The CPM Platinum Group Metals Yearbook 2017

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 CPM GROUP

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Printed in the United States of America.

ISBN-978-0-9983478-2-0

ii CPM GROUP CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

CPM Group’s Platinum Group Metals Yearbook 2017 June 2017 Volume 31, Number 1

CPM Group 168 Seventh Street Suite 310 Brooklyn, NY 11215 USA

Telephone: 212-785-8320 Telefax: 212-785-8325 E-mail: [email protected] Website: www.cpmgroup.com

Jeffrey M. Christian, Managing Partner Doug Sherrod, Managing Director, Investment Banking Carlos Sanchez, Director of Commodities and Asset Management Catherine Virga, Director, Investment Banking Elliot Kalson, Chief Operating Officer

Rohit Savant, Director of Research Mu Li, Senior Precious Metals Analyst Yvonne Li, Research Analyst Bhargava Vaidya, Consultant

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CPM Group provides research and consulting services related to precious, industrial, and specialty metals, in addition to undertaking research and analysis across all commodities markets. These range from research studies on individual markets and market segments to materials management services. In addition to publishing metals and commodities research, CPM Group produces special reports on metals which have piqued investor interests, such as molybdenum, manganese, vanadium, chromium, cobalt, and other specialty metals.

The core of CPM Group's product is its consulting services tailored to the special needs of individual producers, refiners, fabricators, institutional investors, financial institutions, governments, central banks, and others. CPM Group provides advisory services related to hedging production and raw materials requirements, and manages positions for producers, consumers, and accredited investors. CPM Group's financial engineering includes impartial advice, structuring, placements, and management of hedging and investment positions.

CPM Group also provides corporate finance advisory services to companies producing and developing commodities.

Annual Research Reports The CPM Gold Yearbook The CPM Silver Yearbook The CPM Platinum Group Metals Yearbook The CPM Gold Long-Term Outlook: Ten Year Projections The CPM Silver Long-Term Outlook: Ten Year Projections The CPM Platinum Group Metals Long-Term Outlook: Ten Year Projections

Monthly Research Reports Precious Metals Advisory Base Metals Advisory

Specialized Reports The Molybdenum Market Outlook The Tungsten Market Outlook The Vanadium Industry Outlook The Chromium Market Outlook The Manganese Market Outlook

Visit www.cpmgroup.com for additional information.

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Preface

After having fallen from the middle of 2014 through all of 2015, price trends of platinum and palladium diverged over the course of 2016. Platinum and palladium both rose in the first half of 2016, as a more positive sentiment toward commodities raised prices for the entire sector. Platinum, however, faced some headwinds during the second half of the year as the metal’s weak fundamentals overshadowed any broader trend in the market. In contrast, palladium prices rose throughout 2016, albeit in a very volatile fashion, supported primarily by its healthy fundamentals. Rhodium prices, meanwhile, which have been in a declining trend for nearly five consecutive years, showed signs of bottoming out in 2016 and moving with a somewhat upward bias during the last several months of the year.

CPM Group’s surplus/deficit statistics for platinum and to a lesser extent palladium and rhodium are in variance with those published by others. CPM Group’s statistics show surpluses in the platinum market, in contrast to the deficits cited by others. Some market participants continue to discuss the incongruity of long-term deficits and prices falling to half of what they were a few years ago, almost in the same breath as they speak of how supply “has to decline sharply in order to come back in line with demand” before prices will rise, suggesting they are well aware that there are no deficits in the real platinum market, only in marketing material. CPM’s platinum surpluses fit nicely into a model that explains why platinum prices have declined so sharply over the past several years.

CPM Group’s statistics show a deficit and near deficit for the rhodium and palladium markets, respectively, which is constructive for the prices of these markets. This already has been evidenced during the first half of 2017. Inventory holders of these metals are not expected to liquidate their positions easily, especially for rhodium, which is only this year beginning to see a revival in prices. Platinum meanwhile has the weakest fundamentals and its price has now sunk close to parity with palladium.

The 2017 CPM Platinum Group Metals Yearbook discusses in detail the various supply and demand fundamentals that have shaped the course of PGM prices over the past year and a half and the outlook for prices and these fundamentals during the remainder of 2017.

As always this year’s report would not be possible if it were not for our sponsors, to whom we are extremely grateful. This year they are: CME Group, Commodities Now, The Institute of Scrap Recycling Industries, Inc., Kitco Metals Inc., Monex Precious Metals, NOAH Capital Markets, Sabin Metal Group of Companies, Umicore, China Gold Association, China National Gold Group Corporation, and Jingyi Gold Co Ltd.

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The Following Organizations Assisted in the Preparation of the 2017 Platinum Group Metals Yearbook

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China Gold Association

As a nationwide, non-profit, and self-regulatory organization, China Gold Associa- tion (hereinafter referred to as CGA) was officially approved and registered by the Ministry of Civil Affairs of the People’s Republic of China and the former State Economic and Trade Commission in November 2001 in accordance with the Pro- posal for Reforming the State Gold Management System defined by the State Coun- cil. It is the only national-level industrial association in Chinese gold industry. It is now governed by the State-owned Assets Supervision and Administration Commis- sion of the State Council.

CGA is comprised of enterprises involving gold exploration, manufacture, circulation, and investment, scientific research institutes, and gold-related public institutions and organizations according to the law and based on the principle of free will. At present, CGA has gathered influential and powerful backbone enterprises and well-known enterprises in the upstream and downstream sectors of the gold industry. CGA owns over 500 member units which include not only gold-related enterprises involving exploration, mining, smelting, refining, trade, design, processing, sale, and investment, but also colleges, scientific research institutes, commercial banks, construction and installation enterprises, mechanical equipment enterprises, and administrative departments and organizations of the gold industry. CGA covers over 90% of gold production, 85% of gold processing amount, and 80% of gold re- tail sales around the country.

In recent years, by taking the “serving the government, serving the industry, serving enterprises, and serving the society” as its tenet, CGA is giving full play to its role as a bridge and bond, and is strengthening the overall planning and coordination as well as the self-discipline in the industry. CGA is striving to solve critical and strategic problems, having done large amount of fruitful jobs in such aspects as lifting the industry status, accelerating the formulation and implementation of Chinese gold strategy, striving for policy support, establishing self-disciplinary mechanisms, driving resources integration, building green mining industry, advancing the “revitalization of the gold industry through science and technology”, standardizing gold markets, promoting gold consumption, harnessing international exchanges, fulfilling social responsibilities, etc. CGA has become an advisor of the government in making decisions, a defender of interests of the industry, and a pusher of development of related enterprises, recognized and praised by all the member units and related central ministries and commissions.

Contact Details:

Telephone: +86-10-84117162 Fax: +86-10-84123780 website: http://www.cngold.org.cn/

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China National Gold Group Corporation (hereinafter referred to as China Gold) is the only central state-owned enterprise in China’s gold industry and chairman member of China Gold association. It upholds the strategy of centering on gold while developing multiple metals. China Gold is specialized in precious metals such as gold and silver, non-ferrous metals such as copper and molybdenum prospection and designing, resources development, production and sales and engineering procurement construction. Its businesses cover the whole gold production chain in 26 provinces and overseas regions. It has two public listed companies: Zhongjin Gold (A Stock), China Gold International (in Toronto and Hong Kong), and seven major business sectors: Zhongjin Gold, China Gold International, Zhong- jin Jewelry, Zhongjin Construction, Zhongjin Resources, Zhongjin Irradiation and Zhongjin Trade.

Since 2007, China Gold has been performing its political, economic, social and party building duties as a central state-owned enterprise and striving to become a world leading mining company. It has doubled its major indices including reserve base, total asset, sales revenue and profits in 4 years. China Gold is developing in a leaping way which suits its own particular situation. This way characterizes rapid growth, consistent growth momentum and high qualities. In 2010 and 2011, China Gold was accredited as an A level enterprise for 2 consecutive years in the central state-owned enterprise performance evaluation by Central State-owned Assets Supervision and Administration Commission of the State Council (SASAC). In 2013, it won the “Excellent Performing Enterprise Award” in the 2010-2012 term evaluation by SASAC, with the AAA level of comprehensive corporate credit which is the highest rating grated to an enterprise in the gold industry for the first time.

Under new circumstances when China is deepening reforms, China Gold, as the only central state-owned enterprise in China’s gold industry, bears in mind its responsibilities and obliga- tions. It works hard to bolster RMB as a world currency and secure China’s economy and finance with gold. It makes efforts to fulfill its political, economic, social and party building duties as a central state-owned enterprise. China Gold constantly optimizes its development strategies in line with principles in mining industry and accelerates marketization and inter- nationalization. It strengthens its growth foundation, integrates development advantages and improves comprehensive competiveness, so as to build a world leading mining company. China Gold relies on science and technology for growth and dedicates itself to transforming economic development mode on the strategic level. It realizes enormous corporate growth both qualitatively and quantitatively through measures including management improvement, structural adjustment, scientific and technological innovation, environmental protection, energy saving and emission reduction, and cost cutting and efficiency promoting.

It recognizes innovatory mine management and improves its core competitiveness by optimizing the 5 rates including mining loss rate, ores dilution rate, recovery rate, equipment utility and productivity. China Gold has 7 major business sectors: Zhongjin Gold, China Gold International, Zhongjin Jewelry, Zhongjin Construction, Zhongjin Resources, Zhongjin Irradiation and Zhongjin Trade. Non-mining sectors and mining sectors draw each other’s strength and unite to work for the foal of becoming the world leading mining company.

Contact Details: Telephone: +86-10-56353677 Fax: +86-10-56353508 website: http://www.chinagoldgroup.com/

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CME Group

As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options on metals including COMEX Gold and Silver.

Around the world, CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its exchanges based in Chicago, New York and London. CME Group also operates one of the world’s leading central counter- party clearing providers through CME Clearing and CME Clearing Europe, which offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives. CME Group’s products and services ensure that businesses around the world can effectively manage risk and achieve growth.

Contact Details:

CME Group 20 S. Wacker Drive Chicago, IL 60606 312-930-1000 – Telephone 312-446-4410 – Fax [email protected] www.cmegroup.com

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Commodities Now

Commodities Now is the online service specializing in the traded commodity complex… in power and energy, industrial and precious metals, agriculture and softs, together with renewable energy and emission markets, logistics, legal, regulatory policy, and specialist technology. Since 1997 we have been developing our expertise and market connections to provide commodity professionals and the wider investment community with dedicated research and intelligence on the commodity markets.

Contact Details:

Guy Isherwood [email protected] www.commodities-now.com

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The Institute of Scrap Recycling Industries, Inc.

The Institute of Scrap Recycling Industries, Inc. (ISRI) is the “Voice of the Recycling Industry.” ISRI represents nearly 1,600 companies in 21 chapters nationwide that process, broker, and consume scrap commodities, including metals, paper, plastics, glass, rubber, electronics, and textiles. With headquarters in Washington, D.C., the Institute provides education, advocacy, and compliance training, and promotes public awareness of the vital role recycling plays in the U.S. economy, global trade and environment. For more information about ISRI, please visit www.ISRI.org.

Contact Details:

Joseph C. Pickard Chief Economist and Director of Commodities [email protected] www.isri.org

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Jingyi Gold Co Ltd.

JingYi gold Co. Ltd. is a comprehensive platform that includes physical gold, investment, trade, research and training, which is established by J&Y Holdings Group that integrated Beijing Diamond Jewelry Manufacturing Co. Ltd., Italy New Euro Jewelry Company, Shanghai JingYi Trade Development Co. Ltd., Shenzhen JingYi Gold Co. Ltd. and other multi-directional resources. JingYi gold Co. Ltd. is a Gen- eral Member of Shanghai gold exchange (SGE). J&Y Holdings Group is Vice- chairman Unit of China Gold Association (CGA). JingYi gold Co. Ltd. has first- class management and trading talents, who have formal professional training and rich practical experience, and be placed in the leading domestic level in research of investment in precious metals. The research results are given highly praised and fully affirmed by the people's Bank of China (PBoC), Shanghai gold exchange (SGE), Shanghai futures exchange (SHFE), China Gold Association (CGA), the World Gold Council (WGC), a number of large domestic commercial banks, mining enterprises and other domestic companies of the same industry.

Contact Details:

Telephone: +86-10-68343377 website: http://www.jy-gold.com/

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Kitco Metals Inc.

A Canadian corporation founded in 1977, Kitco Metals Inc. is an international company that has its headquarters in Montreal and offices in New York and Hong Kong. Kitco is one of the largest retailers of precious metals in the world and a specialized supplier of refining services. Being one of few authorized resellers of products made by some of the most prestigious government mints, the company provides a vast array of gold, silver, platinum, palladium and rhodium products to tens of thousands of customers. Considered to be the leading precious metals reference, Kitco’s website (www.kitco.com) is visited daily by close to a million people around the world. Kitco has earned a solid reputation for itself as a leading innovator in the industry, being the first precious metals company to carry out its activities online and to create real-time market information applications for smart phones.

Contact Details:

Peter Hug Global Trading Director 514 670-1372 [email protected] www.kitco.com

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Monex Precious Metals

For 50 years, Monex has been America's trusted name in gold and other precious metals. With customer transactions now totaling over $55 billion, Monex Deposit Company, established in 1987, is today America's premier precious metals bullion dealer because of our dedication to customer service and satisfaction.

Our success and our reputation have been built from long and fruitful relationships with our customers. As a result of our customers' trust in Monex, 80% of our business is from customers doing repeat precious metals business, and about one- quarter of our new customers are referred to us by existing customers.

Located in Newport Beach, California, Monex Precious Metals is home to a large and dedicated staff of hard asset professionals committed to serving your precious metals investment needs and being America's best dealer with a convenient market and competitive precious metals prices.

Contact Details:

Monex Precious Metals 4910 Birch Street Newport Beach, CA 92660 Tel: 800-949-4653 www.monex.com

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NOAH Capital Markets

NOAH Capital Markets is a majority black owned and managed South African institutional equity stock brokerage that provides a unique service to the institutional investment community. Services offered include tailored execution and differentiated research.

Our experienced team of investment professionals provides unique services to both South African and International institutional clients with whom we look to develop sustainable and mutually beneficial, long term relationships.

Contact Details:

Rubin Renecke Head of Research Sales [email protected]

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Sabin Metal Group of Companies

The Sabin Metal Group of companies recovers and refines PGMs (platinum, palladium, ruthenium, rhodium), rhenium, gold and silver from a wide variety of materials, specializing in spent hydrocarbon and petroleum processing catalysts with soluble and insoluble alumina, silica alumina, zeolite, and carbon supports.

The Sabin Metal Group is the largest domestically owned, independent precious metals refining organization in North America. The company's recovery/refining facilities and sales/service offices are located in strategic countries around the world.

The group is composed of four independent organizations:

Sabin Metal Corporation located in Scottsville, New York, is a sophisticated facility for safely processing precious metal bearing materials. The Scottsville facility houses the fine metal refinery, which produces market grade precious metals from the output of all three plants, as well as the corporate settlement assay laboratory.

Sabin Metal West a specially equipped facility for sampling large lots of precious metal bearing spent catalysts. This refinery employs electric arc furnace (EAF) technology, which helps maximize recovery of precious metals, and also incorporates a unique "low dust" sampling system for accurate sample derivation and total environmental safety and compliance.

Sabin International Logistics Corp. (SILC) a licensed hazardous waste, hazardous materials, and general commodities transporter providing global transportation and logistics for spent precious metal bearing catalysts and other materials. The company operates its own fleet of trucks, and is also a Permitted and Licensed Freight Broker.

SMC (Canada) Ltd. at the McAlpine Mill in Cobalt, Ontario, Canada, offers capabilities and processing technologies to extract highest possible metal values from residual materials generated in refining, smelting and milling operations.

Sabin's gold, silver, platinum and palladium are accepted on NYMEX/COMEX (Chicago Mercantile Exchange); Sabin's platinum and palladium are also accepted for delivery on the London/Zurich market by the London Platinum and Palladium market (LPPM).

Contact Details: www.sabinmetal.com

Brad Cook Vice President Sales and Marketing [email protected] xix CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 CPM GROUP

Umicore

Umicore is a global materials technology and recycling group. It focuses on application areas where its expertise in materials science, chemistry and metallurgy makes a real difference. Its activities are centered on three business areas: Catalysis, En- ergy and Surface Materials and Recycling. Each business area is divided into market-focused business units offering materials and solutions that are at the cutting edge of new technological developments and essential to everyday life.

Umicore generates the majority of its revenues and dedicates most of its R&D efforts to clean technologies, such as emission control catalysts, materials for rechargeable batteries and recycling.

Umicore’s overriding goal of sustainable value creation is based on an ambition to develop, produce and recycle materials in a way that fulfills its mission: materials for a better life.

The Umicore Group has industrial operations on all continents and our more than 10.000 employees serve a global customer base.

Contact Details:

Dr. Bernhard Fuchs Senior Vice President Precious Metals Management

Umicore AG & Co. KG Rodenbacher Chaussee 4 63457 Hanau-Wolfgang Germany

Tel: +49 6181 59-4610 Fax: +49 6181 59-4719 [email protected] www.umicore.de

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Table of Contents

I. Platinum

Review and Outlook Chart: The Price of Platinum...... 3 Chart: Platinum Surplus/Deficit ...... 4 Table: Platinum Statistical Position ...... 6-7 Chart: Platinum Supply and Demand...... 8

Supply Chart: Annual Platinum Supply ...... 10 Chart: Source of Platinum Mine Supply 2016……...... 11 Chart: South African Mine Production of Platinum...... 12 Table: South African Platinum Mine Production……………...... 13 Chart: Russian Production and Exports…………………...... 15 Table: Russian Platinum Production and Exports ...... 16 Chart: Platinum Mine Production in Zimbabwe ...... 17 Chart: Projected PGM Mine Production Capacity...... 18 Chart: PGM Producers’ C1 Cash Costs in 2016 ...... 19 Chart: Production Weighted Average PGM C1 Cash Cost and Basket Price …………………………………….……...... 21 Chart: South African PGM C1 Cash Costs...... ……... . . 21 Chart: Production-Weighted Average Profit Margin of PGM Mining. . . 22 Chart: Typical PGM Mining Cash Cost Breakdown ...... 22 Chart: Production Weighted PGM Basket Prices……...... ……... . . 23 Table: Platinum Production by Country ...... 24-25 Chart: PGM Secondary Supply in 1995 and 2016 ...... 26 Chart: Available Platinum Scrap and Actual Refined Scrap Supply. . . . .27 Chart: Platinum Available for Recovery from Spent Auto Catalysts. . . . 27 Table: Platinum Secondary Supply ...... 28-29

Fabrication Demand Chart: Annual Platinum Fabrication Demand ...... 30 Chart: Automotive Platinum Demand by Region ...... ……...... 31 Table: Annual Platinum Use ...... 32-33 Chart: Year-To-Date Commercial Vehicle Sales Growth by Region..…..34 Chart: Monthly Commercial Vehicle Sales……………...... 35 Chart: Commercial Vehicle Sales in Major Developed Auto Markets . . 36 Chart: Commercial Vehicle Sales in Major Developing Auto Markets . 36 Chart: Average Engine Size-Europe……………………………………...37 Chart: Diesel Market Share of Major Passenger Car Markets…………… 38 Chart: Hybrid Vehicle, Electric Vehicles and Global Light Duty Vehicle xxi CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 CPM GROUP

Sales……………………………………………………………………..41 Chart: Projections of Future Platinum Use in Fuel Cells……………… 45 Chart: Global Auto Sales ...... 47 Chart: Vehicle Sales in Brazil, Russia, India, and China ...... 48 Chart: Vehicle Sales in North America, Europe, and Japan ...... 48 Chart: Platinum Jewelry Demand and Prices ...... 49 Chart: Platinum Demand in Japan, China, and the United States...... 50 Chart: Platinum Electronics Demand ...... 51 Table: China Platinum Supply and Demand ...... 52-53 Table: Historical U.S. Platinum Demand ...... 54-55 Chart: U.S. Projected 2015 Demand ...... 56 Table: Japanese Platinum Demand ...... 57 Table: Annual European Platinum Use ...... 58-59

Investment Demand Chart: Platinum Market Surplus/Deficit and Prices ...... 60 Table: Reported Platinum Investment Demand by Region...... 62 Chart: Daily Changes in Combined ETP Holdings by Year ...... 63 Chart: Year-End Changes to Global Platinum ETP Holdings...... 64 Chart: Annual Platinum Coin Fabrication ...... 65 Table: Annual Net Additions to Platinum ETP Holdings ...... 67 Chart: Market Value of Precious Metals Coin Sales ...... 68 Chart: Market Value of Precious Metals Coin Sales ...... 68 Chart: Historical Annual Sales of Perth Mint Platinum Coin Programs .. 69 Chart: Historical Annual Sales of Royal Canadian Mint Platinum Coin Programs ...... 69 Chart: Historical Annual Sales of PBOC Mint Platinum Coin Programs. 70 Chart: U.S. Eagle Platinum Bullion Coin Sales ...... 70 Chart: Annual Net Additions to Platinum ETP Holdings ...... 71 Chart: Prices, ETP Holdings and Non-commercial Long Positions . . . . .71 Table: Exchange Traded Products’ Physical Platinum Holdings. . . .. 72-73 Chart: Large Non-Commercial Nymex Platinum Positions ...... 74 Chart: Disaggregated Gross Positions of Non-Commercials ...... 74 Chart: Investment Platinum Product Trading Volume...... 75 Chart: Investment Product Trading Volume as a % of Total Platinum Products Trading Volume...... 75

Markets & Inventories Chart: Combined Platinum Trading Volumes at Nymex, Tocom, and SGE ...... 76 Table: Turnover in the Precious Metals Market in 2016 ...... 77 Chart: Trading Volume in the Futures Market ...... 78 Chart: Open Interest in the Futures Market ...... 79 Chart: Nymex Platinum Trading Volume ...... 80 Chart: Nymex Platinum Open Interest ...... 80

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Chart: Tocom Platinum Trading Volume ...... 81 Chart: Tocom Platinum Open Interest ...... 81 Chart: Shanghai Gold Exchange Monthly Platinum Trading Volume . . 82 Table: Shanghai Gold Exchange Monthly Platinum Trading Volume . . 82 Table: Nymex Platinum Trading Volume ...... 83-84 Table: Nymex Platinum Open Interest ...... 85-86 Table: Nymex Platinum Options Trading Volume ...... 87 Table: Nymex Platinum Options Open Interest ...... 88 Table: Tocom Platinum Open Interest ...... 89 Table: Tocom Platinum Trading Volume ...... 90 Chart: Exchange Stocks of Platinum ...... 91 Chart: Platinum Prices, Total Open Interest, and Nymex Inventories . . .91 Chart: Total Reported Market Inventories ...... 92 Chart: Nymex Platinum Options Trading Volume ...... 92 Table: Reported Market Inventories ...... 93-94

Prices Chart: Real and Nominal Platinum Prices ...... 95 Chart: Daily High, Low, and Settlement Prices ...... 96 Chart: Monthly Platinum Price Volatility ...... 97 Chart: Monthly Platinum Price Seasonality ...... 98 Chart: Monthly Platinum and Gold Prices ...... 99 Chart: Platinum-Gold Differential ...... 99 Chart: Platinum/Gold Price Ratio ...... 99 Chart: Quarterly Real & Nominal Interest Rates and Platinum Price . . .100 Chart: Platinum Contango and Backwardation ...... 100 Chart: Platinum and U.S. Inflation...... 101 Table: New York Dealer Platinum Prices ...... 102-103

II. Palladium

Review and Outlook Chart: The Price of Palladium ...... 106 Chart: Annual Palladium Fabrication Demand...... 107 Chart: Palladium Supply and Demand Balance...... 108 Chart: Palladium Surplus/Deficit...... 109 ` Chart: Annual Palladium Supply……………………...... 110 Table: Palladium Statistical Position ...... 112-113

Supply Chart: Annual Palladium Supply ...... 114 Table: South African Palladium Mine Production ...... 116 Chart: Russian Production and Exports ...... 117 Table: Russian Palladium Production and Exports ...... 118 Chart: Palladium Mine Production in Canada ...... …..119

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Chart: Palladium Mine Production in United States ...... 120 Chart: Palladium Mine Production in Zimbabwe ...... 121 Chart: Palladium Secondary Supply in 1995 and 2016...... 122 Chart: Available Palladium Scrap and Actual Refined Scrap Supply . . 123 Table: Palladium Production by Country ...... 124-125 Table: Palladium Secondary Supply ...... 126-127

Fabrication Demand Chart: Annual Palladium Demand ...... 128 Chart: Automotive Palladium Demand by Region ...... 129 Chart: U.S. Light-Duty Vehicle Sales ...... 130 Chart: Ratio of U.S. Car to Light Truck Sales ...... 130 Table: Annual Palladium Use ...... 131-132 Chart: Chinese Passenger Car Sales………… ...... 133 Chart: Electronics Palladium Demand by Region ...... 136 Chart: Palladium Dental Demand ...... 137 Chart: U.S. Demand by Sector ...... 137 Table: Historical U.S. Palladium Demand ...... 138-139 Table: Japanese Palladium Demand ...... 140

Investment Demand Chart: Palladium Market Surplus/Deficit …………...... 141 Chart: Exchange Traded Products’ Physical Palladium Holdings . . . . . 142 Chart: Annual Net Changes to Palladium ETPs ...... 143 Chart: Monthly Net Changes to Palladium ETPs. . . . . ………………..143 Table: Palladium ETF Holdings…………………...... 146 Table: Palladium ETF Holdings, as of April 2017 ...... 147 Table: Palladium ETF Holdings, as of December 2016 ...... 147 Chart: Large Non-Commercial Nymex Palladium Positions ...... 148 Chart: Large Non-Commercial Nymex Palladium Positions, January 2013 Through April 2017 ...... 148 Chart: Disaggregated Gross Positions of Non-Commercials ...... 149

Markets & Inventories Chart: Trading Volume in the Futures Markets ...... 150 Chart: Open Interest in the Futures Market ...... 151 Chart: Reported Palladium Inventories ...... 152 Chart: Nymex Palladium Trading Volume ...... 153 Chart: Nymex Palladium Open Interest ...... 153 Chart: Tocom Palladium Trading Volume ...... 154 Chart: Tocom Palladium Open Interest ...... 154 Table: Nymex Palladium Open Interest ...... 155-156 Table: Nymex Palladium Trading Volume ...... 157-158 Table: Nymex Palladium Options Trading Volume ...... 159 Table: Nymex Palladium Options Open Interest ...... 160

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Table: Tocom Palladium Open Interest ...... 161 Table: Tocom Palladium Trading Volume ...... 162 Table: Reported Market Inventories ...... 163-166

Prices Chart: Daily High, Low, and Settlement Prices ...... 167 Chart: Monthly Palladium Price Volatility...... 169 Chart: Palladium Price Seasonality ...... 169 Chart: Monthly Palladium and Platinum Prices ...... 170 Chart: Platinum - Palladium Price Differential ...... 170 Chart: Platinum/Palladium Price Ratio ...... 170 Chart: Quarterly Real and Nominal Palladium Prices ...... 171 Chart: Palladium and U.S. Inflation ...... 172 Table: New York Dealer Palladium Prices ...... 172-173

III. Rhodium

Review and Outlook Chart: The Price of Rhodium ...... 176 Table: Selected Rhodium Statistics...... 178-179 Chart: Rhodium Exchange Traded Product Holdings ...... 180 Chart: Rhodium Surplus/Deficit ...... 181

Supply Chart: Annual Rhodium Supply ...... 183 Chart: South African PGM Production Indexed to 100 ...... 182 Chart: Russian Rhodium Production and Exports ...... 184 Table: South African Rhodium Mine Production ...... 186 Table: Russian Production and Exports ...... 187 Chart: Rhodium Mine Production in Zimbabwe ...... 188 Chart: Available Rhodium Scrap and Actual Refined Scrap Supply. . . 189 Table: Rhodium Secondary Supply ...... ……...... 190

Fabrication Demand Chart: Annual Rhodium Demand ...... 191 Chart: European Diesel Passenger Vehicles Emissions Standards……...192 Chart: NOx Emissions Reduction from Previous Standard ...... 193 Table: Emissions Standards……………………………… ...... 195 Chart: Projected U.S. Demand by Sector in 2016...... 195 Table: Annual Rhodium Use ...... 196-197 Table: Historical U.S. Rhodium Demand ...... 198-199 Chart: Annual U.S. Rhodium Demand ...... 200 Table: Japanese Rhodium Demand ...... 201 Chart: Annual Japanese Automotive Demand ...... 202 Chart: Automotive Use as a Percent of Total Japanese Demand ...... 202

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V. Minor PGMs

Chart: The Price of Iridium ...... 205 Chart: The Price of Ruthenium...... 206 Chart: The Price of Osmium ...... 207

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Platinum

1 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

2 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Review and Outlook fabrication demand remained less than total supply during the year, however. Total On an annual average basis platinum prices supply stood at 7.2 million ounces in 2016, declined for the fifth consecutive year in down 1.6% from 2015, while total 2016. The platinum price, basis the nearby fabrication use of platinum rose to 7.05 active Nymex futures contract, fell to million ounces, up 0.5% from 2015. average $991.75 last year, down 5.9% from $1,053.83 averaged in 2015. Platinum Platinum fabrication demand has been hard prices made lower lows and lower highs in pressed to rise in a robust fashion in recent 2016, compared to 2015. years as changing trends in the auto and jewelry sector pose headwinds to demand Relatively softer fabrication demand growth. The declining market share of coupled with more than sufficient newly diesel vehicles in Europe and India, refined supply to meet this demand, resulted technological changes including the in a supply/fabrication demand balance popularity of Selective Catalytic Reduction surplus of 197,000 ounces in the platinum (SCR), and the substitution of platinum with market. Some market participants continue palladium in diesel catalysts all reduce to discuss the incongruity of long-term fabrication demand for platinum from the deficits and prices half of what they were a auto sector. few years ago, almost in the same breath they speak of how supply “has to come back Demand from jewelry, the second largest in line with demand” for prices to rise, source of platinum demand, has also been suggesting they are well aware that there are hurting, with demand from China, the no deficits. largest consumer of the metal in jewelry form, waning in recent years. Total supply declined and fabrication demand rose during 2016. The level of Producers ultimately will need to adjust

Platinum Price 1960-Present Monthly Average Metals Week New York Dealer Prices, Through May 2017 $/Ounce $/Ounce 2,200 2,200 2,000 2,000 1,800 1,800 1,600 1,600 1,400 1,400 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 60 64 68 72 76 80 84 88 92 96 00 04 08 12 16 3 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM their production levels sharply lower to demand, but investors were increasingly reflect the new reality of lower fabrication reluctant to add to their holdings. Some demand, but such adjustments may lie began selling, from 2012 through the first beyond the coming year. half of 2014. In this way the surpluses of metal, and investors’ willingness – or not – Investment demand, and inventory to absorb those surpluses were key to purchases and sales by producers and users platinum prices. of these metals are expected to play crucial roles in determining the course of prices, as Total inventories of refined bullion rose by they have over the past several years. 197,000 ounces in 2016, although a The platinum market has been running substantial portion of that metal appears to surpluses of newly refined metal relative to have been taken up by refiners, fabricators, fabrication demand for most of the time and market-making dealers. If investors had since 2001. In the early years of this period been the larger buyers of this surplus metal, investors were readily willing to mop up platinum prices most likely would not have such surpluses, in part because PGM prices fallen last year, but rather would have been were low and fabrication demand, including more likely to have risen. Falling prices platinum use in automobiles, was rising at during a surplus year suggests that investors healthy rates. were not willing buyers of surplus metal at prevailing prices, waiting for lower prices All of that changed after the Global or some other variable to stimulate their Financial Crisis and Great Recession. By buying interest, and leaving the surpluses to 2011 the PGM markets still were running be taken up by producers and market surpluses of new supply over fabrication makers.

Platinum Surplus/Deficit Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 1,600 1,600 1,400 1,400 Surplus/ Net Additions to Inventories 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 -200 -200 -400 -400 -600 -600 -800 -800 -1,000 -1,000 Deficit/Net Reduction in Inventories -1,200 -1,200 -1,400 -1,400 -1,600 -1,600 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

4 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

exploration and expansion spending in the Going forward, surpluses are projected to past few years has limited growth in mine remain in the platinum market over the next supply, although these cutbacks allowed few years. If investors are reluctant to buy mining companies to continue ongoing large volumes of platinum, this metal’s operations without going out of business. A price may remain weak for several years, relatively lower price environment in the before rising later as the long period of low platinum market has also deterred new prices takes its toll on South African projects from coming online as scheduled. production and encourages increased use of this metal. Total platinum mine supply is expected to be largely flat at 6.0 million ounces in 2017 Supply from the level seen in 2016. Secondary supply of platinum is expected to decline Newly refined platinum supply fell in 2016 0.4% to 1.2 million ounces in 2017 as to 7.2 million ounces, a 1.6% decrease over continued softness in platinum prices may the previous year, as South African discourage additional recovery of the metal platinum mine supply declined following a from scrap materials. Total refined significantly strong year in 2015. platinum supply is expected to remain flat at 7.2 million ounces in 2017 from the Mine production in South Africa accounted previous year. for 70.5% of total platinum mine supply for the year. In 2016 South African platinum The global PGMs industry experienced a miners churned out 5.2% less platinum than wave of ownership reshuffling last year; they did in the previous year, however. while ownership changes should not lead to This more than offset the increases in any swings in future global mine supply, it platinum mine production in Zimbabwe, will be interesting to watch this Canada, and the United States. Total development going forward. platinum mine supply fell 1.9% from 2015 to 6.0 million ounces in 2016. Fabrication Demand

Secondary supply of platinum, on the other Global platinum fabrication demand rose hand, was largely flat in 2016 from the marginally to 7.05 million ounces in 2016, previous year. A small increase in auto up 0.5% from 2015. Evolving demand catalyst scrap supply was largely balanced trends in both the auto market and jewelry out by a decline in jewelry scrap supply. market over the past several years has hurt Secondary supply of platinum accounts for demand for the metal. A decline in demand roughly 17% of total newly refined metal for diesel vehicles in Europe and India, supplies annually. substitution of platinum with palladium in European diesel vehicles, and reduced The decline in refined metal production in platinum jewelry purchases in China have 2016 did not lead to an increase in platinum been the primary changes in demand trends prices over the course of the year, however, in these two markets that have negatively partly due to continued liquidation of affected platinum fabrication demand. platinum inventories during the year which helped make up for the small drop in refined In spite of these developments, demand has platinum supply. managed to grow, albeit at a sluggish rate. This increase has been primarily driven by In 2017 platinum mine supply growth is strength in the commercial vehicle market. expected to be muted. A sharp pullback in Going forward, as early as this year, certain

5 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Platinum Statistical Position Thousand Troy Ounces

1977 1979 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Mine Production South Africa 1,829 1,775 1,950 2,044 2,080 1,626 1,655 2,010 2,300 2,260 2,475 2,475 2,760 2,725 2,785 3,000 3,200 3,260 3,348 3,415 3,691 3,732 3,915 3,808 4,154 4,138 Russia* 693 263 375 334 345 334 302 234 209 317 457 418 500 750 950 750 775 800 1,000 1,000 750 600 300 600 1,030 720 000022211111111000010113646161673 Canada 198 147 84 174 163 97 71 150 144 153 140 170 180 180 190 175 140 129 179 184 149 181 180 188 230 258 United States 1 1 2 1 1 1 2 3 2 1 25 40 46 58 56 59 68 64 51 59 84 104 103 109 130 146 Other _____323829313034363338445262791039797919394949554707186106______Total 2,754 2,225 2,440 2,583 2,621 2,095 2,068 2,430 2,694 2,775 3,150 3,166 3,566 3,816 4,078 4,081 4,274 4,347 4,672 4,763 4,780 4,707 4,614 4,792 5,645 5,440 % Change Year Ago - 18.7% -23.3% 5.9% 1.5% -20.1% -1.3% 17.5% 10.8% 3.0% 13.5% 0.5% 12.6% 7.0% 6.9% 0.1% 4.7% 1.7% 7.5% 1.9% 0.3% -1.5% -2.0% 3.8% 17.8% -3.6%

Secondary Supply Total 84 110 109 223 273 273 188 206 204 288 347 334 358 301 348 350 365 383 400 515 666 750 811 915 900 1040 % Change Year Ago - 31.0% -0.9% 104.6% 22.4% 0.0% -31.1% 9.6% -1.0% 41.2% 20.5% -3.7% 7.2% -15.9% 15.6% 0.6% 4.3% 4.9% 4.4% 28.8% 29.3% 12.6% 8.1% 12.8% -1.6% 15.6% ______Total Supply 2,838 2,335 2,549 2,806 2,894 2,368 2,256 2,636 2,898 3,063 3,497 3,500 3,924 4,117 4,426 4,431 4,639 4,730 5,072 5,278 5,446 5,457 5,425 5,707 6,545 6,480 % Change Year Ago - 31.0% -0.9% 10.1% 3.1% -18.2% -4.7% 16.9% 9.9% 5.7% 14.1% 0.1% 12.1% 4.9% 7.5% 0.1% 4.7% 2.0% 7.2% 4.1% 3.2% 0.2% -0.6% 5.2% 14.7% -1.0%

Fabrication Demand Auto 435 727 1,022 740 653 666 699 931 1,033 1,108 1,162 1,185 1,245 1,297 1,390 1,511 1,591 1,796 1,930 2,051 2,011 2,140 2,290 2,460 2,690 2,875 Jewelry 856 856 637 506 663 663 584 664 727 731 900 1,028 1,105 1,198 1,347 1,387 1,481 1,635 1,757 1,823 1,934 1,790 1,656 2,388 2,159 2,157 Other _____1,045_____ 1,354_____ 1,230_____ 1,378_____ 1,208_____ 885_____ 841_____ 1,009_____ 1,182_____ 818_____ 842_____ 946_____ 994_____ 1,065_____ 1,008_____ 1,210_____ 1,241_____ 1,256_____ 1,320_____ 1,406_____ 1,461_____ 1,425_____ 1,411_____ 1,578_____ 1,667_____ 1,619 Total Demand 2,336 2,937 2,889 2,624 2,524 2,214 2,125 2,604 2,942 2,656 2,905 3,159 3,344 3,560 3,746 4,109 4,314 4,687 5,007 5,280 5,406 5,355 5,357 6,426 6,515 6,651 % Change Year Ago - 25.7% -1.6% -9.2% -3.8% -12.3% -4.0% 22.6% 13.0% -9.7% 9.4% 8.7% 5.9% 6.4% 5.2% 9.7% 5.0% 8.7% 6.8% 5.5% 2.4% -0.9% 0.0% 20.0% 1.4%2.1%

Net Surplus or Deficit 502 -602 -339 182 370 154 131 32 -45 407 592 341 580 558 681 323 325 43 66 -2 40 102 68 -719 30 -170

Coin Fabrication ------35 75 105 100 72 430 50 70 150 175 150 85 95 105 135 210 120 60 50 50

Surplus/Deficit Less Coin Fabrication 502 -602 -339 182 370 154 96 -43 -150 307 520 -89 530 488 531 148 175 -42 -29 -107 -95 -108 -52 -779 -20 -220

Changes in Market Inventories** -98 -68 -64 187 -57 150 -162 199 -68 108 0 77 -148 -9 -585 617 -165 0 -167 66 -287 22 -35 4 -22 -9

Price Per Ounce High 186.40 384.90 716.00 1,040.10 593.50 389.70 498.70 414.00 356.60 677.70 648.70 628.00 566.20 534.40 418.60 392.00 424.70 430.30 478.50 436.90 473.80 432.00 435.00 630.50 641.00 609.90 Low 145.00 185.00 342.40 482.60 369.60 243.60 377.10 286.10 237.40 341.30 475.30 445.50 469.80 388.50 333.10 330.75 338.20 380.40 397.00 369.10 339.50 332.00 341.00 388.10 401.00 448.20 Average 159.14 261.16 442.35 682.34 445.92 327.42 425.95 358.94 292.94 465.69 558.98 531.40 512.04 471.45 375.95 359.88 375.29 406.89 424.89 400.54 394.40 372.79 372.92 534.80 528.26 538.44 % Change Year Ago - 64.1% 69.4% 54.3% -34.6% -26.6% 30.1% -15.7% -18.4% 59.0% 20.0% -4.9% -3.6% -7.9% -20.3% -4.3% 4.3% 8.4% 4.4% -5.7% -1.5% -5.5% 0.0% 43.4% -1.2% 1.9%

Notes: Excludes transitional economies, except as noted. * Prior to 2003 Russian supply represented platinum exports. Russian supply represents mine production since 2003 . Secondary production statistics exclude toll-refined material. Prices are settlement prices for the active nearby contract on the New York Mercantile Exchange Changes in market inventories are year-end. **Changes in 1997 market inventories exclude U.S. Industry stocks since the U.S. Bureau of Mines ceased publication of U.S. Industry stock level data in the third quarter of 1997. As of 2007 Inventories includes changes in ETF holdings. There may be discrepancies due to rounding. NA -- not available. e -- estimates. p -- projections. Sources: U.S. Bureau of Mines, Statistics Canada, trade sources, CPM Group. May 15, 2017

6 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Mine Production 4,472 4,532 5,000 5,369 5,039 4,778 4,537 4,670 4,680 4,132 4,436 3,091 4,465 4,234 4,242 South Africa 1,050 990 980 965 935 800 804 837 857 773 757 786 739 739 742 Russia 139 220 160 167 171 181 229 283 342 342 406 403 406 489 460 Zimbabwe 149 251 242 223 206 235 144 96 247 215 222 300 265 289 309 Canada 139 135 131 143 128 119 126 113 122 121 122 120 121 128 131 United States _____116_____ 137_____ 150_____ 165_____ 193_____ 188_____ 174_____ 164_____ 163_____ 166_____ 147_____ 151_____ 127_____ 128_____ 129 Other 6,065 6,266 6,663 7,031 6,672 6,301 6,014 6,163 6,410 5,748 6,090 4,851 6,122 6,007 6,012 Total 11.5% 3.3% 6.3% 5.5% -5.1% -5.6% -4.6% 2.5% 4.0% -10.3% 5.9% -20.3% 26.2% -1.9% 0.1% % Change Year Ago

Secondary Supply 1130 1180 1230 1280 1315 1,376 1,220 1,525 1,460 1,330 1,322 1,250 1,240 1,237 1,233 Total 8.7% 4.4% 4.2% 4.1% 2.7% 4.6% -11.3% 25.0% -4.3% -8.9% -0.6% -5.4% -0.8% -0.2% -0.4% % Change Year Ago ______7,195 7,446 7,893 8,311 7,987 7,677 7,234 7,688 7,870 7,078 7,412 6,101 7,362 7,244 7,245 Total Supply 11.0% 3.5% 6.0% 5.3% -3.9% -3.9% -5.8% 6.3% 2.4% -10.1% 4.7% -17.7% 20.7% -1.6% 0.0% % Change Year Ago

Fabrication Demand 3,235 3,690 4,053 4,210 4,195 3,785 2,740 3,081 3,173 3,153 3,234 3,123 3,173 3,236 3,265 Auto 2,006 1,819 1,675 1,690 1,772 1,698 2,283 2,126 2,331 2,502 2,443 2,401 2,346 2,328 2,301 Jewelry _____1,601_____ 1,687_____ 1,680_____ 1,822_____ 1,756_____ 1,502_____ 1,394_____ 1,545_____ 1,556_____ 1,522_____ 1,542_____ 1,482_____ 1,491_____ 1,483_____ 1,489 Other 6,842 7,196 7,408 7,721 7,723 6,985 6,417 6,751 7,060 7,177 7,219 7,007 7,010 7,047 7,055 Total Demand 2.9% 5.2% 2.9% 4.2% 0.0% -9.6% -8.1% 5.2% 4.6% 1.7% 0.6% -2.9% 0.0% 0.5% 0.1% % Change Year Ago

Net Surplus 353 250 486 590 264 692 816 937 809 -99 193 -906 353 197 191 or Deficit

40 35 30 23 20 45 42 13 37 74 45 56 50 20 20 Coin Fabrication

Surplus/Deficit Less 313 215 456 567 244 647 774 923 773 -174 148 -962 303 177 171 Coin Fabrication

Changes in 3 12 2 3 171 116 488 444 335 188 915 198 -230 70 Market Inventories**

Price Per Ounce 839.80 935.50 1,018.10 1,321.50 1,549.30 2,276.10 1,506.30 1,809.60 1,905.70 1,725.10 1,736.50 1,517.00 1,286.60 1,183.10 1,038.90 High 594.10 763.40 840.70 981.80 1,112.00 787.20 922.20 1,460.00 1,363.40 1,386.40 1,303.70 1,182.10 832.40 819.20 900.90 Low 687.66 845.87 899.96 1,146.94 1,314.46 1,579.31 1,214.50 1,614.22 1,722.39 1,554.30 1,486.59 1,389.01 1,053.83 991.84 967.19 Average 27.7% 23.0% 6.4% 27.4% 14.6% 20.1% -23.1% 32.9% 6.7% -9.8% -4.4% -6.6% -24.1% -5.9% 0.6% % Change Year Ago

7 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM technological developments are expected to sector has been on a decline in the past few drive demand for platinum higher from the years. Relatively slower income growth in electronics sector as well. recent years as a result of a relatively slower economic growth has weighed on demand Platinum demand from the auto sector is for luxury items like platinum jewelry. This estimated to have reached 3.24 million is already beginning to show. ounces in 2016, up 2.0% from 2015. Demand from this sector is forecast to rise Investment Demand during 2017, albeit at a sluggish pace, to 3.26 million ounces, up 0.9% from 2016. For the most part investor interest in Meanwhile, platinum demand from the platinum remained lackluster during 2016, electronics sector is forecast to rise to which was reflected in the price of the 202,000 ounces in 2017, up from 192,000 metal. As of the end of 2016 investors were ounces in 2016. estimated to hold about 7.6 million ounces of platinum bullion and coins. Roughly 68% Platinum demand from the jewelry sector of this metal, or 5.2 million ounces, are continued to decline for the fourth estimated to be held in unreported bullion consecutive year during 2016, slipping to inventories. While there was continued stale 2.32 million ounces during the year. This -bull liquidation of platinum inventories was the lowest level of demand from the during 2016, other investors have started to jewelry sector since 2010. Reduced demand buy platinum, which provided some support from China is an important factor that has for platinum prices. been weighing on demand. China is the largest platinum jewelry market in the On a net basis investors sold 1,434 ounces world, accounting for approximately 78% of of platinum from their exchange traded global platinum jewelry demand. That said, products (ETP) holdings in 2016. This was demand for platinum from the jewelry the second consecutive year in which

Platinum Supply and Demand Balance

Million Ounces Million Ounces 9.0 9.0

8.0 8.0

7.0 7.0

6.0 6.0 Supply 5.0 5.0

4.0 4.0

3.0 3.0 Fabrication Demand 2.0 2.0

1.0 1.0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

8 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 investors were net sellers of platinum, although the volume of net sales was considerably lower than the 250,770 ounces sold in 2015.

Platinum coin sales are estimated to have totaled around 105,000 ounces in 2016, up from around 61,300 ounces in 2015. Investors remained interested in platinum coins during 2016, which was helped by increased offerings and marketing of platinum coins by mints and dealers.

The platinum investment market is extremely small, which benefits some investors, but hurt demand for the metal when the South African Reserve Bank rejected the idea of producing a platinum coin on the basis of such a coin being commercially and financially unviable due to the small size of the platinum coin market.

Markets

The platinum market, in ounces terms, expanded last year, but in dollar terms contracted due to the lower annual average price in 2016 compared to 2015.

The total platinum market, newly refined physical supply entering the market plus exchange futures and options trading, was 255.6 million ounces in 2016, up from 249.3 million ounces in 2015. The paper market accounted for 248.4 million ounces of the total platinum market in 2016. In dollar terms, however, the platinum market actually shrank last year to $254 billion, down from $263 billion in 2015. Trading volumes of platinum futures on the Nymex have not risen back to the levels of just three to four years ago.

9 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Supply largely balanced out by a decline in jewelry scrap supply. Secondary supply Newly refined platinum supply fell in of platinum accounts for roughly 17% 2016 to 7.2 million ounces, a 1.6% de- of total newly refined metal supplies crease over the previous year, as South annually. African platinum mine supply declined following a significantly strong year in This decline in refined metal production 2015. last year was expected after it recovered significantly in 2015 from the strike- Mine production in South Africa ac- beaten 2014. Limited growth in mine counted for 70.5% of total platinum capacity in South Africa, due largely to mine supply for the year. In 2016 South a lack of new projects coming online, African platinum miners churned out safety stoppages and operational re- 5.2% less platinum than they did in the structuring issues, also were contribut- previous year, however. This more than ing factors. offset the increases in platinum mine production in Zimbabwe, Canada, and The decline in refined metal production the United States. Total platinum mine in 2016 did not lead to an increase in supply fell 1.9% from 2015 to 6.0 mil- platinum prices over the course of the lion ounces in 2016. year, however, partly due to continued liquidation of platinum inventories dur- Secondary supply of platinum, on the ing the year which helped make up for other hand, was largely flat in 2016 the small drop in refined platinum sup- from the previous year. A small in- ply. crease in auto catalyst scrap supply was

Annual Platinum Supply Projected Through 2017 Million Ounces Million Ounces 9 9 Russian Supply 8 8

7 7 Secondary Supply 6 6

5 5 Other Mine Production 4 4

3 3

2 2 South African Mine Production 1 1

0 0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

10 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

In 2017 platinum mine supply growth is The global PGMs industry experienced expected to be muted. A sharp pullback a wave of ownership reshuffling last in exploration and expansion spending year; while ownership changes should in the past few years has limited growth not lead to any swings in future global in mine supply, although these cutbacks mine supply, it will be interesting to allowed mining companies to continue watch this development going forward. ongoing operations without going out of Anglo American Platinum, the world’s business. A relatively lower price envi- largest PGMs producer, continued its ronment in the platinum market has also restructuring strategy over the course of deterred new projects from coming 2016. The Pandora mine, which was a online as scheduled. Total platinum joint venture between Lonmin and An- mine supply is expected to be largely glo American Platinum, is now 92.5% flat at 6.0 million ounces in 2017 from owned by the former after it was an- the level seen in 2016. Secondary sup- nounced in November 2016 that Lon- ply of platinum is expected to decline min had agreed to purchase Amplats’ 0.4% to 1.2 million ounces in 2017 as 42.5% stake in the mine. continued softness in platinum prices may discourage additional recovery of Also in November 2016 Amplats sold the metal from scrap materials. Total its Rustenburg group of mines to Si- refined platinum supply is expected to banye, which was in line with the for- remain flat at 7.2 million ounces in mer’s restructuring strategy. Sibanye 2017 from the previous year. also took over Amplats’ Union mine in February, although Amplats will con-

Source of Platinum Mine Supply 2016 Total Mine Supply = 6.0 million ounces

Russia, 12.3% Canada, 4.8%

United States, 2.1%

Zimbabwe, 8.1%

Other, 2.1% South Africa, 70.5%

11 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 tinue to refine the mine’s PGMs output, Despite experiencing a choppy two- initially under a concentrate purchase year period between 2014 and 2015, agreement and thereafter on toll treat- platinum mine production in South ment terms. Africa has been trending lower since reaching a peak of 5.4 million ounces Sibanye Gold, a primary gold producer, in 2006. Platinum mine output in announced in December 2016 that it 2016 in the country was 21.1% lower would buy the U.S.-based Stillwater than the 2006 peak. Mining Company for $2.2 billion. The transaction was completed in early May The downward trajectory in South Afri- 2017. can mine production over the past decade reflects a range of issues that has Mine Production by Major Country plagued the platinum mining industry in and Company the country, including wage-related labor strikes, mine safety, weak infra- South Africa structure, and a lack of electricity gen- eration capacity and water. Most platinum is mined in South Africa. After a strong rebound in mine produc- These issues cannot be easily resolved; tion in 2015 from the months-long labor they can lead to unexpected disruptions strike in 2014, platinum mine output in to mine and refined metal production the country fell 5.2% to 4.2 million for a short term or for an extended pe- ounces last year, accounting for 70.5% riod of time. Meanwhile reduced capi- of total new mine supply that year. tal expenditures against a backdrop of

South African Mine Production of Platinum Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 6,000 6,000

5,000 5,000

4,000 4,000

3,000 3,000

2,000 2,000

1,000 1,000

0 0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

12 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

South African Platinum Mine Production Thousand Troy Ounces 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Anglo Platinum 2,467 2,315 2,166 2,250 2,184 2,019 2,066 1,630 2,123 1,9581,650 % of Total 49.0% 48.5% 47.7% 48.2% 46.7% 48.9% 46.6% 52.7% 47.5% 46.3% 38.9% % Change -11.9% -6.2% -6.5% 3.9% -2.9% -7.5% 2.3% -21.1% 30.2% -7.7% -15.7%

Impala Platinum 1,197 1,105 1,008 1,084 1,071 776 893 434 816 794 762 % of Total 23.7% 23.1% 22.2% 23.2% 22.9% 18.8% 20.1% 14.0% 18.3% 18.8% 18.0% % Change 4.4% -7.7% -8.7% 7.5% -1.2% -27.6% 15.1% -51.4% 88.1% -2.7% -4.0%

Lonmin 753 678 635 579 717 672 769 375 790 704 665 % of Total 14.9% 14.2% 14.0% 12.4% 15.3% 16.3% 17.3% 12.1% 17.7% 16.6% 15.7% % Change -8.2% -9.9% -6.3% -8.9% 23.9% -6.4% 14.4% -51.2% 111% -11% -6%

Sibanye 295 247 202 234 209 153 138 125 146 141 470 % of Total 5.8% 5.2% 4.4% 5.0% 4.5% 3.7% 3.1% 4.0% 3.3% 3.3% 11.1% % Change 2.0% -16.0% -18.4% 16.1% -10.7% -27.0% -9.9% -9.4% 16.9% -3.5% 233.7%

Northam Platinum 199 189 189 161 171 182 207 180 241 271 271 % of Total 4.0% 3.9% 4.2% 3.4% 3.7% 4.4% 4.7% 5.8% 5.4% 6.4% 6.4% % Change -10.8% -5.4% 0.4% -15.3% 6.8% 6.1% 13.6% -13.0% 34.2% 12.3% 0.0%

African Rainbow Minerals 58 66 138 145 148 155 168 154 163 167 157 % of Total 1.1% 1.4% 3.1% 3.1% 3.2% 3.8% 3.8% 5.0% 3.7% 3.9% 3.7% % Change N/M N/M N/M 5.0% 2.0% 4.8% 8.0% -8.3% 6.1% 2.4% -6.3%

Norilsk 56579121919201513 % of Total 0.1% 0.1% 0.1% 0.2% 0.2% 0.3% 0.4% 0.6% 0.4% 0.4% 0.3% % Change -37.5% 28.6% -25.0% 46.6% 27.2% 34.0% 60.0% -1.5% 5.3% -25.0% -13.3%

Sylvania Resources 14141927242531323932 % of Total 0.3% 0.3% 0.4% 0.6% 0.6% 0.6% 1.0% 0.7% 0.9% 0.8% % Change -1.4% 37.9% 43.9% -12.4% 5.6% 22.0% 3.6% 20.0% -15.8%

Sedibelo Platinum Mines 17 37 38 63 90 93 106 99 98 % of Total 0.4% 0.8% 0.8% 1.5% 2.0% 3.0% 2.4% 2.3% 2.3% % Change 112.0% 4.3% 65.7% 41.3% 3.5% 14.0% -6.0% -1.3%

Pan African Resources 0.26 3.47 6.48 7.20 6.02 5.35 5.35 % of Total 0.01% 0.08% 0.1% 0.2% 0.1% 0.1% 0.1% % Change N/M 86.5% 11.2% -16.5% -11.0% 0.0%

Platinum Group Metals Ltd 39 117 % of Total 2.8% % Change 204.5%

Wesizwe Platinum % of Total % Change

Other 2.0 2.0 3.0 2.0 2.0 1.0 1.0 1.0 1.0 1.0 1.0 % Change -86.7% N/M 50.0% -33.3% 0.0% -50.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Total South African Mine Production 5,039 4,778 4,537 4,670 4,680 4,132 4,436 3,091 4,465 4,234 4,242 % Change -6.1% -5.2% -5.1% 2.9% 0.2% -11.7% 7.4% -30.3% 44.4% -5.2% 0.2%

Note: Production is based on calendar year. Production refers to metal output attributable to company ownership. Exceptions to this include Bafokeng - and 33% Ango Platinum) and Mototolo (50:50 JV between Anglo Platinum and Gelncore). Production at these mines has been fully attributed in Anglo Platinum. Rasimone Platinum Mine (owned 67% Royal Bafokeng Platinum Ltd. Aquarius was taken over by Sibanye in 2016. Anglo Platinum's Rustenberg mines have been included in Sibanye starting 2017. Figures may not equal sum due to rounding. Source: Company Documents, Industry Sources, RMG, and CPM Group May 2017

13 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 persistent weaker metal prices are ex- cushion supplies. As of December 2016 pected to limit growth in new mine ca- Anglo American Platinum (Amplats) pacity coming online in the coming held 440,000 ounces of platinum pipe- years. line inventories, flat from the level as of December 2015 and December 2014. While a three-year wage deal, reached Amplats also held around 130,000 in October 2016 between three major ounces of refined metal inventories at platinum producers and the AMCU, will the end of 2016, compared to 200,000 help prevent labor related supply dis- ounces at the end of 2015 and 212,000 ruptions in the next three years, labor ounces at the end of 2014. discontent will remain in the backdrop. This issue is particularly pertinent these Anglo American Platinum is the larg- days considering that major mining est platinum producer in the world. It companies are actively deploying cost- produced a total of 2.1 million ounces control measures which include reduc- of platinum in 2016, down 7.2% from tions in employee headcounts. This 2.3 million ounces in 2016. Platinum could potentially cause short term op- production at its managed mines rose erational disruptions, even when large year-on-year, helped by output in- scale strikes may seem contained. creases at Mogalakwena mine, Amandebult mine and Unki mine. The Other problems such as safety stop- Twickenham project remained on care pages and community disruptions also and maintenance during 2016 as Am- could lead to temporary supply disrup- plats has delayed all expansionary pro- tions. Platinum production at the Bok- ject decisions until after 2017. The oni mine, Amplats and Atlatsa’s joint company expects platinum production venture, fell 21% last year due largely from its managed operations to be simi- to fatality-related section 54 stoppages lar this year compared to that in 2016. in May 2016. Implats’ Marula mine produced 47.0% less platinum in con- Platinum production for Amplats’ joint centrate in the first quarter of 2017 from venture and associate mines rose mar- the same period a year ago because op- ginally in 2016 from a year ago, mainly erations were severely disrupted by due to section 54 stoppages post fatali- community protest action. ties. The company expects its joint venture and associate mines to produce Pending any unexpected disruptions, similar amount of platinum in 2017 as major mining companies expect their in the previous year. platinum mine production to be in line their guidance in 2017. Platinum mine In the first quarter of 2017 platinum supply in South Africa is expected to be production at Amplats was up 1% from largely flat at 4.2 million ounces this a year earlier as strong performance at year from the previous year. While Mogalakwena offset output declines at short-term supply disruptions are possi- Amandelbult, which was due primarily ble, a buildup of pipeline stocks at ma- to unusually heavy rainfalls. Amplats jor platinum mining companies can help kept its 2017 production guidance un-

14 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM changed at 2.35-2.40 million ounces. 2017, with a medium-term target of Over the course of 2016 Amplats con- 830,000 ounces of platinum by the fis- tinued to implement its restructuring cal year that ends on 30 June 2020. plan. In November 2016 Amplats final- ized the sale of its Rustenburg mine to Lonmin produced 704,487 ounces of Sibanye, in line with the former’s strat- platinum in 2016, down 10.8% from egy of repositioning its portfolios. Am- 790,225 ounces in 2015. Platinum pro- plats is also in the process of the sale of duction from Lonmin is expected to its interest in the Bokoni joint venture. decline over the next few years. The company lowered its sales guidance to Impala Platinum (Implats) produced 650,000-680,000 ounces in the fiscal 889,500 ounces of platinum at its South year ended 30 September 2017. Sales African mining operations in 2016. are projected to fall to 650,000 ounces This was 1.7% lower than the 905,100 in the 2018 fiscal year. ounces produced in 2015. Implats’ output level in 2016 remained below its Russia 2013 production of around 977,110 ounces. Implats’ platinum production at Russia is the second largest platinum its South African mine operations is producing country in the world, ac- expected to decline slightly to 848,000 counting for 12.3% of global mine sup- ounces in 2017. The company expects ply in 2016. The country produced its Rustenburg operation to produce 739,000 ounces of platinum in 2016, 700,000 – 710,000 ounces of platinum flat from a year ago. This reflected the in the fiscal year that ends on 30 June flat rate in platinum mine production

Russian Production and Exports Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 1,400 1,400

Indicates stockpile withdrawal 1,200 1,200 Production

1,000 1,000

800 800 Residual

600 600 Exports 400 400

200 200

0 0 81 84 86 89 92 94 97 00 02 05 07 09 11 13 15 17p

15 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Russian Platinum Production and Exports Thousand Troy Ounces Production Exports Residual Percent of Exports Production 1970 675 * - - - 1975 739 * - - - 1980 900 * 334 37% 566 1981 900 345 38% 555 1982 900 334 37% 566 1983 900 * 302 34% 598 1984 932 * 234 25% 698 1985 965 * 209 22% 756 1986 965 317 33% 648 1987 973 459 47% 514 1988 981 418 43% 563 1989 986 500 51% 486 1990 990 750 76% 240 1991 1,050 950 90% 100 1992 1,000 750 75% 250 1993 900 775 86% 125 1994 850 800 94% 50 1995 850 1,000 118% -150 1996 893 1,000 112% -108 1997 985 750 76% 235 1998 1,060 600 57% 460 1999 1,079 300 28% 779 2000 1,187 600 51% 587 2001 1,200 1,030 86% 170 2002 1,000 720 72% 280 2003 1,050 1,050 100% 0 2004 990 990 100% 0 2005 980 980 100% 0 2006 965 930 96% 35 2007 935 900 96% 35 2008 800 775 97% 25 2009 804 790 98% 14 2010 837 801 96% 36 2011 857 790 92% 67 2012 773 755 98% 18 2013 757 720 95% 37 2014 786 750 95% 36 2015 739 720 97% 19 2016 739 680 92% 59 2017p 742 680 92% 62

Notes: Asterisks denote data released by the Bank for Foreign Trade in January 1988, published in the Schweizer Handels Zeitung. Sources: Bank of Foreign Trade, U.S. Bureau of Mines, Central Intelligence Agency, CPM Group. May 2017 16 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM growth at the nickel mining operations A sharp increase in platinum mine pro- of Norilsk Nickel, which produces the duction at Zimplats was largely respon- bulk of the metal for the country. sible for the 20.5% year-on-year gain in Norisk Nickel produced 610,000 ounces the country’s platinum mine production of platinum last year, above the 542,000 last year. Zimplats, the largest platinum -586,000 ounce production target it set operation in the country, produced earlier. The increase of mine output 296,000 ounces in 2016, up 36.1% from above the production target was attrib- a year earlier. After the safety closure uted to the processing of work-in- of the company’s Bimha mine in the progress material released after the second half of 2014, the redevelopment shutdown of nickel plant. The company of this mine remains on schedule and it expects to produce 581,000-645,000 is expected to reach full production in ounces of platinum from its Russian April 2018. feedstock in 2017. Zimplats also is finalizing plans to de- Zimbabwe velop a new shaft, Portal 6. Develop- ment of this new mine is expected to Zimbabwe, the world’s third-largest cost around $148 million over the next platinum producing country, accounted five years, with first production due in for 8.1% of total mine supply in 2016. 2021. It will replace output from Zim- The country produced a record amount plats’ oldest mines, which will be ap- of platinum last year, up 20.5% year-on- proaching depletion. year to 489,000 ounces. The Mimosa mine, which is jointly owned by Implats and Acquarius, pro-

Platinum Mine Production in Zimbabwe Annual, Projected Through 2017 Ounces Ounces 600,000 600,000

500,000 500,000

400,000 400,000

300,000 300,000

200,000 200,000

100,000 100,000

- - 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p 17 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 duced 120,600 ounces, an increase of num than they did in 2015. The Lac des 1.9% from a year earlier. Anglo Plati- Iles mine produced 10,230 ounces of num’s Unki mine produced 717,000 platinum last year, down 16.8% from ounces o platinum, up 3.3% year-on- the previous year. year. In 2017 platinum mine production from Zimbabwe is expected to reach United States 460,000 ounces, a decrease of 6.0% from a record year in 2016. The United States produced 127,850 ounces of platinum in 2016, up 6.0% Canada from 120,650 ounces in the previous year. Stillwater Mining is the main Canadian platinum mine production PGM producer in the United States, op- totaled 289,000 ounces in 2016, up erating two mines in Montana. The 9.1% from the previous year. Increases Stillwater Mining mine produced in mine production at Vale’s Sudbury 76,500 ounces of platinum and the East and Glencore’s Sudbury and Raglan Boulder mine produced 48,600 ounces operations more than offset a small de- of platinum last year. cline in mine production at North American Palladium’s Lac des Illes. Near Term Mine Capacity Outlook Vale’s Sudbury produced 166,000 ounces of platinum last year, while the There has been a sharp retreat from ex- Sudbury & Raglan operations owned by ploration and expansion spending Glencore produced 18.4% more plati- among mining companies since the

Projected PGM Mine Production Capacity

Million Ounces Million Ounces 18.2 Capacity Additions by Year: 18.0 Post 2018 2018 17.8 2017 2016 17.6

17.4

17.2

17.0

16.8

16.6

16.4 Capacity at Old Mines

16.2 Existing 2014 2015 2016 2017 2018 Post 2018 Capacity Sources: Raw Materials Group, Metals Economics Group, CPM Group

18 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM global financial crisis in 2008, which tion levels, including safety stoppages, will result in future supply constraints, labor disputes, and declining ore grades. although such cutbacks have allowed mining companies to continue ongoing The Cost of Mining PGMs Declined operations without going out of business. Against suck a backdrop, net ad- The concept of cash costs is a non- ditions to global PGMs mining capacity GAAP accounting measure that is used are expected to be muted in the next extensively to analyze production costs, year or two. both internally by company management and externally by those who fol- There was only one new project that low a particular company or mining was brought online in 2016 – Platinum sector. The costs included are those as- Group Metals Ltd’s Maseve mine, sociated with mining and processing of which has a designed PGMs production the ore. They exclude non-cash items capacity of 275,000 ounces. It pro- such as depreciation, amortization costs, duced its first concentrate in February and general corporate overhead. The 2016 although underground develop- cash cost is used as a performance indi- ment and mining rates have fallen be- cator and is typically compared with the hind schedule. price of the metal being mined, in es- sence showing a measure of per-unit Apart from a lack of new projects com- gross margin. In the case of this report ing online, there are a range of other we use a platinum group metals (PGMs) factors that could disrupt PGMs produc- basket price. In order to better encom-

PGM Producers' C1 Cash Costs in 2016 $/Ounce $/Ounce 1,400 1,400

1,200 1,200

1,000 1,000 Annual Average PGM Basket Price - $798.75 800 800 Production-Weighted PGM C1 Cash Cost = $607.45 600 600

400 400

200 200

0 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative Percent of Production Notes: The PGM basket price and average cash costs are weighted by production. Production-weighted PGM C1 Cash Cost curve accounts for 85.7% of world PGM mine production in 2016. Sources: World Mine Cost Data Exchange, company reports, CPM Group

19 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 pass the PGM mining sector, this report ued implementing tariffs over the past has included all PGM mining compa- few years to fund its capacity expansion nies’ cash costs where PGMs account programs (despite that these programs for more than 15% of the mine’s or have experienced significant delays), company’s revenues. The cash cost for although the pace of tariff increase was each mine is weighted by the proportion slower than those between 2008 and of its production to total global PGM 2011. Eskom’s annual tariff rate in- production. creases averaged 10.8% from 2012 to 2016, much lower than the annual aver- The production-weighted global plati- age of 27% from 2008 to 2011. num group metals cash cost per ounce of platinum group metals mined stood at Water also is essential for both mining $607.45 in 2016, down from $663.17 in and processing of ore. Platinum proc- 2015. This figure reflects costs at 22 essing uses a significant amount of wa- mining operations that produce PGMs, ter. Mining companies have to pay for with total output accounting for 85.7% the water that they use. The Department of global PGMs mine output during the of Water Affairs of South Africa issues year. mining companies licenses for using water. Precious metals mines are placed South Africa and the rest of the world under category A mines, which classi- continued to diverge in terms of cash fies them as those mining operations cost during 2016. PGMs producing that will have the most significant im- mines in Russia and North America re- pact on water resources due to mining ported the lowest cash costs while most activity. Operating a mine without a of South African PGMs mines fell in or license can result in stop orders on min- under the 60th percentile of the cash cost ing activity and fines from the Depart- curve. The striking difference is mainly ment of Water Affairs of South Africa. due to the fact that most of the PGMs That said, water accounts for a rela- that are mined in non-South Africa re- tively small proportion of the total util- gion are byproducts of nickel, resulting ity cost to PGM mines, with the major- in significantly lower cash cost. ity of the utilities component comprised of electricity costs. Other factors that tend to exert upward pressure on PGMs cash costs in South Labor costs are the single largest com- Africa are not easily resolved. One im- ponent of South African PGM mining portant component in the making of cash costs, accounting for approxi- PGMs is electricity, which has exposed mately 50% of total operating cash South Africa to power outages before. costs. In October 2016, South Africa’s Memories are still fresh when the coun- three largest platinum producers – An- try experienced serious energy con- glo American Platinum, Impala Plati- straints in 2008 and again in 2015, and num, and Lonmin – reached an agree- South Africa’s economic growth was ment with the Association of Mine- greatly affected by the energy crisis. workers and Construction Union Eskom, which accounts for 95% of the (AMCU) to raise mining workers’ basic country’s electricity supply, has contin- salaries by an average 7.3% per annum

20 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Production-Weighted Average PGM C1 Cash Cost and Basket Price

$/Troy Ounce 1,400

1,200 Cash Cost PGM Basket Price 1,000

800

600

400

200

0 2000 2001 20022003 2004 20052006 2007 20082009 2010 20112012 2013 201420152016 Sources: World Mine Cost Data Exchange, CPM Group.

