20	 	23.133	0.744	

Prill Splits	Pt	Pt g/t	Pd	Pd g/t	Rh	Rh g/t	Au	Au g/t	
MR FPP (*1)	62.18%	4.42	26.00%	1.85	5.12%	0.36	6.70%	0.48	
UG2 (*3)	64.21%	2.15	24.00%	0.80	10.48%	0.35	1.31%	0.05	
(*1) MR FPP: Merensky Reef – Pegmatoidal Feldspathic Pyroxenite
(*3) UG2: Upper Group Number 2 Chromitite Seam

Indicated Resources
Updated 15 September, 2006 Independent Estimate WBJV:

 	Cut-Off (cm g/t)	Million Tonnes	Grade g/t  (4E)	Mining Width (metre)	Tonnes PGM (4E)	Million Ounces PGMs (4E)	
MR FPP (*1)	100	14.933	6.46	1.26	96.467	3.102	
MR CR (*2)	300	0.183	5.68	1.01	1.040	0.033	
UG2 (*3)	100	25.168	2.98	1.50	75.001	2.411	
Total Indicated	 	40.284	4.28	 	172.508	5.546	

									
Prill Splits	Pt	Pt g/t	Pd	Pd g/t	Rh	Rh g/t	Au	Au g/t	
MR FPP (*1)	62.18%	4.02	26.00%	1.68	5.12%	0.33	6.70%	0.43	
MR CR (*2)	62.18%	3.53	26.00%	1.48	5.12%	0.29	6.70%	0.38	
UG2 (*3)	64.21%	1.91	24.00%	0.72	10.48%	0.31	1.31%	0.04	
(*1) MR FPP: Merensky Reef – Pegmatoidal Feldspathic Pyroxenite
(*2) MR CR: Merensky Reef – Chromitite Contact Reef
(*3) UG2: Upper Group Number 2 Chromitite Seam
Inferred Resources
Updated 15 September, 2006 Independent Estimate WBJV:
The following note is mandated under SEC Guidelines to appear before the resource table. Cautionary Note to U.S. Investors concerning estimates of Inferred Resources. This section uses the term “inferred resources”. We advise U.S. investors that while that term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. “Inferred Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

 	Cut-Off (cm g/t)	Million Tonnes	Grade g/t  (4E)	Mining Width (metre)	Tonnes PGM (4E)	Million Ounces PGMs (4E)	
MR FPP (*1)	100	3.257	6.56	1.22	21.366	0.687	
MR CR (*2)	300	0.002	3.50	1.00	0.007	0.0002	
UG2 (*3)	100	11.792	3.48	1.50	41.036	1.319	
Total Inferred	 	15.051	4.15	 	62.409	2.006	

Prill Splits	Pt	Pt g/t	Pd	Pd g/t	Rh	Rh g/t	Au	Au g/t	
MR FPP (*1)	62.18%	4.08	26.00%	1.70	5.12%	0.34	6.70%	0.44	
MR CR (*2)	62.18%	2.18	26.00%	0.91	5.12%	0.18	6.70%	0.23	
UG2 (*3)	64.21%	2.23	24.00%	0.84	10.48%	0.36	1.31%	0.05	
(*1) MR FPP: Merensky Reef – Pegmatoidal Feldspathic Pyroxenite
(*2) MR CR: Merensky Reef – Chromitite Contact Reef
(*3) UG2: Upper Group Number 2 Chromitite Seam

Charles Muller is the Independent Qualified Person, “QP”, for the above resource assessment. He is registered with SACNASP (South African Council for Natural Scientific Professions) (Registration No. 400201/04).

The properties comprising the WBJV are all currently operated under either Old Order or New Order prospecting permits. New Order prospecting permits are granted under the new Mineral and Petroleum Resources Development Act. Old Order rights under prior legislation must be converted into New Order rights within a transitional period and this conversion process is underway for the WBJV’s Old Order rights. Any future production from the WBJV will be subject to the grant of a Mining Authorization from the Government of South Africa.

The resources outlined have not taken into account sufficient engineering, legal, permitting, financial and other considerations to be considered or classified as “Reserves”. They may never be converted to reserves and may not be viable economically. The Pre-feasibility Study, which is now in progress, will address some of these issues. A Bankable Feasibility Study is targeted for completion mid 2007, with partner approval.

The resource base for the WBJV is now at a suitable confidence level to allow for the pre-feasibility design process. Resources in the Measured and Indicated categories can be included in the pre-feasibility financial model under SAMREC and NI-43101 guidelines. Future drilling will now investigate further areas with reef potential along strike on Project areas 2 and 3 within the joint venture area. The WBJV property includes the untested projected surface trace of the Merensky and UG2 reefs which have been intercepted in a number of drill holes outside of areas where resources have been defined to date.

To the time of writing PTM has completed approximately 72,000 metres of drilling in 160 boreholes. The September 15, 2006 resource update included the results up to hole WBJV120, along with previous results from Anglo Platinum. The resources are estimated under SAMREC categories by the kriging statistical method and the Measured and Indicated Resources have drill spacing of approximately 250 metres or less. In keeping with best practice in resource estimation, an allowance for known and anticipated geological losses is made. These are estimated at 18% for the Merensky Reef and 19% for the UG2 Reef and the resource estimate has taken this into account.

The prill split estimates of the platinum, palladium, rhodium, and gold (4E) are estimated in the resource tables. While a rigorous statistical process of resource estimates has been completed on the combined 4E grades consistent with South African platinum industry best practice for estimation, caution must be exercised with respect to the prill-split-estimates as they have been calculated using the arithmetic mean of the assay information.

PTM as operator of the Joint Venture and has engaged a multi-discipline team of independent engineers, which commenced detailed Pre-feasibility Study work in early January 2006. The Pre-feasibility Study will consider the opportunities presented as the result of further drilling up until September of 2006. The Pre-feasibility Study will consider and outline the details and possible mitigation of several considered projects risks, not yet assessed in detail, including metallurgical recoveries, smelt and refining costs, surface and mining rights, permits and involvement of communities in compliance with the Minerals and Petroleum Resources Development Act (2002).

On June 3, 2002, the Company acquired a right to earn a 100% interest in two properties located in the Northern Limb of the Bushveld Complex. The properties are comprised of the 2,396 hectare War Springs Property and the 2,177 hectare b Property, both located on the postulated extension of the Platreef near the PPRust Platinum Mine operated by Anglo Platinum Limited. The Company may purchase 100% of these mineral rights at any time within three years from the date of grant of a prospecting permit on each property for US$475 per hectare in year one, or US$570 per hectare in year two, or US$690 per hectare in year three. The Company was granted Old Order prospecting permits on both properties during the 2004 fiscal year. The Company has agreed to pay prospecting fees to the mineral rights holders of US$2.50 per hectare in year one, US$2.75 per hectare in year two and US$3.25 per hectare in year three. The mineral rights holders retain a 1% Net Smelter Return Royalty (“NSR”) on the property, subject to the Company’s right to purchase the NSR at any time for US$1.4 million. A 5% finder’s fee on payments made to the mineral rights holders is payable to a South African consulting group retained by the Company in 2002. The Company incurred exploration costs of $675 (2005 - $110,354) on Tweespalk and $446,799 (2005 - $1,085,560) on War Springs during the year. Combined acquisition costs to August 31, 2006 on the War Springs and Tweespalk properties amounted to $144,325 (Aug 31, 2005 - $127,044).

Old Order rights under prior legislation must be converted into New Order rights within a transitional period and this conversion process is underway for the War Springs and Tweespalk Old Order rights. The underlying acquisition agreement for these properties is also subject to amendment in order to re-define the original terms and conditions of the agreement under the new Mineral and Petroleum Resources Development Act.

In early 2004 the Company acquired detailed airborne magnetic data covering the War Springs property from a third party corporation. Interpretation of the airborne and later mapping and soil geochemistry surveys provided drill targets. Drilling commenced on the property in May 2004 and continued until April 2005. To the time of writing approximately 8,000 metres in 18 boreholes has been drilled.

In March 2005 the Company received an NI 43-101 compliant technical report for the War Springs and Tweespalk properties. No work was recommended for the Tweespalk property in 2005 or 2006. During 2004 the Company

conducted approximately 2,300 metres of drilling on the Tweespalk property. Results were encouraging and further work is under consideration for the future. The technical report did recommend an amount of $583,139 in continued diamond drilling work, analysis and modeling for War Springs with the objective of delineating a resource on the project in compliance with SAMREC, JORC and NI 43-101 standards. This work was completed in 2006.

In October 2005 the Company announced an independent resource calculation on the War Springs property, including information on a new deposit type with potential for low cost bulk mining. The independent report confirms an NI 43-101 compliant inferred resource of 980,000 ounces of platinum, palladium, and gold (29.6 M tonnes grading 1.03 g/t 2PGM+Au (0.31 g/t Pt, 0.63 g/t Pd, 0.09 g/t Au), 0.13% Nickel, 0.11% Copper) with strong evidence of resource continuity. This new resource is found in two distinct reef layers 5-10 metres thick named the “B” and “C” reefs, starting at surface and dipping in parallel sheets at a 65 degree angle to a depth of 400 metres and remaining open. The Qualified Person (Charles Muller; SACNASP (South African Council for Natural Scientific Professions) Registration No. 400201/04) has assessed the resource cut-off on a gross metal value of Rand 109 per tonne, based on a preliminary low cost decline, block cave mining model. There is potential for resource expansion.

Black Economic Empowerment groups Africa Wide Mineral Prospecting and Exploration (Pty) Limited and Taung Minerals (Pty) Ltd. each have been granted a 15% interest in the War Springs project carried to bankable feasibility. The Company’s retains a net 70% project interest. Africa Wide has also been granted a 30% participating interest in the Tweespalk property. The Company has not recorded a receivable for Africa Wide’s share of costs to date, which at August 31, 2006 are calculated to be $253,783 (August 31, 2005 - $250,994). The Company expects that Africa Wide will be able to fund their share of costs in the future and amounts recovered from Africa Wide will be treated as a reduction of costs relating to the Tweespalk property.

In December 2002 the Company acquired an option to purchase 100% of the surface and mineral rights to 365.64 hectares of the farm Elandsfontein 102 JQ located in the Western Bushveld area. The Company made an initial payment to the Vendors of R 150,000 (approx. C$29,500) and agreed to terms for the purchase of both mineral and surface rights. In 2005 the Company and the Vendors reached agreement whereby the Company would purchase all surface and mineral rights to the property in exchange for 7.0 million Rand. On September 16, 2005, the Company made a final payment to close the purchase. In September 2005 the Company was granted a “New Order” prospecting permit under the new Mineral and Petroleum Resources Development Act over the Elandsfontein property.

During late 2003 the Company acquired an option to earn a 51% interest in the Lakemount nickel-copper-PGM project located near Wawa, Ontario in exchange for cash payments of $150,000 ($75,000 paid to February 28, 2006), share payments of 150,000 (50,000 issued and paid to February 28, 2006) and exploration work of $2.5 million to December 31, 2008 ($1,090,770 completed to February 28, 2006). The Company can buy a further 11% from an underlying vendor for $3.3 million, bringing the Company’s potential project interest to 62%. The property is known to host well-defined low-grade nickel-copper-PGM mineralization. To date the Company has completed more than 3,300 metres of drilling on the property, as well as airborne, ground based and down-hole geophysical surveys. Results continue to indicate the potential for both open pit and underground resources on the property. Combined acquisition and exploration costs deferred on the property by the Company amounted to $1,320,222 at August 31, 2006 (2005 - $1,216,384). Roscoe Postle Associates Inc. of Toronto completed an NI 43-101 compliant preliminary resource assessment and scoping study for the project in early 2005. The Company is not presently active on the property. Future work is under consideration.

After year end the Company negotiated the consolidation of three of its property interests in the Lac Des Iles area of Ontario. On October 6, 2006, the Company and the property vendors for the Lac Des Iles River property entered into a termination and sale agreement whereby the existing option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

On October 13, 2006, the Company and the property vendors for the South Legris property entered into a termination and sale agreement whereby the existing option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

On October 18, 2006, the Company and the property vendor for the Shelby Lake property entered into a termination and sale agreement whereby the existing option agreement was cancelled and the Company purchased an undivided 100% interest in the property for a one-time payment of $5,000 subject only to an underlying 2.0% Net Smelter Return Royalty, of which the Company may buy back one half for $500,000. To August 31, 2006 the Company had incurred costs of $565,869 on the property and elected under the option agreement to form a 50/50 joint venture with the property vendor. Amounts already spent by the Company in excess of $500,000 where repayable to the Company by the property vendor, or would be applied to dilute the vendor’s working interest in the property.

In September 2004 the Company acquired an option to earn an initial 50% interest in the Seagull property located in the Nipigon region of Ontario by completing $7.5 million of exploration work ($702,234 completed to November 30, 2005) and making cash payments of $750,000 ($75,000 paid) over a five-year period to September 24, 2009. PTM could earn an additional 20% property interest by completing a bankable feasibility study for the property and arranging production financing. During the year the Company’s exploration work on this property consisted of drilling, geochemistry, geophysics, mapping and modeling. The Company has now taken a decision to focus its resources on its South African projects and as a result the Seagull property was abandoned as of February 28, 2006, resulting in a write-off in the amount of $785,288.

The Company’s Agnew Lake property was not active during the period. The Company has directly performed $512,265 worth of exploration work and caused further work of approximately $3,140,805 to be performed through the joint venture arrangement with PFN and Kaymin to August 31, 2005. Occurrences of PGMs have been located on the property, but no resource has been delineated to date. At August 31, 2005 the Company wrote off its remaining investment in the property of $276,852. Subsequent to year end Kaymin advised the Company that it would cease further funding of the project. Kaymin also notified the Company that they would vest as to a 26.17% interest in the property in accordance the terms of their option agreement. PFN has now terminated its option and retains no working interest.

e)
Administration Expenses
Before a non-cash charge for stock based compensation of $110,176 (2005 - $1,283,289), and mineral property costs written off of $1,174,325 (2005 - $974,294), and not including interest, other income and recoveries in the year of $235,236 (2005 - $218,373), general and administrative expenses totaled $2,808,715 (2005 - $2,466,085). Since 2002 the Company has grown substantially through its amalgamation with New Millennium Metals Corporation and its expansion into the Republic of South Africa. This growth is reflected in the costs described herein. During 2004 the Company opened and staffed a permanent office in Johannesburg and commenced active exploration on the ground. The costs described above include management and consulting fees of $367,891 (2005 - $326,167); office and miscellaneous expenses of $268,707 (2005 - $102,220); professional fees of $266,223 (2005 - $193,765); salaries and benefits of $904,385 (2005 - $604,260); shareholder relations expense of $153,220 (2005 - $75,323); travel expenses of $271,883 (2005 - $258,125); mail, news releases and printing expense of $92,281 (2005 - $416,083) and promotion expenses of $112,721 (2005 - $130,897).

f)
Related Party Transactions
Management and consulting fees expense and salaries in the year of $354,710 (2005 - $278,401) were incurred with three directors of the Company. Of this amount approximately $195,980 (2005 - $137,794) is related to fees for the Company’s President. At August 31, 2006 there were $7,600 fees (2005 - $Nil) owed and included in accounts payable.

The Company received $135,340 (2005 - $134,757) during the year from MAG Silver Corp. (“MAG”), a company with common directors and a common officer, under the terms of a 2003 service agreement for administrative services. Accounts receivable at the end of the period include an amount of $39,738 due from MAG.

During the year the Company accrued or received payments of $27,300 (2005 - $39,000) from West Timmins Mining Inc. (“WTM”) formerly Sydney Resource Corporation, a company with common directors and a common officer, for administrative services. The amount received was net of a credit adjustment of $19,500 in recognition of WTM’s relative inactivity in the first three quarters of calendar 2005. Accounts receivable at the end of the period include an amount of $15,349 due from WTM.

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.

g)
Shareholder Relations’ Expenses
Shareholder relations’ expense during the year totaled $153,220 (2005 - $75,323). Since 2003 the Company has managed its shareholder relations as an internal function. The Company has been active in raising its profile with both retail and institutional investors. Since May 2005 Roth Investor Relations has been contracted at a rate of US $5,000 per month to provide distribution of the Company’s information to US institutions and other international analysts and money managers. Prior to May 2005 Roth was contracted by the Company to provide services, on an invoice basis, as needed from time to time. Roth has offices in New Jersey, USA and affiliated offices in London and Johannesburg. Mr. Larry Roth is the Company’s primary contact with the firm. Since June 2005 Mr. Tony Mahalski of LM Associates in London, U.K., has been engaged for a fee of GBP 1,000 per month for the purpose of general business development and the raising of the Company’s profile in Europe.

h) Travel and Promotion Expenses
Travel expenses for the year amounted to $271,883 (2005 - $258,125). These activities relate to the supervision of ongoing operations, new property investigations and meetings with potential institutional and sophisticated investors. Since early 2004 the Company’s increased activity level in South Africa has increased these costs. Promotion expenses in the year amounted to $112,721 (2005 - $130,897) and these costs relate to design work, media relations, printed material, postage and trade show attendance.

i)
Property Acquisition Expenses
Property acquisition expenditures during the period totaled $300,928 (2005 - $1,815,434) in cash and shares. This includes $94,800 for properties in Ontario, and $206,128 to acquire or maintain option rights to the South African properties. Of this amount $93,367 (2005 - $1,512,446) was for WBJV property acquisition costs and payments. Cash payments or accruals totaled $260,928 (2005 - $1,787,434) and share issuances for property acquisitions totaled $40,000 (2005 - $28,000).

The sum of all payments required to perfect all of the Company’s mineral rights are greater than its currently available working capital. The Company evaluates its property interests on an ongoing basis and intends to abandon properties that fail to remain prospective. The Company is confident that it will be able to meet its earn-in obligations on those properties which management considers to be of merit. At the time of writing the Company was incurring further property acquisition expenses through its activities in Ontario, Canada and the Republic of South Africa.

3.
CRITICAL ACCOUNTING POLICIES

The Company’s accounting policies are set out in Note 2 of its Consolidated Financial Statements for the year ended August 31, 2006.

There are two policies that, due to the nature of the mining business, are significant to the financial results of the Company. These policies relate to the capitalization of mineral exploration expenditures and the use of estimates:

Under Canadian GAAP, the Company defers all costs relating to the acquisition and exploration of its mineral properties. Any revenues received from such properties are credited against the costs of the property. When commercial production commences on any of the Company’s properties, any previously capitalized costs would be charged to operations over the life of the property using a unit-of-production method. The Company regularly reviews deferred exploration costs to assess their recoverability and when the carrying value of a property exceeds the estimated net recoverable amount, provision is made for impairment in value.

The existence of uncertainties during the exploration stage and the lack of definitive empirical evidence with respect to the feasibility of successful commercial development of any exploration property do create measurement uncertainty concerning the calculation of the amount of impairment to the value of any mineral property. The Company relies on its own or independent estimates of further geological prospects of a particular property and also considers the likely proceeds from a sale or assignment of the rights before determining whether or not impairment in value has occurred.

4.
CHANGE IN ACCOUNTING POLICY

Effective September 1, 2004, the Company adopted the amended recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments . Under the amended standards of this section, the fair value of all stock-based awards granted are estimated using the Black-Scholes model and recorded over their vesting periods. The compensation cost related to stock options granted after September 1, 2004 is recorded in operations.

Previously, the Company provided note disclosure of pro forma net earnings and pro forma earnings per share as if the fair value based method had been used to account for share purchase options granted to employees, directors and officers after September 1, 2002. The amended recommendations have been applied retroactively from September 1, 2002 without restatement of prior periods. As a result, as of September 1, 2004, the deficit was increased by $318,000, contributed surplus was increased by $304,977, and share capital was increased by $13,023 for share purchase options granted in prior years and exercised in 2005. The total compensation expense recognized in the statement of operations for share purchase options granted in 2006 amounts to $110,176 (2005 - $1,283,289). Had the same basis been applied to share purchase options granted in 2004 the stock compensation expense recognized would have been $241,000 .

5.
LIQUIDITY AND CAPITAL RESOURCES

The Company issued a total of 10,532,547 (2005 – 8,571,216) common shares during the year. Of this 10,507,547 shares (2005 – 8,546,216) were issued for cash proceeds of $16,197,711 (2005 - $8,482,291). A further 25,000 shares (2005 – 25,000) were issued for mineral properties for a value of $40,000 (2005 - $28,000). Cash proceeds are to be spent on mineral property acquisitions, exploration and development as well as for general working capital purposes. See Subsequent Events for further equity issuances. The Company’s primary source of capital has been from the sale of equity. At August 31, 2006 the Company had cash and cash equivalents on hand of $10,066,801 compared to cash and cash equivalents of $2,750,461 at August 31, 2005. The primary use of cash during the year was for acquisition and exploration expenditures, being approximately $6,423,839, which includes $5,718,449 for the WBJV project (2005 - $5,395,698 which includes $4,535,571 for the WBJV project), management fees and expenses of $367,891 (2005 - $326,167) and other general and administrative expenses of $2,440,824 (2005 - $2,139,918).

In the normal course of business the Company enters into transactions for the purchase of supplies and services denominated in South African Rand. The Company also has cash and certain liabilities denominated in South African Rand. As a result the Company is subject to foreign exchange risk from fluctuations in foreign exchange rates. In the past year to the time of writing this report, the South African Rand has fallen in value against the Canadian Dollar by approximately 14%.
The following Table discloses the contractual obligations of the Company for optional mineral property acquisition payments, optional exploration work and committed lease obligations for office rent and equipment:

Contractual Obligations	Payments due by period	
	Total	< 1 Year	1 – 3 Years	3 – 5 Years	> 5 Years	
Acquisition Payments	$  6,258,710	$ 5,692,600	$   566,110	$                0	$              0	
Exploration Costs	1,402,351	402,351	1,000,000	0	0	
Lease Obligations	377,823	149,372	176,831	51,620	0	
Totals	$8,038,884	$ 6,244,323	$1,742,941  	$       51,620	$              0	

6.
CORPORATE GOVERNANCE

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to Multilateral Instrument 52-109 is recorded, processed, summarized and reported in the manner specified by the relevant securities laws applicable to the Company. The consolidated Company operates in both Canada and the Republic of South Africa and work is ongoing to improve and modernize these controls and to ensure that they remain consistently applied in both jurisdictions. The Chief Executive Officer and the Chief Financial Officer have evaluated the Company’s disclosure control procedures as of August 31, 2006 through inquiry, review, and testing, as well as by drawing upon their own relevant experience. The Company retained an independent third party specialist in 2006 to assist in the assessment of its disclosure control procedures. The Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure control procedures are effective. Management is also developing and implementing a plan to address disclosure controls and procedures on a forward looking basis as the Company continues to grow.

The Company also maintains a system of internal controls in order to provide reasonable assurance that assets are safeguarded and financial information is accurate and reliable and in accordance with Canadian GAAP. The Company retained an independent third party specialist in 2006 to assist in the assessment of its internal control procedures. The Board of Directors approves the financial statements and ensures that management discharges its financial responsibilities. The Board’s review is accomplished principally through the audit committee, which is composed of independent non-executive directors. The audit committee meets periodically with management and auditors to review financial reporting and control matters. The Board of Directors has also appointed a compensation committee composed of non-executive directors whose recommendations are followed with regard to executive compensation. From time to time the board may also form special sub-committees, which must investigate and report to the Board on specific topics.

7.
SUBSEQUENT EVENTS

Subsequent to year end 2,515,069 common shares were issued pursuant to the exercise of 2,433,194 warrants at a price of $1.50 per share, 50,000 stock options at a price of $1.10 per share,  and 31,875 stock options at a price of $1.00 per share, for aggregate proceeds of $3,736,665.

Other subsequent events are disclosed elsewhere within this document.

8.
LIST OF DIRECTORS AND OFFICERS

a)
Directors:
Eric Carlson
Frank R. Hallam
R. Michael Jones
Iain McLean
Barry W. Smee

b)
Officers:
R. Michael Jones (President)
Frank R. Hallam (Chief Financial Officer)
Barry Smee (Secretary)

c)
Officers of Subsidiary:
John A. Gould
(Managing Director Platinum Group Metals RSA (Pty) Ltd.)

 

PLATINUM GROUP METALS LTD.
328 – 550 Burrard Street
Vancouver, British Columbia
CANADA V6C 2B5

		
ANNUAL
GENERAL
MEETING	Notice of Annual General Meeting of Shareholders
Management Information Circular

	
 	 	
Place:	328 – 550 Burrard Street
Vancouver, British Columbia
V6C 2B5	
 	 	
Time:	2:00 p.m. (Vancouver time)	
 	 	
Date:	Wednesday, January 10, 2007	

	

	

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PLATINUM GROUP METALS LTD.

CORPORATE DATA	

Head Office
328 – 550 Burrard Street
Vancouver, British Columbia
CANADA  V6C 2B5

Directors and Officers
R. Michael Jones – Chairman, President, Chief Executive Officer & Director
Frank R. Hallam – Chief Financial Officer & Director
Barry W. Smee – Secretary & Director
Iain D.C. McLean – Director
Eric H. Carlson– Director

Registrar and Transfer Agent
Pacific Corporate Trust Company
3rd Floor – 510 Burrard Street
Vancouver, British Columbia
CANADA V6C 3B9

Legal Counsel
Gowling Lafleur Henderson LLP
2300 – 1055 Dunsmuir Street
Vancouver, British Columbia
CANADA V7X 1J1	
 	Auditor
Deloitte & Touche LLP
2800 – 1055 Dunsmuir Street
Vancouver, British Columbia
CANADA V7X 1P4

Stock Exchange Listing
Toronto Stock Exchange
Symbol  “PTM”
OTC Bulletin Board
Symbol “PTMQF”	

PLATINUM GROUP METALS LTD.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of Platinum Group Metals Ltd. (the “Company”) will be held at the offices of the Company at 328 – 550 Burrard Street, Vancouver ,  British Columbia, V6C 2B5, on Wednesday, the 10 th day of January, 2007 at the hour of 2:00 p.m. (local time), for the following purposes:
1.
To receive the Annual Report;
2.
To receive the audited consolidated financial statements of the Company for the fiscal year ended August 31, 2006 (with comparative statements relating to the preceding fiscal year) together with the report of the auditors thereon;
3.
To elect directors;
4.
To appoint the auditors;
5.
To consider and, if thought fit, to pass an ordinary resolution approving amendments to the Company’s incentive stock option plan to convert such plan from a “fixed number” plan to a “rolling 10%” plan, as more particularly described in the accompanying information circular; and
6.
To transact such further or other business as may properly come before the meeting or any adjournment or adjournments thereof.
The Notice of the Meeting Date filed on SEDAR pursuant to National Instrument 54-101 indicated that the meeting would be an Annual and Special Meeting as Management was contemplating special business that would have required a special resolution.  However, Management has determined that no special business involving a special resolution is required and, accordingly, the meeting will only be an Annual General Meeting.  
Accompanying this Notice is the Annual Report referred to in item 1 above, as well as the audited financial statements and notes thereto for the financial year ended August 31, 2006, a Management Information Circular, a form of proxy, an annual request form and an information reply card. The accompanying Management Information Circular provides information relating to the matters to be addressed at the meeting and is incorporated into this Notice.
Shareholders are entitled to vote at the Meeting either in person or by proxy in accordance with the procedures described in the Management Information Circular accompanying this Notice. Those who are unable to attend the meeting are requested to read, complete, sign and mail the enclosed form of proxy in accordance with the instructions set out in the proxy and in the Management Information Circular accompanying this Notice. Please advise the Company of any change in your mailing address.
DATED at Vancouver, British Columbia, this 27 th day of November, 2006.
BY ORDER OF THE BOARD

(signed) “R. Michael Jones”

Chairman, President, Chief Executive Officer & Director

PLATINUM GROUP METALS LTD.
MANAGEMENT INFORMATION CIRCULAR
 (Containing information as at November 24, 2006 unless indicated otherwise)
SOLICITATION OF PROXIES
This Management Information Circular (“Information Circular”) is furnished in connection with the solicitation of proxies by the management of Platinum Group Metals Ltd. (the “Company”) for use at the Annual General Meeting of shareholders of the Company (and any adjournment thereof) to be held at 2:00 p.m. (Vancouver time) on Wednesday, January 10, 2007 (the “Meeting”) at the place and for the purposes set forth in the accompanying Notice of Meeting. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the regular employees of the Company at nominal cost. All costs of solicitation by management will be borne by the Company.
The contents and the sending of this Information Circular have been approved by the directors of the Company.
APPOINTMENT OF PROXYHOLDER
The individuals named as proxyholder in the accompanying form of proxy are the Chief Executive Officer and Chief Financial Officer, respectively, of the Company. A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STROKING OUT THE NAMES OF THOSE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON’S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER FORM OF PROXY. A proxy will not be valid unless the completed form of proxy is received by PACIFIC CORPORATE TRUST COMPANY of 3 rd  Floor, 550 Burrard Street, Vancouver, British Columbia, CANADA, V6C 3B9 not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time for holding the Meeting or any adjournment thereof. Proxies delivered after that time will not be accepted.
REVOCATION OF PROXIES
A shareholder who has given a proxy may revoke it by an instrument in writing executed by the shareholder or by his attorney duly authorized in writing or, where the shareholder is a corporation, by a duly authorized officer or attorney of the corporation, and delivered to the registered office of the Company, at Suite 2300, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1J1 (Attention: Daniel M. Allen) at any time up to and including the last business day preceding the day of the Meeting, or if adjourned, any reconvening thereof, or to the Chairman of the Meeting on the day of the meeting or, if adjourned, any reconvening thereof, or in any other manner provided by law. A revocation of a proxy does not affect any matter on which a vote has been taken prior to the revocation.
INFORMATION FOR NON-REGISTERED SHAREHOLDERS
Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Most shareholders of the Company are “non-registered” shareholders because the shares they own are not registered in their names but are instead registered in the names of a brokerage firm, bank or other intermediary or in the name of a clearing agency. Shareholders who do not hold their shares in their own name (referred to herein as “Beneficial Shareholders”) should note that only registered shareholders may vote at the Meeting. If common shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those common shares will not be registered in such shareholder’s name on the records of the Company. Such common shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities, which acts as nominee for many Canadian brokerage firms). Common shares held by brokers (or their agents or nominees) on behalf of a broker’s client can only be voted (for or against resolutions) at the direction of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for the brokers’ clients. Therefore, each

 -2 -

Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate person well in advance of the Meeting .
Existing regulatory policy requires brokers and other intermediaries to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings. The various brokers and other intermediaries have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Meeting. Often the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided by the Company to the registered shareholders. However, its purpose is limited to instructing the registered shareholder (ie. the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for obtaining instructions from clients to ADP Investor Communications Services (“ADP”). ADP typically prepares a machine-readable voting instruction form, mails those forms to the Beneficial Shareholders and asks Beneficial Shareholders to return the forms to ADP, or otherwise communicate voting instructions to ADP (by way of the internet or telephone, for example). ADP then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of common shares to be represented at the Meeting. A Beneficial Shareholder who receives an ADP voting instruction form cannot use that form to vote common shares directly at the Meeting. The voting instruction form must be returned to ADP (or instructions respecting the voting of common shares must be communicated to ADP) well in advance of the Meeting in order to have the common shares voted.
This Information Circular and accompanying materials are being sent to both registered shareholders and Beneficial Shareholders. Beneficial Shareholders fall into two categories – those who object to their identity being known to the issuers of securities which they own (“Objecting Beneficial Owners”, or “OBOs”) and those who do not object to their identity being made known to the issuers of the securities they own (“Non-Objecting Beneficial Owners”, or “NOBOs”). Subject to the provisions of National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”), issuers may request and obtain a list of their NOBOs from intermediaries via their transfer agents. If you are a Beneficial Shareholder, and the Company or its agent has sent these materials directly to you, your name, address and information about your holdings of common shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding the common shares on your behalf.
The Company’s OBOs can expect to be contacted by ADP or their brokers or their broker’s agents as set out above.
Although Beneficial Shareholders may not be recognized directly at the Meeting for the purposes of voting common shares registered in the name of his broker, a Beneficial Shareholder may attend the Meeting as proxyholder for the registered shareholder and vote the common shares in that capacity. Beneficial Shareholders who wish to attend the Meeting and indirectly vote their common shares as proxyholder for the registered shareholder should enter their own names in the blank space on the proxy provided to them and return the same to their broker (or the broker’s agent) in accordance with the instructions provided by such broker.
All references to shareholders in this Information Circular and the accompanying form of Proxy and Notice of Meeting are to registered shareholders of record unless specifically stated otherwise.
VOTING OF PROXIES
The shares represented by a properly executed proxy in favour of persons designated as proxyholders in the enclosed form of proxy will:
(a)
be voted or withheld from voting in accordance with the instructions of the person appointing the proxyholder on any ballot that may be called for; and
(b)
where a choice with respect to any matter to be acted upon has been specified in the form of proxy, be voted in accordance with the specification made in such proxy.

