Paramount Gold Nevada

Gold Exploration and Development in Oregon and Nevada

This profile is part of a paid investor education campaign.*

Overview

Paramount Gold Nevada Corp. (NYSE:PZG) is a US-based precious metals exploration and development company with assets in eastern Oregon and Nevada. The company is focused on building shareholder value by acquiring mid-to advanced-stage deposits in the US. Paramount Gold is currently advancing its high-grade Grassy Mountain gold project in Malheur County, eastern Oregon towards production.

The Grassy Mountain project hosts a pre-feasibility study (PFS) that features an after-tax NPV (five percent) of approximately $88 million, an after-tax initial rate of return (IRR) of 28 percent and an annual production of approximately 47,000 ounces of gold grading 7.06 g/T and 50,000 ounces of silver grading 10 g/T for a 7.25-year mine life. The report outlines a small underground mining operation capable of producing up to 1,400 tonnes per day to feed a 750 ton per day mill and processing plant. The processing plant will utilize a gravity concentration circuit and carbon in leach circuit for an average recovery rate of up to 94.2 percent for gold and 70.1 percent for silver over the course of the mine’s life.

Paramount Gold Nevada is currently in the permitting stage of development consisting of county, state and federal permits. In late May 2019, the company received approval from the County Planning Commission for its proposed underground operation and expects to have state and federal permits by the end of 2020. The Grassy Mountain project is expected to commence production at the beginning of 2022. The company is also looking to expand the life of the Grassy Mountain project by continuing its exploration efforts both on the property and at the newly acquired Frost project, which is within trucking distance 12 miles away.

Paramount Gold also owns the past-producing Sleeper gold project in Nevada. The property produced approximately 1.7 million ounces of gold and 2.3 million ounces of silver between 1986 and 1996 with an average head grade of over 7 g/t gold over life of mine. The property hosts a 2017 preliminary economic assessment (PEA) which outlines a large-scale, open pit operation with a conventional 30,000 tonne per day heap leach of the oxide portion of the resource. The report also contains an after-tax NPV (five percent) of US $125 million, an after-tax IRR of 20 percent and a payback period of 3.5 years.

Franco-Nevada Corporation (TSX:FNV,NYSE:FNV) recently purchased a 2 percent NSR on the Sleeper project for US $2 million, speaking to the potential value of the property as it moves towards production.

Notable shareholders in Paramount Gold Nevada include FCMI Financial Corp. and Seabridge Gold (TSX:SEA) who own approximately 20 percent and approximately 10 percent of the outstanding shares, respectively. Management holds 4.5 percent of the outstanding shares.

Paramount Gold Nevada Highlights:

  • US-focused with 100 percent ownership of two advanced stage assets.
    • Developing a high-grade underground mine in eastern Oregon
      • Well defined, time-based state permitting process
    • Pipeline asset in Nevada with over 4 million ounces of gold inventory
  • Management team and board with a proven track record in creating shareholder value
    • Experts in capital markets
    • Demonstrated operational excellence
    • History of developing advanced stage precious metals projects
    • Aligned with all shareholders and stakeholders
  • Tight capital structure with a modest 26.5 million shares outstanding; significantly less than peer group
  • No debt
  • Strategic long-term, gold-focused shareholders collectively owning approximately 30 percent of the outstanding shares.
  • Management holds 4.5 percent of the outstanding shares.
  • Significant exploration potential at both Grassy Mountain and Sleeper

History

Paramount Gold Nevada Corp. is the product of a spin out from the $200M acquisition of the former Paramount Gold and Silver Corp. by Coeur Mining (NYSE:CDE) in April 2015.

Coeur Mining retained the former Paramount’s San Miguel Project and spun out the Sleeper Gold Project into Paramount Gold Nevada Corp.

In 2016, Paramount Gold Nevada obtained the Grassy Mountain gold project through the purchase of Calico Resources.