South African PGM C1 Cash Costs

$/Troy Ounce $/Troy Ounce 1,800 1,800 South African PGM Basket Price 1,600 1,600

1,400 1,400

1,200 1,200

1,000 1,000

800 800

600 600

400 400

200 CAGR, 2000 - 2016: 9.3% 200

0 0 20002001200220032004200520062007200820092010201120122013201420152016 Notes: Average cash cost and basket price is weighted by production. Sources: World Mine Cost Data Exchange, CPM Group

21 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Production-Weighted Average Profit Margin of PGM Mining Industry

90.0% World South Africa Other Countries 80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016 Note: Profit margin is calculated as (PGM Basket Price - PGM C1 Cash Cost)/PGM Basket Price. Profit margin is the percentage of gross profit earned for every ounce of PGMs sold. Industry average PGM basket prices and cash costs are weighted by production. Sources: World Mine Cost Data Exchange, CPM Group.

Typical PGMs Mining Cash Cost Breakdown Typical Cash Cost Breakdown

Component Range Typical

Labor 40% - 60% 52% Utilities 8% - 11% 10% Parts & Supplies 10% - 15% 12% Fuel 8% - 10% 9% Utilities Explosives, Reagents 4% - 8% 5% 10% Other 7% - 11% 12% Total 100% Labor Parts & 52% Supplies 12% Notes: Labor costs include permanent labor and contract labor. Fuel is most diesel, but also includes petrol/gasoline, Fuel 9% natural gas, and propane. Utilities include electricity and water. Parts and Supplies refers to parts and supplies, structural and 5% rebar steel. Some of the other costs included in the 'Other' category are transpor- Other Explosives, 12% tation cost, exploration costs, royalties, Reagents camp food, and supplies and metal move- ment costs.

22 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM over the next three years. This three- these two currencies extremely impor- year wage deal set the tone for future tant to the margins of South African wage increases, at least in the couple of PGM producers. The relative strength years after it expires, that wage inflation in the South African rand, which will be contained, although one cannot strengthened 12.6% against the dollar say for certain that labor disputes will over the course of 2016, helped bring not arise in the near and medium term. down cash costs in dollar terms for South African miners. Still, in 2016 South African miners were able to continue to bring down Going forward PGMs cash costs are cash costs through ongoing mine con- likely to face continued upward pres- solidation and restructuring initiatives, sure, although sharp increases in cash improved operating efficiencies, and a costs seem unlikely. Wage increases decrease in fuel prices. are likely to be contained in the next few of years given the three-year wage The South African rand exchange rate deal between the South African miners plays an important part in influencing and the labor union. South African cost fluctuations. South African min- miners also will be careful with laying ers’ costs are primarily incurred in rand off workers in the future as they do not while revenues are received in U.S. dol- want to see a repeat of the massive pro- lars, as commodities are dollar- duction loss that occurred during the denominated in international markets. months-long labor strike in 2014. This makes the relationship between

Production-Weighted PGM Basket Prices

$/Troy Ounce $/Troy Ounce 1,800 1,800 World 1,600 1,600 Russia 1,400 1,400 United States 1,200 1,200 Canada 1,000 1,000 South Africa 800 800

600 600

400 400

200 200

- - 2000 2002 2004 2006 2008 2010 2012 2014 2016 23 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Platinum Production by Country Troy Ounces

United South Africa Russia Zimbabwe Canada States Australia Colombia 1976 1,675,000 -- NA 600,000 1,000 3,158 16,779 1977 1,829,000 -- NA 693,000 1,297 3,697 17,315 1978 1,775,000 -- NA 263,000 1,258 12,958 13,939 1979 1,950,000 -- NA 375,000 2,036 2,765 12,933 1980 2,044,000 -- NA 334,000 663 2,500 14,345 1981 2,080,000 -- 2,300 345,000 1,240 2,093 14,804 1982 1,626,000 -- 1,704 334,000 1,381 2,388 12,000 1983 1,655,000 -- 1,695 302,000 2,029 1,900 10,303 1984 2,010,000 -- 772 234,000 2,583 2,122 10,106 1985 2,300,000 -- 611 209,000 1,624 3,054 11,650 1986 2,260,000 -- 836 317,000 613 3,697 14,371 1987 2,475,000 -- 579 457,000 25,078 4,180 20,512 1988 2,475,000 418,000 900 170,000 39,867 3,376 26,203 1989 2,760,000 500,000 804 180,000 45,976 3,215 31,283 1990 2,725,000 750,000 675 180,000 58,193 3,215 42,439 1991 2,785,000 950,000 611 190,000 55,621 3,215 51,441 1992 3,000,000 750,000 289 175,000 59,157 3,215 63,016 1993 3,200,000 775,000 129 140,000 68,000 3,215 55,299 1994 3,260,000 800,000 322 129,000 64,302 3,215 57,871 1995 3,348,000 1,000,000 322 178,613 53,000 3,215 57,871 1996 3,415,000 1,000,000 10,322 184,285 61,000 3,215 57,871 1997 3,690,540 750,000 11,077 149,288 84,000 3,215 58,000 1998 3,732,164 600,000 36,116 180,835 112,500 3,215 13,214 1999 3,915,358 300,000 46,139 180,244 103,030 3,215 14,404 2000 3,807,810 600,000 16,080 187,804 108,820 3,215 10,899 2001 4,153,500 1,030,000 16,080 229,610 130,210 3,215 11,253 2002 4,137,544 720,000 72,822 258,200 146,000 8,000 30,000 2003 4,471,558 1,050,000 139,000 149,440 139,000 8,000 30,000 2004 4,532,198 990,000 220,300 251,000 135,000 6,000 35,000 2005 5,000,381 980,000 159,842 241,603 131,000 3,569 34,787 2006 5,368,655 965,000 167,132 222,659 143,000 4,000 46,320 2007 5,039,317 935,000 170,640 206,442 128,000 4,565 49,060 2008 4,778,367 800,000 181,365 234,711 118,500 3,860 44,010 2009 4,536,679 804,000 229,316 143,875 125,751 4,180 29,870 2010 4,669,883 837,310 282,641 95,500 113,420 4,180 32,150 2011 4,679,669 856,570 341,857 246,743 121,590 4,180 39,580 2012 4,132,349 772,530 341,621 214,400 120,590 3,220 39,345 2013 4,436,379 756,600 405,887 221,737 122,400 3,220 19,290 2014 3,090,963 785,600 403,120 300,032 120,200 3,220 22,685 2015 4,464,851 738,600 405,580 265,370 120,650 3,220 22,685 2016 4,233,530 738,600 488,900 289,420 127,850 3,220 22,685 2017p 4,242,140 741,600 459,600 308,854 130,978 3,220 22,685

Notes: *These figures represent Japanese refined recovery of mine output from other countries, including Australia, Canada, Papua New Guinea, Indonesia, and the Philippines. These figures appear to include some production listed for Canada. Source: U.S. Bureau of Mines; CPM Group. May 2017 e -- estimates. p-- projections.

24 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Serbia & Montenegro China Poland Finland Ethiopia Botswana Japan* Total NA -- -- 600 145 -- 8,706 2,305,388 1976 739 -- -- 640 100 -- 9,737 2,555,525 1977 417 -- -- 640 123 -- 10,176 2,077,511 1978 675 -- -- 720 108 -- 12,142 2,356,379 1979 640 -- -- 700 113 -- 12,366 2,409,327 1980 482 -- -- 1,608 125 -- 10,521 2,458,173 1981 418 -- -- 4,147 125 -- 15,411 1,997,574 1982 193 -- -- 2,186 125 -- 21,460 1,996,891 1983 200 -- -- 1,061 125 -- 19,523 2,280,492 1984 250 -- -- 1,125 150 -- 22,216 2,549,680 1985 1,061 -- -- 3,440 64 -- 21,316 2,622,398 1986 772 -- -- 2,218 32 -- 24,209 3,009,580 1987 739 9,002 -- 1,736 32 -- 20,802 3,165,657 1988 739 8,581 -- 2,154 64 -- 33,147 3,565,964 1989 675 7,904 -- 2,315 64 -- 45,976 3,816,456 1990 707 8,130 -- 1,897 32 -- 31,765 4,078,419 1991 610 8,130 -- 1,736 32 -- 20,223 4,081,408 1992 321 8,807 -- 1,640 32 -- 21,252 4,273,695 1993 225 8,456 -- 1,190 32 -- 22,506 4,347,118 1994 192 9,099 -- 1,190 30 -- 22,506 4,674,038 1995 321 8,552 -- 1,993 30 -- 22,506 4,765,095 1996 350 9,002 675 1,252 30 -- 22,506 4,779,935 1997 322 8,788 675 5,000 30 -- 22,506 4,715,365 1998 161 14,468 675 14,178 30 -- 22,506 4,614,408 1999 161 19,505 675 14,178 30 -- 22,506 4,791,683 2000 161 24,113 675 16,397 30 12,000 17,683 5,644,927 2001 -- 21,863 643 16,333 30 12,000 17,000 5,440,434 2002 -- 32,151 643 16,236 30 12,000 17,000 6,065,058 2003 100 41,796 643 16,075 30 15,000 22,500 6,265,642 2004 96 51,441 643 25,721 129 9,645 24,435 6,663,291 2005 64 54,013 643 25,721 161 9,645 24,435 7,031,448 2006 64 64,837 804 25,721 322 22,506 24,756 6,672,034 2007 64 69,054 804 25,721 322 19,290 24,756 6,300,824 2008 64 68,635 804 25,721 257 19,290 25,078 6,013,591 2009 64 67,796 804 16,080 257 18,000 25,078 6,178,342 2010 64 68,481 804 12,860 257 11,900 25,078 6,424,602 2011 64 69,218 804 13,820 257 14,150 25,078 5,718,213 2012 64 69,887 804 13,820 257 14,150 25,078 6,089,572 2013 64 70,553 804 13,820 257 14,150 25,078 4,850,546 2014 64 47,137 804 13,820 257 14,150 25,078 6,122,266 2015 64 48,251 804 13,820 257 14,150 25,078 6,006,628 2016 64 49,248 804 13,820 257 14,150 25,078 6,012,497 2017p

25 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

While Eskom has in recent years slowed lyst scrap was offset by a decline in down its annual tariff increases on min- jewelry scrap last year. ers, near-or medium-term energy constraints cannot be ruled out. It is be- Softer steel and platinum prices saw cause more than 85% of Eskom’s elec- fewer automobiles entering the scrap tricity output comes from coal-fired yard in the first half of 2016, which led plants, and South Africa has yet been to low availability of spent catalytic able to successfully diversify its energy converters especially in Europe and the mix. The cost of fuel is expected to United States. As steel prices re- rebound slightly this year alongside an bounded in the second half of the year, improvement in crude oil prices. The the volumes of catalyst scrap improved; recovery is expected to be mild, how- increasing amount of platinum-rich die- ever, and will do little in terms of add- sel catalyst scrap in Europe also helped ing to costs on a year-on-year basis in pull up the total amount of platinum the coming years. scrap last year. Persistently lower platinum prices hurt jewelry scrap last year, Platinum Secondary Supply which fell 3.2% to 110,200 ounces.

Secondary supply of platinum fell mar- Secondary supply of platinum is ex- ginally to 1.237 million ounces in 2016 pected to fall slightly to 1.233 million from 1.240 million ounces estimated in ounces in 2017. 2015. A moderate increase in auto cata-

PGM Secondary Supply in 1995 PGM Secondary Supply in 2016 Total = 1.71 million ounces Total = 3.9 million ounces

Electronics 12.4%

Jewelry 3.4% Auto Catalyst 31.8%

Electronics 64.3%

Auto Catalyst 85.1% Jewelry 3.9%

26 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Available Platinum Scrap Feedstock and Actual Refined Secondary Platinum Supply Annual, Projected Through 2017

Thousand Troy Ounces Thousand Troy Ounces 1,600 1,600 Electronic Scrap 1,400 1,400 Jewelry Scrap 1,200 1,200 AutoCatalyst Scrap (adjusted for 1,000 refining loss) 1,000

800 800

600 600 TotalSecondary Supply 400 400

200 200

0 0 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 Note: Bars repres ent the PGM content of material theoretically available for recycling. Line repres ents the outturn from refiners. The spread between PGM content in scrap material and refined metal accounts for refining losses and inventory drawndown patterns, which are driven by price trends , dis posable income trends, and price

Platinum Available for Recovery from Spent Auto Catalysts Annual, Projected Through 2017 Thousand Troy Ounces 1,600 China 1,400 Europe 1,200 Japan 1,000

800 United States

600

400

200

0 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017p

27 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Platinum S econdary S upply Thousand Troy Ounces 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Platinum Contained in Hypothetically Available Scrap Material

Spent Auto Catalysts United States 359.4 424.6 550.7 630.4 605.1 608.4 609.7 708.5 697.4 679.6 Western Europe 2.6 4.9 9.5 17.2 27.8 42.1 59.5 78.3 106.9 142.2 Japan 81.5 98.1 114.6 144.1 169.2 195.9 228.6 264.3 294.1 332.0 China N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Subtotal 443.6 527.6 674.8 791.8 802.0 846.3 897.9 1,051.1 1,098.4 1,153.9 % Change 19.0% 27.9% 17.3% 1.3% 5.5% 6.1% 17.1% 4.5% 5.1% % of Total 88.2% 89.9% 91.5% 91.7% 90.9% 84.0% 90.8% 91.0% 89.3% 89.3%

Old Jewelry 59.2 59.3 62.9 72.0 80.0 161.5 88.1 98.4 123.7 125.0 % Change 0.1% 6.2% 14.4% 11.0% ###### -45.4% 11.6% 25.7% 1.1% % of Total 11.8% 10.1% 8.5% 8.3% 9.1% 16.0% 8.9% 8.5% 10.0% 9.7%

EO L El e ctroni cs 3.0 5.8 8.4 13.7 % Change N/M 45.9% 62.2% % of Total 0.3% 0.5% 0.7% 1.1%

Total 502.8 586.9 737.7 863.8 882.0 1,007.8 988.9 1,155.2 1,230.5 1,292.5 % Change 16.7% 25.7% 17.1% 2.1% 14.3% -1.9% 16.8% 6.5% 5.0% Total Refined Platinum from Secondary Sources 455.0 515.0 666.0 750.0 811.0 915.0 900.0 1,040.0 1,130.0 1,180.0 % Change 13.2% 29.3% 12.6% 8.1% 12.8% -1.6% 15.6% 8.7% 4.4%

Notes: Differences in the volume of platinum contained in hypothetically available scrap material and actual refined secondary supply of platinum are due to factors that influence the hoarding and/or release of scrap inventories by collectors. These factors relate mostly to price and economic trends. Additionally, refined supply accounts for refining losses. N/M - Not Meaningful S ource: CPM Group May 2017

28 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

705.2 680.6 678.5 638.2 589.4 539.9 489.3 430.0 373.4 321.4 327.9 332.1 325.5 183.8 233.1 300.1 378.7 528.0 573.4 606.3 625.2 631.1 631.9 646.4 652.8 662.6 329.1 318.6 301.7 298.9 274.2 249.0 223.0 196.9 171.1 148.8 132.4 122.2 116.0 0.1 0.1 0.2 0.2 0.3 0.6 0.8 1.1 1.4 2.1 3.1 4.3 5.9 1,218.2 1,232.4 1,280.4 1,316.0 1,391.9 1,362.9 1,319.5 1,253.2 1,177.0 1,104.1 1,109.7 1,111.4 1,110.0 5.6% 1.2% 3.9% 2.8% 5.8% -2.1% -3.2% -5.0% -6.1% -6.2% 0.5% 0.2% -0.1% 90.0% 88.4% 88.8% 88.4% 90.5% 86.5% 87.4% 87.4% 86.6% 86.4% 87.2% 87.2% 87.5%

116.3 138.6 134.4 139.9 111.3 175.2 149.8 138.6 137.1 126.8 113.9 114.9 105.0 -6.9% 19.2% -3.1% 4.1% -20.4% 57.4% -14.5% -7.5% -1.1% -7.5% -10.2% 0.9% -8.6% 8.6% 9.9% 9.3% 9.4% 7.2% 11.1% 9.9% 9.7% 10.1% 9.9% 8.9% 9.0% 8.3%

18.6 23.2 27.6 32.0 34.1 37.4 39.7 42.2 45.0 47.5 49.7 49.0 53.1 36.2% 24.5% 19.3% 15.8% 6.5% 9.8% 6.1% 6.2% 6.7% 5.6% 4.6% -1.4% 8.4% 1.4% 1.7% 1.9% 2.2% 2.2% 2.4% 2.6% 2.9% 3.3% 3.7% 3.9% 3.8% 4.2%

1,353.1 1,394.2 1,442.4 1,487.9 1,537.3 1,575.5 1,509.0 1,434.0 1,359.0 1,278.4 1,273.3 1,275.3 1,268.1 4.7% 3.0% 3.5% 3.2% 3.3% 2.5% -4.2% -5.0% -5.2% -5.9% -0.4% 0.2% -0.6%

1,230.0 1,280.0 1,315.0 1,376.0 1,220.0 1,525.0 1,460.0 1,330.0 1,322.0 1,250.4 1,262.9 1,275.6 1,232.9 4.2% 4.1% 2.7% 4.6% -11.3% 25.0% -4.3% -8.9% -0.6% -5.4% 1.0% 1.0% -3.3%

29 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Fabrication Demand trend as the Chinese, who account for around 78% of global platinum jewelry Global platinum fabrication demand demand, have reduced their purchases. rose slightly during 2016 to 7.05 million While these factors have been the major ounces, up 0.5% from 2015. Platinum drags on platinum fabrication demand, fabrication demand has struggled to rise there have been pockets of strength in strongly in recent years as changing the market as well. Much of this demand trends for vehicles and jewelry strength has been centered around around the world have hurt demand. demand for commercial vehicles. The generally healthy state of the global Diesel passenger vehicles, which use economy, especially in 2016, helped to platinum intensive catalysts, have fallen drive higher demand for commercial out of favor in Europe which was the vehicles. These vehicles are primarily largest market for such vehicles. At the powered by diesel and therefore have same time, India which was a growing platinum intensive catalyst. market for diesel cars also saw a shift in Furthermore, the larger engine size of demand to gasoline vehicles when the these vehicles demands a larger catalyst. Indian government took away the Both of these factors have been subsidies on diesel fuel. To make supportive of platinum fabrication matters worse, there has been an demand and have to a large extent been ongoing substitution of platinum with able to offset the weakness in demand palladium in diesel auto catalysts. from the diesel passenger vehicle and Jewelry demand has been in a declining jewelry market.

Annual Platinum Fabrication Demand Through 2017 Million Ounces Million Ounces 9 9

8 8 Other Countries Other Uses 7 7 Dental Petrochemical 6 6 Electronics 5 5 Jewelry 4 4

3 3

2 2

1 Automotive 1

0 0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 30 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Platinum demand from the electronics strong bounce during 2016. Passenger sector also is expected to benefit going vehicle sales also rose in Europe, forward as a greater amount of platinum however, market share for diesel is used in place of ruthenium for coating vehicles, which are more important to hard disks. The strength in demand platinum demand, declined during the from these two sectors is expected to year. Platinum fabrication demand in help prevent platinum fabrication Europe reached 1.2 million ounces in demand from declining in 2017. 2016, up 8% from 2015. North America is the second largest source of platinum Platinum Automotive fabrication demand for the auto sector. The North American commercial Platinum demand from the auto sector is vehicle market is the largest in world, estimated to have reached 3.24 million however, around 95% of its passenger ounces in 2016, up 2.0% from 2015. vehicles are powered by gasoline, Healthy demand for commercial making this part of the vehicle market vehicles was the primary driver of this less relevant to platinum fabrication increase in platinum fabrication demand demand. during the year. Platinum demand from the auto sector rose in North America, North American platinum fabrication Europe, and the ‘other’ category, but demand rose to 750,000 ounces in 2016, declined in Japan. up 1% from 2015. The decline in demand for commercial vehicles in The most important auto market for the Japan during 2016 was the primary platinum sector is Europe, where factor reducing platinum demand from demand for commercial vehicles got a the auto sector, with Japanese demand

Automotive Platinum Demand By Region Projected Through 2017 Thousand Ounces Thousand Ounces 4,500 4,500

4,000 4,000 Other Japan Europe United States 3,500 3,500

3,000 3,000

2,500 2,500

2,000 2,000

1,500 1,500

1,000 1,000

500 500

0 0 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

31 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Annual Platinum Use Thousand Troy Ounces

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Auto United States 517 447 478 508 722 811 789 700 675 690 620 579 630 731 880 1,000 1,100 1,050 1,100 1,175 Japan 209 193 170 167 167 174 248 295 325 340 355 400 306 240 246 235 219 225 218225 Europe 14 13 18 24 42 48 71 167 185 215 322 411 475 500 540 560 582 581 622 640 China Other Countries ____ --____ --____ --____ --____ --____ --____ --____ --_____ --_____ --_____ --_____ --_____ 100_____ 120_____ 130_____ 135_____ 150_____ 155_____ 200_____ 250 Subtotal 740 653 666 699 931 1,033 1,108 1,162 1,185 1,245 1,297 1,390 1,511 1,591 1,796 1,930 2,051 2,011 2,140 2,290 % of Total 28.7% 25.9% 30.1% 32.9% 35.8% 35.1% 41.7% 40.0% 37.5% 37.2% 36.4% 37.1% 36.8% 36.9% 37.5% 37.4% 37.1% 34.6% 35.7% 37.1% % Change Year Ago - -11.8% 2.0% 5.0% 33.2% 11.0% 7.3% 4.9% 2.0% 5.1% 4.2% 7.2% 8.7% 5.3% 12.9% 7.5% 6.3% -2.0% 6.4% 7.0% Jewelry Japan 440 624 630 553 624 675 691 868 987 1,061 1,150 1,290 1,318 1,400 1,547 1,641 1,700 1,775 1,590 1,431 United States 51 28 16 10 9 16 12 6 12 13 14 17 19 31 34 63 70 100 140 150 Germany 7 3 10 17 26 31 24 23 24 26 29 35 45 45 49 48 48 48 48 55 United Kingdom 554222112222222226610 France 333233333333333335610 China Other ______103_____ 160_____ 251_____ 407_____ 643_____ 823 Subtotal 506 663 663 584 664 727 731 900 1,028 1,105 1,198 1,347 1,387 1,481 1,738 1,917 2,074 2,341 2,433 2,479 % of Total 19.6% 26.3% 30.0% 27.5% 25.5% 24.7% 27.5% 31.0% 32.5% 33.0% 33.7% 36.0% 33.8% 34.3% 36.3% 37.1% 37.5% 40.3% 40.6% 40.1% % Change Year Ago - 30.9% 0.1% -11.9% 13.7% 9.4% 0.5% 23.2% 14.2% 7.5% 8.4% 12.5% 3.0% 6.7% 17.4% 10.3% 8.2% 12.9% 3.9% 1.9% Electronics United States 150 112 90 75 99 116 104 108 112 125 126 127 126 129 139 145 146 159 167 175 Japan 16 16 19 16 29 39 42 42 48 50 50 52 43 55 57 53 53 55 57 95 Germany 16207 6 9 6 614161818262926283226222225 United Kingdom 18 16 10 9 10 9 10 12 12 12 12 12 11 11 12 12 12 14 14 14 France 1111111************* China Other ____------______Subtotal 201 165 127 107 148 170 162 176 188 205 206 217 209 221 236 242 237 250 260 309 % of Total 7.8% 6.5% 5.7% 5.0% 5.7% 5.8% 6.1% 6.1% 6.0% 6.1% 5.8% 5.8% 5.1% 5.1% 4.9% 4.7%4.3%4.3%4.3%5.0% % Change Year Ago - -18.1% -22.8% -16.1% 38.5% 15.3% -4.8% 8.6% 6.9% 9.0% 0.2% 5.5% -3.7% 5.8% 6.8% 2.5% -2.1% 5.5% 4.0% 18.8% Chemical/Petroleum Refining U.S. Petroleum 144 88 22 38 28 29 31 24 34 92 105 127 105 100 106 110 113 109 109 113 U.S. Chemical 119786475809597811229786487581637588929496 Japanese Petroleum 0------Japanese Chemical 10 10 10 10 16 16 16 16 19 20 20 20 15 20 22 20 32 38 37 38 China Petroleum China Chemical ______Subtotal 273 176 95 123 124 140 144 121 175 209 211 195 195 201 191 205 233 239 240 247 % of Total 10.6% 7.0% 4.3% 5.8% 4.8% 4.8% 5.4% 4.2% 5.6% 6.2% 5.9% 5.2% 4.7% 4.7% 4.0% 4.0% 4.2% 4.1% 4.0% 4.0% % Change Year Ago - -35.4% -46.1% 29.3% 0.8% 12.7% 2.7% -15.9% 45.3% 19.1% 1.1% -7.7% 0.0% 3.1% -5.0% 7.3% 13.7% 2.6% 0.4% 2.9% Dental/Medical United States 26 19 23 17 19 25 23 15 19 20 22 20 21 24 25 25 25 27 29 30 Germany 62 66 48 28 30 27 22 21 29 16 17 20 19 23 24 24 23 22 20 20 United Kingdom 33222221111------France ___22211111111-______-___ -___ -___ -___ -___ -___ -___ - Subtotal 93 90 75 48 52 55 48 38 50 38 41 40 40 47 49 49 48 49 49 50 % of Total 3.6% 3.6% 3.4% 2.2% 2.0% 1.9% 1.8% 1.3% 1.6% 1.1% 1.2% 1.1% 1.0% 1.1% 1.0% 0.9%0.9%0.8%0.8%0.8% % Change Year Ago - -3.3% -16.6% -36.2% 8.2% 5.6% -12.6% -19.4% 29.4% -22.9% 7.2% -3.9% 0.2% 17.5% 5.4% 0.0% -2.0% 2.1% 0.0% 2.0% Other Uses United States 111 101 88 90 94 146 126 74 118 171 174 129 142 113 108 127 132 147 157 164 Japan 257 345 245 210 345 406 61 135 98 50 100 100 90 105 107 105 151 160 168 100 Western Europe 295 241 167 179 164 178 192 203 216 220 223 228 235 231 235 257 270 281 281 291 China ______Subtotal 663 687 500 479 603 730 379 412 432 442 497 457 467 449 450 489 553 588 606 555 % of Total 25.7% 27.2% 22.6% 22.5% 23.2% 24.8% 14.3% 14.2% 13.7% 13.2% 14.0% 12.2% 11.4% 10.4% 9.4% 9.5% 10.0% 10.1% 10.1% 9.0% % Change Year Ago - 3.7% -27.2% -4.3% 26.0% 21.0% -48.0% 8.7% 4.9% 2.2% 12.5% -8.0% 2.1% -3.8% 0.2% 8.6% 13.2% 6.3% 3.1% -8.4% Other Countries 100 90 87 85 82 88 85 95 100 100 110 100 300 324 330 335 335 335 270 250 % of Total 3.9% 3.6% 3.9% 4.0% 3.1% 3.0% 3.2% 3.3% 3.2% 3.0% 3.1% 2.7% 7.3% 7.5% 6.9% 6.5%6.1%5.8%4.5%4.0% % Change Year Ago - -10.0% -3.3% -2.3% -3.5% 7.3% -3.4% 11.8% 5.3% 0.0% 10.0% -9.1% 200.0% 8.0% 1.9% 1.5% 0.0% 0.0% -19.4% -7.4% ______Total 2,576 2,524 2,214 2,125 2,604 2,942 2,656 2,905 3,159 3,344 3,560 3,746 4,109 4,314 4,790 5,166 5,531 5,813 5,998 6,180 % Change Year Ago - -2.0% -12.3% -4.0% 22.6% 13.0% -9.7% 9.4% 8.7% 5.9% 6.4% 5.2% 9.7% 5.0% 11.1% 7.9% 7.1% 5.1% 3.2% 3.0%

Notes: The subtotals for individual uses presented here are the sums of the countries for which data are available; other countries may consume relatively small amounts of platinum for these uses, but estimates are not available. Other uses in Western Europe includes consumption by major end-using industries in European countries, as well and smaller using industries throughout Western Europe. Japanese petroleum industry demand is included in chemical industry statistics beginning in 1981. Totals may not equal the sums of categories due to rounding. * -- less than 500 ounces. p - projections. Chinese demand is broken out beginning 2000 Source: CPM Group. May 3, 2017

32 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p Auto 1,200 1,100 1,000 975 1,000 1,010 920 850 620 420 475 546 590 637 675 743 750 754 United States 290 340 430 510 615 618 625 595 590 470 555 499 574 580 615 587 578 584 Japan 670 900 1,045 1,300 1,600 1,925 2,125 2,150 1,950 1,100 1,166 1,189 1,023 1,002 1,073 1,158 1,216 1,228 Europe 32 40 53 74 107 90 123 162 186 256 359 367 369 408 388 363 386 375 China _____268 _____ 310 _____ 347 _____ 376 _____ 368 _____ 410 _____ 417 _____ 438 _____ 439 _____ 494 _____ 526 _____ 571 _____ 597 _____ 607 _____ 373 _____ 321 _____ 306 _____ 324 Other Countries 2,460 2,690 2,875 3,235 3,690 4,053 4,210 4,195 3,785 2,740 3,081 3,173 3,153 3,234 3,123 3,173 3,236 3,265 Subtotal 38.3% 41.9% 43.9% 48.0% 52.0% 54.7% 54.5% 54.3% 54.2% 43% 46% 45% 44% 45% 45% 45% 46% 46% % of Total 7.4% 9.3% 6.9% 12.5% 14.1% 9.8% 3.9% -0.4% -9.8% -27.6% 12.4% 3.0% -0.6% 2.6% -3.4% 1.6% 2.0% 0.9% % Change Year Ago Jewelry 1,060 750 780 665 560 510 500 490 450 350 310 290 292 280 269 279 283 274 Japan 200 120 130 120 100 80 75 62 59 60 65 60 62 60 61 68 72 72 United States 52 50 48 45 40 38 35 30 27 30 30 27 26 22 22 22 23 23 Germany 36 39 40 37 33 32 30 25 22 23 22 21 22 17 17 17 17 17 United Kingdom 111010876532333222222 France 949 1,105 1,059 1,031 964 889 935 1,062 1,058 1,752 1,616 1,840 1,988 1,940 1,901 1,825 1,780 1,762 China _____80 _____ 85 _____ 90 _____ 100 _____ 115 _____ 120 _____ 110 _____ 100 _____ 80 _____ 65 _____ 80 _____ 90 _____ 110 _____ 122 _____ 130 _____ 133 _____ 152 _____ 150 Other 2,388 2,159 2,157 2,006 1,819 1,675 1,690 1,772 1,698 2,283 2,126 2,331 2,502 2,443 2,401 2,346 2,328 2,301 Subtotal 37.2% 33.6% 32.9% 29.8% 25.6% 22.6% 21.9% 22.9% 24.3% 35.6% 31.5% 33.0% 34.9% 33.8% 34.3% 33.5% 33.0% 32.6% % of Total -3.7% -9.6% -0.1% -7.0% -9.3% -7.9% 0.9% 4.9% -4.2% 34.5% -6.9% 9.7% 7.3% -2.3% -1.7% -2.3% -0.8% -1.2% % Change Year Ago Electronics 140 108 95 90 85 85 85 80 60 45 35 36 37 36 35 35 34 36 United States 87 80 55 60 50 64 75 65 58 40 38 20 21 19 19 20 22 25 Japan 241814121212121110998888999 Germany 14107666654645322224 United Kingdom * * * * * * * * * * * * * * * * * * France 48 51 53 55 56 56 58 61 65 64 64 64 62 63 63 63 63 63 China ____---- ______16 ____ 19 ____ 22 ____ 29 ____ 20 ____ 40 ____ 50 ____ 65 ____ 60 ____ 62 ____ 62 ____ 63 ____ 63 ____ 65 Other 313 267 224 223 225 242 258 251 217 204 200 198 191 189 189 192 192 202 Subtotal 4.9% 4.2% 3.4% 3.3% 3.2% 3.3% 3.3% 3.3% 3.1% 3.2% 3.0% 2.8% 2.7% 2.6% 2.7% 2.7% 2.7% 2.9% % of Total 1.3% -14.8% -16.0% -0.6% 1.0% 7.6% 6.6% -2.7% -13.5% -6.0% -2.0% -0.7% -3.5% -1.1% -0.2% 1.8% 0.1% 5.0% % Change Year Ago Chemical/Petroleum Refining 117 115 120 122 125 130 132 135 150 135 140 145 147 147 149 145 138 138 U.S. Petroleum 100 80 100 103 107 110 112 115 125 112 130 135 136 136 138 140 135 135 U.S. Chemical 0 0 5 5 5 5 5 10 16 14 15 12 15 14 14 13 12 11 Japanese Petroleum 39 25 30 40 40 50 50 55 55 52 53 46 52 51 51 52 50 49 Japanese Chemical 79 81 83 88 89 92 100 107 113 131 144 152 157 161 165 170 170 171 China Petroleum ____46 ____ 49 ____ 50 ____52 ____ 54 ____ 58 ____ 66 ____ 73 ____ 83 ____ 76 ____ 98 ____ 102 ____ 109 ____ 115 ____ 125 ____ 128 ____129 ____ 130 China Chemical 381 350 388 409 421 445 465 496 542 520 579 592 616 624 642 647 634 635 Subtotal 5.9% 5.5% 5.9% 6.1% 5.9% 6.0% 6.0% 6.4% 7.8% 8.1% 8.6% 8.4% 8.6% 8.6% 9.2% 9.2% 9.0% 9.0% % of Total 54.2% -8.1% 10.8% 5.6% 2.8% 5.7% 4.6% 6.6% 9.3% -4.1% 11.4% 2.2% 4.0% 1.4% 2.9% 0.7% -2.0% 0.1% % Change Year Ago Dental/Medical 31 32 32 32 33 33 34 35 36 32 31 28 25 25 24 24 23 23 United States 21 20 20 20 21 22 25 25 23 22 22 18 18 15 14 13 13 13 Germany ------United Kingdom ___------______France 52 52 52 52 54 55 59 60 59 54 53 46 43 40 38 37 36 36 Subtotal 0.8% 0.8% 0.8% 0.8% 0.8% 0.7% 0.8% 0.8% 0.8% 0.8% 0.8% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% % of Total 4.0% 0.0% 0.0% 0.0% 3.8% 1.9% 7.3% 1.7% -2.1% -8.1% -1.9% -13.2% -6.5% -7.0% -5.0% -3.9% -2.1% 0.7% % Change Year Ago Other Uses 175 155 155 153 162 175 173 154 156 148 154 160 161 160 159 159 160 157 United States 100 125 115 105 130 135 140 100 105 95 100 93 98 90 88 89 89 88 Japan 300 298 310 315 319 337 335 302 290 265 266 240 225 208 206 205 206 208 Western Europe ____25 ____ 30 ____36 ____ 40 ____45 ____ 51 ____ 58 ____ 62 ____ 72 ____ 70 ____78 ____ 82 ____ 79 ____ 81 ____ 83 ____ 85 ____87 ____ 89 China 600 608 616 613 656 698 706 617 623 578 598 575 563 539 536 538 541 541 Subtotal 9.3% 9.5% 9.4% 9.1% 9.2% 9.4% 9.1% 8.0% 8.9% 9.0% 8.9% 8.1% 7.8% 7.5% 7.6% 7.7% 7.7% 7.7% % of Total 8.1% 1.3% 1.3% -0.5% 7.1% 6.5% 1.1% -12.6% 1.0% -7.3% 3.5% -3.9% -2.0% -4.3% -0.6% 0.4% 0.7% 0.1% % Change Year Ago 232 290 239 204 232 240 333 332 61 38 115 145 109 149 77 77 79 75 Other Countries 3.6% 4.5% 3.6% 3.0% 3.3% 3.2% 4.3% 4.3% 0.9% 0.6% 1.7% 2.1% 1.5% 2.1% 1.1% 1.1% 1.1% 1.1% % of Total -7.0% 24.8% -17.7% -14.5% 13.4% 3.6% 39.0% -0.4% -81.5% -37.2% 198.8% 26.1% -24.8% 36.7% -48.3% 0.0% 2.6% -5.1% % Change Year Ago ______6,426 6,415 6,551 6,742 7,096 7,408 7,721 7,723 6,985 6,417 6,751 7,060 7,177 7,219 7,007 7,010 7,047 7,055 Total 4.0% -0.2% 2.1% 2.9% 5.3% 4.4% 4.2% 0.0% -9.6% -8.1% 5.2% 4.6% 1.7% 0.6% -2.9% 0.0% 0.5% 0.1% % Change Year Ago

]

33 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

coming in at an estimated 578,000 crisis. Europe, a laggard in the ounces, down 1.5% from 2016. Demand economic recovery post the Great was a mixed bag in the ‘other’ category. Recession, is showing signs of China, which is the largest of these economic strength. The United States markets, showed an increase in demand, on many economic fronts is at or above as did India. However, weakness in levels seen prior to the recession, China vehicle demand from most other is showing signs of stability, and India countries in this category, weighed on too has been able to eke out healthy platinum demand from the auto sector. growth despite some domestic Demand for platinum from this sector is challenges. Japan’s gross domestic forecast to continue rising, however, the product (GDP) grew for all four pace of growth is expected to slow quarters of 2016, which was the first significantly. Platinum demand from the time this has happened since 2005. This auto sector is forecast at 3.26 million group of countries accounts for around ounces in 2017, up 0.9% from 2016. 72% of global GDP.

After years of accommodative monetary This improvement in economic policies by most central banks around growth bodes well for commercial the world, the major countries and vehicle demand as business regions of the global economy have for investment in these vehicles is closely once shown signs of improving in tied with an improvement in unison, unlike the pattern of rolling sentiment driven by real economic recessions since the global financial growth. Growth for commercial YTD Commercial Vehicle Sales Growth by Region Data for February 2017

8% 8%

6% 6%

4% 4%

2% 2%

0% 0% U.S. Europe Japan India Brazil

Note: Commercial vehicle sales growth in China was excluded from 2017 YTD calculation. The strength in data skewed the chart. Commercial vehicle sales grew 27.7% during the first two months of 2017.

34 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 vehicles has been growing over the past demand for commercial vehicles, several years, which has overall been a weighing on demand for platinum. positive for platinum fabrication demand. Commercial vehicles, which Among the passenger vehicle markets, are primarily diesel engines, have the most important one for platinum platinum intensive catalysts. fabrication demand is Europe. This is Furthermore these catalysts are due to the large diesel passenger car significantly larger than those fitted on market in this region. That said, diesel’s passenger vehicles which help boost market share in Europe has been on the platinum demand further. Cumulative decline since 2011 when it peaked at commercial vehicle sales in the U.S., 55.7% of new passenger car sales in China, Europe, Japan, India, and Brazil Western Europe. In 2016, diesel stood at 18.7 million in 2016, up from accounted for 49.5% of total passenger 17.6 million in 2015 and 16.3 million in vehicle sales. Diesel has been not only 2013. This group of countries accounts losing market share to gasoline but also for around 75% of global commercial to the increase in demand for hybrid, vehicle demand. electric, and alternative fuels such as LPG and natural gas vehicles. In 2016, While it is CPM Group’s expectation gasoline accounted for 45.8% of market that economic growth will continue share, meanwhile, the remaining 4.8% globally during 2017, there is a was taken up by alternative fuels and heightened possibility that a political newer technologies. disaster in some corner of the world could disrupt growth. If this were to The recovery in European economic occur and global economic growth was growth during 2016 helped boost to slow, it could adversely affect passenger vehicle sales to 15.1 million

Monthly Commercial Vehicle Sales

Thous Units 2,000 2013 2014 2015 2016 2017 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 JFMAMJJASOND Notes: Countries/regions includedin this data series are China, US, Europe, Japan, India, and Brazil. These countries/regions account for 75% of global annual sales. Sources: national auto associations, OICA, Bloomberg

35 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Commercial Vehicle Sales in Major Developed Auto Markets

Y-o-Y % Chg. Y-o-Y % Chg. 40% 25.0%

USA Europe Japan 30% 20.0% 15.0% 20% 10.0% 10% 5.0%

0% 0.0%

-10% -5.0% -10.0% -20% -15.0%

-30% -20.0%

-40% -25.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Commercial Vehicle Sales in Major Developing Auto Markets Y-o-Y % Chg. Y-o-Y % Chg. 60% 60% China Brazil India

40% 40%

20% 20%

0% 0%

-20% -20%

-40% -40%

-60% -60% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

36 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 during the year, up from 14.1 million in in developed countries is becoming 2015. The recovery, as mentioned increasingly difficult with traditional above, is expected to continue into 2017 catalysts. The SCR catalyst system is and has been reflected in the healthy more efficient at reducing toxins. It is a sales during the first two months of the more expensive catalyst system, year. Total vehicle sales, passenger however, which has made it more vehicles as well as commercial vehicle popular in large commercial vehicles sales, during this period reached 2.6 such as trucks and buses and high end million, up from 2.45 million vehicles cars. The SCR catalyst itself does not during the corresponding period in contain any PGMs, with PGMs used 2016. Economic growth could slow in only in the downstream catalysts to the latter half of the year as there are ensure that emissions remain low even several risks to not only European when exhaust temperatures drop. The economic growth but to global growth impact of SCR catalysts is an overall as well. reduction in the use of PGMs per vehicle. A relatively new development that is hurting the use of PGMs in catalysts is Europe the growing popularity of Selective Catalytic Reduction (SCR) systems that Engine Sizes: Getting Smaller are being fitted to a variety of vehicles but primarily to platinum intensive The average engine size of cars being large commercial vehicles. These sold in Western Europe began declining catalysts, using urea, have been used in at a rapid rate after 2007. The average stationery site catalysts since the 1980s. cubic capacity of a new registered car Meeting tightening emissions standards went from 1,740 cm3 in 2007 to 1,625

Average Engine Size - Europe

Engine Size (CC) Engine Size (CC) 1,750 1,750

1,700 1,700

1,650 1,650

1,600 1,600

1,550 1,550

1,500 1,500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: ACEA. CPM Group 37 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM cm3 in 2009. There was a brief period have a smaller surface area to coat with during which average engine capacity PGMs. increased again to 1,647 cm3. The average engine size resumed its Evolving Trends In Diesel - Gasoline downward trend in 2013 and in 2016 Engine Market Share the average engine size was down to 1,600 cm3 the lowest it has been since Among the major auto markets of the 1990. world, Europe has been the largest source of demand for diesel passenger The decline in engine size is not vehicles. The 1990s and 2000s saw a expected to reverse over the next ten growth in positive consumer sentiment years, at least not in any meaningful toward diesel vehicles as a solution to way. The move toward more fuel the problem of global warming. Diesel efficient cars in developed economies is vehicles emit lower levels of expected to be an ongoing shift in greenhouse gasses and also were seen as demand. being more fuel efficient than their gasoline counterparts. This positive Furthermore, and more importantly, sentiment toward diesel was further Europe has generally tended to favor supported by European governments smaller cars, especially relative to the that reduced taxes on diesel fuel, North American market. Holdings all making it cheaper for consumers factors that influence PGM loadings in relative to gasoline. This resulted in auto catalyst constant, smaller vehicles diesel’s share of Western Europe’s typically require smaller catalyst and passenger car market rising from around

Diesel's Market Share of Major Passenger Car Markets

60% Western Europe 50% India United States Japan 40%

30%

20%

10%

0% 1990 1993 1996 1999 2002 2005 2008 2011 2014 Note: Japanese data is diesels as a percent of cars in use. U.S. data is estimated for 1990 through 2001. Sources: Historical data-JAMA, ACEA, CAAM,news articles. Projections & estimated data-CPM Group

38 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 14% in 1990 to a peak of 55.7% in reductions in the tax subsidies for diesel 2011. fuel sold in the region it would dramatically reduce the amount of This positive European attitude toward diesel passenger cars sold in Europe. It diesel has been reversing since 2011. is important to note that diesel vehicle Instead, negative sentiment and popularity in Europe is a relatively attitudes toward diesel have been recent construct, since the 1990s, and growing in Europe. It has become was the result of government subsidies apparent to the public that while there and pro-diesel programs. The are benefits to diesel over gasoline in preference for diesel vehicles was not emitting relatively lower green house deeply ingrained in European consumer gases these benefits were beginning to psyches, was heavily influenced by be outweighed by problems such as an government subsidies, and even at their increase in the level of nitrogen oxide peak market penetration in 2011 only emissions and particulate matter. The accounted for 55.7% of the European decline in diesels’ market share in the small vehicle market. Nearly half of the passenger vehicle market has been passenger vehicles in Europe remained gradual to date, however, 2016 marked petrol based. the first year when diesel vehicles accounted for less than the majority of The decision to completely remove passenger cars sold in Europe. the diesel tax subsidy is a tough decision for governments to make, In 2016 new diesel car registrations however, given the amount of accounted for 49.5% of total passenger investments European auto vehicle registrations, the lowest level manufactures and petroleum refiners since 2005. A large part of the reason already have made into building why the decline has been gradual may diesel technology and the large diesel be that diesel fuel still is cheaper than distillation capacity built in Europe. gasoline, which incentivizes buyers to The possibility that these subsidies do still opt for diesel passenger cars. not go that easily or are only phased out over time may help to make the decline The trend of declining diesel vehicle in diesel’s market share in Europe more market share is expected to continue gradual. in Europe in the years ahead. There is some push back from governments with This reduction in diesel market share regards to the sales of diesel passenger is expected to weigh on platinum vehicles in large cities like London and fabrication demand from the Paris. Furthermore, the Volkswagen European auto market over the long diesel vehicle emissions violations term. revealed in September 2015 fortified the negative sentiment toward diesel There are several factors including passenger vehicles in Europe. fuel costs and fuel efficiency that presently favor diesel passenger If negative consumer sentiment in vehicles over gasoline vehicles in Europe toward diesel is met with further Europe. Despite these demand-

39 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM supportive factors, demand for diesel India passenger vehicles in Europe has been declining since 2012 and is likely Changing Market Share Of Gasoline to decline further in the future. And Diesel Engines

The Bottom Line For Europe India was a major auto market with significant potential to grow into a In Europe where the cost of diesel fuel larger consumer of diesel passenger is meaningfully lower than gasoline, vehicles. In late 2014, however, the demand for diesel powered cars is government removed diesel subsidies, forecast to persist for years. allowing the price of diesel to be Additionally these cars are more fuel determined by market forces. This efficient than gasoline vehicles, which shrank the spread between diesel and increases the benefit of owning diesel gasoline and reduced the level of powered vehicles in Europe. demand for diesel passenger cars, which Despite these existing benefits, often are more expensive than their however, demand for these vehicles in gasoline counterparts. Added to this the Europe has declined in recent years. government increased the tax on diesel This reflects a combination of negative vehicles (infrastructure cess or levy) sentiment toward diesel cars, increasing more than on gasoline vehicles in the fuel efficiency in gasoline vehicles, and 2016-17 fiscal year, which is expected an alternative to reducing emissions by to further deter demand for diesel opting for electric or hybrid electric vehicles going forward. vehicles. Electric and hybrid electric vehicles are still a very small market. At its peak, diesel is estimated to have However, both auto makers as well as accounted for around 45%-47% of total governments are trying to push for new car registrations. Following the increased usage of these vehicles. It removal of the subsidy the demand for could be years before electric or these vehicles almost immediately has hybrid vehicles meaningfully reduce declined to around 35% of new car demand for internal combustion registrations. In the future there could engines. Nonetheless, the ball has be periods when the spreads between started rolling. gasoline and diesel widen, in favor of diesel. There is no guarantee that such an increase in spreads will drive demand for diesel vehicles higher, however, as the consumer may remain wary of a shrinking in the spread now that the fuel price is driven by market forces.

40 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

This reduction in market share will have and to shelter themselves from the a longer term negative impact on ongoing possibility of a run up in prices. fabrication demand for platinum, the primary metal used in auto catalysts. That said, consumers tend to make the purchases of their vehicles with a Alternate Power Technologies: shorter term view. As a result, the HEV, PHEV, EV/BEV weakness in gas prices has reduced the urgency on the part of some of these Various alternate power train buyers to make the switch just as many technologies are now a commercial consumers, especially in the U.S., have reality. That said, these technologies purchased light duty trucks in favor of account for a very small percentage of cars in the low gas price environment. the global auto market and that is likely to be the case at least in the medium Hybrid Vehicles term. One of the common factors that has been weighing on demand for these Hybrid vehicles fall broadly into two vehicles in recent years has been the categories, hybrid electric vehicles softness in gasoline prices. The cost of (HEV) and plug-in hybrid electric fuel is one of the key incentives for (PHEV). HEV are powered by both an consumers to opt for alternate internal combustions engine and an technologies, to save on the cost of gas electric motor which uses power stored

Hybrid Vehicles, Electric Vehicles and Global Light Duty Vehicle Sales Annual, Projected Through 2017

Million Units 80 All Other Light Duty Vehicles Hybrid Vehicles Battery Electric Vehicles 70

0 09 10 11 12 13 14 15 16 17p

41 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM in a battery. The primary source of car will be around the same amount power for these cars is the internal as an internal combustion engine. combustion engine with the battery This is even truer in the case of diesel acting more as a backup. The battery is hybrids because diesel engines typically charged from regenerative braking have lower exhaust gas temperatures, (captures energy lost during braking) but it is also true in the case of gasoline and the internal combustion engine. The engines. Depending on the battery cannot be charged by an off- configuration of different hybrids, the board source. PGM loadings in auto catalysts can be higher or lower than the typical case PHEV are primarily powered by their stated above. batteries with the internal combustion engine acting more as a backup. The Electric Vehicles batteries on these vehicles can be charged using electricity from the grid There has been a significant push both as well as by regenerative braking and from industry and governments around the internal combustion engine. Also the the world to produce mass market batteries on these vehicles are larger electric vehicles or battery electric than in the HEVs. vehicles (EVs/BEVs). Pure electric vehicles do not and will not require In both these variants of hybrid auto catalysts. This is because they do vehicles, the extra power provided by not themselves produce any kind of the electric motor (powered by the emissions. battery) allows for a smaller internal combustion engine. As mentioned Demand for these vehicles has been above, holding all else equal, smaller small so far but is expected to increase engines typically require lower PGM going forward as some of the concerns loadings in their auto catalysts. that have held consumers back are resolved. Furthermore there seems to be However, because HEV and PHEVs do a strong push among some governments not have a continuously working to incentivize consumers to purchase combustion engine the engine electric vehicles, especially in Europe. temperatures are lower in these vehicles. The engine’s operating Risks To Electric Vehicle Demand temperature is an important variable in the catalytic process. PGMs loaded in There are numerous challenges facing the auto catalyst can convert harmful mass adoption of electric vehicle emissions into less harmful gases more technology, which should take several effectively at higher temperatures. To years to be overcome. There are serious compensate for some of the lost efforts being made by governments, efficiency occurring due to lower auto makers, and entrepreneurs to temperatures a greater amount of PGM overcome these challenges. may be used. In this way, the total amount of PGMs loaded in the auto catalyst of a hybrid electric vehicle

42 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Vehicle Cost pump. The sharp decline in gas prices since the middle of 2014 has reduced One of the biggest impediments to incentive among buyers who are demand for electric vehicles has been looking to save money on gas to buy and continues to be the cost of owning these cars, especially as they are sold at these vehicles. A compact car powered a premium to internal combustion cars by an internal combustion engine in the same class. typically costs between $18,000 to $20,0000 in the United States. An Driving Range electric vehicle in the same class (Tesla Model 3, Nissan Leaf) would cost One concern many drivers have had and between $30,000 and $35,000. These that has prevented them from adopting prices are without government the electric vehicle technology is the incentives, however, which in the limited driving range on a full change. United States are $7,500 at the Federal For a majority of the compact electric level and then there are other incentives vehicle presently available in the market provided by individual state the typical driving range on a full governments. These incentives help charge is around 80 miles. Even though narrow the gap between the cost of a most drivers do not drive beyond the pure electric and a comparable average range available to electric internal combustion engine. Similar vehicles at present, there is an anxiety incentives are being offered by associated with this limitation. governments all around the world. Consumers driving cars powered by Governments will play a critical role in internal combustion engines at present driving demand for these vehicles, at know that they have no limitations on least initially, until the time that range as long as they have fuel in their sufficient vehicles are produced to drive tanks. Refueling only takes a few costs down. minutes. In contrast, recharging EVs' batteries takes several hours. The largest cost component of electric Two developments are expected to take vehicles is the battery costs. While care of this concern going forward. The still high, they have declined first is an increase in energy density of substantially in the past few years batteries, which has been growing over and are expected to continue the past several years but is expected to declining going forward. In 2010 grow at an exponential pace going batteries were costing around $600 per forward. Each battery will essentially kwh. These costs are now down to pack more power than batteries between $145 to $200 per kwh. presently available in the market.

