Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
PZG > SEC Filings for PZG > Form 10-Q on 5-Feb-2014All Recent SEC Filings

Show all filings for PARAMOUNT GOLD & SILVER CORP.

Form 10-Q for PARAMOUNT GOLD & SILVER CORP.


5-Feb-2014

Quarterly Report


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

The following information should be read in conjunction with (i) our accompanying interim consolidated financial statements and related notes (included elsewhere in this report) and (ii) our consolidated financial statements, related notes and management's discussion and analysis of financial condition and results of operations included in our June 30, 2013 annual report filed on Form 10-K with the Securities and Exchange Commission on September 9, 2013.

We are an exploratory stage mining company that currently has mining concessions in Mexico and mining claims in Nevada, USA. We have no proven reserves at our San Miguel project in Mexico or at our Sleeper Gold project in Nevada but are currently exploring both projects. The following discussion updates our planned operations for this fiscal year. It also analyzes our financial condition and summarizes the results of operations for the three and six month periods ended December 31, 2013 and compares those results to the three and six months period ended December 31, 2012.

Plan of Operation:

Exploration

Mexico

Our plan at the San Miguel Project is to conduct exploration drilling by testing new areas or expanding on known mineralized zones with infill drilling. Over fifty drill holes have been completed since our last material estimate. The Company plans to update this estimate in the first half of 2014. The Company also intends to evaluate silver metallurgical recovery alternatives for the Don Ese Zone. Paramount plans to update its Preliminary Economic Assessment (the "San Miguel PEA") in the second half of 2014. The San Miguel PEA will test the economic viability of the open pit/heap leach operations at multiple zones and further, it will include the updated resources.

The Company's exploration plan and budget for the San Miguel Project will be managed by its in-house technical staff. It will be funded by the Company's cash on hand, and we have budgeted approximately $1.9 million for the next six months.

Nevada

Our plan for our current fiscal year is to continue focusing on our Sleeper Gold Project. Our budget for the next six month period is approximately $1.0 million. The budget activities will include drilling, modeling and metallurgical testing. The drill plans include drilling to obtain metallurgical samples, infill drilling to increase confidence in mineralized material and exploration drilling in the south Sleeper zone.

We plan to update our mineralized material model with drill hole data that was not previously included. This will allow us, along with a newly created geo-metallurgical model, to update our Preliminary Economic Assessment (the "Sleeper PEA") which we completed in 2012.

Our work at both the San Miguel Project and Sleeper Gold Project is consistent with Paramount's strategy of expanding and upgrading known, large-scale precious metal occurrences in established mining camps, defining their economic potential and then partnering them with nearby producers.


Index
Highlights from Q2 - October 1, 2013 to December 31, 2013

At our San Miguel Project in Mexico, results of metallurgical testing by McClelland Laboratories confirm the potential for an economic recovery process at two of San Miguel's open pits using inexpensive heap leach technologies. It is expected that there will be major reductions in costs and cut-off grades and a substantial increase in mineable material.

In November 2013, the Company resumed core drilling at the Don Ese zone at its San Miguel Project. Our main objectives of the current drill program are: 1) add resources at two new high priority exploration targets; 2) acquire further material for metallurgical testing of heap leach processing; and 3) upgrade inferred resources to measured and indicated.

In January 2014, subsequent to quarter end, the Company reported favorable gold recoveries from bio-oxidation testing on the sulfide material at the West Wood Zone at the Sleeper Gold Project. The resources at the West Wood Zone were not included in a previous Sleeper PEA due to poor recoveries from the heap leach operation proposed for Sleeper in the PEA.

Liquidity and Capital Resources

At December 31, 2013, we had cash and cash equivalents of $6,899,680 compared to $11,524,051 as at June 30, 2013. The decrease of $4,624,371 was the result of the funding of our exploration programs and corporate overhead. At December 31, 2013, $230,000 of the Company's cash and cash equivalents was held in Mexico and Canada by its wholly owed subsidiaries. These amounts are not required to fund the Company's U.S. operations.

At December 31, 2013, we had a net working capital of $9,151,762. We anticipate our cash expenditures to fund exploration programs and general corporate expenses to be approximately $0.85 million per month for three month period ending March 31, 2014. Anticipated cash outlays will be funded by our available cash reserves.

At December 31, 2013, the amounts receivable amount of $1,326,277 primarily consisted of value added tax due from the Mexican government.

During the six months ended December 31, 2013, we sold marketable securities and received $450,000. This was offset by our investment in a junior exploration company in the amount of $499,950.

