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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 December 31, 2022

OR

☐ 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.

Large accelerated filer |  | ☐ |  | Accelerated filer |  | ☐
Non-accelerated filer |  | ☒ |  | Small reporting company |  | ☒
|  |  |  | Emerging growth company |  | ☐

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 February 8, 2023 was 48,329,360.

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 December 31, 2022 (Unaudited) and June 30, 2022 |  | 2
|  | Condensed Consolidated Interim Statements of Operations for the Three-Months and Six-Months Ended December 31, 2022 and December 31, 2021(Unaudited) |  | 3
|  | Condensed Consolidated Interim Statements of Stockholders’ Equity for the Six-Months Ended December 31, 2022 (Unaudited) and Year ended June 30, 2022 |  | 4
|  | Condensed Consolidated Interim Statement of Cash Flows for Six-Months Ended December 31, 2022 and December 31, 2021 (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 |  | 19
Item 4. |  | Controls and Procedures |  | 20
PART II |  | OTHER INFORMATION |  |
Item 1A. |  | Risk Factors |  | 21
Item 4. |  | Mine Safety Disclosures |  | 21
Item 6. |  | Exhibits |  | 22
Signatures |  | Directors, Executive Officers and Corporate Governance |  | 23

i

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

PARAMOUNT GOLD NEVADA CORP.

Condensed Consolidated Interim Balance Sheets

(Unaudited)

|  | December 31, 2022 |  |  | June 30, 2022 |
Assets |  |  |  |  |  |
Current Assets |  |  |  |  |  |
Cash and cash equivalents |  | $ | 1,311,359 |  |  | $ | 2,484,156 |
Prepaid expenses and deposits |  |  | 677,796 |  |  |  | 1,280,895 |
Total Current Assets |  |  | 1,989,155 |  |  |  | 3,765,051 |
Non-Current Assets |  |  |  |  |  |
Mineral properties |  |  | 51,772,873 |  |  |  | 51,742,873 |
Reclamation bond |  |  | 499,476 |  |  |  | 498,276 |
Property and equipment |  |  | 5,540 |  |  |  | 6,513 |
Total Non-Current Assets |  |  | 52,277,889 |  |  |  | 52,247,662 |
Total Assets |  | $ | 54,267,044 |  |  | $ | 56,012,713 |
Liabilities and Stockholders' Equity |  |  |  |  |  |
Liabilities |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 467,075 |  |  | $ | 638,256 |
Reclamation and environmental obligation, current portion |  |  | 120,000 |  |  |  | 120,000 |
Convertible debt |  |  | 3,596,142 |  |  |  | — |
Convertible debt, related parties |  |  | 656,070 |  |  |  | — |
Notes payable, related parties |  |  | 1,004,932 |  |  |  | — |
Total Current Liabilities |  |  | 5,844,219 |  |  |  | 758,256 |
Non-Current Liabilities |  |  |  |  |  |
Convertible debt |  |  | — |  |  |  | 3,570,430 |
Convertible debt, related parties |  |  | — |  |  |  | 651,380 |
Deferred tax liability |  |  | 277,627 |  |  |  | 277,627 |
Reclamation and environmental obligation, non-current portion |  |  | 4,518,392 |  |  |  | 4,355,270 |
Total Non-Current Liabilities |  |  | 4,796,019 |  |  |  | 8,854,707 |
Total Liabilities |  |  | 10,640,238 |  |  |  | 9,612,963 |
Commitments and Contingencies (Note 12) |  |  |  |  |  |
Stockholders' Equity |  |  |  |  |  |
Common stock, par value $0.01, 200,000,000 authorized shares, 47,387,477 issued and outstanding at December 31, 2022 and 200,000,000 authorized shares, 46,591,081 issued and outstanding at June 30, 2022 |  |  | 473,876 |  |  |  | 465,912 |
Additional paid in capital |  |  | 114,296,894 |  |  |  | 113,805,101 |
Deficit |  |  | (71,143,964 | ) |  |  | (67,871,263 | )
Total Stockholders' Equity |  |  | 43,626,806 |  |  |  | 46,399,750 |
Total Liabilities and Stockholders' Equity |  | $ | 54,267,044 |  |  | $ | 56,012,713 |

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

2

PARAMOUNT GOLD NEVADA CORP.

Condensed Consolidated Interim Statements of Operations

(Unaudited)

|  | Three Months Ended December 31, |  |  | Six Months Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |
Exploration |  |  | 465,402 |  |  |  | 1,907,861 |  |  |  | 1,304,997 |  |  |  | 3,164,668 |
Land holding costs |  |  | 157,143 |  |  |  | 173,134 |  |  |  | 318,199 |  |  |  | 314,327 |
Professional fees |  |  | 135,295 |  |  |  | 21,050 |  |  |  | 268,622 |  |  |  | 66,014 |
Salaries and benefits |  |  | 260,920 |  |  |  | 216,063 |  |  |  | 568,294 |  |  |  | 463,478 |
Directors' compensation |  |  | 23,233 |  |  |  | 19,281 |  |  |  | 58,574 |  |  |  | 33,118 |
General and administrative |  |  | 214,365 |  |  |  | 217,735 |  |  |  | 373,539 |  |  |  | 395,819 |
Accretion |  |  | 111,561 |  |  |  | 45,969 |  |  |  | 223,122 |  |  |  | 91,938 |
Total Expenses |  |  | 1,367,919 |  |  |  | 2,601,093 |  |  |  | 3,115,347 |  |  |  | 4,529,362 |
Net Loss before Other Expense |  |  | 1,367,919 |  |  |  | 2,601,093 |  |  |  | 3,115,347 |  |  |  | 4,529,362 |
Other Expense (Income) |  |  |  |  |  |  |  |  |  |  |  |
Other income |  |  | (40,308 | ) |  |  | — |  |  |  | (46,283 | ) |  |  | (116,299 | )
Interest and service charges |  |  | 104,874 |  |  |  | 101,332 |  |  |  | 203,637 |  |  |  | 203,107 |
Net Loss |  | $ | 1,432,485 |  |  | $ | 2,702,425 |  |  | $ | 3,272,701 |  |  | $ | 4,616,170 |
Loss per Common Share |  |  |  |  |  |  |  |  |  |  |  |
Basic and diluted |  | $ | 0.03 |  |  | $ | 0.07 |  |  | $ | 0.07 |  |  | $ | 0.12 |
Weighted Average Number of Common |  |  |  |  |  |  |  |  |  |  |  |
Shares Used in Per Share Calculations |  |  |  |  |  |  |  |  |  |  |  |
Basic and diluted |  |  | 47,014,116 |  |  |  | 40,540,887 |  |  |  | 46,971,392 |  |  |  | 39,649,929 |