Fuel Costs Additionally there is an increase in the number of fast charging ports being While many consumers are interested in installed. At a fast charging station a 20 purchasing an electric vehicle for all of minute charge can get you a 50 mile to its environmental benefits they are also 70 mile range. This contrasts with a interested in saving money at the level 2 charging station which gets you

43 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

20 miles for an hour of charging and a Environmental Benefit level 1 charger which gets you 5 miles for an hour of charging. Many consumers, especially in developed countries, may demand this Infrastructure vehicle because it is emission free. The electricity used to power these vehicles The most important component of the will largely be produced by burning infrastructure is the charging stations or coal, however. Therefore the use of electric vehicle supply equipment electric vehicles (if using coal as the (EVSE). This infrastructure is important primary source of electricity production, to get more consumers to adopt the which is the case in most parts of the electric vehicle technology as it would world) is to a large part diverting the boost their confidence to drive long negative environmental impact of distances without worrying about burning fossil fuels from being burnt by running out of charge. Like with other a car to being burnt by an electricity aspects of the electric vehicle market generating facility. The more apparent there has been a strong amount of this fact becomes, the lesser will be the growth in this sector as well but there is demand from consumers purchasing still ways to go. Not only in there a need these cars to reduce emissions. to introduce more charging stations but also charging stations that charge fast. That said, while electric cars are not This is expected to happen in due technically emissions free they still course of time. produce significantly less emissions than a car powered by gasoline. An One area of focus in rechargeable electric vehicle produces around 5,000 batteries even for other electronics like pounds of CO2 equivalent emissions phones is to get them to charge at a compared with around 12,000 pounds faster pace. With regard to volume of by a gasoline car. This is a significant charging stations, this has grown from difference. around 48,000 (2,000 fast charging stations) at the end of 2012 to 110,000 Adoption Of New Technology (15,000 stations) at the end of 2015. Consumers are generally slow to adopt Setting up the required infrastructure new technology, especially when there and meeting electricity demand could are known alternatives that exist in the be a bigger challenge in developing market to meet the same purposes (in countries. This is an important factor this case internal combustion cars). as many of these markets are Hybrid vehicles are an good example, expected to be the growth engines of where after several years of being in the the global auto market going market they still account for only a forward. minuscule portion of the auto market. If new technology meets a need that was not being met by existing technology there is a chance of faster adoption, for

44 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 example a cell phone. This technology quickly gained traction as it filled a Furthermore, the biggest effort made by void. Landlines had limitations which research related to fuel cells is the need were met by cell phones. The primary to reduce the platinum use, if not purpose of an electric car, which is to eliminate it. The amount of platinum aid in transport, is essentially being met used per unit of energy output today is by internal combustion vehicles, which perhaps less than 5% of what was will make it harder for consumers to required in the 1960s – 1980s, with a move toward this technology. further sharp reduction over the next couple of years. ALTERNATE DEMAND SOURCES Some commercialization of fuel cells Fuel cells for stationary and vehicular use of fuel cells has occurred. Most of the platinum Fuel cells have been commercialized. used in commercial application is in That said, they are a long way from fork lift trucks and buses. Fuel cells also competing with some of the new are starting to appear in commercial and technologies like hybrids and electric residential properties, often as backup vehicles that have hit the markets in power sources. The reliability of such recent years and significantly behind, as power sources remains uncertain, as are all of these new technologies, diesel some of the early innovators who and gasoline engines. installed fuel cell back-up systems found they failed to work when they

Projections of Future Platinum Use in Fuel Cells -- Always Optimistic

Troy Ounces Troy Ounces 700,000 700,000 Projections have been overly optimistic for decades 2003 1995 600,000 The year in which each projection was made is shown 600,000 above each bar 1991 500,000 500,000

400,000 400,000 1980

300,000 300,000 1995 200,000 200,000

Actu al u se... mostly in 100,000 100,000 research models

0 0 1988 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2000 2001 2002 2003 2004 2005 2005 2006 2007 2008 2009 2010 2010 2010 2011 2012 2013 2014 2015

45 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM were needed. Despite the technical and for fuel cells vehicles, demand for economic lack of viability, the growth platinum is not only expected to be in stationary fuel cells is rising, albeit reduced on a per unit basis but is also slowly. Only a couple of thousand of unlikely to gain much from sales ounces have been used in such systems volumes of vehicles either. over the past few years. Fuel Cell Passenger Vehicles Fuel cells have some benefits over those of BEV at this time, in that they can be There also are some fuel cell passenger refueled quickly and have longer cars and small trucks in operation. driving ranges, two important Some auto makers are discussing concerns for BEV as they stand right having as many as 30,000 fuel cell cars now. One of the biggest hurdles for sold per year over the next five years fuel cell technology in vehicles is the while others are estimating 70,000 such setting up of refueling infrastructure. vehicles being sold per year at the end Not only are there very few hydrogen of the next ten years. That said, many refueling stations, but these also are auto industry executives consider these very expensive to set up at around two projections overly optimistic. One of the to three million dollars each. It is basis for these projections is that there estimated that there are around 100 will be a greater number of offerings in hydrogen refueling stations globally the market over the next several years. versus tens of thousands of electric The auto companies planning to charging stations for BEV and PHEV. produce these limited numbers of fuel cell vehicles have directed their It should also be noted that the primary suppliers that they only will move source of hydrogen fuel at this time is forward if the platinum loadings are from fossil fuels, reducing the green reduced by at least another 50% from appeal of these vehicles. current levels. As of 2016, on average, fuel cells in passenger cars were using 1.1 ounces of platinum. This demand to further reduce the amount of platinum per vehicle, while not an unusual expectation, is not a very positive factor for platinum demand from this sector. It is common to see a great deal of effort taken to reduce the per unit usage of precious metal in various fabricated uses, often the total demand for precious metals grows from the high volume (demand) of the final product. Based on present projections

46 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Global Auto Sales Annual, Projected Through 2017 Million Vehicles Million Vehicles 100 100

90 90

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

- - 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p

Note: Figures include both passenger vehicles and commercial vehicles

47 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Vehicle Sales in Brazil, Russia, India and China Annual, Projected Through 2017

MillionVehicles MillionVehicles 40 40

35 35 India China Russia Brazil 30 30

25 25

20 20

15 15

10 10

5 5

- - 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p

Note: Figures include both passenger vehicles and commercial vehicles

Vehicle Sales North America, Europe, and Japan Annual, Projected Through 2017

MillionVehicles MillionVehicles 50 50 North America Europe Japan 45 45

40 40

35 35

30 30

25 25

20 20

15 15

10 10

5 5

- 0 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Note: Figures include both passenger vehicles and commercial vehicles

48 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Jewelry the difficulty associated with working with platinum. There is also a very high Platinum demand from the jewelry content of platinum used in making sector continued to decline for the platinum jewelry unlike in the case of fourth consecutive year during 2016, gold jewelry were the gold content in slipping to 2.32 million ounces during jewelry can range from around 58% to the year. This was the lowest level of 93% in the case of platinum jewelry the demand from the jewelry sector since platinum content is typically 95%. The 2010. Platinum jewelry demand, like difficulty of working with platinum other jewelry demand, is greatly coupled with the required high content influenced by the price level and price of platinum offset to a degree the volatility of the metal, the incomes of benefit of lower platinum prices. populations purchasing this jewelry and the level of advertising dollars spent. Reduced demand from China is another Even as the price of platinum has factor that has been weighing on declined over the past several years, it demand. China is the largest platinum has had a limited positive impact on the jewelry market in the world, accounting demand for platinum jewelry. This is for approximately 78% of global because there are various other factors platinum jewelry demand. That said, that are working against demand. For demand for platinum from the jewelry one, while the price of platinum has sector has been on the decline in the declined the making charges of past few years. Relatively slower platinum jewelry are very high due to income growth in recent years as a

Platinum Jewelry Demand and Prices Annual Data, Projected through 2017 Thou. Oz. $/Ounce 2,800 2,100

2,400 1,800

2,000 1,500

1,600 1,200 China 1,200 900

Japan 800 600 Other 400 300

0 0 1976 1981 1986 1991 1996 2001 2006 2011 2016p

49 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

result of a relatively slower economic sell platinum jewelry to customers at a growth has weighed on demand for premium to gold jewelry. luxury items like platinum jewelry. This is already beginning to show. Demand for platinum jewelry in India has been growing at an aggressive pace Demand for platinum jewelry is gaining over the past few years. The strong popularity in the urban parts of India. growth rate is based on both a shift There has been a move away from away from gold among the youth and heavy gold jewelry among younger the fact that total demand is still fairly generations in favor of either lighter low in India, therefore the growth rate is karat gold jewelry or platinum jewelry. much higher. Platinum jewelry demand There is a significant push by the in India was estimated at around 32,000 Platinum Guild to promote the use of ounces in 2016. platinum in jewelry by advertising it as desirable. This sort of advertising is Demand was hurt to some extent, as important to build a market for jewelry was the case with gold jewelry as well, given its non essential purpose. Demand due to the demonetization of currency is further supported by Indian jewelers during the last quarter of 2016. Demand that continue to promote the use of is expected to rise in 2017 to around platinum jewelry. This is especially true 35,300 ounces. since 2015 when the price of platinum declined below that of gold and still jewelers were able to and continue to

Platinum Jewelry Demand in Japan, China, The United States, and Europe Annual Data, Projected Through 2017 Thou Ounces Thou Ounces 2,500 2,500 Japan United States

2,000 China Europe 2,000

1,500 1,500

1,000 1,000

500 500

0 - 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15

50 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Electronics the demand for platinum should rise rapidly. Platinum's role in electronics largely is restricted to the metal being used to coat Chemical and Petroleum Catalysts hard disks. The use of platinum on hard disks helps improve the disk’s capacity Platinum use in chemical and petroleum to store information. Technological refining catalysts declined during 2016. developments in the works over the past Weaker oil prices coupled with a few years are expected to be ratcheting down in Chinese economic commercialized in 2017. The new growth weighed on the addition of new technology for coating medias (the capacity in this space. Platinum demand components coated with the two metals) from the sector slipped to 634,000 in hard drives is expected to increase ounces in 2016, down 2% from 2015. the amount of platinum being used at That said, despite the decline this was the cost of ruthenium. This increased the third highest level of platinum use of platinum in favor of ruthenium in demand from this source. Demand is hard drives is expected push up forecast to rise marginally to 635,000 platinum demand from this sector for ounces in 2017. the first time in several years. Platinum demand from the electronics sector is forecast to rise to 202,000 ounces in 2017, up from 192,000 ounces in 2016. The phase-in period is expected to be three or four years. During this period

Platinum Electronics Demand

Thousand Ounces Thousand Ounces 350 350

300 300

250 250

200 200

150 150

100 100

50 50

- - 77 80 83 86 89 92 95 98 01 04 07 10 13 16 51 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

China Platinum Supply And Demand Thousand Troy Ounces 2000 2001 2002 2003 2004 2005 2006 2007 2008 S upply Mine Production 202422324251546569 % Change Year Ago 23.6% -9.3% 47.1% 30.0% 23.1% 5.0% 20.0% 6.5% Secondary Supply474950515256606873 % Change Year Ago ______4.9%______1.4%______2.0%______3.5%______7.5%______6.9%______12.7%______8.3% Total Supply 66 73 71 83 94 108 114 133 142 % Change Year Ago 10.4% -2.1% 15.8% 13.8% 14.4% 6.0% 16.2% 7.4% Demand Jewelry 949 1,105 1,059 1,031 964 889 935 1,062 1,058 Automotive 32 40 53 74 107 90 123 162 186 Petroleum 79 81 83 88 89 92 100 107 113 Chemical 46 49 50 52 54 58 66 73 83 Glass 253036404551586272 Electronics ______485153555656586165______Total Fabrication Demand 1,179 1,355 1,334 1,339 1,315 1,236 1,340 1,527 1,577 % Change Year Ago 14.9% -1.6% 0.4% -1.8% -6.0% 8.4% 14.0% 3.3% Apparent S upply and Demand Balance -1,112.8 -1,282.0 -1,262.2 -1,255.9 -1,220.8 -1,128.2 -1,225.8 -1,394.3 -1,434.3 Sources: Chinese Industry Sources, CPM Group May 13, 2017

52 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

2009 2010 2011 2012 2013 2014 2015 2016 2017p Supply 69 68 68 69 70 71 71 72 72 Mine Production -0.6% -1.2% 1.0% 1.1% 1.0% 1.0% 0.9% 0.9% 0.6% % Change Year Ago 73 84 90 91 95 100 104 107 110 Secondary Supply ______0.1%14.6%7.0%1.0%4.9%4.3%4.2%3.5%2.6%______% Change Year Ago 142 152 159 160 165 170 175 179 182 Total Supply -0.3%6.9%4.3%1.0%3.2%2.9%2.8%2.5%1.8% % Change Year Ago Demand 1,752 1,616 1,840 1,988 1,940 1,901 1,825 1,780 1,762 Jewelry 256 359 367 369 408 388 363 386 375 Automotive 131 144 152 157 161 165 170 170 171 Petroleum 76 98 102 109 115 125 128 129 130 Chemical 70 78 82 79 81 83 85 87 89 Glass ______64______64______64______62______63______63______63______63______63 Electronics 2,349 2,358 2,608 2,764 2,768 2,725 2,634 2,614 2,591 Total Fabrication Demand 49.0% 0.4% 10.6% 6.0% 0.1% -1.5% -3.4% -0.7% -0.9% % Change Year Ago Apparent S upply and -2,207.3 -2,205.9 -2,449.1 -2,604.0 -2,602.5 -2,555.0 -2,458.7 -2,434.9 -2,408.2 Demand Balance

53 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Historical U.S. Platinum Demand Troy Ounces

Year Automotive Petroleum Chemical Electronics Glass 1955 - - 348,088 48,683 - 1956 - - 320,476 53,872 - 1957 - - 243,226 52,574 - 1958 - - 148,276 53,553 - 1959 - 44,327 80,107 84,837 82,997 1960 - 35,645 71,253 106,903 59,390 1961 - 37,742 72,016 87,419 35,234 1962 - 13,160 87,822 100,569 45,530 1963 - 40,721 156,427 110,576 57,919 1964 - 41,071 137,248 103,584 49,680 1965 - 82,138 131,599 106,808 19,846 1966 - 235,098 191,429 117,156 90,556 1967 - 122,511 159,384 99,686 45,150 1968 - 89,629 157,677 117,256 47,935 1969 - 62,438 175,436 112,589 63,350 1970 - 144,657 148,289 103,318 46,687 1971 - 137,396 135,112 51,940 40,703 1972 - 98,847 225,895 92,381 26,970 1973 - 123,649 238,974 117,352 72,543 1974 350,000 139,519 215,663 98,608 74,398 1975 273,000 107,988 148,813 73,624 33,813 1976 480,965 59,103 83,560 89,319 41,683 1977 354,338 74,772 84,414 90,217 59,995 1978 597,538 108,365 149,696 106,422 98,094 1979 803,229 170,013 98,600 115,775 88,594 1980 517,143 144,039 118,956 150,060 52,897 1981 446,677 88,314 78,134 111,697 29,272 1982 525,000 21,576 63,601 89,994 20,595 1983 600,000 38,030 75,000 74,716 14,903 1984 822,000 28,045 80,000 98,925 12,184 1985 911,000 28,771 95,000 115,840 20,651 1986 890,000 30,566 97,000 103,506 15,793 1987 800,000 23,773 81,000 108,000 9,157 1988 775,000 34,466 122,000 112,335 21,895 1989 790,000 91,919 97,000 125,195 36,330 1990 720,000 105,261 86,000 125,613 13,857 1991 700,000 126,931 48,000 126,931 4,115 1992 730,000 105,000 75,000 126,000 11,574 1993 830,000 100,000 81,000 129,000 7,500 1994 880,000 106,000 63,000 139,000 8,000 1995 1,000,000 110,000 75,000 145,000 17,000 1996 1,100,000 113,000 88,000 146,000 17,000 1997 1,050,000 109,000 92,000 159,000 17,000 1998 1,100,000 109,000 94,000 167,000 17,000 1999 1,175,000 113,000 96,000 175,000 19,000 2000 1,200,000 117,000 100,000 140,000 20,000 2001 1,100,000 115,000 80,000 108,000 30,000 2002 1,000,000 120,000 100,000 95,000 20,000 2003 975,000 122,000 103,000 90,000 18,000 2004 1,000,000 125,000 107,000 85,000 20,000 2005 1,010,000 130,000 110,000 85,000 20,000 2006 920,000 132,000 112,000 85,000 23,000 2007 850,000 135,000 115,000 80,000 23,500 2008 620,000 150,000 125,000 60,000 24,000 2009 420,000 135,000 112,000 45,000 20,000 2010 475,000 140,000 130,000 35,000 23,000 2011 546,250 145,000 135,000 36,000 25,000 2012 589,950 147,000 136,000 37,000 26,000 2013 637,146 147,000 136,000 35,500 25,000 2014 675,375 149,000 138,000 35,000 25,000 2015 742,912 145,000 140,000 35,000 24,000 2016 750,341 140,000 135,000 34,000 24,500 2017p 754,093 138,000 135,000 36,000 24,000

Notes: Petroleum and glass industry demand was included in chemical industry figures prior to 1959. Estimates for 1985 and subsequent years for the automotive and some other industries are CPM Group estimates based on Bureau of Mines statistics prior to revisions made in 1987.

54 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Dental Jewelry Percent and and Change Medical Decorative Miscellaneous Total in Total Year 12,304 12,860 5,297 427,232 1955 12,436 16,075 5,115 407,974 -4.5% 1956 11,514 22,505 6,567 336,386 -17.5% 1957 14,414 41,796 5,727 263,766 -21.6% 1958 15,379 54,656 5,747 368,050 39.5% 1959 15,898 57,871 2,828 349,788 -5.0% 1960 16,487 64,301 4,003 317,202 -9.3% 1961 22,601 77,162 6,017 352,861 11.2% 1962 18,894 115,743 6,844 507,124 43.7% 1963 19,376 90,022 3,195 444,176 -12.4% 1964 26,511 83,592 10,084 460,578 3.7% 1965 24,296 86,807 24,846 770,188 67.2% 1966 24,630 115,743 26,112 593,216 -23.0% 1967 24,903 102,882 31,150 571,432 -3.7% 1968 22,266 138,248 47,174 621,501 8.8% 1969 18,302 199,334 18,555 679,142 9.3% 1970 23,097 398,669 19,859 806,776 18.8% 1971 30,462 729,821 50,089 1,254,465 55.5% 1972 27,887 897,005 55,695 1,533,105 22.2% 1973 25,513 839,133 17,020 1,759,854 14.8% 1974 17,097 1,060,973 21,318 1,736,626 -1.3% 1975 26,858 836,000 46,246 1,663,734 -4.2% 1976 27,083 794,000 64,350 1,549,169 -6.9% 1977 44,139 804,000 66,336 1,974,590 27.5% 1978 27,053 592,000 77,949 1,973,213 -0.1% 1979 25,831 440,000 58,307 1,507,233 -23.6% 1980 18,739 624,000 72,202 1,469,035 -2.5% 1981 22,806 630,000 67,805 1,441,377 -1.9% 1982 16,744 553,000 75,000 1,447,393 0.4% 1983 18,644 624,000 82,000 1,765,798 22.0% 1984 24,514 675,000 125,000 1,995,776 13.0% 1985 22,619 691,000 110,000 1,960,484 -1.8% 1986 15,387 868,000 65,000 1,970,317 0.5% 1987 18,680 987,000 96,000 2,167,376 10.0% 1988 20,319 1,061,000 135,000 2,356,763 8.7% 1989 22,087 1,150,000 160,000 2,382,818 1.1% 1990 19,500 1,290,000 125,000 2,440,477 2.4% 1991 20,576 1,318,000 130,000 2,516,150 3.1% 1992 24,000 1,400,000 105,000 2,676,500 6.4% 1993 25,000 1,547,000 100,000 2,868,000 7.2% 1994 25,000 63,000 110,000 1,545,000 -46.1% 1995 25,000 70,000 115,000 1,674,000 8.3% 1996 27,000 100,000 130,000 1,684,000 0.6% 1997 29,000 140,000 140,000 1,796,000 6.7% 1998 30,000 150,000 145,000 1,903,000 6.0% 1999 31,000 200,000 155,000 1,963,000 3.2% 2000 32,000 120,000 125,000 1,710,000 -12.9% 2001 32,000 130,000 135,000 1,632,000 -4.6% 2002 32,000 120,000 135,000 1,595,000 -2.3% 2003 33,000 100,000 142,000 1,612,000 1.1% 2004 33,000 80,000 155,000 1,623,000 0.7% 2005 34,000 75,000 150,000 1,531,000 -5.7% 2006 35,000 62,000 130,000 1,430,500 -6.6% 2007 35,750 59,000 132,000 1,205,750 -15.7% 2008 32,000 60,000 128,000 952,000 -21.0% 2009 31,000 65,000 131,000 1,030,000 8.2% 2010 28,000 60,000 135,000 1,110,250 7.8% 2011 25,000 62,000 135,000 1,157,950 4.3% 2012 25,000 60,000 135,000 1,200,646 3.7% 2013 24,000 60,600 134,000 1,240,975 3.4% 2014 23,500 67,872 135,000 1,313,284 5.8% 2015 23,000 71,605 135,000 1,313,446 0.0% 2016 23,000 72,321 133,000 1,315,414 0.1% 2017p

Sources: U.S. Bureau of Mines, CPM Group. May 1, 2017 55 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

2016 U.S. Demand: 1,313,446 ounces

Other, 15.4%

Jewelry, 5.0%

Petrochemical, 23.6% Automotive, 53.1%

Electrical, 2.9%

56 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Japanese Platinum Demand Thousand Troy Ounces 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

Electronic 45 39 39 13 16 16 19 16 29 39 42 Automotive 68 68 112 199 209 193 170 167 167 174 248 Jewelry 836 794 804 592 440 624 630 553 624 675 691 Petroleum 3532484548------Chemical 112 112 65 10 10 10 10 10 16 16 16 Other____ 52____ 61____ 129___ 74 257______345____ 245 210______345____ 406____ 61 Total 1,148 1,106 1,197 932 980 1,188 1,074 956 1,181 1,309 1,058 % Change Year Ago -- -3.7% 8.2% -22.1% 5.1% 21.2% -9.6% -11.0% 23.6% 10.8% -19.2%

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Electronics 4248505052435557535355 Automotive 295 325 340 366 400 306 240 246 235 219 225 Jewelry 868 987 1,061 1,180 1,270 1,300 1,400 1,547 1,641 1,700 1,775 Chemical 16 19 20 20 20 15 20 22 20 32 38 Other ____135____ 98____ 50____ 100____ 100____ 85____ 105____ 107____ 105____ 151____ 160 Total 1,356 1,477 1,521 1,716 1,842 1,749 1,820 1,979 2,054 2,155 2,253 % Change Year Ago 28.1% 25.0% 3.0% 12.8% 7.3% -5.0% 4.1% 8.7% 3.8% 4.9% 4.5%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Electronics 5795878055605064756558 Automotive 218 225 290 340 430 510 615 618 625 595 590 Jewelry 643 823 949 1,105 1,059 1,031 964 889 935 1,062 1,058 Chemical 37 38 39 25 30 40 40 50 50 55 55 Petroleum ------555551016 Other 168 100 100 125 115 105 130 135 140 100 105 ______Total 1,123 1,281 1,465 1,675 1,694 1,751 1,804 1,761 1,830 1,887 1,882 % Change Year Ago -50.2% 14.1% 14.4% 14.3% 1.2% 3.3% 3.0% -2.4% 3.9% 3.1% -0.3%

2009 2010 2011 2012 2013 2014 2015 2016 2017p

Electronics 403820211919202225 Automotive 470 555 499 574 580 615 587 584 572 Jewelry 1,752 1,616 290 292 280 269 279 283 274 Chemical 52 53 46 52 51 51 52 50 49 Petroleum 141512151414131211 Other ____95____ 100____ 93____ 98____ 90____ 88____ 89____ 89____ 88 Total 2,423 2,376 960 1,052 1,034 1,056 1,039 1,040 1,019 % Change Year Ago 28.8% -1.9% -59.6% 9.6% -1.7% 2.1% -1.5% 0.0% -2.0%

Notes: Totals may not equal the sums of the individual categories due to rounding. Beginning with 1981, sales to petroleum refiners are included in the chemical sector. Sources: Japanese trade sources, CPM Group. May 1, 2017

57 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Annual European Platinum Use Thousand Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

Auto 14 13 17 20 14 13 18 24 42 48 71 167 185 215 322 411 475 500 Jewelry Germany 10 16 15 10 7 3 10 17 26 31 24 23 24 26 29 35 45 45 United Kingdom6 6645 5 422211222222 France 4 5533 3 323333333333 ______Total 20 27 26 17 15 11 17 21 31 36 28 27 29 31 34 40 50 50 Electronics Germany 15 19 14 17 16 20 7 6 9 6 6 14 16 18 18 26 29 26 United Kingdom1818171818161091091012121212121111 France 2 2111 1 11111******* ______Total 35 39 33 36 35 38 18 16 20 17 17 27 29 30 30 38 40 37 Dental Germany 39 50 59 69 62 66 48 28 30 27 22 21 29 16 17 20 19 23 United Kingdom3 1133 3 222221111 - -- France 5 5332 2 211111111 - -- ______Total 48 56 63 75 68 71 53 31 33 30 25 23 31 18 19 20 19 23

Other Uses 220 161 238 227 230 180 117 131 118 120 134 135 142 143 143 145 156 152 Subtotal 337 296 377 375 362 313 223 219 244 251 275 379 416 437 548 654 740 762 Other Countries 48 44 57 60 65 55 50 50 48 57 58 67 73 77 80 83 79 79 Total Europe 385 340 434 435 427 368 273 269 292 308 333 446 489 514 628 737 819 841 % Change Year Ag - -11.7% 27.6% 0.2% -1.8% -13.8% -25.8% -1.5% 8.6% 5.5% 8.0% 34.1% 9.6% 5.1% 22.2% 17.4% 11.2% 2.6%

Notes: The subtotals for individual uses presented here are the sums of the countries for which data are available; other countries may consume relatively small amounts of platinum for these uses, but estimates are not available. Other uses in Western Europe includes consumption by major end-using industries in some European countries, as well as chemical/petroleum refining use and smaller using industries throughout Western Europe. There may be discrepancies due to rounding. * - less than 500 ounces. p - projections. Source: European trade sources, CPM Group. May 13, 2017

58 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

540 560 582 581 622 640 670 900 1,045 1,300 1,600 1,925 2,125 2,150 1,950 1,100 1,166 1,189 1,023 1,002 1,073 1,158 1,216 1,228

49 48 48 48 48 55 52 50 48 45 40 38 35 30 27 30 30 27 26 22 22 22 23 23 2226610363940373332302522232221221717171717 33356101110108 7 6 5 3 2 3 3 3 2 222 2 2 ______54 53 53 59 60 75 99 99 98 90 80 76 70 58 51 56 55 51 50 41 40 42 42 42

28 32 26 22 22 25 24 18 14 12 12 12 12 11 10 9 9 8 8 8 8 9 9 4 12 12 12 14 14 14 14 10 7 6 6 6 6 5 4 6 4 5 3 2 2 2 2 4 ******* * * * * * * * * * * * * *** * * ______40 44 38 36 36 39 38 28 21 18 18 18 18 16 14 15 13 13 11 10 10 11 11 8

24 24 23 22 20 20 21 20 20 20 21 22 25 25 23 22 22 18 18 15 14 13 13 13 0------0------______24 24 23 22 20 20 21 20 20 20 21 22 25 25 23 22 22 18 18 15 14 13 13 13

155 157 155 158 158 161 165 168 175 180 182 200 200 170 165 155 155 140 135 128 128 127 128 129 813 838 851 856 896 935 993 1,215 1,359 1,608 1,901 2,241 2,438 2,419 2,203 1,348 1,411 1,411 1,237 1,196 1,265 1,351 1,410 1,420 80 100 115 123 123 130 135 130 135 135 137 137 135 132 125 110 111 100 90 80 78 78 78 79 893 938 966 979 1,019 1,065 1,128 1,345 1,494 1,743 2,038 2,378 2,573 2,551 2,328 1,458 1,522 1,511 1,327 1,276 1,343 1,429 1,488 1,499 6.2% 5.0% 3.0% 1.3% 4.1% 4.5% 5.9% 19.2% 11.1% 16.7% 16.9% 16.7% 8.2% -0.9% -8.7% -37.4% 4.4% -0.7% -12.2% -3.8% 5.2% 6.4% 4.1% 0.8%

59 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

Platinum Investment Demand size of the gold ETP market, according to the latest data as of April 2017. Investors have an enormous influence on the price level and direction of The size of platinum coin market is platinum, as they do with other precious even smaller compared to the markets metals. One of the key factor in the for gold and silver coins. In 2016 it platinum market since 2012 has been accounted for 0.6% of the combined investor disinterest and disenchantment market value of gold, silver, and after eight years of strong interest. platinum coins, despite a greater offering of platinum coin products to An important factor that sets platinum investors than before. In addition to this apart from gold and silver is that there is relatively small market size of a very small physical and exchange- investment products, platinum is also traded products market for this metal. less marketed to investors compared to The volume of physical platinum gold or silver. available for investor buying and selling, as well as the extent and This very illiquidity of the platinum diversity of investment product offers investment market is contrasted with the from exchanges and market-makers are enormous sum of investor capital that limited compared to gold and silver. could be deployed in platinum at any given period. In such a market Platinum physical exchange-traded environment, investors can make products are only around 20% the size discretionary decisions to allocate more of the silver ETP market and 3% the or less capital into platinum, in ways

Platinum Market Surplus/Deficit and Prices Projected Through 2017 Thousand Ounces $/Ounce 1,200 $1,800 Net Additions to Inventories (left scale) 1,000 $1,680 800 $1,560 600 $1,440 400 $1,320 200 $1,200 0 $1,080 -200 $960 -400 $840 Net Reductions to Inventories (left scale) -600 $720 Price -800 $600 -1,000 $480 -1,200 $360 -1,400 $240 -1,600 $120 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 60 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 that distinguishes themselves from other the course of 2016 investor concerns industrial commercial market over the influences of major events participants such as producers, refiners, including the Fed’s interest rate manufacturers, and trading companies. schedule, the Brexit, the U.S. election, Oftentimes such investment decisions the Italian referendum, and a host of are detached from the near-term other international political events were fundamentals of the platinum also factored into platinum prices. market, and are swayed by broader These global economic and political economic, political, and financial events generated a reversal of market factors. investment sentiment toward platinum from the previous period between 2012 Historically, investors purchased large and 2015. The bearish sentiment that amounts of platinum in two bouts, from presented itself during the prior period 1985 to 1992 and then from 2001 until was no longer dominant among around 2011. Starting in 2012 those investors. There were nascent signs of a investors who had bought platinum recovery of investor appetite for much earlier began liquidating their platinum as an investment. Some of this positions, and there were significant shift in sentiment was linked to outflows of platinum bullion from such investors allocating more capital to stale-bull investors during that year, and investment products devoted to the then in periods between 2013 and 2015. precious metals baskets that included During 2014, when mine supplies platinum. sharply contracted in South Africa due to labor disruptions, there were notable However there are also factors that are stale-bull investor selling activities. unique to platinum, which set it apart Sales of platinum from investor from other precious metals. It is inventories had continued into 2015, important to note that the very lack of which more than cushioned the market liquidity and investment product supplies of platinum and resulted in availability in platinum enabled it to subpar platinum price performance. have an investor community of a However, after platinum prices fell different profile, as well as the ways sharply in the third quarter of 2014, as in which these investors participate in the South African strike settled, this market. There are currently investors shifted their strategies from millions of active and prospective selling physical metal to hedging their platinum investors, compared to a few remaining inventories with short futures hundred commercial enterprises positions. Physical sales declined as engaged in this market. Those larger short interest on the Nymex platinum investment institutions that tend to trade futures contract increased sharply. gold and/or silver often find the platinum market size overly restrictive Those very macroeconomic, political, for their target capital allocation and and financial market factors that affect may opt to trade an index or a basket of gold and silver are also likely to affect commodity investment products that platinum during a given period. Over offer them small exposures to the metal.

61 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

This means that the investment largest producer of platinum. Many of community in the platinum investment these South African investors are market at any given time is potentially institutional investors that need to have more diverse when compared to the exposures to platinum due to the investment markets of gold and silver. importance of South Africa’s platinum industry in the Johannesburg Stock Another interesting characteristic of the Exchange. These institutions have been platinum investment market is that able to shift away from holding South South Africa-based investors have been African platinum mining shares to particularly active and influential in this holding physical platinum via ETPs in market, perhaps more so than they are the past decade, and they have. In this in gold and silver. The two South way they have a long-term, strategic African exchange-traded fund as of interest in platinum which differentiates April 2017 accounted for 37% of the them from the day-to-day, momentum- total platinum ETP holdings. driven investment style of many investors who participate in the These investors in platinum have platinum market. historically been paying a lot of attention on the economy and currency The availability of platinum ETP fluctuations of this country, which is the products denominated in South African Reported Platinum Investment Demand by Region Troy Ounces

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ETPs Asia Pacific 3,974 4,100 15,921 -1,115 -2,771 3,413 71,407 19,490 South Africa 909,500 306,016 -143,834 -154,308 Europe 194,404 102,264 380,119 110,037 57,788 103,372 -78,179 -32,777 -100,628 76,320 North America 441,929 14,928 141,624 40,911 -36,912 -77,714 57,063 Total 194,404 102,264 384,093 556,066 88,637 243,882 869,461 239,740 -250,770 -1,434

Coins Asia Pacific 965 418 607 317 13,764 30,000 20,000 20,000 7,169 6,218 South Africa Europe North America 9,937 10,689 41,110 10,100 19,983 44,228 25,306 19,062 37,672 63,499 Total 10,902 11,107 41,717 10,417 33,747 74,228 45,306 39,062 44,841 69,717

Subtotals Asia Pacific 965 418 4,581 4,417 29,685 28,885 17,229 23,413 78,576 25,708 South Africa 909,500 306,016 -143,834 -154,308 Europe 194,404 102,264 380,119 110,037 57,788 103,372 -78,179 -32,777 -100,628 76,320 North America 9,937 10,689 41,110 452,029 34,911 185,852 66,217 -17,850 -40,042 120,562 Total 205,306 113,371 425,810 566,483 122,384 318,110 914,767 278,802 -205,928 68,283

Notes: Figures are only from publicly available sources. S ource: ETP issuer and Mint websites, Bloomberg, CPM Group

62 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Rand in their domestic market also NewPlat ETF, the largest platinum ETF provides them a way to hedge their in the market, was a net buyer of exposure to the currency, which platinum in 2014, having bought around depreciated 11% in 2014 and 33% in 195,016 ounces of platinum. In the 2015 against the U.S. dollar. While in following two years it sold platinum 2016 the currency appeared to have back to the market, having liquidated steadied itself against the U.S. dollar, 150,834 ounces of platinum in 2015 and there are continuing investor concerns another 172,308 ounces in 2016. about the future growth potential of the South African economy. Many South In many ways investors in platinum African investors also remain attuned to look for a set of characteristics that are the supply and demand fundamentals of similar to gold and silver – portfolio platinum, which convinced them to buy diversification, currency and risk hedge, the metal rather than mining shares etc. Perhaps to the disappointment of during 2014, a year marked by a record South African platinum mining level of mine disruptions in the country. companies, the metal does not yet enjoy the similar level of recognition as a As major platinum mines were able to store of wealth as gold and silver. In restore production levels back to pre- some of the major emerging economies, strike levels in 2015 and 2016, these such as China and India, where gold and investors were again selling platinum. silver bullion and coins were, quite The South Africa-based Absa Capital’s literally, stashed “under the mattress”

Platinum Exchange Traded Product Holdings Daily, through 30 April 2017

Moz Moz 3.0 3.0

2.5 2.5

2.0 NewPlat 2.0 JSE 1.5 1.5

PPLT 1.0 ZKB NYSE 1.0 Platinum 0.5 0.5

PHPT LSE 0.0 0.0 07 08 09 10 11 12 13 14 15 16 17

Note: Underlying data is data contained in “Platinum Exchange Traded Product Holdings” table.

63 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM by a broad array of individual and Roughly 68% of this metal, or 5.2 institutional investors, investments in million ounces, are estimated to be held platinum bullion and coins remained in unreported bullion inventories. While confined to a very small group of there were continued stale-bull largely wealthy investors. This is liquidations of platinum inventories mainly because of the illiquidity of during 2016, other investors have platinum, as well as restricted started to buy platinum, which provided availability of the metal for circulation some support for platinum prices. in such economies. Gold and silver have millennia of use as money and financial Total inventories of refined bullion stores of wealth; platinum does not. showed a modest gain in 2016, although a substantial portion of that metal If platinum availability in such appears to have been taken up by emerging economies increases over the refiners, fabricators, and market-making longer term, in addition to increased dealers. If investors had been the larger level of marketing, investor recognition buyers of this surplus metal, platinum of platinum as a wealth preservation prices most likely would not have fallen product could gradually improve in last year, but more likely would have these emerging economies. risen. Falling prices during a surplus year suggests that investors were not As of the end of 2016 investors were willing to buy the surplus metal at estimated to hold about 7.6 million prevailing prices, waiting for lower ounces of platinum bullion and coins. prices or some other variable to

Year-End Changes to Global Platinum ETP Holdings

Troy Ounces Troy Ounces 1,400,000 1,400,000

1,200,000 1,200,000 Gross Purchases 1,000,000 1,000,000

800,000 800,000

600,000 600,000

400,000 400,000 Net Change 200,000 200,000

0 0

-200,000 -200,000 Gross Sales -400,000 -400,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

64 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 stimulate their buying interest, and around 170,873 ounces of platinum to leaving the surpluses to be taken up by their portfolios last year. producers and market makers. At the beginning of 2017 investor net Exchange Traded Products selling of platinum holdings at NewPlat ETP slowed considerably. This On a net basis, investors sold 1,434 combined with increases in buying at ounces of platinum from their exchange other ETPs enabled the overall ETP traded products (ETP) holdings in 2016. sector to record net inflows of investor This was the second consecutive year in capital. During the first four months of which investors were net sellers of 2017 investors platinum holdings were platinum, although the volume of net up by 61,323 ounces as of the end of sales was considerably lower than the April from the end of 2016. 250,770 ounces sold in 2015.

South Africa-listed NewPlat ETP, Coin Demand which is the largest platinum ETP, saw a net outflow of 172,308 ounces of Platinum coin sales are estimated to platinum in 2016. This followed and have totaled around 105,000 ounces in was larger than net disposals of 150,834 2016, up from around 61,300 ounces in ounces from the fund in 2015. In the 2015. Investors remained interested in meantime other ETPs experienced net platinum coins during 2016, which was inflows of investor platinum holdings. helped by increased offerings and Excluding the net reductions to holdings marketing of platinum coins by mints at the NewPlat ETP, investors added and dealers.

AnnualPlatinum Coin Fabrication Through 2016 Thousand Ounces Thousand Ounces 450 450

400 400

350 350

300 300

250 250

200 200

150 150

100 100

50 50

0 0 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

65 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

The U.S. Mint sold around 20,000 As platinum prices strengthened ounces of Platinum American Eagle through the beginning of August, Bullion coins during 2016. In 2017 it so however, investors started to book far has allocated the same amount of profits. For the remainder of the year, Platinum American Eagle Bullion coins, investors liquidated some of the gross all 20,000 ounces of which were sold longs built during the prior months, out in January. tripping these positions down to around 2.08 million ounces by the end of the The Royal Canadian Mint was able to year. Meanwhile they also rebuilt some sell roughly 53,300 ounces of Platinum gross shorts in October and November Maple Leaf Bullion coins in 2016, a rise of the year. Such short-building was far from 44,700 ounces of sales in 2015. less aggressive compared to periods in During the first quarter of 2017 it sold 2015. By the end of the year investors 11,500 ounces of these platinum bullion had again liquidated some shorts built in coins, compared with 20,000 ounces of the prior couple of months. Non- sales during the same period last year. commercial gross shorts stood at 860,400 ounces at the end of 2016, During 2016 the Austrian Mint down 26% from the end of 2015. Net launched its first platinum bullion coin long positions in Nymex platinum held program with its Vienna Philharmonic by institutional investors totaled 1.22 design and sold 35,257 ounces of coins million ounces by the end of 2016. This for the year. During the first four was up 3.7% from 1.18 million ounces months of this year it additionally sold at the end of 2015. roughly 5,200 ounces of platinum coins. During the first four months of 2017 Futures and Options investors have largely maintained their net long exposures to platinum. As of During the first seven months of 2016 25 April 2017 non-commercial gross market sentiment toward platinum long positions has risen 4.2% from the improved, as institutional investors end of 2016 to 2.17 million ounces. liquidated their previously held shorts During this period non-commercial and built fresh longs on Nymex gross shorts declined about 5.5% to platinum. From the end of 2015 to 9 813,300 ounces. By 25 April investors August 2016 noncommercial gross held around 1.35 million ounces of net longs in Nymex platinum rose more long positions in platinum, up by than 40% to 3.28 million ounces, while around 11% from the end of last year. noncommercial gross shorts were reduced by around 63% to 435,800 ounces. By 9 August 2016 investor net long positions in Nymex platinum rose to 2.83 million ounces, a historical record high, from about 1.18 million ounces at the end of 2015.

66 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 3,290 5,103 (1,890) 59,579 14,199 60,356 184,448 00 (45,861) (18,650) (150,834) (172,308) (725) (2,784) 3,569 71,407 21,380 13,480 16,865 111,000 7,000 18,000 (22,644) (51,374) (21,454) (19,014) (2,632) 687 232,524 59,919 183,014 1,233 3,594 162 1,107 6,871 (1,547) (12,985) (22,967) (1,910) 909,500 195,016 869,461 128,740 -250,770 -1,434 (21,200) (133,944) 0000 9 (13) (63) 8 , (675) (675) 1 (2,330) (2,096) (156) (1,050) (465) (558) (589) (5,708) 81,486 96,790 (13,124) (31,299) (45,262) (17,266) 4,507 (1,044) -20,848 -35,789 -17,253 -191,226 -103,784 -310,688 - (19,804) (35,789) 52.6% 129.5% 81.7% 7.2% 18.4% 55.4% 9.8% -9.4% -0.1% ------48,220 45,470 10,390 ------3,291 ------3,974 -- 427,629 12,184 61,250 36,052 ------5,348 9,329 107,031 ------7,318 -- 6,982 1,357 5,144 1,387 11,414 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 54,499 71,429 119,964 81,621 39,468 194,404 102,264 384,093 576,914 124,426 261,135 1,060, 139,906 30,835 260,155 194,404 102,264 384,093 556,066 88,637 243,882 869,461 239,740 -250,770 -1,434 SPPTSource S iS PLT hares PPLT ETF S ETF PPLT ecurities PlatinumMSL TotalNet Additions Withdrawals Gross Totalyear-end Holdings Change % 194,404 296,668 680,761 1,236,827 1,325,463 1,569,345 2,438,807 2,678,547 2,427,777 2,426,343 GrossAdditions S PPP ETFS HK AfricaPlatinum PlatinumZKB JSE NewPlat NetChange in Holdings 194,404 102,264 384,093 556,066 88,637 243,882 Annual Net Additions to Platinum ETP Holdings ETP Platinum to Additions Net Annual Troy Ounces ETFS PHPT PlatinumJulius Baer GLTR - ETFS GLTR WITE-ETFS JapanMitsubishi

67 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

Market Value of Precious Metals Coin Sales As Percentage of Total Coin Market Value Gold Silver Platinum 100% 100%

90% 90%

80% 80%

70% 70%

60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0% 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

Market Value of Precious Metals Coin Sales

US$ Billion US$ Billion $16 $16

$14 $14 Gold Silver Platinum $12 $12

$10 $10

$8 $8

$6 $6

$4 $4

$2 $2

$0 $0 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

68 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Historical Annual Sales of Perth Mint Platinum Coin Programs Thousand Ounces Thousand Ounces 140 140

120 120

100 100

80 80

60 60

40 40

20 20

0 0 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

1988 - Platinum Koala Coins Introduced 2011 - Platinum Platypus Coins Introduced

Historical Annual Sales of Royal Canadian Mint Platinum Coin Programs Thousand Ounces Thousand Ounces 80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

1988 - Maple Leaf Introduced 2009 - 79-year-old Queen Version Introduced

69 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

Historical Annual Sales of PBOC Mint Platinum Coin Programs Thousand Ounces Thousand Ounces 6 6

5 5

4 4

3 3

2 2

1 1

- - 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

1994 - Kirin Coins Introduced

1987 - Platinum Panda Coins Introduced 2002 - Platinum Panda Program Resumed

U.S. Eagle Platinum Bullion Coin Sales Monthly, Through April 2017 Troy Troy Oz. 30,000 30,000

25,000 25,000

20,000 20,000

15,000 15,000

10,000 10,000

5,000 5,000

0 0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

70 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Net Additions to Platinum ETP Holdings Annual, Through 30 April 2017

Troy Ounces Troy Ounces 1,000,000 1,000,000

800,000 800,000

600,000 600,000 400,000 400,000 200,000 200,000 0

-200,000 0

-400,000 -200,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Platinum Prices, ETP Holdings, and Non-Commercial Long Positions Weekly As of 25 April 2017 Million Ounces $/Oz 6.0 2,250

2,000 5.0 Price 1,750

4.0 1,500

1,250 3.0 ETP Holdings 1,000

2.0 750

500 1.0 250 Net Long Non-Commercial Positions on Nymex 0.0 - 08 09 10 11 12 13 14 15 16 17

71 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

Platinum Exchange Traded Product Holdings Troy Ounces PHPT LSE Monthly Net (London+Zu ZKB PPLT - Julius Baer Mo nt h Additions Total rich) Platinum MSL ASX NYSE ETFS Platinum 12/31/2007 35,299 194,404 139,906 54,499 - - - 12/31/2008 56,784 296,668 170,740 125,928 - - - 12/31/2009 20,015 680,761 430,895 245,892 3,974 - - 12/31/2010 113,155 1,236,827 411,091 327,513 2,930 427,629 48,220 1/31/2011 58,439 1,295,265 424,043 346,305 2,930 437,310 59,850 2/28/2011 64,634 1,359,900 453,627 361,130 2,930 452,052 65,820 3/31/2011 28,837 1,388,736 477,828 365,715 2,930 441,913 73,940 4/30/2011 46,055 1,434,791 484,238 367,300 2,930 441,584 89,190 5/31/2011 (38,721) 1,396,070 451,916 364,004 2,930 431,557 94,690 6/30/2011 13,245 1,409,315 451,462 363,844 2,930 431,311 95,690 7/31/2011 36,298 1,445,613 471,871 363,689 2,930 436,063 100,690 8/31/2011 50,071 1,495,684 478,818 359,127 4,520 480,285 102,240 9/30/2011 (61,935) 1,433,749 478,573 356,610 4,520 440,527 87,540 10/31/2011 (35,705) 1,398,044 443,025 369,010 5,584 430,416 98,490 11/30/2011 (10,796) 1,387,248 424,078 368,856 7,437 445,001 96,390 12/31/2011 (61,784) 1,325,463 375,302 366,981 7,437 439,813 93,690 1/31/2012 35,384 1,360,847 381,094 366,975 7,437 459,348 104,140 2/29/2012 71,608 1,432,455 400,963 365,252 7,437 508,534 109,690 3/31/2012 (1,977) 1,430,478 415,858 356,478 6,992 493,450 108,540 4/30/2012 (31,382) 1,399,096 407,207 353,179 6,672 478,455 104,590 5/31/2012 (45,052) 1,354,044 376,937 353,019 5,099 468,360 102,390 6/30/2012 20,794 1,374,838 380,693 352,874 7,001 482,893 102,140 7/31/2012 (2,932) 1,371,905 385,679 352,729 4,972 482,646 95,790 8/31/2012 105,797 1,477,702 421,858 352,874 4,972 541,451 104,240 9/30/2012 65,429 1,543,131 502,186 356,816 4,972 521,489 105,170 10/31/2012 (25,258) 1,517,873 507,382 3 53,556 4,972 496,639 105,920 11/30/2012 7,783 1,525,656 518,384 353,395 5,108 491,581 105,670 12/31/2012 43,690 1,569,345 472,092 353,858 5,108 501,063 104,080 1/31/2013 19,891 1,589,236 476,512 353,697 4,972 515,557 104,080 2/28/2013 (15,096) 1,574,140 458,606 351,970 4,972 525,112 99,580 3/31/2013 28,215 1,602,355 456,931 352,401 4,972 559,191 93,180 4/30/2013 114,712 1,717,067 458,424 352,273 4,972 549,048 91,455 5/31/2013 243,529 1,960,596 394,208 351,363 3,012 573,329 88,685 6/30/2013 110,065 2,070,662 393,408 345,714 3,012 621,925 92,615 7/31/2013 53,634 2,124,295 350,075 341,653 3,012 607,047 88,645 8/31/2013 17,932 2,142,227 348,126 336,818 3,012 562,675 90,960 9/30/2013 56,057 2,198,285 341,639 333,882 3,012 552,611 83,160 10/31/2013 109,661 2,307,946 339,506 328,420 3,012 552,356 84,160 11/30/2013 92,214 2,400,160 346,418 325,176 3,012 542,180 82,330 12/31/2013 38,646 2,438,807 338,148 322,559 3,012 537,115 82,880 1/31/2014 (24,347) 2,414,460 343,838 318,074 3,012 522,216 89,960 2/28/2014 6,067 2,420,527 354,346 317,945 2,856 526,793 91,200 3/31/2014 70,729 2,491,256 373,756 317,817 2,856 516,773 86,530 4/30/2014 124,801 2,616,057 397,970 317,688 2,856 526,184 86,130 5/30/2014 101,050 2,717,107 376,293 317,560 2,856 526,041 86,600 6/30/2014 67,620 2,784,728 373,232 314,328 2,856 525,783 87,060 7/31/2014 3,185 2,787,912 374,880 309,551 2,856 530,349 87,510 8/31/2014 (111,187) 2,676,725 350,338 303,844 2,856 530,121 86,385 9/30/2014 (14,863) 2,661,862 345,649 298,758 2,856 534,646 86,235 10/31/2014 3,601 2,665,464 319,520 284,404 2,856 534,440 84,755 11/30/2014 23,353 2,688,817 354,337 282,781 2,856 5 34,129 86,615 12/31/2014 (10,270) 2,678,547 351,628 277,297 2,856 514,471 99,745 1/30/2015 6,494 2,685,041 375,058 275,677 2,856 494,798 103,565 2/27/2015 (73,697) 2,611,344 376,942 271,064 2,856 499,418 86,645 3/31/2015 17,910 2,629,255 346,859 269,443 2,856 503,983 90,505 4/30/2015 2,103 2,631,358 343,891 269,319 2,856 494,102 92,525 5/29/2015 2,892 2,634,250 344,680 269,195 2,856 493,776 96,195 6/30/2015 12,083 2,646,332 333,718 268,174 2,856 512,914 93,925 7/31/2015 132,596 2,778,929 332,309 269,540 2,856 502,954 87,705 8/31/2015 63,325 2,842,253 336,106 263,745 2,856 502,709 87,145 9/30/2015 (70,058) 2,772,196 322,663 263,652 2,856 473,497 85,245 10/30/2015 (179,103) 2,593,093 314,661 260,249 2,856 458,787 82,095 11/30/2015 (155,062) 2,438,030 313,872 260,156 2,856 458,492 81,395 12/31/2015 (10,253) 2,427,777 305,767 260,031 2,856 463,097 81,095 1/31/2016 (37,440) 2,390,337 304,771 268,690 2,856 453,205 80,225 2/29/2016 (36,934) 2,353,402 310,176 265,517 2,856 467,471 80,615 3/31/2016 46,906 2,400,308 307,417 265,421 2,856 486,457 80,615 4/30/2016 55,233 2,455,541 353,798 265,935 2,856 486,310 81,855 5/31/2016 (17,801) 2,437,740 363,511 265,839 2,856 490,842 81,705 6/30/2016 (47,105) 2,390,635 365,593 268,777 2,856 500,142 80,445 7/31/2016 (40,637) 2,349,998 318,938 270,214 2,856 500,013 84,545 8/31/2016 (29,111) 2,320,887 283,840 270,086 2,856 509,325 84,745 9/30/2016 (12,112) 2,308,775 291,902 273,021 2,856 494,682 84,215 10/31/2016 105,850 2,414,625 340,417 274,423 2,856 523,178 85,375 11/30/2016 18,470 2,433,095 371,343 274,326 2,856 522,961 81,065 12/31/2016 (6,752) 2,426,343 366,123 274,230 2,856 522,676 84,385 1/31/2017 18,996 2,445,339 390,293 274,134 2,856 517,605 85,585 2/28/2017 28,013 2,473,351 377,979 274,005 2,856 550,924 97,005 3/31/2017 15,842 2,489,193 373,164 273,909 2,856 550,635 98,265 4/30/2017 (1,528) 2,487,665 366,296 271,025 2,856 555,140 101,635 Note: PHPT is ETF Securities' platinum ETP traded on the LSE. ZKB Platinum is Zurich Cantonal Bank's platinum ETP traded on the SIX Swiss Exchange. MSL ASX refers to ETF Securities' platinum ETP traded on the ASX. PPLT is ETF Securities' platinum ETP traded on the NYSE. Julius Baer's platinum ETP is traded on the SIX Swiss Exchange. Tokyo Mitsubishi refers to Mitsubishi's platinum ETP traded on the Tokyo Stock Exchange. GLTR and WITE are ETF Securities' precious metals basket ETPs traded on the NYSE. SPLT is iShares' platinum ETP traded on the LSE. SPPT is Source's platinum ETP traded on the LSE. HK refers to ETFS Hong Kong's platinum ETF traded on the Hong Kong Stock Exchange. SPPP is Sprott's ETP traded on NYSE and TSX. NewPlat is the platinum ETP traded on the Johannesburg Stock Exchange. Source: Company websites, Bloomberg, CPM Group. May 2017

72 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

HK SPPP- To kyo GLTR- WITE- SPLT-LSE SPPT - LSE Platinum - NYSE Mitsubishi NYSE ETFS NYSE ETFS iShares Source ETFS (Sprott) NewPlat - JSE AfricaPlatinum ------5,144 7,318 6,982 - - - - - 5,144 7,927 11,756 - - - - - 6,076 8,835 9,430 - - - - - 6,076 9,362 10,971 - - - - - 6,076 10,286 12,421 2,849 17,917 - - - 6,076 9,551 9,430 3,298 22,617 - - - 6,076 9,947 9,710 3,297 35,047 - - - 8,423 10,080 10,874 3,296 37,697 - - - 11,349 9,494 10,359 3,295 36,197 - - - 11,349 10,332 10,833 3,294 30,171 - - - 15,014 9,914 9,450 3,293 13,848 - - - 15,014 9,914 9,418 3,292 7,848 - - - 16,558 8,675 8,369 3,291 5,348 - - - 16,558 8,289 8,369 3,289 5,348 - - - 16,558 8,117 7,939 3,288 4,677 - - - 14,950 8,307 7,939 3,287 14,677 - - - 14,950 8,307 7,772 3,286 14,677 - - - 14,950 8,008 7,319 3,285 14,677 - - - 15,947 8,008 7,319 3,284 14,677 - - - 16,911 7,899 7,319 3,283 14,677 - - - 19,130 7,899 7,319 3,282 14,677 - - - 19,130 8,092 7,319 3,281 14,677 - - - 15,882 8,246 7,319 3,280 14,677 - - - 15,882 8,471 7,319 3,279 14,677 1,890 - - 15,882 8,612 7,319 3,278 14,677 1,890 81,486 - 15,882 8,863 8,343 3,276 14,677 1,890 81,486 - 15,079 9,149 8,343 3,275 14,677 1,890 81,486 - 15,754 9,559 8,343 3,274 14,677 1,890 82,183 - 16,558 9,982 8,343 3,273 14,677 1,890 82,183 123,989 - 16,558 9,831 6,855 3,621 65,202 1,890 82,183 363,860 - 16,558 9,982 6,855 3,620 65,202 1,890 82,183 427,699 - 16,558 10,140 6,855 3,619 65,202 1,890 82,183 547,417 - 16,558 10,140 6,855 3,618 100,202 1,890 82,183 579,192 - 15,272 10,607 6,855 3,617 104,702 1,890 82,183 658,856 - 15,272 10,350 6,855 4,015 109,529 1,890 82,183 770,399 - 15,272 10,207 6,855 4,012 122,960 1,890 81,905 857,944 - 15,207 15,483 6,855 4,511 121,708 1,890 79,939 909,500 - 15,207 15,463 6,855 4,509 125,822 1,890 74,375 893,240 - 15,207 9,748 6,855 4,508 125,822 1,890 74,379 888,979 - 15,207 10,556 6,855 5,937 126,222 1,890 74,379 952,479 - 15,207 10,178 6,855 6,838 138,650 1,890 73,779 1,023,832 8,000 15,207 10,143 6,855 6,838 144,042 1,890 73,779 1,135,004 14,000 16,525 10,143 6,755 6,834 159,127 1,890 73,779 1,182,417 24,000 16,525 9,938 6,297 6,834 159,127 1,890 73,779 1,182,378 26,000 16,525 9,938 6,297 6,834 108,156 1,890 73,779 1,153,763 26,000 15,561 9,745 6,297 6,827 100,263 1,890 73,779 1,153,357 26,000 18,069 9,353 6,297 6,825 100,263 1,890 73,779 1,145,013 78,000 18,776 8,892 6,297 7,606 100,263 1,890 70,485 1,108,891 105,000 18,776 14,758 6,297 8,105 100,254 1,890 66,954 1,104,516 111,000 19,548 15,401 6,297 8,103 100,051 1,890 66,562 1,104,237 111,000 21,863 10,131 6,297 8,606 102,121 1,890 64,258 1,044,254 115,000 30,029 9,736 6,297 8,606 102,121 1,890 64,258 1,071,671 121,000 30,029 9,138 6,297 9,102 102,121 1,890 60,833 1,079,254 130,000 30,961 9,330 6,297 9,099 102,124 1,890 58,937 1,078,911 130,000 37,874 9,484 6,297 8,579 58,501 1,890 58,937 1,118,183 135,000 48,933 9,065 6,297 7,441 82,812 1,890 58,937 1,185,188 183,000 53,209 9,693 5,832 7,439 82,812 1,890 53,629 1,252,188 183,000 54,206 9,693 5,708 7,436 78,691 1,890 51,730 1,231,929 183,000 57,711 9,693 5,708 7,714 81,307 1,890 48,344 1,078,078 184,000 74,429 10,239 5,708 7,990 80,238 1,890 43,987 975,778 121,000 90,183 11,974 5,708 8,267 81,240 1,890 43,987 953,682 118,000 94,202 11,395 5,708 8,265 80,357 1,890 43,987 916,786 118,000 94,202 10,640 5,264 9,112 79,532 1,890 42,075 866,053 118,000 94,202 10,640 4,171 9,109 80,141 1,890 42,077 903,314 112,000 97,385 10,832 3,120 9,400 79,107 1,890 42,077 906,978 114,000 97,385 11,408 3,120 9,396 74,707 1,890 42,077 879,005 114,000 97,224 12,153 - 9,393 78,292 1,890 42,077 794,794 137,000 97,224 13,910 - 9,390 78,292 - 42,077 794,541 138,000 97,224 15,004 - 9,387 74,092 - 42,077 794,253 138,000 97,224 15,962 - 9,384 75,352 - 42,077 786,101 136,000 123,330 123,330 15,794 - 9,381 75,962 - 42,077 785,833 136,000 1 16,000 116,000 16,117 - 9,377 78,342 - 42,077 781,632 137,000 1 11,563 111,563 17,077 - 9,374 78,608 - 42,077 781,374 136,000 1 11,563 111,563 17,895 - 10,514 78,058 - 39,737 781,100 136,000 1 08,670 108,670 18,272 - 11,844 80,138 - 39,740 776,921 135,000 1 06,162 106,162 18,430 - 12,426 80,938 - 39,740 780,671 152,000 1 06,162 106,162 19,235 - 12,422 84,738 - 39,740 776,417 152,000

73 CPM GROUP PLATINUM GROUP METLAS YEARBOOK 2017 PLATINUM

Gross Long and Short Positions of Non-Commercial Positions Nymex Platinum Futures & Options. Weekly Data, Through 25 April 2017

Thousand Ounces Thousand Ounces 3,500 3,500

3,000 Gross Long 3,000

2,500 2,500

2,000 2,000

1,500 1,500 Net Fund Position on Nymex 1,000 1,000

500 500

0 0

-500 -500

-1,000 -1,000

-1,500 -1,500 Gross Short -2,000 -2,000 95 97 99 01 03 05 07 09 11 13 15 17

Gross Long and Short Positions of Nymex Disaggregated Non-Commercial Positions Nymex Platinum Futures and Options. Weekly Data, Through 25 April 2017

Thousand Ounces Thousand Ounces 3,500 3,500 Gross Long 3,000 Money Managers 3,000

2,500 Other Traders 2,500 Net Position 2,000 2,000

1,500 1,500

1,000 1,000

500 500

0 0

-500 -500

-1,000 -1,000

-1,500 Gross Short -1,500

-2,000 -2,000 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17

74 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Investment Platinum Product Trading Volume Annual; Platinum Futures, Coins, and ETPs Million Ounces Million Ounces 350 350

300 300 Platinum Futures Coins ETPs 250 250

200 200

150 150

100 100

50 50

0 0 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

Investment Product Trading Volume as a % of Total Platinum Products Trading Volume Annual; Platinum Futures, Coins, and ETPs Platinum Futures Coins ETPs 100% 100%

90% 90%

80% 80%

70% 70%

60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0% 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

75 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Markets

The platinum market is the second In 2016 there was a total of 7.2 million smallest market in dollar terms and in ounces of newly refined physical the physical ounces traded in the platinum produced. The trading volume precious metals complex. Platinum is in the futures and options market on traded on the New York Mercantile exchanges was 34 time the size of this Exchange (Nymex), part of the CME newly refined physical supply in 2016 Group, and on the Tokyo Commodities in both ounce and dollar terms. Exchange (Tocom). These are the two Compared to gold, both the physical major exchanges where activity occurs. and exchange futures and options Platinum also is traded in much smaller markets for platinum were 1.5% of the volumes at exchanges in Shanghai, size of the gold market in dollar terms. Mumbai, Moscow, and South Africa. The total platinum market, newly The over-the-counter market for refined physical supply entering the platinum and other PGMs in London market plus exchange futures and provide daily benchmark prices. Many options trading, was 255.6 million market participants use these ounces in 2016, up from 249.3 million benchmarks to transact in the physical ounces in 2015. The paper market market. Others use prices published by accounted for 248.4 million ounces of refiners. The over-the-counter markets the total platinum market in 2016. In and exchanges provide the liquidity for dollar terms the platinum market many consumers and producers to actually shrank last year to $254 billion, hedge their metals exposures. down from $263 billion in 2015. This

Combined Annual Platinum Trading Volumes at Nymex, Tocom, and SGE Annual Data, Through 2016 Mln Oz Mln Oz 350 350

300 300 SGE 250 250

200 200 Tocom 150 150

100 100

50 50 Nymex

0 0 1975 1980 1985 1990 1995 2000 2005 2010 2015

76 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM contraction in the dollar value of the is on pace to set another record level platinum market was due to the lower this year. Much of this volume may be platinum price last year contributed to the increase in algorithmic trading, computer based Nymex Futures and Options quantitative trading.