Historically, we have funded our exploration and development activities through equity financing arrangements. We continue to assess our needs for additional capital to ensure sufficient financial resources are available to fund our exploration and working capital needs. We believe that our access to additional capital, together with our existing cash resources will be sufficient to meet our needs for the next twelve months. If, however, we are unable to obtain additional capital or financing, our exploration and development activities will be significantly affected.

Comparison of Operating Results for the six month period ended December 31, 2013 as to the six month period ended December 31, 2012

Net Loss

Our net loss before other items for the six month period ended December 31, 2013 was $4,491,217 compared to a loss of $4,123,473 in the comparable period in the prior year. The increase in net loss of approximately 9% is comprised of a reduction in total expenses of approximately $4.1 million and a reduction in gain on sale of mineral property of approximately $4.4 million from the prior year six month period. We will continue to incur losses for the foreseeable future as we continue with our planned explorations programs at both projects.


Index
Expenses

Our level of exploration expenditures for the six month period ended December
31, 2013 decreased 55% or by $3,709,553 from the comparable prior year period.
This reduction was mainly a reduction in drilling activity at both the San
Miguel Project and the Sleeper Gold Project.

The following table summarizes our drilling activities at both projects for the
six month period ended December 31, 2013 and 2012:

                                                      Six month period ended December 31,               Six month period ended December 31,
                                                                      2013                                              2012
                                                                              Cumulative                                       Cumulative
                                                   Holes                    Length in Feet              Holes                Length in Feet
San Miguel Project, Mexico                                 9                              13,061              21                         28,713
Sleeper Gold Project, USA                                  -                                   -              27                         29,273
Total                                                      9                              13,061              48                         57,986

Our general corporate expenses which include professional fees, corporate communications, consulting fees and office and administration totaled $901,120 for the six month period ended December 31, 2012. This is a 42% decrease over the comparable six month period in the 2012. The decrease was mainly due management bonuses paid in the prior period and not paid in the current period.

Comparison of Operating Results for the three month period ended December 31, 2013 to the three month period ended December 31, 2012.

Net Loss

Our net loss before other items for the three month period ended December 31, 2013 was $2,526,290 compared to a gain of $203,869 in the comparable period in the prior year. The increase in net loss of $2,730,159 is comprised of a reduction in a gain on sale of mineral property of approximately $4.4 million and a reduction in total expenses of $1.7 million. We will continue to incur losses for the foreseeable future as we continue with our planned explorations programs at both projects.

Expenses

Our exploration expenses for the three month period ended December 31, 2013
compared to the comparable prior period decreased by 44% or by $1,449,340.  This
decrease was driven by a reduction in drilling activity at both our Sleeper Gold
Project and our San Miguel Project.
The following table summarizes our drilling activities at both projects for the
three month period ended December 31, 2013 and 2012:

                                                          Three month period ended December 31,                 Three month period ended December 31,
                                                                           2013                                                  2012
                                                                                    Cumulative                                            Cumulative
                                                        Holes                     Length in Feet               Holes                    Length in Feet
San Miguel Project, Mexico                                      9                               13,061                 4                              9,299
Sleeper Gold Project, USA                                       -                                    -                13                             12,916
Total                                                           9                               13,061                17                             22,215


Index
Our general corporate expenses which include professional fees, corporate communications, consulting fees and office and administration totaled $418,555 for the three month period ended December 31, 2013. This is a 27% decrease over the comparable three month period in the 2012 and was due to management bonuses paid in the prior period and not paid in the current period.

Critical Accounting Policies

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 cost, stock based compensation, derivative accounting and foreign currency translation.

Estimates

The Company prepares its consolidated financial statements and notes in conformity to 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 allowances for doubtful accounts receivable and long-lived assets. 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 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

The company expenses exploration costs as incurred. When it is determined that 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, the Company has not established any proven or probable reserves and will continue to expense exploration expenses as incurred.

Foreign Currency Translation

The functional currency of the Company is the U.S. dollar. Transactions involving foreign currencies for items included in operations are translated into U.S. dollars using the exchange rate prevailing at the date of transaction and monetary assets and liabilities are translated at the exchange rate prevailing at the consolidated balance sheet date and all other consolidated balance sheet items are translated at historical rates applicable to the transactions that comprise the amounts. Translation gains and losses are included in the determination of other comprehensive loss and gains in the Statement of Operations.


Index
Reclassification

Certain comparative figures have been reclassified to conform to the current quarter presentation.

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.

  Add PZG to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for PZG - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.