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

3

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, 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 |
Stock based compensation |  |  | — |  |  |  | — |  |  |  | 63,005 |  |  |  | — |  |  |  | 63,005 |
Capital issued for financing |  |  | 455,099 |  |  |  | 4,551 |  |  |  | 153,962 |  |  |  | — |  |  |  | 158,513 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,432,485 | ) |  |  | (1,432,485 | )
Balance at December 31, 2022 |  |  | 47,387,477 |  |  | $ | 473,876 |  |  | $ | 114,296,894 |  |  | $ | (71,143,964 | ) |  | $ | 43,626,806 |

|  | Shares (#) |  |  | Common Stock |  |  | Additional Paid-In Capital |  |  | Deficit |  |  | Total Stockholders' Equity |
Balance at June 30, 2021 |  |  | 38,154,109 |  |  | $ | 381,542 |  |  | $ | 107,005,135 |  |  | $ | (60,033,947 | ) |  | $ | 47,352,730 |
Stock based compensation |  |  | — |  |  |  | — |  |  |  | 42,671 |  |  |  | — |  |  |  | 42,671 |
Capital issued for financing |  |  | 2,202,352 |  |  |  | 22,024 |  |  |  | 1,807,527 |  |  |  | — |  |  |  | 1,829,551 |
Capital issued for payment of interest |  |  | 168,690 |  |  |  | 1,687 |  |  |  | 161,955 |  |  |  | — |  |  |  | 163,642 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,913,745 | ) |  |  | (1,913,745 | )
Balance at September 30, 2021 |  |  | 40,525,151 |  |  |  | 405,253 |  |  |  | 109,017,288 |  |  |  | (61,947,692 | ) |  |  | 47,474,849 |
Stock based compensation |  |  | — |  |  |  | — |  |  |  | 41,880 |  |  |  | — |  |  |  | 41,880 |
Capital issued for financing |  |  | 98,706 |  |  |  | 987 |  |  |  | 67,937 |  |  |  | — |  |  |  | 68,924 |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,702,425 | ) |  |  | (2,702,425 | )
Balance at December 31, 2021 |  |  | 40,623,857 |  |  | $ | 406,240 |  |  | $ | 109,127,105 |  |  | $ | (64,650,117 | ) |  | $ | 44,883,228 |

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

4

PARAMOUNT GOLD NEVADA CORP.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

|  | Six Months Ended December 31, |
|  | 2022 |  |  | 2021 |
Net Loss |  | $ | (3,272,701 | ) |  | $ | (4,616,170 | )
Adjustments to reconcile net loss to net cash used in operations: |  |  |  |  |  |
Depreciation |  |  | 973 |  |  |  | 1,293 |
Stock based compensation |  |  | 180,831 |  |  |  | 84,551 |
Amortization of debt issuance costs |  |  | 30,402 |  |  |  | 30,402 |
Interest expense |  |  | 168,910 |  |  |  | 163,978 |
Accretion expense |  |  | 223,122 |  |  |  | 91,938 |
Settlement of asset retirement obligations |  |  | (60,000 | ) |  |  | — |
Change in reclamation bonds accounts |  |  | (1,200 | ) |  |  | 1,215 |
Effect of changes in operating working capital items: |  |  |  |  |  |
(Increase)/Decrease in prepaid expenses |  |  | 603,099 |  |  |  | 455,771 |
Increase/(Decrease) in accounts payable |  |  | (174,746 | ) |  |  | 239,307 |
Cash used in operating activities |  |  | (2,301,310 | ) |  |  | (3,547,715 | )
Cash flows from investing activities: |  |  |  |  |  |
Purchase of mineral properties |  |  | (30,000 | ) |  |  | (20,000 | )
Purchase of equipment |  |  | — |  |  |  | (2,723 | )
Cash used in investing activities |  |  | (30,000 | ) |  |  | (22,723 | )
Cash flows from financing activities |  |  |  |  |  |
Capital issued for financing, net of share issuance costs |  |  | 158,513 |  |  |  | 1,898,475 |
Proceeds from notes payable, related parties |  |  | 1,000,000 |  |  |  | — |
Cash provided by financing activities |  |  | 1,158,513 |  |  |  | 1,898,475 |
Change in cash during period |  |  | (1,172,797 | ) |  |  | (1,671,963 | )
Cash at beginning of period |  |  | 2,484,156 |  |  |  | 3,113,064 |
Cash at end of period |  | $ | 1,311,359 |  |  | $ | 1,441,101 |

See Note 4 for supplemental cash flow information

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

5

PARAMOUNT GOLD NEVADA CORP.

Notes to Condensed Consolidated Interim Financial Statements

For the Six-Months Period Ended December 31, 2022 and 2021

(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 Company faces various risks related to the COVID-19 global pandemic. The Company’s primary goal during the COVID-19 pandemic is to safeguard the health of our employees, suppliers and the communities where we operate while minimizing business interruption. To date, COVID-19 pandemic has not had a material impact on our business however because of the highly uncertain and dynamic nature of events relating to the COVID-19 pandemic, it is not currently possible to predict any future impact of the COVID-19 pandemic, but these impacts could have a material adverse effect on the business, financial position, results of operations and/or cash flows. We will continue to monitor the COVID-19 situation closely.

