Paramount Gold Nevada Corp. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2017 (fiscal first quarter). The interim financial statements are unaudited. Paramount is an exploration and development company with projects in Nevada and Oregon; it reported no revenue from mining operations.
Financial results and position
| Metric | Quarter ended September 30, 2017 | Comparable 2016 quarter |
|---|---|---|
| Other income / total revenue | $85,548 | $5,306 |
| Total expenses | $1,170,135 | $1,270,320 |
| Pre-tax loss | $1,082,719 | $1,261,922 |
| Net result | $1,082,719 loss | $1,953,496 income |
| Operating cash flow | $1,819,193 used | $1,159,935 used |
The prior-year net income reflects a $3,215,418 deferred tax recovery related to the Calico acquisition; excluding that unusual tax benefit, the prior quarter also had a pre-tax loss. Basic and diluted loss per share in 2017 were both $0.06, versus reported income per share of $0.13 in 2016.
At September 30, 2017, cash and cash equivalents were $91,977, down from $1,911,170 at June 30. Current assets were $929,124 against current liabilities of $919,730. Total assets were $49.5 million, including $46.5 million in capitalized mineral properties. Total liabilities were $2.0 million; no borrowings or other debt are reported. The reclamation and environmental obligation was $1,298,718, including $216,101 current. The company reported a $2,090,378 reclamation commutation account and insurance coverage for reclamation costs up to $25 million, subject to policy terms.
Exploration expense rose 20% to $646,912, primarily for Grassy Mountain work; land-holding costs rose 4% to $161,112. Salaries and benefits declined 46% to $142,921, and general and administrative expense declined 20% to $113,602. The reported $85,548 of other income included $80,145 in reclamation-cost reimbursement and $5,403 from leasing water rights.
Material developments and outlook
- Paramount completed a 30-hole drilling program at Grassy Mountain, commenced deep monitoring-well drilling, and filed a mine Plan of Operations with the Bureau of Land Management, initiating the path toward federal environmental review.
- After quarter-end, the company closed a public offering of 3,520,000 shares and a private placement of 1,775,000 shares, both at $1.40 per share, for approximately $7.4 million in aggregate gross proceeds. The filing reports 23,074,954 shares outstanding as of November 3, 2017, compared with 17,779,954 at quarter-end.
- For the remainder of fiscal 2018, management estimated spending of $1.3 million on corporate administration, $0.3 million on Sleeper, and $3.3 million on Grassy Mountain. The filing said expected expenditures would be funded from cash on hand, including the subsequent financing, and cautioned that failure to obtain further capital could significantly affect exploration and development.
- Management expected to complete a NI 43-101 pre-feasibility study for Grassy Mountain by the fiscal third quarter and submit a consolidated Oregon mining-permit application in the first half of 2018. Sleeper activity was expected to focus on reclamation and claim management. No production, revenue, or specific financial guidance was provided.
- The company stated that it had not established proven and probable reserves or commercial feasibility for its prospects, and expected losses to continue. It reported no material changes to the risk factors in its fiscal 2017 Form 10-K. Disclosure controls were assessed as effective, with no material change in internal control reported.
Important facts for investors to verify
- Post-offering cash balance, net proceeds after offering costs, and whether available funding covers planned spending and ongoing claim-maintenance costs.
- Progress, costs, results, and timing for the Grassy Mountain pre-feasibility study, environmental review, monitoring wells, and state permitting.
- Whether exploration and engineering results support economically recoverable reserves; mineral-property carrying values are acquisition costs and do not establish economic value.
- Reclamation obligations, commutation-account availability, and the scope and conditions of the insurance coverage.
- Potential dilution from the new shares and outstanding warrants and options.