Document:

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Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Consolidated Financial Statements

(Unaudited)

Three Months ended September 30, 2005 and 2004

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

To the shareholders of Paramount Gold Mining Corp. (An Exploration Stage Mining Company)

The financial statements and the notes thereto are the responsibility of the management of Paramount Gold Mining Corp. (An Exploration Stage Mining Company). These financial statements have been prepared in accordance with United States generally accepted accounting principles.

Management has developed and maintained a system of internal controls to provide reasonable assurance that all assets are safeguarded and to facilitate the preparation of relevant, reliable and timely financial information.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control. 

The financial statements have been audited by HLB Cinnamon Jang Willoughby LLP, the independent auditors, in accordance with auditing standards in the United States of America on behalf of the shareholders.

The auditors have full and unrestricted access to the Audit Committee.

“Christopher Crupi”

Christopher Crupi, CA

President and Chief Financial Officer.

Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Balance Sheet

As at September 30, 2005 and June 30, 2005 (Unaudited)

(expressed in United States dollars, unless otherwise stated)

________________________________________________________________________

September 30,

       June 30,

2005

2005

(Unaudited)

(Audited)

Assets

Current Assets:

Cash

$ 327,752

      $    11,250   

Prepaid Expense

7,037

-

334,789         

$     11,250

=====================================================================

Liabilities and Shareholders’ Equity

Liabilities

Current Liabilities:

Accounts payable

$      11,907

-   

Advances (Note 4)

472,303    

      -

______________________________________________________________________________

$    483,210

$             -

Stockholders’ Equity and Deficit

Capital Stock (Note 3)

$     47,023

$   13,023

Deficit

    (196,444)

      (1,773)

______________________________________________________________________________

$( 149,421)

$   11,250

$   334,789

$  11,250

=====================================================================

Signed on behalf of the Board of Directors

“Christopher Crupi”

Director

“Charles William Reed”

Director

The accompanying notes are an integral part of the financial statements.

Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Statement of Operations

For the Three Months Ended September 30, 2005 and 2004 (Unaudited)

(expressed in United States dollars, unless otherwise stated)

______________________________________________________________________________

For the

For the

Cumulative since

Three Months

Three Months

Ended

Ended

Inception 

September 30,

September 30,

to 

2005

2004

September 30, 2005

(Unaudited)

(Audited)

(Unaudited)

______________________________________________________________________________

Interest Income

$            15        

$          -

$         15

Expenses:

Incorporation costs

-

-

1,773

Exploration

60,000

-

60,000

Professional Fees

57,750

-

57,750

Travel and Lodging

18,328

-

18,328

Geologist Fees and Expenses

16,296

-

16,296

Corporate Communications

17,780

-

17,780

Consulting Fees

15,000

-

15,000

Marketing

7,948

-

7,948

Office and Administration

1,310

-

1,310

Service Charges

274

-

274

______________________________________________________________________________

194,686

-

196,459

Net Loss

194,671

-

196,444

Deficit, beginning

1,773

1,773

-

______________________________________________________________________________

Deficit, ending

$ 196,444

$    1,773

$    196,444

=====================================================================

 

Earnings per Share

$  (0.067)

$ (0.001)

$ (0.067)

The accompanying notes are an integral part of the financial statements.

Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Statement of Cash Flows

For the Three Months Ended September 30, 2005 and 2004 (Unaudited)

(expressed in United States dollars, unless otherwise stated)

______________________________________________________________________________

For the

For the

Three Months

Three Months

Ended

Ended

September 30,

September 30,

2005

2004

(Unaudited)

(Audited)

FINANCING ACTIVITIES

Proceeds from advances (Note 4)

$

 472,303

  -

Proceeds from share issue (Note 3)

     34,000

________________________________________________________________________

$ 506,303

OPERATING ACTIVITIES

Net Income

($ 194,671)

  -

Accounts Payable

       11,908

  -

Prepaid Expense

     (7,037)

________________________________________________________________________

 ($189,800)

Net increase (decrease) in cash and cash equivalents

    316,503

 -

Cash and cash equivalents, beginning of year

      11,250

 -

________________________________________________________________________

Cash and cash equivalents, end of year

$  327,752

 -

===============================================================

The accompanying notes are an integral part of the financial statements.

Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Notes to Financial Statements (Unaudited)

(expressed in United States dollars, unless otherwise stated)

____________________________________________________________________________

1 – Basis of Presentation:

a – Governing Statutes and Nature of Operations

The Company, incorporated under the General Corporation Law of the State of Delaware, is a natural resource company engaged in the acquisition, exploration and development of gold and precious metal properties.  The corporation’s name was changed from PanelMaster, Corp. to Paramount Gold Mining Corp. on April 14, 2005.  

b – Going Concern

The Company’s ability to continue as a going concern is dependent upon achieving profitable operations and upon the continued financial support of its lenders and investors.  The outcome of these matters cannot be predicted at this time.

Due to a lack of operational history, the Company must continue to obtain external investment capital and financing.  Ongoing operations will be dependent upon the execution of the Business Plan and the successful listing of the Company on a public market.

These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the company be unable to continue.  The company is currently involved in refinancing capital assets and raising funds via share transactions.

c – Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

2 – Principal Accounting Policies

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in these interim statements under the rules and regulations of the Securities and Exchange Commission (“SEC”). Accounting policies used in fiscal 2006 are consistent with those used in fiscal 2005. The results of operations for the three-month period ended September 30, 2005 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2006. These interim financial statements should be read in conjunction with the financial statements for the fiscal year ended June 30, 2005 and the notes thereto included in the Company’s Form 10KSB filed with the SEC on (date). The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States.

Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Notes to Financial Statements (Continued) (Unaudited)

(expressed in United States dollars, unless otherwise stated)

2 – Principal Accounting Policies (Continued)

The financial statements are prepared by management in accordance with generally accepted accounting principles of the United States of America.  The principal accounting policies followed by the Company are as follows:

Cash and cash equivalents

Cash and cash equivalents include cash and highly liquid investments with an original maturity of three months or less. 

Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107 Disclosures about Fair Value of Financial Instruments.  The estimated fair value amounts have been determined by the Company, using available market information and appropriate valuation methodologies.  The fair value of financial instruments classified as current assets including cash approximate carrying value due to the short-term maturity of the instruments.

Mineral Property Option Payments and Exploration Costs

The Company expenses all costs related to the maintenance and exploration of mineral claims in which it has secured exploration rights prior to establishment of proven and probable reserves.   To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all costs are being expensed.

Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Notes to Financial Statements (Continued) (Unaudited)

(expressed in United States dollars, unless otherwise stated)

3 – Capital Stock

Authorized –

100,000,000 Common shares with $0.001 par value

Issued and fully paid –

Paid In

Shares

Capital

__________________________________________________________________________

Balance, June 30, 2005 

11,267,726

$      13,023

(i)

Shares issued

34,000,000

$      34,000

(ii)

Forward split of shares – 2 new common 

45,267,726

shares for 1 old common share

(iii)

Returned to Treasury

 (61,660,000)

______________________________________________________________________________

Balance, September 30, 2005

 28,875,452

$   47,023

=====================================================================

(i)

On July 8, 2005 the Company issued 34,000,000 shares at par value.

(ii)

On July 11, 2005 the Board of Directors approved a forward split of the issued and outstanding common shares on the basis of 2 new common shares for each existing common share.

(iii)

Effective September 30, 2005, 61,660,000 shares were returned to treasury.

4 – Advances

The Company’s share capital financing was not scheduled to close until October 2005.  As such, short term advances were negotiated as bridge financing.  Advances are on demand and bear interest at a rate of 8% per annum.  As of the release of the financial statements, this advance has been repaid by way of private placement.  Please refer to Note 6 of the Financial Statements.

Paramount Gold Mining Corp.

(An Exploration Stage Mining Company)

Notes to Financial Statements (Continued) (Unaudited)

(expressed in United States dollars, unless otherwise stated)

5 – Related Party Transactions

During the three months ended September 30, 2005 Bill Reed, a director, received payments on account of geologist fees and expenses in the amount of $11,977.  During the three months ended September 30, 2004 there were no related party transactions.