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, 2022.

Significant Accounting Policies

Please see Note 1- Description of Business and Summary of Significant Accounting Policies contained in the 2022 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 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 with one year after the date of 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.

6

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 $5.3 million in capital to repay the 2019 convertible notes and the note payable to Seabridge both of which become due in September 2023.

Subsequent to February 10, 2023, the Company expects to fund operations as follows:

•
Existing cash on hand and working capital.
•
The existing at the market ("ATM") program with Cantor Fitzgerald & Co. and Canaccord Genuity LLC.
•
Other debt, equity financings or 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 September 2023. 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.

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 December 31, 2022 and 2021. 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 six months ended December 31, 2022, the Company issued 341,297 shares for payment of interest accrued and owing on its outstanding 2019 Convertible Notes at June 30, 2022.

For the six months ended December 31, 2021, the Company issued 168,690 shares for payment of interest accrued and owing on its outstanding 2019 Convertible Notes at June 30, 2021.

Note 5. Capital Stock

Authorized Capital

Authorized capital stock consists of 200,000,000 common shares with par value of $0.01 per common share (June 30, 2022 – 200,000,000 common shares with par value $0.01 per common share).

For the three months ended December 31, 2022, the Company issued 455,099 shares of Common Stock from its ATM program for net proceeds of $158,513.

7

For the three months ended December 31, 2021, the Company issued 98,706 shares of Common Stock from its ATM program for net proceeds of $68,924.

For the six months ended December 31, 2022, the Company issued 341,297 shares for payment of interest accrued and owing (Note 6) with a fair value of $160,413. The Company also issued 455,099 shares from its ATM program for net proceeds of $158,513.

For the six months ended December 31, 2021, the Company issued 168,690 shares for payment of interest accrued and owing (Note 6) with a fair value of $163,642. The Company also issued 2,301,058 shares from its ATM for net proceeds of $1,898,475.

Stock Options, Restricted Stock Units and Stock Based Compensation

Paramount’s 2015 and 2016 Stock Incentive and Compensation Plans, which are stockholder-approved, permits the grant of stock options, restricted stock units and stock to its employees and directors for up to 3.5 million shares of common stock.

Total stock-based compensation for the three months ended December 31, 2022 and 2021 were $63,005 and $41,880, respectively.

Total stock-based compensation for the six months ended December 31, 2022 and 2021 were $180,831 and $84,551, respectively.

Stock Options

Stock option awards are generally granted with an exercise price equal to the market price of Paramount’s stock at the date of grant and have contractual lives of 5 years. To better align the interests of its key executives, employees and directors with those of its shareholders a significant portion of those share option awards will vest contingent upon meeting certain stock price appreciation performance goals and other performance conditions. Option and share awards provide for accelerated vesting if there is a change in control (as defined in the Stock Incentive and Compensation Plans).

For the three months ended December 31, 2022, the Company did no t grant stock options (2021 – nil).

For the six months ended December 31, 2022, the Company granted 50,000 stock options (2021 - nil) with an exercise price of $0.60 and a term of 5 years. The stock options vested immediately on the date of grant.

The fair value for options granted for the six months ended December 31, 2022 was calculated using the Black-Scholes option valuations method. The weighted average assumptions used were as follows:

|  | Six Months Ended December 31, 2022 |  |  | Six Months Ended December 31, 2021
Weighted average risk-free interest rate |  |  | 2.79 | % |  | N/A
Weighted-average volatility |  |  | 58 | % |  | N/A
Expected dividends |  | 0 |  |  | N/A
Weighted average expected term (years) |  | 5 |  |  | N/A
Weighted average fair value |  | $ | 0.19 |  |  | N/A

For the three months ended December 31, 2022, share-based compensation expense relating to service condition options and performance condition options was $937 and $3,185, respectively (2021 - $25,410 and $16,470).

For the six months ended December 31, 2022, share-based compensation expense relating to service condition options and performance condition options was $12,021 and $6,832, respectively (2021 -$48,050 and $36,500).

A summary of stock option activity under the Stock Incentive and Compensation Plans as of December 31, 2022 is presented below:

Options |  | Options |  |  | Weighted Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term (Years) |  |  | Aggregate Intrinsic Value |
Outstanding at June 30, 2021 |  |  | 1,998,995 |  |  | $ | 1.17 |  |  |  | 3.31 |  |  | $ | — |
Granted |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Exercised |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited or expired |  |  | (190,000 | ) |  |  | 1.42 |  |  |  | 1.48 |  |  |  | — |
Outstanding at June 30, 2022 |  |  | 1,808,995 |  |  | $ | 1.14 |  |  |  | 2.42 |  |  | $ | — |
Granted |  |  | 50,000 |  |  |  | 0.60 |  |  |  | 4.75 |  |  |  | — |
Exercised |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited or expired |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Outstanding at December 31, 2022 |  |  | 1,858,995 |  |  | $ | 1.13 |  |  |  | 1.99 |  |  | $ | — |
Exercisable at December 31, 2022 |  |  | 1,246,664 |  |  | $ | 1.12 |  |  |  | 2.07 |  |  | $ | — |

8

A summary of the status of Paramount’s non-vested options as at December 31, 2022 is presented below:

Non-vested Options |  | Options |  |  | Weighted- Average Grant- Date Fair Value |
Non-vested at June 30, 2021 |  |  | 1,033,998 |  |  | $ | 0.55 |
Granted |  |  | — |  |  |  | — |
Vested |  |  | (288,332 | ) |  |  | 0.53 |
Forfeited or expired |  |  | (88,333 | ) |  |  | 0.73 |
Non-vested at June 30, 2022 |  |  | 657,333 |  |  | $ | 0.55 |
Granted |  |  | 50,000 |  |  |  | 0.19 |
Vested |  |  | (95,002 | ) |  |  | 0.28 |
Forfeited or expired |  |  | — |  |  |  | — |
Non-vested at December 31, 2022 |  |  | 612,331 |  |  | $ | 0.56 |

As of December 31, 2022, there was approximately $13,785 of unamortized stock-based compensation expense related to non-vested stock options outstanding. The expenses are expected to be recognized over a weighted-average period of 0.83 years. The total fair value of stock based compensation that vested related to outstanding stock options during the three months ended December 31, 2022 and 2021, was $16,873 and $nil, respectively.