Annual trading volume of platinum Combined open interest set a record futures on the Nymex reached a record high in 2016 as well, on a month end level in 2016, 196.9 million ounces, up basis. This record high was reached in from the previous record in 2015 when July at 3.94 million ounces. While this trading volume was 174.1 million level was a record high it was not as ounces. Last year was the second large an increase as in trading volumes. consecutive year of rising futures This suggests that while market activity trading volumes on an annual basis. has picked up in terms of trading That said, annual trading volumes have volume, market participants have not really been rising almost consecutively been holding on to their long or short since 2006, only breaking this trading positions for an extended amount of trend in 2014. That year futures trading time. Combined open interest has volume was basically flat, falling to ranged mostly between 3 and 4 million 161.8 million ounces from 162.7 ounces since 2013. At the end last year million ounces totaled in 2013 before combined open interest was 3.15 continuing to rise in 2015. million ounces, down slightly from 3.33 million ounces at the end of 2015. As of Year-to-date through April 2017 Nymex end of April 2017 combined open futures trading volume was 71.4 million interest was 3.38 million ounces. ounces. On an annualized basis volume

Turnover in the Precious Metals Markets in 2016 Million Ounces

Gold Silver Platinum Palladium

Physical Supply 127 988 7.2 9.3

Futures and Options 8,456 142,974 248 149

Total 8,582 143,962 255.6 158.6 Value ($bil) $10,735 $2,472 $254 $110

London Interbank Market 4,951 43,605 NA NA

Total 13,534 187,567 Value ($bil) $16,928 $3,221

Notes: Value calculated at average prices for 2016: $1,250.81 for gold, $17.17 for silver, $991.84 for platinum, and $615.49 for palladium. S ources: CPM Group May 8, 2017 77 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Trading volumes of platinum options on 63.9 million ounces in 2015. Last year’s the Nymex were 2.66 million ounces trading volume was the lowest level last year, down from 2.91 million since 1989, the sixth year that the ounces in 2015. Trading volume of Tocom traded platinum futures. Last exchange traded options has fallen year’s trading volume also was the sharply compared to 2013 and 2014, second consecutive year that trading when volumes were 9.19 million ounces volume declined since recently peaking and 7.22 million ounces, respectively. at 76.5 million ounces in 2014. Open interest meanwhile also has declined over the past couple of years Year-to-date through April trading compared to the levels of 2013 and volume was 16.1 million ounces, which 2014. Month end open interest of is on pace to be the lower than last platinum options on the Nymex was year’s level. The Tocom trades two 387,000 ounces at the end of 2016, up types of platinum contracts. The from 113,700 ounces at the end of 2015. standard platinum contract is for 500 Since the middle of 2015 month end grams (approximately 16.1 troy ounces) open interest has been between 100,000 and the mini is for 100 grams ounces and 400,000 ounces. (approximately 3.2 troy ounces).

Tocom Futures Total open interest in Tocom futures was 1.1 million ounces at the end of In 2016 platinum futures trading 2016, up from 1.0 million ounces at the volumes at Tocom totaled 48.0 million end of 2015. Month end open interest in ounces. This was down sharply from April this year was 948,320 ounces. A

Trading Volume in the Platinum Futures Markets Monthly Totals, Through April 2017 Million Ounces Million Ounces 50 50

45 45

40 40 Tocom 35 35

30 30

25 25

20 20

15 15

10 10 Nymex 5 5

0 0 75 80 85 90 95 00 05 10 15

78 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM relatively stable level of open interest Nymex, Tocom, and SGE registered and declining trading volumes suggest depositories, and other vaults in the case investors and short-term market of exchange traded products (ETPs). participants have continued to retreat There used to be some reported from the Tocom platinum futures inventories from dealers, users, and market. producers in past years in the United States, which are noted in this report at SGE Spot Contract the table in the end of this section. This data in the table is all publicly available. Trading volume of platinum spot contracts at the Shanghai Gold Total reported platinum inventories Exchange declined for the third were 2.73 million ounces at the end of consecutive year in 2016, to 847,076 2016, up slightly from 2.67 million ounces. Volume is off sharply after ounces at the end of 2015. As of end of having peaked in 2013 at 1.5 million March 2016 total inventories were 2.76 ounces in 2013. Year-to-date through million ounces. Combined ETP April this year trading volume totaled platinum holdings owned by investors 207,694 ounces, on pace to match last by far represent the bulk of the reported year’s level. inventories at 2.43 million ounces at the end of last year. Nymex and Tocom Inventories inventory holdings meanwhile are looked at as industry inventories, Total reported platinum inventories are although investors do sometimes hold made up of inventories held at the metal in these markets as well.

Open Interest in the Platinum Futures Markets Month End, Through April 2017 Million Ounces Million Ounces 8 8 Tocom 7 7

6 6

5 5

4 4

3 3

2 2 Nymex 1 1

0 0 75 80 85 90 95 00 05 10 15

79 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

New York Mercantile Exchange Activity - Trading Volume Monthly Total, Through April 2017 Million Ounces Million Ounces 30 30

25 25

20 20

15 15

10 10

5 5

0 0 75 80 85 90 95 00 05 10 15

New York Mercantile Exchange Activity - Open Interest Month-end, Through April 2017 Million Ounces Million Ounces 4.50 4.50

4.00 4.00

3.50 3.50

3.00 3.00

2.50 2.50

2.00 2.00

1.50 1.50

1.00 1.00

0.50 0.50

0.00 0.00 75 80 85 90 95 00 05 10 15

80 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Toyko Commodity Exchange Activity - Trading Volume Monthly Total, Through April 2017 Million Ounces Million Ounces 50 50

45 45

40 40

35 35

30 30

25 25

20 20

15 15

10 10

5 5

0 0 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Tokyo Commodity Exchange Activity - Open Interest Month-end, Through April 2017 Million Ounces Million Ounces 8 8

7 7

6 6

5 5

4 4

3 3

2 2

1 1

0 0 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

81 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Shanghai Gold Exchange Monthly Platinum Trading Volume Data Through April 2017

Troy Ounces Troy Ounces 200,000 200,000 180,000 180,000 160,000 160,000 140,000 140,000 120,000 120,000 100,000 100,000 80,000 80,000 60,000 60,000 40,000 40,000 20,000 20,000 0 0 06 07 08 09 10 11 12 13 14 15 16 17

Shanghai Gold Exchange Platinum Trading Activity Troy Ounces

Trading Volume 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 January 94,041 83,881 103,365 70,474 59,865 64,334 119,151 63,594 139,052 38,967 February 21,219 79,219 53,209 69,124 62,501 56,907 89,090 52,631 41,185 47,680 March 50,927 88,157 63,498 116,546 102,915 121,948 116,868 94,587 74,750 66,713 April 58,675 108,637 65,813 84,524 116,482 166,123 79,027 65,491 73,207 54,335 May 38,517 77,323 106,933 76,680 117,189 137,412 50,477 79,766 94,234 June 28,646 79,766 82,756 99,635 71,600 170,495 70,185 104,361 55,139 July 83,238 78,769 66,166 47,680 77,998 102,143 71,117 80,055 42,439 August 63,433 79,316 80,184 99,957 77,515 98,574 109,377 84,846 52,920 September 86,260 91,533 66,777 136,126 99,699 173,614 117,415 126,160 64,912 October 106,644 57,968 68,449 97,513 100,021 102,625 75,651 41,024 48,773 November 42,793 45,590 75,683 81,502 80,763 147,636 68,031 117,350 71,407 December______62,405______61,794______79,927______88,125______83,946_ 156,478______78,962______71,632______89,058 ______Total 736,799 931,954 912,760 1,067,887 1,050,493 1,498,289 1,045,349 981,498 847,076 207,694 % Change 20.5% 26.5% -2.1% 17.0% -1.6% 42.6% -30.2% -6.1% -13.7% -36.7% Source: SGE, Bloomberg Note: Trading volumes are counted single-sided, adjusted from S GE reported data, which counts both buy and sell side transactions. The total and % change in 2017 is on a YTD basis.

82 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Nymex Platinum Trading Volume Troy Ounces, Monthly Total

1975 1976 1977 1978 1979 1980 1981 1982 January 735,300 290,800 521,800 1,415,400 2,192,100 1,759,000 1,823,150 1,624,900 February 358,950 147,300 373,250 1,792,950 2,272,250 1,424,200 1,484,000 1,472,600 March 276,050 217,100 770,950 2,444,200 2,171,750 2,082,900 2,806,200 2,422,150 April 475,700 948,900 402,600 1,359,150 2,106,950 1,072,200 1,834,800 2,119,800 May 331,050 592,800 295,700 1,922,500 2,258,200 1,330,650 1,541,800 1,657,250 June 239,900 973,200 362,500 1,694,000 2,539,650 1,877,850 2,232,700 2,330,650 July 481,800 1,049,950 270,550 1,298,150 2,382,050 2,037,700 1,896,250 2,791,050 August 420,100 697,450 248,850 1,725,300 2,799,750 1,333,100 1,954,550 3,844,750 September 345,650 590,600 458,650 1,402,950 2,420,500 2,986,850 3,193,100 4,240,300 October 313,850 539,600 729,550 1,949,150 1,750,750 2,048,300 1,771,500 3,541,500 November 173,700 341,900 845,450 1,656,500 1,909,500 1,738,100 1,658,200 3,501,600 December 264,450 383,950 733,550 1,622,650 2,002,750 1,794,550 2,328,400 3,904,650 ______Annual Total 4,416,500 6,773,550 6,013,400 20,282,900 26,806,200 21,485,400 24,524,650 33,451,200

1983 1984 1985 1986 1987 1988 1989 1990 January 6,302,400 2,234,250 2,052,300 5,113,550 5,859,600 4,140,700 5,178,750 4,282,850 February 5,852,300 2,184,050 1,310,050 5,735,600 4,286,550 3,878,700 4,827,550 4,045,400 March 5,395,600 3,444,100 2,672,700 6,990,100 6,705,200 5,961,500 7,423,800 4,063,500 April 3,594,450 2,722,800 2,439,100 5,014,700 7,464,800 3,715,400 5,366,050 2,763,250 May 5,311,600 2,246,150 2,153,900 3,851,000 5,535,100 6,163,150 5,581,950 3,259,400 June 5,769,550 2,688,050 2,109,600 6,110,900 5,826,750 9,112,200 6,342,500 3,506,850 July 3,796,000 2,760,000 2,017,450 3,768,450 4,355,550 5,724,500 3,489,550 2,636,150 August 3,849,100 1,917,600 4,905,800 9,491,150 6,659,950 5,291,500 4,341,250 3,690,800 September 3,961,700 2,611,350 4,133,400 14,469,200 6,133,850 6,252,600 4,257,400 3,860,250 October 3,075,350 1,795,400 3,431,700 8,241,350 6,361,300 5,730,350 2,821,150 3,398,850 November 2,861,950 1,915,200 3,237,900 6,832,250 4,431,150 8,240,700 4,992,200 2,504,750 December 2,894,100 2,037,400 4,198,900 5,663,500 4,457,500 8,961,450 4,404,300 3,034,650 ______Annual Total 52,664,100 28,556,350 34,662,800 81,281,750 68,077,300 73,172,750 59,026,450 41,046,700

1991 1992 1993 1994 1995 1996 1997 1998 January 2,540,350 2,393,750 1,469,600 2,412,950 3,070,000 3,513,000 3,025,750 1,909,900 February 2,116,350 1,916,600 2,777,750 3,264,850 1,929,700 3,027,250 4,166,250 1,776,900 March 3,633,150 2,705,200 3,071,250 4,721,300 6,564,700 4,312,900 4,312,100 3,293,550 April 2,149,750 1,464,700 2,530,150 3,130,000 3,494,600 2,707,550 2,885,950 1,808,450 May 2,552,950 1,883,000 3,288,900 3,257,000 3,019,100 2,396,450 3,350,000 1,810,400 June 2,782,500 4,099,200 3,626,750 4,415,000 3,767,650 4,440,300 3,624,050 2,373,200 July 2,029,450 3,048,650 2,987,550 4,209,100 2,671,100 2,665,600 1,936,800 1,761,150 August 2,287,100 2,531,600 2,819,950 3,770,450 3,122,550 2,682,700 1,819,550 1,375,250 September 2,790,600 2,589,850 2,927,600 4,621,950 4,941,850 4,507,000 3,123,100 2,915,100 October 2,243,350 1,425,300 1,848,250 3,043,900 2,795,950 2,355,800 2,309,400 2,219,050 November 2,093,500 2,113,550 2,199,900 3,863,200 2,816,950 2,098,500 1,445,650 2,132,900 December 3,013,250 2,691,250 3,256,100 4,080,550 4,140,500 4,416,350 2,931,250 3,037,600 ______Annual Total 30,232,300 28,862,650 32,803,750 44,790,250 42,334,650 39,123,400 34,929,850 26,413,450

83 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Nymex Platinum Trading Volume Troy Ounces, Monthly Total

1999 2000 2001 2002 2003 2004 2005 2006 January 1,885,000 1,661,300 963,900 642,400 777,250 816,850 770,500 1,030,200 February 2,684,900 1,567,600 644,250 690,350 757,850 778,700 1,012,650 1,378,600 March 3,417,500 1,750,650 1,580,850 1,221,700 1,908,500 2,112,450 2,064,850 2,140,200 April 1,845,000 1,402,850 748,050 553,300 673,600 1,461,400 813,350 860,750 May 1,325,350 1,137,050 785,700 614,700 948,400 656,250 1,006,750 1,734,200 June 3,772,200 2,359,850 1,162,250 1,358,800 1,548,050 1,424,750 2,779,400 2,299,250 July 1,376,800 826,350 725,200 709,900 542,600 779,900 1,256,600 811,000 August 1,805,750 736,950 623,850 929,150 593,900 909,000 1,330,200 1,071,400 September 5,109,800 1,832,150 852,000 1,488,100 1,884,300 1,703,700 2,626,750 2,200,000 October 1,531,850 606,100 497,850 591,700 963,750 1,219,550 1,091,350 1,059,100 November 1,608,800 633,100 570,050 493,900 702,000 930,300 1,522,350 2,337,700 December 2,000,450 1,532,250 1,144,500 1,694,550 2,115,050 1,991,700 2,534,100 1,733,550 ______Annual Total 28,363,400 16,046,200 10,298,450 10,988,550 13,415,250 14,784,550 18,808,850 18,655,950

2007 2008 2009 2010 2011 2012 2013 2014 January 1,026,700 2,723,950 1,554,500 4,407,350 6,150,600 7,505,550 14,048,950 10,873,250 February 1,348,750 3,598,900 1,759,950 4,181,500 4,857,500 8,641,100 13,750,650 9,714,800 March 2,954,950 4,245,050 4,147,450 8,829,700 11,768,650 12,623,200 16,763,650 19,465,750 April 1,322,850 2,064,150 1,614,850 4,568,250 5,276,200 6,847,700 13,881,700 9,131,400 May 1,776,250 2,723,800 1,829,200 6,689,700 5,682,750 9,060,800 11,710,900 11,969,850 June 3,348,400 3,319,900 5,220,650 7,219,850 14,452,500 14,189,000 19,421,200 18,993,000 July 1,768,550 2,156,350 2,379,850 3,551,400 4,779,450 6,916,300 9,447,100 10,508,150 August 1,798,750 2,376,950 2,432,500 3,704,950 12,562,500 10,887,950 10,809,700 8,996,900 September 2,900,950 3,708,250 6,847,350 9,389,350 14,657,100 18,570,550 17,067,000 19,963,150 October 1,705,000 1,905,350 2,720,650 4,960,200 7,808,600 10,582,800 11,109,500 13,596,050 November 1,806,300 1,500,550 3,409,700 7,653,900 6,805,450 9,157,700 9,269,000 10,557,550 December 3,316,200 3,453,950 6,993,450 9,292,900 11,641,100 16,102,550 15,397,450 18,027,100 ______Annual Total 25,073,650 33,777,150 40,910,100 74,449,050 106,442,400 131,085,200 162,676,800 161,796,950

2015 2016 2017 January 12,150,850 11,454,650 17,280,950 February 10,010,200 13,143,650 14,344,650 March 20,426,400 20,654,100 25,779,650 April 10,859,650 12,437,900 14,028,750 May 10,585,500 12,493,050 June 21,718,700 21,750,900 July 12,087,150 13,984,450 August 13,419,550 13,912,300 September 22,192,500 22,804,600 October 12,551,750 15,131,050 November 11,086,300 18,022,850 December 16,998,800 21,158,600 ______Annual Total 174,087,350 196,948,100 71,434,000

Note: Annual trading volume for 2016 through March. S ource: New York Mercantile Exchange. May 12, 2017

84 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Nymex Platinum Open Interest Troy Ounces

1975 1976 1977 1978 1979 1980 1981 1982

January 272,250 208,050 268,150 370,400 437,750 410,000 470,500 313,900 February 266,950 210,450 301,300 435,150 493,300 420,450 447,300 376,200 March 272,850 208,100 330,250 342,800 465,100 310,450 472,050 434,300 April 197,800 319,500 303,000 347,050 454,400 271,700 385,450 415,100 May 220,250 296,550 287,500 514,450 443,050 318,450 406,500 516,300 June 232,250 414,750 277,500 387,400 484,150 397,150 394,550 466,850 July 288,250 324,950 262,550 406,000 543,250 389,850 276,000 556,850 August 296,500 293,750 258,750 413,900 492,500 414,300 322,300 642,650 September 249,150 309,000 292,950 423,300 428,150 711,950 421,050 707,050 October 210,350 279,000 291,550 418,650 376,250 607,000 352,750 650,100 November 212,950 300,150 260,750 440,800 379,750 601,300 430,050 777,350 December 252,700 272,850 303,250 461,500 446,300 595,550 391,950 781,000

1983 1984 1985 1986 1987 1988 1989 1990

January 996,350 634,600 760,500 908,150 824,500 1,006,750 926,350 938,850 February 1,175,300 695,600 706,550 1,024,500 837,050 961,850 957,200 775,150 March 759,850 690,250 662,800 996,900 988,550 876,700 951,450 851,450 April 793,900 762,200 604,800 788,400 984,950 767,650 980,800 820,750 May 918,750 792,600 583,400 829,100 899,050 1,153,100 1,037,250 791,250 June 795,900 862,700 568,550 937,400 868,100 1,055,100 914,750 823,200 July 846,700 788,750 583,850 937,450 1,047,350 919,800 895,700 850,250 August 783,550 788,300 824,600 1,296,950 1,114,000 886,850 1,009,550 821,000 September 770,650 861,400 657,450 1,168,200 1,311,650 1,066,650 874,200 987,600 October 622,500 741,300 653,400 957,600 1,109,400 905,300 913,100 857,000 November 661,350 737,650 898,450 910,200 1,007,050 1,251,500 1,052,800 779,950 December 669,200 776,250 742,650 885,350 888,200 995,950 938,350 804,450

1991 1992 1993 1994 1995 1996 1997 1998

January 789,250 777,550 658,600 859,100 1,107,150 1,016,550 1,359,950 517,850 February 827,750 689,250 704,850 991,200 1,171,100 1,134,400 1,249,750 535,950 March 757,650 664,500 654,700 1,279,800 1,096,450 1,313,450 872,300 678,550 April 782,000 806,200 906,800 1,096,500 1,098,350 1,271,400 850,350 675,450 May 883,150 916,600 1,009,650 1,107,850 1,002,050 1,381,850 1,013,600 560,900 June 868,500 965,450 857,350 1,116,700 1,007,550 1,344,900 789,100 558,450 July 956,900 930,400 1,132,900 1,446,550 1,217,700 1,237,300 772,350 489,050 August 986,200 905,750 902,300 1,279,550 1,202,150 1,317,650 653,350 538,850 September 908,100 786,200 821,550 1,129,950 1,104,850 1,416,950 696,950 710,550 October 665,500 631,550 840,750 1,240,850 1,199,800 1,399,700 650,650 833,350 November 669,300 666,800 827,950 1,369,700 1,074,650 1,374,350 647,500 729,100 December 761,900 589,800 1,018,900 1,188,400 1,154,500 1,299,500 549,150 577,150

85 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Nymex Platinum Open Interest Troy Ounces

1999 2000 2001 2002 2003 2004 2005 2006

January 675,200 577,950 388,400 308,300 438,400 354,500 396,650 584,300 February 866,150 133,950 366,300 319,250 406,500 414,850 369,400 428,800 March 699,600 491,500 322,950 343,700 321,400 421,750 399,250 453,950 April 628,000 398,000 336,850 355,350 308,750 303,700 432,450 492,450 May 565,350 565,850 372,400 322,400 450,400 269,050 397,300 475,000 June 666,100 473,650 275,900 323,550 330,700 389,750 559,000 366,900 July 783,750 501,750 310,550 256,850 395,650 263,450 486,700 434,100 August 628,700 505,050 305,100 387,100 460,200 322,750 570,100 487,000 September 792,000 431,000 274,900 349,150 422,350 338,600 661,550 391,600 October 677,850 379,900 285,450 347,900 443,550 298,900 665,250 382,400 November 590,350 415,350 310,250 384,700 479,400 418,700 663,500 419,700 December 597,650 434,350 318,150 412,750 407,700 318,900 485,250 394,650

2007 2008 2009 2010 2011 2012 2013 2014

January 504,550 884,200 937,000 1,725,450 2,073,000 2,251,500 3,437,800 2,990,600 February 626,350 763,850 1,022,000 1,742,400 1,981,950 2,258,900 3,290,800 3,250,750 March 578,300 593,200 1,005,050 1,898,850 1,668,150 2,044,450 3,178,500 3,342,250 April 719,950 683,400 991,750 1,869,800 1,923,150 2,065,650 3,134,600 3,177,700 May 715,950 788,000 1,145,450 1,508,250 1,756,050 2,456,600 3,130,650 3,571,450 June 723,600 754,700 1,149,800 1,470,300 1,577,250 2,460,700 3,070,950 3,347,150 July 738,700 664,200 1,113,400 1,513,000 1,754,250 2,611,000 3,155,150 3,466,650 August 522,600 626,200 1,344,500 1,550,500 1,958,100 2,733,750 3,313,650 3,163,250 September 729,750 733,950 1,432,600 1,890,400 1,858,100 2,995,450 2,992,900 2,959,600 October 783,050 765,950 1,540,700 1,893,350 1,890,050 3,057,900 2,842,100 3,019,000 November 660,150 862,950 1,773,750 1,725,050 2,038,750 3,075,050 3,041,450 3,210,700 December 918,200 910,850 1,627,650 1,954,650 2,097,750 2,979,650 3,101,850 3,205,950

2015 2016 2017

January 3,216,100 3,315,200 3,227,600 February 3,442,350 3,279,700 3,560,000 March 3,442,400 2,889,000 3,183,300 April 3,539,550 3,178,350 3,379,000 May 3,731,100 3,089,750 June 3,883,500 3,053,850 July 3,927,050 3,938,000 August 3,504,050 3,931,050 September 3,777,700 3,401,950 October 3,504,950 3,541,400 November 3,824,850 3,439,100 December 3,326,700 3,147,200

Note: Month-end data. Source: New York Mercantile Exchange. May 14, 2017

86 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Nymex Platinum Options Trading Volume Troy Ounces, Monthly Total

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 January - 61,200 156,200 110,150 273,600 146,900 243,500 153,150 70,850 120,000 February - 65,400 148,150 393,050 327,500 135,100 175,150 270,750 37,950 115,500 March - 126,650 132,550 230,150 436,850 190,950 179,900 141,650 67,250 34,300 April - 51,200 104,850 307,550 388,450 196,700 193,250 65,650 50,250 11,300 May - 135,350 163,950 378,000 361,200 293,000 200,150 147,200 68,650 23,550 June - 106,050 163,100 309,000 261,100 103,650 135,800 166,300 83,750 30,450 July - 127,350 232,000 275,250 488,150 160,000 88,100 89,400 70,150 43,100 August - 206,200 212,750 235,600 460,000 281,200 138,200 162,550 42,200 19,250 September - 115,900 170,650 235,650 622,350 228,950 117,400 109,100 41,250 56,650 October 58,350 143,300 113,350 238,650 425,800 175,000 85,000 97,700 72,200 35,600 November 64,050 110,850 125,250 212,950 306,350 180,050 100,100 75,700 71,950 44,600 December______65,050______150,000______250,100______207,050______176,450______88,550______152,200______77,800______32,700______23,000 Annual Total 187,450 1,399,450 1,972,900 3,133,050 4,527,800 2,180,050 1,808,750 1,556,950 709,150 557,300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 January 38,750 8,950 2,150 650 6,150 550 500 10,000 0 0 February 109,200 45,400 250 3,900 2,400 550 150000 March 35,350 7,450 2,550 6,050 4,650 2,000 250 5,000 0 1,000 April28,6003,7002,9504508,6506,400150000 May57,9001,4501,4001,1501,3006,95010,000000 June19,9506,0502,0002,6501,2008000000 July21,2002,1502,3502,8501,5501,0000000 August13,5506,3001,8506001,4504000000 September3,1502,6501,4002,4502,4506000000 October8,3501,9501,5005,250200500000 November2,2002,2502,8502,4509501005,000000 December15,0502,3501,5503,2009008000000______Annual Total 353,250 90,650 22,800 31,650 31,850 20,200 16,050 15,000 0 1,000

2010 2011 2012 2013 2014 2015 2016 2017 January 0 18,500 268,850 1,759,000 721,950 310,150 302,150 4,428 February 500 101,900 457,100 1,396,950 315,450 369,550 239,050 2,118 March 56,750 224,950 190,800 813,350 805,250 169,550 165,200 April 0 384,100 165,150 1,100,200 566,200 642,000 210,500 May 0 561,950 385,350 489,300 1,570,650 179,050 281,900 June 0 767,500 215,100 570,750 683,000 208,550 52,600 July 0 917,950 58,400 1,058,300 570,350 194,850 132,850 August 2,500 541,150 524,150 514,400 473,100 46,300 340,150 September 42,400 286,600 936,200 192,550 566,850 216,800 288,750 October 238,000 227,350 790,800 660,650 369,500 232,800 185,000 November 83,000 177,200 615,050 351,400 399,350 206,800 180,400 December______109,000______37,200______310,600______285,550______176,850______137,350______282,500 ______Annual Total 532,150 4,246,350 4,917,550 9,192,400 7,218,500 2,913,750 2,661,050 6,546

Note: Annual trading volume for 2017 through April. Source: New York Mercantile Exchange May 12, 2017

87 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Nymex Platinum Options Open Interest Troy Ounces, Monthly-End

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 January - 77,650 141,950 184,650 157,750 200,250 168,650 231,750 66,250 120,350 February - 110,300 168,050 278,050 226,550 245,250 182,000 290,300 69,500 133,200 March - 72,900 122,350 159,400 174,500 105,050 75,900 106,200 30,500 19,250 April - 82,200 129,800 194,800 299,500 150,050 141,050 132,750 58,500 24,900 May - 121,600 155,050 254,850 353,500 266,750 209,700 150,250 86,100 32,750 June - 96,850 115,200 140,250 224,150 130,050 161,500 107,250 72,000 28,850 July - 136,700 191,950 180,450 266,700 201,250 189,850 136,200 85,400 61,850 August - 220,250 205,900 229,350 351,650 299,300 238,200 194,100 76,500 68,100 September - 127,950 160,300 134,050 240,500 172,850 96,250 102,200 32,600 23,550 October 40,950 140,300 160,250 157,250 336,650 193,250 145,850 159,050 71,650 0 November 72,650 147,400 193,650 180,400 346,900 260,950 189,450 208,700 81,500 61,300 December 56,900 74,950 124,750 124,750 147,100 117,250 163,800 57,050 20,650 16,300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 January 42,250 22,400 1,650 950 5,150 1,050 250 10,000 0 0 February 77,550 23,800 650 3,900 6,200 1,600 300 10,000 0 0 March32,8505,6001,7504,6503,2002,45050000 April48,7508,3502,7504,6503,2007,85050000 May 62,050 8,850 3,600 5,300 4,550 14,600 0 10,050 0 0 June6,7504,6501,6501,8501,7507000000 July22,6006,3504,6002,2502,1001,7000000 August20,70010,0003,2002,5503,2002,0000000 September3,9504,2506001,2001,1005500000 October10,9505,1001,6505,5001,3006500000 November7,8506,6501,6506,2001,9507505,000000 December15,2501507501,6505004000000

2010 2011 2012 2013 2014 2015 2016 2017 January 0 180,900 810,400 1,546,000 713,950 502,050 199,000 334,700 February 0 278,800 1,165,900 1,819,200 792,000 793,450 205,950 383,050 March 0 274,850 513,000 1,294,400 784,100 327,000 234,700 April 0 572,450 446,900 1,648,700 1,063,450 685,050 295,100 May 0 885,400 725,800 1,458,450 1,817,400 787,600 396,150 June 0 1,147,400 373,150 578,000 1,143,500 185,650 171,850 July 56,250 1,399,300 409,400 1,019,000 1,345,650 256,100 216,350 August 56,250 1,448,600 728,300 916,000 1,331,350 228,450 302,100 September 56,250 1,230,400 788,250 669,400 898,700 260,600 270,850 October 202,500 1,247,350 951,000 1,027,600 818,950 265,100 291,650 November 207,500 1,239,050 863,350 992,450 1,054,500 174,100 340,700 December 232,500 631,100 470,750 229,950 448,550 113,700 387,000

Note: Open Interest for 2017 through April. Month-End. S ource: New York Mercantile Exchange May 12, 2017

88 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Tocom Platinum Trading Volume Troy Ounces, Monthly Total

1984 1985 1986 1987 1988 1989 1990 1991 1992

January 25,406 402,306 1,586,051 2,923,859 4,172,937 3,998,630 4,072,304 5,696,192 7,986,443 February 73,437 350,287 2,019,761 2,101,174 4,161,375 3,182,907 5,151,732 5,971,494 8,558,195 March 58,467 573,702 1,669,876 2,192,604 6,147,931 4,900,541 4,218,573 5,949,166 7,920,727 April 70,913 710,382 2,002,555 3,858,332 6,281,105 4,529,479 4,475,506 4,937,351 4,869,979 May 58,483 711,331 1,683,801 3,027,526 9,739,897 3,600,135 3,524,428 5,603,401 4,542,251 June 67,021 446,558 1,638,118 2,449,000 10,456,406 2,990,526 2,925,811 6,263,358 5,325,812 July 101,497 562,880 1,355,496 3,918,037 6,236,274 2,189,855 4,116,148 6,748,448 6,114,356 August 79,532 1,636,703 5,150,376 7,861,271 4,154,493 2,319,974 4,653,729 13,809,706 7,981,058 September 134,316 1,337,904 7,046,915 2,554,758 5,020,755 1,699,383 5,111,159 6,417,714 5,313,434 October 184,920 1,106,658 3,821,862 4,994,705 3,487,543 2,712,471 6,741,726 6,680,498 5,572,022 November 240,541 1,037,996 4,205,563 5,843,102 5,451,152 11,108,691 5,553,720 5,452,775 4,449,609 December ______346,267______938,895______2,603,030______4,364,836______6,573,842______5,397,702______4,245,629 10,119,401______4,756,407 Annual Total 1,440,800 9,815,602 34,783,404 46,089,204 71,883,710 48,630,294 54,790,464 83,649,503 73,390,290 1993 1994 1995 1996 1997 1998 1999 2000 2001 January 2,519,522 8,988,516 2,594,417 16,363,838 7,901,533 12,192,928 15,658,500 24,671,643 27,172,437 February 6,464,380 8,263,534 3,215,713 19,114,909 16,210,560 8,500,693 24,819,328 39,100,395 17,330,963 March 6,706,588 9,270,301 6,845,527 10,751,339 14,084,820 19,407,031 24,251,578 16,285,567 15,274,396 April 4,742,373 9,243,969 9,237,314 9,350,243 12,207,782 21,598,390 17,124,685 12,607,367 18,583,667 May 6,895,232 5,406,815 5,960,708 8,585,089 16,048,054 13,434,331 13,738,460 18,442,365 16,193,600 June 9,241,767 5,995,270 5,472,467 6,931,096 15,395,491 14,209,532 14,307,946 16,573,413 15,815,460 July 7,537,314 5,594,640 8,283,998 7,156,264 14,978,657 30,851,731 13,513,823 21,654,750 17,158,266 August 8,130,012 4,919,732 12,228,197 5,051,341 14,178,314 27,431,958 13,460,148 16,230,091 47,132,171 September 7,825,127 3,520,534 17,914,724 3,841,076 12,770,885 32,477,126 18,258,608 14,723,092 18,072,117 October 6,188,447 3,861,765 10,410,782 7,722,244 21,225,764 39,199,709 20,093,094 6,456,375 24,604,947 November 6,168,980 4,462,131 8,441,922 7,020,250 12,351,688 28,536,784 22,556,449 9,165,891 18,024,406 December ______7,707,519______3,638,238______5,466,503______8,959,307 16,896,447______24,546,031______15,650,495______22,347,309______25,774,927______Annual Total 80,127,261 73,165,444 96,072,272 110,846,997 174,249,994 272,386,244 213,433,113 218,258,258 261,137,357 2002 2003 2004 2005 2006 2007 2008 2009 2010

January 21,423,876 16,609,245 20,494,801 9,711,280 14,059,276 8,637,125 12,543,242 4,200,158 7,867,244 February 19,142,559 21,255,406 19,939,832 11,748,750 15,040,258 10,111,074 15,853,687 3,926,266 5,335,573 March 21,055,429 18,817,837 27,569,547 11,184,055 14,629,678 12,370,078 7,492,592 4,728,050 6,393,324 April 19,907,263 17,452,686 22,570,081 8,619,812 15,258,095 12,486,737 9,274,143 8,903,468 7,864,765 May 15,782,377 23,407,799 16,907,185 7,922,286 18,054,017 14,367,424 9,171,277 4,275,770 8,639,269 June 18,724,632 20,195,269 17,719,633 10,138,659 15,090,333 15,029,906 9,930,660 6,443,267 6,215,373 July 22,996,190 20,925,701 17,540,088 7,654,053 15,938,034 10,892,947 10,915,902 4,865,565 5,607,593 August 15,065,995 19,758,663 17,777,424 12,260,444 12,766,352 15,190,740 8,731,632 5,000,402 4,960,937 September 16,670,717 18,158,297 16,092,454 9,480,968 16,039,261 8,888,800 8,913,010 4,170,145 4,665,690 October 23,754,722 16,002,529 15,180,114 10,931,881 13,092,006 15,133,334 8,150,701 4,225,493 5,364,627 November 20,268,750 14,162,946 17,335,031 19,621,894 15,584,232 13,311,370 6,041,631 4,994,862 6,377,249 December 17,273,735______21,713,666______14,165,245______18,544,926______11,567,774______10,507,395______5,319,131______5,084,620______4,417,207 Annual Total 232,066,244 228,460,045 223,291,434 137,819,007 177,119,315 146,926,931 112,337,607 60,818,065 73,708,852

2011 2012 2013 2014 2015 2016 2017

January 5,016,268 4,083,766 7,897,231 6,022,357 5,630,356 4,993,354 4,848,030 February 4,481,943 5,044,622 8,867,366 5,282,868 4,802,112 3,782,884 3,740,859 March 6,982,762 5,590,476 6,026,179 6,276,154 5,471,007 3,790,207 4,397,711 April 4,375,157 4,087,473 7,057,072 5,583,455 5,000,807 3,772,087 3,081,140 May 3,846,265 4,155,726 5,638,239 5,813,043 3,519,550 3,258,084 June 4,739,412 4,267,443 6,715,908 6,550,110 5,123,648 4,125,282 July 3,457,309 3,884,361 5,581,889 6,874,498 7,114,207 4,723,690 August 4,929,609 4,628,248 5,297,538 5,236,468 6,712,372 3,809,012 September 4,608,372 5,983,956 4,560,876 6,492,525 5,543,604 3,506,510 October 6,206,908 6,166,009 5,100,062 9,171,151 5,303,985 3,633,309 November 4,489,521 5,631,247 4,522,012 6,037,381 4,780,719 4,349,903 December ______4,262,832______4,602,357______4,217,686______7,189,925______4,920,176______4,224,904 ______Annual Total 57,396,359 58,125,681 71,482,060 76,529,935 63,922,543 47,969,227 16,067,740 Notes: Annual trading volume for 2017 through April. Source: Tokyo Commodity Exchange. May 12, 2017 89 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Tocom Platinum Open Interest Troy Ounces

1984 1985 1986 1987 1988 1989 1990 1991 1992 January 19,473 263,406 676,872 1,769,733 3,075,718 3,684,780 4,045,764 3,824,821 5,743,899 February 41,068 313,769 738,635 1,737,090 3,110,547 3,410,118 3,879,705 4,485,007 5,697,458 March 50,346 368,795 823,135 1,667,560 3,632,183 3,692,901 3,687,942 5,655,340 5,750,603 April 56,505 426,876 847,754 1,745,516 4,004,579 3,306,000 3,398,393 5,539,550 6,425,285 May 60,815 498,593 884,368 1,909,018 4,323,751 3,576,867 3,163,624 5,561,187 4,178,787 June 64,593 536,348 938,091 1,916,479 4,521,278 3,237,049 3,067,319 5,957,669 4,291,138 July 70,302 546,029 1,009,245 1,867,596 4,399,247 3,308,846 2,972,235 6,165,041 4,513,267 August 89,984 495,377 1,340,992 2,330,040 3,911,315 3,258,644 2,912,935 6,546,268 4,025,396 September 130,232 512,872 1,692,082 2,375,852 3,353,629 3,142,112 2,698,960 6,660,886 5,743,899 October 181,575 545,160 1,663,782 2,649,550 3,246,214 2,901,347 3,005,318 6,485,455 4,104,005 November 229,027 606,023 1,763,703 2,847,752 3,678,911 3,757,944 3,590,962 6,404,757 4,161,571 December 226,133 640,338 1,764,844 2,991,137 3,538,661 3,804,480 3,734,448 5,818,666 3,823,924

1993 1994 1995 1996 1997 1998 1999 2000 2001 January 3,675,179 3,988,423 2,353,238 5,260,851 4,853,759 5,186,824 6,949,229 6,397,121 4,882,791 February 3,300,993 4,012,729 2,297,955 5,386,094 5,123,198 4,908,897 7,114,307 5,090,051 4,643,799 March 3,424,066 4,178,819 2,324,190 5,388,152 5,715,108 5,268,391 7,306,439 4,300,333 4,613,063 April 3,257,139 3,981,896 3,031,007 5,069,860 5,607,629 5,897,740 6,688,390 4,128,745 4,656,418 May 3,852,168 3,783,944 3,898,931 5,038,384 5,872,647 5,563,357 6,330,135 3,822,525 4,590,445 June 3,857,762 3,565,304 3,306,153 4,890,234 6,003,147 5,343,816 5,930,904 3,883,531 4,337,724 July 3,924,572 3,422,297 3,838,167 4,909,637 5,666,625 6,840,415 5,459,896 3,564,420 3,810,742 August 3,884,753 3,225,149 4,093,508 4,465,941 5,407,282 7,000,381 5,031,359 3,209,090 4,766,100 September 4,089,617 3,192,147 4,970,337 4,466,616 5,630,150 7,260,030 5,322,854 3,344,412 4,217,288 October 3,983,086 2,934,169 5,369,842 4,648,621 5,685,353 7,182,804 6,482,208 3,061,824 4,402,878 November 4,205,006 2,978,569 5,153,709 4,848,631 6,034,108 7,442,324 6,959,437 3,004,226 3,997,232 December 3,820,596 2,435,962 4,801,787 4,916,839 5,348,655 7,287,149 6,686,944 4,213,831 4,135,866 2002 2003 2004 2005 2006 2007 2008 2009 2010 January 4,164,818 3,633,335 3,482,033 2,580,271 2,099,151 1,476,023 1,209,059 571,488 765,630 February 3,749,190 3,363,494 3,079,716 2,469,109 1,949,715 1,618,531 963,171 530,564 730,390 March 3,575,753 3,034,865 3,318,708 2,458,869 1,952,528 1,250,357 760,766 600,074 761,708 April 3,393,313 2,968,104 2,653,060 2,301,845 2,044,785 1,576,510 794,299 600,868 887,925 May 3,603,740 3,380,228 2,862,923 2,133,199 1,762,968 1,891,988 927,773 636,507 840,439 June 3,251,529 3,469,237 2,774,155 2,077,064 1,524,667 1,760,058 1,152,828 579,828 916,642 July 3,141,590 3,989,291 2,787,643 2,088,927 1,630,024 1,798,944 1,106,981 583,876 857,488 August 3,105,693 4,250,146 2,947,174 1,950,503 1,543,507 1,387,769 790,409 580,510 880,071 September 3,322,550 3,799,554 2,944,667 1,976,545 1,289,854 1,430,111 699,985 555,567 834,070 October 3,647,336 3,614,671 3,045,813 2,106,884 1,311,154 1,428,890 583,873 635,536 856,032 November 3,736,265 3,604,736 2,941,034 2,431,734 1,571,944 1,412,284 593,798 687,630 917,931 December 3,512,191 3,395,982 2,723,004 1,859,420 1,484,462 1,490,523 578,780 696,841 934,460

2011 2012 2013 2014 2015 2016 2017

January 898,300 683,003 1,064,256 1,009,256 1,017,769 989,988 736,598 February 996,566 691,665 1,174,070 960,567 1,147,799 917,276 711,759 March 685,238 755,095 1,145,417 952,982 1,104,904 884,276 891,439 April 638,082 757,429 800,614 1,135,624 1,158,856 787,300 948,320 May 783,963 767,309 919,430 1,144,751 1,083,652 865,835 June 1,017,239 778,809 838,751 1,178,204 1,393,199 837,558 July 1,030,391 811,854 798,251 1,331,409 1,295,641 698,982 August 768,238 832,784 777,809 1,573,124 1,159,705 717,752 September 738,550 898,345 803,469 1,607,493 1,172,928 916,035 October 701,480 929,969 795,990 1,405,561 1,148,182 1,039,718 November 748,967 1,003,182 951,288 1,280,437 1,122,101 995,151 December 764,209 1,007,076 932,579 1,119,963 998,784 1,013,323

Notes: Month-end data. Source: Tokyo Commodity Exchange. May 12, 2017 90 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Exchange Stocks of Platinum Month-end, Through April 2017 Thousand Ounces Thousand Ounces 350 350

300 300

250 250 Tocom Nymex 200 200

150 150

100 100

50 50

0 0 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Platinum Prices, Total Open Interest, and Nymex Inventories Daily, Through 4 May 2017 $ / Oz Mln Ozs 2,500 4.4

2,300 4.0

2,100 3.6 3.2 1,900 Prices (Left scale) 2.8 1,700 2.4 1,500 2.0 1,300 1.6 1,100 Open Interest 1.2

900 0.8 Nymex Stocks 700 0.4

500 0.0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

91 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Total Reported Market Inventories Quarterly, Through First Quarter 2017

Thousand Ounces Thousand Ounces 3,500 3,500

3,000 3,000

2,500 2,500

2,000 2,000

1,500 1,500 Nymex Tocom 1,000 1,000 ETPs 500 500

U.S. Industry 0 0 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

New York Mercantile Exchange Activity - Options Trading Volume Monthly Total, Through April 2017 Ounces Ounces 2,000,000 2,000,000

1,800,000 1,800,000

1,600,000 1,600,000

1,400,000 1,400,000

1,200,000 1,200,000

1,000,000 1,000,000

800,000 800,000

600,000 600,000

400,000 400,000

200,000 200,000

0 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

92 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Reported Market Inventories Troy Ounces Exchanges U.S . Industry Nymex Tocom Exchange Traded Products Total

Ounces % of Total Ounces % of Total Ounces % of Total Ounces % of Total Ounces

1985 I 311,618 57.7 228,850 42.3 -- - - 540,468 II 258,950 50.7 230,500 45.1 21,123 4.1 - - 510,573 III 259,513 47.8 251,150 46.3 31,877 5.9 - - 542,540 IV 258,961 46.6 270,500 48.7 25,672 4.6 - - 555,133 1986 I 336,375 53.2 269,550 42.7 25,769 4.1 - - 631,694 II 380,775 56.2 271,050 40.0 25,817 3.8 - - 677,642 III 395,738 59.1 251,800 37.6 21,702 3.2 - - 669,240 IV 365,012 55.0 277,800 41.9 20,769 3.1 - - 663,581 1987 I 349,619 56.8 240,250 39.0 25,817 4.2 - - 615,686 II 332,306 53.3 223,750 35.9 67,147 10.8 - - 623,203 III 322,704 49.3 267,500 40.9 64,430 9.8 - - 654,634 IV 290,986 43.8 291,000 43.8 81,984 12.3 - - 663,970 1988 I 289,952 45.7 231,450 36.5 113,508 17.9 - - 634,910 II 316,651 43.3 199,050 27.2 216,037 29.5 - - 731,738 III 278,385 42.4 179,050 27.3 198,450 30.3 - - 655,885 IV 411,945 55.6 180,850 24.4 148,279 20.0 - - 741,074 1989 I 295,252 50.4 138,300 23.6 152,410 26.0 - - 585,963 II 259,553 48.7 140,209 26.3 133,699 25.1 - - 533,461 III 267,441 50.0 163,250 30.5 104,321 19.5 - - 535,012 IV 309,891 52.2 165,650 27.9 117,897 19.9 - - 593,438 1990 I 271,586 50.4 153,350 28.5 113,428 21.1 - - 538,364 II 272,871 50.7 150,650 28.0 114,392 21.3 - - 537,913 III 268,295 49.0 137,800 25.2 141,745 25.9 - - 547,840 IV 279,516 47.8 137,350 23.5 167,923 28.7 - - 584,789 1991 I 217,655 43.7 115,100 23.1 164,923 33.1 - - 497,678 II 224,508 41.2 110,950 20.4 209,606 38.5 - - 545,064 III 223,994 40.7 110,373 20.1 215,458 39.2 - - 549,825 IV 238,977 41.5 93,751 16.3 243,252 42.2 - - 575,980 1992 I 184,885 37.4 92,350 18.7 217,403 44.0 - - 494,638 II 277,628 48.0 86,350 14.9 214,043 37.0 - - 578,021 III 274,746 50.7 75,600 13.9 191,779 35.4 - - 542,125 IV 376,972 61.1 79,150 12.8 160,850 26.1 - - 616,972 1993 I 265,000 54.5 78,200 16.1 143,071 29.4 - - 486,271 II 252,000 52.6 72,450 15.1 155,063 32.3 - - 479,513 III 193,519 44.3 116,500 26.7 126,995 29.1 - - 437,014 IV 217,178 48.1 113,300 25.1 121,369 26.9 - - 451,847 1994 I 205,861 46.8 109,150 24.8 124,873 28.4 - - 439,884 II 205,973 46.5 120,550 27.2 116,450 26.3 - - 442,973 III 205,393 47.0 118,750 27.2 113,138 25.9 - - 437,281 IV 207,180 45.9 124,100 27.5 120,147 26.6 - - 451,427 - - 1995 I 200,000 49.8 103,750 25.8 97,835 24.4 - - 401,585 II 202,000 54.0 79,850 21.3 92,240 24.7 - - 374,090 III 185,000 57.5 61,950 19.3 74,750 23.2 - - 321,700 IV 183,000 64.4 38,200 13.4 62,951 22.2 - - 284,151 1996 I 180,000 68.2 31,100 11.8 52,952 20.1 - - 264,052 II 180,000 66.8 40,100 14.9 49,512 18.4 - - 269,612 III 186,000 57.8 70,600 21.9 65,234 20.3 - - 321,834 IV 186,000 53.2 91,450 26.1 72,275 20.7 - - 349,725 1997 I 190,000 60.4 77,300 24.6 47,519 15.1 - - 314,819 II 180,000 64.5 54,700 19.6 44,239 15.9 - - 278,939 III -- 43,000 63.3 24,949 36.7 - - 67,949 IV -- 41,900 66.5 21,123 33.5 - - 63,023 1998 I -- 36,550 66.6 18,310 33.4 - - 54,860 II -- 41,450 69.8 17,940 30.2 - - 59,390 III -- 61,350 78.5 16,783 21.5 - - 78,133 IV -- 57,050 67.3 27,666 32.7 - - 84,716 1999 I -- 69,500 71.9 27,151 28.1 - - 96,651 II -- 70,950 74.5 24,258 25.5 - - 95,208 III -- 67,850 70.2 28,775 29.8 - - 96,625 IV -- 32,700 65.6 17,185 34.4 - - 49,885 2000 I -- 18,750 60.6 12,185 39.4 - - 30,935 II -- 13,200 46.6 15,143 53.4 - - 28,343 III -- 22,400 59.7 15,111 40.3 - - 37,511 IV -- 33,500 62.6 19,998 37.4 - - 53,498 2001 I -- 28,350 59.5 19,290 40.5 - - 47,640 II -- 19,850 53.5 17,249 46.5 - - 37,099 III -- 19,450 54.7 16,075 45.3 - - 35,525 IV -- 12,300 38.5 19,676 61.5 - - 31,976 93 PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Reported Market Inventories Troy Ounces Exchanges U.S . Industry Nymex Tocom Exchange Traded Products Total

Ounces % of Total Ounces % of Total Ounces % of Total Ounces % of TotalOunces

2002 I -- 28,600 55.7 22,763 44.3 - - 51,363 II -- 25,600 61.7 15,915 38.3 - - 41,515 III -- 10,600 39.4 16,333 60.6 - - 26,933 IV -- 6,800 29.4 16,333 70.6 - - 23,133 2003 I -- 7,950 32.7 16,333 67.3 - - 24,283 II -- 5,600 26.0 15,915 74.0 - - 21,515 III -- 31,550 66.7 15,738 33.3 - - 47,288 IV -- 9,100 34.8 17,040 65.2 - - 26,140 2004 I -- 12,000 40.7 17,506 59.3 - - 29,506 II -- 9,150 38.7 14,500 61.3 - - 23,650 III -- 20,950 61.7 12,989 38.3 - - 33,939 IV -- 19,000 50.3 18,760 49.7 - - 37,760 2005 I -- 18,500 55.9 14,580 44.1 - - 33,080 II -- 17,000 54.5 14,195 45.5 - - 31,195 III -- 25,450 64.2 14,195 35.8 - - 39,645 IV -- 23,500 59.3 16,140 40.7 - - 39,640 2006 I -- 23,050 60.2 15,207 39.8 - - 38,257 II -- 22,500 58.4 15,995 41.6 - - 38,495 III -- 35,350 68.8 15,995 31.2 - - 51,345 IV -- 31,900 74.8 10,754 25.2 - - 42,654 2007 I -- 33,200 86.2 5,321 13.8 - - 38,521 II -- 32,800 59.2 5,763 10.4 16,858 30.4 55,421 III -- 39,400 38.5 4,863 4.7 58,129 56.8 102,392 IV -- 48,450 22.7 6,285 2.9 159,105 74.4 213,840 2008 I -- 53,400 12.6 15,014 3.5 356,022 83.9 424,436 II -- 53,400 10.6 20,898 4.1 430,998 85.3 505,296 III -- 52,900 15.1 10,979 3.1 286,040 81.7 349,919 IV -- 78,100 23.7 12,137 3.7 239,884 72.7 330,121 2009 I - - 128,950 24.6 12,973 2.5 382,135 72.9 524,058 II - - 126,150 20.8 20,335 3.4 460,456 75.9 606,941 III - - 146,750 21.4 19,821 2.9 517,970 75.7 684,541 IV - - 139,500 17.1 17,715 2.2 660,746 80.8 817,961 2010 I - - 134,100 12.4 19,403 1.8 928,734 85.8 1,082,237 II - - 132,900 11.1 19,098 1.6 1,044,799 87.3 1,196,797 III - - 128,550 11.0 22,216 1.9 1,019,044 87.1 1,169,811 IV - - 108,100 8.6 30,447 2.4 1,123,671 89.0 1,262,218 2011 I - - 125,650 8.3 23,004 1.5 1,359,900 90.1 1,508,554 II - - 122,600 7.9 23,615 1.5 1,396,070 90.5 1,542,285 III - - 166,650 9.9 24,804 1.5 1,495,684 88.7 1,687,138 IV - - 180,500 11.3 29,804 1.9 1,387,248 86.8 1,597,552 2012 I - - 198,100 12.0 22,907 1.4 1,432,455 86.6 1,653,463 II - - 192,600 12.1 39,706 2.5 1,354,044 85.4 1,586,350 III - - 210,850 12.2 40,092 2.3 1,477,702 85.5 1,728,644 IV - - 207,450 11.6 52,743 3.0 1,525,656 85.4 1,785,849 2013 I - - 234,157 12.8 25,447 1.4 1,574,140 85.8 1,833,745 II - - 230,560 10.4 36,025 1.6 1,960,596 88.0 2,227,181 III - - 286,776 11.7 29,161 1.2 2,142,227 87.1 2,458,164 IV - - 250,669 9.3 49,850 1.8 2,400,160 88.9 2,700,679 2014 I - - 248,117 9.2 37,198 1.4 2,420,527 89.5 2,705,842 II - - 243,441 8.1 42,246 1.4 2,717,107 90.5 3,002,794 III - - 146,491 5.1 70,603 2.4 2,676,725 92.5 2,893,820 IV - - 135,207 4.7 74,799 2.6 2,688,817 92.8 2,898,823 2015 I - - 131,153 4.7 70,812 2.5 2,611,344 92.8 2,813,309 II - - 128,444 4.5 67,742 2.4 2,646,332 93.1 2,842,518 III - - 123,887 4.2 61,006 2.1 2,772,196 93.7 2,957,089 IV - - 154,544 5.8 86,164 3.2 2,427,777 91.0 2,668,485 2016 I - - 192,119 7.2 71,970 2.7 2,400,308 90.1 2,664,397 II - - 187,063 7.1 70,217 2.7 2,390,635 90.3 2,647,916 III - - 242,180 9.2 70,217 2.7 2,308,775 88.1 2,621,172 IV - - 238,070 8.7 70,217 2.6 2,426,343 88.7 2,734,630 2017 I 226,723 8.2 40,880 1.5 2,489,193 90.3 2,756,796 Notes: First through third quarters, end of quarter stock levels; fourth quarter reflects annual reporting. U.S. industry stocks include dealers, importers and refiners. In the third quarter of 1997, U.S. Bureau of Mines ceased publication of U.S. Industry stock level data. NA -- not available. Sources: U.S. Bureau of Mines, Tokyo Commodity Exchange, New York Mercantile Exchange Inc. ETP issuer websites, Bloomberg, CPM Group May 12, 2017 94 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Prices Price trends in 2016

Platinum prices, basis the nearby active During the first half of 2016 platinum Nymex futures contract, fell on an an- prices trended higher, peaking on 10 nual average basis in 2016 to $991.75. August at an intraday high of This was down 5.9% from $1,053.83 $1,199.50. Following this peak prices averaged in 2015, making last year the then trend lower. Prices began 2016 at fifth consecutive year of declining an- $884.50 and end the year at $901.60. nual average prices. Through the first This was a small increase of 1.9% even four months of this year platinum prices as prices had moved in that $388.10 averaged $978.33, up 4.1% from range over the course of the year. $939.49 averaged during the same time in 2016. Platinum traded between $811 and $900 in January 2016, breaking above $900 On an intraday basis platinum traded in in early February. Prices eventually ral- a narrower range in 2016 compared to lied in early March, topping $1,000, but 2015: Prices traded in a $388.10 band only briefly as they settled at $1,002 on between $811.40 and $1,119.50. In 7 March. Prices declined into early 2015 platinum moved between $825 April before move back firmly above and $1,290.30, a $465.30 range. Last $1,000 in the second half of that month. year, on an intraday basis, platinum prices bottomed out at $811.40 on 21 In May prices reached an intraday high January and topped out at $1,199.50 on of $1,092.30 before backing of for most 10 August. of the remainder of the month. By the

Real and Nominal Platinum Prices Quarterly, Through First Quarter 2017 $/Ounce $/Ounce $2,000 $2,000

$1,800 $1,800

$1,600 $1,600

$1,400 $1,400

$1,200 $1,200 Nominal Platinum Price $1,000 $1,000

$800 $800

$600 $600

$400 $400

$200 $200 Real Platinum Price $0 $0 68 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 16

Note: Real prices are indexed to the base period of 1982-1984=100 95

PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 end of May prices had fallen back to above $1,000 in February but then drop- $980.40. Platinum then moved sideways ping back below this level in March. By in June until rallying once more in July. April prices were moving mainly side- Prices broke above $1,100 in July, near- ways, but began a downward descent in ing the $1,200 resistance level in early early May, as platinum settled at August, but supply concerns over South $907.70 on 4 May. The price seasonal- Africa eventually eased and many ity chart later in this section of the re- prices sold off. port shows that there is a strong seasonal price pattern with which 2017 is By October platinum was firmly trading in line. between $900 and $1,000 once more. It was only briefly that prices jumped Volatility above $1,000 in early November, but by the end of December platinum was trad- Annual platinum price volatility was ing on either side of $900. 24.3% in 2016, up from 20.5% in 2015. Volatility is calculated as the standard Prices In Early 2017 deviation of the daily logarithmic price changes based on the nearby active Ny- During the first four months of this year mex contract settlement price. Platinum platinum prices appeared to be follow- price volatility was prevalent in 2016. ing a similar pattern compared to last Monthly volatility was mainly above year. Platinum traded mostly between 20% with the exception of July and Oc- $900 and $1,000 in January, moving tober, when volatility measured 19.6%

Daily High, Low and Settlement Prices Through 4 May 2016 $/Oz $/Oz $1,300 $1,300

$1,200 $1,200

$1,100 $1,100

$1,000 $1,000

$900 $900

$800 $800

$700 $700 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM and 18.5%, respectively. The highest volatility was in December, at 31.1%. During the first four months of 2017 monthly volatility eased, touching a multi-year low of 11.8% in February.

Platinum –Gold Spread

In 2016 gold prices were at a premium to platinum prices every month, averag- ing a premium of $235.30 for the year. The month with the highest gold price premium was May when it averaged $427.65. The gold premium narrowed from then to $20.90 in October before widening once more over the next several months. By April 2017 gold prices held a premium to platinum prices by $301.35.

