In a Nov. 15 research note, ROTH Capital Partners analyst Jake Sekelsky reported Paramount Gold Nevada Corp. (PZG:NYSE.American) entered into an agreement to purchase the Frost project in Oregon, about 12 miles from its Grassy Mountain site, for $250,000.
"The transaction provides Paramount with the opportunity to discover additional ounces that could provide additional mill feed for Grassy Mountain," he noted.
Sekelsky also reviewed the agreement terms and discussed the likelihood of Paramount drilling the new property.
Per the agreement terms, Paramount would pay Nevada Select Royalty (private) five payments to fully own Frost, he explained. They are $10,000 on closing, $15,000 once a drill permit is obtained, $25,000 on the first year anniversary of the permit receipt, $50,000 on the second and third anniversaries and $100,000 on the fourth. Nevada Select would retain a 2% net smelter royalty on Frost.
In view of successful past exploration efforts at Frost, Paramount will likely drill there in 2019 to delineate additional ounces to be added to its Grassy Mountain mine plan, noted Sekelsky. Most recently, Paramount's radiometric magnetic survey over Frost revealed geology similar to Grassy Mountain's. Prior to that, historical drilling returned high-grade intercepts, including 1.5 meters grading 20 grams per ton at shallow depths.
As for permitting at Grassy Mountain, it continues to progress, with 14 of the 23 baseline studies approved so far. The remainder should be greenlighted in H1/19, at which point Paramount could submit the consolidated permit application for Grassy Mountain.
"Paramount should be in line for a rerating once permitting milestones are achieved over the next year," Sekelsky highlighted.
Currently, the Buy-rated company is trading at ~$1.02 per share, whereas ROTH's target price on it is $4 per share.
Editor's note: an earlier version of this article incorrectly named the company as Paramount Gold and Silver. In 2015 Paramount Gold and Silver was acquired by Coeur Mining and Paramount Gold Nevada was spun out. We apologize for the error.
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Disclosures from ROTH Capital Partners, Paramount Gold Nevada Corp., Company Note, November 15, 2018
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Paramount Gold Nevada Corp and as such, buys and sells from customers on a principal basis.
Shares of Paramount Gold Nevada Corp may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
