10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Small reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-36908

PARAMOUNT GOLD NEVADA CORP.

(Exact name of registrant as specified in its charter)


Nevada	98-0138393
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

665 Anderson Street Winnemucca, NV	89445
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (775) 625-3600

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s Common Stock outstanding, $0.01 par value per share, as of November 6, 2023 was 58,999,994.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 Par Value Per Share

PZG

NYSE American

Table of Contents


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Condensed Consolidated Interim Balance Sheets as of September 30, 2023 (Unaudited) and June 30, 2023	2
	Condensed Consolidated Interim Statements of Operations for the Three Months Ended September 30, 2023 and September 30, 2022 (Unaudited)	3
	Condensed Consolidated Interim Statements of Stockholders’ Equity for the Three Months Ended September 30, 2023 (Unaudited) and Three Months Ended September 30, 2022	4
	Condensed Consolidated Interim Statement of Cash Flows for Three Months Ended September 30, 2023 and September 30, 2022 (Unaudited)	5
	Notes to Condensed Consolidated Interim Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	19

PART II	OTHER INFORMATION
Item 1A.	Risk Factors	20
Item 4.	Mine Safety Disclosures	20
Item 6.	Exhibits	21

Signatures	Directors, Executive Officers and Corporate Governance	22

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

PARAMOUNT GOLD NEVADA CORP.

Condensed Consolidated Interim Balance Sheets

(Unaudited)



	September 30, 2023			June 30, 2023
Assets
Current Assets
Cash and cash equivalents	$	1,014,128		$	824,920
Prepaid expenses and deposits		1,487,859			1,472,286
Total Current Assets		2,501,987			2,297,206
Non-Current Assets
Mineral properties		51,458,261			51,458,261
Reclamation bonds		546,176			546,176
Property and equipment		4,237			4,579
Total Non-Current Assets		52,008,674			52,009,016
Total Assets	$	54,510,661		$	54,306,222
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
Accounts payable and accrued liabilities	$	1,877,402		$	937,219
Reclamation and environmental obligation, current portion		2,560,515			2,560,515
Convertible debt		3,511,327			3,614,465
Convertible debt, related parties		658,363			658,363
Notes payable, related party		1,624,767			1,579,397
Total Current Liabilities		10,232,374			9,349,959
Non-Current Liabilities
Deferred tax liability		240,043			240,043
Reclamation and environmental obligation, non-current portion		1,956,946			1,876,387
Total Non-Current Liabilities		2,196,989			2,116,430
Total Liabilities		12,429,363			11,466,389
Commitments and Contingencies (Note 12)
Stockholders' Equity
Common stock, par value $0.01, 200,000,000 authorized shares, 58,880,646 issued and outstanding at September 30, 2023 and 200,000,000 authorized shares, 54,812,248 issued and outstanding at June 30, 2023		588,808			548,124
Additional paid in capital		117,888,444			116,613,503
Accumulated deficit		(76,395,954	)		(74,321,794	)
Total Stockholders' Equity		42,081,298			42,839,833
Total Liabilities and Stockholders' Equity	$	54,510,661		$	54,306,222

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PARAMOUNT GOLD NEVADA CORP.

Condensed Consolidated Interim Statements of Operations

(Unaudited)


	Three Months Ended September 30,
	2023			2022

Expenses
Exploration	$	1,259,793		$	839,594
Land holding costs		157,143			161,055
Professional fees		55,252			133,328
Salaries and benefits		279,596			307,374
Directors' compensation		29,033			35,341
General and administrative		133,632			159,174
Accretion		110,559			111,561
Total Expenses		2,025,008			1,747,427
Net Loss Before Other Expense		2,025,008			1,747,427
Other Expense (Income)
Other income		(85,682	)		(5,975	)
Interest and service charges		134,834			98,764
Net Loss	$	2,074,160		$	1,840,216

Loss per Common Share
Basic and diluted	$	0.04		$	0.04

Weighted Average Number of Common
Shares Used in Per Share Calculations
Basic and diluted		56,299,468			46,928,668

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PARAMOUNT GOLD NEVADA CORP.

Condensed Consolidated Interim Statements of Stockholders’ Equity

(Unaudited)


	Shares (#)		Common Stock		Additional Paid-In Capital		Deficit			Total Stockholders' Equity
Balance at June 30, 2023		54,812,248	$	548,124	$	116,613,503	$	(74,321,794	)	$	42,839,833
Stock based compensation		—		—		66,684		—			66,684
Capital issued for financing		3,515,257		35,153		1,053,375		—			1,088,528
Capital issued for payment of interest		553,141		5,531		154,882		—			160,413
Net loss		—		—		—		(2,074,160	)		(2,074,160	)
Balance at September 30, 2023		58,880,646	$	588,808	$	117,888,444	$	(76,395,954	)	$	42,081,298


	Shares (#)		Common Stock		Additional Paid-In Capital		Deficit			Total Stockholders' Equity
Balance at June 30, 2022		46,591,081	$	465,912	$	113,805,101	$	(67,871,263	)	$	46,399,750
Stock based compensation		—		—		117,826		—			117,826
Capital issued for payment of interest		341,297		3,413		157,000		—			160,413
Net loss		—		—		—		(1,840,216	)		(1,840,216	)
Balance at September 30, 2022		46,932,378	$	469,325	$	114,079,927	$	(69,711,479	)	$	44,837,773

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PARAMOUNT GOLD NEVADA CORP.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)


