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Item 7. Management’s Discussion and Analysis

2021-09-17 compared with 2020-09-25 · 68 added, 69 removed, 90 unchanged (60% of the section changed)

6 unchanged sentences

Operating Highlights:

In June 2020, the Company closed a non-brokered registered direct offering and a concurrent best efforts agency offering in Canada (the “Offerings”) of 4,807,700 shares of its common stock at a price of $1.04 per common stock for aggregate gross proceeds of $5.0 million.

In May 2020, the Company entered into an Controlled Equity Offering SM Sales Agreement (“Sales Agreement”) with Cantor Fitzgerald & Co.

and Canaccord Genuity LLC (together, the “Agents”), pursuant to which the Company may issue and sell shares of its common stock from time to time through the Agents for aggregate sales proceeds of up to $8,000,000, subject to the offering limitations currently applicable to the Company under General Instruction I.B.6.

Sales of the Company’s common stock through the Agents will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

As of June 30, 2020, we sold 372,742 shares of common stock under the Sales Agreement at an average approximate price of $1.17 per share for gross proceeds of $436,783.

After deducting transaction fees and commissions and all other costs, we received net proceeds of $312,518.

In February 2020, the Company submitted a revised POO to the BLM outlining the Company’s plans to build and operate the proposed Grassy Mountain underground gold mine located in Malheur County, eastern Oregon.

The BLM will review the POO for completeness, which is expected to take 30 days, and will subsequently provide the Company with comments, if any.

The BLM has previously reviewed 19 of the baseline data reports (“BDRs”) and their requests for clarifications have all been addressed.

The BLM will register a Notice of Intent (the ”Notice”) in the Federal Register once the application is deemed complete.

The Notice initiates the Environmental Impact Statement (“ EIS ”) process under the National Environmental Policy Act.

In November 2019, Paramount submitted its CPA to DOGAMI to enable the Company to build and operate its proposed, high grade underground gold mine located in Malheur County of eastern Oregon.

The Application was reviewed by the DOGAMI and cooperating agencies for completeness.

As part of this process, the permitting agencies have provided Paramount with a list of supplemental information and recommendations required to submit a modified CPA.

Paramount, the DOGAMI and the permitting agencies will continue to work together to discuss the additional information requested, ensuring the submission of a complete modified CPA which will trigger the 225 day maximum permit evaluation process, upon which draft permits are issued.

The NI 43-101 Feasibility Study for the Grassy Mountain Project is well underway and being led by Ausenco Engineering Canada Inc.

with expected completion during the Company’s second quarter for the year-ended June 30, 2021.

In September 2019, the Company entered into agreements with accredited investors and issued convertible notes in a private transaction (the “Private Placement”).

Under the terms of the Private Placement, Paramount sold an aggregate of 5,478 notes at $975 per $1000 face amount with a four-year maturity for aggregate proceeds of $5.34 million.

Each convertible note bears an interest rate of 7.5% per annum, payable semi-annually.

The principle amount of the convertible notes is convertible at a price of $1.00 per share of Paramount common stock.

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, pursuant to the terms of the convertible notes, the Company is required to maintain a working capital balance of $250,000.

In September 2019, Paramount received from the State of Nevada’s Division of Minerals, the Excellence in Mine Reclamation Award for the Company’s reclamation efforts at the Sleeper Project.

The award was based on an assessment from representatives from the US Forest Service, the Nevada Department of Environmental Protection, the Nevada Division of Minerals, the Nevada Department of Wildlife, and the Bureau of Land Management who visited and reviewed the reclamation of the Sleeper Pit and our management of surface and underground water.

In August 2019, the Company issued 1,096,791 shares of common stock to Ausenco Engineering USA South Inc.

(“Ausenco”) in exchange for services to complete a feasibility study at its Grassy Mountain Project.

The shares will be held in escrow until Ausenco delivers a feasibility study report to the Company.

In April 2021, Paramount purchased 152 unpatented lode mining claims (“South Sleeper Claims”) located two miles south of the Company’s Sleeper Gold Project.

Paramount paid a total consideration of $365,441 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.

Also, during the three-month period ended March 31, 2021, Paramount continued to progress its permitting activities at its Grassy Mountain Project.

In addition to conducting several meetings with the State of Oregon to address comments Paramount received on its initial Consolidated Mining Application, the Company received acceptance of its wildlife baseline data report for its proposed gold mine in Malheur County.

To date, 20 of 22 baseline data reports have been accepted by the state regulators.

The final two reports, ground water and geochemistry, are expected to be filed in advance of submitting the revised Consolidated Permit Application.

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;

Mine 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 $16.64 per ounce of silver sold.

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.

There can be no assurance that the foregoing scenario can be achieved, or if achieved, that it would generate the anticipated economic return.

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

In July 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.

The OWRD and its engineering team are required to review and evaluate the data and design, classify the hazard level (high, significant, or low hazard rating) and evaluate readiness for construction from a dam safety perspective.

Considering the project’s remote geographic location, low population density, arid nature with no rivers or permanent streams in close proximity, seismic analysis and all other data compiled, OWRD has rated the dam as low hazard, its lowest risk level.