Restricted Stock Units ("RSUs")

RSUs are awards for service and performance which upon vesting and settlement entitle the recipient to receive one common share of the Company's Common Stock for no additional consideration, for each RSU held.

For the three months ended December 31, 2022, there were no RSUs granted by the Company (2021 - Nil).

For the three months ended December 31, 2022, share-based compensation expenses related to service condition RSUs and performance condition RSUs was $34,251 and $24,632, respectively (2021 - $nil and $nil)

For the six months ended December 31, 2022, share-based compensation expenses related to service condition RSUs and performance condition RSUs was $73,269 and $88,709, respectively (2021 -$nil and $nil)

A summary of RSUs activity is summarized as follows:

Restricted Share Unit Activity |  | Outstanding RSUs |  |  | Weighted average grant date fair value |
Outstanding at June 30, 2021 |  |  | — |  |  | $ | — |
Granted |  |  | 701,000 |  |  |  | 0.65 |
Vested |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |
Outstanding at June 30, 2022 |  |  | 701,000 |  |  | $ | 0.65 |
Granted |  |  | — |  |  |  | — |
Vested |  |  | 150,000 |  |  |  | 0.65 |
Forfeited |  |  | — |  |  |  | — |
Outstanding at December 31, 2022 |  |  | 551,000 |  |  | $ | 0.65 |

As of December 31, 2022, there was approximately $122,388 of unamortized stock-based compensation expense related to outstanding RSUs. The expenses are expected to be recognized over the remaining weighted-average vesting periods of 0.66 years.

Note 6. Convertible Debt

|  | Debt |
|  | December 31, 2022 |  |  | June 30, 2022 |
|  | Current |  |  | Non-Current |  |  | Current |  |  | Non-Current |
2019 Secured Convertible Notes |  | $ | 4,277,690 |  |  |  | — |  |  | $ | — |  |  | $ | 4,277,690 |
Less: unamortized discount and issuance costs |  |  | (25,478 | ) |  |  | — |  |  |  | — |  |  |  | (55,880 | )
|  | $ | 4,252,212 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,221,810 |

9

In September 2019, the Company completed a private offering of 5,478 Senior Secured Convertible Notes (“2019 Convertible Notes”) at $975 per $1,000 face amount due in 2023. Each 2019 Convertible Note will bear an interest rate of 7.5% per annum, payable semi-annually. The effective interest rate of the 2019 Convertible Notes is 8.46%. The principal amount of the 2019 Convertible Notes will be convertible at a price of $1.00 per share of Paramount common stock. Unamortized discount and issuance costs of $275,883 will be amortized as an additional interest expense over the four year term of the 2019 Convertible Notes. For the six months ended December 31, 2022 and 2021, the Company amortized $30,402 of discount and issuance costs. At any point after the second anniversary of the issuance of the convertible notes, Paramount may force conversion if the share price of its common stock remains above $1.75 for 20 consecutive trading days. The convertible notes are secured by a lien on all assets of the Company and the Company is required to maintain a working capital balance of $250,000. At December 31, 2022, excluding the current 2019 Secured Convertible Notes, the working capital covenant was met by the Company.

During the three and six months ended December 31, 2022, there were no conversions of 2019 Convertible Notes to common stock of the Company.

As of December 31, 2022, there were 4,278 (2021 - 4278) notes outstanding of which 660 (2021 - 660) were held by related parties. Related parties consisted of a director of the Company and an affiliated shareholder Seabridge Gold Inc. ("Seabridge").

Note 7. Notes Payable

On December 9, 2022, the Company issued a Bridge Promissory Note (the "Note") to Seabridge, an entity affiliated with the Chairman of our Board of Directors, Rudi Fronk, and an owner of approximately 5.7% of our outstanding common stock, pursuant to which the Company may borrow, in one or more advances, the principal amount of up to $1,500,000 (the "Loan"). The Loan bears interest at a per annum rate of 12%, payable upon maturity or prepayment, and matures on September 30 2023. The Company has the right to prepay the Loan, in whole or in part, at any time without penalty.

At December 31, 2022, the balance of the loan including accrued interest was $1,004,932.

Note 8. Mineral Properties

The Company has capitalized acquisition costs on mineral properties as follows:

|  | December 31, 2022 |  |  | June 30, 2022 |
Sleeper and other Nevada based Projects |  | $ | 28,537,145 |  |  | $ | 28,507,145 |
Grassy Mountain and other Oregon based Projects |  |  | 23,235,728 |  |  |  | 23,235,728 |
|  | $ | 51,772,873 |  |  | $ | 51,742,873 |

Sleeper:

Sleeper is located in Humboldt County, Nevada, approximately 26 miles northwest of the town of Winnemucca.

Grassy Mountain:

The Grassy Mountain Project is located in Malheur County, Oregon, approximately 22 miles south of Vale, Oregon, and roughly 70 miles west of Boise, Idaho.

Other Nevada Based Projects

During the three month period ended December 31, 2022, the Company made a payment to Nevada Select in the amount of $30,000 after Paramount received a permit to drill the Bald Peak claims from the US Forestry Service.

Impairment of Mineral Properties

The Company reviews and evaluates its long-lived assets for impairment on an annual basis or more frequently when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. For the six months ended December 31, 2022 and 2021, no events or changes in circumstance are believed to have impacted recoverability of the Company’s long-lived assets. Accordingly, it was determined that no interim impairment was necessary.

