Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are engaged in the business of acquiring, exploring and developing precious metal projects in the United States of America. Paramount owns both exploration and development stage projects in the states of Nevada and Oregon. We enhance the value of our projects by implementing exploration and engineering programs that are likely to expand and upgrade known mineral resources to mineral reserves. To further advance our projects towards the production decision, we manage the completion of the appropriate technical studies including feasibility studies and undertake permitting processes with the relevant local, state and federal regulators. The following discussion updates our outlook and plan of operations for the foreseeable future. It also analyzes our financial condition and summarizes the results of our operations for the years ended June 30, 2025 and 2024 and compares each year’s results to the results of the prior year.
Operating Highlights:
During the fiscal year-ended June 30, 2025, the Company continued with its permitting at its Grassy Mountain Project. Highlights include:
The State of Oregon's Technical Review Team ("TRT") approved the completion of the Environmental Evaluation (“EE”) for the Grassy Mountain project.
The TRT to approved all components of Paramount’s mining, processing and closure scenarios for its proposed Grassy Mountain operation. Paramount’s project design used the best available, practicable and necessary technologies (a standard known as “BAPNT”) to minimize environmental impact and ensure responsible extraction, processing and reclamation.
Grassy Mountain project was selected and included in the federal government's FAST-41 program. FAST-41 covered projects are entitled to comprehensive permitting timetables and transparent, collaborative management of those timetables on the Federal Permitting Dashboard.
Outlook:
We believe that investors will gain a better understanding of our company if they understand how we measure and talk about our results. As an exploration and development company, we recognize the importance of managing our liquidity and capital resources. We pay close attention to non-discretionary cash expenses and look for ways to minimize them when possible. We ensure we have sufficient cash on hand to meet our annual land holding costs as the maintenance of mining claims and leases are essential to preserve the value of our mineral property assets.
Comparison of Operating Results for the year ended June 30, 2025 as compared to June 30, 2024
Results of Operations
We did not earn any revenue from mining operations for the years ended June 30, 2025 and 2024. During the year ended June 30, 2025, we completed various activities and milestones as described above in operating highlights. Other normal course of business activities included filing annual mining claim fees with the BLM and reclamation work at the historical Sleeper mine site.
Net Loss
Our net loss for the year ended June 30, 2025 was $9,050,423 compared to a net loss of $8,056,445 in the previous year. The increase of approximately 12% is fully described below. We will continue to incur losses for the foreseeable future as we continue with our planned exploration and development programs.
Expenses
Exploration, Development and Reclamation and Land Holding Costs
For the year ended June 30, 2025, exploration and development expenses were $2,603,457 compared to $2,061,618 in the prior year. This represents an increase of 26% or $541,839 which was mainly due to the Company focusing on permitting activities at Grassy Mountain. Expenses related to our exploration or development activities are generally not comparable from period to period as activities will vary based on several factors. At Grassy Mountain, the Company continued with permitting activities with state and federal permitting agencies. Permitting activities at the state level resulted in the completion of the EE and the commencement of draft permit writing. At the federal level, activity accelerated in the second half as the BLM prepared to publish the draft EIS for the Grassy Mountain Project. These expenses totaled $2,339,283. At Sleeper, exploration activities included various activities including general site maintenance and activities to keep the mining claims in good standing. Total exploration expenses at Sleeper were $264,174.
For the year ended June 30, 2024, at Grassy Mountain the Company continued with permitting activities with state and federal permitting agencies. These expenses totaled $1,613,551. At Sleeper, the Company focused on general site maintenance and other activities to keep the mining claims in good standing incurring expenses of $448,067.
For the year ended June 30, 2025, reclamation expenses at the Sleeper Gold Project were $200,950 compared to $2,605,799 in the prior year. This represents a decrease of 92% or $2,404,849. A significant amount of these reclamation expenses in the previous year were related to the Company completing the conversion of several historical collection ponds at the past producing mine site to E-Cell conversion ponds.