Platinum Price Volatility Monthly, Through April 2017 Percent Percent 100% 100%

90% 90%

80% 80%

70% 70%

60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%

0% 0% 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17

PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Platinum Price Seasonality Monthly Seasonal Strength Seasonal Strength 106 106

104 104

102 102

100 100

98 98

96 96

94 94

92 92 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Monthly Platinum and Gold Prices Through April 2017 $/Ounce $/Ounce 2,200 2,200 2,000 2,000 1,800 Platinum 1,800 1,600 1,600 1,400 1,400 1,200 1,200 1,000 1,000 800 800 600 600 400 Gold 400 200 200 0 0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Platinum - Gold Price Differential Monthly Data, Through April 2017 $/Ounce $/Ounce 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 -200 -200 -400 -400 -600 -600 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Platinum/Gold Price Ratio Monthly, Through April 2017 Price Ratio Price Ratio 2.4 2.4 2.2 2.2 2.0 2.0 1.8 1.8 1.6 1.6 1.4 1.4 1.2 1.2 1.0 1.0 0.8 0.8 0.6 0.6 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Quarterly Real and Nominal Interest Rates and the Price of Platinum Through First Quarter 2017. Nominal interest rate is the T-bill. Real interest rate is adjusted using U.S. Consumer Price Index Percent Change $/Ounce 20 2,400

Nominal Interest Rate Platinum (right scale) 15 2,000

10 1,600

5 1,200

0 800

-5 400 Real Interest Rate -10 0 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Platinum Contango and Backwardation Difference between Nymex nearby active and forward active prices, annualized and expressed in percentage terms. Daily, Through 4 May 2017

Percent Percent 15% 15%

10% 10%

5% 5%

0% 0%

-5% -5%

-10% -10%

-15% -15%

-20% -20%

-25% -25%

-30% -30% 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

100

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

Platinum and U.S. Inflation Quarterly, Through First Quarter 2017 $/Ounce Percent Change 2,000 20 Inflation (right scale) 1,800 Platinum (left scale) 1,600 15

1,400

1,200 10

1,000

800 5

600

400 0

200

0 -5 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

101

PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

New York Dealer Platinum Prices Monthly Averages

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 January $80.00 $83.50 $83.50 $83.50 $88.27 $93.00 $98.50 $102.93 $216.00 $276.00 February 83.50 83.50 83.50 83.50 88.50 98.50 98.50 110.50 209.00 261.00 March 83.50 83.50 83.50 83.50 88.50 98.50 98.50 110.50 219.00 256.00 April 83.50 83.50 83.50 78.50 88.50 98.50 99.65 110.50 227.00 220.00 May 83.50 83.50 83.50 78.50 88.50 98.50 100.00 110.50 237.00 198.00 June 83.50 83.50 83.50 78.50 88.50 98.50 100.00 110.50 283.00 182.00 July 83.50 83.50 83.50 78.50 88.50 98.50 100.00 110.50 292.00 171.00 August 83.50 83.50 83.50 78.95 88.50 98.50 100.00 110.50 287.00 167.00 September 83.50 83.50 83.50 80.75 88.50 98.50 100.00 110.50 286.00 166.00 October 83.50 83.50 83.50 80.50 88.50 98.50 100.00 110.50 276.00 165.00 November 83.50 83.50 83.50 82.90 88.50 98.50 100.00 110.50 272.00 180.00 December______83.50______83.50______83.50______83.50______88.50______98.50______100.00______115.05______272.00______179.00 Annual $83.21 $83.50 $83.50 $80.93 $88.48 $98.04 $99.60 $110.25 $256.33 $201.75 Percent Change -- 0.4% -3.1% 9.3% 10.8% 1.6% 10.7% 132.5% -21.3%

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 January $176.00 $110.00 $103.67 $129.55 $171.55 $150.64 $141.83 $154.73 $202.76 $363.21 February 175.00 105.00 102.00 153.78 211.61 152.28 137.78 161.07 224.08 411.00 March 177.00 105.00 102.00 146.50 215.14 150.71 136.65 162.44 225.30 395.73 April 175.00 107.00 102.00 139.76 227.50 146.50 150.64 159.70 213.44 391.14 May 162.00 105.00 103.09 147.64 210.64 148.24 156.00 156.49 234.89 430.39 June 156.00 109.00 128.98 152.48 197.25 146.29 167.21 149.18 244.42 427.52 July 150.00 111.00 149.05 166.38 190.14 158.00 169.22 149.12 249.20 415.00 August 143.00 117.00 150.48 165.13 185.27 167.95 156.00 146.97 264.30 402.37 September 138.00 115.00 140.85 165.33 169.60 153.14 158.44 150.83 269.70 474.42 October 127.00 115.00 133.46 167.57 181.27 142.63 156.88 157.38 337.55 516.50 November 120.00 106.00 134.50 158.92 177.28 143.29 156.71 167.55 324.25 504.05 December______121.00______109.00______142.52______158.50______171.19______143.46______152.16______177.07______339.78______617.00 Annual $151.67 $109.50 $124.38 $154.29 $192.37 $150.26 $153.29 $157.71 $260.81 $445.69 Percent Change -24.8% -27.8% 13.6% 24.0% 24.7% -21.9% 2.0% 2.9% 65.4% 70.9%

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 January $820.23 $521.67 $367.75 $461.00 $374.50 $273.91 $364.95 $515.00 $491.58 $527.50 February 889.47 479.83 360.89 464.90 390.00 269.22 373.16 514.63 451.85 529.90 March 699.05 496.41 317.57 401.87 398.23 259.83 413.33 525.23 491.17 534.30 April 599.77 478.36 337.38 414.19 391.91 282.27 417.46 584.50 523.33 538.00 May 564.29 461.75 306.75 447.19 386.23 271.89 411.48 605.00 544.53 514.96 June 648.33 440.41 275.74 422.59 381.29 264.38 432.38 565.27 576.36 494.18 July 664.09 408.00 286.25 435.05 341.14 267.82 439.23 568.30 543.25 500.00 August 650.48 422.62 308.77 435.44 337.63 307.64 536.81 608.33 529.13 482.96 September 707.38 434.19 325.38 428.91 325.58 309.10 595.24 586.33 506.24 476.45 October 671.36 419.00 342.35 393.55 323.82 323.39 570.68 564.48 522.10 483.10 November 633.59 393.11 341.47 384.87 327.42 334.05 510.39 494.21 566.50 504.19 December______579.64______396.50______358.70______392.86______303.00______334.19______474.00______499.50______557.38______501.75 Annual $677.31 $445.99 $327.42 $423.53 $356.73 $291.47 $461.59 $552.57 $525.28 $507.27 Percent Change 52.0% -34.2% -26.6% 29.4% -15.8% -18.3% 58.4% 19.7% -4.9% -3.4%

102

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PLATINUM

New York Dealer Platinum Prices Monthly Averages

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 January $492.19 $400.17 $337.05 $355.21 $383.65 $411.55 $412.71 $357.10 $365.60 $350.00 February 515.53 379.21 356.42 353.95 389.47 413.05 415.85 358.68 380.25 358.00 March 493.77 393.10 353.27 347.17 395.70 412.43 408.90 375.57 391.25 365.60 April 474.76 394.00 345.73 365.27 394.10 443.50 401.77 367.23 405.80 353.25 May 483.59 384.09 354.95 381.75 393.10 431.36 399.11 381.62 380.75 351.75 June 478.57 372.00 364.77 378.64 398.95 435.14 389.88 413.57 350.50 345.00 July 475.10 372.48 376.52 398.05 408.40 430.80 391.16 407.14 368.60 345.50 August 486.35 342.66 353.33 385.91 407.65 421.57 398.23 414.67 366.50 362.00 September 458.04 347.10 360.71 357.57 413.24 425.05 388.35 418.86 356.50 362.00 October 415.23 358.64 355.38 363.20 416.35 409.81 382.77 417.82 339.40 406.25 November 416.00 359.37 352.05 371.50 410.25 409.00 380.82 389.67 341.75 421.50 December______414.25______349.95______359.59______379.83______406.67______406.03______369.04______359.05______346.00______432.00 Annual $466.95 $371.06 $355.81 $369.84 $401.46 $420.77 $394.88 $388.41 $366.08 $371.07 Percent Change -7.9% -20.5% -4.1% 3.9% 8.6% 4.8% -6.2% -1.6% -5.8% 1.4%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 January $424.50 $610.75 $465.00 $614.40 $839.00 $850.75 $1,001.25 $1,129.00 $1,554.60 $920.75 February 502.50 595.00 464.25 669.00 833.75 855.50 1,025.25 1,176.75 1,921.50 1,008.75 March 469.60 578.20 502.75 665.00 883.00 859.80 1,022.40 1,205.80 1,943.75 1,055.00 April 480.00 581.50 531.25 619.75 858.00 859.75 1,072.50 1,260.00 1,949.50 1,136.80 May 511.25 601.40 526.00 629.00 790.50 861.75 1,217.50 1,285.20 1,951.40 1,101.00 June 544.60 573.75 545.50 650.75 799.75 870.80 1,167.00 1,275.00 1,991.25 1,178.75 July 550.00 526.75 522.25 673.80 793.40 865.50 1,205.25 1,294.00 1,864.60 1,136.00 August 566.20 441.80 533.40 685.50 833.75 890.75 1,220.00 1,245.80 1,440.50 1,217.50 September 581.00 448.25 547.25 699.00 841.20 905.60 1,167.75 1,287.50 1,172.50 1,260.00 October 574.25 420.75 569.40 718.00 825.00 921.50 1,066.25 1,383.75 863.00 1,304.00 November 584.00 422.00 580.75 750.25 844.00 943.50 1,135.00 1,426.40 798.75 1,361.25 December ______600.50______450.25______589.25______794.00______838.20______962.80 1,105.00______1,469.00______815.20_ 1,416.00______Annual $532.37 $520.87 $531.42 $680.70 $831.63 $887.33 $1,117.10 $1,286.52 $1,522.21 $1,174.65 Percent Change 43.5% -2.2% 2.0% 28.1% 22.2% 6.7% 25.9% 15.2% 18.3% -36.2%

2010 2011 2012 2013 2014 2015 2016 2017 January $1,521.25 $1,758.75 $1,437.50 $1,603.60 $1,397.00 $1,220.00 $830.75 $966.25 February 1,491.25 1,795.00 1,605.00 1,635.00 1,391.75 1,183.75 900.25 1,012.62 March 1,575.00 1,730.00 1,633.00 1,563.75 1,430.25 1,123.50 969.00 961.80 April 1,686.25 1,777.50 1,573.75 1,496.25 1,408.25 1,131.80 997.00 964.27 May 1,566.25 1,752.50 1,450.00 1,481.10 1,431.60 1,127.75 831.75 June 1,526.25 1,738.40 1,407.50 1,433.13 1,431.25 1,078.75 986.50 July 1,507.00 1,737.50 1,393.75 1,388.00 1,473.20 1,001.40 1,086.63 August 1,518.75 1,749.50 1,419.60 1,490.20 1,434.25 960.00 1,138.13 September 1,563.20 1,715.40 1,576.25 1,463.13 1,353.25 963.75 1,055.00 October 1,668.75 1,476.25 1,625.25 1,416.70 1,236.60 951.00 961.13 November 1,673.25 1,571.00 1,548.00 1,425.38 1,192.25 877.50 966.25 December _1,676.00______1,427.00______1,561.25______1,357.50______1,192.00______842.00______916.90 ______Annual $1,581.10 $1,685.73 $1,519.24 $1,479.48 $1,364.30 $1,038.43 $969.94 $976.24 Percent Change 34.6% 6.6% -9.9% -2.6% -6.4% -23.9% -6.6% 5.6%

Notes: Percent change in 2017 compares the average price through April with the same period in 2016. S ource: Metals Week, CPM Group. May 5, 2017

103

PLATINUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

104

CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium

105 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Review and Outlook metal and metal prices for forward delivery. A shift in investor sentiment toward palladium in the beginning of 2016 For the first part of 2017, through 21 provided strong upward momentum to June, palladium prices averaged palladium prices over the course of the $787.76, up 44.2% from the same year. The price of palladium rose to period in 2016. $683.25 at the end of 2016, up from $562.00 at the end of 2015. Even so, Heavy investor selling earlier had the annual average palladium price, weighed palladium prices down from basis the nearby active Nymex futures September 2014 into 2016. By the end contract settlement price, was $615.49 of January 2016 prices had been in 2016, down 10.8% from $690.35 trending downward for 17 months and averaged in 2015. had dipped below the long-run psychological and technical support These trends persisted in the first half of level of $500. Such low levels of prices 2017, and were behind a sharp increase had not been seen since the middle of in palladium prices and a wide 2010, and convinced some investors to backwardation that emerged in the stop their inventory liquidation at least market in the middle of June 2017 as until prices improved. this report was being prepared. Palladium prices rose as high as Since that time investors who had $891.35 on 9 June, , with a very steep shorted palladium on the Nymex started backwardation between spot physical booking profits in their short positions.

The Price of Palladium Monthly Average Metals Week New York Dealer Prices, Through May 2017 $/Ounce $/Ounce 1,000 1,000 900 900 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

106 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Some of these investors who had accommodated by sales of the metal out shorted palladium were using such of investor inventories. shorts to hedge their large positions of the physical metal. The lower prices of While sales of investor inventories palladium enabled them to lock in continued to cushion the palladium profits while waiting for the market to market, the available supplies of improve. As the palladium market palladium became tighter than in the tightened in the third quarter of 2016 past two years as investors decided to and prices rose back above $700, there hold on to their palladium. This helped was another bout of inventory extend a floor to palladium prices. liquidation by stale-bull investors. This lasted through the year’s end. In this Palladium prices also were supported by bout of selling, however, investors were positive fabrication demand trends and less keen on getting rid of their tightening mine supplies. Fabrication inventories. Rather, they stopped selling demand for palladium hit a record high when prices were showing signs of last year while mine production fell in short-term weakness. Russia and South Africa, the two largest producers of the metal. This shift of investor sentiment from selling heavily into the market toward Going forward, investment demand, and holding palladium inventories is a inventory purchases and sales will critical change for the palladium continue to play an important part in market. Since 2014 the shortfalls in determining prices as they have over the newly refined metal over fabrication past few years. demand had been more than

Annual Palladium Fabrication Demand Projected Through 2017 Million Ounces Million Ounces 10.0 10.0 Electrical Auto 9.0 9.0 Dental Jewelry 8.0 8.0

7.0 Petro Chemical Other Uses 7.0

6.0 6.0

5.0 5.0

4.0 4.0

3.0 3.0

2.0 2.0

1.0 1.0

0.0 0.0 76 79 82 85 88 91 94 97 00 03 06 09 12 15 107 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Fabrication Demand United States, reach what some are calling cyclical peak levels of demand Total palladium fabrication demand for the current cycle. Some of the rose to a record high 9.35 million softness in demand from the auto ounces in 2016, driven higher primarily industry should be offset by a revival in by an increase in demand from the auto demand from the electronics sector. sector. Increases in demand from the Total palladium fabrication demand in auto sector during 2016 were offset to 2017 is forecast to reach 9.43 million some extent by softness in demand from ounces, up around 0.9% for the year. the electronics, dental, and jewelry sectors. A healthy passenger vehicle Palladium fabrication demand from the market, increased market share of auto sector is estimated to have risen to gasoline vehicles in Europe, and a record high 6.26 million ounces in ongoing substitution of platinum with 2016, up 2.1% from 2015. The pace of palladium in diesel auto catalysts all growth from the sector declined helped to boost demand for the metal in significantly compared to recent years, the auto sector. even as the total amount of metal being used expanded. The growth rate appears Heading into 2017 demand for to be the lowest rate of increase in palladium from the auto sector annual palladium use since the Great continues rising. The increase is Recession in 2008 – 2009. This expected to be relatively lackluster slowdown in growth can in large part be compared to recent years, as many of attributed to the slowdown in growth the major auto markets, especially the from the U.S. market, the largest source

Palladium Supply and Fabrication Demand Balance Annual, Projected Through 2017 Million Ounces Million Ounces 10.0 10.0

9.0 9.0

8.0 8.0 Supply 7.0 7.0

6.0 6.0

5.0 5.0

4.0 4.0 Demand 3.0 3.0

2.0 2.0

1.0 1.0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

108 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM of palladium demand from the auto 2016, slipping to 445,000 ounces from sector. 447,000 ounces in 2015. This trend is not expected to change any time soon Palladium demand from the electronics and demand for palladium jewelry is sector declined during 2016 to 1.24 expected to soften to 443,000 ounces in million ounces, down 0.7% from 2015. 2017. While demand declined, the contraction was small and from a very high level, Supply suggesting that there is still a large amount of palladium being consumed Newly refined palladium supply fell to by the electronics sector. Demand for 9.3 million ounces in 2016, a decline of palladium in the electronics industry is -1.2% from the previous year. This expected to rebound during 2017 after compared to a 5.4% year-on-year going through a slowdown over the past increase in 2015 from th strike-plagued couple of years due to an increase in 2014. inventory buildup. Demand is forecast to reach a record 1.26 million ounces A decline in palladium mine production, during the year, up 1.3% over 2016. due largely to declines in South Africa and Russia, was mainly responsible for Lack of advertising dollars and the this decrease in total refined metal consequent dearth of awareness among supplies. Global palladium mine consumers regarding palladium jewelry production fell -2.8% from the previous resulted in demand for palladium year to 6.9 million ounces last year, jewelry to continue declining during recovering strongly from the -3.2%

Palladium Market Surplus/Deficit Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 4000 4000 3500 3500 3000 Surplus 3000 2500 2500 2000 2000 1500 1500 1000 1000 500 500 0 0 -500 -500 -1000 -1000 Deficit -1500 -1500 -2000 -2000 -2500 -2500 76 81 86 91 96 01 06 11 16 109 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 decline in 2014. Much of the decline in 3.3% to 2.5 million ounces last year, an 2016 came from South Africa (-7.9%), all-time high. Russia (-1.9%), and Canada (-2.9%), which more than offset increases in the Total newly refined palladium supply is United States. Despite the small drop expected to rebound 2.2% to 9.6 million in palladium mine production, Russia ounces in 2017, helped by expected outpaced South Africa to become the increases in mine production and scrap top palladium producing country once supply. more in 2016, accounting for 37.0% of global palladium mine production. It is Investment Demand followed by South Africa, Canada, and the United States, having accounted for During 2016 the palladium market is roughly 35.9%, 9.8%, and 6.2% of the estimated to have recorded a small global total, respectively. deficit of around 11,000 ounces (within the margin of error for palladium Palladium prices rose strongly over the market supply and demand statistics). course of 2016, encouraging the While sales of investor inventories recycling of spent auto catalysts that continued to cushion the palladium contain significant loadings of market, the available supplies of palladium. Recovery of palladium from palladium became tighter than in the spent auto catalyst, end-of-life past two years as investors decided to electronics scrap, old jewelry scrap, and hold on to their palladium. This helped other scrap is estimated to have risen extend a floor to palladium prices.

AnnualPalladium Supply Projected Through 2017 Million Ounces Million Ounces 10 10 9 Other Mine Production 9 8 8 Secondary Supply 7 7 6 6 5 5 4 4

3 Russian Supply 3 2 2 1 1 South African Mine Production 0 0 76 80 84 88 92 96 00 04 08 12 16 Note: Russian supply is exports through 2002 and production since 2003.

110 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

In the first four months of 2017 investor two years. During 2016 palladium disposals of palladium lessened further prices were mostly in an upward trend, while other investors began ending the year about 20% higher than accumulating fresh inventories. There where they started. appeared to be some investor interest in gaining long exposure to palladium for the longer term. The palladium market is expected to record a surplus around 117,000 ounces for the year, but to tighten significantly in the years ahead. Such surplus metal may become absorbed by those investors with renewed interest in palladium.

Markets

The palladium market is the smallest of the major precious metals markets in terms of both ounces and dollar value traded. As with the platinum market the palladium market in ounces terms grew, but in dollar value contracted. The volume of metal traded, which includes physical supply and exchange traded futures and options activity, was 158.6 million ounces in 2016. This was up from 151.2 million ounces traded in 2015, but in terms of dollar value, last year’s palladium market was $98 billion, down from $104 billion in 2015. Last year’s decline in the dollar value of the market from the previous year was the result of the decline in the annual average price of palladium.

Prices

Palladium prices, basis the nearby active Nymex futures contract settlement prices, averaged $615.49 in 2016, down 10.8% from $690.35 averaged in 2015. Palladium prices have been on a declining trend for the past

111 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Palladium Statistical Position Thousand Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

Mine Production Russia* 1,608 1,075 1,278 1,412 1,214 1,255 1,380 1,286 1,444 1,256 1,393 1,609 1,512 1,500 1,700 1,900 1,850 2,500 South Africa 714 780 757 832 872 887 697 719 876 1,000 985 1,077 1,090 1,206 1,217 1,300 1,450 1,475 Canada 186 207 154 88 183 170 102 74 155 155 175 169 185 200 200 220 210 168 United States 55872687183492120156191170179224 Others ___26 _____ 38 ___ 38 _____ 35 _____ 42 _____ 49 _____ 52 _____ 57 _____ 56 _____ 156 _____ 160 _____ 162 _____ 154 _____ 144 _____ 150 _____ 153 _____ 150 _____ 154 Total 2,539 2,105 2,235 2,374 2,313 2,366 2,238 2,143 2,549 2,570 2,716 3,109 3,061 3,205 3,458 3,743 3,839 4,521 % Change Year Ago - -17.1% 6.2% 6.2% -2.6% 2.3% -5.4% -4.3% 19.0% 0.8% 5.7% 14.5% -1.6% 4.7% 7.9% 8.2% 2.6% 17.8%

Secondary Supply United States 135 134 166 221 162 186 139 178 256 205 173 125 132 135 134 100 115 125 Japan 48 48 48 48 96 80 96 251 200 213 218 243 252 254 269 349 300 310 Taiwan ------2 37 113 128 154 155 163 127 150 177 Other 113 93 124 158 96 141 102 138 183 190 261 383 376 376 393 424 460 482 Total 296 275 338 427 354 407 337 567 641 645 765 879 914 920 959 1,000 1,025 1,094 % Change Year Ago _____ - -7.1% _____ 22.9% _____ 26.3% _____ -17.1% _____ 15.0% _____ -17.2% _____ 68.2% _____ 13.1% ______0.6% 18.6% _____ 14.9% ______4.0% _____ 0.7% _____ 4.2% _____ 4.3% _____ 2.5% _____ 6.7% Total Supply 2,835 2,380 2,573 2,801 2,667 2,773 2,575 2,710 3,190 3,215 3,481 3,988 3,975 4,125 4,417 4,743 4,864 5,615 % Change Year Ago - -16.1% 8.1% 8.9% -4.8% 4.0% -7.2% 5.2% 17.7% 0.8% 8.3% 14.6% -0.3% 3.8% 7.1% 7.4% 2.5% 15.4%

Fabrication Demand Electronics 427 481 552 719 585 905 928 1,024 1,387 1,244 1,476 1,568 1,786 1,897 1,889 2,103 1,969 2,176 Automotive 197 128 203 227 181 212 213 270 384 397 413 430 444 479 445 459 434 582 Dental 368 293 480 568 533 490 617 681 863 956 1,151 1,229 1,193 1,155 1,093 1,048 1,070 1,134 Other _____940 _____ 996 _____ 1,136 _____ 1,375 _____ 1,062 _____ 680 _____ 725 _____ 683 _____ 568 _____ 561 _____ 498 _____ 652 _____ 709 _____ 753 _____ 740 _____ 714 _____ 718740 _____ Total Demand 1,932 1,898 2,371 2,889 2,361 2,287 2,483 2,658 3,201 3,158 3,537 3,879 4,132 4,284 4,167 4,324 4,191 4,632 % Change Year Ago - -1.8% 24.9% 21.8% -18.3% -3.1% 8.6% 7.0% 20.4% -1.4% 12.0% 9.7% 6.5% 3.7% -2.7% 3.8% -3.1% 10.5%

Net Surplus or Deficit 903 482 202 -88 306 486 92 52 -11 58 -55 109 -158 -158 250 419 673 983

Inventory Sales ** ------Changes in Market Stocks*** 128 13 -107 -31 -14 107 -128 108 172 -123 166 -120 21 -95 -58 24 -72 -17

Price Per Ounce High $62.00 $59.50 $83.35 $183.50 $317.50 $147.00 $100.60 $172.50 $165.40 $131.10 $147.00 $151.30 $148.30 $180.65 $139.10 $102.25 $113.90 $144.40 Low 37.40 41.20 52.40 70.60 142.00 63.30 48.90 88.60 121.50 91.15 96.00 103.65 114.10 130.00 81.15 78.25 76.20 98.10 Average 47.76 49.69 62.71 118.04 198.69 93.92 66.30 133.99 146.49 105.76 115.96 130.58 124.52 146.12 114.50 88.31 87.85 122.16 % Change Year Ago - 4.0% 26.2% 88.2% 68.3% -52.7% -29.4% 102.1% 9.3% -27.8% 9.6% 12.6% -4.6% 17.3% -21.6% -22.9% -0.5% 39.1%

Notes: Demand in other countries prior to 1984 is included in the 'Other' category. Excludes transitional economies except as noted. * Prior to 2003 Russian supply represented palladium exports. Russian supply represents mine production since 2003 . Secondary production excludes toll-refined material. Prices are settlement prices for the active nearby contract on the New York M ercantile Exchange. ***Changes in market stocks are year-end. Changes in 1997 market stocks exclude U.S. Industry stocks the U.S. Bureau of Mines ceased publication of U.S. Industry stock level data in the third quarter of 1997. ** Inventory sales in 2002 and 2003 were of a stockpile held by a bullion bank. This metal was acquired from the Russian government earlier. As of 2006 Inventories includes changes in ETP holdings. There may be discrepancies due to rounding. Changes in market inventories are year-end. e -- estimate. p -- projections. - no percent change from previous year. Sources: U.S. Bureau of M ines; Statistics Canada; trade sources; CPM Group. June 13, 2017

112 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e 2012 2013 2014 2015 2016 2017p

Mine Production 3,215 3,950 3,950 2,500 1,700 1,700 1,800 3,550 1,350 3,000 3,200 3,140 3,170 3,120 2,737 2,686 2,732 2,714 2,638 2,590 2,759 2,585 2,536 2,694 Russia* 1,500 1,560 1,620 1,789 1,839 1,926 1,849 2,028 2,040 2,169 2,275 2,602 2,833 2,630 2,447 2,443 2,617 2,637 2,384 2,497 1,939 2,674 2,463 2,464 South Africa 224 295 273 258 303 284 337 423 491 441 582 463 508 550 513 229 250 503 519 585 748 692 671 666 Canada 213 175 202 277 347 321 337 411 482 460 450 438 473 423 394 418 382 407 404 412 408 411 428 432 United States _____157_____ 157_____ 160_____ 187_____ 292_____ 344_____ 299_____ 308_____ 294_____ 357_____ 440_____ 408_____ 424_____ 539_____ 442_____ 550_____ 553____ 575_ ____ 605_ ____ 668_ ____ 685_ ____686_ ____ 754_ ____ 731_ Others 5,309 6,138 6,205 5,012 4,481 4,575 4,622 6,719 4,657 6,427 6,947 7,051 7,409 7,262 6,533 6,326 6,535 6,836 6,550 6,752 6,539 7,048 6,853 6,987 Total 17.4% 15.6% 1.1% -19.2% -10.6% 2.1% 1.0% 45.4% -30.7% 38.0% 8.1% 1.5% 5.1% -2.0% -10.0% -3.2% 3.3% 4.6% -4.2% 3.1% -3.2% 7.8% -2.8% 2.0% % Change Year Ago

Secondary Supply 131 134 139 144 ------United States 315 326 328 328 ------Japan 185 190 194 194 ------Taiwan 505 515 531 549 ------Other 1,136 1,165 1,192 1,215 1,253 1,280 1,408 1,520 1,250 1,275 1,313 1,359 1,407 1,508 1,400 1,412 2,209 2,112 2,152 2,348 2,438 2,410 2,490 2,565 Total ____3.8%_ ____ 2.6%_ ____ 2.3%_ ____ 1.9%_ ____ 3.1%_ ____ 2.2%_ 10.0%______8.0%_ -17.8%______2.0%_ ____ 3.0%_ ____ 3.5%_ ____ 3.5%_ ____ 7.2%_ -7.1%______0.8%_ 56.4%_____ -4.4%______1.9%_ ____ 9.1%_ ____ 3.8%_ -1.2%______3.3%_ ____ 3.0%_ % Change Year Ago 6,445 7,303 7,397 6,227 5,734 5,855 6,030 8,239 5,907 7,702 8,260 8,410 8,816 8,770 7,933 7,738 8,743 8,948 8,702 9,100 8,977 9,457 9,343 9,552 Total S upply 14.8% 13.3% 1.3% -15.8% -7.9% 2.1% 3.0% 36.6% -28.3% 30.4% 7.2% 1.8% 4.8% -0.5% -9.5% -2.5% 13.0% 2.3% -2.7% 4.6% -1.4% 5.4% -1.2% 2.2% % Change Year Ago

Fabrication Demand 2,528 2,822 2,708 2,978 2,805 2,703 2,630 775 768 880 975 1,070 1,220 1,200 1,125 1,095 1,179 1,207 1,191 1,229 1,246 1,250 1,241 1,257 Electronics 821 1,425 1,809 2,077 2,748 3,180 3,220 2,755 2,860 2,895 3,395 3,860 4,240 4,545 4,252 3,960 4,812 5,035 5,465 5,695 5,921 6,132 6,260 6,335 Automotive 1,185 1,245 1,267 1,249 1,143 1,039 872 805 855 788 957 952 765 776 775 782 774 762 756 744 737 727 726 711 Dental ____797_ ____ 790_ ____ 814_ ____ 810_ ____ 791_ ____ 745_ ____ 832_ ____ 821_ ____ 940_ ____ 1,054_ ____ 1,248_ ____ 1,311_ ____ 1,380_ ____ 1,241_ ____ 1,285_ ____ 1,206_ ____ 1,152_ ____ 1,137_ ____ 1,134_ ____ 1,134_ ____ 1,137_ ____ 1,134_ ____ 1,127_ ____ 1,131_ Other 5,331 6,282 6,598 7,114 7,487 7,667 7,554 5,156 5,423 5,617 6,575 7,193 7,605 7,762 7,437 7,043 7,917 8,141 8,546 8,801 9,041 9,242 9,353 9,434 Total Demand 15.1% 17.8% 5.0% 7.8% 5.2% 2.4% -1.5% -31.7% 5.2% 3.6% 17.0% 9.4% 5.7% 2.1% -4.2% -5.3% 12.4% 2.8% 5.0% 3.0% 2.7% 2.2% 1.2% 0.9% % Change Year Ago

1,114 1,021 799 -887 -1,753 -1,812 -1,523 3,083 484 2,085 1,685 1,216 1,211 1,007 496 696 826 807 156 298 -64 215 -11 117 Net Surplus or Deficit

------1,600 1,600 ------Inventory Sales ** Changes in -80 51 17 -200 -16 19 -51 44 -43 262 468 80 -94 148 275 613 712 -17 -30 164 508 -738 Market Stocks***

YTD Price Per Ounce $162.65 $178.15 $145.25 $227.60 $398.15 $454.65 $975.00 ####### $447.00 $275.00 $344.70 $305.00 $409.00 $389.50 $600.00 $410.00 $804.90 $857.70 $719.75 $783.95 $908.65 $831.65 $771.65 $834.05 High 123.40 129.00 115.75 121.10 200.00 288.05 430.20 305.00 224.00 146.25 177.50 170.20 262.00 315.20 160.30 176.10 380.05 564.15 561.60 $633.25 $700.10 $525.80 $469.80 $709.90 Low 143.72 152.75 129.75 174.85 279.26 359.11 684.99 605.73 337.78 202.81 233.08 203.85 323.46 358.28 352.98 266.75 528.97 733.92 644.91 726.51 803.45 690.35 615.49 779.39 Average 17.6% 6.3% -15.1% 34.8% 59.7% 28.6% 90.7% -11.6% -44.2% -40.0% 14.9% -12.5% 58.7% 10.8% -1.5% -24.4% 98.3% 38.7% -12.1% 12.7% 10.6% -14.1% -10.8% 42.5% % Change Year Ago

113 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Supply top palladium producing country once more in 2016, accounting for 37.0% of Newly refined palladium supply fell to global palladium mine production. It is 9.3 million ounces in 2016, a decline of followed by South Africa, Canada, and -1.2% from the previous year. This the United States, having accounted for compared to a 5.4% year-on-year roughly 35.9%, 9.8%, and 6.2% of the increase in 2015. global total, respectively.

A decline in palladium mine production, Palladium prices rose strongly over the due largely to declines in South Africa course of 2016, encouraging the and Russia, was mainly responsible for recycling of spent auto catalysts that this decrease in total refined metal contain significant loadings of supplies. Global palladium mine palladium. Recovery of palladium from production fell -2.8% from the previous spent auto catalyst, end-of-life year to 6.9 million ounces last year, electronics scrap, old jewelry scrap, and recovering strongly from the -3.2% other scrap is estimated to have risen decline in 2014. Much of the decline in 3.3% to 2.5 million ounces last year, an 2016 came from South Africa (-7.9%), all-time high. Russia (-1.9%), and Canada (-2.9%), which more than offset increases in the Total newly refined palladium supply is United States. Despite the small drop expected to rebound 2.2% to 9.6 million in palladium mine production, Russia ounces in 2017, helped by expected outpaced South Africa to become the increases in mine production and scrap

Annual Palladium Supply Projected Through 2017 Million Ounces Million Ounces 10 10 Other Mine Production 9 9 8 8 Secondary Supply 7 7 6 6 5 5 4 4 3 3 Russian Supply 2 2 1 1 South African Mine Production 0 0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Note: Russian supply is exports through 2002 and production since 2003.

114 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 supply. Global palladium mine supply Russia as Norilsk Nickel completes the is expected to rise by 2.0% to nearly 7.0 reconfiguration of its processing routes. million ounces, boosted by a strong recovery in Russian palladium mine South Africa production and a moderate increase in U.S. mine production. Secondary South African palladium mine supply of palladium is expected to production fell 7.9% year-on-year last continue to rise, albeit at a slower pace year to nearly 2.5 million ounces after of 3.0%, to nearly 2.6 million ounces. recording a strong recovery in the previous year. Much of the decline in South African palladium supply in 2016 Mine Production by Major Country came from a sharp decline at Amplats, and Company where palladium production had risen significantly in the previous year. Palladium mine supply fell to nearly 6.9 million ounces in 2016, down 2.8% The level of palladium output from from the previous year. South Africa depends in part on the mix of PGMs ores being mined in a given Declines in Russia and South Africa year. The Merensky Reef is the main were largely responsible for the year-on ore type being mined by major mining -year decrease in global palladium mine companies; it contains higher levels of production last year. platinum (58%-65%) than palladium (26%-31%). South Africa also has Palladium production in South Africa other types of ores with higher fell last year, after rebounding strongly palladium content. The increasingly in 2015 following the labor strike- mined Platreef, which is exploited at plagued 2014, to nearly 2.5 million Amplats’ Mogalakwena mine, contains ounces from 2.7 million ounces in the a higher level of palladium (49%) previous year. Russian palladium relative to platinum (42%). production, largely coming from Norilsk Nickel, dropped 1.9% in 2016 While palladium is of lower per ounce to 2.5 million ounces from the previous value compared to platinum, shifts of year due to changes implemented to the mine plans as well as initiatives to raise process flowsheet at its Polar and Kola production from lower-cost operations divisions following the closure of its old such as Mogalakwena may result in nickel smelter and PGM concentration more palladium-intensive ores being plant at its Norilsk mine site as well as mined. This could result in a boost in the transfer of PGM treatment activities palladium output, although to the Kola division. such increases may not be sustainable for a long period. Mine supply could rise to nearly 7 million ounces in 2017, an increase of In 2017 palladium production from 2.0% from the previous year, helped by South Africa is expected to remain flat a rebound in palladium production in at nearly 2.5 million ounces.

115 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

South African Palladium Mine Production Thousand Troy Ounces 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Anglo Platinum 1,546 1,390 1,319 1,199 1,268 1,236 1,195 1,201 1,070 1,370 1,212 1,089 % of Total 54.6% 52.9% 53.9% 49.1% 48.4% 46.9% 50.1% 48.1% 55.2% 51.2% 49.2% 44.2% % Change 14.2% -10.1% -5.1% -9.0% 5.7% -2.5% -3.3% 0.5% -10.9% 28.0% -11.5% -10.1%

Impala Platinum 532 582 480 531 619 634 472 477 256 445 431 393 % of Total 18.8% 22.1% 19.6% 21.7% 23.7% 24.0% 19.8% 19.1% 13.2% 16.6% 17.5% 16.0% % Change -8.1% 9.4% -17.6% 10.8% 16.6% 2.3% -25.5% 1.2% -46.4% 73.8% -3.1% -8.7%

Lonmin 448 341 329 308 276 340 312 352 179 364 325 307 % of Total 15.8% 13.0% 13.4% 12.6% 10.5% 12.9% 13.1% 14.1% 9.2% 13.6% 13.2% 12.4% % Change 9.9% -23.9% -3.7% -6.4% -10.5% 23.4% -8.1% 12.8% -49.1% 103.3% -10.8% -5.6%

Sibanye 142 138 118 96 121 108 77 69 63 78 72 238 % of Total 5.0% 5.2% 4.8% 3.9% 4.6% 4.1% 3.2% 2.8% 3.3% 2.9% 2.9% 9.7% % Change 30.5% -2.8% -14.2% -18.7% 25.9% -10.4% -28.8% -10.8% -7.8% 23.5% -8.2% 230.4%

Northam Platinum 96 84 90 93 79 84 89 101 99 122 142 142 % of Total 3.4% 3.2% 3.7% 3.8% 3.0% 3.2% 3.8% 4.0% 5.1% 4.6% 5.8% 5.8% % Change -12.5% -12.6% 7.3% 3.9% -15.3% 6.8% 6.1% 13.0% -2.5% 23.7% 16.8% 0.0%

African Rainbow Minerals 10 47 48 113 127 127 132 156 143 160 150 140 % of Total 0.3% 1.8% 2.0% 4.6% 4.9% 4.8% 5.5% 6.2% 7.4% 6.0% 6.1% 5.7% % Change 374.7% 2.2% 134.7% 13.1% -0.4% 3.6% 18.6% -8.2% 12.0% -6.2% -7.0%

Norilsk 191913112324244648534035 % of Total 0.7% 0.7% 0.5% 0.5% 0.9% 0.9% 1.0% 1.8% 2.5% 2.0% 1.6% 1.4% % Change 0.0% 0.0% -31.6% -15.4% 109.0% 4.9% 0.0% 90.8% 4.3% 10.4% -24.5% -13.3%

Sylvania Resources 6 7 9 13 12 12 15 15 18 15 % of Total 0.3% 0.3% 0.3% 0.5% 0.5% 0.5% 0.8% 0.6% 0.7% 0.6% % Change 10.0% 30.7% 47.6% -12.4% 3.0% 22.0% 3.6% 20.0% -15.8%

Sedibelo Platinum Mines 8 13 14 19 45 46 53 50 49 % of Total 0.3% 0.5% 0.5% 0.8% 1.8% 2.4% 2.0% 2.0% 2.0% % Change 69.3% 4.3% 35.8% 139.0% 3.5% 14.0% -6.0% -1.3%

Pan African Resources 0.1 0.9 1.1 2.1 3.0 2.7 2.7 % of Total 0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.1% % Change 616.0% 14.8% 94.4% 43.2% -11.0% 0.0%

Platinum Group Metals 16 49 % of Total 0.7% 2.0% % Change 204.5%

Wesizwe Platinum % of Total % Change

Other 551554444444 % Change -54.5% 0.0% 0.0% 400.0% 0.0% -20.0% -5.0% 1.5% 1.5% 1.5% 1.5% 0.0%

Total South African Mine Production 2,833 2,630 2,447 2,443 2,617 2,637 2,384 2,497 1,939 2,674 2,463 2,464 % Change 8.9% -7.2% -7.0% -0.2% 7.1% 0.8% -9.6% 4.8% -22.3% 37.9% -7.9% 0.0%

Note: Production is based on calendar year. Production refers to metal output attributable to company ownership. Exceptions to this include Bafokeng - and 33% Ango Platinum) and Mototolo (50:50 JV between Anglo Platinum and Gelncore). Production at oth these mines has been fully attributed in Anglo Platinum. Rasimone Platinum Mine owned 67% Royal Bafokeng Platinum Ltd. Aquarius was taken over by Sibanye in 2016. Anglo Platinum's Rustenberg mines have been included in Sibanye starting 2017. Figures may not equal sum due to rounding. Source: Company Documents, Industry Sources, RMG, and CPM Group May 2017

116 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Anglo Platinum is the largest last year, down 10.8% from a record palladium producer in South Africa. high 364,379 ounces in 2015. The The company’s refined palladium decline in palladium production in 2016 output fell to 1.3 million ounces last was in line with the company’s year, from nearly 1.5 million ounces in production guidance in light of 2015. Palladium accounted for a higher unfavorable market conditions as well portion of the PGMs mix produced by as shifts in mine schedules. Lonmin’s the company between 2014 and 2016. palladium production is expected to slip In the past three years palladium was further to 306,637 ounces in 2017. 36.2% of the mix, compared to 33.7% in the previous five years, from 2009 to Russia 2013. In 2016 Russian palladium production Impala Platinum produced 487,500 extended a downward trajectory (with ounces of palladium from its South the exceptions of 2010 and 2014) that African operations in 2016, down 1.9% has been in place over the past decade. from 497,100 ounces in the previous Palladium mine production in the year. The company’s palladium country fell -1.9% to 2.5 million production in 2017 is expected to fall ounces, due largely to a decrease in 8.9% further to 443,873 ounces. palladium production at Norilsk Nickel, the country’s world’s palladium Lonmin’s South African mines producer. Palladium output from produced 324,845 ounces of palladium Norilsk’s Russian fell -2.0% to 2.5

Russian Production and Exports Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 4,000 4,000 Indicates Stockpile Withdrawal 3,500 3,500 Production 3,000 3,000

2,500 2,500 Residual 2,000 2,000

1,500 1,500

Exports 1,000 1,000

500 500 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17p 117 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM Russian Palladium Production and Exports Thousand Troy Ounces

Percent of Production Exports Production Residual

1970 1,318 - - - 1975 1,672 - - - 1980 2,058 1,214 59% 844 1985 2,540 1,256 49% 1,284 1986 2,585 1,393 54% 1,192 1987 2,606 1,609 62% 997 1988 2,628 1,512 58% 1,116 1989 2,641 1,500 57% 1,141 1990 2,655 1,700 64% 955 1991 2,814 1,900 68% 914 1992 2,696 1,850 69% 846 1993 2,500 2,500 100% 0 1994 2,375 3,215 135% -840 1995 2,400 3,950 165% -1,550 1996 2,520 3,950 157% -1,430 1997 2,782 2,500 90% 282 1998 2,949 1,700 58% 1,249 1999 3,002 1,700 57% 1,302 2000 3,302 1,800 55% 1,502 2001 3,338 3,550 106% -212 2002 2,900 1,350 47% 1,550 2003 3,000 1,800 60% 1,200 2004 3,200 2,000 63% 1,200 2005 3,140 3,090 98% 50 2006 3,170 3,080 97% 90 2007 3,120 3,020 97% 100 2008 2,737 2,700 99% 37 2009 2,686 2,650 99% 36 2010 2,732 2,575 94% 157 2011 2,714 2,600 96% 114 2012 2,638 2,510 95% 128 2013 2,590 2,435 94% 155 2014 2,759 2,566 93% 193 2015 2,585 2,404 93% 181 2016 2,536 2,384 94% 152 2017p 2,694 2,505 93% 189 Note: NA -- not available Sources: Bank of Foreign Trade, U.S. Bureau of Mines, Central Intelligence Agency, CPM Group. May 2017 118 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 million ounces last year, due to the Abramovich, and Norilsk were in talks reconfiguration of downstream with the Russian central bank about production facilities. This output level purchasing the palladium from the was above the higher end of the central bank, giving the cash value of production guidance issued by the the palladium to the central bank for use company for the year, however. as collateral and possibly in paying off the bond when it was due. Talks In the first quarter of 2017 palladium between the central bank and Mr. output was down 17% year-on-year, due Potanin went dark for several months, largely to the increase of work-in- but have continued through 2015 and progress materials in transit from the 2016. Polar division to the Kola division after the shutdown of its old nickel plant. The concept behind the offer to buy the palladium was to take the metal into the The disposition of an estimated 1.0 – hands of palladium-interested parties. In 2.5 million ounces of palladium owned 2001 the Russian central bank used by the Russian central bank, stored in around 3.2 million ounces of palladium Switzerland and used as collateral it had pledged against an earlier bond to against an international bond sold by the pay off that bond, at a time when Russian central bank, continues to be up palladium prices had spiked up to in the air. In 2014 Vladimir Potanin, $1,080 two months earlier and had one of the two major owners of Norilsk already fallen to around $750 per ounce. Nickel, said he, his partner Roman That metal was sold to the bank holding

Palladium Mine Production in Canada Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 800 800

700 700

600 600

500 500

400 400

300 300

200 200

100 100

0 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017p

119 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM the collateral, which later sold it in a alongside him. Mr. Abramovich has mechanical fashion that drove said he may invest in the fund. The palladium prices down to a low of $146 Board of Directors of Norilsk Nickel on in the second quarter of 2003. Mr. 1 February approved a proposal that the Potanin would like to avoid having company also would invest in the fund, large volumes of palladium in hands perhaps between $200 and $350 that might allow such sales and price million. In total Mr. Potanin has patterns to recur, so he proposed in indicated he wished to raise between $1 2014 that he create a fund, now named and $2 billion for the fund. the Global Palladium Fund, to buy and hold the central bank’s palladium. In May 2016, Norilsk Nickel reportedly Related to Norilsk and its key had begun pilot purchases in the market shareholders, the Global Palladium for its Global Palladium Fund, in which Fund would hold the palladium as a it may invest up to $200 million. long-term investment, not selling it into Norilsk Nickel intended to buy stocks weak markets but waiting until such held by the Russian central bank and future times when strong demand and hedge funds to reduce market volatility. tight supplies might drive palladium prices sharply higher. Such a move should not swing supply and demand balances given it only Mr. Potanin has said he would invest involves an ownership change in between $100 and $200 million of his existing market stocks. own money into the fund, and would invite friends and associates to invest

PGM Mine Production in the United States Annual, Projected through 2017

Troy Ounces Troy Ounces 700,000 700,000

Palladium 600,000 600,000 Platinum 500,000 500,000

400,000 400,000

300,000 300,000

200,000 200,000

100,000 100,000

0 0 76 80 84 88 92 96 00 04 08 12 16

120 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Canada United States

Palladium mine production in Canada Palladium mine output in the United fell -2.9% last year to 671,480 ounces. States stood at 428,200 ounces in 2016, Production declines were recorded at up 4.2% from 410,900 ounces in 2015. Vale’s Sudbury operations, which in Stillwater Mining Company, which 2016 produced 322,000 ounces of operates the Stillwater and the Easter palladium, down from 341,000 ounces Boulder mines in Montana, is the main in the previous year. palladium producer in the country. The Stillwater mine produced 250,500 North American Palladium’s Lac des ounces of palladium last year, up from Iles mine also saw a decline in 246,400 ounces in the previous year. production to 149,563 ounces from Palladium mine production in the 166,785 ounces in the previous year. United States is projected to increase to 431,958 ounces in 2017. Glencore’s Raglan operations produced 173,000 ounces of palladium, up from Zimbabwe 157,000 ounces in 2015. In 2017 Canadian palladium mine production is Palladium mine production in expected to reach 666,020 ounces, Zimbabwe reached an all-time high in down -0.8% from the previous year. 2016, up 20.5% to 393,500 ounces from the previous year. Zimplats produced

Palladium Mine Production in Zimbabwe Annual, Projected Through 2017 Ounces Ounces 450 450

400 400

350 350

300 300

250 250

200 200

150 150

100 100

50 50

0 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p

121 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

241,400 ounces of palladium last year, of the available scrap material. Old accounting for 61.3% of total palladium jewelry and other sources of scrap mine output in Zimbabwe. The Mimosa account for a minor portion of the mine, jointly owned by Aquarius metal’s secondary supply. Platinum and Impala, produced 95,700 ounces last year, while the Unki mine, Palladium secondary supply has been owned by Anglo Platinum, produced helped in recent years by increased 56,500 ounces of palladium. In 2017 palladium loadings per unit in available palladium mine production in spent auto catalysts. Zimbabwe is expected to decline -6.2% to 369,120 ounces. Steel prices recovered to some extent over the course of 2016 after remaining Secondary Supply weak in the prior two years. This improvement in steel prices and a strong Spent auto catalysts are the largest rebound in palladium prices over the source of scrap material for palladium, course of the year helped encourage accounting for roughly 81% of the more end-of-life (EOL) vehicles to metal’s secondary supply. Electronics enter the scrap yard and increase the also is a major source of palladium volumes of spent auto catalysts that secondary supplies, accounting for 18% could be recovered, which helped

Palladium Secondary Supply in 1995 Palladium Secondary Supply in 2016 Total = 1.21 million ounces Total = 2.5 million ounces

Electronics Jewelry 16% 1% Auto Jewelry Catalyst 1% 9%

Electronics Auto 91% Catalyst 83%

122 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 increase the volumes of scrap palladium in the second half of the year. Spent auto catalysts in advanced economies typically have higher loadings of palladium per unit, which also helped boost the amount of palladium that was recovered during the year.

Palladium secondary supply rose 3.3% to nearly 2.5 million ounces in 2016 from the previous year. In 2017 palladium secondary supply is forecast to rise further to nearly 2.6 million ounces, an increase of 3.0% from the previous year.

Available Palladium Scrap Feedstock and Actual Refined Secondary Palladium Supply Annual, Projected Through 2017

Thousand Troy Ounces Thousand Troy Ounces 3,000 3,000 Available Palladium-Bearing Recyclable Material: Jewelry Scrap 2,500 2,500 Electronics Scrap 2,000 2,000 AutoCatalyst Scrap

1,500 1,500

1,000 1,000

500 500

0 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017p

123 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium Production by Country Troy Ounces

South United Year Russia Africa Canada States Zimbabwe Japan* Botswana China 1976 N/A 1,608,000 714,000 5,088 NA 18,089 - - 1977 2,068,000 1,075,000 780,000 4,910 NA 22,716 - - 1978 2,111,000 1,278,000 757,000 8,399 NA 24,221 - - 1979 2,154,000 1,412,000 832,000 6,832 NA 22,495 - - 1980 2,058,000 1,214,000 872,000 2,438 NA 28,968 - - 1981 2,240,000 1,255,000 887,000 5,536 5,200 25,748 - - 1982 2,285,000 1,380,000 697,000 7,555 2,765 27,862 - - 1983 2,411,000 1,286,000 719,000 7,031 2,395 37,122 - - 1984 2,476,000 1,444,000 876,000 17,898 1,222 33,802 - - 1985 2,540,000 1,256,000 1,000,000 3,463 965 43,703 - - 1986 2,585,000 1,393,000 985,000 3,742 1,125 46,999 - - 1987 2,606,000 1,077,000 169,000 92,095 1,150 45,558 - 2,154 1988 2,628,000 1,090,000 185,000 119,922 1,100 37,616 - 3,826 1989 2,641,000 1,206,000 200,000 155,931 32 26,396 - 3,636 1990 2,655,205 1,217,000 200,000 190,654 997 33,758 - 3,349 1991 2,814,000 1,300,000 220,000 170,000 965 33,758 - 3,445 1992 2,696,000 1,450,000 210,000 179,000 611 31,701 - 3,445 1993 2,500,000 1,475,000 168,000 224,000 354 37,938 - 3,732 1994 2,375,000 1,500,000 224,000 213,000 643 41,057 - 4,180 1995 2,400,000 1,560,000 295,268 175,000 546 40,960 - 4,405 1996 2,520,000 1,620,000 272,626 202,000 546 41,217 - 4,276 1997 2,782,080 1,789,179 258,086 277,030 7,118 61,054 - 4,501 1998 2,949,005 1,838,975 303,328 346,800 28,255 133,458 - 4,394 1999 3,002,087 1,926,462 283,541 321,080 38,600 172,135 - 7,073 2000 3,302,296 1,849,136 336,716 337,150 11,600 151,494 - 15,218 2001 3,338,462 2,028,007 422,700 411,060 11,900 154,484 11,400 8,359 2002 2,900,000 2,039,675 491,300 482,000 62,548 180,623 10,800 13,503 2003 3,000,000 2,168,925 441,000 460,000 111,000 176,829 33,000 14,789 2004 3,200,000 2,274,720 582,000 450,000 176,000 170,399 39,000 21,863 2005 3,140,000 2,601,810 463,167 438,000 126,900 173,614 61,086 27,971 2006 3,170,000 2,833,397 508,338 473,000 134,400 173,614 64,301 27,007 2007 3,120,000 2,629,546 550,400 423,000 134,400 176,829 160,754 46,887 2008 2,737,000 2,446,767 513,083 394,000 107,900 176,829 96,452 37,742 2009 2,686,000 2,442,960 228,869 417,997 214,900 180,044 96,452 39,140 2010 2,732,000 2,616,866 250,227 382,000 221,700 180,044 90,020 41,936 2011 2,714,000 2,636,914 502,534 406,900 265,217 180,044 67,520 42,921 2012 2,638,000 2,383,711 519,030 404,005 264,303 181,500 83,590 43,966 2013 2,590,000 2,497,058 584,754 412,200 313,528 181,500 83,590 44,996 2014 2,759,000 1,939,257 747,844 408,200 328,031 181,500 83,590 46,052 2015 2,759,000 2,674,165 691,568 410,900 326,569 181,500 83,590 47,137 2016 2,585,000 2,463,240 671,480 428,200 393,500 181,500 83,590 48,251 2017p 2,536,000 2,464,371 666,020 431,958 369,120 181,500 83,590 49,248

Notes: * These figures represent Japanese refined recovery of mine output from other countries, including Australia, Canada, Papua New Guinea, Indonesia, and the Philippines. These figures appear to include some production listed for Canada. Russian supply is exports through 2002 and mine production from 2003 and forward. Source: U.S. Bureau of Mines; CPM Group. May 2017 124 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Serbia and Australia Finland Montenegro Brazil Total Year 7,950 330 NA NA 2,353,457 1976 9,581 352 4,951 NA 3,965,510 1977 7,395 352 5,562 NA 4,191,929 1978 6,880 396 5,241 NA 4,439,844 1979 7,100 385 5,150 NA 4,188,041 1980 12,896 1,993 3,119 NA 4,436,492 1981 13,379 4,662 2,893 NA 4,421,116 1982 12,000 2,283 2,926 NA 4,479,757 1983 16,815 1,093 3,100 NA 4,869,930 1984 15,304 1,125 3,300 91,600 4,955,460 1985 13,760 3,086 3,100 91,600 5,126,412 1986 15,800 3,000 3,100 91,600 4,106,457 1987 13,214 3,408 4,565 90,000 4,176,652 1988 12,860 3,215 6,398 91,000 4,346,469 1989 12,860 3,215 4,180 92,000 4,413,218 1990 12,860 3,215 4,983 94,000 4,657,226 1991 12,860 3,215 4,179 94,000 4,685,011 1992 12,860 3,215 2,314 94,000 4,521,413 1993 12,860 3,215 1,511 94,000 4,469,466 1994 12,860 3,054 1,479 94,000 4,587,572 1995 12,860 5,787 1,608 94,000 4,774,921 1996 12,860 6,143 1,752 94,000 5,293,804 1997 25,721 4,823 1,608 94,000 5,730,366 1998 26,235 4,823 804 94,000 5,876,840 1999 26,106 - 804 94,000 6,124,520 2000 26,621 - 804 94,000 6,507,798 2001 25,721 - 900 - 6,207,070 2002 20,300 - 965 - 6,426,808 2003 32,000 - 611 - 6,946,592 2004 17,683 - 611 - 7,050,842 2005 24,113 - 482 - 7,408,652 2006 19,290 - 482 - 7,261,588 2007 22,506 - 482 - 6,532,761 2008 19,290 - 482 - 6,326,135 2009 19,290 - 482 - 6,534,565 2010 19,290 - 482 - 6,835,823 2011 19,290 12,183 482 - 6,550,061 2012 19,290 24,639 482 - 6,752,038 2013 19,290 25,990 482 - 6,539,237 2014 19,290 27,500 482 - 7,221,702 2015 19,290 27,500 482 - 6,902,034 2016 19,290 27,500 482 - 6,829,079 2017p

125 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium Secondary Supply Thousand Troy Ounces 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Palladium Contained in Hypothetically Available Scrap Material

Spent Auto Catalysts United States 114.0 154.3 186.9 194.3 220.0 250.5 335.5 385.1 444.2 563.6 664.0 Western Europe 2.3 4.5 8.3 13.5 20.7 29.5 39.1 53.5 71.7 92.9 117.8 Japan 15.5 19.0 25.3 30.4 37.0 45.4 54.8 66.8 86.9 101.6 113.6 China N/A N/A N/A N/A 0.0 0.1 0.3 0.5 1.4 2.1 3.1 Subtotal 131.7 177.7 220.4 238.3 277.8 325.6 429.6 506.0 604.2 760.1 898.5 % Change 21.0% 34.9% 24.0% 8.1% 16.6% 17.2% 32.0% 17.8% 19.4% 25.8% 18.2% % of Total 10.6% 13.8% 17.2% 18.5% 19.8% 22.0% 37.0% 45.5% 53.5% 65.2% 79.3%

Old Jewelry 8.3 10.8 12.7 12.3 19.5 11.9 11.3 12.5 17.8 17.8 25.6 % Change -0.6% 30.1% 17.0% -3.1% 58.8% -39.0% -4.8% 10.2% 43.0% 0.0% 43.6% % of Total 0.7% 0.8% 1.0% 1.0% 1.4% 0.8% 1.0% 1.1% 1.6% 1.5% 2.3%

EOL Electronics 1,100.0 1,100.0 1,050.0 1,035.6 1,105.8 1,144.9 721.1 594.6 506.3 388.7 208.7 % Change 0.0% 0.0% -4.5% -1.4% 6.8% 3.5% -37.0% -17.5% -14.8% -23.2% -46.3% % of Total 88.7% 85.4% 81.8% 80.5% 78.8% 77.2% 62.1% 53.4% 44.9% 33.3% 18.4%

Total 1,240.1 1,288.5 1,283.1 1,286.2 1,403.1 1,482.3 1,162.0 1,113.1 1,128.3 1,166.6 1,132.7 % Change 1.9% 3.9% -0.4% 0.2% 9.1% 5.6% -21.6% -4.2% 1.4% 3.4% -2.9% Total Refined Palladium from Secondary Sources 1,165.0 1,215.0 1,253.0 1,280.0 1,408.0 1,520.0 1,250.0 1,275.0 1,313.0 1,359.0 1,407.0 % Change 0.0% 4.3% 3.1% 2.2% 10.0% 8.0% -17.8% 2.0% 3.0% 3.5% 3.5%

Notes: Differences in the volume of palladium contained in hypothetically available scrap material and actual refined secondary supply of palladium are due to factors that influence the hoarding and/or release of scrap inventories by collectors. These factors relate mostly to price and economic trends. Additionally, refined supply accounts for refining losses. N/M - Not Meaningful Source: CPM Group May 2017

126 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Spent Auto Catalysts 800.4 918.1 1,039.5 1,141.9 1,211.4 1,267.8 1,306.8 1,322.0 1,358.1 1,334.8 1,331.5 United States 152.1 193.4 272.8 300.9 326.7 346.6 356.0 362.6 383.4 411.6 413.1 Western Europe 122.0 139.3 149.7 162.2 176.3 192.8 210.9 229.3 249.3 270.6 291.4 Japan 4.6 6.9 9.9 18.2 24.1 30.7 37.9 57.7 83.9 119.2 165.8 China 1,079.2 1,257.6 1,471.9 1,623.2 1,738.5 1,837.8 1,911.6 1,971.7 2,074.7 2,136.2 2,201.9 Subtotal 20.1% 16.5% 17.0% 10.3% 7.1% 5.7% 4.0% 3.1% 5.2% 3.0% 3.1% % Change 80.9% 82.1% 83.8% 82.7% 82.1% 81.1% 80.5% 80.5% 81.6% 82.3% 81.9% % of Total

23.7 23.6 24.0 38.6 33.4 28.4 27.1 26.3 24.2 22.5 30.5 Old Jewelry -7.5% -0.2% 1.5% 60.9% -13.5% -15.0% -4.6% -3.0% -8.0% -7.0% 35.7% % Change 1.8% 1.5% 1.4% 2.0% 1.6% 1.3% 1.1% 1.1% 1.0% 0.9% 1.1% % of Total

230.9 250.9 260.1 300.0 344.4 400.3 436.7 451.3 442.2 437.8 456.2 EOL Electronics 10.7% 8.6% 3.7% 15.3% 14.8% 16.2% 9.1% 3.3% -2.0% -1.0% 4.2% % Change 17.3% 16.4% 14.8% 15.3% 16.3% 17.7% 18.4% 18.4% 17.4% 16.9% 17.0% % of Total

1,333.8 1,532.1 1,755.9 1,961.7 2,116.3 2,266.4 2,375.4 2,449.2 2,541.0 2,596.4 2,688.5 Total 17.8% 14.9% 14.6% 11.7% 7.9% 7.1% 4.8% 3.1% 3.8% 2.2% 3.5% % Change Total Refined Palladium 1,508.0 1,400.5 1,412.4 2,208.6 2,112.1 2,151.9 2,347.8 2,437.7 2,409.6 2,489.8 2,564.5 from S econdary S ources 7.2% -7.1% 0.8% 56.4% -4.4% 1.9% 9.1% 3.8% -1.2% 3.3% 3.0% % Change

127 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM Fabrication Demand pared to recent years, however, as many of the major auto markets, especially Palladium fabrication demand contin- the United States, reach their peak lev- ued to rise during 2016, driven higher els of demand for the current cycle. primarily by increased demand from the Some of the softness in demand from auto sector. Total palladium demand the auto industry should be offset by a during 2016 reached a record 9.35 mil- revival in demand from the electronics lion ounces, up 1.2% from 2015. While sector. Total palladium fabrication de- demand rose to a record high, there mand in 2017 is forecast to reach 9.43 were many sectors where palladium million ounces, up around 0.9% for the demand declined, such as in electronics, year. dental, and jewelry. This weakness was more than offset, however, by the in- Automotive crease in demand from the auto sector. A healthy passenger vehicle market, Palladium fabrication demand from the increased market share of gasoline vehi- auto sector is estimated to have risen to cles in Europe, and ongoing substitution a record high 6.26 million ounces in of platinum with palladium in diesel 2016, up 2.1% from 2015. That said, the auto catalysts all helped to boost de- pace of growth from the sector declined mand for the metal in the auto sector. significantly compared to recent years. The growth rate appears to be the lower Heading into 2017, demand for palla- rate of increase in annual palladium use dium from the auto sector is forecast to since the Great Recession in 2008 – continue rising. The increase is ex- 2009. This slowdown in growth can in pected to be relatively lackluster com- large part be attributed to the slowdown

Annual Palladium Fabrication Demand

Million Ounces Million Ounces 10.0 10.0 Electrical Auto 9.0 9.0 Dental Jewelry 8.0 8.0

7.0 Petro Chemical Other Uses 7.0

6.0 6.0

5.0 5.0

4.0 4.0

3.0 3.0

2.0 2.0

1.0 1.0

0.0 0.0 76 79 82 85 88 91 94 97 00 03 06 09 12 15 128 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 in growth from the U.S. market, the pected to further weigh on palladium largest source of palladium demand fabrication demand. Palladium demand from the auto sector. from the U.S. auto market during 2017 is forecast to remain flat from 2016 lev- U.S. vehicle sales grew at a strong pace els. post the Great Recession, rising above their pre-recession highs in 2014 and The overall weakness in auto demand in continuing to rise, reaching a record in Japan during 2016 weighed on palla- 2016. At this late stage of the demand dium fabrication demand from the cycle, it is normal for the level of new country, which slipped to 723,000 and replacement demand for vehicles to ounces, down 1.6% from 2015. Vehicle slow. Palladium demand from the U.S. demand in the country has been rising at market rose to 1.97 million ounces in a healthy pace during the first quarter of 2016, up 0.5% from 2015. This com- 2017 and this demand could be sus- pares with an 11.9% compounded tained following two consecutive years growth rate from 2009 to 2015. While of declines in auto demand and also consideration should be given to the fact some improvement in economic activity that 2009 was a particularly weak year in the country during 2016. This is ex- for demand, the softness in demand pected to drive higher palladium fabri- growth during 2016 is in stark contrast cation demand in Japan during 2017 to to previous years. 738,000 ounces, the highest level of demand since 2014. Heading into 2017, vehicle demand in the U.S. could slow further or could Palladium demand in the European auto potentially decline a little, which is ex- market continued to rise during 2016 for

Palladium Fabrication Demand By Country and Region Projected Through 2017 Thousand Ounces Thousand Ounces 7,000 7,000

United States Japan Europe Other 6,000 6,000

5,000 5,000

4,000 4,000

3,000 3,000

2,000 2,000

1,000 1,000

0 0 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 129 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

U.S. Light-Duty Vehicle Sales Monthly Through March 2017

2,000 2,000

1,800 1,800

1,600 1,600

1,400 1,400

1,200 1,200

1,000 1,000

800 800

600 600

400 400

200 200 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16

Ratio of US Cars to Light Truck Sales

Passenger Cars Light Trucks 100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: 2017 data throughApril.