Note 9. Reclamation and Environmental

Reclamation and environmental costs are based principally on legal requirements. Management estimates costs associated with reclamation of mineral properties and properties under mine closure. On an ongoing basis the Company evaluates its estimates and assumptions; however, actual amounts could differ from those based on estimates and assumptions.

The Company has posted several cash bonds as financial security to satisfy reclamation requirements. The balance of posted cash reclamation bonds at December 31, 2022 is $499,476 (June 30, 2022 - $498,276).

10

Paramount is responsible for managing the reclamation activities from the previous mine operations at the Sleeper Gold Mine as directed by the Bureau of Land Management ("BLM") and the Nevada State Department of Environmental Protection (“NDEP”). Paramount has estimated the undiscounted reclamation costs for existing disturbances at the Sleeper Gold Project required by the BLM to be $3,639,771. These costs are expected to be incurred between the calendar years 2023 and 2060. Paramount has also estimated undiscounted reclamation cost as required by the NDEP to be $5,280,000. These costs include on-going monitoring and new requests from the NDEP to convert three processing ponds from the historical operations to evaporation cell ponds by the 2nd half of calendar year 2023. On-going monitoring costs are expected to be incurred between 2022 and 2039. The sum of expected costs by year are discounted using the Company’s credit adjusted risk free interest rate from the time it expects to pay the retirement to the time it incurs the obligation. The reclamation and environmental costs for the Sleeper Gold Project recorded on the balance sheet is equal to the present value of the estimated reclamation costs as required by both the BLM and NDEP.

The following variables were used in the calculation for the periods ending December 31, 2022 and June 30, 2022:

|  | Six Months Ended December 31, 2022 |  |  | Year Ended June 30, 2022 |
Weighted-average credit adjusted risk free rate |  |  | 9.94 | % |  |  | 9.94 | %
Weighted-average inflation rate |  |  | 2.32 | % |  |  | 2.32 | %

Changes to the Company’s reclamation and environmental costs for the Sleeper Gold Mine for the six-month period ended December 31, 2022 and the year ended June 30, 2022 are as follows:

|  | Six Months Ended December 31, 2022 |  |  | Year Ended June 30, 2022 |
Balance at beginning of period |  | $ | 4,475,270 |  |  | $ | 1,849,644 |
Accretion expense |  |  | 223,122 |  |  |  | 183,693 |
Additions and change in estimates |  |  | — |  |  |  | 2,475,169 |
Settlements |  |  | (60,000 | ) |  |  | (33,236 | )
Balance at end of period |  | $ | 4,638,392 |  |  | $ | 4,475,270 |

The balance of the reclamation and environmental obligation of $4,638,392 at December 31, 2022 (June 30, 2022 -$4,475,270) is comprised of a current portion of $120,000 (June 30, 2022 -$120,000 ) and a non-current portion of $4,518,392 (June 30, 2022 - $4,355,270). The Company recorded an accretion expense for the three and six-month period ended December 31, 2022 of $111,561 and $223,122, respectively (2021 - $45,969 and $91,938).

Note 10. Other Income

The Company’s other income details for the three and six-months ended December 31, 2022 and 2021 were as follows:

|  | Three Months Ended December 31, 2022 |  |  | Six Months Ended December 31, 2022 |  |  | Three Months Ended December 31, 2021 |  |  | Six Months Ended December 31, 2021 |
Re-imbursement of reclamation costs |  | $ | 40,308 |  |  | $ | 40,308 |  |  | $ | — |  |  | $ | 110,441 |
Leasing of water rights to third party |  |  | — |  |  |  | 5,975 |  |  |  | — |  |  |  | 5,858 |
Total |  | $ | 40,308 |  |  | $ | 46,283 |  |  | $ | — |  |  | $ | 116,299 |

11

Note 11. Segmented Information

Segmented information has been compiled based on the material mineral properties in which the Company performs exploration activities.

Expenses and mineral property carrying values by material project for the three and six-months ended December 31, 2022:

|  | Exploration Expenses |  |  | Land Holding Costs |  |  |  |
|  | Three Months Ended December 31, 2022 |  |  | Six Months Ended December 31, 2022 |  |  | Three Months Ended December 31, 2022 |  |  | Six Months Ended December 31, 2022 |  |  | Mineral Properties at December 31, 2022 |
Sleeper Gold Project and other Nevada based Projects |  | $ | 170,431 |  |  | $ | 611,775 |  |  | $ | 118,765 |  |  | $ | 241,442 |  |  | $ | 28,537,145 |
Grassy Mountain Project and other Oregon based Projects |  |  | 294,971 |  |  |  | 693,222 |  |  |  | 38,378 |  |  |  | 76,757 |  |  |  | 23,235,728 |
|  | $ | 465,402 |  |  | $ | 1,304,997 |  |  | $ | 157,143 |  |  | $ | 318,199 |  |  | $ | 51,772,873 |

Expenses for the three and six-months ended December 31, 2021 and mineral property carrying values at June 30, 2022 by material project:

|  | Exploration Expenses |  |  | Land Holding Costs |  |  |  |
|  | Three Months Ended December 31, 2021 |  |  | Six Months Ended December 31, 2021 |  |  | Three Months Ended December 31, 2021 |  |  | Six Months Ended December 31, 2021 |  |  | Mineral Properties As at June 30, 2022 |
Sleeper Gold Project and other Nevada based Projects |  | $ | 648,703 |  |  | $ | 983,945 |  |  | $ | 124,633 |  |  | $ | 237,448 |  |  | $ | 28,507,145 |
Grassy Mountain Project and other Oregon based Projects |  |  | 1,259,158 |  |  |  | 2,180,723 |  |  |  | 48,501 |  |  |  | 76,879 |  |  |  | 23,235,728 |
|  | $ | 1,907,861 |  |  | $ | 3,164,668 |  |  | $ | 173,134 |  |  | $ | 314,327 |  |  | $ | 51,742,873 |

Additional operating expenses incurred by the Company are treated as corporate overhead with the exception of accretion expense which is discussed in Note 8.

