What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-09 compared with 2021-05-07 · 56 added, 93 removed, 80 unchanged (65% of the section changed)

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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 and nine-month period ended March 31, 2021 and compares these results to the results of the prior year three and nine-month period ended March 31, 2020.

It also analyzes our financial condition and summarizes the results of our operations for the three-month period ended September 30, 2021 and compares these results to the results of the prior year three-month period ended September 30, 2020.

Operating Highlights:

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.

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.

The transaction closed in April 2021 subsequent to the period ending March 31, 2021.

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.

During the nine-month period ended March 31, 2021, 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.

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.

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

During the three-month ended September 30, 2021, the Company conducted several exploration programs and continued with its permitting at its Grassy Mountain Project.

Highlights include:

Receiving positive assay results from geotechnical drill holes at its Grassy Mountain Project that indicate the potential for additional economic material to be used during mine operations.

Receiving from Malheur County an extension on the Conditional Use Permit for the proposed Grassy Mountain underground mine.

Entering into an option agreement with Nevada Select Royalty to purchase 100% interest in the Bald Peak Project (“Bald Peak”) located in Mineral County, Nevada.

Total consideration of $300,000 will paid based on achieving certain milestones over time.

Commencing a 15-hole reverse circulation drill program at the Frost Project which is located 12 miles from the Company’s Grassy Mountain Project in Eastern Oregon.

Outlook and Plan of Operation:

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Grassy Mountain Project:

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

Paramount expects to respond to the State of Oregon’s CPA completeness review (“Review”) received in February 2019 during the three-month period ending December 31, 2021.

The Review provided included proposed resolutions and additional information required by the Company and 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 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.

In addition to the State of Oregon permitting activities, Paramount expects to respond to BLM comments it received on its PoO during the period ending March 31, 2022.

The BLM will register a Notice in the Federal Register once the application is deemed complete.

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.

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 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);

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

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

COVID-19 Update

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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 meeting and activities that typically required corporate travel.

Comparison of Operating Results for the three and nine-months ended March 31, 2021 and 2020

Comparison of Operating Results for the three months ended September 30, 2021 and 2020

Results of Operations

We did not earn any revenue from mining operations for the three and nine-months ended March 31, 2021 and 2020.

During the nine-month period ended March 31, 2021, we completed and filed a comprehensive feasibility study on the Grassy Mountain Project.

Our net loss for the three-months ended March 31, 2021 was $1,354,467 compared to a net loss of $1,440,372 in the previous year.

The drivers of the decrease in net loss of 6% are fully described below.

Our net loss for the nine-months ended March 31, 2021 was $4,460,874 compared to a net loss of $4,789,388 in the previous year.

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

We did not earn any revenue from mining operations for the three-months ended September 30, 2021 and 2020.

Our net loss for the three-months ended September 30, 2021 was $1,913,746 compared to a net loss of $1,331,508 in the previous three-month period ended September 30, 2020.

The drivers of the increase in net loss of 44% are 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 March 31, 2021, exploration expenses were $590,245 compared to $1,068,021 in the prior year comparable period.

This represents a decrease of 45% or $477,776.

During the three-month period ended March 31, 2021, the Company continued with permitting activities with the State of Oregon and the BLM for its Grassy Mountain Project and began a technical review of its Sleeper Gold Project.

In the prior year comparable period the company incurred full period costs related to completing the feasibility study.

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

For the three-month period ended September 30, 2021 and 2020, exploration expenses were $1,256,805 and $636,027, repectively.

This represents an increase of 98% or $620,778.

The increase was primarily a result of, the Company continuing with permitting activities with the State of Oregon and the BLM for its Grassy Mountain Project.

Total exploration expenses at the Grassy Mountain Project during the current three-month period were $465,348.

For the three-month period ended March 31, 2021, land holding costs were $130,284 compared to $131,633 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 nine-month period ended March 31, 2021, exploration expenses were $2,100,760 compared to $3,335,221 in the prior year comparable period.

This represents a decrease of 37% or $1,234,461.

During the nine-month period ended March 31, 2021, 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 a revised consolidated permit application.

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 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 $1,449,690.

For the nine-month period ended March 31, 2021, land holding costs were $391,867 compared to $401,346 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.

S alaries and Benefits

For the three-month period ended March 31, 2021, salary and benefits increased by 21% or by $48,680 to $277,360 from the prior year’s three-month period ended March 31, 2020.

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

The increase primarily reflects higher stock-based compensation to management and staff that was recorded during the three-month period ended March 31, 2021 compared to the three-month period ended March 31, 2020.

Included in the salary and benefits expense amount for the three-month period ended March 31, 2021 and 2020 was a non-cash stock-based compensation of $60,470 and $23,361, respectively.