130 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 Annual Palladium Use Thousand Troy Ounces 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 Electronics North America 152 224 287 392 313 345 312 250 389 301 316 318 420 558 579 415 424 Japan 199 177 177 209 177 462 504 646 764 688 874 950 1,044 1,000 950 1,343 1,222 Western Europe 76 80 88 118 95 98 112 128 197 215 242 252 269 281 300 285 263 China Other ___------3640444853586______0 _____60 _____60 Subtotal 427 481 552 719 585 905 928 1,024 1,387 1,244 1,476 1,568 1,786 1,897 1,889 2,103 1,969 % of Total 22.1% 25.3% 23.3% 24.9% 24.8% 39.6% 37.4% 38.5% 43.3% 39.4% 41.7% 40.4% 43.2% 44.3% 45.3% 48.6% 47.0% % Change Year Ago - 12.6% 14.8% 30.3% -18.6% 54.7% 2.5% 10.3% 35.4% -10.3% 18.6% 6.2% 13.9% 6.2% -0.4% 11.3% -6.4% Auto North America 194 125 199 222 177 129 118 172 286 295 270 250 245 255 230 219 252 Japan -----80909396100 129 161 180 200 180 200 132 Western Europe 3 3 4 5 4 3 5 5 222225 13 15 20 China Other___ ------12171818222 ______5 ___30 Subtotal 197 128 203 227 181 212 213 270 384 397 413 430 444 479 445 459 434 % of Total 10.2% 6.7% 8.6% 7.9% 7.7% 9.3% 8.6% 10.2% 12.0% 12.6% 11.7% 11.1% 10.8% 11.2% 10.7% 10.6% 10.4% % Change Year Ago - -35.0% 58.6% 11.8% -20.3% 17.1% 0.5% 26.8% 42.1% 3.4% 4.0% 4.1% 3.4% 7.8% -7.1% 3.1% -5.4% Dental North America 139 112 206 244 244 255 311 344 347 339 402 334 213 271 197 157 166 Japan 177 119 209 257 225 161 193 199 206 214 309 412 425 435 440 418 450 Germany 39 49 52 54 51 61 87 113 195 260 260 257 257 193 196 193 174 Other Europe 13 13 13 13 13 13 26 25 103 127 160 202 273 230 232 250 250 China Other ------1316192424262830 30 ______Subtotal 368 293 480 568 533 490 617 681 863 956 1,151 1,229 1,193 1,155 1,093 1,048 1,070 % of Total 19.0% 15.4% 20.2% 19.7% 22.6% 21.4% 24.8% 25.6% 27.0% 30.3% 32.5% 31.7% 28.9% 27.0% 26.2% 24.2% 25.5% % Change Year Ago - -20.4% 63.8% 18.3% -6.2% -8.1% 25.9% 10.4% 26.7% 10.8% 20.3% 6.8% -3.0% -3.2% -5.4% -4.1% 2.1% Jewelry North America 616131213158768776661130 Japan 48 48 48 64 48 64 61 48 57 59 61 72 85 90 95 120 113 Western Europe 23 31 32 30 22 27 30 35 53 55 55 54 53 52 55 59 56 China Other__ ------122 ______222333 ______Subtotal 77 95 93 106 83 106 99 90 117 124 125 135 146 151 159 193 202 % of Total 4.0% 5.0% 3.9% 3.7% 3.5% 4.6% 4.0% 3.4% 3.7% 3.9% 3.5% 3.5% 3.5% 3.5% 3.8% 4.5%4.8% % Change Year Ago - 23.4% -2.1% 14.0% -21.7% 27.7% -6.6% -9.1% 30.1% 5.8% 0.8% 8.2% 8.4% 2.9% 5.5% 21.4% 4.7% Chemical/Petroleum Refining North America 136 170 165 225 142 111 150 90 170 144 105 76 111 144 124 82 86 Japan 222 203 338 434 402 57 53 125 92 45 32 163 123 145 148 150 135 Western Europe------101103103110115 106 110 115 118 China ______Subtotal 358 373 503 659 544 168 203 215 363 293 240 349 349 395 382 347 339 % of Total 18.5% 19.7% 21.2% 22.8% 23.0% 7.3% 8.2% 8.1% 11.4% 9.3% 6.8% 9.0% 8.4% 9.2% 9.2% 8.0% 8.1% % Change Year Ago - 4.2% 34.9% 31.0% -17.5% -69.1% 20.8% 5.9% 69.0% -19.5% -17.8% 45.0% 0.0% 13.2% -3.2% -9.2% -2.3% Other Uses North America 3053483823342760578861100134 128 127 107 129 Japan 19 19 32 66 35 70 61 24 14 33 48 44 55 55 52 45 23 Western Europe___ 456 ___ 456 ___ 460 ___506 ___ 377 ___ 302 ___ 335 ___294 ___17 ___ 23 ___ 23 ___ 25 ___ 25 ___ 25 ___ 20 ___ 22 ___ 25 Subtotal 505 528 540 610 435 406 423 378 88 144 132 169 214 208 199 174 177 % of Total 26.1% 27.8% 22.8% 21.1% 18.4% 17.8% 17.0% 14.2% 2.7% 4.6% 3.7% 4.3% 5.2% 4.8%4.8%4.0%4.2% % Change Year Ago - 4.6% 2.3% 13.0% -28.7% -6.7% 4.2% -10.6% -76.8% 64.3% -8.2% 27.4% 26.9% -2.9% -4.2% -12.6% 1.7%

Total 1,932 1,898 2,371 2,889 2,361 2,287 2,483 2,658 3,201 3,158 3,537 3,879 4,132 4,284 4,167 4,324 4,191 % Change Year Ago - -1.8% 24.9% 21.8% -18.3% -3.1% 8.6% 7.0% 20.4% -1.4% 12.0% 9.7% 6.5% 3.7% -2.7% 3.8% -3.1%

Notes: For the years prior to 1984, European chemical and petroleum refining demand is included in Other Uses in the Western Europe row. The subtotals for individual uses here are the sums of the countries for which data are available; other countries may consume palladium in these uses, but estimates are not available. Demand in other countries prior to 1984 in all industries is included in the Other Uses in Western Europe row. There may be discrepancies due to rounding. p -- projections. Sources: U.S. Bureau of Mines, trade sources, CPM Group. May 1, 2017

131 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016p 2017e Electronics 475 523 586 568 643 650 680 620 175 202 210 240 270 300 310 280 235 245 247 245 255 258 258 250 250 North America 1,375 1,650 1,850 1,750 1,900 1,710 1,573 1,580 260 146 220 235 265 290 260 220 200 220 210 215 218 221 220 219 225 Japan 256 275 296 280 295 295 280 260 140 170 180 200 205 210 190 170 160 175 175 165 166 167 170 171 175 Western Europe 138 171 198 216 226 233 257 260 277 260 262 263 255 257 260 262 265 269 China _____70_____ 80 _____90_____ 110 _____140_____ 150_____ 170_____ 32_____ 29 _____52_____ 54 _____74_____ 97_____ 163_____ 180_____ 178_____ 240 _____277_____ 312 _____311_____ 333_____ 340_____ 340_____ 336_____ 338 Other 2,176 2,528 2,822 2,708 2,978 2,805 2,703 2,630 775 768 880 975 1,070 1,220 1,200 1,125 1,095 1,179 1,207 1,191 1,229 1,246 1,250 1,241 1,257 Subtotal 47.0% 47.4% 44.9% 41.0% 41.9% 37.5% 35.3% 34.8% 15.0% 14.2% 15.7% 14.8% 14.9% 16.0% 15.5% 15.1% 15.5% 14.9% 14.8% 13.9% 14.0% 13.8% 13.5% 13.3% 13.3% % of Total 10.5% 16.2% 11.6% -4.0% 10.0% -5.8% -3.6% -2.7% -70.5% -0.9% 14.6% 10.8% 9.7% 14.0% -1.6% -6.3% -2.7% 7.6% 2.4% -1.3% 3.2% 1.4% 0.3% -0.7% 1.3% % Change Year Ago Auto 400 460 700 900 1,000 1,300 1,400 1,000 900 910 900 1,200 1,450 1,550 1,600 1,300 1,000 1,3001,450 1,631 1,775 1,872 1,966 1,976 1,978 North America 125 130 194 300 350 500 700 900 505 520 540 635 670 780 790 750 600 720 626 764 768 799 735 723 738 Japan 22 193 474 545 652 848 880 920 880 900 915 960 990 1,010 1,055 1,002 960 1,000 1,005 970 926 991 1,070 1,129 1,152 Western Europe 59 62 86 123 175 173 215 277 318 476 693 808 845 1,024 1,102 1,168 1,297 1,357 China ___35___ 38 ___57___ 64 ___75___ 100___ 200___ 341___ 408___ 444___ 417___ 425___ 577___ 685___ 823___ 882___ 924 1,099___ 1,145___ 1,255___ 1,201___ 1,157___ 1,193___ 1,135___ 1,111___ Other 582 821 1,425 1,809 2,077 2,748 3,180 3,220 2,755 2,860 2,895 3,395 3,860 4,240 4,545 4,252 3,960 4,812 5,035 5,465 5,695 5,921 6,132 6,260 6,335 Subtotal 12.6% 15.4% 22.7% 27.4% 29.2% 36.7% 41.5% 42.6% 53.4% 52.7% 51.5% 51.6% 53.7% 55.8% 58.6% 57.2% 56.2% 60.8% 61.8% 63.9% 64.7% 65.5% 66.3% 66.9% 67.2% % of Total 34.1% 41.1% 73.6% 26.9% 14.8% 32.3% 15.7% 1.3% -14.4% 3.8% 1.2% 17.3% 13.7% 9.8% 7.2% -6.4% -6.9% 21.5% 4.6% 8.5% 4.2% 4.0% 3.6% 2.1% 1.2% % Change Year Ago Dental 183 193 198 202 205 205 195 120 118 122 150 190 225 235 240 240 245 244 240 235 230 228 226 226 222 North America 510 560 576 595 595 580 525 470 475 505 405 520 475 270 268 265 265 260 255 260 260 258 255 255 250 Japan 161 140 170 164 149 104 90 80 60 65 67 73 76 80 82 82 83 82 83 82 80 79 77 76 74 Germany 250 260 268 273 270 229 206 180 130 140 142 150 150 155 158 160 161 160 155 150 145 142 139 139 137 Other Europe 21 21 22 22 23 24 24 25 26 27 27 28 28 28 28 29 29 27 China 30 32 33 33 30 25 23 1 1 1 2 1 2 132 1112 11111 Other ______1,134 1,185 1,245 1,267 1,249 1,143 1,039 872 805 855 788 957 952 765 776 775 782 774 762 756 744 737 727 726 711 Subtotal 24.5% 22.2% 19.8% 19.2% 17.6% 15.3% 13.6% 11.5% 15.6% 15.8% 14.0% 14.6% 13.2% 10.1% 10.0% 10.4% 11.1% 9.8% 9.4% 8.8% 8.5% 8.1% 7.9% 7.8% 7.5% % of Total 6.0% 4.5% 5.1% 1.8% -1.4% -8.5% -9.1% -16.1% -7.7% 6.2% -7.8% 21.4% -0.5% -19.6% 1.4% -0.1% 0.8% -1.0% -1.6% -0.8% -1.6% -1.0% -1.4% -0.1% -2.1% % Change Year Ago Jewelry 40 42 46 48 52 52 54 45 46 48 48 49 50 60 65 68 75 76 72 70 69 69 68 67 67 North America 120 125 125 121 130 118 115 150 140 165 160 155 145 130 125 125 118 119 114 110 108 105 104 103 103 Japan 56 60 62 64 57 57 55 50 50 52 52 53 50 60 62 63 64 65 63 60 62 64 64 65 64 Western Europe 49 66 101 212 356 397 420 269 302 307 201 174 162 155 148 145 144 143 China ___3 ___4 ___6 ___6 ___8 ___8 ___75______6 ___8 ___8 ___20___ 40 ___50___ 60 ___63___ 65___ 68___ 69 ___69 ___67___ 66 ___66___ 67 66 Other 219 231 239 239 247 235 231 299 308 374 480 633 682 720 581 621 629 529 492 471 461 451 447 445 443 Subtotal 4.7% 4.3% 3.8% 3.6% 3.5% 3.1% 3.0% 4.0% 6.0% 6.9% 8.5% 9.6% 9.5% 9.5% 7.5% 8.3% 8.9% 6.7% 6.0% 5.5% 5.2% 5.0% 4.8% 4.8% 4.7% % of Total 8.4% 5.5% 3.5% 0.0% 3.3% -4.9% -1.7% 29.3% 3.2% 21.3% 28.2% 32.0% 7.7% 5.6% -19.3% 6.9% 1.3% -15.9% -7.1% -4.1% -2.2% -2.2% -0.8% -0.5% -0.6% % Change Year Ago Chemical/Petroleum Refining 94 105 105 108 106 106 106 90 92 94 97 102 107 115 112 110 100 115 130 137 140 143 142 140 140 North America 140 155 140 150 146 140 105 90 70 110 110 135 135 140 135 132 110 120 115 120 125 126 125 125 124 Japan 120 130 132 135 133 133 130 120 122 125 128 130 132 135 130 127 107 107 108 106 104 106 106 102 103 Western Europe ______60___ 62 ___62___ 65___ 66___ 68 ___74___ 80 ___85___ 89 ___98___ 104 ___108___ 111___ 114___ 117___ 119___ 128 China 354 390 377 393 385 379 341 360 346 391 400 433 442 464 457 454 406 440 457 471 480 489 490 486 495 Subtotal 7.6% 7.3% 6.0% 6.0% 5.4% 5.1% 4.4% 4.8% 6.7% 7.2% 7.1% 6.6% 6.1% 6.1% 5.9% 6.1% 5.8% 5.6% 5.6% 5.5% 5.4% 5.4% 5.3% 5.2% 5.2% % of Total 4.4% 10.2% -3.3% 4.2% -2.0% -1.6% -10.0% 5.5% -4.0% 13.2% 2.1% 8.3% 2.1% 5.1% -1.6% -0.5% -10.6% 8.4% 3.7% 3.0% 1.9% 2.0% 0.2% -0.9% 1.8% % Change Year Ago Other Uses 110 115 118 120 122 122 118 115 115 120 120 122 125 130 133 135 120 125 130 132 134 136 136 136 136 North America 30 32 27 29 26 25 25 30 30 30 30 35 35 36 39 40 30 35 33 35 35 36 35 34 35 Japan ___27___ 29 ___29___ 33___ 30 ___30___ 30 ___28___ 22 ___25___ 25___ 25___ 28 ___30___ 32 ___35___ 21___ 23___ 26 ___25___ 24___ 25___ 26___ 26 ___23 Western Europe 167 176 174 182 178 177 173 173 167 175 175 182 188 196 204 210 171 183 189 192 193 197 197 196 194 Subtotal 3.6% 3.3% 2.8% 2.8% 2.5% 2.4% 2.3% 2.3% 3.2% 3.2% 3.1% 2.8% 2.6% 2.6% 2.6% 2.8% 2.4% 2.3% 2.3% 2.2% 2.2% 2.2% 2.1% 2.1% 2.1% % of Total -5.6% 5.4% -1.1% 4.6% -2.2% -0.6% -2.3% 0.0% -3.5% 4.8% 0.0% 4.0% 3.3% 4.3% 4.1% 2.9% -18.6% 7.0% 3.3% 1.6% 0.5% 2.1% 0.0% -0.5% -1.0% % Change Year Ago

4,632 5,331 6,282 6,598 7,114 7,487 7,667 7,554 5,156 5,423 5,617 6,575 7,193 7,605 7,762 7,437 7,043 7,917 8,141 8,546 8,801 9,041 9,242 9,353 9,434 Total 10.5% 15.1% 17.8% 5.0% 7.8% 5.2% 2.4% -1.5% -31.7% 5.2% 3.6% 17.0% 9.4% 5.7% 2.1% -4.2% -5.3% 12.4% 2.8% 5.0% 3.0% 2.7% 2.2% 1.2% 0.9% % Change Year Ago

132 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 the third consecutive year. Demand Demand from the ‘other’ category, from this region rose to a record high which includes every country and re- 1.13 million ounces in 2016, up 5.5% gion other than North America, Europe, from 2015. There were several factors and Japan, rose strongly to a record 2.4 that helped palladium fabrication de- million ounces in 2016. This was an mand from the region’s auto sector increase of 3% over 2015 and was in grow in 2016. Not only was there an large part driven by China and India. increase in vehicle demand in the re- Both of these countries’ auto markets gion, but there also has been an increase saw an uptick in demand and the large in demand for gasoline vehicles, which fleets of gasoline powered vehicles in use more palladium intensive catalysts. both markets helped to push demand Furthermore, over the past several years higher, offsetting some of the weakness there has been an ongoing substitution in demand that occurred from Russia of platinum with palladium in diesel and Brazil, but also from some of the autocatalysts, all of which are factors smaller auto markets. The largest con- that were supportive of palladium fabri- tributor to this increase in palladium cation demand from the European auto demand was China, which accounted sector during 2016. Palladium demand for around 53% of the volume. from this region’s auto sector is forecast to continue growing during 2017 reach- A sharp increase in the number of vehi- ing a new record high of 1.15 million cles sold helped to drive demand higher. ounces. The increase in demand is ex- This increase in auto demand was pected to be supported by all of the driven by a government subsidy for same factors that propelled demand small cars. While the number of cars higher in 2016. sold was large, the smaller engine sizes means that holding all other factors that

Chinese Passenger Car Sales Monthly Data, Through March 2017

Thousand Vehicles Thousand Vehicles 3,000 3,000

2,500 2,500

2,000 2,000

1,500 1,500

1,000 1,000

500 500

0 0 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 133 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM influence the amount of PGMs loaded to the price of gas in making their deci- on auto catalysts constant, a smaller sion to purchase light trucks versus cars. engine would require lower PGM load- During periods when oil prices have ings. This curtailed the demand for pal- risen since 2002, light truck sales have ladium from China during 2016. This declined. subsidy was initially set to expire during 2016. This resulted in aggressive pur- Going forward oil prices are forecast to chases during 2016 and in pulling for- remain relatively soft compared to the ward demand from 2017. The subsidy high prices around 2007 - 2014, which was later extended to the end of 2017, is expected to continue encouraging which should provide some support to demand for these light trucks. Aside vehicle demand, but a lot of the demand from fuel cost, higher fuel economy was already met in 2016 which could standards being enforced by the U.S. make demand growth in 2017 relatively government should further encourage lackluster. Demand in Brazil and Russia the use of these vehicles in the United should also recover some in 2017, States. Large vehicles have been profit which should help support demand. De- drivers for all vehicle manufacturers mand from ‘other’ countries is forecast and therefore these companies are to rise to 2.47 million ounces in 2017. taking special efforts to redesign their pick up vehicles to make them more U.S. Demand for Cars versus Light fuel efficient. Trucks The Trump Administration has stated it Weakness in oil prices has played an plans to roll back fuel efficiency stan- important role in driving higher demand dards. Whether or not it will, or will be for light trucks in the United States. allowed to by the courts, improvements (SUVs are considered light trucks by in fuel economy over the past seven U.S. regulators.) This has important years are not likely to be reversed, and implications for PGM demand, particu- further improvements would be ex- larly palladium, because these light pected in the long run. trucks are powered by gasoline engines which use palladium intensive catalysts. Emissions Standards

The volume of light truck sales to cars Emissions standards in the country is important because holding all other where the vehicle is being sold is an- factors that influence PGM loadings in other important factor in influencing the auto catalysts constant, the larger the amount of PGMs loaded in auto cata- engine size the greater the PGM loading lysts. Tighter emissions standards, hold- per catalyst. During 2016 light trucks ing all the other factors that influence accounted for 61% of total light duty PGM loadings constant, typically re- vehicle sales, with the remainder com- quire higher PGM loadings. The impor- prised of passenger cars. This was the tance of tighter emissions standards can highest level that light truck sales have be clearly seen in the amount of PGMs reached at least since 2002, the first demanded in different parts of the year for which such data are available. world. Consumers are typically very sensitive 134 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 In 2016 China was the largest auto mar- Emissions Standards in India ket in the world. Despite this, the United States was the largest consumer India’s emissions standards are modeled of palladium (both markets are primar- on those of Europe and the regulations ily gasoline markets) in auto catalysts. are phased first into major Indian cities This is because the emissions standards and then on a countrywide basis. Emis- in the United States are more stringent sions standards are at Bharat IV, which than those in China. That said, this gap is the equivalent of Euro 4, in the large is expected to start narrowing in com- Indian cities. Meanwhile the rest of the ing years. This expectation is based on country is on Bharat III (Euro 3). The the changes in emissions standards in entire country is expected to remain on China and the large volume of vehicles these emissions standards until 2019. In being sold in the country. 2020, the concept of phasing in emissions standard first in big cities and Chinese Emissions Standards Changes then on a nationwide basis will be abandoned and the entire country Emissions standards in China for pas- will be moved onto Bharat VI (Euro senger vehicles and light duty commer- 6). The severe pollution occurring in cial vehicles were based on the Euro- Delhi as of 2016 may focus national pean regulations until China 5, which attention on air quality, which could would be equivalent of Euro 5 emis- lead to changes in emission control sions standards in Europe. In 2015, the regulations. Offsetting factors, such as government decided that China 6 will the economic costs of implementing a be based on U.S. Tier 3 regulations in- more stringent emission control regime stead of Euro 6 regulations. U.S. Tier 3 more rapidly may prevent this from regulations are significantly more strin- happening, although such developments gent than Euro 6 regulations. Tier 3 are something to be watched in India. emissions standards are not only meaningfully tighter than Tier 2 standards but Electronics are a fraction of allowable limits under Euro 6. Tier 3 emissions standards will Palladium demand from the electronics be introduced in the United States in sector declined during 2016 to 1.24 mil- 2017 and China 6, its equivalent, will be lion ounces, down 0.7% from 2015. introduced only in Beijing in 2017. It This was the first decline in demand has been typical for China to introduce from the electronics sector since 2012. new emissions standards first in Beijing Demand during 2016 declined due to a and then with a three or four year lag in buildup in semiconductor inventory the rest of the country, so while no date globally. While demand declined, it was has been released for the launch of small and from a very high level, sug- China 6 on a nationwide basis there is a gesting that there is still a large amount fairly high likelihood based on the past of palladium being consumed by the that the emissions standards will be electronics sector. Improvement in con- launched around 2020 or 2021 on a na- sumer confidence globally since 2016 tional level. has been helping to increase demand for consumer electronics, which should

135 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM help drive down the built up semicon- jewelry is in white gold which is often ductor inventory. an alloy of gold and palladium. Pure palladium jewelry has a very limited Demand for palladium in the electronics market. Furthermore, the higher price of industry is expected to rebound during gold and palladium and the declining 2017 after going through a slowdown price of platinum reduce the need to opt over the past couple of years due to an for white gold over platinum. This is increase in inventory buildup. Demand trend is not expected to change any time is forecast to reach a record 1.26 million soon and demand for palladium jewelry ounces during the year, up 1.3% over is expected to soften to 443,000 ounces 2016. in 2017.

Jewelry Dental

Palladium jewelry demand continued to Demand for palladium from the dental decline during 2016, slipping to sector has been in a long term decline, a 445,000 ounces from 447,000 ounces in trend that continued during 2016. Palla- 2015. This was the lowest level of de- dium demand from this sector declined mand since 2002. The lack of advertis- to 726,000 ounces in 2016. There has ing for palladium jewelry is the primary been an ongoing shift toward ceramics, reason that demand for the metal from which has weighed on demand for pal- this sector has been suffering. There is ladium in the dental sector. That said, not sufficient awareness among con- the strength and durability of precious sumers regarding what palladium jew- metals have prevented them from being elry. Much of the palladium used in completely substituted in this use. De-

Electronics Palladium Demand by Region Annual, Projected Through 2017

3,500 3,500 United States Japan Europe Other 3,000 3,000

2,500 2,500

2,000 2,000

1,500 1,500

1,000 1,000

500 500

0 0 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

136 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 mand for palladium from the dental sec- several months of 2017 is expected to tor has stagnated in recent years. hurt palladium demand from the dental sector during the year. Demand from Palladium demand in the dental sector this sector is expected to slip to 711,000 tends also to be price sensitive. The ounces during 2017. sharp uptick in price during the first

Palladium Demand In Dental

Thousand Ounces Thousand Ounces 1,400 1,400

1,200 1,200

1,000 1,000

800 800

600 600

400 400

200 200

0 0 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

U.S. Demand by Sector Projected 2016 Demand: 2,794,665

Other, 7.3% Petrochem, 5.0% Electronics, 8.9% Dental/medical, 8.1%

Auto, 70.7%

137 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Historical U.S. Palladium Demand Troy Ounces Dental and Year Electronics MedicalAutomotive Chemical Petroleum 1955 250,714 - 36,246 - 1956 304,990 - 31,449 - 1957 285,576 - 25,936 - 1958 238,815 - 93,215 - 1959 374,080 - 42,394 603 1960 271,560 - 73,854 5,300 1961 353,010 - 90,533 449 1962 327,788 - 110,518 961 1963 331,868 - 118,757 16,008 1964 350,889 - 117,102 41,887 1965 430,384 - 156,796 37,001 1966 531,545 - 221,559 28,760 1967 324,684 - 192,011 3,506 1968 329,012 - 228,318 22,683 1969 430,258 - 214,508 1,337 1970 429,032 - 184,618 15,494 1971 431,505 - 218,651 2,916 1972 425,081 - 292,710 14,499 1973 524,056 - 259,959 3,761 1974 390,237 150,000 163,205 14,877 1975 132,247 97,000 142,975 2,255 1976 152,312 139,000 194,496 128,229 7,291 1977 223,748 112,000 125,010 161,234 8,507 1978 286,574 206,000 198,809 146,352 18,909 1979 392,372 244,000 222,156 199,743 24,588 1980 312,778 244,000 176,518 119,905 22,013 1981 345,365 255,000 129,214 90,272 20,877 1982 312,372 311,000 118,445 128,778 20,845 1983 250,059 344,000 172,050 39,892 49,870 1984 389,070 347,000 286,000 78,600 92,134 1985 300,677 339,000 295,000 63,236 80,940 1986 316,390 402,000 270,000 44,485 60,959 1987 318,301 334,000 250,000 34,682 41,344 1988 419,534 213,000 245,000 65,000 46,233 1989 557,879 271,000 255,000 61,826 81,759 1990 578,616 197,000 230,000 76,165 47,840 1991 414,840 157,000 219,000 46,779 35,402 1992 424,293 166,000 252,000 61,569 24,113 1993 475,000 183,000 290,000 70,000 24,000 1994 523,000 193,000 460,000 77,000 28,000 1995 586,000 198,000 700,000 77,000 28,000 1996 568,000 202,000 900,000 79,000 29,000 1997 643,000 205,000 1,000,000 78,000 28,000 1998 650,000 205,000 1,300,000 80,000 26,000 1999 680,000 195,000 1,400,000 81,000 25,000 2000 620,000 120,000 1,000,000 68,774 21,226 2001 175,000 118,000 900,000 69,000 23,000 2002 202,000 122,000 910,000 70,000 24,000 2003 210,000 150,000 900,000 72,000 25,000 2004 240,000 190,000 1,200,000 76,000 26,000 2005 270,000 225,000 1,450,000 79,500 27,500 2006 300,000 235,000 1,550,000 85,500 29,500 2007 310,000 240,000 1,600,000 89,250 35,000 2008 280,000 240,000 1,300,000 94,000 37,500 2009 235,000 245,000 1,000,000 100,000 40,000 2010 245,000 244,000 1,300,000 83,000 32,000 2011 247,000 240,000 1,450,000 93,000 37,000 2012 245,000 235,000 1,631,250 97,000 40,000 2013 255,000 230,000 1,774,800 99,124 40,876 2014 258,000 228,250 1,872,414 99,500 43,800 2015 258,000 225,500 1,966,035 99,000 42,000 2016p 250,000 226,000 1,975,865 98,800 41,000 Notes: Petroleum consumption was included in chemical prior to 1959; glass industry was included in chemical prior to 1960. 138 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Jewelry Percent and Change Decorative Glass Other Total in Totals Year 28,673 - 7,221 322,854 1955 25,447 - 7,761 369,647 14.5% 1956 21,257 - 5,387 338,156 -8.5% 1957 25,129 - 1,802 358,961 6.2% 1958 34,113 - 5,590 456,780 27.3% 1959 23,336 6 1,552 375,608 -17.8% 1960 14,354 5 2,461 460,812 22.7% 1961 12,975 124 12,595 464,961 0.9% 1962 13,880 20 3,054 483,587 4.0% 1963 20,886 110 10,665 541,539 12.0% 1964 18,203 1,402 23,107 666,893 23.1% 1965 32,215 1,011 12,020 827,110 24.0% 1966 18,676 301 25,878 565,056 -31.7% 1967 17,797 10 62,023 659,843 16.8% 1968 21,837 3,891 34,581 706,412 7.1% 1969 17,329 21,147 24,140 691,760 -2.1% 1970 18,752 237 26,451 698,512 1.0% 1971 19,375 2,250 27,835 781,750 11.9% 1972 23,052 1,439 65,157 877,424 12.2% 1973 21,701 9,549 12,420 761,989 -13.2% 1974 23,026 17,633 11,942 427,078 -44.0% 1975 5,700 2,989 26,766 656,783 53.8% 1976 15,567 907 53,023 699,996 6.6% 1977 12,570 2,757 45,645 917,616 31.1% 1978 11,766 1,729 36,640 1,132,994 23.5% 1979 13,491 1,155 21,828 911,688 -19.5% 1980 14,772 2,922 30,650 889,072 -2.5% 1981 7,866 213 27,031 926,550 4.2% 1982 6,711 146 59,582 922,310 -0.5% 1983 5,884 10 57,134 1,255,832 36.2% 1984 7,982 - 87,970 1,174,805 -6.5% 1985 6,521 - 61,182 1,161,537 -1.1% 1986 7,099 - 100,239 1,085,665 -6.5% 1987 6,302 354 133,618 1,129,041 4.0% 1988 5,755 5,819 121,723 1,360,761 20.5% 1989 5,691 11,124 116,128 1,262,564 -7.2% 1990 10,610 - 107,448 991,078 -21.5% 1991 30,000 4,051 115,228 1,077,254 8.7% 1992 40,000 4,500 105,000 1,191,500 10.6% 1993 42,000 - 115,000 1,438,000 20.7% 1994 46,000 - 118,000 1,753,000 21.9% 1995 48,000 - 120,000 1,946,000 11.0% 1996 52,000 - 122,000 2,128,000 9.4% 1997 52,000 - 122,000 2,435,000 14.4% 1998 54,000 - 118,000 2,553,000 4.8% 1999 45,000 - 115,000 1,990,000 -22.1% 2000 46,000 - 115,000 1,446,000 -27.3% 2001 48,000 - 120,000 1,496,000 3.5% 2002 48,000 - 120,000 1,525,000 1.9% 2003 49,000 - 122,000 1,903,000 24.8% 2004 50,000 - 125,000 2,227,000 17.0% 2005 60,000 - 130,000 2,390,000 7.3% 2006 65,000 - 133,000 2,472,250 3.4% 2007 68,000 - 135,000 2,154,500 -12.9% 2008 75,000 - 120,000 1,815,000 -15.8% 2009 76,000 - 125,000 2,105,000 16.0% 2010 72,000 - 130,000 2,269,000 7.8% 2011 70,000 - 132,000 2,450,250 8.0% 2012 69,000 - 134,000 2,602,800 6.2% 2013 68,500 - 136,000 2,706,464 4.0% 2014 68,000 - 136,000 2,794,535 3.3% 2015 67,000 - 136,000 2,794,665 0.0% 2016p Source: U.S. Bureau of Mines, CPM Group. May 1, 2017 139 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Japanese Palladium Demand Thousand Troy Ounces 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 Electronics 199 177 177 209 177 462 504 646 764 688 874 950 1,044 1,000 Automotive - - - - - 80 90 93 96 100 129 161 180 200 Dental 177 119 209 257 225 161 193 199 206 214 309 412 425 435 Jewelry 4848486448646148575961728590 Chemical/Petroleum Refining 222 203 338 434 402 57 53 125 92 45 32 163 123 145 Other ___1919326635706124143348445555 ______Total 665 566 804 1,030 887 894 962 1,135 1,229 1,139 1,453 1,802 1,912 1,925 % Change Ye ar Ago - -14.9% 42.0% 28.1% -13.9% 0.8% 7.6% 18.0% 8.3% -7.3% 27.6% 24.0% 6.1% 0.7%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Electronics 950 1,343 1,222 1,375 1,650 1,850 1,750 1,900 1,710 1,573 1,580 260 146 220 Automotive 180 200 132 125 130 194 300 350 500 700 900 505 520 540 Dental 440 418 450 510 560 576 595 595 580 525 470 475 505 405 Jewelry 95 120 113 120 125 125 121 130 118 115 150 140 165 160 Chemical/Petroleum Refining 148 150 135 140 155 140 150 146 140 105 90 70 110 110 Other ____5245233032272926252530303030______Total 1,865 2,276 2,075 2,300 2,652 2,912 2,945 3,147 3,073 3,043 3,220 1,480 1,476 1,465 % Change Ye ar Ago -3.1% 22.0% -8.8% 10.8% 15.3% 9.8% 1.1% 6.9% -2.4% -1.0% 5.8% -54.0% -0.3% -0.7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p Electronics 235 265 290 260 220 200 220 210 215 218 221 220 219 225 Automotive 635 670 780 790 750 600 720 626 764 768 799 735 723 738 Dental 520 475 270 268 265 265 260 255 260 260 258 255 255 250 Jewelry 155 145 130 125 125 118 119 114 110 108 105 104 103 103 Chemical/Petroleum Refining 135 135 140 135 132 110 120 115 120 125 126 125 125 124 Other ____3535363940303533353536353435______Total 1,715 1,725 1,646 1,617 1,532 1,323 1,474 1,353 1,504 1,514 1,545 1,474 1,459 1,475 17.1% 0.6% -4.6% -1.8% -5.3% -13.6% 11.4% -8.2% 11.1% 0.7% 2.0% -4.6% -1.0% 1.1%

Note: Totals may not equal the sums of the individual categories due to rounding. Sales to the chemical industry through 1980 include sales for use in automobiles; beginning with 1980, sales to petroleum refiners are included in the chemical sector, while sales for use in automotive catalysts are separated. p -- projections. Sources: Japanese trade sources, CPM Group. May 1, 2017

140 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium Investment Demand during between 2000 and 2013. The volumes involved are opaque to the In 2016 investors continued to sell a market and the actual selling is seen large amount of palladium from their only by the market makers and others Exchange Traded Fund inventories, a involved in buying this metal from pattern that emerged and 2015. In investors. contrast to 2015, however, the ETF- based investor selling was not joined by In the beginning of 2016, however, other investors selling palladium in the there is a notable shift in investor physical market away from ETFs. In sentiment toward palladium. Heavy 2015 investors holding physical investor selling had weighed palladium palladium outside of ETFs also sold. In prices down since September 2014. By 2016 they appear to have been relatively the end of January 2016 prices had been significant net buyers. trending down for 17 months and had dipped below the long-run support level There have been significant levels of of $500. Such low levels of prices had stale-bull investor inventory selling at not been seen since the middle of 2010, times since 2014, which perhaps was and convinced some investors to hold the major force that drove palladium off their inventory liquidation until prices lower in 2015 and 2016. Most of prices improved. the sales came out of ETF holdings, although a significant amount of selling In the meantime investors who had has been apparent from unreported shorted palladium on the Nymex started stocks that investors had built up booking profits in their short positions.

Palladium Surplus/Deficit Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 3,500 3,500 3,000 3,000 2,500 2,500 Surplus/Net Additions to Inventories 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 -500 -500 Deficit/Net Reduction in Inventories -1,000 -1,000 -1,500 -1,500 -2,000 -2,000 76 81 86 91 96 01 06 11 16

141 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Some of these investors who had demand had been more than shorted palladium were using such accommodated by sales of the metal out shorts to hedge their large positions of of investor inventories. the physical metal. The lower prices of palladium enabled them to lock in During 2016 the palladium market was profits while waiting for the market to estimated to have recorded a small improve. As the palladium market deficit of around 11,000 ounces (within tightened in the third quarter of 2016 the margin of error for palladium and prices rose back above $700, there market supply and demand statistics). was another bout of inventory While sales of investor inventories liquidation by stale-bull investors, continued to cushion the palladium which lasted through the year’s end. In market, the available supplies of this bout of selling, however, investors palladium became tighter than in the were less keen on getting rid of their past two years as investors decided to inventories. Rather, they stopped selling hold on to their palladium. This helped when prices were showing signs of extend a floor to palladium prices. short-term weakness. In the first four months of 2017 investor This shift of investor sentiment from disposals of palladium lessened further selling heavily into the market toward while other investors began holding palladium inventories is a accumulating fresh inventories. There critical change for the palladium appeared to be some investor interest in market. Since 2014 the shortfalls in gaining long exposure to palladium for newly refined metal over fabrication the longer term. The palladium market

Palladium ETP Holdings Through April 2017

Mil. Oz. Mil. Oz. 3.5 3.5 ABSA 3.0 Standard Bank 3.0 SPPP NYSE (Sprott) Mitsubishi 2.5 2.5 SPAL SPDM 2.0 2.0 WITE GLTR 1.5 1.5 Julius Baer MSL ASX PALL NYSE 1.0 1.0 ZKB 0.5 0.5 PHPD LSE 0.0 0.0 07 08 09 10 11 12 13 14 15 16 17 Source: ETP issuer websites, Bloomberg

142 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Annual Changes to Palladium ETP Holdings Through April 2017

Thou. Oz. Thou Oz. 1,200 1,200

1,000 1,000

800 800

600 600

400 400

200 200

0 0

-200 -200

-400 -400

-600 -600

-800 -800 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bloomberg, ETP issuer websites.

Monthly Changes in Palladium ETP Holdings and Prices Through April 2017 Thou Oz Percent 500 40% Change in Month-End Palladium Price (RHS) 400 30% 300 20% 200

100 10%

0 0% -100 -10% -200 -20% -300

-400 -30% 10 11 12 13 14 15 16 17

143 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 is expected to record a surplus around 2,305 ounces. Investors in other ETPs 117,000 ounces for the year, but to were liquidating their palladium tighten significantly in the years ahead. holdings as well, selling 189,765 ounces Such surplus metal may become on a net basis. ETF Securities’ PHPD absorbed by those investors with ETF was a major contributor to this renewed interest in palladium. decline, experiencing 158,623 ounces of palladium liquidations during this four- Exchange Traded Products month period.

Futures Over the course of 2016 investors reduced their holdings in palladium ETPs by 586,071 ounces from the end Over the course of 2016 gross short of the previous year. This was a smaller positions in Nymex palladium held by amount of ETP outflows than the net institutional investors generally trended reduction of 695,065 ounces in 2015. lower, as investors were exiting most of This was the second consecutive year in the shorts they had built in 2015. which investors were net sellers of Meanwhile, institutional investors palladium ETPs, as they reduced their exhibited renewed interest in building physical exposure to the metal. longs in palladium during the second half of 2016 and in early 2017. This The decreases in the two South African improvement of investor sentiment palladium ETPs, Standard Bank’s helped extend support to palladium palladium ETP and ABSA’s palladium prices, which strengthened for the most ETP, over the course of 2016 were the part of 2016 and in early 2017. main contributors to the net decline in overall palladium ETPs. Combined, Investors liquidated roughly 28.5% of these two ETPs recorded an outflow of their gross shorts during the first three 303,375 ounces in palladium holdings months of 2016, from around 1.06 during 2016. Investors in other million ounces at the beginning of palladium ETPs also liquidated their January to around 754,800 ounces at the holdings, by a smaller 282,696 ounces end of March. This was followed by for the year. two bouts of short building, which pulled up investor gross short positions In the first four months of 2017 to a yearly high of 1.33 million ounces palladium ETPs holdings fell another on 21 June. 176,541 ounces.

For the remainder of 2016 investors During this period ABSA’s palladium mostly were liquidating previously built ETP reversed its declining trend of the gross shorts, which fell to 376,200 past two years and increased holdings ounces at the end of the year, a drop of 7.4%, or 15,529 ounces. Meanwhile around 72% from the peak reached on Standard Bank’s palladium ETP 21 June. This low level of a level of registered a modest decline of 0.5%, or gross shorts on palladium was last seen

144 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM in January 2015, suggesting that most of related to longer term growth in the investors who had shorted palladium palladium use in auto catalysts and in 2015 and in early 2016 had mostly lower supplies due to weaker platinum exited their bearish bets. market conditions constraining South African mine output. Meanwhile investors also started rebuilding their gross long positions in By the end of April 2017 investor gross Nymex palladium in June 2016. Prior to short positions were 38% higher than this investors had been mostly the end of 2016, reaching around liquidating their gross longs, between 518,000 ounces. Meanwhile there were September 2014 and June 2016, during other investors who were more bullish which time gross longs were halved about the longer term fundamentals of from the record high level around 3.13 palladium. Gross longs in Nymex million ounces in 2 September 2014 to a palladium held by institutional investors low of 1.44 million ounces at the end of rose to 2.5 million ounces by the end of June 2016. Beginning in June 2016, April 2017, a rise of 37% from the end however, investors resumed their long of 2016. building in the Nymex palladium market. This increased long building and relatively less dynamic short exposures Gross longs spiked higher to around to palladium increased investor net long 2.28 million ounces on 9 August, and exposures to Nymex palladium to a high remained at generally elevated levels of 2.09 million ounces on 4 April 2017, for the next three months. There was a up from the previous trough around brief bout of gross long liquidations 223,100 ounces on 21 June 2016. from the middle of October to the During this period prices of palladium middle of November, during which time had recorded substantial gains, up from gross longs dropped to 1.31 million a trough around $530-$550 in the ounces on 8 November 2016. This was middle of June 2016 to around $790 - mainly due to shifts in investor $830 during the last week of April sentiment toward the precious metals 2017. complex ahead of and during the November elections in the United It is important to note that while there States. was a clear shift in many investors attitudes toward more positive In the beginning of 2017 investors dispositions toward palladium, those largely maintained a steady outlook for investors who have made money Nymex palladium. There were concerns shorting palladium, along with its sister among some of the more bearish metal platinum, over the past few years investors, however, about the Fed’s clearly have not abandoned the market. interest rate policies as well as slower They are less heavily shorting Nymex growth in auto sales at the United palladium, but they are still very much States. Overriding these potentially present in this metals’ market. negative factors was investor views

145 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Palladium Exchange Traded Product Holdings Troy Ounces SPPP NYSE PHPD LSEPalladium ZKB MSL ASX PALL Julius Baer GLTR WITE SPDM SPAL Mitsubishi (Sprott) Standard Bank ABSA Total 07 April 14,534 ------14,534 May 21,997 144,669 ------166,666 June 29,080 192,815 ------221,895 July 38,999 224,943 ------263,942 August 29,899 224,866 ------254,765 September 29,899 224,708 ------254,608 October 31,535 237,446 ------268,981 November 34,694 237,446 ------272,140 December 42,969 237,234 ------280,202 08 January 77,492 237,137 ------314,629 February 201,456 333,120 ------534,577 March 233,785 342,605 ------576,390 April 217,121 371,229 ------588,350 May 236,703 380,671 ------617,374 June 258,125 386,905 ------645,030 July 275,093 418,709 ------693,801 August 237,747 418,500 ------656,247 September 240,496 450,194 ------690,690 October 231,790 465,896 ------697,686 November 171,292 475,272 ------646,563 December 170,265 490,977 ------661,242 09 January 160,248 532,117 3,879 ------696,244 February 241,683 544,669 3,879 ------790,231 March 248,060 557,124 3,879 ------809,063 April 274,452 556,906 3,879 ------835,236 May 279,888 556,642 3,880 ------840,409 June 312,950 556,401 3,879 ------873,230 July 342,249 549,832 4,277 ------896,359 August 389,941 540,075 4,277 ------934,293 September 529,481 546,212 4,186 ------1,079,878 October 575,783 517,412 4,499 ------1,097,695 November 626,743 514,016 4,499 ------1,145,259 December 665,329 497,973 4,499 ------1,167,801 10 January 605,479 488,261 7,523 399,925 8,850 - - - - - 1,510,038 February 642,844 475,381 7,523 469,793 16,405 - - - - - 1,611,947 March 672,713 465,700 7,812 549,407 27,955 - - - - - 1,723,586 April 619,322 456,000 7,812 694,007 37,985 - - - - - 1,815,126 May 506,573 478,149 7,812 788,437 48,515 - - - - - 1,829,485 June 470,904 495,147 7,812 808,020 49,015 - - - - - 1,830,897 July 475,037 450,647 7,710 752,760 50,745 - - - - 7,395 1,744,293 August 488,988.60 450,454.46 5,101.29 752,343.51 51,195.00 - - - - 7,394.67 1,755,478 September 510,579.01 450,261.56 5,101.29 717,186.72 49,535.00 - - - - 7,394.67 1,740,058 October 549,184.50 431,131.87 6,027.00 841,287.56 56,935.00 1,732.42 - - 7,394.67 1,893,693 November 568,631.54 421,493.06 6,027.00 920,361.81 63,785.00 9,209.24 798.23 - - 7,394.67 1,997,701 December 586,775.72 437,082.97 3,307.14 1,088,962.44 73,535.00 10,986.72 5,597.16 - - 7,394.67 2,213,642 11 January 624,614.90 452,672.88 3,308.14 1,153,059.91 73,513.00 11,896.66 7,195.05 - - 9,002.21 2,335,263 February 594,849.75 452,483.19 3,308.14 1,212,057.47 81,073.00 13,306.18 7,582.24 - - 10,609.75 2,375,270 March 602,775.75 442,844.38 3,308.14 1,037,722.96 78,473.00 13,985.48 8,765.99 - - 12,217.28 2,200,093 April 632,530.49 442,395.09 3,308.14 1,047,070.32 96,243.00 15,430.23 9,173.94 6,388.53 46,870.80 12,217.28 2,311,628 May 579,971.49 432,769.16 3,308.14 1,011,928.18 88,843.00 14,269.64 7,578.26 6,387.47 54,070.80 12,217.28 2,211,343 June 565,219.49 423,136.78 3,308.14 1,001,509.78 94,843.00 14,553.22 7,973.20 6,385.00 64,549.90 12,217.28 2,193,696 July 547,109.24 416,661.63 3,307.14 1,015,890.26 101,743.00 15,086.97 8,765.19 6,382.08 70,049.10 12,217.28 2,197,212 August 520,519.60 416,497.66 3,307.14 921,217.28 126,293.00 14,252.31 8,353.07 6,379.69 63,047.70 12,217.28 2,092,085 September 512,785.56 410,032.13 3,307.14 782,108.75 115,943.00 15,445.22 8,739.80 6,378.22 95,064.00 12,217.28 1,962,021 October 489,145.68 409,289.47 4,327.14 687,751.38 126,843.00 14,821.17 7,482.58 6,375.49 97,259.00 12,217.28 1,855,512 November 487,484.00 402,836.81 4,327.14 613,222.75 130,893.00 14,821.17 7,482.58 6,373.74 94,759.00 12,217.28 1,774,417 December 464,076.69 386,967.19 4,327.14 588,123.00 128,243.00 12,977.17 6,728.05 6,371.78 94,759.00 12,217.28 1,704,790 12 January 459,145.39 387,256.56 4,327.14 647,167.19 123,243.00 12,409.43 6,728.05 6,369.06 94,759.00 12,217.28 1,753,622 February 494,994.15 383,954.66 4,327.14 735,713.88 124,043.00 12,121.29 6,300.00 6,367.04 102,059.00 12,217.28 1,882,097 March 512,068.60 383,800.34 4,327.14 784,753.63 123,043.00 12,423.12 6,300.00 6,365.02 95,559.00 12,217.28 1,940,857 April 524,472.94 378,907.00 3,706.26 799,148.31 123,643.00 12,322.07 6,300.00 6,362.65 105,672.30 12,217.28 1,972,752 May 529,742.00 375,611.56 3,706.26 838,170.88 121,693.00 12,114.90 5,875.33 6,360.63 105,672.30 12,217.28 2,011,164 June 535,629.34 369,187.84 3,706.26 827,931.88 124,723.00 12,016.49 5,875.33 6,358.61 97,672.30 12,217.28 1,995,318 July 537,420.87 365,895.59 3,706.26 807,744.50 122,223.00 11,718.36 5,875.33 6,356.38 97,672.30 12,860.30 1,971,473 August 525,796.09 369,187.84 3,706.26 827,036.00 130,773.00 11,718.36 5,875.33 6,354.22 97,672.30 12,860.30 1,990,980 September 512,108.90 357,160.25 3,706.26 792,152.74 131,923.00 12,031.88 5,875.33 6,352.27 101,472.30 12,860.30 1,935,643 October 514,133.65 355,436.97 3,812.19 752,493.79 132,523.00 12,340.36 5,875.33 6,349.56 101,472.30 12,538.79 1,896,976 November 550,720.69 355,276.19 3,812.19 712,675.23 133,923.00 12,632.81 5,875.33 6,347.89 102,981.70 12,538.79 1,896,784 December 555,077.11 365,445.47 3,812.19 712,363.30 135,123.00 12,934.77 5,875.33 6,346.43 102,981.70 12,538.79 186,098.00 2,098,596 13 January 554,272.35 363,722.19 3,812.19 716,845.06 177,623.00 13,233.73 6,682.12 6,345.74 102,981.70 11,895.78 186,098.00 2,143,512 February 617,855.44 361,998.91 3,812.19 765,638.32 190,373.00 13,809.41 6,682.12 10,229.67 102,981.70 11,252.76 186,098.00 2,270,732 March 603,863.46 360,587.50 3,812.19 765,332.53 195,813.00 14,401.51 6,682.12 10,226.41 101,564.20 11,252.76 187,994.00 2,261,530 April 578,536.60 356,716.56 3,812.19 784,500.02 189,263.00 14,987.46 6,682.12 10,222.82 101,564.20 11,252.76 187,994.00 2,245,532 May 543,466.38 344,623.06 3,812.19 789,055.94 214,403.00 14,695.00 5,455.04 11,229.09 154,415.20 11,252.76 187,944.00 2,280,352 June 524,567.69 331,606.81 3,812.19 788,656.39 188,813.00 14,995.90 5,455.04 11,225.51 155,932.00 11,252.76 187,944.00 2,224,261 July 482,659.12 321,308.94 3,812.19 793,161.81 199,643.00 15,203.77 5,455.04 11,221.44 137,635.20 9,645.22 187,944.00 2,167,690 August 469,713.24 305,294.66 3,812.19 763,339.47 193,963.00 15,203.77 5,455.04 11,217.75 170,635.20 9,645.22 187,944.00 2,136,224 September 459,690.53 302,983.00 3,812.19 762,943.57 193,653.00 15,850.12 5,455.04 11,213.93 174,355.20 8,359.19 187,708.00 2,126,024 October 459,311.11 295,694.44 3,812.19 694,205.37 196,473.00 15,459.23 5,455.04 11,212.94 173,100.90 8,359.19 187,714.00 2,050,797 November 480,145.34 289,344.66 3,812.19 708,399.68 188,473.00 15,251.02 5,455.04 11,206.54 173,100.90 8,359.19 187,055.00 2,070,603 December 467,013.50 288,003.97 3,812.19 717,864.88 187,723.00 23,182.86 5,455.04 11,202.73 169,359.70 8,359.19 182,562.00 2,064,539 14 January 461,030.35 286,319.31 3,812.19 717,459.25 195,973.00 23,182.86 5,455.04 11,198.79 170,239.70 8,359.19 169,851.00 2,052,881 February 467,911.21 286,190.00 3,596.20 648,826.51 195,973.00 14,588.84 5,455.04 11,195.35 170,907.60 8,359.19 169,851.00 1,982,854 March 505,906.59 283,612.22 3,596.20 643,555.12 201,663.00 15,790.75 5,455.04 11,191.54 157,859.80 8,359.19 169,851.00 33,000.00 20,000.00 2,059,840 April 511,074.14 280,381.06 3,596.20 633,544.08 197,183.00 15,185.86 5,455.04 11,187.85 156,015.00 7,073.16 168,489.00 270,888.39 208,769.00 2,468,842 May 594,315.20 273,459.13 3,596.20 623,518.80 186,503.00 15,185.86 5,455.04 11,187.85 166,124.90 7,073.16 168,489.00 400,717.72 336,588.14 2,792,214 June 571,262.19 267,163.88 3,596.20 628,042.53 169,943.00 15,185.86 5,455.04 11,179.50 166,124.90 7,073.16 168,489.00 437,560.37 420,380.47 2,871,456 July 577,660.96 260,871.98 3,596.20 632,670.54 171,583.00 14,881.16 5,037.25 11,178.60 166,059.00 7,073.16 168,489.00 501,326.77 436,214.22 2,956,642 August 456,329.59 256,403.03 3,596.20 622,615.85 162,883.00 14,881.16 5,037.25 11,172.39 164,871.90 7,073.16 168,489.00 530,124.03 436,070.00 2,839,547 September 447,174.68 254,441.84 3,596.20 578,518.70 148,913.00 14,567.64 5,037.25 11,169.00 163,940.00 7,073.16 168,489.00 575,786.00 443,925.00 2,822,631 October 393,752.34 241,534.84 2,382.17 558,723.42 146,203.00 13,972.54 5,037.25 11,165.00 166,474.00 7,073.16 168,489.00 693,225.33 476,699.00 2,884,731 November 495,433.78 240,542.66 2,382.17 553,586.17 143,093.00 13,376.12 5,037.25 11,162.00 150,915.90 7,073.16 160,961.00 700,070.42 492,531.00 2,976,165 December 511,005.20 238,054.38 2,382.17 514,503.51 143,093.00 22,144.70 5,037.25 11,157.18 144,788.40 7,073.16 152,898.00 702,831.62 516,223.20 2,971,192 15 January 492,875.39 236,430.77 2,382.17 489,974.52 143,443.00 23,028.39 5,037.25 11,154.12 144,381.30 7,073.16 151,996.00 705,583.35 508,153.41 2,921,513 February 488,274.21 236,337.45 2,382.17 484,907.06 138,573.00 15,067.00 5,037.25 11,279.21 147,832.90 7,073.16 146,375.00 705,387.93 502,960.11 2,891,486 March 469,028.00 229,964.36 2,382.17 460,434.00 136,943.00 14,541.00 5,037.25 11,146.53 133,581.50 7,073.16 138,909.00 727,026.00 478,886.76 2,814,953 April 466,918.27 229,839.94 2,382.17 460,222.73 154,683.00 14,237.98 5,037.25 11,279.21 133,581.50 7,073.16 138,909.00 747,711.48 506,594.57 2,878,470 May 476,060.56 226,760.70 2,382.17 460,012.59 167,563.00 13,938.47 5,037.25 7,303.77 132,364.50 7,073.16 134,562.00 753,462.91 518,399.13 2,904,920 June 471,139.66 222,042.30 2,382.17 445,203.10 165,083.00 14,182.24 5,037.25 7,301.21 133,784.60 7,716.18 134,562.00 765,060.59 526,176.60 2,899,671 July 503,459.50 221,948.98 2,382.17 435,289.65 163,913.00 13,582.36 5,037.25 6,237.38 160,973.10 9,966.73 134,562.00 777,017.96 529,993.43 2,964,364 August 500,242.42 220,362.70 2,382.17 381,942.84 164,943.00 14,480.90 4,661.29 6,235.05 165,342.40 10,609.75 118,088.00 756,560.13 537,767.49 2,883,618 September 452,682.59 220,269.41 2,382.17 343,056.37 163,193.00 14,480.89 4,661.29 6,233.06 143,186.50 10,609.75 118,088.00 756,189.30 592,239.69 2,827,272 October 400,441.91 218,387.64 2,382.17 338,014.99 138,113.00 14,480.90 4,660.00 6,231.01 158,281.50 10,609.75 110,353.00 684,675.38 430,070.62 2,516,702 November 313,871.56 216,804.48 2,382.17 352,396.09 137,393.00 15,359.80 4,575.92 6,229.09 150,303.00 10,609.75 100,399.00 621,788.33 337,563.33 2,269,676 December 362,272.76 216,711.17 2,382.17 337,706.17 135,893.00 17,963.45 4,575.92 6,226.43 142,176.00 10,609.75 100,400.00 610,715.92 328,493.92 2,276,127 16 January 362,014.94 223,911.48 2,382.17 318,216.32 126,923.00 17,047.42 4,575.92 6,225.88 135,930.10 11,574.27 96,032.00 610,494.53 328,465.00 2,243,793 February 359,595.50 223,815.05 2,382.17 318,118.65 117,713.00 15,885.61 4,261.83 6,222.61 149,241.80 11,574.27 96,032.00 567,612.12 312,412.12 2,184,867 March 359,366.70 223,718.58 2,382.17 313,079.03 117,713.00 15,885.61 3,308.65 6,220.50 143,201.80 11,574.27 96,032.00 606,124.72 312,312.64 2,210,920 April 364,846.37 219,629.02 2,382.17 308,113.02 119,083.00 16,187.25 2,526.57 6,220.50 143,201.80 11,574.27 96,032.00 609,918.71 297,348.48 2,197,063 May 375,618.88 215,574.80 2,382.17 307,979.57 117,613.00 17,019.74 2,526.57 6,216.01 140,821.80 11,574.27 96,032.00 578,959.90 259,576.74 2,131,895 June 380,171.76 215,478.34 2,382.17 307,804.55 116,313.00 18,172.21 0.00 6,214.03 145,821.80 11,574.27 96,032.00 581,741.60 271,359.44 2,153,065 July 380,749.77 215,381.91 2,382.17 293,163.32 120,813.00 20,803.00 0.00 6,212.13 152,721.80 11,574.27 96,032.00 566,732.85 271,276.02 2,137,842 August 356,444.95 213,751.84 2,382.17 283,443.80 121,083.00 22,482.38 0.00 6,209.68 161,851.80 11,574.27 96,032.00 536,815.20 259,286.16 2,071,357 September 365,703.49 213,655.41 2,382.17 283,342.17 118,273.00 22,784.23 0.00 6,209.68 140,151.80 11,574.27 96,032.00 526,745.28 249,304.56 2,036,158 October 360,917.99 210,494.98 2,382.17 292,740.83 114,273.00 23,724.00 0.00 6,108.63 134,064.50 11,574.27 96,032.00 516,635.97 249,230.69 2,018,179 November 360,189.34 210,430.69 2,382.17 268,649.03 106,953.00 24,869.00 0.00 5,465.62 134,700.00 8,037.69 96,032.00 425,493.87 215,503.39 1,858,706 December 331,556.52 210,366.38 2,382.17 263,741.25 102,073.00 25,666.33 0.00 5,465.62 8,900.00 8,037.69 96,032.00 426,324.79 209,510.41 1,690,056 17 January 186,629.10 204,183.80 2,382.17 253,958.73 103,253.00 26,781.19 0.00 6,108.63 7,600.00 8,037.69 90,682.00 425,209.06 193,606.08 1,508,431 February 182,210.68 204,087.34 2,382.17 253,871.16 105,723.45 27,309.32 0.00 6,108.63 8,300.00 8,037.69 90,694.00 424,090.17 214,299.90 1,527,115 March 178,311.87 204,023.05 2,382.17 253,702.22 111,343.00 27,619.87 0.00 6,108.63 8,300.00 8,037.69 90,187.00 422,044.00 229,053.27 1,541,113 April 172,933.49 192,001.88 2,382.17 244,082.42 111,713.00 28,709.60 0.00 6,108.63 8,300.00 8,037.69 90,187.00 424,020.00 225,039.68 1,513,516

146 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium ETP Holdings Data as of 30 April 2017, Changes from 31 December 2016

Month-end Holdings ∆ % ∆ Ounce PALL ETF Securities 244,082 ↓ -7.45% -19,659 Palladium ZKB - SIX 192,002 ↓ -8.73% -18,365 Palladium Julius Baer 111,713 ↑ 9.44% 9,640 PHPD ETF Securities 172,933 ↓ -47.84% -158,623 GLTR - ETFS 28,710 ↑ 11.86% 3,043 WITE - ETFS - - ── Palladium MSL - ASX 2,382 ─ 0.00% 0 SPDM iShares 6,109 ↑ 11.76% 643 SPAL Source 8,300 ↓ -6.74% -600 Mitsubishi 8,038 ─ 0.00% 0 Standard Bank 424,020 ↓ -0.54% -2,305 ABSA 225,040 ↑ 7.41% 15,529 Sprott 90,187 ↓ -6.09% -5,845 Total 1,513,516 ↓ -10.4% -176,541

Palladium ETP Holdings Data as of 31 December 2016, Changes from 31 December 2015

Month-end Holdings ∆ % ∆ Ounce PALL ETF Securities 263,741 ↓ -21.90% -73,965 Palladium ZKB - SIX 210,366 ↓ -2.93% -6,345 Palladium Julius Baer 102,073 ↓ -24.89% -33,820 PHPD ETF Securities 331,557 ↓ -8.48% -30,716 GLTR - ETFS 25,666 ↑ 42.88% 7,703 WITE - ETFS - ↓ -100.00% -4,576 Palladium MSL - ASX 2,382 _ 0.00% 0 SPDM iShares 5,466 ↓ -12.22% -761 SPAL Source 8,900 ↓ -93.74% -133,276 Mitsubishi 8,038 ↓ -24.24% -2,572 Standard Bank 426,325 ↓ -30.19% -184,391 ABSA 209,510 ↓ -36.22% -118,984 Sprott 96,032 ↓ -4.35% -4,368 Total 1,690,056 ↓ -25.7% -586,071

147 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Gross Long and Short Positions of Non-Commercial Positions Nymex Palladium Futures & Options. Weekly Data, Through 25 April 2017

'000 Ozs '000 Ozs 3,600 3,600 Gross Long 2,800 2,800 Net Position in Nymex 2,000 2,000

1,200 1,200

400 400

-400 -400

-1,200 Gross Short -1,200

-2,000 -2,000 95 97 99 01 03 05 07 09 11 13 15 17

Gross Long and Short Positions of Non-Commercial Positions Nymex Palladium Futures & Options. Weekly Data, Jan 2013 Through Apr. 2017 '000 Ozs '000 Ozs 3,400 3,400 3,000 3,000 2,600 Long 2,600 2,200 2,200 1,800 1,800 1,400 1,400 1,000 1,000 600 600 Net Position in Nymex 200 200 -200 -200 -600 -600 -1,000 -1,000 -1,400 -1,400 Short -1,800 -1,800 -2,200 -2,200 J-13A-13J-13O-13J-14A-14J-14O-14J-15A-15J-15O-15J-16A-16J-16O-16J-17A-17

148 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Disaggregated Non-Commercial Positions Nymex Palladium Futures and Options. Weekly Data, 25 April 2017 Thousand Ounces Thousand Ounces 3,600 3,600 Other Traders 3,200 Gross Long 3,200 2,800 Money Managers 2,800 2,400 Net Position 2,400 2,000 2,000 1,600 1,600 1,200 1,200 800 800 400 400 0 0 -400 -400 -800 -800 -1,200 -1,200 Gross Short -1,600 -1,600 -2,000 -2,000 Nov-09 Oct-10 Sep-11 Aug-12 Jul-13 Jun-14 May-15 Apr-16 Mar-17

149 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium Markets million ounces of newly refined physical palladium, down from 9.6 The palladium market is the smallest in million ounces in 2015. the precious metals complex. The volume of metal traded, which includes The palladium market compared to the physical supply and exchange traded gold market was just 0.6%. Compared futures and options activity, was 158.6 to the silver market the palladium million ounces in 2016. while this was market was 3.0%. The palladium up from 151.2 million ounces traded in market was just 38.5% of the platinum 2015, in dollar terms the value of these market. palladium transactions fell last year to $98 billion, from $104 billion in 2015. Futures Obviously, last year’s decline from the previous year was the result of the Palladium futures trading volume for decline in the annual average prices of the Nymex and Tocom totaled 145.1 palladium. million ounces in 2016, up 7.1% from 137.4 million ounces in 2015. Last The palladium market consists of year’s increase in futures trading futures and options traded at the New volume was a reversal of 2015’s York Mercantile Exchange (Nymex), decline. Since 2011 the Nymex has which is part of the CME Group. accounted for the more than 90% of the Palladium futures also trade on the combined futures trading volume. More Tokyo Commodity Exchange (Tocom). recently, in 2016 Nymex accounted for In 2016 there also was a total of 9.3 99.0% of the futures trading volume,