6 – Subsequent Events

Subsequent to September 30, 2005 the following events occurred:

Private Placement

On October 13, 2005, the Company concluded arrangements for a US $750,000 private placement financing of 1-year restricted stock. The transaction is based on a per share price of US $1.26 with no warrants attached or finder fees. The price is calculated on the basis of the average closing price of Paramount's common stock over the past 10 trading days.

Interest in San Miguel Groupings

The Company signed an agreement to extend the due diligence period with American Stellar Energy, Inc. to November 30, 2005 to complete title search. 

Letter of Intent with Sydney Resource Corp.

On September 28, 2005 the Company signed a Letter of Intent with Sydney Resource Corp. to acquire up to a 75% interest in a property in the Yoquivo District, Chihuahua State, Mexico, .  Based on due diligence conducted, the Company did not exercise its option under the Letter of Intent and the agreement was terminated. 

Letter of Intent with Minera ABX Exploraciones S.A., a subsidiary of Barrick Gold Corporation

On October 11, 2005 the Company and its newly formed Peruvian subsidiary, Compania Minera Paramount SAC, have signed a Letter of Intent with Minera ABX Exploraciones S.A. (“Minera ABX”), a subsidiary of Barrick Gold Corporation, to acquire a minimum 51% interest in the Linda property, located in the Department of Ayacucho, South Peru.  The agreement calls for a two-year work commitment including 6000 metres of drilling, of which 2000 metres is a firm commitment during the first year of the deal.  Once the Company has completed the drill program, it will have acquired a 51% interest in the property and will remain the operator of the project as long as it maintains a majority interest.  

Minera ABX has been granted a back-in right to reach a 65% interest, exercisable at any time after the Company acquires its 51% interest in the property, if exploration work uncovers a gold resource greater than 2 million ounces.  To earn its 65% interest, Minera ABX will reimburse the Company an amount equal to two times all exploration expenditures incurred by the Company and Minera ABX will become the operator of the project.August 3, 2005

November 25, 2005

Mr. K.C. Kane 

Drilling Consultants Inc.

P.O. Box 5249

Spokane, Washington 99205

VIA FACSIMILE: (509) 684-3105

Re:  Option Agreement to acquire a 100% interest in La Blanca property, located in the municipality of Guazapares, Chihuahua, Mexico between Drilling Consultants Inc. (Kane) and Paramount Gold de Mexico S.A. (Paramount), a wholly-owned subsidiary of Paramount Gold Mining Corp., a U.S. publicly-traded company. La Blanca consists of 4 concessions totaling approximately 150 hectares. 

Dear Mr. Kane;

I am pleased to present the following proposal regarding La Blanca. 

Terms:

1)

PGDP agrees to bear the cost of maintaining the Concessions in good standing, regarding taxes due, all work assessment reports on the concessions, etc.  

2)

PGDP will have no right to encumber the concessions in any way, until the full price, outlined above, has been paid.

3)

DCI agrees to provide PGDP an exclusive due diligence period that extends to January 20, 2005. DCI further agrees to provide PGDP access to the 4 mining concessions during the due diligence period in order that PGDP may conduct on-site testing.

4)

DCI agrees to make available to PGDP all data in its possession. Such data to include, but not be limited to, data that supports the drill-indicated block of approximately 6 million tonnes of ore that average 4.7 ounces per tonne silver and 0.013 ounces per tonne gold;

5)

DCI agrees to provide evidence of clear title satisfactory to PGDP on or before January 20, 2005.

6)

DCI will confirm that there is no royalty payable (NSR), to any party, on any of the 4 concessions detailed above.

Purchase Price Schedule:

The total purchase price for the Interests and assets outlined above will be U.S. $4,300,000.00 (Four million three hundred thousand dollars) paid for under the following terms and conditions;

(UPA) = Underlying Purchase Agreement

1)

$50,000.00 (Fifty thousand dollars) due on signing of this Agreement (the payment will be refundable if a satisfactory title search is not secured by Paramount from DCI by January 20, 2006)

2)

$150,000.00 (One hundred fifty thousand dollars) due on January 31, 2006 at the time of signing a definitive purchase and sale agreement.

3)

$125,000.00 (One hundred twenty five thousand dollars) due on April 30, 2006

4)

$180,000.00 (One hundred eighty thousand dollars) due on June 10, 2006 (UPA)

5)

$125,000.00 (One hundred twenty five thousand dollars) due on July 30, 2006

6)

$200,000.00 (Two hundred thousand dollars) due on October 30, 2006

7)

$180,000.00 (One hundred eighty thousand dollars) due on November 10, 2006 (UPA)

8)

$200,000.00 (Two hundred thousand dollars) due on January 30, 2007

9)

$210,000.00 (Two hundred ten thousand dollars) due on February 10, 2007 (UPA)

10)

$150,000.00 (One hundred fifty thousand dollars) due on April 30, 2007

All payments beyond January 20, 2007 will be Underlying Property Agreement (UPA) Payments and PGDP will assume the responsibilities of making these payments directly to the property owner.

11)

$210,000.00 (Two hundred ten thousand dollars) due on May 10, 2007

12)

$225,000.00 (Two hundred twenty five thousand dollars) due on September 10, 2007

13)

$225,000.00 (Two hundred twenty five thousand dollars) due on January 10, 2008

14)

$250,000.00 (Two hundred fifty thousand dollars) due on May 10, 2008

15)

$250,000.00 (Two hundred fifty thousand dollars) due on September 10, 2008

16)

$325,000.00 (Three hundred twenty five thousand dollars) due on January 10, 2009

17)

$325,000.00 (Three hundred twenty five thousand dollars) due on May 10, 2009

18)

$435,000.00 (Four hundred thirty five thousand dollars) due on September 10, 2009

19)

$435,000.00 (Four hundred thirty five thousand dollars) due on January 10, 2010

The payments shall be made by wire transfer no later than the date outlined above. All payments shall be applied towards the total purchase price, as outlined above. 

At the completion of the due diligence period, PGDP will inform DCI of its intention to proceed or not with the Agreement. If it chooses not to proceed, PGDP will forfeit the US$50,000 deposit (as long as Term 5 as noted above has been satisfied). If PGDP elects to proceed, both parties agree to sign a definitive Purchase and Sale Agreement on or before January 31, 2006 to formally close this transaction.

Obligations of Kane:

1.

Upon the signing of this Agreement, Kane agrees to:

a)

Grant to Paramount an exclusive due diligence period to January 20, 2006;

b)

Make available to Paramount all data in its possession in order that Paramount may conduct its due diligence. Such data to include, but not be limited to, data that supports the drill-indicated block of approximately 6 million tonnes of ore that average 4.7 ounces per tonne silver and 0.013 ounces per tonne gold; 

c)

Confirm that there is no royalty payable (NSR), to any party, on any of the 4 concessions that constitute La Blanca;

d)

Deliver a certified copy of title satisfactory to Paramount. 

At the completion of the due diligence period, Paramount will inform Kane of its intention to proceed or not with the Agreement. If it chooses not to proceed, Paramount will forfeit the US$50,000 deposit (as long as a certified copy of title was delivered on time). If Paramount elects to proceed, both Paramount and Kane agree to sign a definitive agreement on or before January 31, 2006 to formally close this transaction.

Subject to any disclosure requirements as promulgated by the Securities and Exchange Commission, the parties agree to consult each other and agree on joint news releases in the event of any public disclosure.

The parties mutually understand that, subject to the conditions contained herein, this letter constitutes a binding agreement.

Please indicate your concurrence with the foregoing by affixing your signature below, and thereafter transmitting such executed copy in the manner heretofore described.

DATED this 8th day of November, 2005

Per:  /S/ Chris Crupi

Christopher Crupi, CA

President & CFO 

Paramount Gold Mining Corp.

DATED this 8th day of November, 2005

Per:  /S/ K.C. Kane

K.C. Kane

Drilling Consultants Inc.   

1

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