Grassy Mountain Gold Project

Paramount Gold Nevada’s wholly-owned 9,530-acre Grassy Mountain gold project is located in Malheur County, eastern Oregon. The project is located approximately 22 miles south of Vale, Oregon and 70 miles west of Boise, Idaho. The property resides in the rolling hills of the high desert region of the far western Snake River Plain.

2018 PFS

In May 2018, Paramount Gold Nevada released a PFS for the project. Highlights from the report include:

  • An average mill head grade of 7.06 g/t gold and 9.94 g/t silver;
  • Cash operating costs of $582 per ounce of gold;
  • Total operating cash-flows of $249 million;
  • An after-tax NPV (five percent) of $87.7 million;
  • An after-tax IRR of 28 percent;
  • Annual production of approximately 47,000 ounces of gold and 50,000 ounces of silver for 7.25 years;
  • Initial infrastructure capital expenditures of $69.9 million for a 750 ton per day mine and milling operation;
  • Total initial capital costs of $110 million; and
  • Payback period of 2.5 years.

The report outlined a small high grade, underground mining operation capable of producing up to 1,400 tonnes per day to feed a 750 ton per day mill and processing plant. The processing plant will utilize a gravity concentration circuit and carbon in leach circuit for an average recovery rate of up to 94.2 percent for gold and 70.1 percent for silver over the course of the mine’s life.

With the completion of the PFS, Paramount Gold Nevada is now focusing its efforts on submitting its permits into the Oregon Department of Geology and Mineral Industries (DOGAMI) and providing the Bureau of Land Management (BLM) with the required information for its environmental impact statement (EIS).

2018 Resources and Reserves

Grassy Mountain has a measured and indicated resource of 1.06 million ounces of gold grading 1.17 g/t gold and 33.3 million ounces of silver grading 3.67 g/t silver. The project also has proven and probable reserves of 362,000 ounces of gold grading 7.23 g/t gold and 516,000 ounces of silver grading 10.3 g/t silver.

Permitting

Shortly after releasing its PFS, Paramount Gold Nevada began preparing its consolidated mining permit for submission to the DOGAMI and BLM. The company is currently completing all of the baseline data reports (“BDRs”), which will be submitted for approval. To date, 18 of the 23 BDRs have been reviewed and accepted by state regulators, and four additional reports have been submitted with revisions in progress. The Mined Land Reclamation BDR will be filed with the final permit application. It is also the last of the baseline reports that need to be submitted to the DOGAMI.

Paramount Gold Nevada has received approval for the underground mine from the Planning Department of Malheur County.

“We are in the process of completing revisions to the geochemistry, groundwater, cultural and wildlife BDRs. Concurrently, we are completing all the detailed designs required for the Consolidated Permit Application to the DOGAMI and the updated plan of operation for the BLM, both of which are expected to be submitted in 3Q 2019” said Paramount Gold President and CEO, Glen Van Treek.

Paramount Gold Nevada expects to receive approval for all of its permits in the second half of 2020, and initiate construction in 2021.

 

Exploration

In 2018, Paramount Gold Nevada completed helicopter, magnetic and radiometric surveys over the property, including the recently acquired Frost project, to map structures and magnetic anomalies. Through the program, the company was able to identify three high-priority targets areas: North Spur, Dennis Folley and Wally Wood.

The North Spur target is located 500 feet north of Grassy and contains low-grade gold. Dennis Folley is two miles north of Grassy and has not been drilled to date. Surface mapping and sampling, however, has identified silicified outcrops with geochemical anomalies. The Wally Wood target is located approximately one-mile north-northwest of the main deposit. Historical drilling has intercepted 90 feet grading 0.71 g/t gold. The area also hosts a well-defined resistivity anomaly that is similar to the one found at the Grassy deposit.

Future exploration work may include the Crabgrass and Bluegrass targets. Crabgrass is located 1.5 miles southwest of the Grassy Mountain deposit and hosts a historical resource estimate of 0.6 million tonnes grading 1.35 g/t gold. Bluegrass has seen shallow drilling and has returned 24 meters grading 1.1 g/t gold.