	Three Months Ended September 30,
	2023			2022
Net Loss	$	(2,074,160	)	$	(1,840,216	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		342			486
Stock based compensation		66,684			117,826
Amortization of debt issuance costs		4,862			15,201
Interest expense		127,359			81,989
Accretion expense		110,559			111,561
Settlement of asset retirement obligations		(30,000	)		(30,000	)
Effect of changes in operating working capital items:
(Increase)/Decrease in prepaid expenses		(15,573	)		397,850
Increase/(Decrease) in accounts payable		910,607			(67,403	)
Cash used in operating activities		(899,320	)		(1,212,706	)
Cash flows from investing activities:
Cash used in investing activities		—			—
Cash flows from financing activities
Capital issued for financing, net of share issuance costs		1,088,528			—
Cash provided by financing activities		1,088,528			—

Change in cash during period		189,208			(1,212,706	)
Cash at beginning of period		824,920			2,484,156
Cash at end of period	$	1,014,128		$	1,271,450

See Note 4 for supplemental cash flow information

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PARAMOUNT GOLD NEVADA CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the Three Months Period Ended September 30, 2023 and 2022

(Unaudited)

Note 1. Description of Business and Summary of Significant Accounting Policies

Paramount Gold Nevada Corp. (the “Company” or “Paramount”), incorporated under Chapter 78 of Nevada Revised Statutes, and its wholly-owned subsidiaries are engaged in the acquisition, exploration and development of precious metal properties. The Company’s wholly owned subsidiaries include New Sleeper Gold LLC, Sleeper Mining Company, LLC, and Calico Resources USA Corp (“Calico”). The Company is in the process of exploring its mineral properties in Nevada and Oregon, United States. The Company’s activities are subject to significant risks and uncertainties, including the risk of failing to secure additional funding to advance its projects and the risks of determining whether these properties contain reserves that are economically recoverable. The Company’s shares of common stock trade on the NYSE American LLC under the symbol “PZG”.

Basis of Presentation and Preparation

The unaudited condensed consolidated interim financial statements are prepared by management in accordance with accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included.

The condensed consolidated interim financial statements have been prepared on an accrual basis of accounting, in conformity with U.S. GAAP, are presented in US dollars and follow the same accounting policies and methods of their application as the most recent annual financial statements. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and related footnotes for the year ended June 30, 2023.

Significant Accounting Policies

Please see Note 1- Description of Business and Summary of Significant Accounting Policies contained in the 2023 10-K.

Note 2. Going Concern

The Company has not generated any revenues or cash flows from operations to date. As such the Company is subject to all the risks associated with development stage companies. Since inception, the Company has incurred losses and negative cash flows from operating activities which have been funded from the issuance of common stock, convertible notes, note payable and the sale of royalties on its mineral properties. The Company does not expect to generate positive cash flows from operating activities in the near future, if at all, until such time it successfully initiates production at its Grassy Mountain Project, including obtaining construction financing, completing the construction of the proposed mine and anticipates incurring operating losses for the foreseeable future.

The Consolidated Financial Statements of the Company have been prepared on a “going concern” basis, which means that the continuation of the Company is presumed even though events and conditions exist that, when considered in aggregate, raise substantial doubt about the Company’s ability to continue as a going concern because it is possible that the Company will be required to adversely change its current business plan or may be unable to meet its obligations as they become due within one year after the date that these financial statements were issued.

Paramount expects to continue to incur losses as a result of costs and expenses related to maintaining its properties and general and administrative expenses. Since 2015, the Company has relied on equity financings, debt financings and sale of royalties to fund its operations and the Company expects to rely on these forms of financing to fund operations into the near future. The Company will also continue to identify ways to reduce its cash expenditures.

Paramount’s current business plan requires working capital to fund non-discretionary expenditures for its exploration and development activities on its mineral properties, mineral property holding costs and general and administrative expenses. It also requires approximately $6.0 million in capital to repay the 2019 convertible notes and the note payable to Seabridge, which become due in September 2024 and November 2023, respectively. It also requires approximately $2.6 million to complete evaporation pond conversions as part of its reclamation and environmental obligations at its Sleeper Gold Project.

Subsequent to November 9, 2023, the Company expects to fund operations as follows:

•

Existing cash on hand and working capital.

•

The existing ATM with Cantor Fitzgerald & Co. and Canaccord Genuity LLC.

•

Insurance proceeds to fund reclamation and environmental obligations at its Sleeper Gold Project.

•

Other debt, equity financings and sale of royalties.

Historically, we have been successful in accessing capital through equity and debt financing arrangements or by the sale of royalties on its mineral properties, no assurance can be given that additional financing will be available to it in amounts sufficient to meet its needs, or on terms acceptable to the Company. In the event that we are unable to obtain additional capital or financing, our operations, exploration and development activities will be significantly adversely affected. The continuation of the Company as a going concern is dependent on having sufficient capital to maintain our operations and to repay debt which become due in November 2023 and September 2024. In considering our financing plans and our current working capital position the Company believes there is substantial doubt about its ability to continue as a going concern twelve months after the date that our financial statements are issued.

Note 3. Fair Value Measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described below:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 Inputs that are both significant to the fair value measurement and unobservable.

Financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Our financial instruments include cash, accounts payable, accrued liabilities, notes payable and convertible debt. Due to their short maturity of our cash, accounts payable, notes payable and accrued liabilities, we believe that their carrying amounts approximate fair value as of September 30, 2023 and 2022. The carrying amount of convertible debt approximates fair value as the interest rate charged represents a market rate of interest.

Note 4. Non-Cash Transactions

For the three months ended September 30, 2023, the Company issued 553,141 shares of common stock for payment of interest accrued on its outstanding 2019 Convertible Notes with a fair value of $160,413.

For the three months ended September 30, 2022, the Company issued 341,297 shares of common stock for payment of interest accrued on its outstanding 2019 Convertible Notes with a fair value of $160,413.

SEC Form 10-Q filed by Paramount Gold Nevada Corp.