Business context and reporting period
Paramount Gold Nevada Corp. filed this Form 10-K for the fiscal year ended June 30, 2019. Although the request metadata refers to 2018 Q4, the filing covers fiscal 2019 and includes unaudited quarterly results for fiscal 2019 and 2018. Paramount is an exploration and development company with projects in Nevada and Oregon; it had no producing mines and no revenue from mining operations.
Key financial metrics
| Metric | FY 2019 | FY 2018 |
|---|---|---|
| Other income, not mining revenue | $400,388 | $344,632 |
| Total expenses | $6,388,132 | $6,429,352 |
| Net loss | $5,970,048 | $6,068,154 |
| Basic and diluted loss per share | $0.23 | $0.28 |
| Cash used in operating activities | $5,633,515 | $5,840,679 |
| Cash and cash equivalents at year-end | $463,690 | $297,389 |
Revenue and operating margins are not meaningful measures for the company’s exploration-stage business: the reported income was principally reclamation-cost reimbursements, not sales. At June 30, 2019, current assets were $812,461 and current liabilities were $1,077,597, implying a current ratio of about 0.75. Total liabilities were $1,945,987, primarily accounts payable and reclamation obligations; the balance sheet showed no interest-bearing debt at that date. Mineral properties were carried at $47.1 million, and total assets were $49.3 million.
Changes versus prior year and quarterly context
- Net loss narrowed by about 2%, while loss per share declined from $0.28 to $0.23; weighted-average shares increased from 21.6 million to 25.9 million.
- Exploration expense fell 16% to $3.56 million, mainly reflecting lower Grassy Mountain exploration spending. Land-holding costs rose 17% to $610,018; salaries and benefits rose 41% to $929,179, and professional fees increased to $186,852, including one-time permitting legal fees.
- Cash from operating activities improved by about $207,000. A $1.93 million net royalty-sale receipt and $3.87 million of financing and warrant-exercise proceeds helped fund operations; cash increased by $166,301 year over year.
- In fiscal 2019 Q4, the unaudited table reports $3,852 of revenue and a $2,307,419 net loss, compared with $236,824 of revenue and a $1,507,797 net loss in fiscal 2018 Q4.
Outlook, risks, and unusual items
- For fiscal 2020, management budgeted approximately $4 million for Grassy Mountain permitting, feasibility work, and Frost Project exploration; approximately $700,000 for Sleeper; and $1.7 million for corporate administration. Management stated further capital would be required to meet the anticipated cash budget.
- The company planned to advance Grassy Mountain permitting, submit a consolidated Oregon mining permit application and a Bureau of Land Management plan of operations, and have Ausenco complete a feasibility study. The filing does not provide a completed feasibility-study result.
- After year-end, Paramount agreed to issue convertible notes for stated proceeds of $5.34 million, with a four-year maturity, 7.5% annual interest, and conversion at $1.00 per share. The filing describes definitive agreements but does not clearly establish whether the financing had closed by the filing date.
- After year-end, Paramount issued Ausenco shares for feasibility-study services, held in escrow pending delivery. The filing gives inconsistent share counts: 1,109,225 in the operating highlights versus 1,096,791 in the subsequent-events disclosure.
- Key risks include continued operating losses and reliance on external financing; no proven or probable reserves and no completed feasibility studies at the time described; uncertainty in permitting, reclamation costs and mineral-property title; commodity-price volatility; and possible dilution from equity, warrants, options, or convertible notes.
- The Grassy Mountain PFS was preliminary and explicitly not a feasibility study. Its stated case estimated average annual output of 47,000 ounces of gold and 50,000 ounces of silver over seven years, with $110 million of life-of-mine capital needs; management cautioned that these estimates may not be realized.
Important facts for investors to verify
- Whether the post-year-end $5.34 million convertible-note financing closed, and its final terms and cash proceeds.
- Which Ausenco share count is correct, the valuation and timing of issuance, and whether the feasibility study was delivered.
- Current cash runway and the timing and terms of any additional capital raises needed to fund the fiscal 2020 plan.
- Progress, costs, and required approvals for Oregon and federal permitting, and the status and conclusions of the Grassy Mountain feasibility study.
- Support for the $47.1 million mineral-property carrying value, the project assumptions in the preliminary studies, and adequacy of reclamation funding and insurance.