Future exploration work at Grassy Mountain will be completed with the intent of optimizing the PFS. Exploration targets at Frost will be targeted based on: historic drill programs, which generated encouraging near surface results of up to 20 g/t gold; results from the 2018 magnetic and radiometric surveys; and controlled source audio-frequency magneto-tellurics survey which is currently being analyzed.

Frost Project

The wholly-owned 1,786-acre Frost project is located 12 miles west of the Grassy Mountain project. Paramount Gold Nevada acquired the project from Nevada Select Royalty, a subsidiary of Ely Gold Royalties Inc. (TSXV:ELY,OTCQB:ELYGF). Shortly after purchasing the property, the company staked an additional 40 claims to bring the land package up to 1,786 acres after identifying gold-bearing structures that extended past the boundaries of the property in recent magnetic and radiometric surveys.

The property features geological signatures that are similar to the mineralization found at Grassy Mountain. A high-grade historical drill intercept returned 1.5 meters grading 20 g/t gold. Other historical drill intercepts include 4.6 meters grading 14.5 g/t gold, 4.6 meters grading 8 g/t gold and 7.6 meters grading 1.2 g/t gold.

Paramount Gold Nevada will be conducting a drill program on the property in the near term as it explores the potential of bringing the project into production to extend the life of its Grassy Mountain project.

Sleeper Gold Project

Paramount Gold Nevada’s wholly-owned 15,500-hectare Sleeper gold project is a past-producing high-grade, open pit gold mine located 25 miles northwest of Winnemucca, Nevada. Between 1986 and 1996, AMAX Gold Inc. operated the Sleeper mine and produced approximately 1.7 million ounces of gold and 2.3 million ounces of silver. The property is located off the main highway and is north of Newmont Mining’s (NYSE:NEM) Sandman project.

2015 PEA

In September 2017, Paramount Gold Nevada released a PEA for the project. The report outlined a large-scale, open pit operation with a conventional 30,000 tonne per day heap leach facility. Highlights from the PEA include:

 

As part of the 2017 PEA, Paramount Gold Nevada released an updated resource estimate for the Sleeper project. The report outlined a measured and indicated resource of 297 million tonnes grading 0.33 g/t gold and 3.00 g/t silver containing 3.14 million ounces of gold and 28.9 million ounces of silver. The project also has an inferred resource of 148.8 million tonnes grading 0.31 g/t gold and 1.4 g/t silver containing 1.48 million ounces of gold and 6.7 million ounces of silver.

Exploration

Paramount Gold and Silver Corp. completed its first exploration program on the property in October 2010. The program included a total of 19 drill hole holes with the goal of verifying the data in existing models and to confirm continuity and strike extensions of known mineralized zones.

The following year, Paramount Gold and Silver Corp. released a new resource estimate and began preparations to develop a PEA for the property. The results of the PEA were announced in July 2012 and outlined a large-scale open pit mining operation with a heap leach processing plant. The report assumed an 81,000 ton per day operation with an average annual production of 172,000 ounces of gold and 263,000 ounces of silver over a period of 17 years.

In 2013, Paramount Gold and Silver Corp. completed a drill program that focused on the existing resource and pit areas. The program extended mineralization to the south and east of the existing resource, opened new depth potential at the Sleeper pit and intercepted exceptional results in several zones. Paramount Gold and Silver Corp. also completed an extensive database review and a reinterpreted lithological and structural model.

Following the spin out in 2015, Paramount Gold Nevada conducted thorough metallurgical testing, updated the resource estimate and updated the PEA. Moving forward, the company intends to complete a PFS for the Sleeper project. The company is also assessing the value of new geophysical programs to help identify high-priority drill targets outside of the primary resource area.

Franco-Nevada Royalty Agreement

In April 2019, Franco-Nevada Corporation (TSX:GNV,NYSE:FNV) purchased a two percent NSR on the Sleeper project for US$2 million. The money will be used to advance the permitting, feasibility work and exploration at Grassy Mountain.