Note 12. Commitments and Contingencies

Other Commitments

Paramount has an agreement to acquire 44 mining claims (“Cryla Claims”) covering 589 acres located immediately to the west of the proposed Grassy Mountain site from Cryla LLC. Paramount is obligated to make annual lease payments of $60,000 per year until 2033 with an option to purchase the Cryla Claims for $560,000 at any time. The term of the agreement is 25 years and commenced in 2018. In the event Paramount exercises its option to acquire the Cryla Claims, all annual payments shall be credited against a production royalty that will be based on a prevailing price of the metals produced from the Cryla Claims. The royalty rate ranges between 2% and 4% based on the daily price of gold. The agreement with Cryla can be terminated by Paramount at any time. All lease payments under the agreement are up-to-date and no other payments were made during the three and six month periods ended December 31, 2022. The Cryla Claims are without known mineral reserves and there is no current exploratory work being performed.

Paramount has an agreement with Nevada Select Royalty (“Nevada Select”) to purchase 100% of the Frost Project, which consists of 40 mining claims located approximately 12 miles west of its Grassy Mountain Project. A total consideration of $250,000 payable to Nevada Select will be based on certain events over time. Nevada Select will retain a 2% NSR on the Frost Claims and Paramount has the right to reduce the NSR to 1% for a payment of $1 million. For the three and six-month periods ended December 31, 2022, the Company has made all required payments under the agreement. The Frost Claims are without known mineral reserves.

The Company has an agreement with Nevada Select to purchase the Bald Peak mining claims in the State of Nevada and California for a total consideration of $300,000. Payments under the agreement will be based on achieving certain events over time. Upon signing the agreement Paramount made a payment to Nevada Select of $20,000. During the three-month period ended December 31, 2022, a payment was made to Nevada Select for $30,000 after the Company received a drill permit from the US Forestry Service. All payments under the agreement are up to date as of December 31, 2022. The Bald Peak Claims are without known mineral reserves.

12

Seabridge Gold Inc. ("Seabridge") holds a Net Profit Interest ("NPI") put option in which during the 30-day period immediately following the day that the Company has delivered notice to Seabridge that a positive production decision has been made and construction financing has been secured with respect to the Grassy Mountain Project, Seabridge may cause the Company to purchase the NPI for CDN$10,000,000. If Seabridge exercises the right to cause the Company to purchase the NPI, the Company would likely need to seek additional equity or other financing to fund the purchase, which financing may not be available to the Company on favorable terms or at all. As of December 31, 2022, Seabridge holds 5.7% interest in the Company and three members of Paramount's board of directors are either officers or directors of Seabridge.

Note 13. Subsequent Events

Subsequent to the period ended December 31, 2022, the Company issued 458,316 shares of its Common Stock for the payment of interest owing on its 2019 Convertible Notes and issued 150,000 shares for the conversion of vested RSUs.

It also sold 344,567 shares under its at the market program for gross proceeds of $133,322.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Certain statements in this Quarterly Report on Form 10-Q (“Form 10-Q”) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give the Company's current expectations and forecasts of future events. All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding the Company's future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. These statements are based on the Company's current plans, and the Company's actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Any or all of the forward-looking statements in this quarterly report may turn out to be inaccurate. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-Q, and in the risk factors on Form 10-K that was filed with the U.S. Securities and Exchange Commission ("SEC") on October 13, 2022. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.

Cautionary Note to U.S. Investors

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and applicable Canadian securities laws, and as a result we report our mineral reserves and mineral resources according to two different standards. U.S. reporting requirements, for disclosure of mineral properties, are governed by Item 1300 of Regulation S-K (“S-K 1300”), as issued by the SEC. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), as adopted from the definitions provided by the Canadian Institute of Mining, Metallurgy and Petroleum. Both sets of reporting standards have similar goals in terms of conveying an appropriate level of confidence in the disclosures being reported, but the standards embody slightly different approaches and definitions.

In our public filings in the U.S. and Canada and in certain other announcements not filed with the SEC, we disclose proven and probable reserves and measured, indicated and inferred resources, each as defined in S-K 1300. The estimation of measured resources and indicated resources involves greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves, and therefore investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into S-K 1300-compliant reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources, and therefore it cannot be assumed that all or any part of inferred resources will ever be upgraded to a higher category. Therefore, investors are cautioned not to assume that all or any part of inferred resources exist, or that they can be mined legally or economically.

Overview

We are a company engaged in the business of acquiring, exploring and developing precious metal projects in the United States of America. Paramount owns advanced stage exploration projects in the states of Nevada and Oregon. We enhance the value of our projects by implementing exploration and engineering programs that have the goal to expand and upgrade known mineralized material to reserves. 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 three and six months ended December 31, 2022 and compares these results to the results of the prior year three and six months ended December 31, 2021.

Operating Highlights:

For the three and six months ended December 31, 2022, the Company highlights include:

•
The Federal Bureau of Land Management ("BLM") has accepted the Plan of Operation ("PoO") for the proposed underground Grassy Mountain gold mine as complete. With completeness, the BLM will issue a Notice of Intent which initiates the Environmental Impact Statement ("EIS") process under the National Environment Policy Act.
•
The Company received the permit from the U.S. Forest Service to drill its Bald Peak Project in Mineral County, Nevada.
•
The Oregon State Technical Review Team accepted and approved both the geo-chemistry and groundwater baseline data reports ("BDR Reports"). Both BDR Reports are required to be approved in order for the State of Oregon to determine, along with other application information, that Company's submitted Consolidated Permit Application (the “CPA”) is complete. As of December 31, 2022, the completeness determination has not been made by the State of Oregon.

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•
The Company made progress with the BLM by responding and providing additional information that will allow the Company to submit an updated PoO. Once the PoO is accepted by the BLM and a notice in the Federal Registry is filed, the Environmental Impact Statement process will begin.
•
Completed new technical reports summaries ("TRS") for the Grassy Mountain Property and the Sleeper Gold Property under Item 1300 of Regulation S-K.