Trading Volume in the Palladium Futures Markets Monthly Total, Through April 2017 Million Ounces Million Ounces 45 45

40 40

35 35 Tocom 30 30

25 25 Nymex 20 20

15 15

10 10

5 5

0 0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

150 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 with its market share rising almost the end of 2016, down from 2.51 linearly since 2011. million ounces at the end of 2015. At the end of April this year combined Palladium trading volumes on the open interest on both exchanges was Nymex were 143.6 million ounces in 3.72 million ounces, up from 2.36 2016, up 6.8% from 134.4 million million ounces at the end of April in ounces in 2015. From January to April 2015 and up from open interest at the 2017 trading volume at the Nymex was end of 2016. 45.0 million ounces, up from 43.2 million ounces during the same period Nymex open interest of palladium in 2016. futures accounted for the majority of activity as in trading volume when Tocom accounted for just 1.0% of total compared to the Tocom. At the end of trading volume of palladium futures in last year Tocom open interest was 2016. Palladium trading volume at the 53,097 ounces, down from 66,504 Tocom was 1.5 million ounces last year, ounces at the end of 2015. At the end of down from 3.0 million ounces in 2015. April this year open interest on the During the first four months of this year Tocom was 60,379 ounces, up from trading volume at the exchange totaled both the end of last year and the end of 467,985 ounces, little changed from the April 2016. same period in 2016. Options Combined year-end open interest of palladium futures on the Nymex and The only exchange to trade palladium Tocom totaled 2.43 million ounces at options is the Nymex, which began to

Palladium Open Interest in the Futures Markets Month-end, Through April 2017 Million Ounces Million Ounces 7 7

6 6 Tocom 5 5

4 4 Nymex

3 3

2 2

1 1

0 0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

151 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM offer options on palladium futures producers. At the end of 2016 combined contracts in August 2010. That said, the inventories in Nymex and Tocom exchange traded palladium options registered depositories were 69,620 market is still very illiquid. Most ounces, down from 94,282 ounces at the options trading activity appears to end of 2015. Palladium stocks at continue to occur in the over the counter Nymex registered warehouses were market or interbank market. 59,397 ounces or 85.3% of the exchange inventories. Options trading volume for palladium futures was 4.21 million ounce last year, By the end of the first quarter 2017 up slightly from 4.16 million ounces in exchange inventories were 61,041 2015. At the end of February 2017 ounces, of which 57,848 or 94.8% were Nymex palladium options volume made up of Nymex stocks. Holdings for totaled 600,000 million ounces, down ETPs in various depositories at the end from 636,500 ounces at the end of of 2016 were 1.76 million ounces, down February 2016. from 2.37 million ounces at the end of 2015. As of the end of March 2017, Inventories ETP holding of palladium were 1.6 million ounces. Reported inventories of palladium are made up of inventories held at Nymex and Tocom registered warehouses, bank vaults for exchange traded products (ETPs), and for dealers, users, and

Reported Palladium Inventories Quarterly, Through First Quarter 2017 Thousand Ounces 3,000 3,000

2,500 2,500 ETF Holdings 2,000 2,000

1,500 1,500

Nymex 1,000 1,000

500 500

Tocom 0 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

152 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

New York Mercantile Exchange Activity - Trading Volume Montly Total, Through April 2017 Thousand Ounces Thousand Ounces 25,000 25,000

20,000 20,000

15,000 15,000

10,000 10,000

5,000 5,000

0 0 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17

New York Mercantile Exchange Activity - Open Interest Month-end, Through April 2017 Thousand Ounces Thousand Ounces 5,000 5,000

4,500 4,500

4,000 4,000

3,500 3,500

3,000 3,000

2,500 2,500

2,000 2,000

1,500 1,500

1,000 1,000

500 500

0 0 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17

153 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Tokyo Commodity Exchange Activity - Trading Volume Monthly Total, Through April 2017 Thousand Ounces Thousand Ounces 45,000 45,000

40,000 40,000

35,000 35,000

30,000 30,000

25,000 25,000

20,000 20,000

15,000 15,000

10,000 10,000

5,000 5,000

0 0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Tokyo Commodity Exchange Activity - Open Interest Month-end, Through April 2017 Thousand Ounces Thousand Ounces 7,000 7,000

6,000 6,000

5,000 5,000

4,000 4,000

3,000 3,000

2,000 2,000

1,000 1,000

0 0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

154 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Nymex Palladium Open Interes t Troy Ounces

1977 1978 1979 1980 1981 1982 1983

January 59,900 237,200 203,500 220,200 255,500 282,300 690,200 February 65,400 267,400 236,400 227,200 240,300 288,500 656,400 March 58,800 180,700 179,100 179,100 219,000 281,100 632,200 April 59,000 139,700 171,600 175,700 207,200 311,000 702,200 May 59,800 193,000 174,300 185,300 275,000 350,400 759,200 June 65,000 162,000 155,600 208,400 212,600 305,900 774,800 July 65,000 177,700 150,000 236,800 215,600 327,600 969,300 August 69,000 175,800 155,000 244,800 230,100 323,300 862,900 September 86,800 177,500 197,200 276,700 205,800 309,900 910,600 October 123,200 252,200 203,700 306,200 241,500 355,300 840,800 November 253,600 222,700 198,600 279,100 274,900 519,700 800,400 December 193,100 195,900 225,200 241,000 267,900 543,100 876,400

1984 1985 1986 1987 1988 1989 1990

January 774,200 682,500 666,700 649,000 617,800 640,300 631,500 February 738,500 672,800 604,900 650,300 642,600 696,400 578,300 March 693,100 655,500 620,600 677,800 638,900 677,800 547,100 April 721,500 701,700 610,100 770,700 624,000 959,800 524,100 May 701,800 731,700 573,900 771,100 690,700 946,600 568,800 June 683,200 652,000 525,900 615,000 674,300 896,000 552,000 July 625,800 686,800 533,500 742,200 755,200 780,500 549,400 August 620,700 720,000 607,300 867,300 673,400 438,000 575,600 September 607,300 619,300 650,900 711,200 654,600 692,400 501,300 October 623,800 644,500 694,600 727,100 635,700 687,700 543,300 November 683,700 695,000 667,000 685,500 644,300 743,600 504,900 December 679,900 642,400 587,200 572,800 642,400 623,700 457,700

1991 1992 1993 1994 1995 1996 1997

January 465,500 414,300 380,600 455,800 785,300 618,500 871,700 February 451,900 428,400 469,600 502,700 687,200 708,700 1,194,300 March 423,600 412,500 469,600 465,500 775,800 670,300 968,200 April 457,800 424,500 555,500 468,800 635,700 828,700 975,400 May 448,900 425,400 495,400 459,900 686,500 884,100 940,600 June 453,500 385,900 467,600 509,800 649,400 794,800 637,900 July 436,600 378,900 519,900 629,100 654,900 800,400 567,300 August 445,300 327,100 470,700 259,900 668,500 903,500 409,900 September 401,200 295,800 431,700 646,700 595,400 791,100 381,900 October 385,700 281,300 465,500 743,500 623,000 811,200 424,400 November 401,800 253,500 451,000 739,900 633,500 854,000 438,700 December 366,500 345,400 463,800 737,800 619,600 799,500 356,500

155 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Nymex Palladium Open Interest Troy Ounces

1998 1999 2000 2001 2002 2003 2004

January 469,800 285,200 340,900 179,200 113,200 204,300 1,084,900 February 486,300 336,200 267,900 152,200 114,000 199,400 1,252,500 March 539,000 305,200 280,300 153,200 113,600 191,600 1,116,500 April 490,900 260,000 183,300 160,400 137,500 219,300 894,300 May 439,800 271,700 703,400 158,400 160,800 268,300 880,900 June 394,100 279,900 262,200 136,400 202,700 257,800 779,500 July 398,100 275,800 312,000 148,700 222,500 283,800 829,700 August 282,200 218,600 516,900 119,700 199,000 495,800 943,100 September 312,000 305,400 185,700 124,200 190,500 546,300 973,600 October 300,400 334,300 191,300 141,500 190,200 566,400 978,000 November 271,600 319,600 181,200 150,000 199,900 638,700 1,369,300 December 286,100 286,900 184,800 127,400 194,100 734,400 1,265,900

2005 2006 2007 2008 2009 2010 2011

January 1,293,200 1,593,900 1,551,200 2,208,700 1,265,300 2,307,000 2,174,100 February 1,382,400 1,690,500 1,712,000 2,182,900 1,154,100 2,180,100 2,261,500 March 1,276,300 1,689,900 1,576,100 1,928,900 1,317,400 2,328,700 2,087,300 April 1,352,300 1,810,000 1,994,500 1,921,200 1,392,100 2,444,000 2,120,900 May 1,321,200 1,720,400 2,162,500 1,764,100 1,556,200 2,156,600 2,010,400 June 1,352,800 1,342,300 1,751,100 1,725,200 1,644,400 2,047,500 1,963,000 July 1,416,300 1,410,900 1,862,300 1,372,500 1,882,200 2,036,600 2,505,700 August 1,338,000 1,146,800 1,628,000 1,345,600 2,227,500 2,025,700 2,041,900 September 1,327,500 1,112,700 1,604,000 1,499,600 2,072,200 2,380,200 1,871,700 October 1,462,400 1,270,700 1,664,700 1,353,200 2,229,100 2,619,000 1,891,500 November 1,493,400 1,171,700 1,486,400 1,324,700 2,380,100 2,284,200 2,025,100 December 1,406,300 1,193,000 1,636,000 1,200,600 2,261,500 2,284,900 1,781,500

2012 2013 2014 2015 2016 2017

January 1,939,800 3,615,900 3,905,500 3,364,500 2,553,800 2,848,800 February 2,192,000 3,558,900 3,920,000 3,268,700 2,626,600 2,764,500 March 2,045,800 3,919,800 4,105,100 3,149,700 2,224,700 3,304,500 April 2,163,600 3,619,300 4,292,100 3,248,100 2,307,300 3,659,900 May 2,313,700 3,720,200 4,099,900 2,916,900 2,234,100 June 2,269,400 3,496,600 4,015,300 3,710,000 2,164,800 July 2,369,800 3,764,700 4,578,200 3,796,700 2,802,500 August 1,953,700 3,592,700 4,427,500 2,871,000 2,541,800 September 1,977,400 3,558,700 3,423,800 2,670,000 2,810,500 October 2,075,300 3,874,400 3,369,600 2,601,700 2,275,800 November 2,303,100 3,569,000 3,172,100 2,663,600 2,665,400 December 2,853,200 3,888,100 3,316,800 2,445,900 2,381,200

Note: Month-end data. S ource: New York Mercantile Exchange, Inc. May 16, 2017 156 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Nymex Palladium Trading Volume Troy Ounces

1977 1978 1979 1980 1981 1982 1983

January 74,300 549,800 316,400 621,100 327,900 153,300 753,200 February 79,100 672,000 585,500 819,000 428,200 602,900 268,400 March 90,400 518,000 383,200 727,700 262,000 302,200 145,300 April 37,100 237,600 662,200 291,900 205,600 196,400 400,500 May 53,000 372,200 462,300 403,400 588,500 637,700 868,500 June 80,500 204,800 264,200 428,200 195,300 417,400 774,600 July 16,400 186,700 279,300 554,900 202,800 384,300 811,500 August 63,500 348,600 379,200 462,400 477,500 559,700 291,400 September 85,400 120,400 326,600 476,800 301,300 475,000 766,500 October 89,600 650,100 453,100 407,900 190,500 433,600 199,500 November 722,800 444,700 301,700 564,300 575,400 1,332,800 200,200 December______617,100 ______210,700 ______535,300 ______306,600 ______328,200 ______888,900 ______541,000 Annual Total 2,009,200 4,515,600 4,949,000 6,064,200 4,083,200 6,384,200 6,020,600

1984 1985 1986 1987 1988 1989 1990

January 2,237,100 985,200 1,211,500 965,300 1,136,500 1,287,000 513,000 February 2,099,800 1,387,100 2,129,600 1,330,000 1,531,500 1,476,200 1,722,300 March 1,119,300 1,097,800 868,000 967,400 924,900 1,385,900 725,500 April 1,335,000 877,800 979,600 1,927,500 969,500 4,314,700 513,700 May 1,837,200 1,727,700 1,234,800 2,130,900 1,307,000 3,101,900 1,374,300 June 769,500 721,800 645,600 777,000 1,577,300 1,369,200 568,200 July 838,900 789,000 446,000 1,012,900 1,301,200 1,401,000 446,600 August 1,424,800 1,426,900 2,276,400 1,829,000 1,290,600 1,664,400 1,167,900 September 815,100 832,200 1,626,600 674,300 637,000 1,071,400 540,700 October 1,085,500 893,200 1,056,500 1,835,300 709,500 928,900 715,000 November 1,545,900 1,482,900 1,409,000 1,604,200 1,427,800 1,774,800 959,200 December______963,000 ______990,300 ______672,600 ______974,900 1,175,500______1,032,900______317,800 Annual Total 16,071,100 13,211,900 14,556,200 16,028,700 13,988,300 20,808,300 9,564,200

1991 1992 1993 1994 1995 1996 1997

January 501,700 721,700 770,800 825,000 1,088,400 1,372,500 1,390,800 February 1,054,200 732,300 1,446,100 1,495,300 1,709,200 3,351,900 4,316,000 March 538,000 342,900 805,700 606,700 2,100,100 1,193,100 2,270,600 April 724,500 283,300 506,300 667,600 1,277,500 1,641,600 2,160,400 May 1,052,100 801,100 1,219,000 1,548,100 1,741,300 2,746,700 3,642,200 June 444,700 288,100 736,800 651,400 961,500 898,900 1,764,700 July 523,000 496,500 704,300 902,400 1,161,600 989,600 1,809,700 August 1,011,400 675,200 1,335,600 923,900 1,894,800 2,374,000 1,875,100 September 291,400 506,600 697,700 1,569,000 975,400 1,072,100 833,100 October 566,800 535,900 922,000 960,300 932,000 814,900 1,309,400 November 815,000 674,200 1,247,700 2,138,400 1,666,200 2,887,000 1,314,300 December______297,100 ______791,200 1,368,100______839,000 1,163,300______1,218,700______1,176,3______00 Annual Total 7,819,900 6,849,000 11,760,100 13,127,100 16,671,300 20,561,000 23,862,600

157 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Nymex Palladium Trading Volume Troy Ounces

1998 1999 2000 2001 2002 2003 2004

January 1,150,600 309,200 458,400 217,100 127,500 420,000 1,709,300 February 1,778,600 1,161,400 1,397,600 609,000 337,200 726,600 4,103,600 March 1,867,800 408,200 280,300 139,700 153,800 325,600 2,050,800 April 1,404,200 709,700 183,300 112,100 152,700 397,100 3,021,400 May 1,794,200 889,000 703,400 332,500 612,600 842,000 2,734,300 June 737,000 341,100 262,200 101,300 216,600 343,000 1,143,300 July 424,100 505,300 312,000 117,300 215,400 422,100 760,600 August 873,700 686,800 516,900 322,100 897,100 1,564,500 2,889,500 September 621,400 582,600 252,300 52,300 145,200 815,200 1,069,000 October 496,200 372,200 246,000 125,500 171,000 758,700 1,503,600 November 1,283,900 1,067,000 304,100 326,100 811,800 1,832,300 3,894,100 December ______693,300 ______506,900 ______160,100 ______137,500 ______264,400 1,114,200______1,474,500______Annual Total 13,125,000 7,539,400 5,076,600 2,592,500 4,105,300 9,561,300 26,354,000

2005 2006 2007 2008 2009 2010 2011

January 772,800 2,844,700 2,363,600 2,695,400 1,428,400 4,876,200 7,212,100 February 4,326,800 5,927,900 6,281,500 10,584,500 4,172,600 9,037,800 12,127,100 March 1,697,900 3,257,300 1,498,700 4,941,100 1,450,900 4,833,200 9,440,200 April 1,331,600 2,313,500 2,516,600 2,475,000 1,733,200 5,810,400 8,589,700 May 4,613,200 6,486,300 6,908,900 6,693,900 5,421,300 13,432,300 13,260,800 June 1,359,400 2,585,700 1,632,200 1,893,400 2,340,300 4,593,100 8,066,500 July 1,718,500 1,346,400 1,507,200 2,624,500 2,568,900 4,423,300 6,629,000 August 4,926,800 4,112,300 6,510,600 5,369,200 5,750,200 8,736,600 13,920,800 September 1,774,700 1,622,200 1,697,500 2,525,300 2,539,300 5,428,600 8,093,200 October 2,168,000 1,435,100 2,638,500 2,862,700 2,897,600 6,962,300 7,289,500 November 5,064,300 4,779,700 5,241,100 4,387,900 7,122,800 15,529,700 11,973,200 December ______2,440,300 1,100,500______1,302,900______1,329,900______2,871,900______6,135,500______7,350,800______Annual Total 32,194,300 37,811,600 40,099,300 48,382,800 40,297,400 89,799,000 113,952,900

2012 2013 2014 2015 2016 2017

January 7,047,300 12,698,700 8,750,200 9,978,700 9,012,900 11,195,900 February 11,975,400 19,882,100 15,876,000 14,692,800 15,115,900 14,164,800 March 7,591,000 8,768,100 13,612,600 10,074,800 9,691,700 9,830,800 April 6,183,300 12,252,000 11,164,800 7,799,800 9,388,700 9,786,100 May 13,603,300 18,101,600 19,588,000 13,110,500 14,258,500 June 6,771,000 9,349,700 10,161,000 9,104,400 9,493,700 July 5,930,800 7,717,500 9,780,900 10,266,500 10,421,900 August 12,373,100 16,389,200 20,847,400 18,509,400 16,985,200 September 8,520,900 8,247,000 12,613,200 8,720,100 8,844,000 October 8,473,000 9,994,400 11,570,800 9,228,400 11,397,700 November 14,583,500 18,213,300 16,194,700 16,238,200 19,853,700 December ______7,748,300 6,988,000______7,237,600______6,695,600______9,122,400______Annual Total 110,800,900 148,601,600 157,397,200 134,419,200 143,586,300 44,977,600

Notes: Annual trading volume for 2016 through September S ource: New York Mercantile Exchange, Inc. May 16, 2017 158 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Nymex Palladium Options Trading Volume Troy Ounces, Monthly Total

2010 2011 2012 2013 2014 2015 2016 January 0 193,500 197,200 1,479,600 304,300 615,700 205,000 February 0 338,000 123,400 1,917,400 277,900 228,100 431,500 March 0 79,000 567,900 2,138,000 2,416,500 605,000 419,000 April 0 123,600 481,800 1,385,500 1,970,600 293,200 200,400 May 0 485,000 573,500 570,000 1,544,900 312,100 170,000 June 0 1,104,400 475,200 748,000 1,301,300 446,000 183,700 July 0 107,300 1,132,900 1,220,100 1,275,400 272,700 539,200 August 128,000 275,400 725,100 671,500 1,553,400 397,900 491,000 September 360,000 89,700 282,000 676,000 1,315,800 323,800 275,600 October 42,400 201,500 366,200 928,300 1,047,500 330,000 410,500 November 466,000 12,419 864,900 1,126,200 469,700 273,800 458,100 December______225,000 ______487,700 ______840,600 ______551,400 ______273,800 ______64,100 ______423,200 Annual Total 1,221,400 3,497,519 6,630,700 13,412,000 13,751,100 4,162,400 4,207,200

2017 January 468,800 February 211,200 March April May June July August S eptember October November December ______Annual Total 680,000

Note: Annual trading volume for 2017 through February. Source: New York Mercantile Exchange May 22, 2017

159 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Nymex Palladium Options Open Interest Troy Ounces, Monthly-End

2010 2011 2012 2013 2014 2015 2016 January 0 588,500 699,100 1,742,800 1,314,800 510,100 450,200 February 0 447,500 208,400 1,433,000 477,300 447,500 419,500 March 0 493,500 765,800 2,388,000 2,205,000 801,800 440,900 April 0 553,000 1,181,600 2,477,000 2,746,200 969,800 466,800 May 0 391,500 923,000 1,906,000 1,690,300 433,900 412,000 June 0 803,700 1,109,000 1,867,500 1,304,100 569,000 465,700 July 0 906,500 1,207,100 2,252,000 1,961,900 565,700 694,600 August 128,000 735,200 752,500 1,439,000 1,415,000 429,300 354,400 September 448,000 738,300 709,700 1,901,000 1,461,800 521,200 413,900 October 448,000 914,400 1,000,700 2,226,500 1,619,700 556,800 356,900 November 402,000 504,900 685,100 1,129,500 468,300 447,400 193,900 December 495,000 735,100 1,030,400 1,125,600 405,900 344,900 265,200

2017 January 546,900 February 308,600 March April May June July August S eptember October November December

Note: Open Interest for 2017 through February. Month-End. Source: New York Mercantile Exchange May 22, 2017

160 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Tocom Palladium Open Interest Troy Ounces

1992 1993 1994 1995 1996 1997 1998 1999 2000

January - 4,032,321 2,664,535 1,962,991 1,408,489 1,111,850 3,627,946 4,686,024 4,503,489 February - 4,257,874 2,237,059 1,736,859 1,193,690 4,333,444 3,718,466 5,334,085 2,426,925 March - 4,216,206 2,078,348 1,474,992 1,100,903 4,894,071 4,284,977 5,533,355 1,444,079 April - 3,923,860 1,736,715 1,712,071 889,432 5,688,643 4,970,172 5,771,447 1,103,459 May - 3,690,012 1,586,780 1,820,049 922,901 6,140,761 4,763,186 6,337,138 1,000,593 June - 3,331,886 1,334,606 1,793,332 868,695 5,914,485 4,329,634 5,706,052 863,487 July - 3,462,241 1,589,818 1,741,537 811,981 5,870,069 4,614,794 5,048,153 772,822 August 491,423 3,381,993 2,169,640 1,577,714 1,161,620 4,263,275 4,551,425 4,360,788 638,753 S eptember 456,604 3,496,047 2,337,514 1,467,373 1,311,603 3,804,067 4,512,941 4,046,740 572,925 October 477,727 3,736,165 2,180,828 1,405,643 1,401,978 3,513,409 4,096,316 3,506,898 347,661 November 688,957 3,559,127 2,414,579 1,434,241 1,457,631 3,328,366 4,584,508 3,500,822 304,065 December 3,565,445 3,234,904 2,244,197 1,466,553 1,256,336 3,021,262 4,441,856 3,797,798 101,226

2001 2002 2003 2004 2005 2006 2007 2008 2009

January 128,040 149,501 220,875 960,373 933,366 1,101,482 550,403 472,759 364,974 February 130,451 146,028 221,598 899,560 862,474 1,011,781 539,794 1,218,430 288,102 March 141,929 133,441 235,536 1,161,137 1,084,989 940,793 434,564 1,020,173 266,931 April 155,577 143,569 281,640 998,568 1,002,233 848,488 560,483 853,504 258,491 May 172,167 151,430 607,792 1,010,383 997,121 840,869 654,041 838,361 255,501 June 181,667 137,251 641,358 970,259 922,370 653,125 644,396 945,857 211,905 July 184,706 128,378 650,328 1,026,635 758,547 629,012 653,076 861,365 181,137 August 187,888 118,105 676,804 1,124,389 652,208 564,630 447,393 575,529 167,489 S eptember 151,092 113,138 747,310 1,054,944 615,653 477,341 476,087 512,835 162,811 October 149,790 124,327 708,681 1,040,235 683,796 400,999 461,185 428,102 153,021 November 132,332 168,598 752,663 1,034,399 1,069,026 496,487 406,159 425,160 156,590 December 141,109 198,884 704,968 937,706 927,434 447,489 475,123 375,584 159,869

2010 2011 2012 2013 2014 2015 2016 2017

January 184,272 165,946 122,590 131,946 69,687 108,364 65,057 56,714 February 159,580 177,713 121,240 118,491 59,173 105,422 58,257 60,909 March 183,114 124,520 133,634 139,614 75,908 113,958 55,701 62,453 April 232,498 129,053 120,999 108,653 77,065 94,234 51,602 60,379 May 216,197 141,640 103,252 120,565 91,967 96,018 49,239 June 193,917 130,692 196,087 83,045 102,480 109,762 49,817 July 187,454 135,804 101,709 86,228 94,523 93,896 53,579 August 165,222 151,140 103,541 84,540 102,625 75,425 49,094 S eptember 175,253 184,898 122,205 74,027 119,986 76,197 47,406 October 190,830 126,304 94,137 68,819 91,967 66,166 37,616 November 133,924 121,047 99,828 68,529 96,163 67,854 50,637 December 189,142 116,273 104,072 74,172 110,775 66,504 53,097

Note: Month-end data. S ource: Tokyo Commodity Exchange. May 16, 2017

161 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Tocom Palladium Trading Volume Troy Ounces

1992 1993 1994 1995 1996 1997 1998 1999 2000

January - 8,343,677 3,026,278 1,886,360 1,578,726 3,482,978 15,377,294 24,071,622 24,661,378 February - 19,739,866 3,233,216 1,731,892 3,880,360 18,250,069 11,026,586 37,100,358 19,937,255 March - 14,805,044 2,604,493 4,324,763 2,348,365 19,205,956 21,531,752 30,173,417 1,077,755 April - 11,397,829 2,052,113 4,072,637 1,744,431 17,139,954 21,378,248 42,301,098 497,065 May - 6,251,970 2,390,997 2,981,138 1,504,121 21,223,780 39,637,142 39,414,869 200,620 June - 6,041,705 2,803,908 2,718,066 907,613 26,528,351 23,083,905 26,423,604 419,180 July - 7,756,718 3,894,925 1,990,142 1,198,271 26,123,301 17,033,230 19,812,832 307,923 August 1,980,883 8,703,250 5,625,563 2,489,281 1,691,382 19,160,383 14,763,281 12,383,038 345,009 September 797,610 7,169,518 3,984,480 3,311,149 1,777,851 4,986,183 17,941,133 10,407,557 191,264 October 570,706 9,193,805 2,828,455 1,835,482 1,681,978 11,987,633 23,887,881 9,843,168 312,408 November 1,014,193 4,710,716 3,099,437 1,288,792 1,361,854 6,175,098 20,528,506 10,972,428 153,696 December 15,124,301 5,640,706 1,796,756 1,706,091 1,262,991 9,857,973 24,315,742 18,381,340 474,833 ______Annual Total 19,487,693 109,754,805 37,340,620 30,335,794 20,937,945 184,121,660 250,504,700 281,285,331 48,578,387

2001 2002 2003 2004 2005 2006 2007 2008 2009

January 253,187 580,545 558,264 2,295,365 726,959 1,737,872 1,004,596 798,526 292,057 February 367,048 381,371 464,175 1,473,111 734,964 3,395,641 990,176 12,074,199 489,639 March 351,326 386,965 429,115 3,363,185 1,838,375 2,504,666 875,447 8,427,735 484,141 April 525,422 284,533 672,319 5,061,801 696,625 2,440,091 1,074,041 2,281,427 724,547 May 472,808 382,046 1,551,720 1,527,125 628,529 1,636,742 987,283 1,467,710 380,455 June 379,297 368,254 1,755,909 1,911,196 672,126 1,404,872 1,105,774 1,982,233 621,151 July 695,805 202,115 1,208,013 1,028,516 874,627 749,721 768,626 1,716,556 316,700 August 602,921 179,690 1,448,564 804,795 713,552 644,975 944,796 1,605,106 431,044 September 408,860 170,334 2,426,925 889,095 750,589 854,613 374,523 1,129,067 291,237 October 560,724 163,245 1,191,809 886,346 1,225,278 750,300 800,069 686,256 415,322 November 373,752 584,451 567,282 699,132 3,073,202 703,183 534,537 489,108 375,681 December 656,018 554,695 1,003,583 1,228,364 3,658,907 609,962 564,726 361,550 378,188 ______Annual Total 5,647,168 4,238,246 13,277,679 21,168,031 15,593,732 17,432,638 10,024,594 33,019,474 5,200,161

2010 2011 2012 2013 2014 2015 2016 2017

January 631,375 662,239 252,077 395,067 214,365 287,379 169,804 167,585 February 345,588 549,391 307,055 533,428 172,746 189,046 116,176 95,536 March 538,781 590,286 287,089 453,566 228,109 342,115 120,999 102,336 April 1,034,496 343,417 214,220 448,502 212,436 300,400 94,282 102,528 May 949,908 300,930 206,890 385,808 193,820 183,355 93,558 June 406,497 381,371 218,030 404,761 324,320 306,524 88,302 July 337,341 310,961 173,951 258,588 290,803 417,830 160,544 August 297,603 479,415 192,518 186,297 418,264 308,116 129,824 September 424,244 537,913 208,529 233,366 480,620 173,903 105,711 October 636,728 556,335 252,560 169,900 440,496 183,982 80,248 November 1,103,411 257,237 257,672 174,096 312,842 192,181 177,327 December 862,908 343,224 319,787 183,452 416,046 132,863 183,645 ______Annual Total 7,568,878 5,312,721 2,890,377 3,826,830 3,704,866 3,017,694 1,520,421 467,985

S ource: Tokyo Commodity Exchange. Note: Annual trading volume for 2017 through April. May 8, 2017

162 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Reported Market Inventories Quarterly, Troy Ounces Exchanges U.S. Industry Nymex Tocom Exchange Traded Products %%% Ounces of Total Ounces of Total Ounces of Total Ounces % of Total Total

1977 I 359,023 94.7 20,000 5.3 - - - - 379,023 II 359,514 91.7 32,400 8.3 - - - - 391,914 III 376,306 94.1 23,700 5.9 - - - - 400,006 IV 378,049 84.7 68,300 15.3 - - - - 446,349

1978 I 314,473 82.4 67,400 17.6 - - - - 381,873 II 320,298 83.1 65,100 16.9 - - - - 385,398 III 299,451 85.7 50,100 14.3 - - - - 349,551 IV 299,473 88.2 40,000 12.7 - - - - 339,473 - - - - 1979 I 337,077 91.3 32,000 8.7 - - - - 369,077 II 314,855 92.0 27,300 8.0 - - - - 342,155 III 336,546 91.3 32,200 8.7 - - - - 368,746 IV 284,478 92.3 23,700 7.7 - - - - 308,178

1980 I 311,995 91.1 30,500 8.9 - - - - 342,495 II 280,734 90.9 28,200 9.1 - - - - 308,934 III 289,765 90.3 31,300 9.7 - - - - 321,065 IV 261,631 89.0 32,200 11.0 - - - - 293,831

1981 I 312,457 86.3 49,700 13.7 - - - - 362,157 II 317,784 77.6 91,900 22.4 - - - - 409,684 III 299,911 75.7 96,500 24.3 - - - - 396,411 IV 302,769 75.5 98,400 24.5 - - - - 401,169

1982 I 216,863 69.6 94,800 30.4 - - - - 311,663 II 213,440 70.2 90,700 29.8 - - - - 304,140 III 252,514 73.4 91,400 26.6 - - - - 343,914 IV 208,771 76.4 64,650 23.6 - - - - 273,421

1983 I 328,442 69.8 142,100 30.2 - - - - 470,542 II 314,810 71.3 127,000 28.7 - - - - 441,810 III 297,105 75.1 98,300 24.9 - - - - 395,405 IV 302,295 79.3 79,100 20.7 - - - - 381,395

1984 I 262,411 77.2 77,300 22.8 - - - - 339,711 II 481,447 86.4 75,800 13.6 - - - - 557,247 III 435,634 89.3 52,300 10.7 - - - - 487,934 IV 486,934 87.9 66,900 12.7 - - - - 553,834

1985 I 370,772 83.2 75,000 16.8 - - - - 445,772 II 321,553 82.8 66,800 17.2 - - - - 388,353 III 319,488 79.1 84,600 20.9 - - - - 404,088 IV 319,836 74.2 111,400 23.3 - - - - 431,236

1986 I 290,304 71.1 117,800 28.9 - - - - 408,104 II 284,505 75.9 90,500 24.1 - - - - 375,005 III 315,644 78.1 88,400 21.9 - - - - 404,044 IV 489,662 82.0 107,300 16.8 - - - - 596,962

163 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Reported Market Inventories Quarterly, Troy Ounces Exchanges U.S. Industry Nymex Tocom Exchange Traded Products %%% Ounces of Total Ounces of Total Ounces of Total Ounces % of Total Total

1987 I 285,293 72.9 106,200 14.4 - - - - 391,493 II 312,114 75.2 103,200 24.8 - - - - 415,314 III 324,330 79.5 83,500 20.5 - - - - 407,830 IV 415,620 87.1 61,800 12.9 - - - - 477,420

1988 I 454,486 81.0 106,300 19.0 - - - - 560,786 II 466,015 80.2 115,400 19.8 - - - - 581,415 III 452,221 78.0 127,200 22.0 - - - - 579,421 IV 463,557 93.0 35,100 7.0 - - - - 498,657 - - 1989 I 375,352 83.9 71,800 16.1 - - - - 447,152 II 355,136 89.7 40,896 10.3 - - - - 396,032 III 324,433 79.7 82,499 20.3 - - - - 406,931 IV 313,570 77.6 90,500 22.4 - - - - 404,070

1990 I 270,720 78.3 74,900 21.7 - - - - 345,620 II 309,247 81.1 71,900 18.9 - - - - 381,147 III 310,520 82.5 65,900 17.5 - - - - 376,420 IV 280,863 81.1 65,400 18.9 - - - - 346,263

1991 I 259,584 75.7 83,400 24.3 - - - - 342,984 II 259,713 76.1 81,502 23.9 - - - - 341,215 III 257,109 76.1 89,602 26.5 - - - - 337,711 IV 257,302 69.5 112,688 30.5 - - - - 369,990

1992 I 266,080 79.9 76,904 23.1 - - - - 333,210 II 286,458 80.4 69,900 19.6 - - - - 356,358 III 281,965 79.6 72,400 20.4 - - - - 354,365 IV 247,755 83.3 49,800 16.7 - - - - 297,555

1993 I 387,400 89.1 47,400 10.9 22,956 5.0 - - 457,756 II 304,462 88.9 38,200 11.1 19,098 5.3 - - 361,760 III 280,228 83.8 54,300 16.2 18,905 5.3 - - 353,433 IV 242,674 86.8 36,900 13.2 70,506 20.1 - - 350,080

1994 I 237,084 86.5 37,000 13.5 52,181 16.0 - - 326,265 II 240,079 78.3 26,500 8.6 40,317 13.1 - - 306,896 III 195,252 80.3 48,000 19.7 36,073 12.9 - - 279,325 IV 164,100 72.0 63,700 28.0 5,594 2.4 - - 233,394

1995 I 150,000 72.3 49,500 23.9 8,006 3.9 - - 207,506 II 170,000 84.2 0 0.0 31,926 15.8 - - 201,926 III 163,000 66.6 60,600 24.8 21,027 8.6 - - 244,627 IV 154,000 61.3 69,100 27.5 28,260 11.2 - - 251,360

1996 I 147,000 78.3 22,200 11.8 18,615 9.9 - - 187,815 II 147,000 74.4 31,000 15.7 19,580 9.9 - - 197,580 III 150,000 61.1 67,300 27.4 28,068 11.4 - - 245,368 IV 150,000 56.0 98,500 36.8 19,483 7.3 - - 267,983

164 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Reported Market Inventories Quarterly, Troy Ounces Exchanges U.S. Industry Nymex Tocom Exchange Traded Products %%% Ounces of Total Ounces of Total Ounces of Total Ounces % of Total Total

1997 I 153,000 47.2 158,900 49.0 12,539 3.9 - - 324,439 II 140,000 81.3 28,400 16.5 3,762 2.2 - - 172,162 III - - 57,900 99.2 482 0.8 - - 58,382 IV - - 65,500 96.6 2,315 3.4 - - 67,815

1998 I - - 55,100 97.3 1,543 2.7 - - 56,643 II - - 33,500 96.1 1,350 3.9 - - 34,850 III - - 41,100 93.8 2,701 6.2 - - 43,801 IV - - 46,400 89.6 5,401 10.4 - - 51,801 - - 1999 I - - 53,400 97.7 1,254 2.3 - - 54,654 II - - 48,400 93.7 3,279 6.3 - - 51,679 III - - 32,200 76.6 9,838 23.4 - - 42,038 IV - - 33,300 47.3 37,038 52.7 - - 70,338

2000 I - - 19,600 47.8 21,412 52.2 - - 41,012 II - - 21,600 87.2 3,183 12.8 - - 24,783 III - - 12,400 79.6 3,183 20.4 - - 15,583 IV - - 15,900 83.3 3,183 16.7 - - 19,083

2001 I - - 20,500 86.6 3,183 13.4 - - 23,683 II - - 10,500 76.7 3,183 23.3 - - 13,683 III - - 42,200 96.3 1,640 3.7 - - 43,840 IV - - 60,200 95.7 2,701 4.3 - - 62,901

2002 I - - 244,800 98.7 3,279 1.3 - - 248,079 II - - 279,100 98.0 5,691 2.0 - - 284,791 III - - 1,986 25.9 5,691 74.1 - - 7,677 IV - - 620,600 99.3 4,437 0.7 - - 625,037 0 2003 I - - 230,100 98.1 4,437 1.9 - - 234,537 II - - 274,900 97.9 5,980 2.1 - - 280,880 III - - 1,987 27.2 5,305 72.8 - - 7,292 IV - - 677,800 98.4 10,899 1.6 - - 688,699 2004 I - - 323,300 97.8 7,234 2.2 - - 330,534 II - - 519,700 98.6 7,620 1.4 - - 527,320 III - - 745,300 98.9 7,909 1.1 - - 753,209 IV - - 724,400 96.6 25,463 3.4 - - 749,863

2005 I - - 676,800 96.9 21,798 3.1 - - 698,598 II - - 718,600 97.0 22,570 3.0 - - 741,170 III - - 694,500 96.9 22,570 3.1 - - 717,070 IV - - 800,200 96.4 29,611 3.6 - - 829,811 2006 I - - 1,193,100 97.8 27,103 2.2 - - 1,220,203 II - - 1,111,800 97.5 28,164 2.5 - - 1,139,964 III - - 944,500 97.5 23,824 2.5 - - 968,324 IV - - 715,100 97.1 21,027 2.9 - - 736,127

165 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Reported Market Inventories Quarterly, Troy Ounces Exchanges U.S. Industry Nymex Tocom Exchange Traded Products %%% Ounces of Total Ounces of Total Ounces of Total Ounces % of Total Total

2007 I - - 715,700 92.8 55,267 7.2 - - 770,967 II - - 608,500 90.8 47,165 7.0 14,534 2.2 670,199 III - - 634,900 67.1 47,165 5.0 263,942 27.9 946,007 IV - - 571,000 64.6 43,982 5.0 268,981 30.4 883,963

2008 I - - 523,000 61.2 17,265 2.0 314,629 36.8 854,894 II - - 456,600 42.6 26,910 2.5 588,350 54.9 1,071,860 III - - 433,000 37.3 33,951 2.9 693,801 59.8 1,160,753 IV - - 428,900 37.0 32,215 2.8 697,686 60.2 1,158,801 2009 I - - 345,000 32.5 21,027 2.0 696,244 65.5 1,062,270 II - - 429,100 33.4 20,448 1.6 835,236 65.0 1,284,784 III - - 548,800 37.5 16,397 1.1 896,359 61.3 1,461,556 IV - - 661,100 37.3 12,635 0.7 1,097,695 62.0 1,771,430

2010 I - - 635,400 29.5 11,960 0.6 1,510,038 70.0 2,157,398 II - - 626,700 25.5 13,310 0.5 1,815,126 73.9 2,455,136 III - - 614,200 25.9 13,310 0.6 1,744,293 73.5 2,371,804 IV - - 577,900 23.3 11,478 0.5 1,893,693 76.3 2,483,071 2011 I - - 520,600 18.2 11,285 0.4 2,335,263 81.4 2,867,148 II - - 503,300 17.8 10,996 0.4 2,311,628 81.8 2,825,923 III - - 547,900 19.9 10,996 0.4 2,197,212 79.7 2,756,107 IV - - 603,300 24.5 6,945 0.3 1,855,512 75.3 2,465,757

2012 I - - 593,100 25.2 5,305 0.2 1,753,622 74.6 2,352,027 II - - 574,800 22.5 8,006 0.3 1,972,752 77.2 2,555,557 III - - 542,000 21.5 4,919 0.2 1,971,473 78.3 2,518,392 IV - - 533,800 21.9 4,823 0.2 1,896,976 77.9 2,435,599 2013 I - - 553,029 20.5 4,340 0.2 2,143,512 79.4 2,700,881 II - - 565,839 20.1 4,147 0.1 2,245,532 79.8 2,815,518 III - - 557,450 20.4 5,016 0.2 2,167,690 79.4 2,730,155 IV - - 545,513 21.0 3,472 0.1 2,050,797 78.9 2,599,783

2014 I - - 417,863 16.9 2,604 0.1 2,052,881 83.0 2,473,348 II - - 341,663 12.1 3,183 0.1 2,468,842 87.7 2,813,688 III - - 268,784 8.3 2,218 0.1 2,956,642 91.6 3,227,644 IV - - 221,466 7.1 2,025 0.1 2,884,731 92.8 3,108,223 2015 I - - 184,474 5.9 2,025 0.1 2,921,513 94.0 3,108,012 II - - 143,605 4.7 5,208 0.2 2,899,671 95.1 3,048,484 III - - 95,448 3.3 7,041 0.2 2,827,272 96.5 2,929,761 IV - - 83,865 3.5 10,417 0.4 2,276,127 96.0 2,370,408

2016 I - - 65,870 2.9 11,478 0.5 2,210,920 96.6 2,288,267 II - - 68,367 3.1 11,671 0.5 2,153,065 96.4 2,233,103 III - - 68,425 3.2 11,381 0.5 2,036,158 96.2 2,115,964 IV - 59,397 3.4 10,224 0.6 1,690,056 96.0 1,759,677

2017 I 57,858 3.6 3,183 0.2 1,541,113 96.2 1,602,154

Notes: Quarterly stock levels are end-quarter; year-end figure may reflect annual reporting. Industrial stocks as reported to the Bureau of Mines on a voluntary basis by traders, refiners, and users. The U.S. Bureau of Mines stopped reporting year-end data in 1995. In the third quarter of 1997, U.S . Bureau of Mines ceased publication of U.S . Industry stock level data. S ources: U.S . Bureau of Mines, New York Mercantile Exchange, Inc., Tokyo Commodity Exchange, ETP issuer websites, Bloomberg. May 18, 2017

166 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Prices than the previous year’s figures, when palladium touched an intraday low of Even though palladium prices ended $520 and an intraday high of $833.60. last year more than one-fifth higher than they started the year, on an annual Price Trends in 2016 average basis prices declined. Palladium prices, basis the nearby active Nymex While on an annual average basis futures contract settlement prices, palladium prices fell, on a year-end to averaged $615.49 in 2016. This was year-end basis prices actually rose. down 10.8% from $690.35 averaged in Palladium prices ended 2016 at 2015. While palladium prices have $683.25, up 21.6% from $562 at the end come off in the past two years, they of 2015. Palladium recouped a remain at historically high levels. substantial part of its losses from the decline of 29.6% in prices during 2015, The chart below shows that palladium when it dropped from $798.40 at the prices moved steadily higher through end of 2014. 2016. Palladium prices entered 2016 on a Palladium prices continued to move in a downward trend. Prices began January wide trading range in 2016, expanding at $544.20, ending the month at to a $324.50 band from $313.60 in $498.50. Prices had fallen to an intraday 2015. In 2016 prices moved between an low of $451.50 in the middle of the intraday low of $451.50 and an intraday month, on 12 January. This proved to be high of $776. These levels were lower the low for the year. Platinum traded on

Daily High, Low and Settlement Prices Through 4 May 2017 $/Oz $900 $900

$850 $850

$800 $800

$750 $750

$700 $700

$650 $650

$600 $600

$550 $550

$500 $500

$450 $450

$400 $400 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17

167 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

either side of $500 in February, moving began to trade on either side of this above $550 in early March. Prices level. As of 4 May palladium prices had briefly topped $600 on 21 and 22 March settled at $800.65. before ending the quarter at $564, slightly higher than where prices began Volatility for the year. The annual volatility rate for 2016 was During the second quarter of the year 29.8%, little changed from 29.4% in palladium prices moved broadly 2015. Volatility is calculated as the sideways, between $523 and $632, as standard deviation of the daily they consolidated the gain or recovery logarithmic price changes based on the that occurred in early March. Prices fell nearby active Nymex contract into early April before rising to their settlement price. January 2016 was the quarterly high in late April. Palladium most volatile month of the year, then fell to around $550 and traded on measuring at 37.5%. Volatility either side of this level for the remained around this level in the first remainder of the quarter. quarter, then eased to between 22% and 29% in the second quarter on a monthly In July prices began to trend higher basis. Volatility dropped to 15.4% in once more, breaking above $700 by 27 July, as would be expected to happen in July. Palladium traded mainly sideways the summer months of the Northern in August, before prices fell to test the Hemisphere, but picked up in August to $650 support level in the middle of 32%. During the remaining four months September. By the end of September, of 2016 monthly price volatility ranged however, prices were back above $700. from 22.7% to 26.7%.

Palladium price volatility picked up in Platinum / Palladium Ratio the last quarter of 2016 as prices fell from above $700 at the start of October Platinum prices have typically held a to near $600 by late October and early premium to palladium prices. There was November before surging to above $750 an exception in recent times during in late November. Prices settled at 2000 and 2001, when there was $771.65 on 30 November and reached uncertainty and some lack Russian an intraday high of $776 on 1 supply. Over the most recent years, December. These were the highs for however, the premium of platinum to 2016. Palladium prices eventually fell, palladium has narrowed. In October ending 2016 at $683.25. 2012 platinum prices held more than a $1,000 premium to palladium. In April In 2017 palladium prices have 2017 that premium was between $150 continued their upward trend. Palladium and $200, and more recently in early rose to trade above $750 in early May 2017 it had narrowed to around January, breaking below this level only $100. The platinum to palladium ratio a few times each month since then, if has shrunk from 2.6 in October 2012 to any. Prices held below $800 until the 1.2 in April 2017. The narrowing trend second half of March, when palladium was prevalent for most of 2016.

168 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Palladium Price Volatility Monthly Data, through April 2017 Percent Percent 160% 160%

140% 140%

120% 120%

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0% 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Palladium Price Seasonality Monthly Seasonal Strength Seasonal Strength 112 112

107 107

102 102

97 97

92 92

87 87

82 82 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

169 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Monthly Palladium and Platinum Prices Through April 2017 $/Ounce 2,200 2,200 2,000 2,000 1,800 1,800 1,600 1,600 1,400 1,400 Platinum Palladium 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Platinum - Palladium Price Differential Daily, Through 4 May 2017 $/Ounce $/Ounce 1,800 1,800 1,500 1,500 1,200 1,200 900 900 600 600 300 300 0 0 -300 -300 -600 -600 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Platinum - Palladium Price Ratio Monthly Data, Through April 2017 Price Ratio Price Ratio 6.0 6.0

5.0 5.0

4.0 4.0

3.0 3.0

2.0 2.0

1.0 1.0

0.0 0.0 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17

170 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

Quarterly Real and Nominal Palladium Prices Through First Quarter 2017. Basis Metals Week New York Dealer Price $/Ounce $/Ounce 1,000 1,000

900 900

800 800 Nominal Palladium Price 700 700

600 600

500 500 Real Palladium Price 400 400

300 300

200 200

100 100

0 0 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Palladium and U.S. Inflation Quarterly, Through First Quarter 2017. Inflation is change in U.S. Consumer Price Index. Palladium price is Metals Week New York Dealer Price $/Ounce Percent Change 1,000 20 900 18 Inflation Palladium (left scale) 800 16 14 700 12 600 10 500 8 400 6 300 4 200 2 100 0 0 -2 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

171 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

New York Dealer Palladium Prices Monthly Averages

1968 1969 1970 1971 1972 1973 1974 January $44.00 $42.75 $35.50 $35.00 $34.50 $65.05 $87.55 February 46.00 40.88 35.50 35.00 35.50 66.89 99.67 March 51.50 40.80 36.00 35.00 35.50 65.46 114.52 April 49.60 39.13 36.00 35.00 35.50 65.43 140.82 May 49.00 38.75 36.00 35.00 35.50 74.82 142.91 June 49.25 37.70 36.00 35.25 37.43 79.10 134.00 July 49.10 36.50 36.00 35.25 48.90 81.19 139.91 August 45.50 36.50 36.00 35.2553.04 82.22 141.32 September 44.88 36.40 36.00 35.25 57.20 80.21 132.80 October 42.88 36.50 36.00 35.25 65.21 82.00 131.55 November 42.00 36.50 35.40 34.75 67.00 81.50 130.06 December ______42.00 ______35.88 ______35.00 _____34.5_0 ______67.57 ______81.50 ______119.9_5 Annual $46.31 $38.19 $35.78 $35.04 $47.74 $75.45 $126.25 Percent Change -- -17.5% -6.3% -2.1% 36.2% 58.0% 67.3%

1975 1976 1977 1978 1979 1980 1981 January $111.00 $42.29 $54.61 $55.69 $76.00 $230.96 $127.71 February 100.94 38.00 58.22 63.83 99.44 271.05 111.67 March 89.24 37.34 57.10 63.33 95.18 230.24 118.73 April 82.73 39.55 54.50 60.00 94.38 194.55 107.18 May 66.33 42.19 52.06 60.94 108.55 159.81 102.80 June 53.19 51.06 44.52 59.46 124.02 170.43 92.50 July 54.82 56.75 44.01 59.53 123.36 199.23 84.65 August 55.14 51.09 42.08 61.51 121.08 204.91 85.52 September 49.24 52.88 41.98 60.46 142.47 213.00 86.62 October 46.23 51.90 42.78 73.71 144.55 201.32 78.45 November 43.71 52.49 49.03 67.40 141.53 183.12 69.36 December ______42.77 ______51.00 ______51.21 _____70.11______167.38______150.77______69.77 Annual $66.28 $47.21 $49.34 $63.00 $119.83 $200.78 $94.58 Percent Change -47.5% -28.8% 4.5% 27.7% 90.2% 67.6% -52.9%

1982 1983 1984 1985 1986 1987 1988 January $66.50 $125.10 $156.14 $121.29 $102.43 $122.75 $123.66 February 67.17 124.90 160.13 124.44 100.95 119.50 118.90 March 66.91 101.89 160.27 112.98 110.10 122.50 121.44 April 69.19 120.33 160.10 112.05 106.77 135.93 121.50 May 67.88 131.48 155.14 108.00 107.74 144.70 122.10 June 56.64 132.73 152.86 98.38 110.19 136.71 127.46 July 56.62 146.45 138.10 94.48 111.23 139.50 124.45 August 59.46 148.07 137.44 102.89 128.31 140.00 122.96 September 64.26 150.98 138.05 98.80 140.14 136.71 119.62 October 62.58 142.00 140.36 100.75 134.84 129.24 120.68 November 74.47 145.91 145.58 100.47 121.94 111.21 125.48 December ______90.23 ______164.10______134.00______94.55______116.89______120.5_9 ______131.14_ Annual $66.82 $136.16 $148.18 $105.76 $115.96 $129.95 $123.28 Percent Change -29.3% 103.8% 8.8% -28.6% 9.6% 12.1% -5.1%

172 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 PALLADIUM

New York Dealer Palladium Prices Monthly Averages

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 January $134.95 $134.93 $84.29 $81.31 $108.79 $123.88 $155.05 $128.52 $120.26 $216.28 February 141.05 135.24 82.90 84.71 108.11 130.53 156.66 135.75 132.63 232.13 March 145.07 129.57 84.33 83.83 104.83 131.61 160.28 137.31 144.29 251.50 April 166.25 126.57 94.39 82.93 112.41 132.02 167.75 135.61 150.02 294.00 May 152.36 118.41 94.05 82.03 118.00 135.00 159.14 133.53 165.24 320.00 June 152.46 114.57 96.00 79.59 124.11 136.84 157.66 128.00 188.48 267.50 July 149.95 115.95 94.50 85.28 137.10 144.75 154.68 131.02 178.27 294.80 August 133.61 115.02 81.32 84.48 133.36 151.35 148.98 126.61 204.43 280.25 September 136.57 103.47 81.23 89.62 119.52 151.19 141.05 120.63 187.05 278.00 October 136.98 93.68 83.94 93.67 126.80 153.20 134.33 116.64 200.00 275.60 November 138.14 92.78 85.95 94.06 127.38 155.90 133.52 117.03 203.67 274.25 December ______136.98 ______87.25 ______80.30 ______103.95 ______123.17 ______153.17 ______130.20 ______117.52 ______194.41 ______290.00 Annual $143.70 $113.95 $86.93 $87.12 $120.30 $141.62 $149.94 $127.35 $172.40 $272.86 Percent Change 16.6% -20.7% -23.7% 0.2% 38.1% 17.7% 5.9% -15.1% 35.4% 58.3%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 January $313.00 $439.25 $985.00 $400.40 $244.00 $208.50 $181.25 $264.50 $329.75 $368.60 February 341.00 565.00 982.50 366.25 247.25 229.25 179.75 276.25 334.25 442.75 March 349.60 650.60 766.40 366.25 220.50 254.75 190.00 296.00 344.40 465.75 April 353.75 566.00 673.25 363.25 156.75 275.00 196.00 336.25 359.50 437.75 May 317.00 565.00 644.00 351.20 158.40 237.25 187.75 356.25 361.60 418.60 June 337.75 619.40 601.75 330.25 174.50 223.75 184.00 303.40 365.00 430.75 July 327.60 678.75 526.75 316.75 168.40 215.60 179.50 309.25 363.50 417.00 August 337.50 733.00 434.40 317.00 175.50 210.25 185.00 321.00 338.20 302.25 September 354.30 715.75 429.50 322.25 202.50 208.40 184.40 316.00 330.25 237.75 October 380.25 732.00 323.00 312.60 193.80 212.25 200.75 304.25 356.25 190.00 November 394.75 772.40 320.40 281.00 194.25 211.75 233.50 318.00 359.80 189.50 December ______419.00 ______892.50 ______376.25 ______236.25 ______193.20 ______187.60 ______253.80 ______323.00 ______346.50 ______168.40 Annual $352.13 $660.80 $588.60 $330.29 $194.09 $222.86 $196.31 $310.35 $349.08 $339.09 Percent Change 29.1% 87.7% -10.9% -43.9% -41.2% 14.8% -11.9% 58.1% 12.5% -2.9%

2009 2010 2011 2012 2013 2014 2015 2016 2017 January $178.50 $420.25 $766.25 $633.25 $697.40 $719.80 $765.25 $499.13 $742.25 February 200.00 405.00 796.75 682.50 731.25 716.25 770.75 509.45 751.94 March 195.00 445.60 740.00 670.20 738.75 752.25 778.25 570.28 773.54 April 220.40 515.00 752.50 640.00 686.50 771.25 750.20 563.00 776.41 May 219.00 452.50 706.25 606.00 718.20 804.40 771.25 575.25 June 234.75 445.00 747.40 594.50 714.13 817.00 721.25 552.50 July 240.80 439.00 767.50 568.25 708.50 859.80 627.00 644.75 August 265.25 475.00 731.75 581.40 741.20 860.00 573.75 704.88 September 289.25520.80 692.00 634.00 701.25 829.50 576.00 683.90 October 306.40 571.25 615.76 624.75 725.90 750.40 667.20 655.63 November 340.50 661.25 611.75 613.00 735.63 758.25 555.75 677.63 December ______362.00 ______721.00 ______607.00 ______675.50 ______703.50 ______789.40 ______551.90 ______710.70 ______Annual $254.32 $505.97 $711.24 $626.95 $716.85 $785.69 $675.71 $612.26 $761.03 Percent Change -25.0% 98.9% 40.6% -11.9% 14.3% 9.6% -14.0% -20.6% 44.6%

Note: Percent change in 2017 compares the average price through April with the same period in 2016. Source: Metals Week, CPM Group. May 8, 2017

173 PALLADIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

174 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Rhodium

175 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

176 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Review and Outlook inventory liquidation by holders of rhodium in expectation of higher prices After declining for five consecutive helped push the price of rhodium higher years, the price of rhodium showed during the first several months of 2017. some signs of bottoming out during The price of rhodium rose to $1,025 in 2016. Prices started the year at $660 and April 2017 before softening in May to spent the year trading in a range around $930, which was still higher between $625 and $825. The average than levels seen in 2016. price during 2016 was $693.74, down 26.9% from 2015. The rhodium market was in a deficit of newly refined metal relative to After moving mostly sideways during fabrication demand for the third the first nine months of the year, the consecutive year in 2016. The market price of rhodium picked up toward the was in a deficit of 48,700 ounces in end of the year, supported by an overall 2016, up from a deficit of 37,134 optimistic view toward industrial ounces in 2015. A decline in South commodities that swept the markets African mine supply and an uptick in following the election of Donald Trump fabrication demand were the primary as U.S. president. This sentiment toward reasons for the expansion of the deficit. industrial commodities continued into The deficit is forecast to shrink in 2017 the first several months of 2017. to 45,000 ounces as supply rises slightly Strength in palladium prices, inventory and fabrication demand moderates. building by automakers, and lack of These deficits have been met by a

Daily JM Rhodium Prices Through 2 June 2017

$/Ounce 11,000

8,800

6,600

4,400

2,200

0 S-94 S-97 S-00 S-03 S-06 S-09 S-12 S-15 177 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

Selected Rhodium Statistics Troy Ounces 1977 1978 1979 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Mine Production South Africa 77,000 74,000 82,000 86,000 103,000 180,000 212,000 271,000 285,000 311,000 355,000 358,000 436,440 392,085 437,150 416,567 Russia* - - - 24,000 33,000 150,000 120,000 118,000 115,000 85,000 63,000 70,000 70,000 47,000 0 14,000 Canada 17,700 13,200 7,500 15,600 13,200 20,000 22,000 20,000 16,000 18,000 16,200 19,440 18,468 18,000 18,540 19,652 Other ______- ______- ______-______-______-______-______-______2,000______3,000______3,000______2,000______2,000______2,000______4,863 ______4,909______3,000 Total 94,700 87,200 89,500 125,600 149,200 350,000 354,000 411,000 419,000 417,000 436,200 449,440 526,908 461,948 460,599 453,219 % Change Year Ago 10.4% -7.9% 2.6% 40.3% 4.0% 12.5% 1.1% 16.1% 1.9% -0.5% 4.6% 3.0% 17.2% -12.3% -0.3% -1.6%

Secondary Supply Total 5,333 8,588 8,286 16,141 11,609 25,000 30,000 23,000 30,200 32,700 30,000 36,000 39,000 45,000 50,000 60,000 % Change Year Ago______-36.4%______61.0%______-3.5%______94.8%______18.5%______14.4%______20.0%______-23.3%______31.3%______8.3%______-8.3%______20.0%______8.3%______15.4%______11.1%______20.0% Total Supply 100,033 95,788 97,786 141,741 160,809 375,000 384,000 434,000 449,200 449,700 466,200 485,440 565,908 506,948 510,599 513,219 % Change Year Ago 6.2% -4.2% 2.1% 45.0% 4.9% 12.7% 2.4% 13.0% 3.5% 0.1% 3.7% 4.1% 16.6% -10.4% 0.7% 0.5%

Fabrication Demand Automotive 871 2,939 26,136 37,012 114,188 270,000 306,000 329,000 344,000 354,366 356,800 360,000 369,000 384,000 404,000 463,500 Electronics 18,796 22,367 26,568 21,248 15,310 27,809 24,851 19,200 24,500 22,450 25,255 25,900 26,200 27,000 27,500 55,163 Other 62,363 72,434 69,732 44,750 30,662 51,697 51,705 43,091 48,300 42,466 37,850 42,300 65,525 68,880 69,650 116,341 Other Countries ______29,000______27,000______35,000______35,000______33,000______32,000______29,000______24,000______23,000______22,000______20,000______21,000______4,000 Total 82,030 97,740 122,437 132,010 187,161 384,506 417,556 424,291 448,800 448,282 443,905 451,200 482,725 499,880 522,150 639,004 % Change Year Ago 18.3% 19.2% 25.3% 7.8% 1.1% 8.9% 8.6% 1.6% 5.8% -0.1% -1.0% 1.6% 7.0% 3.6% 4.5% 22.4%

Apparent Surplus or Deficit 18,003 -1,952 -24,651 9,731 -26,352 -9,506 -33,556 9,709 400 1,418 22,295 34,240 83,183 7,068 -11,551 -125,785

Price per Ounce High $445 $645 $830 $870 $1,145 $5,500 $5,500 $2,950 $1,175 $900 $590 $330 $330 $715 $950 $2,550 Low 375 448 670 610 615 2,000 1,425 1,725 725 565 240 215 175 360 725 980 Average 411 525 772 728 928 3,567 3,737 2,365 1,066 713 424 281 268 575 862 1,833 % Change Year Ago 32.4% 28.0% 46.9% -5.7% 51.5% 174.4% 4.8% -36.7% -54.9% -33.1% -40.5% -33.8% -4.4% 114.3% 50.1% 112.5%

Notes: Secondary supply for Europe includes small amounts recovered elsewhere in the years prior to 1987. * Prior to 2003 Russian supply represented rhodium exports. Russian supply represents mine production since 2003. Automotive includes U.S., Japanese, and European data. Electronics and other Uses include U.S. and Japanese use only. Other Countries include European use excluding auto catalysts. Industrial stocks are as of year end. Prices are Metals Week New York Dealer monthly average prices, 2012 through April; percent change is from the same 2011 period. There may be discrepancies due to rounding. e -- estimate. p -- projections. Sources: U.S. Bureau of Mines; trade sources; CPM Group. May 20, 2017

178 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017p

466,600 466,005 524,070 513,180 654,902 677,559 643,570 624,160 656,305 642,992 641,774 582,541 599,446 433,570 614,539 599,895 590,531 48,000 100,000 108,000 105,000 100,000 95,000 94,000 88,000 87,000 87,000 87,000 88,000 87,000 88,000 87,000 86,000 92,618 19,510 19,510 20,000 35,500 35,600 35,700 27,810 29,245 21,601 9,795 23,710 21,204 22,024 25,929 23,570 26,010 27,803 ______3,000______7,000______15,000______19,100______13,700______13,900______14,300______14,800______20,000______24,200______27,713______28,567______37,087______35,204______36,096______43,800______40,164 537,110 592,515 667,070 672,780 804,202 822,159 779,680 756,205 784,906 763,987 780,197 720,312 745,557 582,703 761,206 755,704 751,116 18.5% 10.3% 12.6% 0.9% 19.5% 2.2% -5.2% -3.0% 3.8% -2.7% 2.1% -7.7% 3.5% -21.8% 30.6% -0.7% -0.6%

70,000 80,000 100,000 130,000 140,000 150,000 170,000 154,136 139,895 182,215 173,989 167,491 206,295 211,000 214,623 220,938 233,840 ______16.7%______14.3%______25.0%______30.0%______7.7%______7.1%______13.3%______-9.3%______-9.2%______30.3%______-4.5%______-3.7%______23.2%______2.3%______1.7%______2.9%______5.8% 607,110 672,515 767,070 802,780 944,202 972,159 949,680 910,341 924,801 946,202 954,186 887,803 951,852 793,703 975,828 976,642 984,956 18.3% 10.8% 14.1% 4.7% 17.6% 3.0% -2.3% -4.1% 1.6% 2.3% 0.8% -7.0% 7.2% -16.6% 22.9% 0.1% 0.9%

430,000 551,000 584,000 718,000 795,000 865,000 877,550 818,168 689,875 734,160 739,177 775,854 790,001 820,248 851,759 866,639 872,119 42,830 41,571 40,879 44,950 44,884 45,526 45,947 44,580 41,246 43,860 44,457 44,338 43,897 43,616 44,136 43,667 44,197 96,540 99,778 103,754 110,488 102,415 95,470 95,426 95,913 93,543 98,882 103,724 108,817 110,488 113,164 115,067 113,291 112,460 ______2,000______4,000______4,000______4,000______5,000______5,000______5,000______4,000______2,000______4,000______4,000______2,000______2,000______2,000______2,000______1,750______1,250 571,370 696,349 732,632 877,438 947,299 1,010,996 1,023,922 962,661 826,664 880,901 891,358 931,009 946,387 979,028 1,012,962 1,025,346 1,030,025 -10.6% 21.9% 5.2% 19.8% 8.0% 6.7% 1.3% -6.0% -14.1% 6.6% 1.2% 4.4% 1.7% 3.4% 3.5% 1.2% 0.5%

35,740 -23,834 34,438 -74,658 -3,097 -38,837 -74,242 -52,321 98,137 65,300 62,828 -43,206 5,465 -185,324 -37,134 -48,704 -45,069

YTD $2,150 $2,941 $575 $1,275 $2,950 $5,900 $6,725 $9,494 $2,285 $2,712 $2,285 $1,415 $1,206 $1,475 $1,245 $740 $1,015 673 1,346 385 475 1,275 2,960 5,400 1,050 1,038 2,375 1,038 1,038 1,070 1,025 640 640 930 1,478 776 487 903 1,967 4,359 6,051 6,240 1,478 2,354 1,931 1,195 1,029 1,060 950 689 956 -19.3% -47.5% -37.2% 85.3% 117.9% 121.6% 38.8% 3.1% -76.3% 59.3% -18.0% -38.1% -17.0% 8.9% -10.4% -27.4% 38.7%

179 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM combination of selling by investors and is estimated to have come from industrial entities that had inventories. liquidation of unreported inventories Some of the industrial stocks have come from both other investors and industrial from producers and the semi-fabricators users. that process and sell their metal, especially during the 2014 strike. Other Rhodium prices are likely to remain industrial sales were from fabricators supported around current levels as an whose demand for rhodium has absence of sales from inventory holders, declined in some cases and who have who are showing signs of being more determined that they did not need to willing to wait for higher prices, keep hold as much rhodium in inventory as prices supported. Furthermore, they formerly did. continued tightness in the supply of newly refined rhodium relative to The weakness in annual average fabrication demand is forcing rhodium prices during 2016 coupled automakers to build larger inventories, with a deficit in the market suggests that which should also provide support to inventory holders were willing and prices. Most of this inventory building ready net sellers of the metal to meet was done during the first quarter, which fabrication demand needs. A majority of is when it is typically done, and is likely the investor liquidation came from to resume after the summer in the investors in the one existing rhodium northern hemisphere. exchange traded fund, who sold 45,300 ounces of the metal on a net basis Newly refined total rhodium supply was during 2016. The balance 3,400 ounces largely flat at 977,000 ounces in 2016,

Rhodium Exchange Traded Product Holdings Daily, Through 31 May 2017

Ounces Ounces 140,000 140,000

120,000 120,000

100,000 100,000

80,000 80,000

60,000 60,000

40,000 40,000

20,000 20,000

0 0 May-11 Aug-12 Nov-13 Feb-15 May-16 Note: Metal is stored in the United Kingdom and is the combined holdings of the ETC's two primary listings, the db Physical Rhodium ETC (EUR) traded on the Xetra and Borse Italiano and the db Physical Rhodium ETC traded on the LSE. Source: db, Bloomberg

180 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 compared to an estimated 976,000 Total rhodium fabrication demand rose ounces in the previous year. Global 1.3% in 2016 to a record 1.026 million rhodium mine supply was down 0.7% in ounces during the year. The auto and 2016 from 2015, levels when output had glass industries were primarily recovered strongly from the South responsible for the rise in rhodium African labor strike in 2014. fabrication demand during 2016. Demand for rhodium is forecast to There was an increase in the amount of continue rising slightly during 2017, rhodium recovered from spent auto reaching 1.03 million ounces supported catalysts, which helped push secondary by demand from the auto and supply higher. This source of supply electronics sector during the year. rose to 221,000 ounces in 2016, up 2.9% from 2015. Growth in total refined The largest source of demand for rhodium supply is expected to be muted rhodium is from autocatalysts, which in 2017, up 0.9% to 985,000 ounces. rose to an estimated 867,000 ounces in 2016, up 1.7% from 2015. Ongoing Rhodium mine supply is expected to thrifting, increased popularity of slip further to 751,000 ounces, down Selective Reduction Catalyst, and 0.6% due to lower South African reduced demand for autos from Japan production. Secondary supply of weighed on the growth rate of demand rhodium, meanwhile, is forecast to rise for rhodium from the auto sector during 5.8% to 234,000 ounces in 2017. 2016. Even so, 2016 saw the second highest level of rhodium fabrication

Rhodium Surplus/Deficit Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 200 200

150 150 Surplus/ Net Additions to Inventories 100 100

50 50

0 0

-50 -50

-100 -100 Deficit/ Net Reduction in Inventories -150 -150

-200 -200 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

181 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM demand on record from the auto sector. The ongoing tightening of emissions standards should continue to provide support to rhodium fabrication demand. The incremental benefits of these tighter emissions standards are expected to wane going forward, as catalyst makers rely on alternate catalyst and power- train technologies to meet tighter emissions regulations.

