Paramount Gold Nevada Corp. 10-Q

Item 1. Financial Statements. PARAMOUNT GOLD NEVADA CORP. Condensed Consolidated Interim Balance Sheets (Unaudited) As at March 31, As at June 30, 2021 2020 Assets Current Assets Cash and cash equivalents $ 4,607,317 $ 5,434,081 Prepaid expenses and other deposits 479,783 442,596 Other assets 18,182 — Total Current Assets 5,105,282 5,876,677 Non-Current Assets Mineral properties (Note 7) 47,333,313 47,333,313 Reclamation bond (Note 8) 462,952 695,041 Property and equipment 6,583 8,467 Total Non-Current Assets 47,802,848 48,036,821 Total Assets $ 52,908,130 $ 53,913,498 Liabilities and Stockholders' Equity Liabilities Current Liabilities Accounts payable and accrued liabilities $ 460,992 $ 925,260 Reclamation and environmental obligation, current portion (Note 8) 75,000 154,231 Total Current Liabilities 535,992 1,079,491 Non-Current Liabilities Convertible debt (Note 6) 4,146,467 5,256,228 Promissory note 35,947 35,628 Reclamation and environmental obligation, non-current portion (Note 8) 336,143 460,939 Total Non-Current Liabilities 4,518,557 5,752,795 Total Liabilities 5,054,549 6,832,286 Stockholders' Equity Common stock, par value $0.01, 200,000,000 authorized shares, 37,313,267 issued and outstanding at March 31, 2021 and 50,000,000 authorized shares, 32,958,404 issued and outstanding at June 30, 2020 (Note 5) 373,133 329,584 Additional paid in capital 106,071,651 100,881,957 Deficit (58,591,203 ) (54,130,329 ) Total Stockholders' Equity 47,853,581 47,081,212 Total Liabilities and Stockholders' Equity $ 52,908,130 $ 53,913,498 The accompanying notes are an integral part of these condensed consolidated interim financial statements. Subsequent Events: Note 12 2 PARAMOUNT GOLD NEVADA CORP. Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (Unaudited) For the Three-Month Period Ended March 31, 2021 For the Three-Month Period Ended March 31, 2020 For the Nine-Month Period Ended March 31, 2021 For the Nine-Month Period Ended March 31, 2020 Revenue Other income (Note 9) $ — $ 391,492 $ 254,800 $ 728,910 Total Revenue — 391,492 254,800 728,910 Expenses Exploration 590,245 1,068,021 2,100,760 3,335,221 Land holding costs 130,284 131,633 391,867 401,346 Professional fees 21,812 35,477 94,964 124,809 Salaries and benefits 277,360 228,680 1,113,237 740,369 Directors' compensation 38,891 27,555 115,002 64,499 General and administrative 130,615 160,868 369,492 423,736 Insurance 49,542 34,825 148,866 103,286 Depreciation 624 651 1,884 2,096 Accretion (Note 8) 15,010 23,648 45,030 70,942 Total Expenses 1,254,383 1,711,358 4,381,102 5,266,304 Net Loss before Other Expense 1,254,383 1,319,866 4,126,302 4,537,394 Other Expense (Income) Interest income (27 ) (1,725 ) (2,283 ) (14,466 ) Interest and service charges 100,111 122,231 336,855 266,460 Net Loss and Comprehensive Loss $ 1,354,467 $ 1,440,372 $ 4,460,874 $ 4,789,388 Loss per Common Share Basic $ 0.04 $ 0.05 $ 0.13 $ 0.17 Diluted $ 0.04 $ 0.05 $ 0.13 $ 0.17 Weighted Average Number of Common Shares Used in Per Share Calculations Basic 36,323,652 27,774,419 34,783,677 27,489,446 Diluted 36,323,652 27,774,419 34,783,677 27,489,446 The accompanying notes are an integral part of these condensed consolidated interim financial statements. 3 PARAMOUNT GOLD NEVADA CORP. Condensed Consolidated Interim Statements of Stockholders’ Equity (Unaudited) Shares (#) Common Stock Additional Paid-In Capital Deficit Total Stockholders' Equity Balance at June 30, 2019 26,519,954 $ 265,200 $ 94,764,730 $ (47,700,188 ) $ 47,329,742 Stock based compensation — — 203,192 — 203,192 Capital issued for services 1,096,791 10,968 965,176 — 976,144 Capital issued for payment of interest 161,217 1,612 117,697 — 119,309 Capital issued for financing 5,180,442 51,804 4,831,162 — 4,882,966 Net loss — — — (6,430,141 ) (6,430,141 ) Balance at June 30, 2020 32,958,404 $ 329,584 $ 100,881,957 $ (54,130,329 ) $ 47,081,212 Stock based compensation — — 77,424 — 77,424 Capital issued for payment of interest 183,395 1,834 203,579 — 205,413 Capital issued for financing 595,281 5,953 764,561 — 770,514 Capital issued on conversion of debt 200,000 2,000 190,066 — 192,066 Net loss — — — (1,331,508 ) (1,331,508 ) Balance at September 30, 2020 33,937,080 $ 339,371 $ 102,117,587 $ (55,461,837 ) $ 46,995,121 Stock based compensation — — 201,465 — 201,465 Capital issued for services 166,792 1,668 179,790 — 181,458 Capital issued for financing 132,500 1,325 125,517 — 126,842 Capital issued on conversion of debt 350,609 3,506 334,277 — 337,783 Net loss — — — (1,774,899 ) (1,774,899 ) Balance at December 31, 2020 34,586,981 $ 345,870 $ 102,958,636 $ (57,236,736 ) $ 46,067,770 Stock based compensation — — 80,864 — 80,864 Capital issued for payment of interest 179,032 1,790 191,574 — 193,364 Capital issued for financing 1,897,863 18,979 2,219,291 — 2,238,270 Capital issued on conversion of debt 649,391 6,494 621,286 — 627,780 Net loss — — — (1,354,467 ) (1,354,467 ) Balance at March 31, 2021 37,313,267 $ 373,133 $ 106,071,651 $ (58,591,203 ) $ 47,853,581 The accompanying notes are an integral part of these condensed consolidated interim financial statements. 