 -3 -

SUCH SHARES WILL BE VOTED IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED OR WHERE BOTH CHOICES HAVE BEEN SPECIFIED BY THE SHAREHOLDER.
The enclosed form of proxy, when properly completed and delivered and not revoked, confers discretionary authority upon the person appointed proxyholder thereunder to vote with respect to amendments or variations of matters identified in the Notice of Meeting, and with respect to other matters which may properly come before the Meeting. In the event that amendments or variations to matters identified in the Notice of Meeting are properly brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated by management as proxyholders in the enclosed form of proxy to vote in accordance with their best judgment on such matters or business. At the time of the printing of this Information Circular, the management of the Company knows of no such amendment, variation or other matter which may be presented to the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
Authorized Capital:
unlimited common shares without par value
Issued and Outstanding:
56,206,247 common shares without par value as at November 24, 2006.
Only shareholders of record holding common shares at the close of business on November 24, 2006, (the “Record Date”) who either personally attend the Meeting or who have completed and delivered a form of proxy in the manner and subject to the provisions described above shall be entitled to vote or to have their shares voted at the Meeting.
On a show of hands, every individual who is present and is entitled to vote as a shareholder or as a representative of one or more corporate shareholders, or who is holding a valid proxy on behalf of a shareholder who is not present at the Meeting, will have one vote, and on a poll every shareholder present in person or represented by a valid proxy and every person who is a representative of one or more corporate shareholders, will have one vote for each share registered in that shareholder’s name on the list of shareholders, which is available for inspection during normal business hours at Pacific Corporate Trust Company of Canada and will be available at the Meeting. Shareholders represented by proxyholders are not entitled to vote on a show of hands.
To the knowledge of the directors and senior officers of the Company, there are no persons or companies who beneficially own, directly or indirectly, or exercise control or direction over, shares carrying more than 10% of the voting rights attached to all outstanding shares of the Company.
ELECTION OF DIRECTORS
The Board of Directors has determined the number of directors at five and presently consists of five directors. It is proposed to elect five directors for the ensuing year.
The term of office of each of the present directors expires at the Meeting. The persons named below will be presented for election at the Meeting as management’s nominees and the persons named by management as proxyholders in the accompanying form of proxy intend to vote for the election of these nominees. Management does not contemplate that any of these nominees will be unable to serve as directors. Each director elected will hold office until the next annual general meeting of the Company or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the Articles of the Company or the provisions of the Business Corporations Act (British Columbia).
The following table and notes thereto sets out the name of each person proposed to be nominated by management for election as a director, his province and country of residence, all offices of the Company now held by him, his principal occupation, the period of time for which he has been a director of the Company, and the number of shares of the Company beneficially owned by him, directly or indirectly, or over which he exercises control or direction, as at November 24, 2006:

 -4 -

 
				
Name, Position and
Province or State, and Country of Residence (1)	Principal Occupation and
Occupation During the
Past 5 Years (1)	Previous Service
as a Director	Number of Shares beneficially owned, directly or indirectly, or controlled or directed (2)	
R. MICHAEL JONES
Chairman, President, Chief Executive Officer and Director
British Columbia, Canada	Chairman, President, and Chief Executive Officer of the Company and a predecessor company from 2000 to present.	Feb. 18, 2002 (3)	1,460,772 (4)	
FRANK HALLAM
Chief Financial Officer and Director
British Columbia, Canada	Chartered Accountant since 1993; Chief Financial Officer of the Company and the founder of a predecessor company from 1983 to present.	Feb. 18, 2002 (5)	601,614	
BARRY W. SMEE (6)(7)
Secretary and Director
British Columbia, Canada	President of Smee & Associates, a private consulting, geological and geochemistry company, since 1990.	Feb. 18, 2002 (3)	48,500	
IAIN D.C. MCLEAN (6)(7)
Director
British Columbia, Canada	Chief Executive Officer of Municipal Software Corporation of Canada, a software development company based in Victoria BC. Former Vice President and General Manager of Total Care Technologies, a division of Ad Opt Technologies Inc, a medical software development company.	Feb. 18, 2002 (8)	140,339	
ERIC CARLSON (6)
Director
British Columbia, Canada	Chartered Accountant since 1985; President and Chief Executive Officer of Anthem Properties Corp., an investment group specializing in the acquisition and management of residential and office properties in Canada and the United States, since July 1994.	Feb. 22, 2005	60,800 (9)	
NOTES:
(1)
The information as to the municipality of residence and principal occupation, not being within the knowledge of the Company, has been furnished by the respective directors individually.
(2)
The information as to shares beneficially owned or over which a director exercises control or direction, not being within the knowledge of the Company, has been furnished by the respective directors individually.
(3)
Served as a director of one of the Company’s predecessors from  February 24, 2000 to February 18, 2002.
(4)
Of these shares 956,000 are held by 599143 B.C. Ltd. (a company 50% owned by Mr. Jones and 50% owned by Mr. Jones’ wife).
(5)
Served as a director of one of the Company’s predecessors from March 11, 1983 to February 18, 2002.
(6)
Denotes member of the Audit Committee.
(7)
Denotes member of the Compensation Committee.
(8)
Served as a director of one of the Company’s predecessors from October 9, 2000 to February 18, 2002.
(9)
Of these shares, 33,800 are held by Carmax Enterprises Corporation, a private company owned by Mr. Carlson.

 -5 -

AUDIT COMMITTEE
Under Multilateral Instrument 52-110 – Audit Committees (“MI 52-110”), companies are required to provide certain disclosure with respect to their audit committee, including the text of the audit committee’s charter, the composition of the audit committee and the fees paid to the external auditor. Please refer to the Company’s Annual Information Form dated November 27, 2006 (the “2006 AIF”) with respect to the fiscal year ended August 31, 2006. A copy of the 2006 AIF has been filed on SEDAR ( www.sedar.com ).
STATEMENT OF EXECUTIVE COMPENSATION
“Named Executive Officers” means the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Company and each of the Company’s three most highly compensated executive officers, other than the CEO and CFO, who were serving as executive officers at the end of the most recently completed fiscal year and whose total salary and bonus exceeded $150,000. In addition, disclosure is also required for any individual whose total salary and bonus during the most recently completed fiscal year exceeded $150,000 whether or not he was an officer at the end of the fiscal year.
The Company’s Named Executive Officers currently are R. Michael Jones, the Chairman, President and CEO of the Company and Frank Hallam, the CFO of the Company.
Summary Compensation Table

 	 	Annual Compensation	Long Term Compensation	 	
 	 	 	 	 	Awards	Payouts	 	
Name and
Principal
Position	

Year  (1)	Salary
($)	Bonus
($)	Other
Annual
Compensation (3)
 ($)	Securities
Under
Options/
SARs
granted
(#) (2)	Shares or
Units Subject to Resale Restrictions
($)	LTIP
Payouts
($)	All Other
Compensation
($)	
R. Michael Jones,
Chairman, President & CEO	2006
2005
2004	Nil
Nil
Nil	$50,000
Nil
Nil	$145,980
$137,794
$132,319	Nil/Nil
250,000/Nil
Nil/Nil	Nil
Nil
Nil	Nil
Nil
Nil	Nil
Nil
Nil	
Frank R. Hallam,
CFO	2006 2005
2004	$123,750
$114,900
$108,000	$30,000
$20,000
Nil	Nil
Nil
Nil	Nil/Nil
226,000/Nil
75,000/Nil	Nil
Nil
Nil	Nil
Nil
Nil	Nil
Nil
Nil	
NOTES:
(1)
Fiscal year ended August 31.
(2)
Figures represent options granted during a particular year; see “Aggregate Option” table for the aggregate number of options outstanding at year end.
(3)
These fees were paid to Mr. Jones from September 1, 2005 to August 31, 2006 pursuant to a consulting services agreement dated April 1, 2005, and then as amended effective August 1, 2006 for management and administrative services. Prior to such time, Mr. Jones was paid for such services pursuant to a management services agreement dated February 27, 2001. For further information regarding the employment agreements of Messrs. Jones and Hallam, see “Termination of Employment, Change in Responsibilities and Employment Contracts”.
Long Term Incentive Plan Awards
A long term incentive plan (“LTIP”) is any plan providing compensation intended to motivate performance over a period greater than one fiscal year. A LTIP does not include option or stock appreciation rights plans or plans for compensation through shares or units that are subject to restrictions on resale. The Company has not granted any LTIPs during the past fiscal year.

 -6 -

Stock Appreciation Rights
A stock appreciation right (“SAR”) is a right granted by an issuer or any of its subsidiaries as compensation for employment services or office to receive cash or an issue or transfer of securities based wholly or in part on changes in the trading price of the issuer’s shares. No SARs were granted to or exercised by the Named Executive Officers during the recently completed fiscal year ended August 31, 2006.
Option Grants During The Most Recently Completed Fiscal Year
No stock options were granted to the Named Executive Officers during the fiscal year ended August 31, 2006.
  Aggregated Option Exercises During the Most Recently Completed Fiscal Year and Fiscal Year-End Option/SAR Values
The following table sets forth details of all stock options exercised by the Named Executive Officers during the fiscal year ended August 31, 2006 and the value of unexercised stock options held by the Named Executive Officers on an aggregated basis as of August 31, 2006:

Name	Securities
Acquired on
Exercise
(#)	Aggregate
Value
Realized
($)	Unexercised Options/SARs
at
Fiscal Year-End
(#) (1)
 Exercisable/
Unexercisable	Value of
Unexercised
In-the-Money
Options/SARs at
Fiscal Year-End
(#) (1)(2)
 Exercisable/
Unexercisable	
R. Michael Jones	Nil	Nil	370,000/Nil	$374,000.00/Nil	
Frank Hallam	Nil	Nil	325,000/Nil	$304,400.00/Nil	
NOTES:
(1)
As freestanding SARs have not been granted, the number of shares relate solely to the Company’s options.
(2)
Calculated using the closing price of common shares of the Company on the Toronto Stock Exchange on August 31, 2006 (being the last day of the Company’s fiscal year end on which such shares traded) of $1.80 per share, less the exercise price of the stock options granted.
Option and SAR Repricings
During the fiscal year ended August 31, 2006, no options held by the Named Executive Officers were repriced. The Company has not granted any freestanding SARs.
Defined Benefit or Actuarial Plan Disclosure
The Company does not have a defined benefit or actuarial plan under which benefits are determined primarily by final compensation (or average final compensation) and years of service of the Company’s officers and key employees. The Company does not provide retirement benefits for directors or executive officers.
Termination of Employment, Change in Responsibilities and Employment Contracts
The Company may terminate the consulting services agreement between R. Michael Jones and the Company dated August 1, 2006 on notice without cause upon payment of 3 months’ typical consulting fees and provision of benefits made available to officers of the Company from time to time on terms determined by the Board of Directors for the earlier of 3 months or until Mr. Jones obtains comparable benefits from another source. The services agreement includes a provision whereby Jones shall have 60 days from the date of a change of control of the Company to elect in writing whether or not he wishes to terminate the agreement, after which time he shall be deemed to have elected not to do so. If Jones elects to terminate the agreement, then he shall give written notice of his election to the Company and the agreement shall terminate 30 days from the day of such notice. Jones shall then, from the date of

 -7 -

termination, be entitled to receive from the Company in one lump sum the equivalent of one year’s compensation, defined as $165,000.
Under an employment agreement dated August 1, 2006 between Frank Hallam and the Company, the Company may terminate summarily and without notice, or payment in lieu of notice, severance payments, benefits, damages or any sums whatsoever, in the event that there is just cause for termination of Mr. Hallam’s employment. Mr. Hallam’s employment agreement may be terminated on notice by the Company to Mr. Hallam without cause upon payment to him at termination of 3 months’ base salary and provision of benefits made available to officers of the Company at the discretion of the Board of Directors. The employment agreement includes a provision whereby Hallam shall have 60 days from the date of a change of control of the Company to elect in writing whether or not he wishes to terminate the agreement, after which time he shall be deemed to have elected not to do so. If Hallam elects to terminate the agreement, then he shall give written notice of his election to the Company and the agreement shall terminate 30 days from the day of such notice. Hallam shall then, from the date of termination, be entitled to receive from the Company in one lump sum the equivalent of one year’s compensation, defined as $145,000.
 
Composition of the Compensation Committee
The Company’s Compensation Committee is comprised of two unrelated directors, Messrs. Smee and McLean. All members of the Compensation Committee are directors of the Company.
REPORT ON EXECUTIVE COMPENSATION
The Company’s principal goal is to create value for its shareholders. The Company’s compensation philosophy is based on the objectives of linking the interests of the executive officers with both the short and long-term interests of the Company, of linking executive compensation to the performance of the Company and the individual and of compensating executive officers at a level and in manner that ensures the Company is capable of attracting, motivating and retaining individuals with exceptional executive skills.
The Compensation Committee’s primary responsibility is to make recommendations for approval by the board of directors with respect to the appointment and remuneration of executive officers of the Company. The Committee evaluates the performance of the Company’s senior executive officers, as well as reviews the design and competitiveness of the Company’s compensation plans for all of its employees.
The Compensation Committee believes that it is important to award incentive stock options as part of an overall compensation package intended to engage new employees directly with the aims of shareholders and provide incentive. It is intended that such options be considered as part of a package in the overall mix of remuneration. The Compensation Committee has implemented a process of evaluating employees on a regular basis and PTM management is responsible for preparing an individual evaluation process for each employee and then conduct reviews on an annual basis. The evaluation framework is objective where a number of factors are judged for each employee. The same evaluation parameters are used for each review period.
The Company’s executive compensation program is administered by the Compensation Committee of the board of directors. The Compensation Committee has, as part of its mandate, primary responsibility for making recommendations for approval by the board of directors with respect to the appointment and remuneration of executive officers of the Company. The Committee held 2 meetings during 2006.
Executive Compensation
The executive compensation program is designed to encourage, compensate and reward employees on the basis of individual and corporate performance, both in the short and the long term. Base salaries are competitive with corporations of a comparable size and stage of development within the mineral exploration industry, thereby enabling the Company to compete for and retain executives critical to the Company’s long term success. Incentive compensation is directly tied to corporate and individual performance. Share ownership opportunities are provided to align the interests of executive officers with the longer term interests of shareholders. Compensation for each of

 -8 -

the Named Executive Officers consists of a base salary, along with annual incentive compensation in the form of a performance based bonus, and a longer term incentive in the form of stock options.
Base Salary
The Committee approves ranges for base salaries for employees at all levels of the Company based on reviews of market data from peer companies in the mineral exploration industry. The level of base salary for each employee within a specified range is determined by the level of past performance, as well as by the level of responsibility and the importance of the position to the Company.
The Committee has approved agreements with respect to the base payments to be paid to the Chief Executive Officer and Chief Financial Officer. The Committee’s recommendations for such amounts and base salaries are then submitted for approval by the Board of the Company.
Annual Bonus
Senior managers are eligible for annual incentive awards. Corporate performance, as assessed by the board of directors, determines the aggregate amount of bonus to be paid by the Company to all eligible senior managers in respect of a fiscal year.
The aggregate amount of bonuses to be paid will vary with the degree to which targeted corporate performance was achieved for the year. The individual performance factor allows the Company to effectively recognize and reward those individuals whose efforts have assisted the Company to attain its corporate performance objective.
Stock Options
The Stock Option Plan is designed to give each option holder an interest in preserving and maximizing shareholder value in the longer term, to enable the Company to attract and retain individuals with experience and ability, and to reward individuals for current performance and expected future performance. The Committee considers stock option grants when reviewing executive officer compensation packages as a whole.
The Committee has sole discretion to determine the key employees to whom it recommends that grants be made and to determine the terms and conditions of the options forming part of such grants. The Committee approves ranges of stock option grants for each level of executive officer. Individual grants are determined by an assessment of an individual’s current and expected future performance, level of responsibilities and the importance of the position to the Company.
The number of stock options which may be issued under the Stock Option Plan in the aggregate and in respect of any fiscal year is limited under the terms of the Stock Option Plan and cannot be increased without shareholder approval.
The foregoing report has been furnished by the Compensation Committee as of November 9th, 2006.
Performance Graph
The following graph compares the yearly percentage change in the Company’s cumulative total shareholder return on common shares of the Company with the cumulative total return of the S&P/TSX Composite Index, assuming reinvestment of dividends, since the date of public trading (being February 18, 2002) until the fiscal year ended August 31, 2006.

 -9 -

Compensation of Directors
The Company does not compensate its directors in their capacities as such.
Option Grants in Last Fiscal year to Directors Who are Not Named Executive Officers
No stock options were granted by the Company to directors who were not Named Executive Officers during the fiscal year ended August 31, 2006.
Aggregated Option Exercises in Last Fiscal year and Fiscal Year-End Option Values
of Directors Who are Not Named Executive Officers (as a group)
The following table sets forth details of all exercises of stock options during the last financial year ended August 31, 2006, by directors who are not Named Executive Officers of the Company, as a group, and the financial year-end value of unexercised stock options on an aggregated basis:

Name	Securities
Acquired on
Exercise
(#)	Aggregate
Value
Realized
($)	Unexercised Options
at Fiscal Year-End (#) (2)
 Exercisable/Unexercisable	Value of Unexercised
In-the-Money Options at
Fiscal Year-End (#) (2)(3)
 Exercisable/Unexercisable	
Directors who are not Named Executive Officers (three)	Nil	Nil	545,000/Nil	$514,000.00/Nil	
NOTES:
(1)
As freestanding SARs have not been granted, the number of shares relate solely to the Company’s options.
(2)
Calculated using the closing price of common shares of the Company on the Toronto Stock Exchange on August 31, 2006 (being the last day of the Company’s fiscal year end on which such shares traded) of $1.80 per share, less the exercise price of the stock options granted.

 -10 -

Other Director Compensation
During the most recently completed fiscal year, Barry Smee, who is not a Named Executive Officer, received $4,980.00 as compensation for services provided to the Company in his capacities as a geological consultant. Mr. Smee does not have a formal agreement but was paid by the Company upon the rendering of services and receipt of expense reports and/or invoices.
The Company entered into a Sublease Agreement with Anthem Works Ltd. dated August 5, 2004 for the rental of the Company’s office premises at Suite 328, 550 Burrard Street, Vancouver, B.C. The Company began occupying this facility on October 1, 2004 on a three year lease and the current annual obligation is approximately $62,333. Anthem Works Ltd. is related by a director in common, Eric Carlson.
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
Effective June 30, 2005, National Instrument 58-101 Disclosure of Corporate Governance Practices (“NI 58-101”) was adopted in each of the provinces and territories of Canada. NI 58-101 requires issuers to disclose the corporate governance practices that they have adopted. The corporate governance practices adopted by the Company are set out in the attached Schedule “A”.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
At any time during the Company’s last completed fiscal year, no director, executive officer or employee, or any former director, executive officer or employee of the Company or any of its subsidiaries is or has been indebted to the Company or any of its subsidiaries or is or has been indebted to another entity where such indebtedness is or has been the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries, other than routine indebtedness.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATIONS PLANS
The Company implemented a stock option plan (the “Plan”) on January 14, 2003, which was approved by the Company’s shareholders on February 11, 2003. On February 19, 2004 the shareholders of the Company approved an amendment to the Plan increasing the maximum number of shares issuable pursuant to such Plan from 2,725,915 common shares to 3,100,000 common shares. On February 22, 2005, the shareholders of the Company approved a further amendment to the Plan to 3,790,000 common shares are issuable under the Plan. On January 10, 2006, the shareholders of the Company approved a further amendment to the Plan replenishing 85,000 common shares which had been issued upon the exercise of options previously granted under the Plan since September 1, 2005 and increasing the number of common shares available for issuance upon the exercise of options granted under such Plan by an additional 710,000 common shares so that 4,500,000 common shares are issuable under the Plan.
The Plan is administered by the Board of Directors or such committee of the Board as may be designated by the Board (the “committee”). Options may be granted pursuant to the Plan to the Company’s directors, senior officers, employees, non-employee directors, management company employees and consultants to purchase common shares on such terms that the Board or committee may determine, subject to the limitations of the plan and the rules of applicable regulatory authorities. The exercise price for options granted under the Plan may not be less than the closing price of the Company’s common shares on the TSX on the trading day immediately preceding the day on which the option is granted (provided that if there are no trades on such day then the last closing price within the preceding ten trading days will be used, and if there are no trades within such ten-day period, then the simple average of the bid and ask prices on the trading day immediately preceding the day of grant will be used.  Options under the Plan are non-assignable and are exercisable for a period of up to ten years from the date the option is granted, subject to earlier termination after certain events such as the optionee’s cessation of service to the Company or death.
The Board of Directors of the Company has approved, subject to the necessary shareholder approval and regulatory acceptance, a further amendment to the Plan to convert the fixed number Plan to a rolling 10% plan. See “Particulars of Matters to be Acted Upon – Amendment to Stock Option Plan”.

 -11 -

The following table provides information regarding the Plan, being the only compensation plan in effect as of the end of the Company’s most recently completed fiscal year, under which securities of the Company are authorized for issuance to directors, senior officers, employees, non-employee directors, management company employees, and consultants:
EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options
(a)	Weighted-Average Exercise Price of Outstanding Options
(b)	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(c)	
Equity Compensation Plans Approved By Shareholders	3,285,375 (1)	$0.94	1,060,125 (2)	
Equity Compensation Plans Not Approved By Shareholders	N/A	N/A	N/A	
Total	3,285,375	$0.94	1,060,125	
NOTES:
(1)
This represents 5.85% of the Company’s issued and outstanding share capital
(2)
This represents 1.89% of the Company’s issued and outstanding share capital.

CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES
No proposed director of the Company is, or during the ten years preceding the date of this Information Circular has been, a director or executive officer of any company that, while the person was acting in that capacity:
(a)
was the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days;
(b)
was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company being the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or
(c)
within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets.
PERSONAL BANKRUPTCIES
During the ten years preceding the date of this Information Circular, no proposed director of the Company has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

 -12 -

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as set forth in the following sentences, and other than transactions carried out in the ordinary course of business of the Company or any of its subsidiaries, none of the directors or executive officers of the Company, any shareholder beneficially owning shares carrying more than 10% of the voting rights attached to the shares of the Company nor an associate or affiliate of any of the foregoing persons has, since September 1, 2005 (being the commencement of the Company’s last completed financial year), had any material interest, direct or indirect, in any transactions which materially affected or would materially affect the Company or any of its subsidiaries.
During Fiscal 2006, the Company received $27,300 for services during the year from West Timmins Mining Inc. (formerly: Sydney Resource Corporation) (“West Timmins”) and as of August 31, 2006 accounts payable of $15,349. West Timmins is related to the Company by way of common directors and officers: Frank Hallam, Chief Financial Officer of the Company, R. Michael Jones, CEO and President of the Company and Eric Carlson, a director of the Company.
APPOINTMENT OF AUDITORS

Unless such authority is withheld, the persons named in the accompanying proxy intend to vote for the appointment of Deloitte & Touche LLP, as auditors of the Company. Deloitte & Touche LLP were first appointed auditors of the Company on September 15, 2000.
MANAGEMENT AND CONSULTING CONTRACTS
John Gould, Managing Director of Platinum Group Metals (RSA) (Proprietary) Limited, the Company’s wholly-owned subsidiary incorporated under the laws of the Republic of South Africa provided management and consulting services to the Company. During fiscal 2006, Mr. Gould was paid and/or accrued $132,350 for management and consulting services rendered. Mr. Gould does not have a formal agreement but was paid by the Company upon the rendering of services and receipt of expense reports and/or invoices.
Other than as set forth under “Termination of Employment, Change in Responsibilities and Employment Contracts” in this Information Circular, the Company has not entered into any further management contracts.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as set forth in this Information Circular, no person who has been a director or executive officer of the Company at any time since the beginning of the last fiscal year, nor any proposed nominee for election as a director of the Company, nor any associate or affiliate of any of the foregoing, has any material interest, directly or indirectly, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon other than the election of directors or the approval of the amendment to the Company’s Incentive Stock Option Plan.
PARTICULARS OF MATTERS TO BE ACTED UPON
Amendment to Stock Option Plan
The Company currently has an incentive stock option plan in place (the “Plan”) which provides for the granting of options to purchase common shares based on a maximum fixed number, currently an aggregate of 4,500,000 common shares of the Company (representing 8.01% of the Company’s issued and outstanding share capital as at the date of this Information Circular). The Plan was approved by the Shareholders on January 10, 2006. On November 27, 2006, the Directors resolved to convert the Plan to a rolling 10% plan which reserves such number of shares as is equal to 10% of the issued and outstanding shares from time to time for the grant of options. See “Securities Authorized for Issuance Under Equity Compensation Plans” for details of the Plan.
At the Meeting shareholders will be asked to approve a resolution authorizing amendments to the Plan, including  amendments to paragraphs 5.1 and 16 of the Plan providing that the aggregate number of common shares available for issuance upon the exercise of options granted under such Plan shall be a maximum of 10% of the Company’s

 -13 -

issued and outstanding common shares at the date of any grant.  Paragraphs 5.1(a) and 16 of the Plan currently read as follows:
“5.1
The number of Shares that may be reserved for issuance under the Plan, is limited as follows:
(a)
the maximum aggregate number of Shares issuable pursuant to the exercise of Options granted under the Plan shall be a maximum of 4,500,000 Shares  (including Shares issuable upon the exercise of outstanding stock options as at January 14, 2003, referred to in subsection 4.3 hereof), provided that:
(i)
if any Option subject to the Plan is forfeited, expires, is terminated or is cancelled for any reason whatsoever (other than by reason of the exercise thereof), then the maximum number of Shares for which Options may be granted hereunder shall be increased by the number of Shares which were the subject of such forfeited, expired, terminated or cancelled Option;
(ii)
such maximum number of Shares shall be appropriately adjusted in the event of any subdivision or consolidation of the Shares; and
16.
The Board reserves the right to amend or terminate the Plan at any time if an when it is deemed advisable in the absolute discretion of the Board; provided, however, that no such amendment or termination shall adversely affect any outstanding Options granted under the Plan without the consent of the Optionee.  Any amendment to the Plan shall also be subject to acceptance of such amendment or amended Plan for filing by the TSX and, where required by the TSX, the approval of the shareholders of the Company.”
Shareholders will be asked at the Meeting to ratify and approve these amendments in the form of the resolution set forth in Schedule “B” to this Information Circular (the “Amendment”).  Any stock options granted pursuant to the amended Plan or currently outstanding under the existing Plan, which are subsequently exercised, will automatically be reloaded and available for future option grants.
As at the date of this Information Circular 3,402,875 options (representing 6.05% of the Company’s issued and outstanding share capital as at the date of this Information Circular) remain outstanding and unexercised and, if the amendment to the Plan is approved by shareholders, a total of 2,217,749 shares will be available for future grants based on the number of shares issued and outstanding as of November 24, 2006 and this number will increase as the number of shares issued and outstanding increases. No financial assistance is or will be provided to participants in the Plan by the Company to facilitate the purchase of common shares under the Plan.
A copy of the Plan, as amended by the Amendment and including certain additional administrative amendments to update the Plan in accordance with TSX and regulatory requirements, is available for viewing up to the date of the Meeting at the Company’s offices at Suite 328, 550 Burrard Street, Vancouver, British Columbia and at the Meeting to be held on January 10, 2007. In addition, a copy of the amended Plan will be mailed free of charge, to any holder of common shares who requests a copy from the Secretary of the Company. Any such requests should be mailed to the Company, at its head office, to the attention of the Secretary. In accordance with TSX policy, the Plan will require the approval of the Company’s shareholders every three years.
The Plan is intended to provide the board of directors with the ability to issue options to provide the employees, consultants, officers and directors of the Company with long-term equity-based performance incentives which are a key component of the Company’s executive compensation strategy. The Company believes it is important to align the interests of management and employees with shareholder interests and to link performance compensation to enhancement of shareholder value. This is accomplished through the use of stock options whose value over time is dependent on market value.
The Board reserves the right to amend or terminate the Plan at any time if and when it is deemed advisable in the absolute discretion of the Board; provided, however, that no such amendment or termination shall adversely affect

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any outstanding options granted under the Plan without the consent of the optionees. Any amendment to the Plan shall also be subject to acceptance of such amendment or amended Plan for filing by the TSX and, where required by the TSX, the approval of the shareholders of the Company.
Under the amended Plan, the following conditions still remain in full force and effect:
(a)
the number of optioned common shares granted to insiders during any 12 month period may not exceed 10% of the issued shares of the Company;
(b)
the number of optioned common shares reserved for issuance under stock options granted to Insiders may not exceed 10% of the issued shares of the Company;
(f)
the number of optioned common shares granted to any one individual during any 12 month period may not exceed 5% of the issued shares of the Company;
(g)
the number of optioned common shares granted to any one consultant during any 12 month period may not exceed 2% of the issued shares of the Company;
(h)
the number of optioned common shares granted to all persons employed to provide investor relations activities (as a group) may not exceed 2% of the issued shares of the Company during any 12 month period;
(in each case calculated as at the date of grant of the option, including all other shares under option to such person at that time)
(i)
The exercise price for options granted under the Current Plan may not be less than the closing price of the Company’s common shares on the TSX on the trading day immediately preceding the day on which the option is granted (provided that if there are no trades on such day then the last closing price within the preceding ten trading days will be used, and if there are no trades within such ten-day period, then the simple average of the bid and ask prices on the trading day immediately preceding the day of grant will be used);
(j)
options may be exercisable for a period of up to 10 years;
(k)
the options are non assignable and non transferable. The options can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the Plan. Options granted to any optionee who is a Director, Employee, Consultant or Management Company Employee must expire within ninety (90) days after the optionee ceases to be in a least one of these categories  and
(l)
in the event of death of the optionee, the outstanding options shall remain in full force and effect and exercisable by the heirs or administrators of the deceased optionee in accordance with the terms of the agreement for one (1) year from the date of death or  the balance of the option period, which ever is earlier and;
(m)
options granted to consultants engaged to perform investor relations activities must be subject to a vesting requirement, whereby such options will vest over a period of not less than 12 months, with a maximum of 25% vesting in any 3 month period.
The Amendment is by way of an ordinary resolution which must be passed by a simple majority of the votes cast by shareholders entitled to vote who are represented in person or by proxy at the Meeting who vote in respect of that resolution.
ANY OTHER MATTERS
Management of the Company knows of no matters to come before the meeting other than those referred to in the Notice of Meeting accompanying this Information Circular. However, if any other matters properly come before the meeting, it is the intention of the persons designated by management as proxyholders in the form of proxy accompanying this Information Circular to vote the same in accordance with their best judgment of such matters.

 -15 -

ADDITIONAL INFORMATION
Additional information regarding the Company and its business activities is available on the SEDAR website located at www.sedar.com under “Company Profiles – Platinum Group Metals Ltd.”  The Company’s financial information is provided in the Company’s audited consolidated financial statements and related management discussion and analysis for its most recently completed fiscal year and may be viewed on the SEDAR website. Shareholders of the Company may request copies of the Company’s consolidated financial statements and related management discussion and analysis by contacting Platinum Group Metals Ltd., at Suite 328, 550 Burrard Street, Vancouver, British Columbia, CANADA, V6C 2B5, attention R. Michael Jones, President; or by telephone: 604-899-5450.

SCHEDULE  “A”
CORPORATE GOVERNANCE PRACTICES
The following table addresses the disclosure requirements set out in Form 58-101F1 Corporate Governance Disclosure:

Corporate Governance Disclosure Requirement	The Company’s Approach	
1.
Board of Directors –
(a)
Disclose identity of directors who are independent.	
(a)
The Company’s three independent directors are Messrs. Barry W. Smee, Eric H. Carlson and Iain D. C. McLean. Although Mr. Smee is the Secretary for the Company, he does not perform a policy-making function for the Company and is compensated only as an independent director and not as a member of management or as an officer.	
(b)
Disclose identity of directors who are not independent and describe the basis for that determination.	(b)
The Company’s two non-independent directors are Messrs. R. Michael Jones and Frank R. Hallam. These two directors are non-independent insofar as they hold senior executive positions with the Company.	
(c)
Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors (the board) does to facilitate its exercise of independent judgment in carrying out its responsibilities.	(c)
The board is composed of three independent and two non-independent directors.	
(d)
If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.	(d)
The following directors are presently also directors of other issuers as listed:
·
R. Michael Jones is also a director of Jerico Explorations Inc. (TSXV), West Timmins Mining Inc. (TSX)  and MAG Silver Corp. (TSXV)
·
Frank R. Hallam is also a director of Jerico Explorations Inc. (TSXV) and West Timmins Mining Inc. (TSX) and a senior officer of Callinan Mines Ltd. (TSXV) and MAG Silver Corp. (TSXV)
·
Barry Smee is also a director of Almaden Minerals Ltd. (TSX).
·
Iain McLean is also a director of Municipal Solutions Group Inc. (TSXV)
·
Eric Carlson is also a director of MAG Silver Corp. (TSXV) and West Timmins Mining Inc. (TSX)	
(e)
Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings,	 	

 -2 -

		
Corporate Governance Disclosure Requirement
disclose the number of meetings held since the beginning of the issuer’s most recently completed financial year. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.	The Company’s Approach
(e)  
The independent directors of the board do not hold meetings at which non-independent directors and members of management are not in attendance. The Company holds regular quarterly meetings and other meetings as required, at which the opinion of the independent directors is sought and duly acted upon for all material matters related to the Company.	
(f)
Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors.	(f)
The board does not presently have an independent director as the chair of the board, but plans to appoint a lead director. R. Michael Jones, the Company’s President and CEO, chairs the meetings of the board and actively seeks out the views of independent directors on all board matters.	
(g)
Disclose the attendance record of each director for all board meetings held since the beginning of the issuer’s most recently completed financial year.	 (g)
The Company has held 4 board meetings since September 1, 2005, the beginning of its most recently completed financial year. The attendance record for its five directors is: R. Michael Jones (4/4), Frank R. Hallam (4/4), Barry W. Smee (4/4), Iain D. C. McLean (4/4) and Eric H. Carlson (2/4).	
2.
Board Mandate –	 	
Disclose the text of the board’s written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities.	The board assumes responsibility for stewardship of the Company, including overseeing all of the operation
of the business, supervising management and setting milestones for the Company. The board reviews the statements of responsibilities for the Company including, but not limited to, the code of ethics and expectations for business conduct.
The board approves all significant decisions that affect the Company and its subsidiaries and sets specific milestones towards which management directs their efforts.
The strategic planning process is carried out at each board meeting where there are regularly reviewed specific milestones for the Company. The corporate milestones are incorporated into senior management’s bonus scheme where performance bonuses are matched to the corporate objectives and milestones. The board reviews the strategic plan at each meeting, usually at least once quarterly.
The strategic planning process incorporates identifying the main risks to the Company’s objectives and ensuring that mitigation plans are in place to manage
and minimize these risks. In addition to the typical currency, commodity, mining exploration and	

 -3 -

		
Corporate Governance Disclosure Requirement
 	The Company’s Approach
 
development risks, the board has identified additional risk with respect to timely conversion of exploration rights and the granting of final mining authorizations on the Company’s properties in South Africa. To mitigate these risks the Company is working closely with its BEE partner and Anglo Platinum in South Africa, and is in frequent dialogue with the representatives of the Department of Minerals and Energy. This dialogue has been initiated long in advance of the permissions and authorization expiration dates and in advance of the dates required for the Company’s strategic plan. The board is updated regularly as to the status of these discussions.
The board appoints senior management. As the Company has grown it has seen that management has also grown, mitigating risk with respect to succession planning. At this time two executives are in place with sufficient experience to assume the CEO role in the case of the loss of the CEO.
The board approves all of the Company’s major communications, including annual and quarterly reports and press releases. The board also approved the hiring of a communications manager to oversee all of the Company’s communication and ensure a consistent and well-delivered message of the Company’s objectives, achievements and results. The communication policy of the Company is to circulate all press releases to technical staff and all responsible people involved in press release material. This policy ensures that shareholders receive information not only from the senior management point of view but from the viewpoint of the project staff. Shareholder feedback, when significant, is also communicated directly back to the board.
The board and the Audit Committee examine the effectiveness of the Company’s internal control processes and information systems. The board, and the Audit Committee, consults with the auditor with respect to these systems. The Company also initiated a process in 2005 to work towards compliance with the new Sarbanes-Oxley regulations in the United States well in advance of the deadline for corporations of the Company’s size. This process involving the work of a full time senior accounting advisor in consultation with the Company’s auditors is nearing its completion and the results of the interim/internal review will be communicated to the board.
In general, transactions over a CDN$50,000 limit or involving mineral properties requires the board’s approval. Project budgets are brought before the board on a regular basis. The board’s direction with respect to these budgets are communicated back to project staff.

 -4 -

		
Corporate Governance Disclosure Requirement
 	The Company’s Approach
 
The board as a whole, given its small size, is involved in developing the Company’s approach to corporate governance.
The number of scheduled board meetings varies with circumstances but a minimum of 3 meetings are held annually. In addition, special meetings are called as necessary. The Chairman establishes the agenda at each board meeting and submits a draft to each director for their review and recommendation for items for inclusion on the agenda and each director has the ability to raise subjects that are not on the agenda at any board meeting. Meeting agendas and other materials to be reviewed and/or discussed for action by the board are distributed to directors in time for review prior to each meeting.
Board members have full and free access to senior management and employees of the Company.

3.
Position Description -
 
Disclose whether or not the board has developed written position descriptions for the chair and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefly describe how the board delineates the role and responsibilities of each such position.
 
Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO.	 

 

 

 
 
(a)
The board does not currently have a separate chair. The chair of the Audit Committee and the Compensation Committee has a clear written mandate from the board to carry out his responsibilities. Please refer to the Company's Annual Information Form with respect to the fiscal year ended August 31, 2006, which is filed on SEDAR ( www.sedar.com ).
(b)
The board has developed a written position description for the CEO.
 	
4.
Orientation and Continuing Education –
 (a)
Briefly describe what measures the board takes to orient new directors regarding
i.
The role of the board, its committees and its directors, and
ii.
The nature and operation of the issuer’s business.
(b)
Briefly describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.	 

 

 
 
(a)
The Company does not have a formal orientation and education program for new directors. However, new directors are provided with relevant materials with respect to the Company as well as being oriented on relevant corporate issues by the CEO.
(b)
The board currently does not provide continuing education for its directors. By using a board composed of experienced professionals with a wide range of financial, legal, exploration and mining expertise, the Company ensures that the board operates effectively and efficiently.	

 -5 -

		
Corporate Governance Disclosure Requirement	The Company’s Approach	
5.
Ethical Business Conduct –	 	
(a)
Disclose whether or not the board has adopted a written code for the directors, officers and employees. If the board has adopted a written code:
i.
Disclose how a person or company may obtain a copy of the code;
ii.
Describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board satisfies itself regarding compliance with its code; and
iii.
Provide a cross-reference to any material change report filed since the beginning of the issuer’s most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.	(a)
The board has adopted a written code of ethics and expectations for business conduct for the directors, officers and employees of the Company. The code is stated in the responsibilities section of the Company’s annual report, a copy of which is filed on SEDAR ( www.sedar.com ).
The Company’s Audit Committee monitors compliance with the code.	
(b)
Describe any steps the board dates to ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest.	(b)
Directors with an interest in a material transaction are required to declare their interest and abstain from voting on such transactions.
A thorough discussion of the documentation related to material transaction is required for review by the board, particularly independent directors.	
(c)
Describe any other steps that board takes to encourage and promote a culture of ethical business conduct.	(c)
The board seeks directors who have solid track records in spheres ranging from legal and financial to exploration and mining in order to ensure a culture of ethical business conduct.	
6.
Nomination of Directors -  	 	
 (a)
Describe the process by which the board identifies new candidates for board nomination	(a)
All of the Company’s directors are involved in the search for new directors.	
(b)
Disclose whether or not the board has a nominating committee composted entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process.	(b)
The board does not have a nominating committee.
A new director should have direct experience in
the mining business and significant public company experience. The nominee must not have a significant conflicting public company association. Experienced mining directors are currently difficult to source as a result of the high level of activity in the mining sector.	
(c)
If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.	(c)
The board does not have a nominating committee at the present time.

 -6 -

		
Corporate Governance Disclosure Requirement	The Company’s Approach	
7.
Compensation --	 	
(a)
Describe the process by which the board determines the compensation for the issuer’s directors and officers.	(a)
The board reviews the adequacy and form of compensation and compares it to other companies of similar size and stage of development. There is no minimum share ownership requirement of directors. Directors’ compensation is in the form of stock options. The Company’s compensation committee reviews the amounts and effectiveness of stock option compensation.	
(b)
Disclose whether or not the board has a compensation committee composed entirely of independent directors.	(b)
The board has a Compensation Committee composed entirely of independent directors.	
(c)
If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.	(c)  
The Compensation Committee’s primary responsibility is to make recommendations for approval by the board of directors with respect to
the appointment and remuneration of executive officers of the Company. The Committee also evaluates the performance of the Company’s senior executive officers and reviews the design and competitiveness of the Company’s compensation plans. The Compensation Committee meets annually to review and set the remuneration for the upcoming year.	
(d)
If a compensation consultant or advisor has, at any time since the beginning of the issuer’s most recently completed financial year, been retained to assist in determining compensation for any of the issuer’s directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work.	(d)
The Company has felt no need to retain any compensation consultants or advisors at any time since the beginning of the Company’s most recently completed financial year.	
8.
Other Board Committees –	 	
If the board has standing committees other than the audit and compensation committees, identify the committees and describe their function.	The Company does not presently have any standing committees other than the Audit Committee and the Compensation Committee.	

 -7 -

		
 Corporate Governance Disclosure Requirement	The Company’s Approach	
9.
Assessments –	 	
Disclose whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfies itself that the board, its committees and its individual directors are performing effectively.	The Audit Committee, as part of their annual review, assesses the effectiveness of the board and its independence. The Audit Committee assesses the adequacy of the information provided, the regular nature of the communication between the board and management and reviews whether management is following the mandated strategic direction as set out in the board’s direction and management milestones.
The board assesses the CEO’s effectiveness in attaining the Company’s corporate objectives, budgets and milestones.
Management and directors communicate with shareholders on an ongoing basis, and shareholders are regularly consulted on the effectiveness of board members and senior staff.	

SCHEDULE “B”
 ORDINARY RESOLUTION OF THE SHAREHOLDERS OF
PLATINUM GROUP METALS LTD.
(the “Company”)
RE:
Amendment to the Company’s Stock Option Plan
WHEREAS the Company wishes to convert from a fixed number plan to a rolling 10% plan.
NOW THEREFORE BE IT RESOLVED as an ordinary resolution that:
1.
The Company is hereby authorized to delete Section 5.1 (a) of the Company’s Plan in its entirety and to replace it with the following:
5.
Number of Shares Reserved under the Plan
“5.1
The number of Shares that may be reserved for issuance under the Plan, is limited as follows:
(a)
The maximum aggregate number of Shares which may be reserved for issuance pursuant to the exercise of Options granted under the Plan shall be a maximum of TEN (10%) PERCENT of the number of issued and outstanding Shares from time to time (including Shares issuable upon the exercise of outstanding stock options as at January 14, 2003, referred to in subsection 4.3 hereof), provided that:  
(i)
if any Shares covered by an Option subject to the Plan are forfeited, or if an Option has expired, terminated or been cancelled for any reason whatsoever (other than by reason of exercise), then the maximum number of Shares for which Options may be granted hereunder shall be increased by the number of Shares which were the subject of such forfeited, expired, terminated or cancelled Option;
(ii)
such maximum number of Shares shall be appropriately adjusted in the event of any subdivision or consolidation of the Shares; and”
2.
The Company is hereby authorized to delete Section 16 of the Company’s Plan in its entirety and to replace it with the following:
“16.1
Subject to the policies, rules and regulations of any lawful authority having jurisdiction (including the TSX), the Board may, at any time, without further action by its shareholders, amend the Plan or any Option granted hereunder in such respects as it may consider advisable and, without limiting the generality of the foregoing, it may do so to:
(i)
ensure that the Options granted hereunder will comply with any provisions respecting stock options in the income tax and other laws in force in any country or jurisdiction of which a Participant to whom an Option has been granted may from time to time be resident or a citizen;
(ii)
make amendments of an administrative nature;
(iii)
change vesting provisions of an Option or the Plan;
(iv)
change termination provisions of an Option provided that the expiry date does not extend beyond the original expiry date;
(v)
reduce the exercise price of an Option for an Optionee who is not an Insider;

 -2 -

(vi)
make any amendments required to comply with applicable laws or TSX requirements; and
(vii)
make any other amendments which are approved by the TSX.
16.2
No Common Shares shall be issued under any amendment to this Plan unless and until the amended Plan has been approved by the Exchange.
16.3
The Plan may be abandoned or terminated in whole or in part at any time by the Board, except with respect to any Option then outstanding under the Plan.
The Board may not, however, without the consent of the Optionee, alter or impair any of the rights or obligations under an Option theretofore granted.”
3.
The Board of Directors of the Company be authorized to make any changes to its Stock Option Plan as may be required by the Toronto Stock Exchange.
4.
Any director or officer of the Company is hereby authorized and directed for and in the name of and on behalf of the Company to execute or cause to be executed, whether under corporate seal of the Company or otherwise, and to deliver or cause to be delivered all such documents, and to do or cause to be done all such acts and things, as in the opinion of such director or officer may be necessary or desirable in connection with the foregoing.

 
PLATINUM GROUP METALS LTD.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of Platinum Group Metals Ltd. (the “Company”) will be held at the offices of the Company at 328 – 550 Burrard Street, Vancouver ,  British Columbia, V6C 2B5, on Wednesday, the 10 th day of January, 2007 at the hour of 2:00 p.m. (local time), for the following purposes:
1.
To receive the Annual Report;
2.
To receive the audited consolidated financial statements of the Company for the fiscal year ended August 31, 2006 (with comparative statements relating to the preceding fiscal year) together with the report of the auditors thereon;
3.
To elect directors;
4.
To appoint the auditors;
5.
To consider and, if thought fit, to pass an ordinary resolution approving amendments to the Company’s incentive stock option plan to convert such plan from a “fixed number” plan to a “rolling 10%” plan, as more particularly described in the accompanying information circular; and
6.
To transact such further or other business as may properly come before the meeting or any adjournment or adjournments thereof.
The Notice of the Meeting Date filed on SEDAR pursuant to National Instrument 54-101 indicated that the meeting would be an Annual and Special Meeting as Management was contemplating special business that would have required a special resolution.  However, Management has determined that no special business involving a special resolution is required and, accordingly, the meeting will only be an Annual General Meeting.  
Accompanying this Notice is the Annual Report referred to in item 1 above, as well as the audited financial statements and notes thereto for the financial year ended August 31, 2006, a Management Information Circular, a form of proxy, an annual request form and an information reply card. The accompanying Management Information Circular provides information relating to the matters to be addressed at the meeting and is incorporated into this Notice.
Shareholders are entitled to vote at the Meeting either in person or by proxy in accordance with the procedures described in the Management Information Circular accompanying this Notice. Those who are unable to attend the meeting are requested to read, complete, sign and mail the enclosed form of proxy in accordance with the instructions set out in the proxy and in the Management Information Circular accompanying this Notice. Please advise the Company of any change in your mailing address.
DATED at Vancouver, British Columbia, this 27 th day of November, 2006.
BY ORDER OF THE BOARD

(signed) “R. Michael Jones”

Chairman, President, Chief Executive Officer & Director

 
Request for Voting Instructions (“VIF”)
ANNUAL GENERAL
 MEETING OF SHAREHOLDERS OF
PLATINUM GROUP METALS LTD.
TO BE HELD AT  328 - 550 Burrard Street, Vancouver BC  CANADA
ON  Wednesday,  January 10th,  2007, AT  2:00PM

To our securityholders:
We are sending to you the enclosed proxy-related materials that relate to a meeting of the holders of the series or class of securities that are held on your behalf by the intermediary identified below.  Unless you or someone on your behalf attends the meeting as a proxyholder, your securities can be voted only by management, as proxyholder of the registered holder, in accordance with your instructions.
We are prohibited from voting these securities on any of the matters to be acted upon at the meeting without your specific voting instructions.  In order for these securities to be voted at the meeting, it will be necessary for us to have your specific voting instructions.  Please complete and return the information requested in this form to provide your voting instructions to us promptly.
Should you wish to attend and vote at the meeting or have someone else attend and vote at the meeting on your behalf, please complete the reverse side of this form.

SECURITYHOLDER SIGN HERE:                                                                                   

DATE SIGNED:                                                                                                                 

THIS FORM MUST BE SIGNED AND DATED ABOVE.

SEE IMPORTANT VOTING INSTRUCTIONS ON REVERSE.
Resolutions
(For full details of each resolution, please see the enclosed Information Circular)

 	For	Against	Withhold	
 1.
To elect as Director, R. MICHAEL JONES	 	N/A	 	
 2.
To elect as Director, FRANK HALLAM	 	N/A	 	
 3.
To elect as Director, BARRY W. SMEE	 	N/A	 	
 4.
To elect as Director, IAIN D.C. McLEAN	 	N/A	 	
 5.
To elect as Director, ERIC CARLSON	 	N/A	 	
 6.
Appointment of Deloitte & Touche LLP,                             as auditors of the Company	 	N/A	 	
 7.
To pass an ordinary resolution approving amendments to the Company’s stock option plan to convert such plan from a “fixed number” plan to a “rolling 10%” plan, as more particularly set out in the Company’s information circular dated November 27 th , 2006	 	 	N/A	

Please complete the following only if you or someone other than a management representative will be attending the meeting to vote on your behalf .

     IF YOU WISH TO:	
 	
A)    VOTE IN PERSON AT THE MEETING or
B)   APPOINT SOMEONE OTHER THAN THE MANAGEMENT PROXYHOLDERS NAMED IN THE MEETING MATERIAL
       TO VOTE ON YOUR  BEHALF,
PRINT THE NAME OF PERSON WHO WILL BE ATTENDING THE MEETING HERE:

SECURITYHOLDER SIGN HERE:  

DATE SIGNED:
           	
If you complete the above, a form of legal proxy will be issued which will grant you or the person specified by you the right to attend the meeting and vote.  If you require assistance in completing this form, please contact  enter name of CSR here at PCTC at 604-689-9853.	
 	
INSTRUCTIONS FOR COMPLETION OF VOTING INSTRUCTION FORM (“VIF”)
1.
If this VIF is signed and the form is not marked otherwise , the securities will be voted in favour of each matter identified in the notice of meeting.
2.
If this VIF is not dated in the space provided , authority is hereby given by you, the securityholder, for the proxyholder to date this form seven (7) calendar days after the date on which it was mailed to you, the securityholder.
3.
This VIF confers discretionary authority to vote on such other business as may properly come before the meeting or any adjournment thereof.
4.
This VIF should be read in conjunction with the accompanying notice of meeting and information circular.
5.
By providing voting instructions as requested, you are acknowledging that you are the beneficial owner of, and are entitled to instruct us with respect to voting of, these securities.
6.
If these voting instructions are given on behalf of a body corporate, set out the full legal name of the body corporate, the name and position of the person giving voting instructions on behalf of the body corporate and the address for service of the body corporate.
7.
To be represented at the Meeting, VIFs must be submitted no later than forty-eight (“48”) hours , excluding Saturdays, Sundays and holidays, prior to the time of the Meeting or adjournment thereof .
VOTING METHODS
INTERNET VOTING 24 Hours a Day, 7 days a week
If a HOLDER ID and HOLDER CODE appear on the face of this proxy in the address box, holders may complete internet voting at http://webvote.pctc.com .    To receive securityholder communications electronically in the future, simply fill in your e-mail address at the bottom of the Internet Voting page.
TELEPHONE VOTING 24 Hours a Day, 7 days a week
If a HOLDER ID and HOLDER CODE appear on the face of this proxy in the address box, holders may complete telephone voting at 1-888-Tel-Vote (1-888-835-8683) .   Please have this proxy in hand when you call.   A proxyholder that is not a management proxyholder cannot be appointed by telephone.
RETURN YOUR PROXY BY MAIL OR FAX to Pacific Corporate Trust Company
510 Burrard Street, 2 nd Floor, Vancouver, British Columbia, V6C 3B9.  Fax number 604-689-8144.   Voting by mail or fax may be the only method for holdings held in the name of a corporation or holdings voted on behalf of another individual.   Do not mail the printed proxy or VIF if you have voted by internet or telephone.

 

PLATINUM GROUP METALS LTD.
(the “Company”)
Request for Annual and Interim Financial Statements
In accordance National Instrument 51-102 “Continuous Disclosure Obligations”, a reporting issuer must send annually a request form to the registered holders and to the beneficial owners of its securities (“Securityholder”), that the Securityholders may use to request a copy of the reporting issuer’s annual financial statements and related Management’s Discussion & Analysis (“MD&A”), the interim financial statements and related MD&A, or both.  Please complete the form below if you wish to receive such statement(s) and related MD&A for the Company’s current financial year.

Copies of all previously issued annual and quarterly financial statements and related MD&A are available to the public on the SEDAR website at www.sedar.com .

I, the undersigned, certify that I am the owner of the securities of Platinum Group Metals Ltd., and request that my name be placed on the Company’s Mailing List in respect of its quarterly and/or annual financial statements and related MD&A for the current financial year .

The undersigned Securityholder hereby elects to receive:
Interim Financial Statements for the first quarter ended November 30, 2006, second quarter ended February 28, 2007 and third quarter ended May 31, 2007 and the related MD&A;
Annual Financial Statements for the fiscal year ended August 31, 2007 and related MD&A; or
BOTH – Interim Financial Statements and MD&A and the Annual Financial Statements and related MD&A.
Please note that this request form will be mailed each year and Securityholders must return such form each year to receive the documents indicated above.
Name:                                                                                                                                                                                                                     
Address:                                                                                                                                                                                                               
    Street Name & Number
Apt. or Suite

        
  City

Prov or State
   
Country
 Postal or Zip Code
*Signature:                                                                                                                                 
 
Date:                                                        
PLEASE RETURN YOUR COMPLETED REQUEST FORM BY MAIL TO:
PLATINUM GROUP METALS LTD.
328 – 550 Burrard Street
Vancouver, BC CANADA  V6C 2B5
OR BY FAX TO: 604-484-4710

* At Platinum Group Metals Ltd., we respect your privacy and we are committed to protecting your information.  The personal information you are providing on this form will only be used for its intended purpose described above, and will be handled in accordance with our Privacy Policy, available on our website at www.platinumgroupmetals.net , or by writing to us at 328 – 550 Burrard Street, Vancouver, BC, V6C 2B5. Platinum Group Metals Ltd. will use the information that you are providing on this form in order to process your request and will treat your signature on this form as your consent to the above.