Paramount Gold Nevada Management

Glen Van Treek — President, CEO and Director

Glen Van Treek has been President and director of Paramount Gold Nevada Corp. since February 2015. He was formerly the Chief Operating Officer and VP Exploration of Paramount Gold and Silver Corp. between January 2011 and the merger with Coeur Mining Inc. in April 2015. He has approximately 30 years of progressive global experience in all stages of mineral exploration. Prior to joining Paramount, he held various senior positions at Teck Resources Ltd. Most recently, he managed the production geology, resource modeling and exploration programs at Teck’s Quebrada Blanca mine in Chile. Prior to his experience at Teck, Van Treek held positions with Placer Dome and other junior exploration companies. He is a graduate geologist from the University of Chile. Throughout his career, Mr. Van Treek has worked across the globe with a focus in the Americas (north, central and south) and West Africa in all stages of the mining cycle, from grassroots exploration to production.

Carlo Buffone — CFO

Carlo Buffone is the Chief Financial Officer of Paramount Gold Nevada Corp. He was formerly the Chief Financial Officer of Paramount Gold and Silver Corp. and had served in this role since February 2010 through the merger with Coeur Mining Inc. in April 2015. Prior to joining Paramount, Buffone founded a private wine agency which developed sales channels for Italian artisanal wine makers. From 1995 to 2005, he held various senior financial management positions including his employment as a corporate development specialist for CMA Holdings Group, a wealth management firm with over $35 billion in assets under administration where he was responsible for mergers and acquisitions. Buffone is a CPA. He received his Bachelor of Commerce Degree from the University of Ottawa in 1993 and studied mergers and acquisitions at the Kellogg School of Management at Northwestern University in 2004.

John W. Seaberg — Executive Chairman

John Seaberg has over 25 years of experience in the mining industry spanning a wide array of positions with a focus on capital markets and strategic relationships. He completed a Bachelor of Science and Business Administration at Colorado State University, which he followed up with a Master of Business Administration from the University of Denver.

Seaberg was appointed to the Board in June 2018 and serves as the Boards Executive Chairman. From 2015 to 2018, he acted as Senior Vice President of Strategic Relations for Klondex Mines and was responsible for executing the company’s global investor relations strategy. In his 10 years with Newmont Mining, the world’s second largest gold producer, he served several roles including Vice President of Investor Relations and Director of Corporate Development. Prior to his tenure with Newmont, he spent six years with Apex Silver Mines Corporation, a silver producer, serving as controller and treasurer.

Nancy J. Wolverson, MS, MBA, CPG — US Project Manager

Nancy Wolverson is the US Project Manager for Paramount Gold Nevada Corp. She previously held the same position at Paramount Gold and Silver Corp from 2011 to 2015. She has over 30 years of experience in mineral exploration and development throughout the US and internationally, including over 15 years in Nevada. She has recently been a consulting geologist for several junior exploration companies and throughout her career has worked for large and small mining companies. Her development experience includes Haile, SC (AMAX Gold) and Bodie, CA (AMAX Gold).  Wolverson has a Master’s degree in Geology from the Mackay School of Mines in Reno, Nevada and an MBA in Finance from the University of Missouri-St. Louis. She is also a Certified Professional Geologist (AIPG-11048).

Rudi P. Fronk — Director

Rudi Fronk is a graduate of Columbia University from which he holds a Bachelor of Science in Mining Engineering and a Master of Science in Mineral Economics. He has over 30 years of experience in the gold sector primarily as a senior officer and director of publicly traded gold exploration and development companies.

Fronk was appointed to the Board in January 2017 and serves as the Board’s Non-Executive Chairman. In 1999, he co-founded Seabridge Gold Inc., a US$750 million market cap company with proven and probable gold reserves exceeding 45 million ounces and one of the world’s largest resource bases of gold and copper. He currently serves as Chairman and as the company’s CEO, a position he has held since its inception. In addition to his extensive experience with Seabridge Gold, he has held senior management positions with Greenstone Resources, Columbia Resources, Behre Dolbear & Company, Riverside Associates, Phibro-Salomon, Amax and DRX.