For the year ended June 30, 2025, land holding costs increased by $95,622 or by 15% from the prior year of $647,497 to $743,119. The increase is primarily related to the increase in holding costs per claim enacted by the BLM commencing in September 2024.
Salaries and Benefits
For the year ended June 30, 2025, salary and benefits were $1,640,394 compared to $1,505,912 in the prior year. This represents an increase of 9% or $134,482. Salary and benefits are comprised of cash and stock-based compensation of the Company’s executive and corporate administration teams. The increase reflects lower cash bonuses netted against higher equity based compensation recorded in the current year compared to the previous comparable year. Included in the salary and benefits expense amount for the year ended June 30, 2025 and 2024 was non-cash stock based compensation of $387,052 and $168,471 respectively.
Directors’ Compensation
For the year ended June 30, 2025, directors’ compensation of $320,848 increased from $199,590 from the prior year ended June 30, 2024. The increase of 61% or $121,258 is due to higher equity based compensation recorded in the current year-ended June 30, 2025.
Professional Fees and General and Administration
For the year ended June 30, 2025, professional fees were $446,723 compared to $337,628 in the prior year. This represents an increase of 32% or $109,095. The increase was mainly due to consulting fees and legal fees incurred in the current period that were not incurred in the previous year comparable period. Professional fees included audit, legal, advisory and consultant expenses incurred on corporate and operational activities on a period-by-period basis.
For the year ended June 30, 2025, general and administration expenses increased by 11% to $774,615 from $696,210 in the prior year. The increase in general and administration expenses from the previous year’s comparable period was mainly due to higher insurance, travel and investor relations costs.
Asset Retirement Obligation
For the year ended June 30, 2025, the Company's asset retirement obligation for the Sleeper Gold Project increased to $2,293,765 from $2,270,288 from the prior year ended June 30, 2024. The net increase of $23,477 was the result of settlements of $120,000 plus
a downward revision in estimate of $81,936 offset by the current year accretion of $225,413. The settlements were a result of the Company completing annual monitoring requirements from the BLM and NDEP.
Liquidity and Capital Resources
Operating, Investing and Financing Activities
At June 30, 2025, we had cash and cash equivalents of $1,351,001 compared to $5,423,059 as at June 30, 2024. As of June 30, 2025, we had working capital of approximately $2,047,379. Our plans to manage our liquidity position is described below under Going Concern and Capital Resources.
In May 2024, the Company continued with an established “at the market” equity offering program (“ATM”) with Cantor Fitzgerald & Co. and A.G.P/Alliance Global Partners to proactively increase financial flexibility. During the fiscal year ended June 30, 2025, the Company issued 4,728,165 shares (2024 - 6,379,754 shares) for net proceeds of $2,356,709 (2024 - $1,923,120) under the program.
The main uses of cash were comprised of the following material amounts:
Cash used to fund our operations, which included general and administration expenses, land holding costs, exploration and development programs at our mineral properties, of $6,267,284.
In addition to cash used in operating activities, the Company used and received cash as follows:
Cash used to purchase mining claims and equipment of $161,483;
Cash received from equity financings of $2,356,709.
Going Concern and Capital Resources
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.
We anticipate our twelve-month cash expenditures for our fiscal year ending June 30, 2026 to be as follows:
$2.7 million on corporate, land claim maintenance and general expenses
For discretionary exploration and development, subject to available cash on hand and additional share issuances, we are budgeting the following amounts:
$2.0 million to complete the state and federal permitting process at the Grassy Mountain Project
For the planned reclamation activities required by state and federal regulators at Sleeper, the Company expects that these expenditures will be reimbursed by insurance proceeds. For any interest that accrues and is owing on the outstanding Debenture, the Company expects to elect to pay the quarterly interest payment in shares of its Common Stock.
Subsequent to September 25, 2025, the Company expects to fund operations as follows:
Existing cash on hand and working capital.