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

Outlook and Plan of Operation:

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Grassy Mountain Project:

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

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

Paramount expects to 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.

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

To complete these activities Paramount will engage specialized mining consulting firms, work with State and Federal contracted thirds parties and work directly with both state and federal permitting agencies.

The Company has budgeted approximately $1.5 million to complete these permitting activities during the upcoming fiscal year.

The Company has also budgeted approximately $0.4 million for general and administration expenses and annual claim maintenance fees for a total budget at Grassy Mountain of $1.9 million.

To complete these activities Paramount will engage specialized mining consulting firms, work with State and Federal contracted third parties and work directly with both state and federal permitting agencies.

Sleeper Gold Project:

Paramount is planning to initiate several programs during the upcoming fiscal year that it believes will enhance the value of the Sleeper Gold Project.

The programs planned include:

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.

This could include bio or alkaline oxidation in a heap leach scenario, flotation and oxidation and gold recoveries from concentrates.;

and (3) Update the resource estimation and preliminary economic assessment with the best alternatives identified for the project.

These exploration programs are expected to cost approximate $0.5 million to $0.75 million.

The Company is also budgeting $0.75 million for claim management and general and administration expenses at the Sleeper Gold Project.

If all exploration programs are completed the total budget for fiscal year ended June 30, 2021 will be approximately $1.25 to $1.50 million.

During our fiscal year-ended June 30, 2021, Paramount initiated several targeted programs including metallurgical testing to enhance the value of the Sleeper Gold Project.

As a result of a review of all geological, geochemical and geophysical data, the Company has identified several targets for exploration drilling.

The purpose of an exploration drill at the Sleeper Gold Project is 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 and to facilitate further metallurgical testing.

This commencement of this exploration program is subject to having sufficient capital on hand.

Frost Project:

The Company will implement an initial reverse circulation drill program to test historical drill results and additional selective targets.

The estimated budget to complete the drill program, assay lab testing and geological model is approximately $0.5 million.

Comparison of Operating Results for the year ended June 30, 2021 as compared to June 30, 2020

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Our net loss for the year ended June 30, 2021 was $5,903,618 compared to a net loss of $6,430,141 in the previous year.

The increase of approximately 8% is fully described below.

The decrease of approximately 8% is fully described below.

We will continue to incur losses for the foreseeable future as we continue with our planned exploration and development programs.

Exploration and Land Holding Costs

Exploration, Reclamation and Land Holding Costs

For the year ended June 30, 2021, exploration expenses were $2,816,685 compared to $4,201,138 in the prior year.

This represents an increase of 18% or $642,475.

In the current fiscal year, the Company submitted the consolidated mining permit application with the State of Oregon and submitted a revised POO for its Grassy Mountain Project.

It also continued to work on its previously announced feasibility study for the Grassy Mountain project.

This represents a decrease of 33% or $1,384,453 mainly due to the Company not incurring comparable costs as in the previous fiscal year to complete its feasibility study at the Grassy Mountain Project and incurring a higher level of permitting costs to prepare and submit its CPA with the State of Oregon.

The feasibility study for the Grassy Mountain Project was commenced in July 2019 and completed in October 2020.

For the year-ended June 30, 2021, the Company was focused on working with the State of Oregon to address information requests required to advance the permitting process and submit a revised consolidated permit application.

Total exploration expenses at Grassy Mountain during the year were $1,949,753 .

Included were expenses of $723,279 related to the Company’s reclamation activities at the Sleeper Project to reclaim various water collection ponds from the past mining operation.

Included, for the year-ended June 30, 2021, were expenses of $324,516 (2020 - $723,279) related to the Company’s reclamation activities at the Sleeper Project.

Reclamation work continues to focus on reclaiming the past mine operation collection ponds and continued monitoring as required by the State of Nevada and the BLM.

These reclamation expenses are reimbursed from funds held in a commutation account as part of the Company’s insurance program for outstanding reclamation and environmental obligations at the Sleeper Gold Project.

For the year ended June 30, 2019, the Company developed mine design plans required to satisfy permit application requirements at the Grassy Mountain Project.

The Company received its conditional land use permit application with the county of Malheur.

For the year ended June 30, 2020, the Company submitted the consolidated mining permit application with the State of Oregon and submitted a revised POO for its Grassy Mountain Project.

It also continued to work on its feasibility study for the Grassy Mountain project.

For the year ended June 30, 2021, land holding costs decreased by 9% or by $52,577 from the prior year to $540,401.

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For the year ended June 30, 2021, salary and benefits increased by 39% or by $383,849 from the prior year to $1,373,451.

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

The increase in expenses was due to bonuses awarded to the Company’s employees and stock-based compensation incurred for new option grants.

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

The increase in expenses was primarily due to stock-based compensation incurred for new option grants, as well as bonuses awarded to the Company’s employees.

Included in the salary and benefits expense amount for the year ended June 30, 2021 and 2020 was non-cash stock based compensation of $332,786 and $132,286 respectively.

Directors’ Compensation

For the year ended June 30, 2020, directors’ compensation decreased by 40% or by $60,979 from the prior year ended June 30, 2019.