John Carden, Ph.D. — Director

Dr. John Carden has over 35 years of experience in exploration management, teaching and research and has been a director of Paramount Gold Nevada Corp. since February 2015 and a director of Paramount Gold and Silver Corp. from September 2006 through the completion of the merger with Coeur Mining Inc. in April 2015. Since 2001, he has been a geologic consultant and a director of a number of junior resource companies each which were TSXV-listed companies. Dr. Carden worked as a senior exploration geologist for Exxon Minerals, Atlas Precious Metals, Tenneco and Echo Bay Mines and later was Director of US Exploration from 1992 until 1998 for Echo Bay Mines. From 2010 to the present, Dr. Carden has acted as a geologic consultant to Otis Gold Corp. He is a licensed professional geologist in the State of Washington. Dr. Carden received his B.Sc. and M.Sc. in geology From Kent State University in Ohio, and his doctorate in geology from the Geophysical Institute at the University of Alaska in 1978.

Christopher Reynolds — Director

Christopher Reynolds has over 25 years of mineral industry and public accounting experience and has been a director of Paramount Gold Nevada Corp. since February 2015. He was a director of Paramount Gold and Silver Corp. from December 2009 through April 2015 when the merger with Coeur Mining Inc. was completed. Since May 2011, he has been the Vice President Finance and Chief Financial Officer of Seabridge Gold Inc., a TSX and NYSE American listed corporation. From October 2007 to April 2011, he served as Vice President of Finance and Chief Financial Officer of Norsemont Mining Inc. and, prior to that, he served as Senior Vice President, CFO and Secretary of Southern Era Diamonds Inc. He has held various finance and accounting positions at Southern Platinum Corp., TVX Gold Inc., Inmet Mining Corporation and Price Waterhouse, now PricewaterhouseCoopers. Reynolds also served as a director of Arizona Star Resource Corp. He is a CPA, CGA and holds a B.A. (Economics) from McGill University. He has extensive experience with the mineral industry, finance and accounting, and we believe he is qualified to serve on our board of directors. Reynolds serves as Chairman of our Audit Committee.

Eliseo Gonzalez-Urien — Director

Eliseo Gonzalez-Urien currently serves as a member of the board of directors of Seabridge Gold since January 2006 and as a consulting geologist for Seabridge since March 2003. He has been a director of Paramount Gold Nevada Corp. since February 2015 and a director of Paramount Gold and Silver Corp. from March 2009 through the merger with Coeur Mining Inc. in April 2015. He is an exploration geologist with over 30 years of experience in the mining industry. From 1989 through 2001, he held various executive positions with Placer Dome Inc. including senior vice president of the parent company and president of Placer Dome Exploration Inc. During this period, he was charged with responsibility for Placer Dome’s worldwide exploration activities. Prior to Placer Dome, Gonzalez-Urien held senior positions with BHP-Utah Inc. and Noranda. He holds a degree in geology from the University of Santiago, Chile, followed by post graduate studies in geology at the University of California, Berkeley.

Pierre Pelletier — Director

Pierre Pelletier is an environmental engineer, with a Masters of Business Administration from Queens University and a qualified person under National Instrument 43-101. He has over 20 years of extensive international experience spanning the operational, technical and financial aspects of the environmental consulting industry managing complex environmental and social impact projects. From 2012 through to the present, he has served as managing director of Environmental Resources Management Canada Ltd., a leading global provider of environmental, health, safety, risk and social consulting services with an emphasis on the mining and oil and gas sectors. From 1998 through 2009, Pelletier served as a Project Manager for Rescan Environmental Services Ltd., managing project and technical development. In 2010, he became President and Chief Operating Officer for Rescan and remained in this role through 2012.

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The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Paramount Gold Nevada Corp. and seek advice from a qualified investment advisor.