Outlook and Plan of Operation:

We believe that investors will gain a better understanding of the Company if they understand how we measure and disclose our results. As a development stage company, we do not generate cash flow from our operations. We recognize the importance of managing our liquidity and capital resources. We pay close attention to all 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.

Having accomplished many of the activities we outlined in our Annual Report on Form 10-K for the year ended June 30, 2022, the Company now expects to undertake the following activities in the next several months:

Grassy Mountain Project:

Paramount expects to continue with both state and federal permitting activities for its proposed underground gold mine. With 22 baseline studies approved and accepted by the State of Oregon and the submitted modified CPA, the Company will continue working with the appropriate permitting agencies to ensure a complete permit application. Once the State of Oregon determines that the CPA is complete it will proceed to the drafting permits process which includes issuing an environmental evaluation and socio-economic impact analysis and the drafting of all relevant permits for the project. Under Oregon law the drafting permits process, which includes public notice and public hearing period, must be completed within 225 days. Subsequent to the drafting permit process if draft permits are issued, up to an additional 120 days is provided for further public consultation and the development and distribution of final permits. The costs incurred by the State of Oregon for the drafting permit and final permit processes will be reimbursed by the Company directly through cost recovery invoices received from the Oregon Department of Geology and Mineral Industries or by permit fees established by individual permitting agencies. In addition to the state incurred costs, the Company will engage with its permitting and technical advisors and consultants to respond to any further information requests from the state's permitting agencies.

With respect to federal permitting, once a Notice of Intent is registered and the Environmental Impact Statement has commenced, Paramount will also engage with its permitting and technical advisors to assist in the process.

Sleeper Gold Project:

In completing the Sleeper TRS, the Company undertook a comprehensive review of the project’s database which included over 4,000 drill holes dating back to the early 1980s from the time of the first discovery of mineralization to when the mine was closed in 1996. Given the lack of digitization of the original drill hole database, the Company has, under the direction of QP RESPEC Company LLC, engaged in digitizing and re-verifying the entire Sleeper database.

Once the data verification is complete and a higher confidence level can be applied to the resources and allowing for additional 3D modeling, Paramount will continue to advance the evaluation of Sleeper to update the Sleeper TRS in 2023.

COVID-19 Update

Paramount continues to monitor the evolution of the COVID-19 pandemic and continues to evaluate its business activities and plans. Our priority is to ensure the health and safety of our employees and consultants. We continue to perform the majority of our activities remotely with a limited amount of on-site or in-office attendance only when required.

Comparison of Operating Results for the three and six months ended December 31, 2022 and 2021

We did not earn any revenue from mining operations for the three and six months ended December 31, 2022 and 2021.

Net Loss

Our net loss for the three-months ended December 31, 2022 was $1,432,485 compared to a net loss of $2,702,425 in the previous three-month period ended December 31, 2021. The drivers of the decrease in net loss of 47% are fully described below.

Our net loss for six months ended December 31, 2022, was $3,272,701 compared to a net loss of $4,616,170 in the previous six-month period ended December 31, 2021. The drivers of the decrease in net loss of 29% are fully described below.

The Company expects to incur losses for the foreseeable future as we continue with our planned exploration and development programs.

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Expenses

Exploration and Land Holding Costs

For the three months ended December 31, 2022 and 2021, exploration expenses were $465,402 and $1,907,861, respectively. This represents a decrease of 76% or $1,442,459. 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. These expenses totaled $294,971. At Sleeper, the Company continued with the digitizing and reverification of its geological database and redesigned its E-Cell conversion plans for upcoming reclamation work totaling $170,431. In the prior year comparable period, the Company focused its efforts on preparing its modified permit applications for the Grassy Mountain Project, completed a drill program at its Frost property and incurred expenses related to reclamation activities its Sleeper Gold Project.

For the three months ended December 31, 2022 and 2021, land holding costs were $157,143 and $173,134, respectively. The decrease in land holding costs was primarily due to 2021 costs associated with staking additional mining claims with respect to the Bald Peak Project in Nevada.

For the six months ended December 31, 2022 and 2021, exploration expenses were $1,304,997 and $3,164,668, respectively. This represents a decrease of 59% or $1,859,671. 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 and completed a TRS on the property. These expenses totaled $693,222. At Sleeper, the Company has re-assayed historical drill holes, digitized and re-verified its geological database, completed a TRS on the property and redesigned its E-cell pond conversion plans for upcoming reclamation work for expenses totaling $611,775. In the prior year comparable period, the Company continued with permitting activities for the Grassy Mountain Project, completed a drill program at the Frost Project and incurred on-going reclamation expenses at its Sleeper Gold Project.

For the six months ended December 31, 2022 and 2021, land holding costs were $318,199 and $314,327, respectively.

Salaries and Benefits

For the three-month period ended December 31, 2022 and 2021, salary and benefits were $260,920 and $216,063, respectively. This represents an increase of 21% . Salary and benefits are comprised of cash and equity based compensation of the Company’s executive and corporate administration teams. The increase primarily reflects higher equity based compensation that was recorded during the three-month period ended December 31, 2022 compared to the three-month period ended December 31, 2021. Included in the salary and benefits expense amount for the three months ended December 31, 2022 and 2021 was non-cash equity based compensation of $60,268 and $33,575, respectively.

For the six months ended December 31, 2022 and 2021, salary and benefits were $568,294 and $463,478, respectively. This represents an increase of 23%. The increase is a result of higher equity based compensation that was recorded during the six months ended December 31, 2022 compared to the six months ended December 31, 2021. Included in the salary and benefits expense amount for the six months ended December 31, 2022 and 2021 was non-cash equity based compensation of $165,439 and $79,669, respectively.

Directors’ Compensation

For the three-month period ended December 31, 2022 and 2021, directors’ compensation expenses were $23,233 and $19,281, respectively. This represents an increase of 20%. Directors’ compensation consists of cash and stock-based compensation of the Company’s board of directors. The increase reflects higher equity based compensation recorded in the current quarter compared to the prior year’s comparable period.

