Paramount Gold Nevada Corp. — Form 10-Q Summary
Business context and reporting period. This filing covers the quarter and six months ended December 31, 2021, Paramount’s fiscal second quarter and first half of fiscal 2022. The company explores and develops precious-metal projects in Nevada and Oregon and reported no mining revenue. Results are unaudited.
Key financial metrics
| Metric | Three months ended Dec. 31, 2021 | Six months ended Dec. 31, 2021 | Comparable 2020 period |
|---|---|---|---|
| Other income | $0 | $116,299 | $185,852 quarter; $254,800 half-year |
| Exploration expense | $1,907,861 | $3,164,668 | $874,488 quarter; $1,510,515 half-year |
| Total expenses | $2,601,093 | $4,529,362 | $1,848,720 quarter; $3,126,719 half-year |
| Net loss | $2,702,425 | $4,616,170 | $1,774,899 quarter; $3,106,407 half-year |
| Loss per share, basic and diluted | $0.07 | $0.12 | $0.05 quarter; $0.09 half-year |
| Cash used in operating activities | $3,547,715 for the six months | $2,833,344 for the six months |
As of December 31, 2021, cash and equivalents were $1,441,101, down from $3,113,064 at June 30, 2021. Current assets were $2,112,726 and current liabilities were $1,168,865, implying working capital of about $943,861. Total assets were $51,863,557; total liabilities were $6,980,329. Convertible debt had a carrying value of $4,191,904, with $4,277,690 principal due in 2023. The notes bear 7.5% interest and are secured by company assets. The company reported compliance with the notes’ $250,000 working-capital covenant.
There was no operating revenue, so operating margins are not meaningful. Mineral properties totaled $49,242,704. The filing provides no production-based profitability measures.
Changes versus the prior comparable period
- Net loss increased 52% for the quarter and 49% for the six-month period, primarily as exploration activity increased.
- Six-month exploration expense more than doubled to $3,164,668, with higher spending at Grassy Mountain and Frost and additional work at Sleeper and Bald Peak.
- Cash used in operations rose to $3,547,715 from $2,833,344. The company raised $1,898,475 net through its at-the-market equity offering during the six months.
- Shares outstanding increased to 40,623,857 from 38,154,109 at June 30, 2021.
Outlook, commentary, and risks
- The company expects to continue incurring losses while it advances exploration and development; it generates no cash flow from mining operations.
- For the remainder of fiscal 2022, management budgeted $1.1 million for corporate and general expenses, plus $1.5 million for Grassy Mountain permitting and $0.3 million for a Sleeper technical report. Discretionary program spending depends on available cash and additional share issuances.
- Grassy Mountain: modified state and federal permit applications were submitted. Management expected continued regulator review; completeness would trigger further state environmental review and the federal NEPA process, including an Environmental Impact Statement.
- Sleeper: a drill program began, with results and a technical and economic analysis expected to inform project evaluation. The company also reported positive geotechnical drill results at Grassy Mountain, a completed Frost reverse-circulation drill program, and surface sampling and geophysical work at Bald Peak.
- Management cautioned that additional capital may be needed and that inability to obtain financing could significantly impair exploration and development. The company has not established proven or probable reserves; mineral-property carrying values do not establish economic recoverability.
- Reclamation obligations had a recorded balance of $1,909,832. Estimated undiscounted costs include $3,557,944 for BLM requirements and $1,470,000 for NDEP requirements; estimates and timing may change.
- Management said COVID-19 had not materially affected the business to date, but future effects remained uncertain. No material risk-factor changes from the latest 10-K were reported. Disclosure controls were assessed as effective.
- After quarter-end, the company issued 235,894 shares to pay accrued note interest and sold 2,919,045 ATM shares for approximately $2,043,332 gross proceeds.
Important facts for investors to verify
- Confirm the company’s available funding and expected cash runway against its planned exploration, permitting, and corporate spending.
- Track regulatory progress and timing for Grassy Mountain, including whether applications are deemed complete and the subsequent environmental review milestones.
- Review drill results and updated technical or economic analyses for Sleeper, Grassy Mountain, Frost, and Bald Peak; no reserves are established in the filing.
- Assess dilution from ATM sales and the terms, maturity, security, interest, and covenant requirements of the 2019 convertible notes.
- Reconcile the MD&A’s stated aggregate operating cash use of $3,567,715 with the cash-flow statement’s $3,547,715 for the six months ended December 31, 2021.