The decrease reflects the reduction in stock-based compensation recorded in the current year-ended June 30, 2020 compared to the prior year ended June 30, 2019.

For the year ended June 30, 2021, directors’ compensation increased by 72% or by $66,640 from the prior year ended June 30, 2020.

The increase is due to the stock-based compensation recorded in the current year-ended June 30, 2021 compared to the prior year ended June 30, 2020.

Professional Fees and General and Administration

For the year ended June 30, 2021, professional fees were $174,039 compared to $166,894 in the prior year.

This represents a decrease of 11% or $19,958.

The decrease is mainly due to the one time nature of legal expenses incurred for the various permitting activities undertaken for the Grassy Mountain Project in the comparative year.

This represents a increase of 4% or $7,145.

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 year ended June 30, 2021, general and administration expenses decreased by 2% to $483,608 from $495,628 in the prior year.

The decrease is mainly a result of decreased travel and marketing costs incurred by the Company.

In general, these expenses remained stable from the prior year comparable period and any decrease was due to reduced travel related expenses due to restrictions resulting from the COVID-19 global pandemic.

Liquidity and Capital Resources

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At June 30, 2021, we had cash and cash equivalents of $3,113,064 compared to $5,434,081 as at June

In May 2020, the Company established an “at the market” equity offering program (“ATM”) with Cantor Fitzgerald & Co.

and Canaccord Genuity LLC to proactively increase financial flexibility.

During the fiscal year ended June 30, 2021 the Company issued 3.209,133 shares for net proceeds of $3,722, 5 54 under the program and subsequent to the year -ended June 30, 2021 issued 2,189,936 shares for gross proceeds of $1,875,521 .

At June 30, 2021, the Company’s prepaid expenses were $1,152,396 compared to $442,596 for the year-ended June 30, 2020.

Included in the total for the year-ended June 30, 2021 were annual payments to hold the Company’s mining claims in the for all its mineral properties of $548,127.

The prepaid expenses also included amounts to secure a drill rig for the Paramount’s upcoming drill program at the Frost project.

Drill rigs and related services have been in high-demand from an industry perspective as the US economy re-opens from the restrictions placed due to the COVID-19 pandemic.

The main uses of cash were comprised of the following material amounts:

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In addition to cash used in operating activities, the Company used and received cash as follows:

Cash used to purchase computer equipment of $ 4,719 ;

Cash received from equity financings, convertible debt financing and issuance of a promissory note of $10,120,401.

Cash used to purchase mining claims in the State of Nevada of $87,500;

Cash received from equity financings of $3,722,554.

We anticipate our twelve-month cash expenditures for our fiscal year ending June 30, 2022 to be as follows:

$1.8 million on corporate administration expenses (expenses include executive management and employee salaries, legal, audit, marketing and other general and administrative expenses)

$1.25 million to $1.50 million on the Sleeper Gold Project (exploration programs, expenses include reclamation costs, employee salary and benefits, and land holding costs)

$2.4 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)

$2.3 million on corporate and general expenses

For discretionary exploration and permitting programs, subject to available cash on hand and additional share issuances, we are budgeting the following amounts:

$2.0 million on the Grassy Mountain Project state and federal permitting activities

$0.7 million on the Frost Project exploration programs

$1.25 million on the Sleeper Gold Project exploration programs

Our anticipated expenditures will be funded by our cash on hand and other capital resources.

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GAAP”) and requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the reported amounts of revenue and expenses during the reporting period.

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

On an ongoing basis, management evaluates these estimates, including those related the adequacy of the Company’s reclamation and environmental obligation, share based compensation, valuation of deferred tax asset and assessment of impairment of mineral properties.

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.

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Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are recorded in the accounts of the specific mineral property at the time the payments are made.

The amounts recorded as mineral properties reflect actual cost s incurred to acquire the properties and do not indicate any present or future value of economically recoverable reserves.

The amounts recorded as mineral properties reflect actual costs incurred to acquire the properties and do not indicate any present or future value of economically recoverable reserves.

Exploration expenses

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The Company prepares estimates of the timing and amounts of expected cash flows and ongoing reclamation expenditures are charged against the ARO as incurred to the extent they relate to the ARO.

Significant judgments and estimates are made when estimating the fair value of AROs.

Significant judgments and estimates are made when estimating the fair value of ARO.

Stock Based Compensation

For stock option grants with market conditions that affect vesting, the Company uses a lattice approach incorporating a Monte Carlo simulation to value stock options granted.

For stock option grants that have no market conditions that affect vesting, the Company uses the Black-Scholes option valuation model to value stock options granted.

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, employee and directors with those of its shareholders a significant portion of those share option awards will vest contingent upon meeting certain stock price appreciation performance goals and other performance conditions.

Option and share awards provide for accelerated vesting if there is a change in control (as defined in the employee share option plan).

For stock option grants made in the fiscal years ended June 30, 2021 and 2020, the Company used the Black-Scholes option valuation model to value stock options granted.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable.

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WA Expected life of options

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-K

Item 7. Management’s Discussion and Analysis