For the nine-month period ended March 31, 2021, salary and benefits increased by 50% or by $372,868 to $1,113,237 from the prior year’s nine-month period ended March 31, 2020.

The increase primarily reflects higher incentive cash compensation and stock-based compensation to management and staff that was recorded during the nine-month period ended March 31, 2021 compared to the nine-month period ended March 31, 2020.

Included in the salary and benefits expense amount for the nine-month period ended March 31, 2021 and 2020 was a non-cash stock-based compensation of $273,382 and $34,970, respectively.

The Company also commenced a drill program at the Frost Project.

Expenses incurred during the period ended September 30, 2021 for the drill program at the Frost Project were $456,215.

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

In the prior year comparable period the company focused its efforts on completing the feasibility study for the Grassy Mountain Project and incurred expenses related to reclamation activities its Sleeper Gold Project.

For the three-month period ended September 30, 2021 and 2020, land holding costs were $141,193 and $131,183, repectively.

The increase of land holding costs was primarily due to the acquisition of Bald Peak Property in Nevada.

Salaries and Benefits

For the three-month period ended September 30, 2021, salary and benefits decreased by 10% or by $25,192 to $230,749 from the prior year’s three-month period ended September 30, 2020.

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

The decrease primarily reflects lower stock-based compensation that was recorded during the three-month period ended September 30, 2021 compared to the three-month period ended September 30, 2020.

Included in the salary and benefits expense amount for the three-month period ended September 30, 2021 and 2020 was a non-cash stock-based compensation of $ 42,671 and $ 58,929 , respectively.

Directors’ Compensation

For the three-month period ended March 31, 2021, directors’ compensation increased by 41% or by $11,336 to $38,891 from the prior year’s three-month period ended March 31, 2020.

For the three-month period ended September 30, 2021, directors’ compensation decreased by 55% or by $17,105 to $13,837 from the three-month period ended September 30, 2020.

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

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

For the nine-month period March 31, 2021, directors’ compensation increased by 78% or by $50,503 to $115,002 from the prior year’s nine-month period ended March 31, 2020.

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 March 31, 2021, professional fees were $21,812 compared to $35,477 in the prior year’s comparable period.

This represents a decrease of 39% or $13,665.

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 March 31, 2021, general and administration expenses decreased by 19% to $130,615 from $160,868 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 nine-month period ended March 31, 2021, professional fees were $94,964 compared to $124,809 in the prior year’s comparable period.

This represents a decrease of 24%.

For the three-month period ended September 30, 2021 and 2020, professional fees were $44,963 and $44,452, respectively.

This represents a increase of 1% or $511.

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 nine-month period ended March 31, 2021, general and administration expenses decreased by 13% to $369,492 from $423,736 in the prior year comparable period.

For the three-month period ended September 30, 2021, general and administration expenses increased by 5% to $119,863 from $114,123 from the three-month period ended September 30, 2020.

The increase in general and administration expenses from the previous year’s comparable period was mainly due to an increase in travel related expenses.

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 March 31, 2021, we had cash and cash equivalents of $4,607,317 compared to $5,434,081 as at June 30, 2020.

At September 30, 2021, we had cash and cash equivalents of $3,659,067 compared to $3,113,064 as at June 30, 2021.

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 and nine-months ended March 31, 2021, the Company issued 1,897,863 and 2,625,644 shares for net proceeds of $2,238,270 and $3,135,626 under the program, respectively.

The main uses of cash for the nine-month period ended March 31, 2021 comprised of the following material amounts:

During the three-months ended September 30, 2021, the Company issued 2,202,352 shares for net proceeds of $1,829,551 under the program.

The main uses of cash for the three-month period ended September 30, 2021 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 $1,280,825

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

$0.5 million on corporate administration expenses (expenses include executive management and employee salaries, legal, audit, marketing and other general and administrative expenses)

$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) and approximately $0.09 million for the purchase of the South Sleeper claims

$0.8 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)

We anticipate our cash expenditures for the remainder of our fiscal year ending June 30, 2022 to be as follows:

$1.8 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 for the remainder of our fiscal year ending June 30, 2022 as follows:

$1.5 million on the Grassy Mountain Project state and federal permitting activities

$0.2 million on the Frost Project exploration programs

$1.0 million on the Sleeper Gold Project exploration programs

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

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Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation.

Management believes the Company’s critical accounting policies are those related to mineral property acquisition costs, exploration and development cost, stock-based compensation, derivative accounting and foreign currency translation.

Management believes the Company’s critical accounting policies are those related to mineral property acquisition costs, exploration and development cost, stock-based compensation, asset retirement obligations, derivative accounting and foreign currency translation.

Mineral property acquisition costs

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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 option 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.

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.

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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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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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