4 PARAMOUNT GOLD NEVADA CORP. Condensed Consolidated Interim Statements of Cash Flows (Unaudited) For the Nine-Month Period Ended March 31, 2021 For the Nine-Month Period Ended March 31, 2020 Net Loss $ (4,460,874 ) $ (4,789,388 ) Adjustment for: Depreciation 1,884 2,096 Share based payments (Note 5) 181,458 976,144 Stock based compensation (Note 5) 359,753 127,012 Amortization of debt issuance costs (Note 6) 47,868 37,225 Interest expense 278,155 (102,425 ) Accretion expense (Note 8) 45,030 70,942 Interest earned on reclamation bond (16,968 ) (14,447 ) Increase in other assets (18,182 ) — Increase in prepaid expenses (37,187 ) (422,089 ) Decrease in accounts payable (343,327 ) (131,540 ) Cash used in operating activities (3,962,390 ) (4,246,470 ) Purchase of equipment — (4,719 ) Cash used in investing activities — (4,719 ) Capital issued for financing (Note 5) 3,135,626 — Convertible debt issued (Note 6) — 5,201,807 Cash provided by financing activities 3,135,626 5,201,807 Change in cash during period (826,764 ) 950,618 Cash at beginning of period 5,434,081 463,690 Cash at end of period $ 4,607,317 $ 1,414,308 The accompanying notes are an integral part of these condensed consolidated interim financial statements. Non-Cash Transactions: Note 4 5 PARAMOUNT GOLD NEVADA CORP. Notes to Condensed Consolidated Interim Financial Statements For the Nine-Month Periods Ended March 31, 2021 and 2020 (Unaudited) Note 1. Description of Business and Summary of Significant Accounting Policies Paramount Gold Nevada Corp. (the “Company” or “Paramount”), incorporated under Chapter 78 of Nevada Revised Statutes, and its wholly-owned subsidiaries are engaged in the acquisition, exploration and development of precious metal properties. The Company’s wholly owned subsidiaries include New Sleeper Gold LLC, Sleeper Mining Company, LLC, and Calico Resources USA Corp (“Calico”). The Company is in the process of exploring its mineral properties in Nevada and Oregon, United States. The Company’s activities are subject to significant risks and uncertainties, including the risk of failing to secure additional funding to advance its projects and the risks of determining whether these properties contain reserves that are economically recoverable. The Company’s shares of common stock trade on the NYSE American LLC under the symbol “PZG”. Basis of Presentation and Preparation The unaudited condensed consolidated interim financial statements are prepared by management in accordance with accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included. The Company faces various risks related to the COVID-19 global pandemic. The Company cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on the business, financial position, results of operations and/or cash flows. The results of operations for the interim period ended March 31, 2021 is not necessarily indicative of the operating results expected for the year ended June 30, 2021 or for any future period. The condensed consolidated interim financial statements have been prepared on an accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), are presented in US dollars and follow the same accounting policies and methods of their application as the most recent annual financial statements. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and related footnotes for the year ended June 30, 2020. Significant Accounting Policies Please see Note 1- Description of Business and Summary of Significant Accounting Policies contained in the 2020 10-K. Note 2. Recent Accounting Guidance In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. The changes were effective for the Company’s fiscal year beginning July 1, 2020. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adoption of this guidance on July 1, 2020 did not have a material effect on the Company’s consolidated financial position, results of operations, cash flows and related disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. These changes were effective for the Company’s fiscal year beginning July 1, 2020. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. The Company adoption of this guidance on July 1, 2020 did not have a material effect on the Company’s consolidated financial position, results of operations, cash flows and related disclosures. 6 Note 3. Fair Value Measurements Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Financial assets carried at fair value on a recurring basis by level within the fair value hierarchy in the Condensed Consolidated Interim Balance Sheets at March 31, 2021 and June 30, 2020 are presented in the following table: Fair Value at March 31, 2021 June 30, 2020 Total Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 4,607,317 4,607,317 — — $ 5,434,081 The carrying values of accounts payable, promissory note and convertible debt (Note 6) approximate fair value as of March 31, 2021 and June 30, 2020. Note 4. Non-Cash Transactions During the nine-month period ended March 31, 2021, the Company issued 362,427 shares of Common Stock for payment of interest accrued and owing on its outstanding 2019 Convertible Notes. Additionally, 1,200,000 shares of Common Stock were issued upon the conversion of 1,200 of its outstanding 2019 Convertible Notes. The Company also issued 166,792 shares of Common Stock to Ausenco Engineering USA South Inc. in exchange for services valued at $181,458. During the nine-month period ended March 31, 2020, the Company issued 1,096,791 shares to Ausenco in exchange for services valued at $976,144 to complete a feasibility study at its Grassy Mountain Project. Note 5. Capital Stock Authorized Capital Authorized capital stock consists of 200,000,000 common shares with par value of $0.01 per common share (June 30, 2020 – 50,000,000 common shares with par value $0.01 per common share). An increase to authorized capital stock was approved by the Company’s stockholders during the nine-month period ended March 31, 2021. During the three-month period ended March 31, 2021, the Company issued 1,897,863 shares at an approximate average price of $1.22 for gross proceeds of $2,318,522 through its at-the-market offering. Share issuance costs related to this were $80,252. The Company also issued 179,032 shares for payment of interest accrued and owing at December 31, 2020 (Note 6) with a fair value of $193,364. Additionally, the Company issued 649,391 shares upon the conversion of 649 notes of the 2019 Senior Secured Convertible Notes (Note 6). During the nine-month period ended March 31, 2021, the Company issued 2,625,644 shares at an approximate average price of $1.24 for gross proceeds of $3,266,548 through its at-the-market offering. Share issuance costs related to this were $130,922. The Company issued 166,792 shares at a value of $1.10 for services to complete a feasibility study at its Grassy Mountain Project (Note 4). The Company also issued 362,427 shares for payment of interest accrued and owing at June 30, 2020 and December 31, 2020 (Note 6) with a fair value of $398,777. The Company also issued 1,200,000 shares upon the conversion of 1,200 of the 2019 Senior Secured Convertible Notes (Note 6). During the three and nine-month period ended March 31, 2020, the Company issued 1,096,791 shares at a value of $0.89 per share to Ausenco in exchange for services to complete a feasibility study at its Grassy Mountain Project (Note 4) . 7 At March 31, 2021 there were 37,313,267 common shares issued and outstanding (June 30, 2020 – 32,958,404 common shares). Warrants A summary of warrants exercisable into common stock activity as of March 31, 2021, and changes during the nine-month period ended is presented below: Warrants Weighted Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($) Outstanding at July 1, 2020 1,200,000 $ 1.40 0.03 — Issued — — — — Expired (1,200,000 ) 1.40 — — Exercised — — — — Outstanding at March 31, 2021 — $ — — — Stock Options and Stock Based Compensation Paramount’s 2015 and 2016 Stock Incentive and Compensation Plans, which are stockholder-approved, permits the grant of stock options and stock to its employees and directors for up to 2.169 million shares of common stock. Option awards are generally granted with an exercise price equal to the market price of Paramount’s stock at the date of grant and have contractual lives of 5 years. To