Paramount Gold Nevada Corp. — Form 10-Q Summary
Reporting period: Three and nine months ended March 31, 2018, the third quarter and first nine months of fiscal 2018. The request metadata identifies “2017 Q3,” but the filing covers fiscal 2018 Q3.
Business context
Paramount is an exploration and development company with precious-metal projects in Nevada and Oregon. It reported no revenue from mining operations; its projects had no established proven and probable reserves, and exploration costs were expensed as incurred.
Financial performance and position
| Metric | Three months ended March 31, 2018 | Nine months ended March 31, 2018 |
|---|---|---|
| Other income (total revenue) | $22,260 | $107,807 |
| Total expenses | $1,687,771 | $4,679,125 |
| Net loss | $1,658,748 | $4,560,357 |
| Loss per share, basic and diluted | $0.07 | $0.22 |
| Cash used in operating activities | $4,921,771 for the nine-month period |
At March 31, 2018, cash and cash equivalents were $1.414 million, down from $1.911 million at June 30, 2017. Current assets were $1.733 million and current liabilities were $796,184. Total liabilities were $1.932 million, principally reclamation obligations; the balance sheet reports no borrowings. Mineral properties totaled $48.860 million. The filing reports $1.999 million in a reclamation commutation account.
Changes versus prior comparable periods
- Quarterly net loss increased to $1.659 million from $1.424 million. Nine-month pretax loss was $4.560 million versus $4.511 million.
- Prior-year nine-month net loss was $1.296 million, materially reduced by a $3.215 million deferred tax recovery related to the Calico acquisition; there was no comparable recovery in 2018.
- Nine-month operating cash use increased to $4.922 million from $3.962 million. Investing cash use was $2.4 million for Grassy Mountain land and royalty rights, while financing provided $6.825 million.
- In October 2017, the company issued 5.295 million shares through a public offering and private placement for approximately $7.4 million gross proceeds. Shares outstanding rose from 17.780 million at June 30, 2017 to 23.075 million at March 31, 2018.
- Grassy Mountain mineral-property carrying value increased by $2.4 million after the company paid to reduce the net smelter royalty from 6% to 1.5% and acquire private land rights.
Outlook, commentary and risks
- For the remainder of fiscal 2018, management anticipated spending approximately $0.4 million on corporate administration, $0.04 million on Sleeper, and $0.5 million on Grassy Mountain. It expected to fund spending with cash on hand and further capital resources.
- Management expected to complete a NI 43-101 preliminary feasibility study for Grassy Mountain in the fiscal third quarter and submit a consolidated Oregon mining permit application in the second half of calendar 2018. The filing describes these as plans, not assured outcomes.
- The company completed a 30-hole Grassy Mountain drill program, advanced feasibility-study and water-monitoring work, filed a federal Plan of Operations, and received approval for four environmental baseline studies.
- Management expects continued losses and warns that inability to obtain additional capital would significantly adversely affect exploration and development. Project advancement also depends on permitting and on establishing economically recoverable reserves.
- Reclamation costs are estimated at $3.835 million undiscounted for existing Sleeper disturbances; the recorded obligation was $1.272 million. The company’s insurance policy provides up to $25 million of reclamation coverage if its bond is insufficient, subject to policy terms.
- Cash balances included $1.1 million above federally insured limits. Management reported effective disclosure controls and no material change in internal control; it disclosed no material changes to previously reported risk factors.
Key facts for investors to verify
- Whether the planned feasibility study and Oregon permit application were completed on schedule, and their findings and permitting status.
- Cash requirements, subsequent financing, dilution, and whether available capital is sufficient to advance Grassy Mountain and maintain the projects.
- Drill results, resource and reserve status, and the assumptions and economics underlying any feasibility study.
- Reclamation obligations, adequacy and terms of the bond and insurance, and the status of environmental reviews.
- The filing’s period is March 31, 2018; confirm this resolves the “2017 Q3” request metadata discrepancy.