Proxy
ANNUAL GENERAL
MEETING OF SHAREHOLDERS OF
PLATINUM GROUP METALS LTD.
TO BE HELD AT  328 - 550 Burrard Street, Vancouver BC  CANADA
ON  Wednesday,  January 10th,  2007, AT  2:00PM
I/We being holder(s) of the Company hereby appoint:
R. Michael Jones , the Chairman, Chief Executive Officer and a Director of the Company, or failing this person, Frank Hallam , the Chief Financial Officer and a Director of the Company, or in the place of the foregoing,
(print the name)
           ,       
as my/our proxyholder with full power of substitution to attend, act and vote for and on my/our behalf in respect of all matters that may properly come before the aforesaid meeting of the holders of the Company (the “Meeting”) and at every adjournment thereof, to the same extent and with the same powers as if I/we were present at the said Meeting and at any adjournment thereof.  
I/We hereby direct the proxyholder to vote the securities of the Company recorded in my/our name as specified herein.
I/We hereby revoke any proxy previously given to attend and vote at said Meeting.

SECURITYHOLDER SIGN HERE:                                                                                   

DATE SIGNED:                                                                                                                 

THIS FORM MUST BE SIGNED AND DATED ABOVE.

SEE IMPORTANT VOTING INSTRUCTIONS ON REVERSE.
Resolutions
(For full details of each resolution, please see the enclosed Information Circular)

 	For	Against	Withhold	
 1.
To elect as Director, R. MICHAEL JONES	 	N/A	 	
 2.
To elect as Director, FRANK HALLAM	 	N/A	 	
 3.
To elect as Director, BARRY W. SMEE	 	N/A	 	
 4.
To elect as Director, IAIN D.C. McLEAN	 	N/A	 	
 5.
To elect as Director, ERIC CARLSON	 	N/A	 	
 6.
Appointment of Deloitte & Touche LLP,                             as auditors of the Company	 	N/A	 	
 7.
To pass an ordinary resolution approving amendments to the Company’s stock option plan to convert such plan from a “fixed number” plan to a “rolling 10%” plan, as more particularly set out in the Company’s information circular dated November 27 th , 2006	 	 	N/A	

INSTRUCTIONS FOR COMPLETION OF PROXY

1 .
This Proxy is solicited by the Management of the Company.
2.
This form of proxy (“Instrument of Proxy”) must be signed by you, the holder , or by your attorney duly authorized by you in writing, or, in the case of a corporation, by a duly authorized officer or representative of the corporation; and if executed by an attorney, officer, or other duly appointed representative , the original or a notarial copy of the instrument so empowering such person, or such other documentation in support as shall be acceptable to the Chairman of the Meeting, must accompany the Instrument of Proxy.
3.
If this Instrument of Proxy is not dated in the space provided, authority is hereby given by you, the holder, for the proxyholder to date this proxy seven (7) calendar days after the date on which it was mailed to you, the holder, by Pacific Corporate Trust Company.
4.
A holder who wishes to attend the Meeting and vote on the resolutions in person may simply register with the scrutineers before the Meeting begins.
5.
A holder who is not able to attend the Meeting in person but wishes to vote on the resolutions , may do the following:
(a)
   appoint one of the management proxyholders named on the Instrument of Proxy, by leaving the wording appointing a nominee as is (i.e. do not strike out the management proxyholders shown and do not complete the blank space provided for the appointment of an alternate proxyholder ).  Where no choice is specified by a holder or where both choices are specified with respect to a resolution set out in the Instrument of Proxy, the management appointee acting as a proxyholder will vote in favour of each matter identified on this Instrument of Proxy and, if applicable, for the nominees of management for directors and auditors as identified in this Instrument of Proxy; OR
(b)
   appoint another proxyholder, who need not be a holder of the Company, to vote according to the holder’s instructions, by striking out the management proxyholder names shown and inserting the name of the person you wish to represent you at the meeting in the space provided for an alternate proxyholder.
6.
The securities represented by this Instrument of Proxy will be voted or withheld from voting in accordance with the instructions of the holder on any ballot of a resolution that may be called for and, if the holder specifies a choice with respect to any matter to be acted upon, the securities will be voted accordingly.  If a holder has submitted an Instrument of Proxy, the holder may still attend the Meeting and may vote in person .  To do so, the holder must record his/her attendance with the scrutineers before the commencement of the Meeting and revoke, in writing, the prior votes.
7.
Further, the securities will be voted by the appointed proxyholder with respect to any amendments or variations to matters identified in the Notice of Meeting or other matters which may properly come before the Meeting, as the proxyholder in its sole discretion sees fit.
8.
To be represented at the Meeting, proxies must be submitted no later than forty-eight (“48”) hours , excluding Saturdays, Sundays and holidays, prior to the time of the Meeting or adjournment thereof.
9.
This proxy confers discretionary authority to vote on such other business as may properly come before the meeting or any adjournment thereof.
 
VOTING METHODS
 INTERNET VOTING 24 Hours a Day, 7 days a week 
If a HOLDER ID and HOLDER CODE appear on the face of this proxy in the address box, holders may complete internet voting at http://webvote.pctc.com .    To receive securityholder communications electronically in the future, simply fill in your e-mail address at the bottom of the Internet Voting page.
TELEPHONE VOTING 24 Hours a Day, 7 days a week
If a HOLDER ID and HOLDER CODE appear on the face of this proxy in the address box, holders may complete telephone voting at 1-888-Tel-Vote (1-888-835-8683) .   Please have this proxy in hand when you call.   A proxyholder that is not a management proxyholder cannot be appointed by telephone.
RETURN YOUR PROXY BY MAIL OR FAX to Pacific Corporate Trust Company
510 Burrard Street, 2 nd Floor, Vancouver, British Columbia, V6C 3B9.  Fax number 604-689-8144.   Voting by mail or fax may be the only method for holdings held in the name of a corporation or holdings voted on behalf of another individual.   Do not mail the printed proxy or VIF if you have voted by internet or telephone. nd Floor, Vancouver, British Columbia, V6C 3B9.  Fax number 604-689-8144.   Voting by mail or fax may be the only method for holdings held in the name of a corporation or holdings voted on behalf of another individual.   Do not mail the printed proxy or VIF if you have voted by internet or telephone.

   

• Advanced engineering and mine design to optimize the extraction plan for our extraordinary near-surface platinum resource on Project 1 of the Western Bushveld Joint Venture.
• Added  significantly to our high-grade, near-surface platinum deposit in the Western Bushveld Joint Venture with aggressive drilling on Project 1.
• Initiated  drilling across the Project 2 and Project 3 land areas to expand resource base for additional mine planning opportunities.
• Completed our earn-in expenditure of 35 Million Rand ahead of schedule on the Western Bushveld Joint Venture. Partners Anglo Platinum and Africa Wide Mineral Prospecting and Exploration approved a large-scale drilling and engineering budget for the project.
• Closed  a $10 million financing in Toronto, Calgary, New York and London to solidify the funding of engineering and our large-scale drilling programs.
View of Western Bushveld Joint Venture.

 

 
ROOM TO GROW
In 2006 we met our ambitious goals for the Western Bushveld Joint Venture and laid the groundwork for an exciting 2007.
This year we advanced the resource drilling and mine engineering on our first platinum deposit, the Project 1 area of the Western Bushveld Joint Venture. Through this process, we added signifi-cantly to our platinum ounces and firmly placed our Project 1 area on the path to production.
We have also begun our early exploratory work on the remaining 60% of the Western Bushveld Joint Venture area.
As Project 1 nears completion of its pre-feasibility study we have come to truly appreciate the scale of the Western Bushveld Joint Venture. The sheer size of the land position has meant we have had to break it into three separate projects. Each area contains approximately one-third of the eleven kilometre available potential strike length.
Both Project 2 and Project 3 offer signifi-cant room to grow for the partnership across the enormous land position we control in the heart of the world’s platinum production.
It is hard to believe that it has been less than two years since we finalized the Western Bushveld Joint Venture with our partners Anglo Platinum Limited, which like Platinum Group Metals holds 37% and Africa Wide, which holds 26%. PTM is the operator of the project and works with the joint venture management committee to implement decisions.
With over 69,000 metres of core logged, the Project 1 deposit modeled and the completion of several potential mine designs, the pre-feasibility study is expected in late fall 2006 and an optimum design will be selected for the final phase of design at that time with partner approval. The team has also started the definition drilling on the adjacent Project 2 to outline the potential scale of resources and on Project 3 we are at the initial exploration drilling stage.
On Project 1, the measured and indicated resource base totals an estimated 6.29 million ounces of platinum, palladium, rhodium, and gold (see tables on page 22), providing a solid base for a long life and robust mine plan. Because of the shallow depth, large scale tonnage with room to grow, above average grade and a high ratio of platinum, Project 1 stands out when compared to the other new platinum projects.
During 2006 we also completed a $10 million private placement financing led by RBC Capital Markets and J.F.Mackie and Company Ltd. This has placed us in a strong financial position to pursue our ambitious goals into 2007. Over the past 5 years, we have developed a strong, supportive group of institutional shareholders from Canada, the USA, the UK and South Africa.
When we meet with investors and other stakeholders, many of them ask why it takes so long to develop a platinum mine. Of course, when you consider the detailed engineering necessary for something relatively small like your car – and contrast that with a mine that is five kilometers long and two and a half kilometers wide, with many variables - you can begin to imagine what needs to be considered. Getting it right from the beginning will pay major benefits down the road. In addition, the design study we are doing now will provide important information when we approach the next areas in our development pipeline, Projects 2 and 3.
Most of the technical work leading to the mine design has been done by our in-house team with oversight from independent qualified persons. Our staff in Johannesburg has done an excellent job and because much of the work has been done by our employees, the experience gained adds to PTM’s growing knowledge base. We expect to further expand our team over the next few months as we prepare for the additional requirements of a potential mining operation.

 Our partners in the Western Bushveld Joint Venture have been supportive and have made excellent contributions to the project’s value. Anglo Platinum, the largest producer of platinum in the world, has been a responsive and enthusiastic partner and has provided access to, and input from, their sizable internal resources and experience.
The WBJV is an excellent example of the co-operative environment envisaged in South Africa’s new mining regulations, including the Mining Charter.
PTM’s entrepreneurial energy, combined with Anglo Platinum’s production experience and the inclusion of historically disadvantaged South Africans at the management level, have propelled the project forward in an extraordinary manner.
The Western Bushveld Joint Venture will be our focus in the years ahead, both as a result of the outstanding nature of Project 1 and the large scale potential afforded by the investigation of Projects 2 and 3 within the mineral rights area.
We recognize that we have a responsibility to our shareholders to ensure the best valuation for our enormous potential. To achieve this, we will be working to reach as large an investment audience as possible over the next twelve months.
In addition to our responsibilities to our shareholders, we also have responsibilities to our partners Anglo Platinum and Africa Wide, to our employees and to the communities in which we operate. We strive to exceed the minimum governance, environmental and community standards and we have worked hard over the past year to develop innovative ways to maximize the benefits of the project and infrastructure to the people in the regions where we are operating.
We look forward to the next twelve months, as we drive Project 1 towards a feasibility study and production decision and as we further define and understand the full potential of the unique Western Bushveld Joint Venture.
R. Michael Jones, 
President and CEO 
Platinum Group Metals Ltd.

 

ADVANCING AND GROWING

Located in the heart of the world’s largest platinum producing district, the Western Bushveld Joint Venture includes Platinum Group Metals Ltd. and Anglo Platinum Limited, each with a 37% interest, and Africa Wide, an accredited Black Economic Empowerment company, with a 26% portion. From the beginning, Platinum Group Metals has been designated the operator of the joint venture and we have moved the project forward in a rapid fashion.
Platinum Group Metals completed our earn-in requirements early and all three partners are investing directly in the development and exploration costs of the Western Bushveld Joint Venture, according to their interests. (Additional details of the joint venture agreement can be found in the Financial Statements Notes, page 21.)
The Western Bushveld Joint Venture covers 67 square kilometres of mineral rights and approximately 11 kilometres of potential strike length. Because the area is so large, it has been divided into three potential areas: Projects 1, 2 and 3, each measuring the footprint size of a typical full-scale, stand-alone mine.
Our resources are immediately adjacent to Anglo Platinum’s BRPM platinum mine which is currently producing approximately 200,000 ounces of refined platinum per year from shallow decline tunnels. Resources have been defined on the surrounding properties, both along strike and down dip of the WBJV Projects 1 and 2 areas, indicating continuity of the platinum reefs and good prospects for Project 2. Grades and recoveries of platinum group metals estimated in our work have been consistent with the published figures for the adjoining mine.
At the current pre-feasibility stage, cost estimates are typically +/- 20% and the mining methods, equipment required, metallurgical recovery, metal sales and price assumptions are all reasonably well defined.
A final bankable feasibility study is the next step for Project 1 and work for that study is expected to take place during the balance of 2006 and early 2007, once the partners have approved the plans.
At this stage, major project design components will be cost-estimated using actual quotes from suppliers and many of the detailed drawings for construction will be completed. The feasibility study would be used for debt and equity funding decisions for construction of the proposed Project 1 platinum mine.
Platinum Group Metals is concentrating heavily on the development of the Western Bushveld Joint Venture, especially in the near term. Our dual focus, both on the engineering efforts for Project 1’s path to production, while simultaneously exploring the remaining 60% of the property, promises to make 2007 an active and exciting year.

“Because the area is so large, the WBJV has been divided into three potential areas each measuring the footprint size of a typical full-scale stand-alone mine.”	Deposit modelling and engineering on Project 1 WBJV.	

WESTERN BUSHVELD JOINT VENTURE RESOURCES

 
The resources of the Western Bushveld Joint Venture in Project 1 are calculated on two flat and dipping layers called the Merensky Reef and UG2 Reef.
A three dimensional model of these two layers in our Project 1 deposit is shown here. Drilling on Project 2 and Project 3 is taking place adjacent to this area. The blue areas are mined out areas on the same reefs on nearby mines.

 

 

 
We have grown and increased the confidence level in our Project 1 resources, as seen by the advancement to the measured and indicated resource category from our initial 2004 resource of 4.7 million ounces platinum, palladium, rhodium, and gold in the inferred category.
In September 2006 the Project 1 resources were expanded to include 6.29 million ounces in the measured and indicated category, with a further 2 million ounces in the inferred category. (See table page 22).
Through systematic drilling and testing across Project 1, and with over 400 platinum reef intersections for evaluation purposes, we know our deposit extremely well.
South Africa’s Bushveld Complex hosts most of the world’s platinum group metals (PGM) and is home to 17 of the world’s 22 primary producing PGM mines accounting for 79% of annual global platinum production.
The Merensky and UG2 Reefs of the platinum-rich Western Limb of the Complex account for the bulk of the district’s total metal output, with 11 active mines producing 70% of the world’s annual platinum.
PTM’s Western Bushveld Joint Venture property lies in the heart of this prolific district.
The following note is mandated under SEC Guidelines to appear before the resource table. Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources and Inferred Resources. This section uses the terms “measured and indicated resources” and “inferred resources”. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. This report refers to adjacent properties where we have no right to mine. We advise investors that the SEC mining guidelines strictly prohibit information of this type and investors are cautioned mineral deposits on adjacent properties are not indicative of mineral deposits on our properties. Resources on our properties may not exist or be legally or economically feasible.

 THE SELECT NATURE OF OUR PROJECT 
As we learn more about the resources of Western Bushveld Joint Venture through our engineering and development work, we have realized how this project stands out when compared to many of the other new platinum projects using the four principal factors for platinum mine evaluation.
1. TONNES: The WBJV has an enormous strike length of 11 kilometres. This means that its tonnage is configured in an easily accessible position with sufficient size for large-scale operations. Our preliminary engineering designs indicate a 250,000 ounce a year mine - for more than 15 years on Project 1 alone.
2. GRADE, ORE TYPE: As with any mining project, grade is all important. The Merensky Reef grade for the Western Bushveld Joint Venture, on which the initial mine plans focus, is above average. The Merensky Reef is generally preferred over UG-2 Reef as Merensky reef concentrate is easier to smelt. As mining continues on the Bushveld Complex, the availability of Merensky Reef is expected to decline. This may mean our high platinum content Merensky Reef concentrate will likely become even more desirable.
3. PERCENTAGE OF PLATINUM: The percentage of platinum versus other valuable minerals is also very important in evaluation of platinum projects. Platinum is valued higher than palladium at the current time, and industry preference is for a higher platinum percentage ore, with more than 60% platinum being optimal.

 
“PTM is part of a select group of companies with large-scale near-surface platinum rights, excellent grades and high platinum ratios.”

 

 4. DEPTH: Obviously shallower deposits are cheaper and faster to develop, but many new projects are looking at depths in excess of 1,000 metres. The Western Bushveld Joint Venture starts near surface. It is not only the cost of going deep that may be prohibitive, but also the time. Recent platinum mines located more than 1,000 metres deep have taken five to seven years to develop.
There are large resources of platinum identified in the Bushveld Complex – more than sufficient to meet the world’s demand for hundreds of years. The initial hurdle of acquiring platinum rights on the Bushveld Complex is not impossible to overcome and some thirty or so companies have entered the business. PTM is part of a select group of companies with large-scale near-surface platinum rights, excellent grades and high platinum ratios.
HISTORY
In 2002, Platinum Group Metals began acquiring high potential platinum properties in South Africa. Starting with a relatively small piece of prime Western Bushveld land in 2004, Platinum Group Metals leveraged our strategic land position and an existing relationship with Anglo Platinum from an exploration joint venture in Canada into a large-scale joint venture agreement. Both Anglo Platinum and Platinum Group Metals contributed land and expertise to the project.
All this was happening during a time of regulatory change in South Africa which required active exploration on held mineral rights, something new in that country but very natural for Canadians. The new regulations also required the inclusion of historically disadvantaged South Africans into all levels of mine development, exploration and beneficiation.
This confluence of events has made for a unique situation and opportunity in the South African platinum fields.

 

Careful sampling and quality control of the drill core on the WBJV site.

THE PLATINUM STORY
 Overall demand for platinum grew 2% to a record 6.70 million ounces last year.
With ever more stringent clean air standards, both in the developed and the developing world, the requirement for clean burning vehicles isn’t going to diminish anytime soon. The key driver for platinum demand is catalytic converters for vehicles. Platinum helps “scrub” pollutants from an engine’s exhaust. Each of us owns a little bit of platinum in the tail pipe of our cars.
While palladium is substituted in vehicles operating with gasoline engines, platinum is still the dominant PGM (platinum group metal) employed by diesel cars and trucks. 50% of all new light vehicles in Europe run on diesel, partly as a reaction to climbing gasoline prices.
Over 57% of platinum demand comes from the automotive sector, but industrial usage continues to mount and is close to surpassing the other big user, the jewelry industry.
So with all the demand, why can’t producers ramp up supply more quickly, especially since a deficit has existed since 1999?
Gold, silver, copper, nickel, and iron-ore are pretty evenly distributed around the world. Platinum and other PGMs are very different. Approximately 79% of the world’s platinum supply is produced in South Africa, with 90% of that coming from the high-yield Western Bushveld region. Because of unique geological formations, primary platinum production is really limited to a couple of places on earth.

 

 

Platinum bearing UG-2 Chromite Core, Project 1 WBJV.

 
			
	The major platinum producers have striven to increase output but world demand has surged ahead of the production expansion. Smelter capacity needed for final recovery of platinum has been constrained. The last major platinum smelter completed in South Africa was the 1.3 Billion Rand Polokwane Smelter commissioned in March 2003.
Most analysts are predicting a robust market for platinum and the other elements associated with it. This is where Platinum Group Metals comes into the story. Our Western Bushveld Joint Venture is one of the few development projects in the region with high platinum grades, a resource close to surface and the benefit of having the world’s largest producer as our partner.
“As clean air standards increase, the key driver of platinum demand continues to be catalytic converters for vehicles. Each of us owns a little bit of platinum in the tail pipe of our cars.”		

 OTHER PROJECTS
WAR SPRINGS AND TWEESPALK
PTM continues to hold large land positions with our War Springs and Tweespalk properties in the Northern Limb of the Bushveld Complex. In October 2005, a resource of 980,000 ounces (1.03 g/t) in 29.6 million tonnes was outlined (C. Muller, SACNASP, QP). The economics of this deposit and its potential are being evaluated under current metal prices and exchange rates. Additional drilling to define the limits of the deposit is being considered for 2007.
In 2004, a single bore hole with an interesting 4 g/t 4E over four metres intercept was completed at the Tweespalk Property in the North Limb. This property is being considered for early 2007 drilling follow-up. Exploration elsewhere in the north limb has shown some potential for increased grade and thickness at depth, making this property worthy of further drill testing by PTM in 2007.
CANADA
PTM continues to hold a sizable land position near Thunder Bay, Ontario and the Lac des Iles Mine operated by North American Palladium. Although this mine has been struggling due to low palladium prices, the area continues to have potential and is one of only two platinum/palladium districts in North America. PTM plans to retain this strategic mineral rights position.
Exploration on the Canadian portfolio has been mostly deferred while we focus on our South African projects. In late 2006 we increased and consolidated our interests on several Lac des Iles properties so that they could be more easily held as strategic assets for the long term.

Exploration planning using geological and geophysical information.

 

OUR RESPONSIBILITIES
“In addition to the Charter, PTM takes our responsibilities to the communities where we operate seriously and we ha ve identified specific opportunities for people to gain fro m the regional benefits that accrue from our activities.”
PTM strives to exceed mandated standards in the areas of environment, health and safety, corporate governance and sustainable development. Internally and externally we work to foster a climate of mutual respect and open, honest and transparent dialogue. In interactions with our stakeholders, including reporting to shareholders, we encourage all of our employees, where appropriate, to contribute.
PTM’s primary activities are in South Africa where our operations are covered by the new Mineral and Petroleum Resources Development Act introduced by the government of South Africa in 2002. A key component of the Act is the Mining Charter (see page 17) The Mining Charter provides guidelines for mining projects regarding their community and social responsibilities.
In addition to the Mining Charter, PTM takes its responsibilities to the communities where we operate seriously, and we have identified specific opportunities for people to gain from the regional benefits that accrue from our activities.
By assessing both the available skills and needs of the community we have worked hard to act as a “spark plug” for sustainable development, beyond mining, in the local area.
On the Western Bushveld Joint Venture we engaged in dialogue with the local community at the earliest exploration stage. We are proud to report that we have identified some key opportunities for tangible community support that are being embraced both by the local municipality as well as the South African Department of Land Affairs.
Created in conjunction with local community leaders and members, these projects have the potential to be self-sustaining for the long term. Two specific businesses have been identified and seed financing is being secured. In addition to the local economic development that a mine would bring, these community projects have the potential to provide jobs and additional positive spin-offs for the region’s people.

PTM’S MINING CHARTER/RESPONSIBILITIES REPORT CARD
Human Resource Development
·	With advisors and consultants, PTM has begun the dialogue with community leaders to establish to skills and education levels within the communities in which we are operating.
·	PTM has provided opportunities to Historically Disadvantaged South Africans (HDSA) at all levels in our team including: basic labour, project management, and geological staff. We have developed a program of executive mentoring – not just because it satisfies the Charter, but because it makes good management sense to do so.
·	PTM’s Canadian stock option plan has been extended to all South Africa professionals and PTM is working towards providing opportunities for workers to learn literacy skills as the project advances.
Employment Equity
·	A draft labour plan has been prepared, and planning and targets have been discussed early with government. • PTM has already achieved a strong level of HDSA involvement in the field (more than the 40% requirement) and at our Johannesburg office. The WBJV is being operated by HDSA technical staff and one of the three senior executives in Johannesburg is HDSA.
·	Women have been targeted for employment and advancement.
Migrant Labour
·	PTM has a policy not to discriminate against migrant labor or any other qualified applicants.
Mine Community and Rural Development
·	The process of dialogue is underway through Africa Wide Mining and consultants at the Maverick Group, in partnership with the government, in order to ensure maximum benefit to the community from the mining project.
·	Leaders and groups within the community have been identified and communications channels opened to allow for development projects and ideas to be brought forward.
·	Contributing to the potential broad-based empower-ment indirectly associated with the mine project, a number of potential community projects have been identified including opportunities in agriculture, tourism and cottage industry that further build the economic and general heath of the community. These projects may only require seed funding and leadership, and iden-tified NGO funding may also be attracted.
Housing and Living Conditions
·	Assessment work is underway as part of mine planning and feasibility.
·	Projects, like those mentioned above, that generate broad based economic improvements are one of the best ways to improve community living conditions.
Procurement
·	Assessment work is underway as part of mine planning and feasibility.
·	Opportunities for procurement include capital goods, services and consumables.
·	PTM’s current largest supplier is an HDSA-controlled drilling company.
Ownership and Joint Ventures
·	All of PTM’s exploration and development projects in South Africa have been structured to achieve the 15 year target of HDSA direct project ownership of 26%.  In addition, approximately 6% of PTM’s public company stock option plan is held by HDSA.
·	The Joint Venture is managed and controlled by a management committee with active HSDA involvement. 
·	Currently, there is important two-way mentoring in project activities. PTM receives mentoring on community and government relationships, and on the permit application process from the HDSA members. Africa Wide, our BEE partner, receives mentoring on exploration, mining, mine development and capital markets.
·	All transactions are simple and transparent and part of PTM’s Canadian public market filings.
Beneficiation 
·	It is anticipated that the products of the Western Bushveld Joint Venture and other projects will be smelted and refined in South Africa.
·	The Western Bushveld Joint Venture includes an agreement on concentrate supply potentially to Anglo Platinum.

MANAGEMENT DISCUSSION AND ANALYSIS
1.
DESCRIPTION OF BUSINESS

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. (“Old Platinum”) and New Millennium Metals Corporation (“New Millennium”). The Company is an exploration and development company conducting work primarily on mineral properties it has staked or acquired by way of option agreement in Ontario, Canada and the Republic of South Africa. The Company has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The Company defers all acquisition, exploration and development costs related to mineral properties. The recoverability of these amounts is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of the property, and any future profitable production, or alternatively upon the Company’s ability to dispose of its interests on an advantageous basis.

2.
DISCUSSION OF OPERATIONS AND FINANCIAL CONDITIONS

a)
Results of Operations
The Company has been very active on projects in South Africa during the year. The Company’s Canadian projects were not active. During the year the Company incurred a net loss of $3,853,273 (2005 - $3,795,648). Before a non-cash charge for stock based compensation of $110,176 (2005 - $1,283,289) and mineral property costs written off of $1,174,325 (2005 - $974,294), general and administrative expenses totaled $2,808,715 (2005 - $2,466,085). Interest, other income and recoveries amounted to $235,236 (2005 - $218,373). Global exploration expenditures during the period totaled $5,474,479 (2005 - $5,309,859), of this $4,998,447 was for the WBJV project (2005 - $3,023,125) and $476,032 for other exploration (2005 - $2,286,734).

On October 27, 2004, the Company announced the formation of the Western Bushveld Joint Venture (“WBJV”) with Anglo Platinum Limited and Africa Wide Mineral Prospecting and Exploration (Pty) Limited. Work commenced immediately thereafter on the project and the rate of work has accelerated since then. Activities consist of research and data review, prospecting, mapping, engineering and drilling of the project area. At the time of writing there are 5 diamond drills turning on WBJV properties.  The Company is in the process of completing a pre-feasibility study for the Project 1 area of the WBJV. In August of 2005 the Company completed an engineering review, a statement of inferred resources, and Preliminary Assessment for the Project 1 area on the WBJV in compliance with Canadian National Instrument 43-101. Later, on December 12, 2005, again on March 2, 2006, and finally on September 15, 2006 the Company published updated resource estimates for the WBJV (see the September 15, 2006 resource statement below).

During the fourth quarter the Company incurred a loss of $1,200,351 (2005 - $62,634). General and administrative expenses totaled $849,740 (2005 - $637,195) while interest, other income and recoveries was $100,991 (2005 - $87,850). Global exploration expenditures during the quarter totaled $676,555 (2005 - $1,462,287)

The Company has increased its general level of activity in the past three years in South Africa. Activities in Canada have been reduced, as the more advanced nature of the WBJV project has caused it to become an investment focus for the Company. The Company still actively reviews many potential property acquisitions in the normal course of business. The Company also makes efforts to raise its profile and liquidity in the capital markets.

The following tables set forth selected financial data from the Company’s Audited Financial Statements and should be read in conjunction with these financial statements.

 	Year ended
Aug. 31, 2006	Year ended
Aug. 31, 2005	Year ended
Aug. 31, 2004	
Interest & other income	$235,236	$218,373	$430,106	
Net Income (Loss)	($3,853,273)	($3,795,648)	($2,242,627)	
Net Income (Loss) per Share	($0.08)	($0.10)	($0.07)	
Total Assets	$27,664,441	$15,705,187	$9,134,019	
Long Term Debt	Nil	Nil	Nil	
Dividends	Nil	Nil	Nil	
The following table sets forth selected quarterly financial information for each of the last eight (8) quarters.

