What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-02-05 compared with 2020-11-05 · 66 added, 42 removed, 100 unchanged (52% of the section changed)

21 unchanged sentences

The following discussion updates our outlook and plan of operations for the foreseeable future.

It also analyzes our financial condition and summarizes the results of our operations for the three-month period ended September 30, 2020 and compares these results to the results of the prior year three-month period ended September 30, 2019.

It also analyzes our financial condition and summarizes the results of our operations for the three and six-month period ended December 31, 2020 and compares these results to the results of the prior year three and six-month period ended December 31, 2019.

Operating Highlights:

During the three-month period ended September 30, 2020, the Company announced that the Oregon Water Resource Department (“OWRD”) had reviewed and approved the plans and specifications for the tailings dam proposed for the Grassy Mountain mine and stated that from a safety perspective the plans are construction ready.

During the six-month period ended December 31, 2020, the Company announced that the Oregon Water Resource Department (“OWRD”) had reviewed and approved the plans and specifications for the tailings dam proposed for the Grassy Mountain mine and stated that from a safety perspective the plans are construction ready.

The OWRD reviewed the data within the Consolidated Permit Application which Paramount submitted in November 2019 and which included all tailings design drawings, safety analysis, field data collected and laboratory testing.

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The approval for construction is valid for 5 years with extensions possible on request.

In September 2020, we press released the results of a Canadian NI 43-101 Feasibility Study (“FS”) for our Grassy Mountain Project in Oregon.

In September 2020, we announced the results of a Canadian NI 43-101 Feasibility Study (“FS”) for our Grassy Mountain Project in Oregon.

The FS was completed by a group of industry leading consulting firms led by Ausenco Engineering Canada Inc.

(“Ausenco”) who managed the overall study and were responsible for processing and infrastructure design and oversaw metallurgical testing;

Development Associates (“MDA”) who updated the mineral resource estimate and com pleted the mine planning and reserves estimation;

Golder Associates designed the tailings storage facility and EM strategies who oversaw the environmental aspects of the FS.

Development Associates (“MDA”) who updated the mineral resource estimate and completed the mine planning and reserves estimation;

Golder Associates designed the tailings storage facility and EM Strategies oversaw the environmental aspects of the FS.

This mining scenario in the FS results in an average annual production of 47,000 ounces of gold and 55,000 ounces of silver for eight years.

The metal prices used for the economic analysis includes $1,472 per ounce of gold sold and $16.96 per ounce of silver sold.

The life of mine average cash operating are estimated to be $583 per gold ounce including silver revenues as credit produced and the total initial capital requirements are estimated to be $97.5 million resulting in a net present value of $105 million using a 5% discount rate.

The life of mine average cash operating costs are estimated to be $583 per gold ounce including silver revenues as by product credit and the total initial capital requirements are estimated to be $97.5 million resulting in a net present value of $105 million using a 5% discount rate.

In October, 2020, we filed the completed FS on SEDAR as required by Canadian security laws.

Outlook and Plan of Operation:

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Grassy Mountain Project:

Paramount expects to receive the Feasibility Study report from Ausenco in its second quarter of the current fiscal year and to focus its efforts on continued state and federal mining permitting for the fiscal year ending June 30, 2021.

Paramount received the final Feasibility Study report from Ausenco during the three-month period ended December 31, 2020 and expects to focus its efforts on continued state and federal mining permitting for the fiscal year ended June 30, 2021.

As a follow up to submitting the Consolidated Permit Application (“CPA”) in November 2019, Paramount will respond to the State of Oregon’s CPA completeness review (“Review”) received in February 2019.

The Review provided included proposed resolutions and additional information required by the Company and will assist the Company in submitting a revised CPA.

The Review provided requests for additional information required by the Company and its proposed resolutions will assist the Company in submitting a revised CPA.

The Company expects the revised CPA to address all the comments and requests for additional information with the objective of submitting a complete revised CPA that allows the State of Oregon to determine whether to issue a state mining permit for the Grassy Mountain Project.