For the six months ended December 31, 2022 and 2021, directors compensation expenses were $58,574 and $33,118, respectively. This represents an increase of 77%. The increase in costs reflects a higher equity based compensation and the addition of a new board member in the current year compared to the prior year's comparable period.

Professional Fees and General and Administration

For the three months ended December 31, 2022 and 2021, professional fees were $135,295 and $21,050, respectively. This represents an increase of $114,245. The increase was mainly due to one-time consulting fees and legal fees incurred in the period. Professional fees include legal, advisory and consultant expenses incurred on corporate and operational activities being performed by the Company on a period-by-period basis.

For the three-month period ended December 31, 2022, general and administration expenses decreased by 2% to $214,365 from $217,735 from the three-month period ended December 31, 2021. The decrease in general and administration expenses from the previous year’s comparable period was mainly due to reduced office related expenses.

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For the six months ended December 31, 2022 and 2021, professional fees were $268,622 and $66,014, respectively. This represents an increase of $202,608. The increase was due to the timing of the recording the audit fees for the fiscal year ended June 30, 2022 after engaging the Company's new auditor in the current period and incurring one-time consulting and legal fees in the period.

For the six months ended December 31, 2022 and 2021, general and administration expenses were $373,539 and $395,819, respectively. This represents a decrease of 6% and was mainly due to reduced office related expenses.

Liquidity and Capital Resources

As an exploration and development company, Paramount funds its operations, reclamation activities and discretionary exploration programs with its cash on hand. At December 31, 2022, we had cash and cash equivalents of $1,311,359 compared to $2,484,156 as at June 30, 2022.

In May 2020, the Company established an $8.0 million “at the market” equity offering program with Cantor Fitzgerald & Co. and Canaccord Genuity LLC to proactively increase its financial flexibility. During the six-months ended December 31, 2022, the Company issued 455,099 shares under the program for net proceeds of $158,513.

In December 2022, the Company issued the Note to Seabridge, an entity affiliated with the Chairman of our Board of Directors, Rudi Fronk, and an owner of approximately 5.7% of our outstanding common stock, pursuant to which the Company may borrow, in one or more advances, the principal amount of up to $1,500,000. The Loan bears interest at a per annum rate of 12%, payable upon maturity or prepayment, and matures on September 30 2023. The Company has the right to prepay the Loan, in whole or in part, at any time without penalty. During the six-months ended December 31, 2022, the Company borrowed $1,000,000 from Seabridge.

The main uses of cash for the six months ended December 31, 2022 was:

•
cash used in operating activities of $2,301,310 were mainly used to fund our permitting and exploration activities at our projects, salary and benefits costs of our employees and ongoing general and administration costs.

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 many be unable to meet its obligations as they become due with one year after the date of 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 $5.3 million in capital to repay the 2019 convertible notes and the note payable to Seabridge which both become due in September 2023.

We anticipate our twelve-month cash expenditures to be as follows:

•
$3.2 million on corporate, land claim maintenance and general expenses

We anticipate our twelve-month cash discretionary exploration and development, subject to available cash on hand as follows:

•
$3.0 million on the Grassy Mountain Project state and federal permitting activities
•
$0.25 million on the Sleeper Gold 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 convertible debt, the Company expects to elect to pay the semi-annual interest payment in shares of its Common Stock.

Subsequent to February 13, 2023, the Company expects to fund operations as follows:

•
Existing cash on hand and working capital.
•
The existing ATM program with Cantor Fitzgerald & Co. and Canaccord Genuity LLC.
•
The existing Note facility with Seabridge.
•
Other debt, equity financings or sale of royalties.

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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 September 2023. 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, stock-based compensation, asset retirement obligations and foreign currency translation.

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 and do not indicate any present or future value of economically recoverable reserves.

Exploration expenses

We record exploration expenses as incurred. When we determine that a precious metal resource deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration expenses related to such reserves incurred after such a determination will be capitalized. To date, we have not established any proven or probable reserves and will continue to expense exploration expenses as incurred.

Stock Based Compensation

For stock option grants with market conditions that affect vesting, the Company uses a lattice approach incorporating a Monte Carlo simulation to value stock options granted.

Option awards are generally granted with an exercise price equal to the market price of Paramount’s stock at the date of grant and have contractual lives of 5 years. To better align the interests of its key executives, employee and directors with those of its shareholders a significant portion of those share option awards will vest contingent upon meeting certain stock price appreciation performance goals and other performance conditions. Option and share awards provide for accelerated vesting if there is a change in control (as defined in the employee share option plan). For stock option grants made in the fiscal years ended June 30, 2021, the Company used the Black-Scholes option valuation model to value stock options granted. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates which are subjective and may not be representative of actual results. Changes in assumptions can materially affect estimates of fair values.

Use of 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 long-lived assets and asset retirement obligations. 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.

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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable as a smaller reporting company.

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Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and determined that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q. The evaluation considered the procedures designed to ensure that the information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

During the period covered by this Quarterly Report on Form 10-Q, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(d) and 13d-15(d) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

(c) Inherent Limitations of Disclosure Controls and Internal Controls over Financial Reporting

Because of its inherent limitations, disclosure controls and internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation or effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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PART II – OTHER INFORMATION

Item 1A. Risk Factors.

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended June 30, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART IV

Item 6. Exhibits.

(a)
Index to Exhibits

Exhibit Number |  | Description
31.1* |  | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* |  | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* |  | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS* |  | Inline XBRL Instance Document -the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, has been formatted in Inline XBRL.

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | Paramount Gold Nevada Corp.
Date: February 10, 2023 |  | By: | /s/ Rachel Goldman
|  |  | Rachel Goldman
|  |  | Chief Executive Officer
Date: February 10, 2023 |  | By: | /s/ Carlo Buffone
|  |  | Carlo Buffone
|  |  | Chief Financial Officer

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