182 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Supply Mine Supply

Total supply of newly refined rhodium Rhodium is the most difficult and time was largely flat at 977,000 ounces in consuming metal to recover and refine 2016 from 976,000 ounces in the from ore. Prior to the use of rhodium in previous year. auto catalysts, there was relatively less requirement for the metal. This meant Global rhodium mine supply was down that platinum group metal (PGM) 0.7% from a year ago after recovering producers did not have as great of an strongly from the South African labor incentive to refine the metal from the strike in 2014. Increased recovery of residual material left after other metals, rhodium from spent auto catalysts including platinum, palladium, iridium, helped pull secondary supply higher, and ruthenium, had been extracted from rising 2.9% from 2015 to 221,000 the polymetallic PGM-bearing smelter ounces last year. matte. In the 1970s perhaps around 40% of the rhodium contained in ore was Growth in total refined rhodium supply recovered during the smelting and is expected to be muted in 2017, up by refining process. Rhodium is the last 0.9% to 985,000 ounces. Rhodium metal to be extracted from the matte mine supply is expected to slip further through a complex series of by 0.6% to 751,000 ounces, due to hydrochemical and pyrometallurgical moderately lower South African processes. production. Secondary supply of rhodium is forecast to rise 5.8% further This means it has the longest lead time to 234,000 ounces in 2017.

Annual Rhodium Supply Projected Through 2017 Thousand Ounces Thousand Ounces 1,200 1,200

1,000 1,000 Secondary Supply

800 800

600 600

400 400

200 Mine 200

0 0 1977 1985 1993 1997 2001 2005 2009 2013 2017p

183 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM and is the most costly to produce. It also year-on-year increase in its rhodium led to some rhodium not being refined production to 293,300 ounces last year. back when there was not a great deal of Output increases at some of its demand for it. The increase in demand operations more than offset declines at since the late 1970s has pushed refiners other operations. Amandelbult’s to improve recovery rates for the metal rhodium output rose sharply in 2016, up and has encouraged greater refining of 13.0% to 72,000 ounces, while its rhodium. In contrast to that 40% Union mine produced 6.2% more recovery rate back in the 1970s (and rhodium than the previous year. through much of the 1980s into the Rhodium production at its 1990s), today probably 85% - 90% of Mogalakwena mine fell slightly to rhodium is recovered to refined metal 28,000 ounces last year after a record form. year in 2015.

Rhodium supply is the most Impala Platinum produced 128,900 geographically concentrated among the ounces of rhodium from its South major platinum group metals. In 2016, African operations last year, down 7.7% South Africa accounted for 79.4% of from 2015. Implats’ rhodium output is global mine supply. This compared to forecast to decline further to 125,063 platinum and palladium, in which South ounces in 2017. Africa accounted for 70.5% and 35.9% of global mine supplies, respectively. Lonmin produced 101,390 ounces of As a result of this high level of rhodium last year, down 10.8% from concentration, rhodium mine supply 2015. Rhodium production is expected was heavily swayed by the South to fall 5.6% to 95,707 ounces in 2017. African labor strike in 2014 and the sharp production recovery in 2015. Russia Global rhodium mine supply is expected to moderately decline -1.6% Russia’s rhodium mine supply comes from last year to 751,000 ounces in almost entirely from Norilsk Nickel. 2017, due to expected lower production The company is estimated to have levels at South Africa. produced 84,000 ounces in 2016, down from around 87,000 ounces in the South Africa previous year. Most of the rhodium produced at Norilsk Nickel is exported Similar to trends in platinum and once it is refined. There is little use for palladium mine production, South the metal domestically other than some Africa’s rhodium mine production fell auto catalyst production capacity in the in 2016 after a strong rebound in the country, and small electronics and previous year, down 2.4% year-on-year chemical process catalyst work. to 600,000 ounces. Pruduction had been Russian rhodium exports are estimated 615,000 ounces in 2015. It is projected at 84,000 ounces in 2016. to be around 591,000 ounces in 2017. Anglo Platinum, the world’s largest producer of rhodium, recorded a 0.6%

184 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

South African PGM Production Annual, Projected Through 2017. Indexed to 100 = 1990 Index Index 450 450

400 400

350 350

300 300 Rhodium

250 Palladium 250

200 200

150 150 Platinum 100 100

50 50 90 93 96 99 02 05 08 11 14 17p

Russian Production and Exports Annual, Projected Through 2017 Thousand Ounces Thousand Ounces 160 160 Production Indicates Stockpile Withdrawal 140 140

120 120

100 100

80 80 Residual 60 60

40 40 Exports 20 20

0 0 76 80 84 88 92 96 00 04 08 12 16

185 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

South African Rhodium Mine Production Thousand Troy Ounces 2010 2011 2012 2013 2014 2015 2016 2017p

Anglo Platinum 277.5 279.6 268.5 249.3 188.2 257.7 257.5 209.8 % of Total 43.2% 43.6% 46.1% 41.6% 43.4% 41.9% 42.9% 35.5% % Change -7.2% 0.8% -4.0% -7.1% -24.5% 37.0% -0.1% -18.5%

Impala Platinum 154.7 151.8 111.4 134.2 63.6 123.8 112.1 109.8 % of Total 24.1% 23.6% 19.1% 22.4% 14.7% 20.1% 18.7% 18.6% % Change 6.4% -1.9% -26.6% 20.4% -52.7% 94.8% -9.5% -2.0%

Lonmin 87.4 92.5 97.1 100.2 68.6 113.7 101.4 95.7 % of Total 13.6% 14.4% 16.7% 16.7% 15.8% 18.5% 16.9% 16.2% % Change -11.2% 5.8% 5.0% 3.1% -31.5% 65.8% -10.8% -5.6%

Sibanye 39.9 37.5 25.7 22.7 22.4 24.6 25.4 67.6 % of Total 6.2% 5.8% 4.4% 3.8% 5.2% 4.0% 4.2% 11.4% % Change 17.7% -6.0% -31.6% -11.6% -1.0% 9.5% 3.5% 165.8%

Northam Platinum 21.1 22.5 23.9 28.2 33.1 39.5 45.9 45.9 % of Total 3.3% 3.5% 4.1% 4.7% 7.6% 6.4% 7.7% 7.8% % Change -15.3% 6.8% 6.1% 18.4% 17.4% 19.1% 16.4% 0.0%

African Rainbow Minerals 25.2 26.6 25.2 30.4 27.5 28.9 30.4 28.6 % of Total 3.9% 4.1% 4.3% 5.1% 6.3% 4.7% 5.1% 4.9% % Change 0.7% 5.4% -5.2% 20.5% -9.5% 5.2% 4.9% -5.6%

Norilsk 1.2 1.3 1.4 2.6 2.7 2.9 2.2 1.9 % of Total 0.2% 0.2% 0.2% 0.4% 0.6% 0.5% 0.4% 0.3% % Change 90.0% 10.1% 9.2% 80.5% 2.6% 9.0% -24.7% -13.3%

Sylvania Resources 4.9 7.1 6.2 8.9 8.9 8.3 9.9 8.3 % of Total 0.8% 1.1% 1.1% 1.5% 2.0% 1.3% 1.7% 1.4% % Change 136.2% 43.9% -12.4% 43.7% 0.0% -7.1% 20.0% -15.8%

Sedibelo Platinum Mines 3.6 3.8 5.1 11.9 12.4 10.6 9.9 9.8 % of Total 0.6% 0.6% 0.9% 2.0% 2.8% 1.7% 1.7% 1.7% % Change 61.6% 4.3% 35.8% 133.7% 3.5% -14.5% -6.0% -1.3%

Pan African 0.04 0.3 0.4 0.7 1.0 0.9 0.9 % of Total 0.0% 0.1% 0.1% 0.2% 0.2% 0.1% 0.2% % Change 616.0% 14.8% 94.4% 43.2% -11.0% 0.0% Platinum Group Metals 4 12 % of Total 0.6% 2.0% % Change 204.5% Wesizwe Platinum % of Total % Change

Other 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4 % Change N/M 0.0% -20.0% 1.0% 1.0% 1.0% N/M 0.0%

Total S outh African Mine Production 643.0 641.8 582.5 599.4 433.6 614.5 599.9 590.5 % Change -2.0% -0.2% -9.2% 2.9% -27.7% 41.7% -2.4% -1.6%

Note: Production forecasts are based on calendar year. Source: Company Documents, Industry Sources, RMG, and CPM Group May 2017

186 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Russian Rhodium Production and Exports Thousand Troy Ounces Percent of Production Exports Production Residual 1976 80 - - - 1977 88 - - - 1978 90 - - - 1979 92 - - - 1980 93 24 26% 69.0 1981 95 23 24% 72.0 1982 97 33 34% 64.0 1983 102 43 42% 59.0 1984 104 38 37% 66.0 1985 104 33 32% 71.0 1986 104 67 64% 37.0 1987 105 92 88% 13.0 1988 106 100 94% 6.0 1989 107 132 123% -25.0 1990 108 150 140% -42.5 1991 108 120 112% -12.5 1992 100 118 118% -18.0 1993 90 115 128% -25.0 1994 80 85 106% -5.0 1995 80 63 79% 17.0 1996 84 70 83% 14.0 1997 93 70 75% 22.7 1998 100 47 47% 53.0 1999 102 0 0% 101.8 2000 112 14 13% 97.9 2001 113 48 42% 65.2 2002 105 100 95% 5.0 2003 108 108 100% 0.0 2004 105 105 100% 0.0 2005 100 100 100% 0.0 2006 95 94 99% 1.0 2007 94 92 98% 2.0 2008 88 85 97% 3.0 2009 87 84 97% 3.0 2010 87 82 94% 5.0 2011 87 82 94% 5.0 2012 88 81 92% 7.0 2013 87 81 93% 6.0 2014 88 87 99% 1.0 2015 87 85 98% 2.0 2016 86 84 98% 2.0 2017p 93 83 90% 9.6

Notes: NA -- not available. Sources: Bank of Foreign Trade, U.S. Bureau of Mines, Central Intelligence Agency, CPM Group. May 2017

187 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

Zimbabwe reached 19,910 ounces last year. Canadian rhodium mine production is Zimbabwe is the third largest producer expected to rise further in 2017 to of rhodium in the world. Mine output 27,803 ounces. from the country reached an all-time high of 43,800 ounces in 2016, up Secondary Supply 21.3% from the previous year. Much of the increase came from rhodium Rhodium secondary supply comes production at Zimplats, which grew almost entirely from spent auto 36.2% to 27,100 ounces last year from catalysts. A negligible amount comes 2015. In 2017 rhodium production in from end-of-life electronics. Most of Zimbabwe is forecast to fall slightly to the rhodium used in glass and fiber 40,164 ounces after a record year in glass manufacturing equipment is 2016. recovered and refined on a toll basis, with the manufacturers or their leasing Canada agents retaining ownership of the metal during the recovery, refining, and re- Output in Canada totaled 26,010 ounces fabrication processes rather than selling in 2016, up from 23,570 ounces in the scrap and buying new rhodium. previous year. Vale’s Sudbury operations produced most of the Increased availability of rhodium- country’s rhodium output, which bearing scrap coupled with increased

Rhodium Mine Production in Zimbabwe Annual, Projected Through 2017 Ounces Ounces 50,000 50,000

45,000 45,000

40,000 40,000

35,000 35,000

30,000 30,000

25,000 25,000

20,000 20,000

15,000 15,000

10,000 10,000

5,000 5,000

- - 04 05 06 07 08 09 10 11 12 13 14 15 16 17p

188 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 efficiency of metal recovery from some prices during the year, helped increase of the refining operations have been the availability of spent auto catalysts. helping improve secondary supply of Higher loadings of rhodium that were rhodium, a trend expected to continue. contained in those scrap feeds also Recovery of rhodium is less pegged to helped. In 2017 rhodium secondary price trends of rhodium and is more supply is forecast to rise further to closely aligned with the prices scrap 233,800 ounces, an increase of 5.8% collectors can receive in total for old from the previous year. spent auto catalysts.

Secondary supply of rhodium rose 2.9% to 220,900 ounces in 2016, as rising volumes of scrapped automobiles, due to some improvement in global steel

Available Rhodium Scrap Feedstock and Actual Refined Secondary Rhodium Supply Annual, Projected Through 2017

Thousand Troy Ounces Thousand Troy Ounces 300 300 Available Spent Auto Catalyst Rhodium Material: China 250 250

Japan 200 200 Europe Refined Secondary Supply 150 150 United States

100 100

50 50

0 0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

189 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM % Change % Change Total Refined Platinum Platinum Refined Total from Secondary S ources Spent CatalystsAuto 8 .8 8.5 12.1 16.6 China 30.4 30.2 30.2 30.0 29.9 29.9 30.3 30.9 Japan .9 61.4 66.3 70.0 72.3 74.1 79.0 85.8 87.4 Europe Western 5.1 183.1 191.3 198.8 205.1 210.2 215.5 227.6 239.4 245.7 Total .5 93.6 95.7 97.8 100.0 101.9 104.1 105.7 110.1 111.3 110.8 United States 14.9 122.6 144.6 154.1 139.9 182.2 174.0 167.5 206.3 211.0 214.6 220.9 233. etically available scrap scrap available etically to factors thatinfluence Theserelate factors mostly 20.0% 8.3% 15.4% 11.1% 20.0% 16.7% 14.3% -4.2% 27.8% 17.3% 6.7% 17.9% 6.6% -9.2% 30.3% -4.5% -3.7% 23.2% 2.3% 1.7% 2.9% 5.8% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p % Change Total% Change 36.0 44.6 23.7% 33.3% 59.4 22.0% 4.9% 72.5 -12.3% 76.0 8.2% 20.5% 66.7 7.8% 72.1 8.7% 10.8% 86.9 6.6% 93.7 27.2% 101.9 7.9% 112.9 10.9% 120.3 4.5% 153.0 3.9% 16 3.2% 2.5% 2.5% 5.6% 5.2% 2.6% United StatesUnited Western Europe N/AN/AN/AN/AN/A0.00.00.00.00.10.10.20.40.60.91.72.33.03.85 JapanChina 28.6 0.3 35.4 0.5 48.1 57.6 1.0 7.2 57.5 1.9 8.7 48.5 3.1 10.2 49.7 13.0 3.7 59.9 15.4 61.7 5.3 14.5 63.4 7.0 17.1 70.3 20.0 9.5 73.3 22.4 12.7 91 25.6 16.4 26.0 20.8 26.0 31.3 29.8 39.7 31.2 55 30.7 Total Refined Platinum Platinum Refined Total Secondary Sourcesfrom 30.0 36.0 39.0 45.0 50.0 60.0 70.0 80.0 76.6 98.0 1 Notes: Differences in the volume of rhodium contained in hypoth material and actual refined secondary thesupply ofhoarding rhodium and/or are release due of scrap losses. inventories refining economic and price to trends. Additionally,for refinedunts acco supply by collectors. MeaningfulNot - N/M S ource: CPM Group 2017 May Rhodium SecondarySupply Ounces Troy Thousand Rhodium Containedin Hypothetically Available ScrapMaterial Spent Auto Catalysts 190 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

Fabrication Demand however, during 2016 relative to the preceding two years on account of a Total rhodium fabrication demand rose decline in demand from vehicles in to a record 1.026 million ounces in Japan, ongoing thrifting of the metal in 2016, up 1.3% from 2015. The increase auto catalysts, and the increased use of was driven primarily by increased Selective Reduction Catalyst. Demand demand from the auto and glass sectors. is forecast to rise to 872,000 ounces in Healthy vehicle demand helped boost 2017, up 0.6% from 2016. Trends demand from the auto sector while related to thrifting and the use of SCRs weak rhodium prices helped demand are expected to continue during 2017, from the glass sector. Demand for although these trends will be offset by rhodium is forecast to continue rising the fact that vehicle demand in Japan is slightly during 2017, reaching 1.03 forecast to grow during the year. million ounces supported by demand Increased demand for vehicles in Japan from the auto and electronics sector is expected to be offset by slower during the year. growth in demand from the United States, China, and Europe. Automotive Increased Emphasis on Nitrogen Oxide Rhodium demand from the auto sector Emissions rose to an estimated 867,000 ounces in 2016, up 1.7% from 2015. This was the As global emission standards get tighter second highest level of demand on there is an increased emphasis on record. Demand growth slowed, reducing the level of nitrogen oxide

Rhodium Fabrication Demand Annual Data, Projected Through 2017 Thousand Ounces Thousand Ounces 1200 1200 Automotive Electronics 1000 1000 Chemical Glass

800 800 Other Other Countries

600 600

400 400

200 200

0 0 76 79 82 85 88 91 94 97 00 03 06 09 12 15

191 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

emissions (nitrous oxide and nitric are reduced by 50% for diesel vehicles oxide, collectively referred to as and 53% for gasoline engines, from nitrogen oxides or NOx in the auto Euro 4 to Euro 5 NOx emissions are emission control market). Nitrogen reduced by a further 28% for diesel and oxides emissions are of particular 25% for gasoline vehicles. Euro 6 importance to the rhodium market reduces NOx emissions by another 92% because it is the only PGM that is for diesel and keep them unchanged for capable of reducing nitrogen oxides to gasoline. While NOx emissions from harmless nitrogen and oxygen gasoline are left untouched in Euro 6, emissions. they are now 60% lower than Euro 3 and are 25% lower than Euro 6 for The other two PGMs typically loaded in diesel. auto catalysts, platinum and palladium, are used for oxidizing carbon monoxide, The Tier 2 emission standard presently reducing hydrocarbons, and oxidizing in effect in the United States also puts some of the gases that result from the special emphasis on the reduction of reduction of hydrocarbons into their NOx emissions. The reduction is from constituent elemental gases. These 0.6 grams per mile in the Tier 1 emissions have already been reduced provision to 0.2 g/mile in Tier 2 and significantly in the earlier phases of 0.16 g/mile in Tier 3. emissions controls. Reduced Incremental Benefit All of the major auto markets are now at Euro 4 or higher. As the world moves While the tightening of emissions from Euro 3 to Euro 4, NOx emissions standards is typically positive for PGM

European Diesel Passenger Vehicle Emission Standards European Gas Passenger Vehicle Emission Standards

g/km g/km g/km Particulate Matter g/km 4.50 4.50 4.50 4.50 Particulate Matter 4.00 4.00 4.00 Nox 4.00 3.50 NOx 3.50 3.50 3.50 HC+NOx 3.00 3.00 3.00 3.00 HC+NOx 2.50 2.50 2.50 HC 2.50 2.00 CO 2.00 2.00 2.00 CO 1.50 1.50 1.50 1.50 1.00 1.00 1.00 1.00 0.50 0.50 0.50 0.50 0.00 0.00 0.00 0.00 Euro 1 Euro 2 Euro 3 Euro 4 Euro 5 Euro 6 Euro 1 Euro 2 Euro 3 Euro 4 Euro 5 Euro 6

Source: Dieselnet, CPM Group Source: Dieselnet, CPM Group

192 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

demand, there is expected to be a lowered incremental benefit to PGM The second is that auto makers will demand in catalysts moving forward. need to do more than just optimizing This is already being seen to some their traditional PGM catalysts, degree. The loadings are increased as increasing fuel efficiency, and emissions standards become tighter, improving fuel quality to curb essentially to ensure that the internal emissions in the face of ever tightening surface area of the auto catalyst, over regulations. They will need to do all this which emissions flow, is coated with and more to be able to meet future sufficient PGMs for optimal regulations. There already is some shift performance. But the increase of PGM away from traditional catalysts toward loadings has a limited benefit. SCR catalysts, which are more efficient in curbing emissions. Furthermore as There are essentially two reasons why some of the traditional efforts the benefit of tighter emissions may not mentioned here begin to fall short in be as beneficial for PGM demand in the meeting tighter regulations, they are future as they have been in the past. The expected to potentially push automakers first is the use of nanotechnology, and governments to make electric and which has been making inroads into the hybrid vehicles a larger share of the auto catalyst market over the past few market to meet emissions standards. years and is likely to become a more established technology in the sector Selective Catalytic Reduction over the next several years. It has been applied to on-road vehicles since around There is a growing popularity of 2011. Selective Catalytic Reduction (SCR)

NOx Emissions Reduction from Previous Standards for Diesel Cars NOx Emissions Reduction from Previous Standards for Gasoline Cars 0% 0% 0% 0% Euro 3 Euro 4 Euro 5 Euro 6 Euro 3 Euro 4 Euro 5 Euro 6 -10% -10% -10% -10%

-20% -20% -20% -20% -30% -30% -30% -30% -40% -40% -40% -40% -50% -50%

-60% -60% -50% -50%

-70% -70% -60% -60% Note: Euro 2 did not have NOx only limits. Euro 2 had -80% -80% combined limits on NOx and HC, which exaggerates the decline in NOx emissions for Euro 3 shown here.

193 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 systems that are being fitted on large Demand is forecast to rise to 44.2 commercial vehicles. These catalysts, million ounces in 2017 as product using urea, have been used in stationery inventory that was built up in 2016, site catalysts since the 1980s. Meeting which weighed on demand during that tightening emissions standards in year, gets worked through and there is a developed countries is becoming fresh demand from this sector. increasingly difficult with traditional catalysts. The SCR catalyst system is Chemical Catalysts more efficient at reducing toxins. It is a more expensive catalyst system, The PGMs, mostly platinum in however, which has made it more combination with rhodium, are also popular in large commercial vehicles used in chemical catalysts. The metals such as trucks and buses and high end are used in the production of nitric acid, cars. The SCR catalyst itself does not which is used in fertilizers and contain any PGMs, with PGMs used explosives. The need for increased only in the downstream catalysts to productivity in the agricultural sector is ensure that emissions remain low even expected to keep the demand for when exhaust temperatures drop. The fertilizers high. The explosives are impact of SCR catalysts is an overall typically used for road construction and reduction in the use of PGMs per mining. The overall slowdown in vehicle. demand from the mining sector has weighed on rhodium demand from this Electronics sector. Rhodium demand slipped to 51,160 ounces in 2016, down 1.8% Rhodium is used in a wide range of from 2016 and is forecast to slip to electronics and electrical applications. 51,080 ounces in 2017. The surge in the price of rhodium in 2008 has largely been responsible for Glass lower per unit demand from the electronics sector. There are certain Platinum and rhodium are the two qualities inherent to rhodium that do not PGMs that are used in glass allow the metal to be completely manufacturing equipment. The typical substituted, however. breakdown between platinum and rhodium used in glass manufacturing Furthermore, the sheer increase in the equipment is 80% platinum and 20% volume of electronic items that are rhodium. The manufacturer can change being produced has, to some degree, the breakdown to be 90% platinum and offset this decline in per unit usage of 10% rhodium. rhodium. Rhodium demand from electronics declined during 2016 due to The decision to change the mix is the overall condition of the electronics largely driven by the relative prices of market. the two metals. Making a change in the composition even within the prescribed Demand slipped to 43,700 million limits of 80% - 20% or 90% - 10% ounces in 2016, down 1.1% from 2015. platinum and rhodium is complicated by

194 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM China 6 Bharat VI Bharat Bharat VI Bharat China 5 China China 6 China Euro 5 Euro Tier 3 and LEV III LEV Tier 3 and Euro 6 Tier 2 and LEV III Euro 4 Euro China 5 Bharat IV Bharat Bharat III Bharat China 4 Prconve 6 lations. China 6 is based on U.S. Tierlations. 3.6 U.S. China is on based Euro 5 Euro 3 Prconve 5 China 4 China Tier 2 and LEV II China 3 China ty commercialty vehicles China to 5up regu are European on based tandards) Bharat II Bharat Bharat III Bharat ) will be introduced on a nationwide basis in 2020 in basis nationwide a on introduced be will ) , Banglore,Hyderabad, Ahmedabad, Ahmedabad, Banglore,Hyderabad, , Euro 2 Euro 4 Prconve 3 China 2 China China 3 China 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Euro 1 Euro Beijing Nationwide Select Cities Nationwide India China Emission Standards In Major Auto Markets Auto Major In Standards Emission USA Brazil vehicles commercial light and cars passenger for 2005. are Standards December Notes: in Beijing in introduced was 3 du China light and cars passenger new for standards Emissions Chinese 6 Euro of (equivalent VI Agra.Bharat and Pune, Surat, Kanpur, Europe Russia Chennai Kolkata, Delhi, Mumbai, include, India in Cities S Select Emission (California Vehicles Emission Low - Standards II LEV Group CPM Dieselnet, Source: 195 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 the fact that it takes more than an ounce from this sector. While the price had of platinum to meet the efficiency of moved to a significant discount to one ounce of rhodium. This means that platinum in 2016, the price of rhodium to alter the composition so that it is a has bounced back strongly since the last cost-effective change would require that quarter of 2016 and into the first four the price of rhodium would have to rise months of 2017. In March and April of enough to offset the increased use of 2017, the price of rhodium rose to be at platinum. par and at times higher than the price of platinum. That said, this has not been an issue in recent years, with the price of rhodium It should also be noted that replacement trading at a discount to platinum. This demand for platinum and rhodium from discount benefitted the use of rhodium this industry if fairly low in large part

Annual Rhodium Use Troy Ounces

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

Automotive U.S. 391 871 2,939 26,136 37,012 30,009 26,323 19,734 63,000 74,000 92,500 90,000 95,000 97,000 105,000 95,000 105,000 Japan - - - - - 14,468 14,468 27,328 36,330 40,188 64,301 65,266 64,301 67,000 70,000 85,000 64,000 Europe------13,00055,00058,00076,00095,000126,000120,000 China Other Co ___------______- ______------40,000 ______Subtota 391 871 2,939 26,136 37,012 44,477 40,791 47,062 99,330 114,188 169,801 210,266 217,301 240,000 270,000 306,000 329,000 % of Tot 0.6% 1.1% 3.0% 21.3% 28.0% 33.1% 35.1% 30.4% 53.7% 61.0% 64.2% 69.9% 72.3% 68.0% 70.2% 73.3% 77.5% % Chang - 122.8% 237.4% 789.3% 41.6% 20.2% -8.3% 15.4% 111.1% 15.0% 48.7% 23.8% 3.3% 10.4% 12.5% 13.3% 7.5%

El e ctroni cs U.S. 9,062 10,758 14,329 16,923 14,818 12,050 9,392 8,472 9,023 5,665 6,813 5,775 3,955 8,745 8,809 5,851 5,900 Japan 6,430 8,038 8,038 9,645 6,430 13,825 13,503 12,217 12,860 9,645 14,468 19,290 17,683 18,400 19,000 19,000 13,300 China ______Subtota 15,492 18,796 22,367 26,568 21,248 25,875 22,895 20,689 21,883 15,310 21,281 25,065 21,638 27,145 27,809 24,851 19,200 % of Tot 22.3% 22.9% 22.9% 21.7% 16.1% 19.2% 19.7% 13.4% 11.8% 8.2% 8.0% 8.3% 7.2% 7.7% 7.2% 6.0% 4.5% % Chang - 21.3% 19.0% 18.8% -20.0% 21.8% -11.5% -9.6% 5.8% -30.0% 39.0% 17.8% -13.7% 25.5% 2.4% -10.6% -22.7%

Chemical U.S. 19,225 20,245 19,397 11,684 5,273 8,899 6,873 3,984 4,631 4,096 5,083 3,446 3,504 6,076 5,433 5,841 5,048 Japan 6,430 6,430 6,430 11,253 11,253 6,430 6,109 8,038 9,645 10,288 11,253 12,217 10,288 11,000 11,250 10,000 7,500 Europe ------China ______Subtota 25,655 26,675 25,827 22,937 16,526 15,329 12,982 12,022 14,276 14,384 16,336 15,663 13,792 17,076 16,683 15,841 12,548 % of Tot 37.0% 32.5% 26.4% 18.7% 12.5% 11.4% 11.2% 7.8% 7.7% 7.7% 6.2% 5.2% 4.6% 4.8% 4.3% 3.8% 3.0% % Chang - 4.0% -3.2% -11.2% -28.0% -7.2% -15.3% -7.4% 18.8% 0.8% 13.6% -4.1% -11.9% 23.8% -2.3% -5.0% -20.8%

Glass U.S. 3,828 13,986 16,605 15,376 8,581 3,950 2,005 2,033 2,941 2,467 2,952 1,772 2,733 5,691 997 161 386 Japan 6,430 6,430 6,430 8,038 6,430 3,215 2,251 2,251 3,215 3,537 3,537 3,858 3,215 3,600 3,700 3,500 3,000 Europe------China ______Subtota 10,258 20,416 23,035 23,414 15,011 7,165 4,256 4,284 6,156 6,004 6,489 5,630 5,948 9,291 4,697 3,661 3,386 % of Tot 14.8% 24.9% 23.6% 19.1% 11.4% 5.3% 3.7% 2.8% 3.3% 3.2% 2.5% 1.9% 2.0% 2.6% 1.2% 0.9% 0.8% % Chang - 99.0% 12.8% 1.6% -35.9% -52.3% -40.6% 0.7% 43.7% -2.5% 8.1% -13.2% 5.6% 56.2% -49.4% -22.1% -7.5%

Other U.S. 8,369 9,356 16,370 13,351 7,844 7,202 5,322 10,002 8,342 8,024 11,580 12,548 10,787 16,236 22,987 26,203 22,657 Japan______9,163 ______5,916 ______7,202 ______10,031 ______5,369 _____ 1,961 _____ 836 ______29,482 _____ 997 ______2,251 ______12,539 ______6,430 ______257 ______7,000 ______7,330 ______6,000 ______4,500 Subtota 17,532 15,272 23,572 23,382 13,213 9,163 6,158 39,484 9,339 10,275 24,119 18,978 11,044 23,236 30,317 32,203 27,157 % of Tot 25.3% 18.6% 24.1% 19.1% 10.0% 6.8% 5.3% 25.5% 5.0% 5.5% 9.1% 6.3% 3.7% 6.6% 7.9%7.7%6.4% % Chang - -12.9% 54.3% -0.8% -43.5% -30.7% -32.8% 541.2% -76.3% 10.0% 134.7% -21.3% -41.8% 110.4% 30.5% 6.2% -15.7%

Other Countries (excluding - - - - 29,000 32,500 29,000 31,250 34,060 27,000 26,500 25,350 31,000 36,270 35,000 35,000 33,000

Total 69,328 82,030 97,740 122,437 132,010 134,509 116,081 154,791 185,045 187,161 264,525 300,953 300,723 353,018 384,506 417,556 424,291 % Chang - 18.3% 19.2% 25.3% 7.8% 1.9% -13.7% 33.3% 19.5% 1.1% 41.3% 13.8% -0.1% 17.4% 8.9% 8.6% 1.6%

Notes: There may be discrepancies due to rounding. p -- projections. Sources: U.S. Bureau of Mines, trade sources, CPM Group. May 15, 2016

196 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM because around 95% to 97% of PGMs may slow, especially with the expected used in these application is recovered relative softness in demand from the from the equipment, which reduces the solar panel market. need for fresh PGMs substantially. Demand for PGMs in this industry is Rhodium demand from this sector expected to come from the building on reached 41,380 ounces in 2016, up new capacity for glass manufacturing. 1.1% from 2015. Demand for rhodium While demand for all kinds of glass is from the glass industry is expected to expected to grow over the long term, in slip slightly to 41,130 ounces in 2017. the short term building of new capacity

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016p 2017p

Automotive 125,000 132,000 138,000 138,000 143,000 152,000 154,000 170,000 170,000 190,000 210,000 320,000 370,000 395,000 383,150 320,000 230,000 250,000 262,500 294,000 311,640 320,989 337,039 340,409 341,260 U.S. 49,000 35,366 24,800 25,000 26,000 26,000 32,000 67,500 50,000 84,000 85,000 90,000 100,000 105,000 110,000 112,000 90,000 95,000 85,500 102,600 103,113 106,722 104,588 103,019 104,049 Japan 125,000 137,000 140,000 142,000 145,000 158,000 164,000 172,000 160,000 215,000 225,000 240,000 250,000 280,000 274,400 266,168 244,875 249,160 244,177 219,759 210,969 227,846 243,795 253,547 255,449 Europe 4,573 4,851 6,725 9,570 13,614 13,472 16,691 21,547 24,703 37,013 49,247 58,068 64,581 72,937 80,317 77,741 85,583 93,385 China ______45,000______50,000______54,000 ______55,000______55,000______48,000 ______54,000______49,427______45,149______55,275______54,430______54,386______61,528______68,309______88,453 ______95,297 ______87,987______90,753______88,932______94,914______91,342______84,374______88,597______84,082 ______77,976 Other Countries 344,000 354,366 356,800 360,000 369,000 384,000 404,000 463,500 430,000 551,000 584,000 718,000 795,000 865,000 877,550 818,168 689,875 734,160 739,177 775,854 790,001 820,248 851,759 866,639 872,119 Subtotal 76.6% 79.0% 80.4% 79.8% 76.4% 76.8% 77.4% 72.5% 75.3% 79.1% 79.7% 81.8% 83.9% 85.6% 85.7% 85.0% 83.5% 83.3% 82.9% 83.3% 83.8% 83.8% 84.1% 84.4% 84.5% % of Total 4.6% 3.0% 0.7% 0.9% 2.5% 4.1% 5.2% 14.7% -7.2% 28.1% 6.0% 22.9% 10.7% 8.8% 1.5% -6.8% -15.7% 6.4% 0.7% 5.0% 1.8% 3.8% 3.8% 1.7% 0.6% % Change Year Ago

El e ctron i cs 7,500 8,000 9,000 9,500 9,800 10,000 10,500 10,800 7,000 7,400 7,500 8,500 8,500 8,000 8,000 7,000 6,000 7,000 10,500 9,000 8,750 8,500 9,000 9,000 9,000 U.S. 17,000 14,450 16,255 16,400 16,400 17,000 17,000 34,000 25,000 23,000 22,000 25,000 25,000 26,000 26,000 25,000 23,000 25,000 22,000 23,500 23,250 23,100 23,000 22,500 23,000 Japan ______10,363______10,830______11,171______11,379______11,450______11,384______11,526______11,947 ______12,580 ______12,246______11,860______11,957______11,838______11,897______12,016______12,136______12,167 ______12,197 China 24,500 22,450 25,255 25,900 26,200 27,000 27,500 55,163 42,830 41,571 40,879 44,950 44,884 45,526 45,947 44,580 41,246 43,860 44,457 44,338 43,897 43,616 44,136 43,667 44,197 Subtotal 5.5% 5.0% 5.7% 5.7% 5.4% 5.4% 5.3% 8.6% 7.5% 6.0% 5.6% 5.1% 4.7% 4.5% 4.5% 4.6% 5.0% 5.0% 5.0% 4.8% 4.5% 4.5% 4.4% 4.3% 4.3% % of Total 27.6% -8.4% 12.5% 2.6% 1.2% 3.1% 1.9% 100.6% -22.4% -2.9% -1.7% 10.0% -0.1% 1.4% 0.9% -3.0% -7.5% 6.3% 1.4% -0.3% -1.0% -0.6% 1.2% -1.1% 1.2% % Change Year Ago

Chemical 6,200 6,300 6,500 7,000 12,000 12,500 12,750 12,200 12,200 12,300 12,350 14,000 11,000 10,000 9,500 9,500 10,000 10,900 12,000 13,000 11,500 12,000 12,000 11,000 11,250 U.S. 8,500 6,800 9,100 11,000 15,000 16,000 15,500 20,000 15,000 16,000 17,000 19,000 17,000 16,000 16,000 16,000 15,000 15,800 14,500 16,000 16,250 16,300 15,750 15,500 15,250 Japan -- - - 6,000 6,250 6,000 7,000 5,000 5,500 6,500 8,000 7,000 6,000 7,000 7,000 7,000 7,000 7,000 7,000 7,500 8,000 8,000 8,000 7,500 Europe ______6,501______7,507______7,677______7,918______7,557______7,705______7,017______7,809 ______8,801 ______8,073______10,412______11,973______12,836______13,862______15,055______16,334______16,661 ______17,077 China 14,700 13,100 15,600 18,000 33,000 34,750 34,250 45,701 39,707 41,477 43,768 48,557 42,705 39,017 40,309 41,301 40,073 44,112 45,473 48,836 49,112 51,355 52,084 51,161 51,077 Subtotal 3.3% 2.9% 3.5% 4.0% 6.8% 7.0% 6.6% 7.2% 6.9% 6.0% 6.0% 5.5% 4.5% 3.9% 3.9% 4.3% 4.8% 5.0% 5.1% 5.2% 5.2% 5.2% 5.1% 5.0% 5.0% % of Total 17.2% -10.9% 19.1% 15.4% 83.3% 5.3% -1.4% 33.4% -13.1% 4.5% 5.5% 10.9% -12.1% -8.6% 3.3% 2.5% -3.0% 10.1% 3.1% 7.4% 0.6% 4.6% 1.4% -1.8% -0.2% % Change Year Ago

Glass 600 500 500 600 625 1,500 1,200 1,200 2,000 3,000 4,000 5,000 6,000 5,000 4,000 3,750 3,750 5,000 10,000 9,000 9,000 9,250 9,400 9,500 9,500 U.S. 3,300 2,706 3,350 3,900 3,900 4,200 4,200 12,000 10,000 10,000 9,000 11,000 12,000 11,000 10,000 10,000 9,000 9,000 7,000 9,000 10,000 10,500 10,750 11,000 10,750 Japan -- - - 7,000 5,500 6,500 14,000 7,500 7,000 8,000 8,000 8,000 8,000 9,000 9,000 8,250 8,000 8,000 8,000 8,250 8,300 8,350 8,250 8,000 Europe ______7,440______8,333______9,301______9,486______9,931______9,710______9,453______11,117 ______11,362 ______11,770______11,770______11,770______11,982______12,126______12,259______12,443______12,630 ______12,882 China 3,900 3,206 3,850 4,500 11,525 11,200 11,900 34,640 27,833 29,301 30,486 33,931 35,710 33,453 34,117 34,112 32,770 33,770 36,770 37,982 39,376 40,309 40,943 41,380 41,132 Subtotal 0.9% 0.7% 0.9% 1.0% 2.4% 2.2% 2.3% 5.4% 4.9% 4.2% 4.2% 3.9% 3.8% 3.3% 3.3% 3.5% 4.0% 3.8% 4.1% 4.1% 4.1% 4.1% 4.0% 4.0% 4.0% % of Total 15.2% -17.8% 20.1% 16.9% 156.1% -2.8% 6.3% 191.1% -19.7% 5.3% 4.0% 11.3% 5.2% -6.3% 2.0% 0.0% -3.9% 3.1% 8.9% 3.3% 3.7% 2.4% 1.6% 1.1% -0.6% % Change Year Ago

Other 24,000 21,600 12,200 13,300 14,500 15,970 16,400 16,000 14,000 15,000 15,500 14,000 12,000 12,000 11,000 10,500 10,500 11,000 11,480 11,000 11,000 10,750 11,000 10,000 9,750 U.S. ______5,700______4,560______6,200______6,500______6,500______6,960______7,100______20,000______15,000______14,000______14,000______14,000______12,000______11,000______10,000______10,000______10,200______10,000______10,000______11,000______11,000______10,750______11,040______10,750______10,500 Japan 29,700 26,160 18,400 19,800 21,000 22,930 23,500 36,000 29,000 29,000 29,500 28,000 24,000 23,000 21,000 20,500 20,700 21,000 21,480 22,000 22,000 21,500 22,040 22,040 22,040 Subtotal 6.6% 5.8% 4.1% 4.4% 4.4% 4.6% 4.5% 5.6% 5.1% 4.2% 4.0% 3.2% 2.5% 2.3% 2.1% 2.1% 2.5% 2.4% 2.4% 2.4% 2.2% 2.2% 2.2% 2.1% 2.1% % of Total 9.4% -11.9% -29.7% 7.6% 6.1% 9.2% 2.5% 53.2% -19.4% 0.0% 1.7% -5.1% -14.3% -4.2% -8.7% -2.4% 1.0% 1.4% 2.3% 2.4% -2.3% 0.0% 0.0% 0.0% 0.0% % Change Year Ago

Other Countries 32,000 29,000 24,000 23,000 22,000 20,000 21,000 4,000 2,000 4,000 4,000 4,000 5,000 5,000 5,000 4,000 2,000 4,000 4,000 2,000 2,000 2,000 2,000 1,750 1,250 (excluding auto)

448,800 448,282 443,905 451,200 482,725 499,880 522,150 639,004 571,370 696,349 732,632 877,438 947,299 1,010,996 1,023,922 962,661 826,664 880,901 891,358 931,009 946,387 979,028 1,012,962 1,026,636 1,031,815 Total 5.8% -0.1% -1.0% 1.6% 7.0% 3.6% 4.5% 22.4% -10.6% 21.9% 5.2% 19.8% 8.0% 6.7% 1.3% -6.0% -14.1% 6.6% 1.2% 4.4% 1.7% 3.4% 3.5% 1.3% 0.5% % Change Year Ago

197 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Historical U.S. Rhodium Demand Troy Ounces

Year Automotive Electronics Glass Chemical Jewelry 1955 - 1,408 - 14,929 2,798 1956 - 1,193 - 13,379 2,834 1957 - 1,665 - 12,610 2,337 1958 - 1,714 - 12,790 3,523 1959 - 5,649 8,375 12,023 4,407 1960 - 4,163 8,273 7,705 4,175 1961 - 3,004 2,481 6,880 5,593 1962 - 5,265 5,111 8,276 6,546 1963 - 6,676 13,191 9,537 7,044 1964 - 7,687 23,923 13,179 8,296 1965 - 7,924 10,275 12,499 7,498 1966 - 9,216 34,491 14,210 9,100 1967 - 11,736 11,281 17,770 8,775 1968 - 9,514 7,441 14,507 7,059 1969 - 10,788 10,839 18,060 5,622 1970 - 9,056 7,138 26,445 5,343 1971 - 9,084 3,362 14,910 5,419 1972 - 7,867 13,923 15,358 6,593 1973 - 13,187 16,689 23,772 12,526 1974 - 15,538 7,464 23,328 10,460 1975 - 8,252 4,471 15,440 4,932 1976 391 9,062 3,828 19,225 5,170 1977 871 10,758 13,986 20,245 5,011 1978 2,939 14,329 16,605 19,397 9,950 1979 26,136 16,923 15,376 11,684 7,458 1980 37,012 14,818 8,581 5,273 5,434 1981 30,009 12,050 3,950 8,899 3,618 1982 26,323 9,392 2,005 6,873 3,372 1983 19,734 8,472 2,033 3,984 2,248 1984 63,000 9,023 2,941 4,631 1,238 1985 74,000 5,665 2,467 4,096 2,222 1986 92,500 6,813 2,952 5,083 3,194 1987 90,000 5,775 1,772 3,446 7,391 1988 95,000 3,955 2,733 3,504 5,691 1989 97,000 8,745 5,691 6,076 6,591 1990 105,000 8,809 997 5,433 6,269 1991 95,000 5,851 161 5,841 4,951 1992 105,000 5,900 386 5,048 3,720 1993 125,000 7,500 600 6,200 3,000 1994 132,000 8,000 500 6,300 3,150 1995 138,000 9,000 500 6,500 - 1996 138,000 9,500 600 7,000 - 1997 143,000 9,800 625 12,000 - 1998 152,000 10,000 1,500 12,500 - 1999 154,000 10,500 1,200 12,750 - 2000 170,000 10,800 1,200 12,200 - 2001 170,000 7,000 2,000 12,200 - 2002 190,000 7,400 3,000 12,300 - 2003 210,000 7,500 4,000 12,350 - 2004 320,000 8,500 5,000 14,000 - 2005 370,000 8,500 6,000 11,000 - 2006 395,000 8,000 5,000 10,000 - 2007 383,150 8,000 4,000 9,500 - 2008 320,000 7,000 3,750 9,500 - 2009 230,000 6,000 3,750 10,000 - 2010 250,000 7,000 5,000 10,900 - 2011 262,500 10,500 10,000 12,000 - 2012 294,000 9,000 9,000 13,000 - 2013 311,640 8,750 9,000 11,500 - 2014 320,989 8,500 9,250 12,000 - 2015 337,039 9,000 9,400 12,000 - 2016 340,409 9,000 9,500 11,000 - 2017p 341,260 9,000 9,500 11,250 - Note: Consumption by the glass and petroleum industries is included in chemical figures for years prior to 1959. There may be discrepancies due to rounding. 198 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

Percent Change Petroleum Dental Miscellaneous Total in Totals Year - 29 51 19,215 1955 - 56 102 17,564 -8.6% 1956 - 243 598 17,453 -0.6% 1957 - 51 503 18,581 6.5% 1958 45 138 176 30,813 65.8% 1959 33 83 183 24,615 -20.1% 1960 550 16 650 19,174 -22.1% 1961 152 44 659 26,053 35.9% 1962 188 10 422 37,068 42.3% 1963 2,121 38 182 55,426 49.5% 1964 369 124 221 38,910 -29.8% 1965 517 335 1,819 69,688 79.1% 1966 397 77 4,916 54,952 -21.1% 1967 201 38 6,016 44,776 -18.5% 1968 2,341 339 2,155 50,144 12.0% 1969 59 51 805 48,897 -2.5% 1970 176 31 1,384 34,366 -29.7% 1971 149 48 2,157 46,095 34.1% 1972 3,057 297 3,987 73,515 59.5% 1973 1,239 373 3,200 61,602 -16.2% 1974 114 41 3,598 36,848 -40.2% 1975 1 75 3,123 40,875 10.9% 1976 - 275 4,070 55,216 35.1% 1977 281 232 5,907 69,640 26.1% 1978 1,223 45 4,625 83,470 19.9% 1979 662 45 1,703 73,528 -11.9% 1980 - 35 3,549 62,110 -15.5% 1981 4 7 1,939 49,915 -19.6% 1982 - 173 7,581 44,225 -11.4% 1983 11 427 6,666 87,937 98.8% 1984 31 352 5,419 94,252 7.2% 1985 - 611 7,775 118,928 26.2% 1986 - 334 4,823 113,541 -4.5% 1987 32 64 5,000 115,979 2.1% 1988 868 - 8,777 133,748 15.3% 1989 - - 16,718 143,226 7.1% 1990 - - 21,252 133,055 -7.1% 1991 - - 18,937 138,990 4.5% 1992 1,000 - 20,000 163,299 17.5% 1993 1,250 - 17,200 168,399 3.1% 1994 - - 12,200 166,199 -1.3% 1995 - - 13,300 168,399 1.3% 1996 - - 14,500 179,924 6.8% 1997 - - 15,970 191,970 6.7% 1998 - - 16,400 194,850 1.5% 1999 - - 16,000 210,200 7.9% 2000 - - 14,000 205,200 -2.4% 2001 - - 15,000 227,700 11.0% 2002 - - 15,500 249,350 9.5% 2003 - - 14,000 361,500 45.0% 2004 - - 12,000 407,500 12.7% 2005 - - 12,000 430,000 5.5% 2006 - - 11,000 415,650 -3.3% 2007 - - 10,500 350,750 -15.6% 2008 - - 10,500 260,250 -25.8% 2009 - - 11,000 283,900 9.1% 2010 - - 11,480 306,480 8.0% 2011 - - 11,000 336,000 9.6% 2012 - - 11,000 351,890 4.7% 2013 - - 10,750 361,489 2.7% 2014 - - 11,000 378,439 4.7% 2015 - - 10,000 379,909 0.4% 2016 - - 9,750 380,760 0.2% 2017p Source: U.S. Bureau of Mines, CPM Group. May 1, 2017 199 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Annual U.S. Rhodium Demand Projected Through 2017

Thousand Ounces Thousand Ounces 500 500

450 450

400 400

350 350

300 300

250 250

200 200

150 150

100 100

50 50

0 0 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

200 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 RHODIUM

Japanese Rhodium Demand Troy Ounces

1974 1975 1976 1977 1978 1979 1980 1981 1982 ------14,468 14,468 6,430 8,038 6,430 8,038 8,038 9,645 6,430 13,825 13,503 6,430 9,645 6,430 6,430 6,430 11,253 11,253 6,430 6,109 8,038 9,645 6,430 6,430 6,430 8,038 6,430 3,215 2,251 ______3,987______18,037______9,163______5,916______7,202______10,031______5,369______1,961______836 24,885 45,365 28,453 26,814 28,100 38,967 29,482 39,899 37,166 -- 82.3% -37.3% -5.8% 4.8% 38.7% -24.3% 35.3% -6.8%

1983 1984 1985 1986 1987 1988 1989 1990 1991

27,328 36,330 40,188 64,301 65,266 64,301 67,000 70,000 85,000 12,217 12,860 9,645 14,468 19,290 17,683 18,400 19,000 19,000 8,038 9,645 10,288 11,253 12,217 10,288 11,000 11,250 10,000 2,251 3,215 3,537 3,537 3,858 3,215 3,600 3,700 3,500 ______29,482______997______2,251______12,539______6,430______257______7,000______7,330______6,000 79,316 63,048 65,909 106,097 107,062 95,745 107,000 111,280 123,500 113.4% -20.5% 4.5% 61.0% 0.9% -10.6% 11.8% 4.0% 11.0%

1992 1993 1994 1995 1996 1997 1998 1999 2000 64,000 49,000 35,366 24,800 25,000 26,000 26,000 32,000 67,500 13,300 17,000 14,450 16,255 16,400 16,400 17,000 17,000 34,000 7,500 8,500 6,800 9,100 11,000 10,600 16,000 15,500 20,000 3,000 3,300 2,706 3,350 3,900 3,900 4,200 4,200 12,000 ______4,500______5,700______4,560______6,200______6,500______6,500______6,960______7,100______20,000 92,300 83,500 63,882 59,705 62,800 63,400 70,160 75,800 153,500 -25.3% -9.5% -23.5% -6.5% 5.2% 1.0% 10.7% 8.0% 102.5%

2001 2002 2003 2004 2005 2006 2007 2008 2009

50,000 84,000 85,000 90,000 100,000 105,000 110,000 112,000 90,000 25,000 23,000 22,000 25,000 25,000 26,000 26,000 25,000 23,000 15,000 16,000 17,000 19,000 17,000 16,000 16,000 16,000 15,000 10,000 10,000 9,000 11,000 12,000 11,000 10,000 10,000 9,000 ______15,000______14,000______14,000______14,000______12,000______11,000______10,000______10,000______10,200 115,000 147,000 147,000 159,000 166,000 169,000 172,000 173,000 147,200 -25.1% 27.8% 0.0% 8.2% 4.4% 1.8% 1.8% 0.6% -14.9%

2010 2011 2012 2013 2014 2015 2016 2017p 95,000 85,500 102,600 103,113 106,722 104,588 103,019 104,049 25,000 22,000 23,500 23,250 23,100 23,000 22,500 23,000 15,800 14,500 16,000 16,250 16,300 15,750 15,500 15,250 9,000 7,000 9,000 10,000 10,500 10,750 11,000 10,750 ______10,000______10,000______11,000______11,000______10,750______11,040______10,750______10,500 154,800 139,000 162,100 163,613 167,372 165,128 162,769 163,549 5.2% -10.2% 16.6% 0.9% 2.3% -1.3% -1.4% 0.5%

Notes: Sales for use in automobiles prior to 1981 were included in sales for use by the chemical sector. There may be discrepancies due to rounding. S ources: Japanese trade sources, CPM Group. p - projections. May 1, 2017 201 RHODIUM CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Annual Japanese Automotive Demand Projected Through 2017 Thousand Ounces Thousand Ounces 120 120

100 100

80 80

60 60

40 40

20 20

0 0 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

Automotive Use as a Percentage of Total Japanese Demand Annual, Projected Through 2017 Percent Percent 75 75

70 70

65 65

60 60

55 55

50 50

45 45

40 40

35 35

30 30 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

202 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 MINOR PGMS

Minor PGMs

203 MINOR PGMS CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

204 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 MINOR PGMS

Minor PGMs in any products that involve large numbers of units being manufactured. Ruthenium, iridium, and osmium often For example, researchers showed that are referred to as the minor PGMs, iridium offers various valuable given the smaller size of their markets. performance enhancements in That may not be fair. These are critical automotive emission control catalysts metals that have long served in a and some semi-conductor applications. number of useful applications. Their There simply is not enough iridium volumes of mine output are much lower around to allow the metal to be used in than those of platinum and palladium. these applications, however, given the Ruthenium output actually can approach tens of millions of units that are output levels of rhodium, although the produced every year. dollar value is much less, given the price spread between the two metals. Even with the supply constraints, however, iridium, ruthenium, and even As a consequence of their smaller osmium, so long overlooked by most supply volumes, fabrication demand market participants, have been also tends to be much lower for these benefiting from on-going research and metals. It is not so much that these development efforts across a range of metals are not useful in a number of technologies. These metals have found electronic, metallic, mechanical, uses in which their presence is critical, catalytic, medical, and other despite supply constraints and fears that applications. They simply do not exist any major new use will drive prices in sufficient volumes to allow their use higher.

Iridium Prices Metals Week NY dealer weekly low prices, through 25 May 2017 $/Ounce $/Ounce 1200 1200

1000 1000

800 800

600 600

400 400

200 200

0 0 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

205 MINOR PGMS CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

Last year and during the first half of this are now buying and deploying these year there has been a noticeable metals in these new uses do not even increase in demand for all three of these want it pointed out in public that the metals in various uses. The result is that prices are rising due to new uses, as that iridium prices began rising in the also goes against their best commercial middle of 2016, and have continued to interests. rise in 2017. Ruthenium prices began rising in the first five months of 2017. CPM used the low end of the Metals Osmium prices, mired at $350 since Week dealer quotes for these metals. 1998, have not changed on any official The logic is that if these prices are fabricator price sheet, even though there available in the market, it is likely that is a clear pick up in fabrication demand. more users are buying at the low end of prevailing prices than at the high end. Iridium, ruthenium, and osmium are not being used in increasing volumes in a Iridium prices began rising in the number of new products and middle of 2016. Much earlier, the applications, including electronics, iridium price had spent much of the chemical process catalysts, and other time from 1992 to 1997 below $100 per new technologies. Unfortunately for the ounce, dropping to around $30 per curious, almost all of the new uses are ounce from 1993 into 1996. Prices confidential to the companies deploying began rising then as new applications the new technologies, so little to came into production. Iridium had risen nothing can be said about the to $525 by 1998, before subsiding to for applications. Indeed, the companies that a few years. By 2002 – 2003 prices

The Price of Ruthenium Metals Week New York Dealer Prices, Through 25 May 2017

$/Ounce $/Ounce 900 900 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

206 CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017 MINOR PGMS were below $100 once more, only to The price averaged $790.24 during the rise again. Iridium entered an extended first five months of this year, up 61% bull market that took the metal to from the same period last year. The $1,060 in September 2011, around the $960 at the end of May was 37.1% time many other commodities prices higher than the price at the start of this were peaking. Iridium average $987.92 year. in 2011 and $1,025.57 in 2012, using the low end of the Metals Week dealer Annual average ruthenium prices have quote. Prices dropped sharply after that, been falling at double-digit rates since hitting $350 in December 2013. 2011, through 2016. On a more frequent basis, the low end of the weekly Metals Iridium traded between $400 and $550 Week dealer Ruthenium price fell from for much of the period from 2013 until a short term high around $75 in May September 2016. In the middle of last 2014 to around $50 by September and year industrial demand from a handful October of that year. Prices continued to of new uses and companies emerged. weaken, touching $30 by July 2015. Prices began rising. By the end of 2016 Prices moved sideways between $35 iridium was trading at $700 and above. and $42 from then until March of this The price averaged $567.79 in 2016, up year. Prices then started rising, 12.0% from 2015. increasing 88.6% between March and the end of May. In the first five months of 2017 iridium rose further to $960 by the end of May.

The Price of Osmium Metals Week New York Dealer Prices, Through 25 May 2017 $/Ounce $/Ounce 1,000 1,000

900 900

800 800

700 700

600 600

500 500

400 400

300 300

200 200

100 100

0 0 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

207 MINOR PGMS CPM GROUP PLATINUM GROUP METALS YEARBOOK 2017

208