better align the interests of its key executives, employees and directors with those of its stockholders, a significant portion of those stock option awards will vest contingent upon meeting certain stock price appreciation performance goals or other performance conditions. Option and stock awards provide for accelerated vesting if there is a change in control (as defined in the employee stock option plan). During the three-month period ended March 31, 2021, the Company did not grant any stock options. During the three-month period ended March 31, 2021, share-based compensation expense relating to service condition options and performance condition was $45,021 and $35,843, respectively (2020- $23,029 and $44,477) . During the nine-month period ending March 31, 2021, a total of 755,000 stock options were granted by the Company. During the nine-month period ended March 31, 2021, share-based compensation expense relating to service condition options and performance condition was $245,022 and $114,731, respectively (2020- $50,473 and $76,539) . The fair value for these options was calculated using the Black-Scholes option valuations method. The weighted average assumptions used for the nine-month period ended March 31, 2021 and fiscal year ended June 30, 2020 were as follows: 2021 2020 Weighted average risk-free interest rate 0.22 % 1.60 % Weighted-average volatility 60 % 61 % Expected dividends $ 0.00 $ 0.00 Weighted average expected term (years) 5.00 5.00 Weighted average fair value $ 0.57 $ 0.39 8 A summary of option activity under the Stock Incentive and Compensation Plans as of March 31, 2021, and changes during the nine-month period ended are presented below: Options Options Weighted Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at July 1, 2020 1,243,995 $ 1.20 3.63 $ 165,600 Granted 755,000 1.13 4.69 — Exercised — — — — Forfeited or expired — — — — Outstanding at March 31, 2021 1,998,995 $ 1.17 3.56 $ — Exercisable at March 31, 2021 964,997 $ 1.19 3.27 $ — A summary of the status of Paramount’s non-vested options as at July 1, 2020 and changes during the nine-month period ended March 31, 2021 is presented below: Non-vested Options Options Weighted- Average Grant- Date Fair Value Non-vested at July 1, 2020 943,992 $ 0.51 Granted 755,000 0.57 Vested 664,994 0.50 Forfeited — — Non-vested at March 31, 2021 1,033,998 $ 0.61 As of March 31, 2021, there was $218,173 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the employee share option plans. That cost is expected to be recognized over a weighted-average period of 0.93 years. The total fair value of stock based compensation arrangements vested during the nine-month period ended March 31, 2021 and 2020, was $332,836 and $49,408, respectively. Note 6. Convertible Debt Debt March 31, 2021 June 30, 2020 Current Non-Current Current Non-Current 2019 Secured Convertible Notes $ — $ 4,277,690 $ — $ 5,477,690 Less: unamortized discount and issuance costs — (131,223 ) — (221,462 ) $ — $ 4,146,467 $ — $ 5,256,228 In September 2019, the Company completed a private offering of 5,478 Senior Secured Convertible Notes (“2019 Convertible Notes”) at $975 per $1,000 face amount due in 2023. Each 2019 Convertible Note will bear an interest rate of 7.5% per annum, payable semi-annually. The principal amount of the 2019 Convertible Notes will be convertible at a price of $1.00 per share of Paramount common stock. Unamortized discount and issuance costs of $275,883 will be amortized as an additional interest expense over the four year term of the 2019 Convertible Notes. During the nine-month period ended March 31, 2021, the Company amortized $47,868 (2020- $37,225) of discount and issuance costs. At any point after the second anniversary of the issuance of the convertible notes, Paramount may force conversion if the share price of its common stock remains above $1.75 for 20 consecutive trading days. The convertible notes are secured by a lien on all assets of the Company and the Company is required to maintain a working capital balance of $250,000. During the three-month period ended March 31, 2021, 649 of the 2019 Convertible Notes outstanding were converted into 649,391 shares of common stock of the Company (Note 5) and $21,611 of unamortized discount and issuance costs were debited to additional paid in capital to reflect the issued common stock. 