The existing ATM with Cantor Fitzgerald & Co. and A.G.P/Alliance Global Partners.
Insurance proceeds to fund reclamation and environmental obligations at its Sleeper Gold Project.
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 our mineral properties, no assurance can be given that additional financing will be available to it in amounts sufficient to meet our 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. In considering our financing plans, our current working capital position and our ability to reduce operating expenses 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.
Critical Accounting Policies and Estimates
Management considers the following policies to be most critical in understanding the judgments that are involved in preparing the Company’s consolidated financial statements and the uncertainties that could impact the results of operations, financial condition and cash flows. Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. Management believes the Company’s critical accounting policies are those related to mineral property acquisition costs, exploration and development costs and debt and derivative liability accounting.
Estimates
The Company prepares its consolidated financial statements and notes in conformity to United States Generally Accepted Accounting Principles (“U.S. GAAP”) and requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, including those related to the adequacy of the Company’s reclamation and environmental obligation, and assessment of impairment of mineral properties. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Mineral property acquisition costs
The Company capitalizes the cost of acquiring mineral properties and will amortize these costs over the useful life of a property following the commencement of production or expense these costs if it is determined that the mineral property has no future economic value or the properties are sold or abandoned. Costs include cash consideration and the fair market value of shares issued on the acquisition of mineral properties. Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are recorded in the accounts of the specific mineral property at the time the payments are made.
The amounts recorded as mineral properties reflect actual costs incurred to acquire the properties.
Asset Retirement Obligation
The fair value of the Company’s asset retirement obligation (“ARO”) is measured by discounting the expected cash flows using a discount factor that reflects the credit-adjusted risk free rate of interest, while taking into account the inflation rate. The Company prepares estimates of the timing and amounts of expected cash flows and ongoing reclamation expenditures are charged against the ARO as incurred to the extent they relate to the ARO. Significant judgments and estimates are made when estimating the fair value of ARO.
Convertible debt and derivative liabilities
We account for the royalty convertible debenture in accordance with Accounting Standards Codification ("ASC") 815, Derivatives and Hedging. The embedded conversion features are assessed to determine whether they meet the criteria for separate accounting as derivatives. If so, they are bifurcated and recorded at fair value with changes in fair value recognized in our Statement of Operations and the remaining value allocated to the royalty convertible debenture net the unamortized debt issuance costs. The determination of fair value involves the use of estimates, assumptions, and valuation models, including but not limited to discounted cash flow analysis and option pricing models. These estimates and assumptions may include, but are not limited to, future interest rates, volatility of gold and silver prices, and credit spreads and changes in these inputs could result in significant adjustments to the fair value of our derivatives and may impact our financial results.
Off-Balance Sheet Arrangements
We are not currently a party to, or otherwise involved with, any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, or capital resources.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk.
Foreign Currency Exchange Rate Risk
The Company holds cash balances in both U.S. and Canadian dollars. We transact most of our business in U.S. dollars. We do not manage our foreign currency exchange rate risk through the use of financial or derivative instruments, forward contracts or hedging activities.
In general, the strengthening of the U.S. dollar will positively impact our expenses transacted in Canadian dollars. Conversely, any weakening of the U.S. dollar will increase our expenses transacted in Canadian dollars. We do not believe that any weakening of the U.S. dollar as compared to the Canadian dollar will have an adverse material effect on our operations.
Interest Rate Risk
The Company’s investment policy for its cash and cash equivalents is focused on the preservation of capital and supporting the liquidity requirements of the Company. The Company’s interest earned on its cash balances is impacted on the fluctuations of U.S. interest rates. We do not use interest rate derivative instruments to manage exposure to interest rate changes. We do not believe that interest rate fluctuations will have any material effect on our operations.
Item 8. Financial Statemen ts and Supplementary Data.
Our financial statements, accompanying notes and Report of Independent Registered Public Accounting Firm are included in this Annual Report on Form 10-K beginning on page F-1, which are incorporated in this Item 8 by reference.