Quarter Ending	Revenue (interest & other income)	Net Loss	Net Loss per share	
August 31, 2006	$100,991	($1,200,351)	($0.02)	
May 31, 2006	$55,062	($515,092)	($0.01)	
February 28, 2006	$53,234	($1,447,883)	($0.03)	
November 30, 2005	$25,949	($689,947)	($0.02)	
August 31, 2005	$87,850	($62,634)	($0.00)	
May 31, 2005	$44,993	($975,865)	($0.03)	
February 28, 2005	$47,089	($2,157,952)	($0.05)	
November 30, 2004	$38,441	($599,197)	($0.02)	

The Company has not declared nor paid dividends on its common shares. The Company has no present intention of paying dividends on its common shares, as it anticipates that all available funds will be invested to finance the growth of its business.

b)
Trend Information
Other than the financial obligations as set out in the table provided at item 5 below, there are no identifiable trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, the Company’s liquidity either increasing or decreasing at present or in the foreseeable future. The Company will require sufficient capital in the future to meet its acquisition payments and other obligations under mineral property option agreements for those properties it considers worthy to incur continued holding and exploration costs upon. The need to make such payments is a trend as it is unlikely that all such obligations will be eliminated from the Company’s future business activities. The Company intends to utilize its cash on hand in order to meet its obligations under mineral property option agreements. It is unlikely that the Company will generate sufficient operating cash flow to meet all of these ongoing obligations in the foreseeable future. Accordingly, the Company will likely need to raise additional capital by issuance of equity within the next year. At this time the Company has no plan or intention to issue any debt in order to raise capital for future requirements; however, the Company is working to complete a bankable feasibility study for the Project 1 area of the WBJV in 2007. If a production decision is taken by the WBJV upon completion of that study, the Company will likely pursue debt financing for a portion of its share of the capital requirements for that project.

At the time of writing there is a noted favourable trend with regard to the market for metal commodities and related products, however, it is the opinion of the Company that its own liquidity will be most affected by the results of its own acquisition, exploration and development activities. The acquisition or discovery of an economic mineral deposit on one of its mineral properties may have a favourable effect on the Company’s liquidity, and conversely, the failure to acquire or find one may have a negative effect.

c)
Risk Factors
The following is a brief discussion of those distinctive or special characteristics of the Company’s operations and industry that may have a material impact on, or constitute risk factors in respect of, the Company’s future financial performance.

The Company, and thus the securities of the Company, should be considered a highly speculative investment and investors should carefully consider all of the information disclosed in this Annual Report prior to making an investment in the Company. In addition to the other information presented in this management discussion and analysis, the following risk factors should be given special consideration when evaluating an investment in the Company’s securities.

General
Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits, which, though present, are insufficient in quantity and quality to return a profit from production.

The Company’s business is subject to exploration and development risks
All of the Company’s properties are in the exploration stage of development and no known reserves have been discovered on such properties. There is no certainty that the expenditures to be made by the Company or its joint venture partners in the exploration of its properties described herein will result in discoveries of precious metals in commercial quantities, or that any of the Company’s properties will be developed. Most exploration projects do not result in the discovery of precious metals and no assurance can be given that any particular level of recovery of precious metals will in fact be realized or that any identified resource will ever qualify as a commercially mineable (or viable) resource which can be legally and economically exploited. Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permit regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of precious metals ultimately discovered may differ from that indicated by drilling results. There can be no assurance that precious metals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale.

Political and economic instability may affect the Company’s business
The Company’s activities in Canada and South Africa are subject to risks common to operations in the mining industry. South Africa has recently undergone significant change in its government since the free elections in 1994. At present, Mining Legislation in South Africa is undergoing change. The new Mineral and Petroleum Resources Development Act became law on May 1, 2004. The regulation and operation of this new law is still being implemented. In association with the new Act, the Mining Charter sets out a target of 26% ownership and participation in the mineral industry by “Historically Disadvantaged Persons” within ten years, but the mechanisms to fully affect this objective are still evolving. Accordingly, all laws may be considered relatively new, resulting in risks related to the possible misinterpretation of new laws, unilateral modification of mining or exploration rights, operating restrictions, increased taxes, environmental regulation, mine safety and other risks arising out of new sovereignty over mining, any or all of which could have an adverse affect on the Company. There is not certainty that the Company will be able to convert its existing exploration rights into mining rights. The Company’s operations in general may also be affected in varying degrees by political and economic instability, terrorism, crime, extreme fluctuations in currency exchange rates and inflation.

The Company is subject to the risk of fluctuations in the relative values of the Canadian Dollar as compared to the South African Rand and the United States Dollar
The Company may be adversely or favorably affected by foreign currency fluctuations. The Company is primarily funded through equity investments into the Company denominated in Canadian Dollars. Several of the Company’s options to acquire properties in the Republic of South Africa may result in option payments by the Company denominated in South African Rand or in U.S. Dollars over the next three years. Exploration and development programs to be conducted by the Company in South Africa will also be funded in South African Rand. Fluctuations in the exchange rate between the Canadian Dollar and the South African Rand or U.S. Dollar may have an adverse or favorable affect on the Company.

The Company’s properties are subject to title risks
The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties, and properties that it has the right to acquire or earn an interest in, are in good standing. However, the Company’s properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects. These defects could adversely affect the Company’s title to such properties or delay or increase the cost of the development of such properties.

The Company’s properties may also be subject to aboriginal or other historical rights that may be claimed on Crown properties or other types of tenure with respect to which mineral rights have been conferred. The Company is not aware of any aboriginal land claims having been asserted or any legal actions relating to native issues having been instituted with respect to any of the mineral properties in which the Company has an interest. The Company is aware of the mutual benefits afforded by co-operative relationships with indigenous people in conducting exploration activity and is supportive of measures established to achieve such co-operation.

Environmental risk
Environmental legislation on a global basis is evolving in a manner that will ensure stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessment of proposed development and a higher level of responsibility for companies and their officers, directors and employees. There is no assurance that future changes to environmental legislation in Canada or South Africa will not adversely affect the Company’s operations. Environmental hazards may exist on properties in which the Company holds interests which are unknown at present and which have been caused by previous or existing owners or operators. Furthermore, future compliance with environmental reclamation, closure and other requirements may involve significant costs and other liabilities. In particular, the Company’s operations and exploration activities are subject to Canadian and South African national and provincial laws and regulations governing protection of the environment. Such laws are continually changing and, in general, are becoming more restrictive.

The mineral exploration industry is extremely competitive
The resource industry is intensely competitive in all of its phases, and the Company competes with many companies possessing greater financial resources and technical facilities than it. Competition could adversely affect the Company’s ability to acquire suitable new producing properties or prospects for exploration in the future. Competition could also affect the Company’s ability to raise financing to fund the exploration and development of its properties or to hire qualified personnel.

Metal prices affect the success of the Company’s business
The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the sale of such product. Factors beyond the control of the Company may affect the marketability of any minerals discovered. No assurance may be given that metal prices will remain stable. Significant price fluctuations over short periods of time may be generated by numerous factors beyond the control of the Company, including domestic and international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increases or decreases in production due to improved mining and production methods. The effect of these factors on the price of minerals and therefore the economic viability of any of the Company’s exploration projects cannot accurately be predicted. As the Company is in the exploration stage, the above factors have had no material impact on present operations or income.

Off-balance sheet arrangements
The Company has no off-balance sheet arrangements.

d)
Exploration Programs and Expenditures
Mineral property acquisition costs deferred during the year totaled $300,928 (2005 - $1,815,434). Of this amount $93,367 (2005 - $1,512,446) was for WBJV property acquisition costs and payments. Exploration and development costs deferred in the year totaled $5,474,479 (2005 - $5,309,860). Of that amount $27,422 (2005 - $1,079,938) was incurred on the Company’s Canadian properties and $5,447,057 (2005 - $4,229,922) was incurred on the Company’s South African properties. Of the South African amount $4,998,447 was for the WBJV project (2005 - $3,023,125).

Cost recoveries on Canadian mineral properties during the period amounted to $Nil (2005 - $55,000). During the year $1,174,325 (2005 - $974,294) in deferred costs relating to mineral properties were written off. An amount of $964,847 (2005 - $958,844) was written off for Ontario projects while the balance of $209,478 (2005 - $15,450) related to South African write offs. For more information on mineral properties see Note 5. of the Company’s August 31, 2006 Audited Financial Statements.

The Company continues to be active in the Republic of South Africa (“RSA”). In 2003 the Company acquired a 100% South African subsidiary named Platinum Group Metals RSA (Pty.) Ltd. (“PTM RSA”) for the purposes of holding mineral rights and conducting operations on behalf of the Company. The Company conducts all of its South African exploration and development work through PTM RSA.

On October 26, 2004 the Company (37%) entered into a joint venture with Anglo Platinum Limited (37%) and Africa Wide Mineral Prospecting and Exploration (Pty) Limited (26%) to pursue platinum exploration and development on combined mineral rights covering 67 square kilometres on the Western Bushveld Complex of South Africa. The Company contributed all of its interests in portions of the farms Onderstepoort 98JQ and Elandsfontein 102JQ. Anglo Platinum contributed its interests in portions of the farms Koedoesfontein 94JQ, Elandsfontein 102JQ and Frischgewaagd 96JQ. The Western Bushveld Joint Venture (“WBJV”) immediately provides for a 26% Black Economic Empowerment interest to Africa Wide in satisfaction of the 10-year target set by the Mining Charter and newly enacted Mineral and Petroleum Resources Development Act. Africa Wide will also work with local community groups in order to facilitate their inclusion in the economic benefits of the JV in areas such as training, job creation and procurement.

From October 2004 to April 2006 PTM operated and funded an exploration program in the amount of Rand 35 million (at August 31, 2005 approx. US$5.4 million; C$6.44 million). According to the terms of the WBJV agreement this work was only due over five years to January 26, 2010. As of April 2006 this requirement had been completed and the partners are now required to fund their portion of further expenditures pro-rata based upon their working interest in the Joint Venture. In March 2006 the Company and partners Anglo Platinum Limited and Africa Wide Mining approved a 2006 cash budget for the WBJV totaling R 29,712,200 (approx. Cdn $4.59 million at August 31, 2006). Later, in September 2006 this budget was increased to a cumulative total of R 76,393,208 (approx. Cdn. $11.75 million at September 2006). Each party is to fund their pro-rata share of the approved budget by way of several separate cash calls. To the time of writing both Anglo Platinum and the Company have funded R 21,370,075 towards the approved budget and Africa Wide has funded R 3,200,000. Of the $2,126,584 in accounts payable at August 31, 2006, an amount of $1,850,000 (approx. R 12 million) was incurred on behalf of the WBJV.

Once a bankable feasibility study has been completed the respective deemed capital contribution of each party will be credited by adding their contribution of measured, indicated, and inferred PGM ounces from the contributed properties comprising the WBJV, determined in accordance with the South African SAMREC code. Inferred ounces will be credited at US$0.50 per ounce, indicated ounces will be credited at US$3.20 per ounce and measured ounces will be credited at US$6.20 per ounce. Each party will be credited with their contribution to approved budgets and PTM will also be credited for its Rand 35 million expenditure as described above. Each party will then have the opportunity to make an equalizing cash payment, or contribute forward going capital in order to catch up any resulting shortfall in their contributed capital and thereby maintain their respective working interest in the JV. Should a party not wish to participate, the JV agreement provides a mechanism whereby the parties may elect to become “non-contributory” to the JV and by doing so they would be subject to dilution.
Primary exploration targets for the WBJV are the Merensky and UG2 Reefs. The exploration areas on the properties are

adjacent to the separate BRPM joint venture, which incorporates an existing platinum mine, and the Styldrift property, contributed to the BRPM JV by the Royal Bafokeng Nation. At the time of writing the Company has five diamond drilling rigs deployed onto the WBJV in project areas 2 and 3. The Company is simultaneously in the process of completing a pre-feasibility study for the Project 1 area of the WBJV. Following the completion of this work the Company plans to complete a bankable feasibility study in 2007, with partner approval.

On September 21, 2006 the Company published a further updated Independent Resource Estimate dated September 15, 2006, which shows Measured, Indicated and Inferred 4E (platinum, palladium, rhodium and gold) resources for the project. See tables below. About 40% of the prospective project area has now been classified as a resource by the drilling to date.

Measured Resources WBJV
Updated 15 September, 2006 Independent Estimate:

The following note is mandated under SEC Guidelines to appear before the resource table. Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources. This section uses the terms “measured” and “indicated resources”. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part of all of mineral deposits in these categories will ever be converted into reserves.

 	Cut-Off (cm g/t)	Million Tonnes	Grade g/t  (4E)	Mining Width (metre)	Tonnes PGM (4E)	Million Ounces PGMs (4E)	
MR FPP (*1)	100	2.186	7.11	1.24	15.542	0.500	
UG2 (*3)	100	2.266	3.35	1.47	7.591	0.244	
Total Measured	 	4.452	5.20	 	23.133	0.744	

Prill Splits	Pt	Pt g/t	Pd	Pd g/t	Rh	Rh g/t	Au	Au g/t	
MR FPP (*1)	62.18%	4.42	26.00%	1.85	5.12%	0.36	6.70%	0.48	
UG2 (*3)	64.21%	2.15	24.00%	0.80	10.48%	0.35	1.31%	0.05	
(*1) MR FPP: Merensky Reef – Pegmatoidal Feldspathic Pyroxenite
(*3) UG2: Upper Group Number 2 Chromitite Seam

Indicated Resources
Updated 15 September, 2006 Independent Estimate WBJV:

 	Cut-Off (cm g/t)	Million Tonnes	Grade g/t  (4E)	Mining Width (metre)	Tonnes PGM (4E)	Million Ounces PGMs (4E)	
MR FPP (*1)	100	14.933	6.46	1.26	96.467	3.102	
MR CR (*2)	300	0.183	5.68	1.01	1.040	0.033	
UG2 (*3)	100	25.168	2.98	1.50	75.001	2.411	
Total Indicated	 	40.284	4.28	 	172.508	5.546	

									
Prill Splits	Pt	Pt g/t	Pd	Pd g/t	Rh	Rh g/t	Au	Au g/t	
MR FPP (*1)	62.18%	4.02	26.00%	1.68	5.12%	0.33	6.70%	0.43	
MR CR (*2)	62.18%	3.53	26.00%	1.48	5.12%	0.29	6.70%	0.38	
UG2 (*3)	64.21%	1.91	24.00%	0.72	10.48%	0.31	1.31%	0.04	
(*1) MR FPP: Merensky Reef – Pegmatoidal Feldspathic Pyroxenite
(*2) MR CR: Merensky Reef – Chromitite Contact Reef
(*3) UG2: Upper Group Number 2 Chromitite Seam
Inferred Resources
Updated 15 September, 2006 Independent Estimate WBJV:
The following note is mandated under SEC Guidelines to appear before the resource table. Cautionary Note to U.S. Investors concerning estimates of Inferred Resources. This section uses the term “inferred resources”. We advise U.S. investors that while that term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. “Inferred Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

 	Cut-Off (cm g/t)	Million Tonnes	Grade g/t  (4E)	Mining Width (metre)	Tonnes PGM (4E)	Million Ounces PGMs (4E)	
MR FPP (*1)	100	3.257	6.56	1.22	21.366	0.687	
MR CR (*2)	300	0.002	3.50	1.00	0.007	0.0002	
UG2 (*3)	100	11.792	3.48	1.50	41.036	1.319	
Total Inferred	 	15.051	4.15	 	62.409	2.006	

Prill Splits	Pt	Pt g/t	Pd	Pd g/t	Rh	Rh g/t	Au	Au g/t	
MR FPP (*1)	62.18%	4.08	26.00%	1.70	5.12%	0.34	6.70%	0.44	
MR CR (*2)	62.18%	2.18	26.00%	0.91	5.12%	0.18	6.70%	0.23	
UG2 (*3)	64.21%	2.23	24.00%	0.84	10.48%	0.36	1.31%	0.05	
(*1) MR FPP: Merensky Reef – Pegmatoidal Feldspathic Pyroxenite
(*2) MR CR: Merensky Reef – Chromitite Contact Reef
(*3) UG2: Upper Group Number 2 Chromitite Seam

Charles Muller is the Independent Qualified Person, “QP”, for the above resource assessment. He is registered with SACNASP (South African Council for Natural Scientific Professions) (Registration No. 400201/04).

The properties comprising the WBJV are all currently operated under either Old Order or New Order prospecting permits. New Order prospecting permits are granted under the new Mineral and Petroleum Resources Development Act. Old Order rights under prior legislation must be converted into New Order rights within a transitional period and this conversion process is underway for the WBJV’s Old Order rights. Any future production from the WBJV will be subject to the grant of a Mining Authorization from the Government of South Africa.

The resources outlined have not taken into account sufficient engineering, legal, permitting, financial and other considerations to be considered or classified as “Reserves”. They may never be converted to reserves and may not be viable economically. The Pre-feasibility Study, which is now in progress, will address some of these issues. A Bankable Feasibility Study is targeted for completion mid 2007, with partner approval.

The resource base for the WBJV is now at a suitable confidence level to allow for the pre-feasibility design process. Resources in the Measured and Indicated categories can be included in the pre-feasibility financial model under SAMREC and NI-43101 guidelines. Future drilling will now investigate further areas with reef potential along strike on Project areas 2 and 3 within the joint venture area. The WBJV property includes the untested projected surface trace of the Merensky and UG2 reefs which have been intercepted in a number of drill holes outside of areas where resources have been defined to date.

To the time of writing PTM has completed approximately 72,000 metres of drilling in 160 boreholes. The September 15, 2006 resource update included the results up to hole WBJV120, along with previous results from Anglo Platinum. The resources are estimated under SAMREC categories by the kriging statistical method and the Measured and Indicated Resources have drill spacing of approximately 250 metres or less. In keeping with best practice in resource estimation, an allowance for known and anticipated geological losses is made. These are estimated at 18% for the Merensky Reef and 19% for the UG2 Reef and the resource estimate has taken this into account.

The prill split estimates of the platinum, palladium, rhodium, and gold (4E) are estimated in the resource tables. While a rigorous statistical process of resource estimates has been completed on the combined 4E grades consistent with South African platinum industry best practice for estimation, caution must be exercised with respect to the prill-split-estimates as they have been calculated using the arithmetic mean of the assay information.

PTM as operator of the Joint Venture and has engaged a multi-discipline team of independent engineers, which commenced detailed Pre-feasibility Study work in early January 2006. The Pre-feasibility Study will consider the opportunities presented as the result of further drilling up until September of 2006. The Pre-feasibility Study will consider and outline the details and possible mitigation of several considered projects risks, not yet assessed in detail, including metallurgical recoveries, smelt and refining costs, surface and mining rights, permits and involvement of communities in compliance with the Minerals and Petroleum Resources Development Act (2002).

On June 3, 2002, the Company acquired a right to earn a 100% interest in two properties located in the Northern Limb of the Bushveld Complex. The properties are comprised of the 2,396 hectare War Springs Property and the 2,177 hectare b Property, both located on the postulated extension of the Platreef near the PPRust Platinum Mine operated by Anglo Platinum Limited. The Company may purchase 100% of these mineral rights at any time within three years from the date of grant of a prospecting permit on each property for US$475 per hectare in year one, or US$570 per hectare in year two, or US$690 per hectare in year three. The Company was granted Old Order prospecting permits on both properties during the 2004 fiscal year. The Company has agreed to pay prospecting fees to the mineral rights holders of US$2.50 per hectare in year one, US$2.75 per hectare in year two and US$3.25 per hectare in year three. The mineral rights holders retain a 1% Net Smelter Return Royalty (“NSR”) on the property, subject to the Company’s right to purchase the NSR at any time for US$1.4 million. A 5% finder’s fee on payments made to the mineral rights holders is payable to a South African consulting group retained by the Company in 2002. The Company incurred exploration costs of $675 (2005 - $110,354) on Tweespalk and $446,799 (2005 - $1,085,560) on War Springs during the year. Combined acquisition costs to August 31, 2006 on the War Springs and Tweespalk properties amounted to $144,325 (Aug 31, 2005 - $127,044).

Old Order rights under prior legislation must be converted into New Order rights within a transitional period and this conversion process is underway for the War Springs and Tweespalk Old Order rights. The underlying acquisition agreement for these properties is also subject to amendment in order to re-define the original terms and conditions of the agreement under the new Mineral and Petroleum Resources Development Act.

In early 2004 the Company acquired detailed airborne magnetic data covering the War Springs property from a third party corporation. Interpretation of the airborne and later mapping and soil geochemistry surveys provided drill targets. Drilling commenced on the property in May 2004 and continued until April 2005. To the time of writing approximately 8,000 metres in 18 boreholes has been drilled.

In March 2005 the Company received an NI 43-101 compliant technical report for the War Springs and Tweespalk properties. No work was recommended for the Tweespalk property in 2005 or 2006. During 2004 the Company

conducted approximately 2,300 metres of drilling on the Tweespalk property. Results were encouraging and further work is under consideration for the future. The technical report did recommend an amount of $583,139 in continued diamond drilling work, analysis and modeling for War Springs with the objective of delineating a resource on the project in compliance with SAMREC, JORC and NI 43-101 standards. This work was completed in 2006.

In October 2005 the Company announced an independent resource calculation on the War Springs property, including information on a new deposit type with potential for low cost bulk mining. The independent report confirms an NI 43-101 compliant inferred resource of 980,000 ounces of platinum, palladium, and gold (29.6 M tonnes grading 1.03 g/t 2PGM+Au (0.31 g/t Pt, 0.63 g/t Pd, 0.09 g/t Au), 0.13% Nickel, 0.11% Copper) with strong evidence of resource continuity. This new resource is found in two distinct reef layers 5-10 metres thick named the “B” and “C” reefs, starting at surface and dipping in parallel sheets at a 65 degree angle to a depth of 400 metres and remaining open. The Qualified Person (Charles Muller; SACNASP (South African Council for Natural Scientific Professions) Registration No. 400201/04) has assessed the resource cut-off on a gross metal value of Rand 109 per tonne, based on a preliminary low cost decline, block cave mining model. There is potential for resource expansion.

Black Economic Empowerment groups Africa Wide Mineral Prospecting and Exploration (Pty) Limited and Taung Minerals (Pty) Ltd. each have been granted a 15% interest in the War Springs project carried to bankable feasibility. The Company’s retains a net 70% project interest. Africa Wide has also been granted a 30% participating interest in the Tweespalk property. The Company has not recorded a receivable for Africa Wide’s share of costs to date, which at August 31, 2006 are calculated to be $253,783 (August 31, 2005 - $250,994). The Company expects that Africa Wide will be able to fund their share of costs in the future and amounts recovered from Africa Wide will be treated as a reduction of costs relating to the Tweespalk property.

In December 2002 the Company acquired an option to purchase 100% of the surface and mineral rights to 365.64 hectares of the farm Elandsfontein 102 JQ located in the Western Bushveld area. The Company made an initial payment to the Vendors of R 150,000 (approx. C$29,500) and agreed to terms for the purchase of both mineral and surface rights. In 2005 the Company and the Vendors reached agreement whereby the Company would purchase all surface and mineral rights to the property in exchange for 7.0 million Rand. On September 16, 2005, the Company made a final payment to close the purchase. In September 2005 the Company was granted a “New Order” prospecting permit under the new Mineral and Petroleum Resources Development Act over the Elandsfontein property.

During late 2003 the Company acquired an option to earn a 51% interest in the Lakemount nickel-copper-PGM project located near Wawa, Ontario in exchange for cash payments of $150,000 ($75,000 paid to February 28, 2006), share payments of 150,000 (50,000 issued and paid to February 28, 2006) and exploration work of $2.5 million to December 31, 2008 ($1,090,770 completed to February 28, 2006). The Company can buy a further 11% from an underlying vendor for $3.3 million, bringing the Company’s potential project interest to 62%. The property is known to host well-defined low-grade nickel-copper-PGM mineralization. To date the Company has completed more than 3,300 metres of drilling on the property, as well as airborne, ground based and down-hole geophysical surveys. Results continue to indicate the potential for both open pit and underground resources on the property. Combined acquisition and exploration costs deferred on the property by the Company amounted to $1,320,222 at August 31, 2006 (2005 - $1,216,384). Roscoe Postle Associates Inc. of Toronto completed an NI 43-101 compliant preliminary resource assessment and scoping study for the project in early 2005. The Company is not presently active on the property. Future work is under consideration.

After year end the Company negotiated the consolidation of three of its property interests in the Lac Des Iles area of Ontario. On October 6, 2006, the Company and the property vendors for the Lac Des Iles River property entered into a termination and sale agreement whereby the existing option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

On October 13, 2006, the Company and the property vendors for the South Legris property entered into a termination and sale agreement whereby the existing option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

On October 18, 2006, the Company and the property vendor for the Shelby Lake property entered into a termination and sale agreement whereby the existing option agreement was cancelled and the Company purchased an undivided 100% interest in the property for a one-time payment of $5,000 subject only to an underlying 2.0% Net Smelter Return Royalty, of which the Company may buy back one half for $500,000. To August 31, 2006 the Company had incurred costs of $565,869 on the property and elected under the option agreement to form a 50/50 joint venture with the property vendor. Amounts already spent by the Company in excess of $500,000 where repayable to the Company by the property vendor, or would be applied to dilute the vendor’s working interest in the property.

In September 2004 the Company acquired an option to earn an initial 50% interest in the Seagull property located in the Nipigon region of Ontario by completing $7.5 million of exploration work ($702,234 completed to November 30, 2005) and making cash payments of $750,000 ($75,000 paid) over a five-year period to September 24, 2009. PTM could earn an additional 20% property interest by completing a bankable feasibility study for the property and arranging production financing. During the year the Company’s exploration work on this property consisted of drilling, geochemistry, geophysics, mapping and modeling. The Company has now taken a decision to focus its resources on its South African projects and as a result the Seagull property was abandoned as of February 28, 2006, resulting in a write-off in the amount of $785,288.

The Company’s Agnew Lake property was not active during the period. The Company has directly performed $512,265 worth of exploration work and caused further work of approximately $3,140,805 to be performed through the joint venture arrangement with PFN and Kaymin to August 31, 2005. Occurrences of PGMs have been located on the property, but no resource has been delineated to date. At August 31, 2005 the Company wrote off its remaining investment in the property of $276,852. Subsequent to year end Kaymin advised the Company that it would cease further funding of the project. Kaymin also notified the Company that they would vest as to a 26.17% interest in the property in accordance the terms of their option agreement. PFN has now terminated its option and retains no working interest.

e)
Administration Expenses
Before a non-cash charge for stock based compensation of $110,176 (2005 - $1,283,289), and mineral property costs written off of $1,174,325 (2005 - $974,294), and not including interest, other income and recoveries in the year of $235,236 (2005 - $218,373), general and administrative expenses totaled $2,808,715 (2005 - $2,466,085). Since 2002 the Company has grown substantially through its amalgamation with New Millennium Metals Corporation and its expansion into the Republic of South Africa. This growth is reflected in the costs described herein. During 2004 the Company opened and staffed a permanent office in Johannesburg and commenced active exploration on the ground. The costs described above include management and consulting fees of $367,891 (2005 - $326,167); office and miscellaneous expenses of $268,707 (2005 - $102,220); professional fees of $266,223 (2005 - $193,765); salaries and benefits of $904,385 (2005 - $604,260); shareholder relations expense of $153,220 (2005 - $75,323); travel expenses of $271,883 (2005 - $258,125); mail, news releases and printing expense of $92,281 (2005 - $416,083) and promotion expenses of $112,721 (2005 - $130,897).

f)
Related Party Transactions
Management and consulting fees expense and salaries in the year of $354,710 (2005 - $278,401) were incurred with three directors of the Company. Of this amount approximately $195,980 (2005 - $137,794) is related to fees for the Company’s President. At August 31, 2006 there were $7,600 fees (2005 - $Nil) owed and included in accounts payable.

The Company received $135,340 (2005 - $134,757) during the year from MAG Silver Corp. (“MAG”), a company with common directors and a common officer, under the terms of a 2003 service agreement for administrative services. Accounts receivable at the end of the period include an amount of $39,738 due from MAG.

During the year the Company accrued or received payments of $27,300 (2005 - $39,000) from West Timmins Mining Inc. (“WTM”) formerly Sydney Resource Corporation, a company with common directors and a common officer, for administrative services. The amount received was net of a credit adjustment of $19,500 in recognition of WTM’s relative inactivity in the first three quarters of calendar 2005. Accounts receivable at the end of the period include an amount of $15,349 due from WTM.

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.

g)
Shareholder Relations’ Expenses
Shareholder relations’ expense during the year totaled $153,220 (2005 - $75,323). Since 2003 the Company has managed its shareholder relations as an internal function. The Company has been active in raising its profile with both retail and institutional investors. Since May 2005 Roth Investor Relations has been contracted at a rate of US $5,000 per month to provide distribution of the Company’s information to US institutions and other international analysts and money managers. Prior to May 2005 Roth was contracted by the Company to provide services, on an invoice basis, as needed from time to time. Roth has offices in New Jersey, USA and affiliated offices in London and Johannesburg. Mr. Larry Roth is the Company’s primary contact with the firm. Since June 2005 Mr. Tony Mahalski of LM Associates in London, U.K., has been engaged for a fee of GBP 1,000 per month for the purpose of general business development and the raising of the Company’s profile in Europe.

h) Travel and Promotion Expenses
Travel expenses for the year amounted to $271,883 (2005 - $258,125). These activities relate to the supervision of ongoing operations, new property investigations and meetings with potential institutional and sophisticated investors. Since early 2004 the Company’s increased activity level in South Africa has increased these costs. Promotion expenses in the year amounted to $112,721 (2005 - $130,897) and these costs relate to design work, media relations, printed material, postage and trade show attendance.

i)
Property Acquisition Expenses
Property acquisition expenditures during the period totaled $300,928 (2005 - $1,815,434) in cash and shares. This includes $94,800 for properties in Ontario, and $206,128 to acquire or maintain option rights to the South African properties. Of this amount $93,367 (2005 - $1,512,446) was for WBJV property acquisition costs and payments. Cash payments or accruals totaled $260,928 (2005 - $1,787,434) and share issuances for property acquisitions totaled $40,000 (2005 - $28,000).