In addition to the State of Oregon permitting activities, Paramount expects to respond to BLM comments it received on its POO.

Once all the comments have been addressed, the BLM will register a Notice in the Federal Register once the application is deemed complete.

In addition to the State of Oregon permitting activities, Paramount expects to respond to BLM comments it received on its Plan of Operation (“PoO”).

Once all the comments have been addressed and the PoO is deemed complete, the BLM will register a Notice in the Federal Register.

The Notice initiates the EIS process under the National Environmental Policy Act.

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1) a review of all geological, geochemical and geophysical data for the purposes of generating targets for exploration drilling to locate additional higher-grade mineralization in the close proximity of the original Sleeper pit or in the large mining claim package owned by the Company;

(2) Evaluate the various successful metallurgical tests, previously conducted on the sulfide bearing mineralized material in order to optimize the best economic alternatives and increase the number of gold ounces produced in a proposed mining scenario.

(2) evaluate the various successful metallurgical tests, previously conducted on the sulfide bearing mineralized material in order to optimize the best economic alternatives and increase the number of gold ounces that could be produced in a proposed mining scenario.

(this could include bio or alkaline oxidation in a heap leach scenario, flotation and oxidation and gold recoveries from concentrates);

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We continue to perform the majority of our activities remotely with a limited amount of on-site or in-office attendance only when required.

Video conferencing has replaced in-person participation in conferences, permitting and other corporate activities that typically required corporate travel.

Comparison of Operating Results for the three - months ended September 30 , 2020 and 2019

Video conferencing has replaced in-person participation in conferences, permitting and other corporate meeting and activities that typically required corporate travel.

Comparison of Operating Results for the three and six - months ended December 31 , 2020 and 2019

Results of Operations

We did not earn any revenue from mining operations for the three-months ended September 30, 2020 and 2019.

During the three-month period ended September 30, 2020, we continued with activities related to completing a feasibility study on the Grassy Mountain Project and released a summary of results from the comprehensive study in which a complete report is expected in our second quarter.

Our net loss before income taxes for the three-months ended September 30, 2020 was $1,331,508 compared to a net loss before income taxes of $1,006,499 in the previous year.

The drivers of the increase in net loss before income taxes of 32% are fully described below.

We did not earn any revenue from mining operations for the three and six-months ended December 31, 2020 and 2019.

During the six-month period ended December 31, 2020, we completed and filed a comprehensive feasibility study on the Grassy Mountain Project.

Our net loss for the three-months ended December 31, 2020 was $1,774,899 compared to a net loss of $2,342,517 in the previous year.

The drivers of the decrease in net loss of 24% are fully described below.

Our net loss for the six-months ended December 31, 2020 was $3,106,407 compared to a net loss of $3,349,016 in the previous year.

The decrease in net loss of 7% is fully described below.

The Company expects to incur losses for the foreseeable future as we continue with our planned exploration and development programs.

Exploration and Land Holding Costs

For the three-month period ended September 30, 2020, exploration expenses were $636,027 compared to $458,572 in the prior year comparable period.

This represents an increase of 39% or $177,455.

During the three-month period ended September 30, 2020, the Company focused its efforts on completing its previously announced feasibility study for the Grassy Mountain project.

For the three-month period ended December 31, 2020, exploration expenses were $874,488 compared to $1,808,632 in the prior year comparable period.

This represents a decrease of 52% or $934,144.

During the three-month period ended December 31, 2020, the Company completed its previously announced feasibility study for the Grassy Mountain Project and it continued with permitting activities with the State of Oregon and the BLM.

In the prior year comparable period the company incurred full period costs related to completing the feasibility study and incurred a higher level of permitting costs to prepare and submit its comprehensive CPA with the State of Oregon.

Included were expenses related to the Company’s reclamation activities at the Sleeper Project.

Total exploration expenses at the Grassy Mountain Project during the current three-month period were $725,867.

For the three-month period ended September 30, 2020, land holding costs were $131,183 compared to $137,577 in the prior year comparable period.