9 During the nine-month period ended March 31, 2021, 1,200 of the 2019 Convertible Notes outstanding were converted into 1,200,000 shares of common stock of the Company (Note 5) and $42,371 of unamortized discount and issuance costs were debited to additional paid in capital to reflect the issued common stock. Note 7. Mineral Properties The Company has capitalized acquisition costs on mineral properties as follows: March 31, 2021 June 30, 2020 Sleeper $ 24,147,585 $ 24,147,585 Grassy Mountain 23,185,728 23,185,728 $ 47,333,313 $ 47,333,313 Sleeper: Sleeper is located in Humboldt County, Nevada, approximately 26 miles northwest of the town of Winnemucca. The Sleeper Gold Mine consists of 2,322 unpatented mining claims totaling approximately 38,300 acres. Grassy Mountain: The Grassy Mountain Project is located in Malheur County, Oregon, approximately 22 miles south of Vale, Oregon, and roughly 70 miles west of Boise, Idaho. It consists of 442 unpatented lode claims, 3 patented lode claims, and various leased fee land surface and surface/mineral rights, covering approximately 8,300 acres . Note 8. Reclamation and Environmental The Company has funds in a commutation account which is used to reimburse reclamation costs and indemnity claims at its Sleeper Gold Project. It also has provided financial security for future reclamation work in the form of reclamation bonds held by the U.S Bureau of Land Management (“BLM”) for the Sleeper Gold Project and Grassy Mountain Project. The balance of the commutation account and reclamation bonds at March 31, 2021 is 462,952 (June 30, 2020- $695,041). The Company holds an insurance policy which is in effect until 2033 related to its Sleeper Gold Project. The policy covers reclamation costs up to an aggregate of $25 million in the event the Company’s commutation account is insufficient to cover any mandated reclamation obligations. Reclamation and environmental costs are based principally on legal requirements. Management estimates costs associated with reclamation of mineral properties and properties under mine closure. On an ongoing basis the Company evaluates its estimates and assumptions, however, actual amounts could differ from those based on estimates and assumptions. The asset retirement obligation at the Sleeper Gold Project has been measured using the following variables: 1) Expected costs for earthwork, re-vegetation, in-pit water treatment, on-going monitoring, labor and management, 2) Inflation adjustment, and 3) Market risk premium. The sum of the expected costs by year is discounted using the Company’s credit adjusted risk free interest rate from the time it expects to pay the retirement obligation to the time it incurs the obligation. The reclamation and environmental obligation recorded on the balance sheet is equal to the present value of the estimated costs. The current undiscounted estimate of the reclamation costs for existing disturbances at the Sleeper Gold Project is $ 4,010,403 as required by the BLM and the Nevada Department of Environmental Protection. Assumptions used to compute the asset retirement obligations as at March 31, 2021 and June 30, 2020 for the Sleeper Gold Project included a credit adjusted risk free rate and inflation rate of 9.76% (June 30, 2020– 9.76%) and 1.6% (June 30, 2020 – 1.6%), respectively. Expenses are expected to be incurred between the years 2021 and 2049. 10 Changes to the Company’s asset retirement obligations for the nine -month period ended March 31, 2021 and the year ended June 30, 2020 are as follows: Nine-Month Period Ended March 31, 2021 Year Ended June 30, 2020 Balance at beginning of period $ 615,170 $ 965,677 Accretion expense 45,030 94,591 Payments (249,057 ) (723,279 ) Change in estimate of existing obligation — 278,181 Balance at end of period $ 411,143 $ 615,170 The balance of the asset retirement obligation of $411,143 at March 31, 2021 (June 30, 2020 -$615,170 ) is comprised of a current portion of 75,000 (June 30, 2020 -$154,231 ) and a non-current portion of 336,143 (June 30, 2020 -$460,939). The Company recorded an accretion expense for the nine-month period ended March 31, 2021 of $45,030 (March 31, 2020 - $70,942) Note 9. Other Income The Company’s other income details for the three and nine-month period ended March 31, 2021 and 2020 were as follows: Three-Month Period Nine-Month Period Three-Month Period Nine-Month Period Ended March 31, 2021 Ended March 31, 2021 Ended March 31, 2020 Ended March 31, 2020 Re-imbursement of reclamation costs $ — $ 249,057 $ 391,492 $ 723,279 Leasing of water rights to third party — 5,743 — 5,631 Total $ — $ 254,800 $ 391,492 $ 728,910 Note 10. Segmented Information: Segmented information has been compiled based on the material mineral properties in which the Company performs exploration activities. Expenses and mineral property carrying values by material project for the three and nine-month period ended March 31, 2021: Exploration Expenses Land Holding Costs Three-Month Period Ended March 31, 2021 Nine-Month Period Ended March 31, 2021 Three-Month Period Ended March 31, 2021 Nine-Month Period Ended March 31, 2021 Mineral Properties As at March 31, 2021 Sleeper Gold Project $ 219,185 $ 651,070 $ 106,906 $ 320,715 $ 24,147,585 Grassy Mountain Project 371,060 1,449,690 23,378 71,152 23,185,728 $ 590,245 $ 2,100,760 $ 130,284 $ 391,867 $ 47,333,313 Expenses for the three and nine-month period ended March 31, 2020 and mineral property carrying values as at June 30, 2020 by material project: Exploration Expenses Land Holding Costs Three-Month Period Ended March 31, 2020 Nine-Month Period Ended March 31, 2020 Three-Month Period Ended March 31, 2020 Nine-Month Period Ended March 31, 2020 Mineral Properties As at June 30, 2020 Sleeper Gold Project $ 99,962 $ 761,271 $ 106,903 $ 316,605 $ 24,147,585 Grassy Mountain Project 968,059 2,573,950 24,730 84,741 23,185,728 $ 1,068,021 $ 3,335,221 $ 131,633 $ 401,346 $ 47,333,313 11 Note 11. Commitments and Contingencies: Lease Commitments The Company has an office premise lease that expires on June 30, 2021. The aggregate minimum rentals payable for these operating leases are as follows: Year Total Amount 2021 $ 2,644 During the nine-month period ended March 31, 2021, $41,951 was recognized as rent expense in the statement of operations and comprehensive loss. Other Commitments During the three-month period ended March 31, 2021, Paramount entered into an agreement to purchase 152 unpatented lode mining claims (“South Sleeper Claims”) located two miles south of the Company’s Sleeper Gold Project. With an effective date of April 6, 2021 and upon satisfaction of several closing conditions, Paramount has agreed to pay a total consideration of $350,000 in a combination of cash and common stock of the Company. The mining claims are subject to a mineral production royalty based on net smelter returns of 1%. The South Sleeper Claims are without known mineral reserves. Paramount has an agreement to acquire 44 mining claims (“Cryla Claims”) covering 589 acres located immediately to the west of the proposed Grassy Mountain site from Cryla LLC. Paramount is obligated to make annual lease payments of $40,000 per year for the first two years of the lease term commencing in 2018 and $60,000 per year thereafter with an option to purchase the Cryla Claims for $560,000 at any time. The term of the agreement is 25 years. In the event Paramount exercises its option to acquire the Cryla Claims, all annual payments shall be credited against a production royalty that will be based on a prevailing price of the metals produced from the Cryla Claims. The royalty rate ranges between 2% and 4% based on the daily price of gold. The agreement with Cryla can be terminated by Paramount at any time. All lease payments under the agreement are up-to-date and no other payments were made during the nine-month period ended March 31, 2021. The Cryla Claims are without known mineral reserves and there is no current exploratory work being performed. Paramount has an agreement with Nevada Select Royalty (“Nevada Select”) to purchase 100% of the Frost Project, which consists of 40 mining claims located approximately 12 miles west of its Grassy Mountain Project. A total consideration of $250,000 payable to Nevada Select will be based on certain events over time. Nevada Select will retain a 2% NSR on the Frost Claims and Paramount has the right to reduce the NSR to 1% for a payment of $1 million. During the nine-month period ended March 31, 2021, the Company made a payment to Nevada Select for $15,000 upon receipt of its drilling permit from state and federal regulators and all required payments under the agreement are up-to-date as of March 31, 2021. The Frost Claims are without known mineral reserves. Note 12 Subsequent Events Subsequent to the period-ended March 31, 2021, the Company sold, pursuant to its “at the market” equity offering program, 138,307 shares at an approximate average price of $1.06 per share for gross proceeds of $145,965. Additionally, the Company issued 257,353 shares for the purchase of the South Sleeper Claims. 12