The sum of all payments required to perfect all of the Company’s mineral rights are greater than its currently available working capital. The Company evaluates its property interests on an ongoing basis and intends to abandon properties that fail to remain prospective. The Company is confident that it will be able to meet its earn-in obligations on those properties which management considers to be of merit. At the time of writing the Company was incurring further property acquisition expenses through its activities in Ontario, Canada and the Republic of South Africa.

3.
CRITICAL ACCOUNTING POLICIES

The Company’s accounting policies are set out in Note 2 of its Consolidated Financial Statements for the year ended August 31, 2006.

There are two policies that, due to the nature of the mining business, are significant to the financial results of the Company. These policies relate to the capitalization of mineral exploration expenditures and the use of estimates:

Under Canadian GAAP, the Company defers all costs relating to the acquisition and exploration of its mineral properties. Any revenues received from such properties are credited against the costs of the property. When commercial production commences on any of the Company’s properties, any previously capitalized costs would be charged to operations over the life of the property using a unit-of-production method. The Company regularly reviews deferred exploration costs to assess their recoverability and when the carrying value of a property exceeds the estimated net recoverable amount, provision is made for impairment in value.

The existence of uncertainties during the exploration stage and the lack of definitive empirical evidence with respect to the feasibility of successful commercial development of any exploration property do create measurement uncertainty concerning the calculation of the amount of impairment to the value of any mineral property. The Company relies on its own or independent estimates of further geological prospects of a particular property and also considers the likely proceeds from a sale or assignment of the rights before determining whether or not impairment in value has occurred.

4.
CHANGE IN ACCOUNTING POLICY

Effective September 1, 2004, the Company adopted the amended recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments . Under the amended standards of this section, the fair value of all stock-based awards granted are estimated using the Black-Scholes model and recorded over their vesting periods. The compensation cost related to stock options granted after September 1, 2004 is recorded in operations.

Previously, the Company provided note disclosure of pro forma net earnings and pro forma earnings per share as if the fair value based method had been used to account for share purchase options granted to employees, directors and officers after September 1, 2002. The amended recommendations have been applied retroactively from September 1, 2002 without restatement of prior periods. As a result, as of September 1, 2004, the deficit was increased by $318,000, contributed surplus was increased by $304,977, and share capital was increased by $13,023 for share purchase options granted in prior years and exercised in 2005. The total compensation expense recognized in the statement of operations for share purchase options granted in 2006 amounts to $110,176 (2005 - $1,283,289). Had the same basis been applied to share purchase options granted in 2004 the stock compensation expense recognized would have been $241,000 .

5.
LIQUIDITY AND CAPITAL RESOURCES

The Company issued a total of 10,532,547 (2005 – 8,571,216) common shares during the year. Of this 10,507,547 shares (2005 – 8,546,216) were issued for cash proceeds of $16,197,711 (2005 - $8,482,291). A further 25,000 shares (2005 – 25,000) were issued for mineral properties for a value of $40,000 (2005 - $28,000). Cash proceeds are to be spent on mineral property acquisitions, exploration and development as well as for general working capital purposes. See Subsequent Events for further equity issuances. The Company’s primary source of capital has been from the sale of equity. At August 31, 2006 the Company had cash and cash equivalents on hand of $10,066,801 compared to cash and cash equivalents of $2,750,461 at August 31, 2005. The primary use of cash during the year was for acquisition and exploration expenditures, being approximately $6,423,839, which includes $5,718,449 for the WBJV project (2005 - $5,395,698 which includes $4,535,571 for the WBJV project), management fees and expenses of $367,891 (2005 - $326,167) and other general and administrative expenses of $2,440,824 (2005 - $2,139,918).

In the normal course of business the Company enters into transactions for the purchase of supplies and services denominated in South African Rand. The Company also has cash and certain liabilities denominated in South African Rand. As a result the Company is subject to foreign exchange risk from fluctuations in foreign exchange rates. In the past year to the time of writing this report, the South African Rand has fallen in value against the Canadian Dollar by approximately 14%.
The following Table discloses the contractual obligations of the Company for optional mineral property acquisition payments, optional exploration work and committed lease obligations for office rent and equipment:

Contractual Obligations	Payments due by period	
	Total	< 1 Year	1 – 3 Years	3 – 5 Years	> 5 Years	
Acquisition Payments	$  6,258,710	$ 5,692,600	$   566,110	$                0	$              0	
Exploration Costs	1,402,351	402,351	1,000,000	0	0	
Lease Obligations	377,823	149,372	176,831	51,620	0	
Totals	$8,038,884	$ 6,244,323	$1,742,941  	$       51,620	$              0	

6.
CORPORATE GOVERNANCE

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to Multilateral Instrument 52-109 is recorded, processed, summarized and reported in the manner specified by the relevant securities laws applicable to the Company. The consolidated Company operates in both Canada and the Republic of South Africa and work is ongoing to improve and modernize these controls and to ensure that they remain consistently applied in both jurisdictions. The Chief Executive Officer and the Chief Financial Officer have evaluated the Company’s disclosure control procedures as of August 31, 2006 through inquiry, review, and testing, as well as by drawing upon their own relevant experience. The Company retained an independent third party specialist in 2006 to assist in the assessment of its disclosure control procedures. The Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure control procedures are effective. Management is also developing and implementing a plan to address disclosure controls and procedures on a forward looking basis as the Company continues to grow.

The Company also maintains a system of internal controls in order to provide reasonable assurance that assets are safeguarded and financial information is accurate and reliable and in accordance with Canadian GAAP. The Company retained an independent third party specialist in 2006 to assist in the assessment of its internal control procedures. The Board of Directors approves the financial statements and ensures that management discharges its financial responsibilities. The Board’s review is accomplished principally through the audit committee, which is composed of independent non-executive directors. The audit committee meets periodically with management and auditors to review financial reporting and control matters. The Board of Directors has also appointed a compensation committee composed of non-executive directors whose recommendations are followed with regard to executive compensation. From time to time the board may also form special sub-committees, which must investigate and report to the Board on specific topics.

7.
SUBSEQUENT EVENTS

Subsequent to year end 2,515,069 common shares were issued pursuant to the exercise of 2,433,194 warrants at a price of $1.50 per share, 50,000 stock options at a price of $1.10 per share,  and 31,875 stock options at a price of $1.00 per share, for aggregate proceeds of $3,736,665.

Other subsequent events are disclosed elsewhere within this document.

8.
LIST OF DIRECTORS AND OFFICERS

a)
Directors:
Eric Carlson
Frank R. Hallam
R. Michael Jones
Iain McLean
Barry W. Smee

b)
Officers:
R. Michael Jones (President)
Frank R. Hallam (Chief Financial Officer)
Barry Smee (Secretary)

c)
Officers of Subsidiary:
John A. Gould
(Managing Director Platinum Group Metals RSA (Pty) Ltd.)

Independent auditors’ report

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

We have audited the consolidated balance sheets of Platinum Group Metals Ltd. (an exploration stage company) as at August 31, 2006 and 2005 and the consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three year period ended August 31, 2006 and the cumulative period from March 16, 2000 to August 31, 2006.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our 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).  These standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2006 and 2005 and the results of its operations and its cash flows for each of the years in the three year period ended August 31, 2006 and the cumulative period from March 16, 2000 to August 31, 2006 in accordance with Canadian generally accepted accounting principles.

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

Independent Registered Chartered Accountants
November 8, 2006

Comments by auditors on Canada - United States of America reporting differences

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

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

Independent Registered Chartered Accountants
November 8, 2006

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Balance Sheets
August 31

 	 	2006	 	 	2005	 	
ASSETS  	 		 	 		 	
CURRENT  	 		 	 		 	
    Cash and cash equivalents  	$  	10,066,801	 	$  	2,750,461	 	
    Marketable securities (market value-$564,000; 2005 - $272,375)  	 	210,000	 	 	251,750	 	
    Amounts receivable (Note 3)  	 	394,993	 	 	344,059	 	
    Prepaid expenses and other  	 	64,148	 	 	53,575	 	
Total current assets  	 	10,735,942	 	 	3,399,845	 	
PERFORMANCE BONDS  	 	27,364	 	 	24,685	 	
INVESTMENT IN WESTERN BUSHVELD  	 		 	 		 	
JOINT VENTURE (Note 5)  	 	10,830,088	 	 	5,770,020	 	
MINERAL PROPERTIES (Note 6)  	 	5,830,797	 	 	6,321,529	 	
FIXED ASSETS (Note 7)  	 	240,250	 	 	189,108	 	
Total assets  	$  	27,664,441	 	$  	15,705,187	 	
LIABILITIES  	 		 	 		 	
CURRENT  	 		 	 		 	
    Accounts payable and accrued liabilities  	$  	2,126,584	 	$  	1,997,633	 	
    Current portion of capital lease obligation  	 	6,658	 	 	5,929	 	
Total current liabilities  	 	2,133,242	 	 	2,003,562	 	
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATION  	15,911	 	 	22,569	 	
FUTURE INCOME TAXES (Note 11)  	 	-	 	 	-	 	
Total liabilities  	 	2,149,153	 	 	2,026,131	 	
SHAREHOLDERS' EQUITY  	 		 	 		 	
Share capital (Note 8)  	 	39,798,768	 	 	23,513,389	 	
Contributed Surplus (Note 2 (f) and Note 9)  	 	1,785,705	 	 	1,723,198	 	
Cumulative translation adjustment  	 	(658,381	)  	 	-	 	
Deficit accumulated during the exploration stage  	 	(15,410,804	)  	 	(11,557,531	)  	
Total shareholders' equity  	 	25,515,288	 	 	13,679,056	 	
Total liabilities and shareholders' equity  	$  	27,664,441	 	$  	15,705,187	 	

 	 	 	 	 	 	 	
CONTINUING OPERATIONS (Note 1)	
CONTINGENCIES AND COMMITMENTS (NOTE 12)	
 	 	 	 	 	 	 	
APPROVED BY THE DIRECTORS:	
 	 	 	 	 	 	 	
"R. Michael Jones"	
R. Michael Jones, Director	
 	 	 	 	 	 	 	
"Frank R. Hallam"	
Frank Hallam, Director	 	

See accompanying notes to the consolidated financial statements.

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Statements of Operations
 
 	 		 			 	 		 		Cumulative	 	
 	 		 			 	 		 		amount from	 	
 	 	Year ended	 		Year ended	 	 	Year ended	 		March 16, 2000	 	
 	 	August 31,	 		August 31,	 	 	August 31,	 		to August 31,	 	
 	 	2006	 		2005	 	 	2004	 		2006	 	
EXPENSES  	 		 			 	 		 			 	
    Amortization  	$  	93,906	 	$	75,760	 	$  	31,768	 	$	236,485	 	
    Annual general meeting  	 	50,563	 		33,199	 	 	32,125	 		146,664	 	
    Corporate finance fees  	 	-	 		-	 	 	100,000	 		125,000	 	
    Filing and transfer agent fees  	 	49,108	 		84,996	 	 	57,756	 		285,476	 	
    Insurance  	 	28,683	 		30,840	 	 	13,674	 		94,401	 	
    Mineral property costs written off  	 	1,174,325	 		974,294	 	 	1,044,542	 		5,107,071	 	
    Management and consulting fees  	 	367,891	 		326,167	 	 	322,996	 		1,495,745	 	
    News releases, print and mailout  	 	92,281	 		416,083	 	 	21,938	 		544,262	 	
    Office and miscellaneous  	 	268,707	 		102,220	 	 	84,368	 		600,054	 	
    Other taxes  	 	3,000	 		-	 	 	6,500	 		86,766	 	
    Professional fees  	 	266,223	 		193,765	 	 	130,383	 		1,070,419	 	
    Promotion  	 	112,721	 		130,897	 	 	126,464	 		429,457	 	
    Property investigations  	 	850	 		1,163	 	 	4,591	 		128,254	 	
    Rent  	 	100,685	 		88,090	 	 	76,619	 		339,570	 	
    Salaries and benefits  	 	904,385	 		604,260	 	 	404,936	 		2,168,481	 	
    Shareholder relations  	 	153,220	 		75,323	 	 	38,090	 		703,755	 	
    Stock compensation expense  	 	110,176	 		1,283,289	 	 	92,881	 		1,528,397	 	
    Telephone  	 	44,609	 		45,197	 	 	39,533	 		174,645	 	
    Travel  	 	271,883	 	 	258,125	 	 	231,507	 	 	893,856	 	
 	 	(4,093,216	)  		(4,723,668	)  	 	(2,860,671	)  		(16,158,758	)  	
Less interest and other income (Note 10(b))  	 	235,236	 	 	218,373	 	 	430,106	 	 	1,145,955	 	
Loss before other items  	 	(3,857,980	)  	 	(4,505,295	)  	 	(2,430,565	)  	 	(15,012,803	)  	
Other items:  	 		 			 	 		 			 	
    Write-down of investment in and  	 		 			 	 		 			 	
        advances to Active Gold Group Ltd.  	 		 			 	 		 			 	
        (Note 4)  	 	-	 		127,488	 	 	90,062	 		242,275	 	
    (Gain) loss on sale  	 		 			 	 		 			 	
        of marketable securities  	 	(5,050	)  		(51,200	)  	 	-	 		(47,682	)  	
        Loss on sale of furniture  	 	343	 		7,065	 	 	-	 		7,408	 	
    Equity in loss of Active Gold  	 		 			 	 		 			 	
        Group Ltd. (Note 4)  	 	-	 	 	-	 	 	-	 	 	187,000	 	
 	 	(4,707	)  		83,353	 	 	90,062	 		389,001	 	
Loss for the period before income taxes  	 	(3,853,273	)  		(4,588,648	)  	 	(2,520,627	)  		(15,401,804	)  	
Future income tax recovery  	 	-	 	 	793,000	 	 	278,000	 	 	1,737,000	 	
Loss for the period  	$  	(3,853,273	)  	$	(3,795,648	)  	$  	(2,242,627	)  	$	(13,664,804	)  	
Basic and diluted loss per share  	$  	(0.08	)  	$	(0.10	)  	$  	(0.07	)  	 	 	 	
Weighted-average number of  	 		 			 	 		 			 	
    common shares outstanding  	 	47,230,202	 	 	39,194,947	 	 	31,640,642	  	 	 	 	
 
See accompanying notes to the consolidated financial statements.

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity
From commencement of operations, March 16, 2000, to August 31, 2006

 	 		 	 		 		 		 		 			 	 		 		Deficit	 			 	
 	 		 	 		 	Flow-through  		 			 	 		 		accumulated	 			 	
 	Common shares  	 	Obligation	 	special  		 			 	 	Cumulative	 		during	 		Total	 	
 	without par value  	 	to issue	 	warrants  		 		Contributed	 	 	translation	 		exploration	 		shareholders'	 	
 	Shares  		Amount  	 	shares	 	Number	 		Amount	 		surplus	 	 	adjustment	  		stage	 	 	equity	 	
Issued for cash  	1,395,001  	$	89,000  	$  	-	 	2,605,000	 	$	521,000	 		$ -	 	$  	-	 		$ -	 	$	610,000	 	
Issued for mineral properties  	-  		-  	 	20,000	 	-	 		 	-	 		-	 	 	-	 		-	 		20,000	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(39,956	)  	 	(39,956	)  	
Balance, August 31, 2000  	1,395,001  		89,000  	 	20,000	 	2,605,000	 		521,000	 		-	 	 	-	 		(39,956	)  		590,044	 	
Issued for cash  	3,195,391  		1,356,532  	 	-	 	2,383,090	 		1,107,771	 		-	 	 	-	 		-	 		2,464,303	 	
Issued upon exercise of share purchase warrants  	2,000  		1,100  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,100	 	
Issued for mineral properties  	210,000  		57,050  	 	(17,400	)  	-	 		 	-	 		-	 	 	-	 		-	 		39,650	 	
Issued upon exercise of special warrants  	2,605,000  		521,000  	 	-	 	(2,605,000	)  		(521,000	)  		-	 	 	-	 		-	 		-	 	
Issued upon exercise of flow through  	 		 	 		 		 		 		 			 	 		 			 			 	
  special warrants  	2,383,090  		1,107,771  	 	-	 	(2,383,090	)  		(1,107,771	)  		-	 	 	-	 		-	 		-	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(310,000	)  		(310,000	)  	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(482,687	)  	 	(482,687	)  	
Balance at August 31, 2001  	9,790,482  		3,132,453  	 	2,600	 	-	 		 	-	 		-	 	 	-	 		(832,643	)  		2,302,410	 	
Issued for cash  	6,864,001  		1,951,135  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,951,135	 	
Issued for mineral properties  	102,728  		36,509  	 	(2,600	)  	-	 		 	-	 		-	 	 	-	 		-	 		33,909	 	
Issued to acquire New Millennium Metals  	5,468,421  		1,310,385  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,310,385	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through  	 		 	 		 		 		 		 			 	 		 			 			 	
  shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(266,000	)  		(266,000	)  	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	 		(1,501,620	)  	 	(1,501,620	)  	
Balance, August 31, 2002  	22,225,632  		6,430,482  	 	-	 	-	 		 	-	 		-	 	 	-	 		(2,600,263	)  		3,830,219	 	
Issuance of flow-through common shares for cash  	1,181,346  		678,589  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		678,589	 	
Issuance of common shares for cash  	3,062,500  		1,411,342  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,411,342	 	
Issued on exercise of mineral property option (Note 7)  	571,603  		200,061  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		200,061	 	
Issued on exercise of warrants  	645,990  		233,389  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		233,389	 	
Issued on exercise of stock options  	96,500  		35,075  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		35,075	 	
Issued for mineral properties  	47,696  		16,140  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		16,140	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(140,000	)  		(140,000	)  	
Stock options granted to consultants  	-  		-  	 	-	 	-	 		 	-	 		42,051	 	 	-	 		-	 		42,051	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(1,748,993	)  	 	(1,748,993	)  	
Balance, August 31, 2003  	27,831,267  		9,005,078  	 	-	 	-	 		 	-	 		42,051	 	 	-	 		(4,489,256	)  		4,557,873	 	
Issuance of flow-through common shares for cash  	1,056,000  		1,267,200  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,267,200	 	
Issuance of common shares for cash  	3,810,207  		3,226,590  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		3,226,590	 	
Issued on exercise of warrants  	1,747,032  		1,428,407  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,428,407	 	
Issued on exercise of stock options  	132,000  		59,200  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		59,200	 	
Issued for mineral properties  	10,909  		3,600  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		3,600	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(346,000	)  		(346,000	)  	
Stock options granted to consultants  	-  		-  	 	-	 	-	 		 	-	 		92,881	 	 	-	 		-	 		92,881	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(2,242,627	)  	 	(2,242,627	)  	
Balance, August 31, 2004  	34,587,415  		14,990,075  	 	-	 	-	 		 	-	 		134,932	 	 	-	 		(7,077,883	)  		8,047,124	 	
Cumulative effect of change in accounting policy (Note 2 (f))  	-  		-  	 	-	 	-	 		 	-	 		318,000	 	 	-	 		(318,000	)  		-	 	
Issuance of flow-through common shares for cash  	173,267  		259,901  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		259,901	 	
Issuance of common shares for cash  	5,000,000  		5,441,078  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		5,441,078	 	
Issued on exercise of warrants  	2,469,949  		2,272,462  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		2,272,462	 	
Issued on exercise of stock options  	903,000  		521,873  	 	-	 	-	 		 	-	 		(13,023	)  	 	-	 		-	 		508,850	 	
Issued for mineral properties  	25,000  		28,000  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		28,000	 	
Future income taxes relating to exploration  	 		 	 		 		 		 		 			 	 		 			 			 	
  expenditures applicable to flow-through shares  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	-	 		(366,000	)  		(366,000	)  	
Stock options granted  	-  		-  	 	-	 	-	 		 	-	 		1,283,289	 	 	-	 		-	 		1,283,289	 	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(3,795,648	)  	 	(3,795,648	)  	
Balance, August 31, 2005  	43,158,631  	$	23,513,389  	$  	-	 	-	 		$  	-	 	$	1,723,198	 	$  	-	 	$	(11,557,531	)  		13,679,056	 	
Issuance of common shares for cash  	9,500,000  		14,898,656  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		14,898,656	 	
Issued on exercise of warrants  	843,047  		1,181,305  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		1,181,305	 	
Issued on exercise of stock options  	164,500  		165,418  	 	-	 	-	 		 	-	 		(47,669	)  	 	-	 		-	 		117,750	 	
Issued for mineral properties  	25,000  		40,000  	 	-	 	-	 		 	-	 		-	 	 	-	 		-	 		40,000	 	
Stock options granted  	-  		-  	 	-	 	-	 		 	-	 		110,176	 	 	-	 		-	 		110,176	 	
Translation adjustment  	-  		-  	 	-	 	-	 		 	-	 		-	 	 	(658,381	)  		-	 		(658,381	)  	
Net loss  	-  		-  	 	-	 	-	 	 	 	-	 		-	 	 	-	  		(3,853,273	)  	 	(3,853,273	)  	
Balance, August 31, 2006  	53,691,178  	$	39,798,768  	$  	-	 	-	 	 	$  	-	 	$	1,785,705	 	$  	(658,381	)  	$	(15,410,804	)  	$	25,515,288	 	
 
See accompanying notes to the consolidated financial statements.

PLATINUM GROUP METALS LTD.
(An exploration stage company)
Consolidated Statements of Operations

 			 			 			 		Cumulative	 	
 			 			 			 		amount from	 	
 		Year ended	 		Year ended	 		Year ended	 		March 16, 2000	 	
 		August 31,	 		August 31,	 		August 31,	 		to August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 	 	2006	 	
OPERATING ACTIVITIES  			 			 			 			 	
    Loss for the year  	$	(3,853,273	)  	$	(3,795,648	)  	$	(2,242,627	)  	$	(13,664,804	)  	
    Add items not affecting cash  			 			 			 			 	
        Amortization  		93,906	 		75,760	 		31,768	 		236,485	 	
        Loss on sale of capital assets  		343	 		7,065	 		-	 		7,408	 	
        Equity in loss of Active Gold Group Ltd.  		-	 		-	 		-	 		187,000	 	
        Write-down of investment in and  			 			 			 			 	
advances to Active Gold Group Ltd.  		-	 		127,488	 		90,062	 		242,275	 	
        Future income tax recovery  		-	 		(793,000	)  		(278,000	)  		(1,737,000	)  	
        (Gain) loss on disposal  			 			 			 			 	
of marketable securities  		(5,050	)  		(51,200	)  		-	 		(47,682	)  	
        Mineral property costs written off  		1,174,325	 		974,294	 		1,044,542	 		5,107,071	 	
        Finders fee received in shares (Note 4.b)  		-	 		-	 		-	 		(100,000	)  	
        Gain on sale of mineral property  		-	 		-	 		(240,000	)  		(240,000	)  	
        Non-cash share compensation expense  		110,176	 		1,283,289	 		92,881	 		1,528,397	 	
    Net change in non-cash working  			 			 			 			 	
        capital (Note 13)  	 	123,312	 	 	(419,954	)  	 	333,541	 	 	54,456	 	
 	 	(2,356,261	)  	 	(2,591,906	)  	 	(1,167,833	)  	 	(8,426,394	)  	
FINANCING ACTIVITIES  			 			 			 			 	
    Performance Bonds  		(2,679	)  		(13,393	)  		(11,292	)  		(27,364	)  	
    Issuance of common shares  		16,197,711	 		8,482,291	 		5,981,397	 		36,349,948	 	
    Issuance of flow-through special warrants  		-	 		-	 		-	 		1,107,771	 	
    Issuance of special warrants  	 	-	 		-	 	 	-	 	 	521,000	 	
 	 	16,195,032	 	 	8,468,898	 	 	5,970,105	 	 	37,951,355	 	
INVESTING ACTIVITIES  			 			 			 			 	
    Costs to acquire New Millennium Metals  		-	 		-	 		-	 		(231,325	)  	
    Acquisition of capital assets  		(145,392	)  		(160,177	)  		(105,095	)  		(482,905	)  	
    Sale of capital assets  		-	 		2,456	 		-	 		2,456	 	
    Acquisition cost of mineral properties  		(167,561	)  		(219,988	)  		(174,697	)  		(1,425,366	)  	
    Exploration expenditures  		(476,032	)  		(2,286,734	)  		(1,769,443	)  		(7,428,154	)  	
    Investment in and advances to Joint Venture  		(5,780,246	)  		(2,888,976	)  		(1,234,449	)  		(9,903,671	)  	
    Investment in and advances to Active Gold Group Ltd.  		-	 		3,712	 		(90,062	)  		(246,677	)  	
    Proceeds on sale of marketable securities  	 	46,800	 	 	-	 	 	-	 	 	257,482	 	
 	 	(6,522,431	)  	 	(5,549,707	)  	 	(3,373,746	)  	 	(19,458,160	)  	
Net increase in cash and cash equivalents  		7,316,340	 		327,285	 		1,428,526	 		10,066,801	 	
Cash and cash equivalents, beginning of year  	 	2,750,461	 	 	2,423,176	 	 	994,650	 	 	-	 	
Cash and cash equivalents, end of year  	$	10,066,801	 	$	2,750,461	 	$	2,423,176	 	$	10,066,801	 	

 	 	
SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES:	
(i)	During the year ended August 31, 2006, the Company issued 25,000 common shares with a value of $40,000 in connection with	
 	the acquisition of mineral properties.	
(ii)	During the year ended August 31, 2005, the Company issued 25,000 common shares with a value of $28,000 in connection with	
 	the acquisition of mineral properties.	
(iii)	During the year ended August 31, 2005 the Company acquired 1,407,069 shares of Active Gold Group Ltd. (Active Gold")	
 	from six of Active Gold's founding shareholders, all of whom are at arm's length to the Company, in exchange for 399,999	
 	shares of Sydney Resource Corporation, paid from the Company's holdings of that security. Subsequent to year end, Sydney	
 	Resource Corporation was reorganized and named West Timmins Mining Inc. As Active Gold is estimated to have	
 	nominal value, the tranaction was entered into for the purpose of preserving existing business relationships. The	
 	Company therefore recorded the exchange as an expense.	
(iv)	During the year ended August 31, 2004, the Company issued 10,909 common shares with a value of $3,600 in connection with	
 	the acquisition of mineral properties.	
(v)	During the year ended August 31, 2004, the Company received marketable securities with a fair value of $33,750 relating to the	
 	recovery of mineral properties' costs.	
(vi)	During the year ended August 31, 2004, the Company received 1,200,000 shares of Sydney Resource Corp. with	
 	a value of $0.20 per share in exchange for sale of a 100-percent interest in the Company's Simlock Creek, British Columbia  	
 	gold project and the termination of the earn-in requirements under a related option agreement.	
 	 	 	 	 	 	 	 	 	 	 	 	 	
SUPPLEMENTARY INFORMATION ON CASH FLOWS:	
No interest or income tax expenses were paid during the periods disclosed.	 	

See accompanying notes to the consolidated financial statements.

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

1.
CONTINUING 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. (“Old Platinum”) and New Millennium Metals Corporation (“New Millennium”).  The Company is an exploration company conducting work on mineral properties it has staked or acquired by way of option agreements principally in Ontario, Canada and the Republic of South Africa. The Company has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The Company defers all acquisition, exploration and development costs related to mineral properties. The recoverability of these amounts is dependant upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of the property, and future profitable production, or alternatively, upon the Company’s ability to dispose of its interests on an advantageous basis.

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles applicable to a going concern, which presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. The Company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long-term. The Company’s ability to continue as a going concern is dependent upon its ability in the future to achieve profitable operations and, in the meantime, to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. External financing, predominately by the issuance of equity to the public, will be sought to finance the operations of the Company; however, there is no assurance that sufficient funds can or will be raised.

These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company not be able to continue as a going concern. If the going concern basis was not appropriate for these consolidated financial statements, then significant adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used.

2.
SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and include the significant policies outlined below. These policies conform, in all material respects, with accounting principles generally accepted in the United States of America (“US GAAP”), except as described in Note 15 to these consolidated financial statements.

(a)
Basis of Presentation and principles of consolidation
The financial statements of entities which are controlled by the Company through voting equity interest, referred to as subsidiaries, are consolidated. Variable interest entities (“VIEs”), which include, but are not limited to, special purpose entities, trusts, partnerships and other legal structures, as defined by the Accounting Standards Board in Accounting Guideline 15, “Consolidation of Variable Interest Entities”, are entities in which equity investors do not have the characteristics of a “controlling financial interest”

See accompanying notes to the consolidated financial statements.

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(a)
Basis of Presentation and principles of consolidation (continued)

or there is not sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. VIEs are subject to consolidation by the primary beneficiary who will absorb the majority of the entities’ expected losses and/or residual returns.