The decrease of land holding costs from the prior year comparable period was due to the expiry of a lease term on non material BLM mining claims owned by a third party.

For the three-month period ended December 31, 2020, land holding costs were $130,400 compared to $132,137 in the prior year comparable period.

The marginal decrease of land holding costs from the prior year comparable period was due to the expiry of a lease term on non-material BLM mining claims owned by a third party.

For the six-month period ended December 31, 2020, exploration expenses were $1,510,515 compared to $2,267,200 in the prior year comparable period.

This represents a decrease of 33% or $756,685.

During the six-month period ended December 31, 2020, the Company completed a feasibility study for its Grassy Mountain project.

The Company also has been working with the State of Oregon to address information requests required to advance the permitting process and submit and revised consolidated permit application.

Included in the Company’s exploration expenses were costs related to reclamation activities performed at the Sleeper Project.

Total exploration expenses at the Grassy Mountain Project during the current six-month period were $1,078,631.

For the six-month period ended December 31, 2020, land holding costs were $261,584 compared to $269,714 in the prior year comparable period.

The marginal decrease of land holding costs from the prior year comparable period was due to the expiry of a lease term on non-material BLM mining claims owned by a third party.

Salaries and Benefits

For the three-month period ended September 30, 2020, salary and benefits increased by 23% or by $48,174 to $255,941 from the prior year’s three-month period ended September 30, 2019.

For the three-month period ended December 31, 2020, salary and benefits increased by 91% or by $276,013 to $579,935 from the prior year’s three-month period ended December 31, 2019.

Salary and benefits is comprised of cash and stock based compensation of the Company’s executive and corporate administration teams.

The increase primarily reflects changes to salary and stock-based compensation incurred during the three-month period ended September 30, 2020 compared to the three-month period ended September 30, 2019.

Included in the salary and benefits expense amount for the three-month period ended September 30, 2020 and 2019 was a non-cash stock-based compensation of $58,929 and $43,409, respectively.

The increase primarily reflects incentive cash compensation and stock-based compensation to management and staff that was recorded during the three-month period ended December 31, 2020 compared to the three-month period ended December 31, 2019.

Included in the salary and benefits expense amount for the three-month period ended December 31, 2020 and 2019 was a non-cash stock-based compensation of $57,922 and $23,361, respectively.

For the six-month period ended December 31, 2020, salary and benefits increased by 63% or by $324,188 to $835,877 from the prior year’s six-month period ended December 31, 2019.

The increase primarily reflects incentive cash compensation and stock-based compensation to management and staff that was recorded during the six-month period ended December 31, 2020 compared to the six-

month period ended December 31, 2019.

Included in the salary and benefits expense amount for the six-month period ended December 31, 2020 and 2019 was a non-cash stock-based compensation of $ 116,851 and $ 34,970 , respectively.

Directors’ Compensation

For the three-month period ended September 30, 2020, directors’ compensation increased by 26% or by $6,355 from the prior year’s three-month period ended September 30, 2019.

For the three-month period ended December 31, 2020, directors’ compensation increased by 266% or by $32,811 to $45,169 from the prior year’s three-month period ended December 31, 2019.

Directors’ compensation consists of cash and stock-based compensation of the Company’s board of directors.

The increase reflects the additional cash compensation recorded in the current quarter compared to the prior year’s comparable period.

The increase reflects the additional stock-based compensation recorded in the current quarter compared to the prior year’s comparable period.

For the six-month period December 31, 2020, directors’ compensation increased by 106% or by $39,167 to $76,111from the prior year’s six-month period ended December 31, 2019.

The increase reflects the additional stock-based compensation recorded in the current six-month period compared to the prior-year’s comparable period.

Professional Fees and General and Administration

For the three-month period ended September 30, 2020, professional fees were $44,452 compared to $23,636 in the prior year’s comparable period.

This represents an increase of 88% or $20,816.

Advisory fees incurred related to the completion of our feasibility study were the main factors for the increase in these expenses from the prior year comparable period.

