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Paramount Gold Nevada (NYSE American: PZG) has completed its previously announced financing with Sprott Resource and Streaming Royalty for total proceeds of $15 million, part of which will be used to advance its proposed Grassy Mountain mine in eastern Oregon.
The Grassy Mountain project consists of approximately 8,200 acres of private and public land in Malheur county. The private land hosts a gold-silver deposit for which results of a positive feasibility study have been released and key permitting milestones accomplished.
In early October, Grassy Mountain became the first mine project in Oregon to have its consolidated permit application determined complete by state agencies, who are now expected to start permit writing for the high-grade gold and silver mine.
Subsequent to the state agency decision, the Oregon Department of Geology and Mineral Industries moved the Grassy Mountain into the next phase of permitting. Based on state regulations, it is expected that the final consolidated permit package will be issued within one year, Paramount said last month.
“With the receipt of the notice to proceed from the state of Oregon, the Grassy permitting process has taken on greater certainty and this financing will allow us to fund our activities through to the receipt of final permits,” Paramount CEO Rachel Goldman said in a news release.
The Sprott financing is in the form of a non-dilutive secured royalty convertible note that carries an interest rate of 10% per annum, payable in cash or shares at a 7% discount to the 10-day VWAP from the scheduled interest payment date.
The note is convertible into a gross revenue royalty of 4.75% of the gold and silver produced from the Grassy Mountain mine proportionate to the final amount of funds that have been advanced upon reaching commercial production. Paramount has the option to buy back half of the royalty by paying either $11.25 million on the second anniversary of the financing agreement, or $12.375 million on the third anniversary.
“With the closing of this financing, Paramount will start a catalyst rich 2024 with the financial flexibility to fund our goal of making Grassy Mountain the first modern mine in the state of Oregon, and we welcome Sprott Streaming as a new stakeholder supporting our journey,” Goldman added.
Based on the feasibility study published in October 2022, the proposed mine has an initial eight-year life producing 47,000 oz. of gold and 55,000 oz. of silver annually. It has an after-tax internal rate of return of 22.5% and net present value (at 5% discount) of $114.1 million.
Initial capital expenditure is estimated at $136.2 million, with an after-tax payback period of 3.3 years.