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

The Company’s 37% working interest in the Western Bushveld Joint Venture (Note 5) is recorded using the equity method.

(b)
Mineral properties and deferred exploration costs

Mineral properties consist of exploration and mining concessions, options and contracts.  Acquisition and leasehold costs and exploration costs are capitalized until such time as the property is put into production or disposed of either through sale or abandonment. The estimated values of all properties are assessed by management on a quarterly basis and if the carrying values exceed estimated recoverable values, then the properties are written down to fair value. If put into production, the costs of acquisition and exploration will be amortized over the life of the property based on the estimated economic reserves. Proceeds received from the sale of any interest in a property will first be credited against the carrying value of the property, with any excess included in operations for the period. If a property is abandoned, the property and deferred exploration costs are written off to operations.

(c)
Cash and cash equivalents

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

(d)
Marketable securities and investments

Marketable securities are recorded at the lower of cost or market value.

Investments where the Company has the ability to exercise significant influence, generally where the Company has a 20% to 50% equity interest, are accounted for using the equity method.  Under this method, the Company’s share of the investee’s earnings or losses is included in operations and its investments therein are adjusted by a like amount.  Dividends received from these investments are credited to the investment accounts.

Page 4

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(d)
Marketable securities and investments (continued)

Other long-term investments are accounted for using the cost method, whereby income is included in operations when received or receivable.  

Provisions for impairment of long term investments are made, where necessary, to recognize other than temporary declines in value.  

(e)
Fixed assets

Fixed assets are recorded at cost and are amortized on the declining balance basis at the following annual rates:

Computer equipment
30%
Computer software
30%
Office furniture and equipment
20%

(f)
Stock-based compensation

Effective September 1, 2004, the Company adopted the amended recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments .  Under the amended standards of this section, the fair value of all stock-based awards granted are estimated using the Black-Scholes model and are recorded in operations over their vesting periods.  The compensation cost related to stock options granted after September 1, 2004 is recorded in operations.

Previously, the Company provided note disclosure of pro forma net earnings and pro forma earnings per share as if the fair value based method had been used to account for share purchase options granted to employees, directors and officers after September 1, 2002.  The amended recommendations have been applied retroactively from September 1, 2002 without restatement of prior periods.  As a result, as of September 1, 2004, the deficit was increased by $318,000, contributed surplus was increased by $304,977, and share capital was increased by $13,023 for share purchase options granted in prior years and exercised in Fiscal 2005.

The total compensation expense recognized in the statement of operations for share purchase options granted in Fiscal 2006 to employees and directors amounted to $110,176 (2005 - $1,283,289). Had the same basis been applied to share purchase options granted in 2004, net earnings would have been as follows:

Page 5

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(f)
Stock-based compensation (continued)
		
 	2004	
 	 	
Net loss	 $       2,242,627	
Additional compensation expense	         241,000	
Pro forma net loss	 $       2,483,627	
 	 	
Pro forma basic and diluted loss per share	 $             (0.08)	

For the year ended August 31, 2004, stock-based compensation expense was determined using an option pricing model assuming no dividends are to be paid, a weighted average volatility of the Company’s share price of 200%, an annual risk free interest rate of 3.97% and expected lives of 3.47 years.  The weighted average fair value of share purchase options granted in 2004 was $1.04 per share.

Please refer to Note 8 (c) for a summary of stock options granted in the current period and the related valuation assumptions.

(g)
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.

(h)
Earnings (loss) per common share

Basic earnings per share are calculated using the weighted average number of common shares outstanding, excluding contingently returnable shares held in escrow.

The Company uses the treasury stock method for the calculation of diluted earnings per share. Diluted earnings per share are computed using the weighted average number of common and common equivalent shares outstanding during the year. Common equivalent shares consist of the incremental common shares arising upon the assumed exercise of stock options and warrants, or the return of contingently returnable shares, but are excluded from the computation if their effect is anti-dilutive.

(i)
Financial instruments

The fair values of cash and cash equivalents, amounts receivable, accounts payable and capital lease obligation reflected in the balance sheet approximate their respective carrying values. The fair value of marketable securities is disclosed on the balance sheet.

Page 6

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

2.
SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i)
Financial instruments (continued)

Price risk is the risk that the value of the Company’s financial instruments will vary from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.

(j)
Measurement Uncertainty

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenditures during the reporting period. Significant items where management’s judgement is applied include provisions for loss on and the estimated recoverable amount of assets, depreciation, income tax provisions, contingent liabilities, stock compensation and asset retirement obligations. Actual results could differ from those estimates.

(k)
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 depreciated over the life of the asset. The amount of the liability is subject to re-measurement at each reporting period and is accreted over time to the estimated asset retirement obligation ultimately payable through charges to operations.

The estimates are based principally on legal and regulatory requirements. It is possible that the Company’s estimates of its ultimate reclamation and closure liabilities could change as a result of changes in regulations, the extent of environmental remediation required, changes in technology and the means and cost of reclamation.

3.
AMOUNTS RECEIVABLE
					
Aug 31, 2006	 	 Aug. 31, 2005	
Advances receivable	 $38,401 	 	 $15,786 	
Due from related parties (Note 10 (b) and (c ))	 55,087 	 	 53,300 	
Goods and services tax recoverable	 22,519 	 	 7,799 	
South African value added tax ("VAT") recoverable	 241,462 	 	 263,466 	
Interest receivable	 37,524 	 	 380 	
Other	 -   	 	 3,328 	
 	 	 $394,993 	 	 $344,059 	

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

Page 7

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

4.
INVESTMENTS

(a)
Active Gold Group Ltd.

At August 31, 2003 the Company held 1,461,905 shares (26.79%) of Active Gold Group Ltd. at a cost of $160,327. Active Gold was a private corporation founded by the Company that attempted to acquire and develop gold projects in South Africa.  Active Gold failed to achieve a prospecting license for its Rooderand Gold Project and the project was abandoned.  The Company is now defunct.  Advances by the Company to Active Gold in the normal course of business during 2003 amounted to $45,487 and in 2004 amounted to $90,062.  In 2003 the Company wrote off its investment in and advances to Active Gold after recognizing its equity in that company’s losses.  Advances in 2004 were written off in the year they occurred.

On September 30, 2004 the Company acquired 1,407,069 shares of Active Gold from six of its other founding shareholders, all of whom were at arm’s length to the Company, in exchange for 399,999 shares (market value $131,200) of Sydney Resource Corporation (now West Timmins Mining Inc. or “WTM”), paid from the Company’s holdings of that security (see Note 4 (c)). As Active Gold was of nominal value, the transaction was entered into for the purpose of preserving existing business relationships.  PTM, therefore, recorded the exchange as an expense of $131,200.

(b)
MAG Silver Corporation

In 2003 the Company earned a finders’ fee of 200,000 shares of MAG Silver Corporation (“MAG”), a company with one director and one officer in common with the Company, with an assigned value of $0.50 per share for introducing MAG to certain individuals and mineral properties located in Mexico. During 2003 the Company sold 100,000 of these shares for proceeds of $67,630. The remaining 100,000 MAG shares owned by the Company had a market value of $300,000 at August 31, 2006 and are included in marketable securities.

(c)
Sydney Resource Corporation

In 2002 New Millennium granted Sydney Resource Corporation (“SYR”), a company with two directors in common with the Company, an option to earn a 50% interest in New Millennium’s 100% owned Simlock Creek gold project, located in the Cariboo Mining District of British Columbia.  On December 2, 2003 the Company and SYR agreed to terminate the Option and the Company then sold the property to SYR outright in exchange for 1,200,000 shares of SYR at a value of $0.20 per share.  At August 31, 2006 the Company held 800,001 SYR shares with an aggregate cost of $160,000. Market value for these 800,001 shares at August 31, 2006 was $264,000. The shares are included in marketable securities.  Subsequent to year end SYR was reorganized and named West Timmins Mining Inc.

Page 8

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

5.
Investment in Western Bushveld Joint Venture (the “WBJV”)

 	2006	2005	
Opening Balance	$5,770,020	$1,234,449	
Additional investment and advances	
5,718,449	
4,535,571	
Translation adjustment	(658,381)	-	
Share of net loss	-	-	
Ending Balance	$10,830,088	$5,770,020	

Details of the assets of the WBJV excluding the property rights contributed by the other ventures are as follows:
					
Year ended August 31, 2006	
 	SOUTH AFRICA	
 	 	 	 	 	
 	2006	 	2005	 	
Acquisition costs	
of mineral rights	
   Balance, beginning of year	 $1,804,926 	 	 $292,480 	 	
   Incurred during year	 93,367 	 	 1,512,446 	 	
   Translation adjustment	 (112,501)	 	 -   	 	
   Balance, end of year	 $1,785,792 	 	 $1,804,926 	 	
Deferred exploration costs	
   Balance, beginning of year	 3,965,094 	 	 941,969 	 	
   Assays and geochemical	 $756,770 	 	 $121,495 	 	
   Drilling	 4,554,926 	 	 1,744,881 	 	
   Geological	 1,557,563 	 	 459,855 	 	
   Geolophysical	 12,725 	 	 11,529 	 	
   Site administration	 661,430 	 	 670,940 	 	
   Travel	 68,811 	 	 14,425 	 	
 	 11,577,319 	 	 3,965,094 	 	
   Less other venture's interest	 (2,613,778)	 	 -   	 	
   Translation adjustment	 (545,880)	 	 -   	 	
   Balance, end of year	 $8,417,661 	 	 $3,965,094 	 	
   Due from other venturer's	 $626,635 	 	 $-   	 	
 	 $10,830,088 	 	 $5,770,020 	 	

From inception of the joint venture to August 31, 2006 there have been no material earnings or losses as all activities of the joint venture have been in connection with acquiring mineral rights and exploring the properties for minerals.

On October 26, 2004 the Company entered into a joint venture with Anglo American Platinum Corporation Limited and Africa Wide Mineral Prospecting and Exploration (Pty) Limited (the “WBJV”) to pursue platinum exploration and development on combined mineral rights covering 67 square kilometres on the Western Bushveld Complex of South Africa.  The transaction closed effective January 26, 2005. The Company contributed all of its interests in portions of the farms Onderstepoort 98JQ and Elandsfontein 102JQ (see (ii) (1) and (ii) (2) below). Anglo Platinum contributed its interests in portions of the farms Koedoesfontein 94JQ, Elandsfontein 102JQ and Frischgewaagd 96JQ. The Company and Anglo Platinum will each own an initial 37% working interest in the WBJV, while Africa Wide will own an initial 26% working interest. Africa Wide will work with local community groups in order to facilitate their inclusion in the economic benefits of the WBJV in areas such as training, job creation and procurement.

Page 9

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

5.
Investment in Western Bushveld Joint Venture (the “WBJV”) (continued)

The Company was required to operate and fund an exploration program in the amount of Rand 35 million (Cdn$6.44 million at August 31, 2005) over five years in order to earn its 37% interest in WBJV. As of April 2006 this requirement had been completed. After Rand35 million in expenditures were funded by PTM, the parties are required to fund their portion of further expenditures in excess of Rand 35 million pro-rata based on their working interest in the WBJV.

Once a bankable feasibility study has been completed, the respective deemed capital contribution of each party will be credited by adding their contribution of measured, indicated, and inferred PGE ounces from the contributed properties comprising the WBJV, determined in accordance with the South African SAMREC code.  Inferred ounces will be credited at US$0.50 per ounce, indicated ounces will be credited at US$3.20 per ounce and measured ounces will be credited at US$6.20 per ounce. Each party will then have the opportunity to contribute additional capital in order to catch up any resulting shortfall in their contributed capital and thereby maintain their respective working interest in the JV. Should a party not wish to participate, the JV agreement provides a mechanism whereby the parties may elect to become “non-contributory” to the JV and by doing so they would be subject to dilution.

The Company has concluded that it has significant influence over the operations of WBJV but not joint control and is therefore recording the investment using the equity method.

The initial exchange of the Company’s pre-existing interests in the Elandsfontein and Onderstepoort properties for the interest in WBJV has been recorded at cost as it represents a non-monetary exchange.  The balance paid to date under the Company’s commitment to spend up to Rand 35 million in exploration costs has also been recorded as a cost of the investment.

Prior to August 31, 2006 the Company and WBJV participants Anglo Platinum Limited and Africa Wide Mining had approved a 2006 cash budget for the WBJV totalling Rand 29,712,200 (approximately Cdn $4.59 million at August 31, 2006).  Each party is to fund their pro-rata share of the approved budget by way of three separate cash calls.  At August 31, 2006 Anglo Platinum was due to contribute Rand 975,276, which was subsequently contributed.  At August 31, 2006 Africa Wide was due to contribute Rand 3,101,731, (Cdn $498,798) which amount was still outstanding at October 24, 2006. The joint venture does not maintain separate records and all receipts, disbursements and net assets excluding property contributed by other venturers are recorded in the records of and disbursed by the Company on behalf of the joint venture. Of the $2,126,584 in accounts payable at August 31, 2006, an amount of $1,850,000 (approximately Rand 12 million) was incurred on behalf of the WBJV.

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

Page 10

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

5.
Investment in Western Bushveld Joint Venture (the “WBJV”) (continued)

(a)
Elandsfontein interest

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

The Company exercised its option to purchase the Elandsfontein property by way of written notice on June 26, 2003. A dispute arose with the Vendors as to the purchase price and the matter was referred for Expert Determination as provided for in the option agreement.

In 2005 the Company and the Vendors reached agreement whereby the Company purchased all surface and mineral rights to the property in exchange for Rand 7.0 million. In September 2005 the Company was granted a “New Order” prospecting permit under the new Mineral and Petroleum Resources Development Act (2002) over the Elandsfontein property.

(b)
Onderstepoort interest

During 2003 the Company entered into three option agreements to acquire mineral rights on seven portions comprising approximately 1085 hectares of the farm Onderstepoort 98 JQ located in the Western Bushveld. The Company may earn 100% of the mineral rights over 647 hectares and 50% of the mineral rights over the balance of 438 hectares. To earn its interests the Company must make aggregate prospecting and option payments over time to the vendors of Rand 12.44 million (approximately C$2.24 million) ending April 2008.  Of this amount Rand 834,000 has been paid.  During 2004 the Company was granted Old Order prospecting permits on five portions of the farm.  In 2005 the Company was granted New Order prospecting permits on the remaining two farm portions. Certain portions covering 569 ha are subject to the vendors right to participate as to a 7.5% working interest, or to convert 1% NSR royalty, which the Company may buy-back for Rand 5,000,000 (approximately C $900,000).

Page 11

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES

Year ended August 31, 2006	

 	 	Tweespalk	 	War Springs	 	Lakemount	 	LDI River	 	Shelby Lake	 	 Other	 	Total	
Acquisition costs	
of mineral rights	
   Balance, beginning of year	 $23,213 	 	 $103,832 	 	 $136,773 	 	 $540,532 	 	 $307,345 	 	 $248,858 	 	 $1,360,553 	
   Incurred during year	 8,622 	 	 8,658 	 	 84,800 	 	 5,000 	 	 -   	 	 100,481 	 	 207,561 	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (339,339)	 	 (339,339)	
   Balance, end of year	 $31,835 	 	 $112,490 	 	 $221,573 	 	 $545,532 	 	 $307,345 	 	 $10,000 	 	 $1,228,775 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deferred exploration costs	
   Assays and geochemical	 $-   	 	 $63,788 	 	 $301 	 	 $-   	 	 $-   	 	 $-   	 	 $64,089 	
   Drilling	 -   	 	 150,334 	 	 -   	 	 -   	 	 -   	 	 -   	 	 150,334 	
   Geological	 675 	 	 215,444 	 	 6,767 	 	 425 	 	 425 	 	 5,001 	 	 228,738 	
   Geophysical	 -   	 	 995 	 	 -   	 	 -   	 	 -   	 	 2,210 	 	 3,205 	
   Maps, fees and licenses	 -   	 	 -   	 	 -   	 	 128 	 	 -   	 	 128 	 	 256 	
   Site administration	 -   	 	 4,973 	 	 10,468 	 	 -   	 	 -   	 	 195 	 	 15,636 	
   Travel	 -   	 	 11,265 	 	 1,502 	 	 -   	 	 -   	 	 1,007 	 	 13,774 	
 	 	 675 	 	 446,799 	 	 19,038 	 	 553 	 	 425 	 	 8,541 	 	 476,032 	
   Balance, beginning of year	 813,434 	 	 1,632,760 	 	 1,079,611 	 	 215,391 	 	 391,546 	 	 828,234 	 	 4,960,976 	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (834,986)	 	 (834,986)	
   Balance, end of year	 $814,109 	 	 $2,079,559 	 	 $1,098,649 	 	 $215,944 	 	 $391,971 	 	 $1,789 	 	 $4,602,022 	
Total Mineral Properties	 $845,944 	 	 $2,192,049 	 	 $1,320,222 	 	 $761,476 	 	 $699,316 	 	 $11,789 	 	 $5,830,797 	

															
Year ended August 31, 2005	

 	 	Tweespalk	 	War Springs	 	Lakemount	 	LDI River	 	Shelby Lake	 	 Other	 	Total	
Acquisition costs	
of mineral rights	
   Balance, beginning of year	 $13,054 	 	 $86,986 	 	 $65,188 	 	 $540,532 	 	 $307,345 	 	 $594,120 	 	 $1,607,225 	
   Incurred during year	 10,159 	 	 16,846 	 	 71,585 	 	 -   	 	 -   	 	 204,398 	 	 302,988 	
   Less recoveries	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (55,000)	 	 (55,000)	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (494,660)	 	 (494,660)	
   Balance, end of year	 $23,213 	 	 $103,832 	 	 $136,773 	 	 $540,532 	 	 $307,345 	 	 $248,858 	 	 $1,360,553 	
Deferred exploration costs	
   Assays and geochemical	 $14,230 	 	 $306,401 	 	 $20,108 	 	 $-   	 	 $-   	 	 $113,024 	 	 $453,763 	
   Drilling	 -   	 	 458,680 	 	 1,300 	 	 -   	 	 -   	 	 519,886 	 	 979,866 	
   Geological	 91,147 	 	 283,859 	 	 119,241 	 	 39 	 	 885 	 	 94,221 	 	 589,392 	
   Geophysical	 2,551 	 	 9,352 	 	 5,678 	 	 -   	 	 -   	 	 134,942 	 	 152,523 	
   Maps, fees and licenses	 -   	 	 187 	 	 8,752 	 	 -   	 	 -   	 	 3,022 	 	 11,961 	
   Site administration	 98 	 	 17,496 	 	 13,873 	 	 -   	 	 -   	 	 10,637 	 	 42,104 	
   Travel	 2,328 	 	 9,584 	 	 16,055 	 	 44 	 	 -   	 	 29,114 	 	 57,125 	
 	 	 110,354 	 	 1,085,559 	 	 185,007 	 	 83 	 	 885 	 	 904,846 	 	 2,286,734 	
   Balance, beginning of year	 703,080 	 	 546,895 	 	 894,604 	 	 215,308 	 	 390,661 	 	 403,328 	 	 3,153,876 	
   Less amounts written off	 -   	 	 -   	 	 -   	 	 -   	 	 -   	 	 (479,634)	 	 (479,634)	
   Balance, end of year	 $813,434 	 	 $1,632,454 	 	 $1,079,611 	 	 $215,391 	 	 $391,546 	 	 $828,540 	 	 $4,960,976 	
Total Mineral Properties	 $836,647 	 	 $1,736,286 	 	 $1,216,384 	 	 $755,923 	 	 $698,891 	 	 $1,077,398 	 	 $6,321,529 	

Page 12

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES (continued)

(a)
Republic of South Africa

(i)
War Springs and Tweespalk

On June 3, 2002, the Company entered an option agreement whereby it may earn a 100% interest in the 2,396 hectare War Springs property and the 2,177 hectare Tweespalk property both located in the Northern Limb or Platreef area of the Bushveld Complex north of Johannesburg. Acquisition and exploration costs on these properties to August 31, 2006 total $3,037,933 (August 31, 2005 - $2,572,933).
 
The Company may purchase 100% of these mineral rights at any time within three years from the grant of a prospecting permit on each property for US$475 per hectare in year one, or US$570 per hectare in year two, or US$690 per hectare in year three. The Company must also pay prospecting fees to the vendors of US$2.50 per hectare in year one, US$2.75 per hectare in year two and US$3.25 per hectare in year three. Old Order prospecting permits were granted to the Company in August 2003 for the Tweespalk property and February 2004 for the War Springs property. The vendors retain a 1% NSR Royalty on the property, subject to the Company’s right to purchase the NSR at any time for US$1.4 million. A 5% finders’ fee applies to vendor payments.

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

Black Economic Empowerment groups Africa Wide Mineral Prospecting and Exploration (Pty) Limited and Taung Minerals (Pty) Ltd. each have been granted a 15% interest in the War Springs project carried to bankable feasibility.  The Company’s retains a net 70% project interest.

Africa Wide also has a 30% participating interest in the Tweespalk property.  The Company has not recorded a receivable for Africa Wide’s share of costs to date, which at August 31, 2006 are calculated to be $253,783 (August 31, 2005 - $250,994).  The Company expects that Africa Wide will be able to fund their share of costs in the future and amounts recovered from Africa Wide will be treated as a reduction of costs relating to the Tweespalk property.

Page 13

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES (continued)

(b)
Ontario

(i)
Agnew Lake

The Company has earned a 99% interest in certain claims located near Sudbury, Ontario known as the Agnew Lake property subject to a 2% royalty interest payable to the original vendor. The Company optioned the Agnew Lake property to Pacific Northwest Capital Corporation (“PFN”) on June 18, 2000. On June 22, 2001, the Company and PFN optioned their property interests to Kaymin Resources Limited (“Kaymin”), a subsidiary of Anglo American Platinum Corporation Limited. At August 31, 2004, the Company had directly performed $512,265 worth of exploration work and caused further work of approximately $3,140,805 to be performed through the joint venture arrangement with PFN and Kaymin.  At August 31, 2005 the project was not active and the Company wrote off its remaining investment in the property amounting to $276,852. Kaymin has vested as to a 26.17% interest in the property in accordance with the terms of their option agreement.  PFN has terminated their option on the property and retains no working interest.

(ii)
Lakemount

On November 6, 2003 the Company acquired an option to earn up to a 62% interest in the 3,017 hectare Lakemount property located near Wawa, Ontario. The Company may earn up to a 51% undivided property interest by completing $2.5 million in exploration and development expenditures ($1,098,649 incurred to August 31, 2006) and by making staged payments totalling $150,000 ($75,000 paid) and 150,000 common shares (50,000 issued) by December 31, 2008. The Company may acquire an additional 11% interest in the property by making a payment of $3.3 million to an underlying holder. The property is subject to NSR royalties ranging from 1.5% to 3.0% and a net sales royalty on precious stones of 1.5%, subject to buy-out and buy-down provisions.

(iii)
Lac des Iles River

On May 5, 2000, New Millennium entered into an option agreement to acquire a 50% interest in the Lac des Iles River property in exchange for payments of $38,500 over three years (paid) and the completion of exploration expenditures in the amount of $1,000,000 over five years, $548,952 of which has been incurred to August 31, 2006. The option agreement was amended January 27, 2005 to allow the Company an additional three years, to May 5, 2008, to meet its exploration commitments in exchange for making annual cash payments of $5,000 to May 5, 2008 and undertaking a minimum of $50,000 in annual exploration expenditures.

After year end, on October 6, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement as

Page 14

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

 
6.
MINERAL PROPERTIES (Continued)

(b)
Ontario (continued)

(iii)
Lac des Iles River (continued)

amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

(iv)
Moss Lake

On August 5, 2004 the Company optioned a 100% property interest in the Moss Lake property for optional cash payments of $85,000 over 3 years ($25,000 paid) and optional share payments of 40,000 common shares over 3 years. The property is subject to an underlying 3% NSR Royalty, from which the Company may buy-back 2.0% at a price of $500,000 per one-half percentage point bought back. The Company terminated the Moss Lake option as of August 31, 2006 resulting in a write-off of $158,855.

(v)
South Legris

In April 2000 the Company acquired an option to earn a 50% interest in 261 mineral claims located near Thunder Bay, Ontario known as the South Legris property in exchange for cash payments of $98,300 (paid) and the expenditure of $1,000,000 ($492,330 incurred) in exploration expenditures within 5 years of the date of the agreement. The Company terminated the option in 2004 and $587,369 in deferred costs related to the property were written off at August 31, 2004. The South Legris Option Agreement was later amended on January 27th, 2005 to allow the Company an additional three years to meet its exploration commitments in exchange for making annual cash payments of $5,000 to April 10, 2008 and undertaking a minimum of $50,000 in annual exploration expenditures.

After year end, on October 13, 2006, the Company and the property vendors entered into a termination and sale agreement whereby the option agreement as amended was cancelled and the Company purchased an undivided 100% interest in the property subject only to an underlying 1.0% Net Smelter Return Royalty granted to an underlying vendor. The Company also granted the property vendors an additional 1.0% Net Smelter Return Royalty, with buy back provisions for the Company, on the same terms and conditions as that for the underlying royalty and made a one-time payment of $50,000 in lieu of past and future exploration expenditure commitments not incurred.

Page 15

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

6.
MINERAL PROPERTIES (Continued)

(b)
Ontario (continued)

(vi)
Seagull

On September 24, 2004 the Company acquired an option to earn up to a 70% interest in the Seagull property located in the Nipigon region of Ontario. The Company could earn an initial 50% property interest by completing certain exploration expenditures and cash payments over 5 years.  The Company could earn an additional 20% property interest by completing a bankable feasibility study and providing or arranging production financing. The Company terminated the Seagull option as of February 28, 2006 resulting in a write-off of $785,288.

(vii)
Shelby Lake

On June 28, 2000, New Millennium entered into an option agreement to earn up to 60% interest in the Shelby Lake property, located in the Lac des Iles area. To earn a 50% interest the Company was required to make cash payments of $10,000 (paid), issue 30,303 shares (issued) and complete $500,000 in exploration expenditures over a four-year period. To August 31, 2006 the Company had incurred costs of $565,869 and elected under the option agreement to form a 50/50 joint venture with the property vendor.  Amounts already spent by the Company in excess of $500,000 where repayable to the Company by the property vendor, or would be applied to dilute the vendor’s working interest in the property.

After year end, on October 18, 2006, the Company and the property vendor entered into a termination and sale agreement whereby the option agreement was cancelled and the Company purchased an undivided 100% interest in the property for a one-time payment of $5,000 subject only to an underlying 2.0% Net Smelter Return Royalty, of which the Company may buy back one half for $500,000.

(c)
Write-down of mineral properties

During the year the carrying values of certain mineral properties of the Company were determined to be impaired, resulting in a write-off in the amount of $1,174,325 (2005 - $974,294)

(d)
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.

Page 16

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

7.
FIXED ASSETS

 	  August 31, 2006  	
 	 	 	 	Accumulated  	 	Net Book  	
 	 	Cost  	 	Amortization  	 	Value  	
Computer equipment and software  	$  	316,385  	$  	164,931  	$  	151,454  	
Leasehold improvements  	 	29,907  	 	15,894  	 	14,013  	
Office furniture and equipment  	 	120,471  	 	45,688  	 	74,783  	
 	$  	466,763  	$  	226,513  	$  	240,250  	
  		
 	  August 31, 2005  	
 	 	 	 	Accumulated  	 	Net Book  	
 	 	Cost  	 	Amortization  	 	Value  	
Computer equipment and software  	$  	223,983  	$  	103,650  	$  	120,333  	
Leasehold improvements  	$  	22,970  	$  	7,345  	$  	15,625  	
Office furniture and equipment  	 	75,418  	 	22,268  	 	53,150  	
 	$  	322,371  	$  	133,263  	$  	189,108  	

 
8.
SHARE CAPITAL

(a)
Authorized

Unlimited common shares without par value

(b)
Issued and outstanding

At August 31, 2006 there were 53,691,178 shares outstanding.

During the year ended August 31, 2006:

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

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

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

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

Page 17

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

 

8.
SHARE CAPITAL (Continued)

(b)
Issued and outstanding (continued)

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

During the year ended August 31, 2005:

(vi)
the Company issued 25,000 common shares in connection with the acquisition of mineral properties at a fair value of $28,000.

(vii)
2,469,949 share purchase warrants were exercised for proceeds of $2,272,462 and 903,000 stock options were exercised for proceeds of $508,850.

(viii)
the Company closed brokered private placements for gross proceeds of $6,259,900 on April 14, 2005. Proceeds of $259,901 were from the sale of 173,267 flow-through shares at $1.50 per share and $6,000,000 was from the sale of 5,000,000 non-flow-through units at $1.20 per unit. Each non-flow-through unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to purchase an additional common share until October 14, 2006 at a price of $1.50 per share. Agent’s fees amounted to 7.0% of gross proceeds, which totalled $438,193, which was paid in cash. The Agents’ legal and other costs totalling $24,229 were paid by the Company. The Company paid $47,000 to its lawyers for legal costs relating to the private placement, $20,000 for consulting services, and $29,500 as a filing fee. The Agents also received 517,327 compensation options exercisable into common shares of the Company at a price of $1.50 per share until October 14, 2006.

During the year ended August 31, 2004:

(ix)
The Company issued 10,909 common shares in connection with the acquisition of mineral properties at a fair value of $3,600.

(x)
1,747,032 share purchase warrants were exercised for proceeds of $1,428,407 and 132,000 stock options were exercised for proceeds of $59,200.

(xi)
the Company completed a private placement for total proceeds of $2,040,000 through the issuance of 2,400,000 units at a price of $0.85 per unit. Each unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable into one common share of the Company at a price of $1.10 until October 31, 2004.

Page 18

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

8.
SHARE CAPITAL (Continued)

(b)
Issued and outstanding (continued)

(xii)
the Company closed brokered private placements for gross proceeds of $2,721,555 on July 14, 2004. Proceeds of $1,267,200 were from the sale of 1,056,000 flow-through shares at $1.20 per share and $1,454,355 was from the sale of 1,385,100 non-flow-through units at $1.05 per unit. Each non-flow-through unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to purchase an additional common share until January 14, 2006 at a price of $1.35 per share. Agent’s fees amounted to 8.0% of gross proceeds. Of this amount $188,842 was paid in cash and $26,362 was paid by way of 25,107 non-flow-through units of the offering at the issue price of $1.05 per unit. The Agents’ legal and other costs totalling $42,535 were paid by the Company. The Company paid $36,409 in legal costs relating to the private placement. The Agents also received 241,110 compensation options exercisable into common shares of the Company at a price of $1.20 per share until July 14, 2005.

(c)
Incentive stock options

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

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

Page 19

 
Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

 		 	 	Weighted  	
 		 	 	Average  	
 	Number	 	 	Exercise  	
 	of Shares	 	 	Price  	
Options outstanding at August 31, 2003  	2,267,000	 	 	0.53  	
    Granted  	590,000	 	 	1.04  	
    Exercised  	(132,000	)  	 	0.45  	
    Cancelled  	(300,000	)  	 	0.60  	
Options outstanding at August 31, 2004  	2,425,000	 	 	0.65  	
    Granted  	2,046,000	 	 	1.02  	
    Exercised  	(903,000	)  	 	0.56  	
    Cancelled  	(155,000	)  	 	1.05  	
Options outstanding at August 31, 2005  	3,413,000	 	 	0.88  	
    Granted  	220,000	 	 	1.79  	
    Exercised  	(164,500	)  	 	0.72  	
    Cancelled  	(183,125	)  	 	0.97  	
Options outstanding at August 31, 2006  	3,285,375	 	$  	0.94  	

Page 20

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

8.
SHARE CAPITAL (Continued)

(c)
Incentive stock option agreement (continued)

 	 	Number  	Average  	Number  	
 	 	Outstanding at  	Remaining  	Exercisable at  	
 	Exercise  	August 31,  	Contractual  	August 31,  	
 	Price  	2006  	Life (Years)  	2006  	
$  	0.35  	335,000  	0.52  	335,000  	
 	0.50  	295,000  	1.75  	295,000  	
 	0.55  	30,000  	0.52  	30,000  	
 	0.70  	132,000  	2.05  	132,000  	
 	0.75  	75,000  	0.87  	75,000  	
 	1.00  	1,635,375  	3.47  	1,590,375  	
 	1.05  	50,000  	3.92  	50,000  	
 	1.10  	332,500  	3.28  	332,500  	
 	1.15  	90,000  	3.99  	90,000  	
 	1.18  	50,000  	3.21  	50,000  	
 	1.44  	50,000  	2.28  	50,000  	
 	1.45  	15,000  	4.40  	15,000  	
 	1.50  	20,500  	4.36  	20,500  	
 	1.85  	115,000  	4.80  	-  	
 	1.92  	60,000  	4.84  	-  	
 	 	3,285,375  	2.93  	3,065,375  	

(i)
During the year ended August 31, 2006 the Company granted 220,000 stock options to employees. The Company has recorded $110,176 of compensation expense relating to stock options granted in this year.

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

 	Aug. 31, 2006	 	
Risk-free interest rate  	4.26	 	
Expected life of options  	3.50	 	
Annualized volatility  	85.21	 	
Dividend rate  	0.00	%  	

Page 21

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

8.
SHARE CAPITAL (Continued)

(ii)
During the year ended August 31, 2005 the Company granted 2,046,000 stock options to directors, officers, employees and consultants, (30,000 of which were cancelled during the same period). The Company has recorded $1,283,289 of compensation expense relating to stock options granted during the year. The stock-based compensation expense was determined using the Black-Scholes option pricing model and the following weighted average assumptions:

 	August 31, 2005	 	
Risk-free interest rate  	2.93	 	
Expected life of options  	3.50	 	
Annualized volatility  	94	%  	
Dividend rate  	0.00	%  	

(iii)
During the year ended August 31, 2004, the Company granted 75,000 stock options to consultants and 515,000 stock options to employees. The Company recorded compensation expense of $92,881 relating to the stock options granted to consultants.  No compensation expense was recorded for those granted to employees.  (Note 2.(f))

(d)
Share purchase warrants
 
 		 	 	Weighted  	
 		 	 	Average  	
 	Number of	 	 	Exercise  	
 	Warrants	 	 	Price  	
Balance at August 31, 2003  	3,016,981	 	$  	0.79  	
Issued to private placement placees (Note 7 (b) (x) and (xi))  	1,892,550	 	 	1.19  	
Issued to agents on brokered financing (Note 7 (b) (xi))  	253,663	 	 	1.21  	
Exercised and converted to common shares  	(1,747,032	)  	 	0.82  	
Balance at August 31, 2004  	3,416,162	 	 	1.03  	
Issued to private placement placees (Note 7 (b) (vii))  	2,500,000	 	 	1.50  	
Issued to agents on brokered financing (Note 7 (b) (vii))  	517,327	 	 	1.50  	
Expired during the period  	(241,110	)  	 	1.20  	
Exercised and converted to common shares  	(2,469,949	)  	 	0.92  	
Balance at August 31, 2005  	3,722,430	 	$  	1.47  	
Issued to private placement placees (Note 7 (b) (iii, iv and v))  	4,750,000	 	 	1.96  	
Expired during the period  	(150,000	)  	 	1.35  	
Exercised and converted to common shares  	(843,047	)  	 	1.40  	
Balance at August 31, 2006  	7,479,383	 	$  	1.79  	

				
Warrant expiry dates:	October 14, 2006	2,729,383	$1.50	
 	March 31, 2007	2,800,000	2.10	
 	April 13, 2007	747,000	1.75	
 	April 14, 2007	203,000	1.75	
 	April 21, 2007	150,000	1.75	
 	March 6, 2008	850,000	1.75	

Page 22

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

9.
CONTRIBUTED SURPLUS

The following table summarizes the Company’s Contributed Surplus:

 	 	 	
 	 	 	
 	 	Contributed	
 	 	Surplus	
Balance at August 31, 2004	$134,932 	
Retroactive accounting change for stock options	 318,000 	
Stock options granted during the year	 1,283,289 	
Stock options exercised during the year	 (13,023)	
Balance at August 31, 2005	 1,723,198 	
Stock options granted during the year	 110,176 	
Stock options exercised during the year	 (47,669)	
Balance at August 31, 2006	$1,785,705 	

10.
RELATED PARTY TRANSACTIONS

Transactions with related parties are as follows:

(a)
Management, salary and consulting fees of $354,710 (2005 - $278,401, 2004 - $249,253) were incurred with directors during the year. At August 31, 2006, $7,600 was included in accounts payable (2005 - $Nil).

(b)
The Company received $135,340 (2005 - $134,757, 2004 - $152,353) during the year from MAG Silver Corp. (“MAG”), a company with certain common directors and a common officer, under the terms of a 2003 service agreement for administrative services.  Accounts receivable at the end of the year include an amount of $39,738 due from MAG.

(c)
During the period the Company accrued or received payments of $27,300 (2005 - $39,000, 2004 - $Nil) from Sydney Resource Corporation, a company with certain common directors and a common officer, for administrative services.  Subsequent to year end SYR was reorganized and named West Timmins Mining Inc. (“WTM”).  The amount received was net of a credit adjustment of $19,500 in recognition of WTM’s relative inactivity in the first three quarters of calendar 2005.  Accounts receivable at the end of the year include an amount of $15,349 due from WTM.

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.

Page 23

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

11.
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:

 	 	2006	 	 	2005	 	
Statutory tax rates  	 	36	%  	 	36	%  	
Recovery of income taxes computed at statutory rates  	$  	1,391,802	 	$  	1,657,420	 	
Effect of lower tax rates in foreign jurisdictions  	 	(55,932	)  	 	(34,701	)  	
Tax losses not recognized in the period that the  	 		 	 		 	
benefit arose  	 	(1,335,870	)  	 	(829,719	)  	
Future income tax recovery  	$  	-	 	$  	793,000	 	

The approximate tax effect of the temporary differences that gives rise to the Company’s future income tax assets and liability are as follows:
 
 	 	2006	 	 	2005	 	
Future income tax assets  	 		 	 		 	
    Operating loss carryforwards  	$  	2,834,397	 	$  	2,599,980	 	
    Fixed assets  	 	34,143	 	 	12,875	 	
    Mineral properties  	 	783,875	 	 	72,993	 	
    Share issuance costs  	 	386,483	 	 	287,579	 	
Valuation allowance on future income tax assets  	 	(4,038,898	)  	 	(2,973,427	)  	
 	$  	-	 	$  	-	 	

The Company has Canadian non-capital loss carryforwards available to offset future taxable income in the amount of approximately $7.2 million, which expire at various dates from 2006 to 2026.

The Company has South African non-capital loss carryforwards available to offset future taxable income in the amount of approximately $1.5 million, which do not expire, subject to business continuity.

12.
CONTINGENCIES AND COMMITMENTS

The Company’s minimum payments under its office and equipment lease agreements, which it has entered into for the years ending on August 31, as well as its South African subsidiary commitments, are as follows as at August 31, 2006.
 
2007  	 	149,372  	
2008  	 	84,101  	
2009  	 	92,730  	
2010  	 	51,620  	
 	$  	377,823  	

Page 24

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

13.
SUPPLEMENTARY CASH FLOW INFORMATION

(a)
Net change in non-cash working capital

 	 	Year ended	 	 	Year ended	 	 	Year ended	 	
 	 	August 31,	 	 	August 31,	 	 	August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 	
Amounts receivable  	$  	(50,934	)  	$  	(102,923	)  	$  	(164,724	)  	
Prepaid expenses and other  	 	(10,573	)  	 	(36,673	)  	 	7,918	 	
Accounts payable  	 	184,819	 	 	(280,358	)  	 	490,347	 	
 	$  	123,312	 	$  	(419,954	)  	$  	333,541	 	

(b)
Cash and cash equivalents

Cash and cash equivalents consist of the following:

 	 	Aug. 31, 2006  	 	Aug. 31, 2005  	 	Aug. 31, 2004  	
Cash  	$  	1,666,801  	$  	693,661  	$  	273,176  	
Short-term deposits  	 	8,400,000  	 	2,056,800  	 	2,150,000  	
 	$  	10,066,801  	$  	2,750,461  	$  	2,423,176  	

14.
SEGMENTED INFORMATION

The Company operates in one operating segment, that being exploration on mineral properties. Investment in joint ventures, fixed assets, capitalized costs for mineral rights and deferred exploration relate to properties situated as follows:

 	 	August 31,  	 	August 31,  	
 	 	2006  	 	2005  	
Canada  	$  	2,872,433  	$  	3,717,075  	
South Africa  	 	14,028,702  	 	8,563,582  	
 	$  	16,901,135  	$  	12,280,657  	

Page 25

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
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 material differences between Canadian and US GAAP affecting the Company’s consolidated financial statements are summarized as follows:

Consolidated Balance Sheet

 	 	2006	 	 	2005	 	
Total assets under Canadian GAAP  	$  	27,664,441	 	$  	15,705,187	 	
Decrease in mineral properties due to expensing  	 		 	 		 	
    of exploration costs (a)  	 	(4,602,022	)  	 	(4,960,976	)  	
Decrease due to lower equity interest in WBJV (b)  	 	(9,044,296	)  	 	(3,965,094	)  	
Marketable securities (e)  	 	354,000	 	 	20,625	 	
Total assets under US GAAP  	$  	14,372,123	 	$  	6,799,742	 	
Total liabilities under Canadian GAAP  	$  	2,149,153	 	$  	2,026,131	 	
Liability relating to issuance of flow-through shares (c)  	 	24,758	 	 	30,264	 	
 	 	2,173,911	 	 	2,056,395	 	
Shareholders' equity under Canadian GAAP  	 	25,515,288	 	 	13,679,056	 	
Cumulative mineral properties adjustment (a), (c)  	 	(4,602,022	)  	 	(4,960,976	)  	
Cumulative equity adjustment for WBJV (b)  	 	(9,590,176	)  	 	(3,965,094	)  	
Liability recorded upon issuance of flow-through shares (c)  	 	(24,758	)  	 	(30,264	)  	
Cumulative translation adjustment (b)  	 	545,880	 	 	-	 	
Marketable securities (e)  	 	354,000	 	 	20,625	 	
Shareholders' equity under US GAAP  	 	12,198,212	 	 	4,743,347	 	
Total liabilities and shareholders' equity under US GAAP  	$  	14,372,123	 	$  	6,799,742	 	

Page 26

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Consolidated Statement of Loss and Deficit

 	 		 	 		 	 		 		Cumulative	 	
 	 		 	 		 	 		 		from	 	
 	 		 	 		 	 		 		March 16,	 	
 	 	Year ended	 	 	Year ended	 	 	Year ended	 		2000	to  	
 	 	August 31,	 	 	August 31,	 	 	August 31,	 		August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 		2006	 	
Net loss under Canadian GAAP  	$  	(3,853,273	)  	$  	(3,795,648	)  	$  	(2,242,627	)  	$	(13,664,804	)  	
Mineral property costs  	 		 	 		 	 		 			 	
    written off (a)  	 	1,174,325	 	 	974,294	 	 	1,044,542	 		5,099,746	 	
Acquisition costs included  	 		 	 		 	 		 			 	
    in write off (a)  	 	(339,339	)  	 	(494,660	)  	 	(450,217	)  		(2,099,839	)  	
Adjustment for equity loss on WBJV (b)  	 	(4,998,447	)  	 	(3,023,125	)  	 	-	 		(8,021,572	)  	
Mineral property exploration  	 		 	 		 	 		 			 	
    expenditures (a)  	 	(476,032	)  	 	(2,286,735	)  	 	(2,711,412	)  		(8,543,900	)  	
Future income taxes (c)  	 	5,506	 	 	(660,574	)  	 	(190,242	)  		(1,138,095	)  	
Consulting (d)  	 	-	 	 	-	 	 	-	 		(287,250	)  	
Variable Stock based compensation (d)  	 	(50,200	)  	 	37,800	 	 	(125,510	)  		(175,200	)  	
Stock based compensation for  	 		 	 		 	 		 			 	
    employees and directors (d)  	 	-	 	 	1,136,055	 	 	-	 		1,136,055	 	
Write-down of "available for  	 		 	 		 	 		 			 	
    sale" securities (e)  	 	-	 	 	-	 	 	-	 	 	18,450	 	
Net loss under US GAAP  	$  	(8,537,460	)  	$  	(8,112,593	)  	$  	(4,675,466	)  	$	(27,676,409	)  	
Basic loss per share  	 		 	 		 	 		 			 	
    under US GAAP  	$  	(0.18	)  	$  	(0.21	)  	$  	(0.15	)  	 	 	 	

Page 27

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Consolidated Statement of Cash Flows

 	 		 	 		 	 		 		Cumulative	 	
 	 		 	 		 	 		 		from	 	
 	 		 	 		 	 		 		March 16,	 	
 	 	Year ended	 	 	Year ended	 	 	Year ended	 		2000 to		
 	 	August 31,	 	 	August 31,	 	 	August 31,	 		August 31,	 	
 	 	2006	 	 	2005	 	 	2004	 		2006	 	
Operating activities  	 		 	 		 	 		 			 	
    Operating activities under  	 		 	 		 	 		 			 	
        Canadian GAAP  	$  	(2,356,261	)  	$  	(2,591,906	)  	$  	(1,179,125	)  	$	(8,426,394	)  	
    Deferred exploration (a)  	 	(4,979,915	)  	 	(4,219,624	)  	 	(2,711,412	)  	 	(14,846,896	)  	
Operating activities  	 		 	 		 	 		 			 	
    under US GAAP  	$  	(7,336,176	)  	$  	(6,811,530	)  	$  	(3,890,537	)  	$	(23,273,290	)  	
Financing activity  	 		 	 		 	 		 			 	
    Financing activities under  	 		 	 		 	 		 			 	
    Canadian and US GAAP  	$  	16,195,032	 	$  	8,468,898	 	$  	5,981,397	 	$	37,951,355	 	
Investing activities  	 		 	 		 	 		 			 	
    Investing activities under  	 		 	 		 	 		 			 	
        Canadian GAAP  	$  	(6,522,431	)  	$  	(5,549,707	)  	$  	(3,373,746	)  	$	(19,458,160	)  	
    Deferred exploration (a)  	 	4,979,915	 	 	4,219,624	 	 	2,711,412	 	 	14,846,896	 	
Investing activities  	 		 	 		 	 		 			 	
    under US GAAP  	$  	(1,542,516	)  	$  	(1,330,083	)  	$  	(662,334	)  	$	(4,611,264	)  	

(a)
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 capital assets.  Under US GAAP, exploration expenditures on mineral property costs can only be deferred subsequent to the establishment of mining reserves.  For US GAAP purposes the Company has expensed exploration expenditures in the period incurred. During the year ended August 31, 2006 and 2005 the Company incurred $4,998,447 and $3,023,125 respectively in exploration expenditures on behalf of the WBJV and recorded a share of equity loss from the WBJV of a corresponding amount (Note 15.b). The Company believes that these cash expenditures under U.S. GAAP are also more appropriately classified as cash operating activities as they were funded by the Company in the respective periods.

(b)
Investment in WBJV

Under Canadian and U.S. GAAP the Company accounts for this investment using the equity method. Under U.S. GAAP the equity loss from the investment is higher as WBJV expenses exploration expenses under U.S. GAAP, whereas under Canadian GAAP these expenditures are capitalized in WBJV.

Page 28

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(c)
Flow-through shares

Under Canadian GAAP, flow-through shares are recorded at their face value, net of related issuance costs.  When eligible expenditures are made, the carrying value of these expenditures may exceed their tax value due to the renunciation of the tax benefit by the Company.  The tax effect of this temporary difference is recorded as a cost of issuing the shares.

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

Furthermore, under US GAAP, the amounts received through the issuance of flow-through shares and not yet expended on the related mineral exploration costs are separately classified as restricted cash.  Such amounts unexpended at August 31, 2006 and 2005 totalled approximately $123,790 and $150,917, respectively.

(d)
Accounting for stock-based compensation

On September 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123 (R)), which requires the recognition of compensation expense for all share-based payment awards. SFAS 123 (R) requires the Company to measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award will be recognized over the period during which services are provided in exchange for the award, generally the vesting period. The Company adopted SFAS 123 (R) using the modified prospective transition method. Under this method, compensation expense recognition provisions are applicable to new awards and to any awards modified, repurchased or cancelled after the adoption date. Additionally, for any unvested awards outstanding at the adoption date, compensation cost is recognized over the remaining service period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Prior periods are not restated for comparative purposes.

During the year ended August 31, 2006, the Company recognized $110,176 in stock-based compensation expense or $0.01 per share.

Page 29

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(d)
Accounting for stock-based compensation (continued)

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

 	Aug. 31, 2006	 	
Risk-free interest rate  	4.26	 	
Expected life of options  	3.50	 	
Annualized volatility  	85.21	 	
Dividend rate  	0.00	%  	

Prior to the adoption of SFAS 123 (R), the Company recognized stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 (APB 25) “Accounting for Stock Issued to Employees” and applied the disclosure provisions of SFAS 123, “Accounting for Stock-Based Compensation” as if the Company had applied the fair value method to measuring stock- based compensation expense. If the Company had accounted for stock-based compensation in accordance with the fair value method as prescribed by SFAS 123, net loss per share for the years ended August 31, 2005 and 2004 would have been:    

 	 	Year ended	 	 	Year ended	 	
 	 	August 31,	 	 	August 31,	 	
 	 	2005	 	 	2004	 	
Net loss, as originally reported  	$  	(8,112,593	)  	$  	(4,675,466	)  	
Adjustments:  	 		 	 		 	
    Additional stock-based employee compensation expense  	 		 	 		 	
    under fair value based method for all awards  	 	(1,136,055	)  	 	(250,000	)  	
Net loss, adjusted  	$  	(9,248,648	)  	$  	(4,925,466	)  	
Basic and diluted net income per share, as reported  	$  	(0.21	)  	$  	(0.15	)  	
Basic and diluted net loss per share, adjusted  	$  	(0.23	)  	$  	(0.16	)  	

FASB Interpretation 44 states that when fixed stock option awards to employees and directors are modified, the stock options must be accounted for as variable from the date of modification to the date the stock options are exercised, forfeited or expire unexercised.

Consequently, 65,000 stock options issued to employees and directors that were repriced on March 6, 2002 are now considered to be variable and any increase in the market price over the reduced exercise price must be recognized as compensation cost.  As at August 31, 2006, the market price of the Company’s common shares was $1.80 per share (2005 - $1.15) resulting in compensation (recovery) expense of $50,200 (2005 - $(37,800); 2004 - $125,510).

Page 30

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(e)
Comprehensive income

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, Reporting Comprehensive Income , which 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,	 	
 	 	2006	 	 	2005	 	 	2004	 	
Net loss under US GAAP  	$  	(8,537,460	)  	$  	(8,112,593	)  	$  	(4,675,466	)  	
Other comprehensive income:  	 		 	 		 	 		 	
    Unrealized gain (loss) on  	 		 	 		 	 		 	
marketable securities  	 	333,375	 	 	(289,000	)  	 	243,625	 	
    Translation adjustment  	 	(112,501	)  	 	-	 	 	-	 	
    Other  	 	-	 	 	-	 	 	(87,999	)  	
Comprehensive net loss  	 		 	 		 	 		 	
    under US GAAP  	$  	(8,316,586	)  	$  	(8,401,593	)  	$  	(4,519,840	)  	
Comprehensive loss per share  	$  	(0.18	)  	$  	(0.21	)  	$  	(0.14	)  	

(f)
Accounting for derivative instruments and hedging activities

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities , which standardizes the accounting for derivative instruments.  SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999.  The Company does not engage in hedging activities or invest in derivative instruments.  Therefore, adoption of SFAS No. 133 has no significant financial impact.

(g)
Recent accounting pronouncements

In March 2004, the Emerging Issues Task Force (“EITF”) issued EITF 04-3, Mining Assets: Impairment and Business Combinations .  EITF 04-3 requires mining companies to consider cash flows related to the economic value of mining assets (including mineral properties and rights) beyond those assets proven and probable reserves, as well as anticipated market price fluctuations, when assigning value in a business combination in accordance with SFAS 141 and when testing the mining assets for impairment in accordance with SFAS 144.  The consensus is effective for fiscal periods beginning after March 31, 2004. The adoption of EITF 04-3 did not have a material impact on the Company’s financial position, results of operations or cash flows.

Page 31

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(g)
Recent accounting pronouncements (continued)

On March 30, 2005, the FASB ratified the consensus of the Emerging Issues Task Force (“EITF”) of the FASB Issue 04-6 that stripping costs incurred during the production phase of a mine are variable production costs that should be included in the costs of the inventory produced during the period that the stripping costs are incurred.  This consensus is effective for the first reporting period in fiscal years beginning after December 15, 2005, with early adoption permitted.  The consensus can be adopted either prospectively through a cumulative-effect adjustment or retrospectively by restating prior period financial statements.  The Company will apply this consensus on its results of operations, financial position and cash flows if and when commercial production commences.

In September 2005, the EITF reached a consensus on Issue No. 04-13, Accounting for Purchases and Sales of Inventory with the Same Counterparty (EITF 04-13). The EITF concluded that entities that enter into inventory purchase and sales transactions with the same counterparty, in contemplation of one another, should combine the transactions and treat them as non-monetary exchanges involving inventory. The consensus is effective for new inventory arrangements entered into, or modifications or renewals of existing inventory arrangements occurring, in interim or annual reporting periods beginning after March 15, 2006. The adoption of EITF 04-13 did not have any impact on the Company’s operating results or financial positions.

In February 2006, the FASB issued Statement of Financial Accounting Standard No. 155, Accounting for Certain Hybrid Financial Instrument (SFAS 155), an amendment of SFAS 140 and SFAS 133. SFAS 155 permits the Company to elect to measure any hybrid financial instrument at fair value (with changes in fair value recognized in earnings) if the hybrid instrument contains an embedded derivative that would otherwise be required to be bifurcated and accounted for separately under SFAS 133. The election to measure the hybrid instrument at fair value is made on an instrument-by-instrument basis and is irreversible. This Statement will be effective for all instruments acquired, issued, or subject to a remeasurement event occurring after the beginning of the Company’s first fiscal year that begins after September 15, 2006. The Company expects that the adoption of SFAS 155 will have no impact on its operating results or financial position.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). This interpretation clarifies the recognition threshold and measurement of a tax position taken on a tax return, and requires expanded disclosure with respect to the uncertainty in income taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact that adoption of FIN 48 will have on its financial condition or results of operations.

Page 32

Platinum Group Metals Ltd.
(An exploration stage company)
Notes to the consolidated financial statements
August 31, 2006 and 2005

15.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(g)
Recent accounting pronouncements (continued)

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157). This statement defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements.  SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company expects that adoption of SFAS 157 will not have a material effect on its financial condition or results of operation.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statement No. 87, 88, 106 and 132R” (SFAS 158). This Statement requires an employer to recognize in its statement of financial position an asset of a plan’s over funded status or a liability for a plan’s under funded status, measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions), and recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur. The Company expects that adoption of SFAS 158 will have no impact on its financial condition or results of operations.

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 permits existing public companies to record the cumulative effect of initially applying this approach in the fiscal year ending after November 15, 2006 by recording necessary correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings.  The Company expects that adoption of SAB 108 will not have a material impact on its financial condition and results of operations.

16.
SUBSEQUENT EVENTS

Subsequent to August 31, 2006, 2,515,069 common shares were issued pursuant to the exercise of 2,433,194 warrants at a price of $1.50 per share, 50,000 stock options at a price of $1.10 per share, and 31,875 stock options at a price of $1.00 per share, for aggregate proceeds of $3,736,665.

There are other subsequent events disclosed elsewhere in the notes to the consolidated financial statements.

Page 33

                                             
OFFICES
Canada 
Suite 328
550 Burrard Street 
Vancouver, BC 
Canada V6C 2B5 
T 604.899.5450 
F 604.484.4710 
info@platinumgroupmetals.net 
www.platinumgroupmetals.net 
Toll Free 1.866.899.5450
South Africa 
Technology House 
Greenacres Office Park
Victory Park, Johannesburg 2193 
PostNet Suite No 81 
Private Bag X12 
Rooseveltpark 2129 
T +27(11) 782.2186 
F +27(11) 782.4338
DIRECTORS AND OFFICERS 
R. Michael Jones 
Director, President & CEO 
Frank Hallam 
Director & CFO
Dr. Barry Smee 
Director & Secretary 
Iain McLean 
Director 
Eric Carlson 
Director 
John Gould
Managing Director, Platinum Group 
Metals RSA (Pty) Ltd.	ADVISORY BOARD 
Dr. Roger Eckstrand 
Anthony Frizelle 
Nonpumelelo Maduna 
Dr. Barry Smee
REGISTERED OFFICE 
Suite 2300 
1055 Dunsmuir Street 
Vancouver, BC 
Canada V7X 1J1
REGISTRAR AND TRANSFER AGENT 
Pacific Corporate Trust 
625 Howe Street, 10th Floor 
Vancouver, BC
Canada V6C 3B8
LEGAL COUNSEL
Gowlings Lafleur 
Henderson LLP 
Suite 2300 
1055 Dunsmuir Street 
Vancouver, BC
Canada V7X 1J1
AUDITOR
Deloitte and Touche LLP 
Suite 2800 
1055 Dunsmuir Street 
Vancouver, BC
Canada V7X 1P4
SHARE LISTING
TSX: PTM; OTCBB: PTMQF 
SEC Form 20F File #0-30306 
CAPITALIZATION
ISSUED & OUTSTANDING 56,206,247 
OPTIONS: 3,382,875 
WARRANTS: 4,750,000 
FULLY DILUTED: 64,149,122 
November 09, 2006	
PTM ANNUAL GENERAL MEETING 
Wednesday January 10th, 2007; 2:00 PM (local time) 
328 – 550 Burrard Street, Vancouver, BC CANADA
DISCLAIMER:
This annual report may contain projections or other foward-looking statements regarding future events and/or future financial performance. Such statements are only predictions and actual events or results may differ materially. The Company relies on Safe Harbor Rules with respect to any projections or forward-looking statements that may be contained within this report. All investors are referred to the more complete disclosure contained in the Company’s documents filed from time to time with the United States Securities and the Exchange Commission (SEC File #0-30306) and the British Columbia Securities Commission, specifically the Company’s last filed Form 20F and alternate form of Annual Information Form.