For the three-month period ended September 30, 2020, general and administration expenses increased by 2% to $114,123 from $112,124 in the prior year comparable period.

Although general and administration expenses did not change significantly from the previous year’s comparable period the Company did incur lower travel related expenses due to the COVID-19 related travel restriction.

The reduction in travel expenses were offset by additional costs to support remote working and the participation in additional industry related virtual investment conferences.

For the three-month period ended December 31, 2020, professional fees were $28,699 compared to $65,695 in the prior year’s comparable period.

This represents a decrease of 56% or $36,996.

Professional fees included legal, advisory and consultant expenses incurred on corporate and operational activities being performed by the Company on a period by period basis.

For the three-month period ended December 31, 2020, general and administration expenses decreased by 17% to $124,752 from $150,743 in the prior year comparable period.

The decrease in general and administration expenses from the previous year’s comparable period the Company were due to reduced travel related expenses due to the travel restrictions resulting from the COVID-19 global pandemic.

For the six-month period ended December 31, 2020, professional fees were $73,151 compared to $89,332 in the prior year’s comparable period.

This represents a decrease of 18%.

Professional fees included legal, advisory and consultant expenses incurred on corporate and operational activities being performed by the Company on a period by period basis.

For the six-month period ended December 31, 2020, general and administration expenses decreased by 9% to $238,877 from $262,867 in the prior year comparable period.

Liquidity and Capital Resources

As an exploration and development company, Paramount funds its operations, reclamation activities and discretionary exploration programs with its cash on hand.

At September 30, 2020, we had cash and cash equivalents of $4,491,478 compared to $5,434,081 as at June 30, 2020.

In May 2020, the Company established an $8.0 million “at the market” equity offering with Cantor Fitzgerald & Co.

At December 31, 2020, we had cash and cash equivalents of $3,498,093 compared to $5,434,081 as at June 30, 2020.

In May 2020, the Company established an $8.0 million “at the market” equity offering program with Cantor Fitzgerald & Co.

and Canaccord Genuity LLC to proactively increase its financial flexibility.

During the three-months ended September 30, 2020, the Company issued 595,281 shares for net proceeds of $770,514 under the program.

The main uses of cash for the three-month period ending comprised of the following material amounts:

During the three and six-months ended December 31, 2020, the Company issued 132,500 and 727,781 shares for net proceeds of $131,660 and $897,356 under the program, respectively.

The main uses of cash for the six-month period ended December 31, 2020 comprised of the following material amounts:

Cash used in operating activities which included general and administration expenses, land holding costs, exploration programs at our Grassy Mountain and Sleeper Gold Projects and reclamation activities of $2,833,344

We anticipate our operating expenditures for the remainder of the fiscal year ending June 30, 2021 to be as follows:

We anticipate our operating expenditures for the remainder of the fiscal year ended June 30, 2021 to be as follows:

$0.9 million on corporate administration expenses (expenses include executive management and employee salaries, legal, audit, marketing and other general and administrative expenses)

$0.85 to $1.1 million on the Sleeper Gold Project (expenses include exploration programs, reclamation costs, employee salary and benefits, and land holding costs)

$0.75 million to $1 million on the Sleeper Gold Project (expenses include exploration programs, reclamation costs, employee salary and benefits, and land holding costs)

$1.2 million on the Grassy Mountain Project and Frost Project (expenses include consulting fees, land holding costs and general and administration expenses, environmental impact statement preparation, and costs associated with the State of Oregon permit revised CPA)

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Changes in assumptions can materially affect estimates of fair values.

For stock option grants with performance conditions that affect vesting, the Company recognizes the compensation expense when the Company concludes that it is probable that the performance condition will be achieved.

The Company reassesses the probability of achieving the performance condition at each reporting date.

Use of Estimates

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On an ongoing basis, management evaluates these estimates, including those related to allowances for doubtful accounts receivable, long-lived assets and asset retirement obligations.

Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

Reclassification

Certain comparative figures have been reclassified to conform to the current year-end presentation.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis