PERPETUA RESOURCES CORP. 10-K

Item 8. Financial Statements and Supplementary Data. PERPETUA RESOURCES CORP. TABLE OF CONTENTS ​ Page ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238 ) ​ F-2 ​ ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1208 ) ​ F-3 ​ ​ ​ Consolidated Balance Sheets as of December 31, 2021 and 2020 ​ F-4 ​ ​ ​ Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020 ​ F-5 ​ ​ ​ Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 ​ F-7 ​ ​ Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2021 and 2020 ​ F-6 ​ ​ Notes to the Consolidated Financial Statements ​ F-8 ​ ​ ​ ​ F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Perpetua Resources Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Perpetua Resources Corp. and its subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of operations, of changes in shareholders’ equity and of cash flows for the year then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Denver, Colorado March 18, 2022 We have served as the Company’s auditor since 2021. ​ ​ F-2 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Perpetua Resources Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Perpetua Resources Corp. and subsidiaries (the "Company") as of December 31, 2020, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows, for the year ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and its financial performance and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Deloitte LLP Chartered Professional Accountants Vancouver, Canada February 11, 2022 We have served as the Company’s auditor since 2011. ​ ​ F-3 Table of Contents Perpetua Resources Corp. CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2021 2020 ASSETS ​ ​ CURRENT ASSETS ​ ​ Cash and cash equivalents ​ $ 47,852,846 ​ $ 25,037,766 Receivables ​ 279,946 ​ 107,727 Prepaid expenses ​ 946,281 ​ 646,996 ​ ​ 49,079,073 ​ 25,792,489 NON-CURRENT ASSETS ​ ​ Buildings and equipment, net (Note 3) ​ 165,256 ​ 189,294 Right-of-use assets (Note 4) ​ 49,103 ​ 235,965 Environmental reclamation bond (Note 13) ​ ​ 3,000,000 ​ ​ — Mineral properties and interest (Note 5) ​ 72,204,334 ​ 71,913,864 TOTAL ASSETS ​ $ 124,497,766 ​ $ 98,131,612 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ CURRENT LIABILITIES ​ ​ Trade and other payables ​ $ 2,838,214 ​ $ 3,736,222 Lease liabilities (Note 4) ​ 69,987 ​ 201,825 Environmental reclamation liabilities (Note 13) ​ ​ 2,835,000 ​ ​ — ​ ​ 5,743,201 ​ 3,938,047 NON-CURRENT LIABILITIES ​ ​ Convertible notes (Note 7) ​ — ​ 9,562,293 Convertible note derivative (Notes 7,8) ​ — ​ 26,060,446 Warrant derivative (Notes 6) ​ 100,770 ​ 874,864 Lease liabilities (Note 4) ​ — ​ 65,136 Environmental reclamation liabilities (Note 13) ​ 7,053,200 ​ — TOTAL LIABILITIES ​ 12,897,171 ​ 40,500,786 ​ ​ ​ ​ ​ ​ ​ COMMITMENT AND CONTINGENCIES (Note 14) ​ ​ ​ ​ ​ ​ ​ ​ ​ SHAREHOLDERS’ EQUITY (Note 9) ​ ​ Common stock, no par value, unlimited shares authorized, 62,971,859 and 47,481,134 shares outstanding, respectively ​ 615,359,152 ​ 528,715,788 Additional paid-in capital ​ ​ 29,454,696 ​ ​ 26,176,265 Accumulated deficit ​ ( 533,213,253 ) ​ ( 497,261,227 ) TOTAL SHAREHOLDERS’ EQUITY ​ 111,600,595 ​ 57,630,826 ​ ​ ​ ​ ​ ​ ​ TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY ​ $ 124,497,766 ​ $ 98,131,612 ​ See accompanying notes to the consolidated financial statements ​ F-4 Table of Contents Perpetua Resources Corp. CONSOLIDATED STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31 ​ 2021 2020 EXPENSES ​ ​ Consulting ​ $ 185,031 ​ $ 104,428 Corporate salaries and benefits ​ 2,038,883 ​ 1,404,980 Depreciation ​ 58,922 ​ 96,605 Directors’ fees ​ 767,013 ​ 333,489 Exploration ​ ​ 22,716,806 ​ ​ 26,416,999 Environmental liability expense ​ ​ 12,198,651 ​ ​ — Gain on sale of equipment ​ ​ — ​ ​ ( 8,500 ) Office and administrative ​ 1,493,211 ​ 402,169 Professional fees ​ 1,261,038 ​ 813,463 Shareholder and regulatory ​ 555,517 ​ 387,632 Travel and related costs ​ 14,789 ​ 32,801 OPERATING LOSS ​ 41,289,861 ​ 29,984,066 ​ ​ ​ ​ ​ ​ ​ OTHER EXPENSES (INCOME) ​ ​ Change in fair value of warrant derivative (Note 6) ​ ( 774,094 ) ​ 600,141 Change in fair value of convertible note derivative (Note 8) ​ ( 5,710,557 ) ​ 179,133,742 Finance costs ​ 362,551 ​ 3,353,367 Foreign exchange loss ​ 842,573 ​ 7,838,609 Interest income ​ ( 58,308 ) ​ ( 277,818 ) Total other loss (income) ​ ( 5,337,835 ) ​ 190,648,041 ​ ​ ​ ​ ​ ​ ​ NET LOSS ​ $ 35,952,026 ​ $ 220,632,107 ​ ​ ​ ​ ​ ​ ​ NET LOSS PER SHARE, BASIC AND DILUTED ​ $ 0.66 ​ $ 6.45 ​ ​ ​ ​ ​ ​ ​ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED ​ 54,530,322 ​ 34,227,710 ​ See accompanying notes to the consolidated financial statements ​ ​ F-5 Table of Contents Perpetua Resources Corp. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY For the years ended December 31, 2021 and 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional Paid ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ in ​ Accumulated ​ ​ ​ ​ Shares Amount Capital Deficit Total BALANCE, December 31, 2019 27,112,550 ​ $ 283,489,579 ​ $ 25,882,517 ​ $ ( 276,629,120 ) ​ $ 32,742,976 Share based compensation — ​ — ​ ​ 1,546,771 ​ — ​ 1,546,771 Shares issued upon conversion of convertible notes 19,969,280 ​ 242,142,800 ​ ​ — ​ — ​ 242,142,800 Share issue cost — ​ ( 22,148 ) ​ ​ — ​ — ​ ( 22,148 ) Shares issued through stock appreciation rights 24,142 ​ 233,103 ​ ​ ( 186,334 ) ​ — ​ 46,769 Exercise of share purchase options 375,162 ​ 2,872,454 ​ ​ ( 1,066,689 ) ​ — ​ 1,805,765 Net loss for the year — ​ — ​ ​ — ​ ( 220,632,107 ) ​ ( 220,632,107 ) BALANCE, December 31, 2020 47,481,134 ​ ​ 528,715,788 ​ ​ 26,176,265 ​ ​ ( 497,261,227 ) ​ ​ 57,630,826 Share based compensation — ​ — ​ ​ 3,949,204 ​ — ​ 3,949,204 Shares sold through stock offering (Note 9) 10,952,382 ​ 57,500,005 ​ ​ — ​ — ​ 57,500,005 Share issue cost — ​ ( 3,243,184 ) ​ ​ — ​ — ​ ( 3,243,184 ) Shares issued upon conversion of convertible notes (Note 8) 4,351,850 ​ 31,183,654 ​ ​ — ​ — ​ 31,183,654 Shares issued through stock appreciation rights 39,789 ​ 301,794 ​ ​ ( 279,868 ) ​ — ​ 21,926 Restricted shares units distributed ​ 21,166 ​ ​ 119,981 ​ ​ ( 119,981 ) ​ ​ — ​ ​ — Exercise of share purchase options 125,538 ​ 781,114 ​ ​ ( 270,924 ) ​ — ​ 510,190 Net loss for the year — ​ — ​ ​ — ​ ( 35,952,026 ) ​ ( 35,952,026 ) BALANCE, December 31, 2021 62,971,859 ​ $ 615,359,152 ​ $ 29,454,696 ​ $ ( 533,213,253 ) ​ $ 111,600,595 Footnotes: Common share amounts have been retrospectively restated for all prior periods to reflect the Share Consolidation effected on January 27, 2021. Refer to Note 9(a) – Equity - Authorized for more information See accompanying notes to the consolidated financial statements ​ ​ F-6 Table of Contents Perpetua Resources Corp. CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended ​ ​ December 31, 2021 ​ December 31, 2020 OPERATING ACTIVITIES: ​ ​ Net loss ​ $ ( 35,952,026 ) ​ $ ( 220,632,107 ) Noncash items included in net loss: ​ ​ Share based compensation (Note 9) ​ 3,949,204 ​ 1,546,771 Depreciation (Note 3) ​ 58,922 ​ 96,605 Accretion of convertible debt discount (Note 7) ​ 362,545 ​ 3,096,636 Gain on disposal of buildings and equipment ​ — ​ ( 8,500 ) Change in fair value of warrant derivative (Note 6) ​ ( 774,094 ) ​ 600,141 Change in fair value of convertible note derivative (Note 8) ​ ( 5,710,557 ) ​ 179,133,742 Environmental liability expense ​ ​ 12,198,651 ​ ​ — Unrealized foreign exchange loss ​ 917,662 ​ 7,922,572 Changes in: ​ ​ ​ Receivables ​ ( 182,331 ) ​ 15,849 Prepaid expenses ​ ( 299,285 ) ​ 135,420 Trade and other payables ​ ( 905,198 ) ​ ( 682,198 ) Environmental reclamation liabilities ​ ​ ( 2,310,451 ) ​ ​ — Net cash used in operating activities ​ ( 28,646,958 ) ​ ( 28,775,069 ) ​ ​ ​ ​ ​ ​ ​ INVESTING ACTIVITIES: ​ ​ Investment in mineral properties and interest (Note 5) ​ ( 290,470 ) ​ ( 490,495 ) Purchase of buildings and equipment ​ ( 34,884 ) ​ ( 38,796 ) Sale of buildings and equipment ​ — ​ 8,500 Purchase of surety bond ​ ​ ( 3,000,000 ) ​ ​ — Net cash used in investing activities ​ ( 3,325,354 ) ​ ( 520,791 ) ​ ​ ​ ​ ​ ​ ​ FINANCING ACTIVITIES: ​ ​ Proceeds from issuance of Convertible Notes, net (Note 7) ​ — ​ 35,000,000 Proceeds from sale of common stock ​ ​ 57,500,005 ​ ​ — Payment of shares issue costs (Note 9) ​ ( 3,243,184 ) ​ ( 259,319 ) Finance cost deducted as share issue costs ​ ​ — ​ ​ 224,210 Proceeds from exercise of share purchase options (Note 9) ​ 532,116 ​ 1,852,534 Net cash provided by financing activities ​ 54,788,937 ​ 36,817,425 ​ ​ ​ ​ ​ ​ ​ Effect of foreign exchange on cash and cash equivalents ​ ( 1,545 ) ​ ​ 11,579 Net increase in cash and cash equivalents ​ 22,815,080 ​ ​ 7,533,144 Cash and cash equivalents, beginning of year ​ 25,037,766 ​ ​ 17,504,622 Cash and cash equivalents, end of year ​ $ 47,852,846 ​ $ 25,037,766 ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL CASH FLOW INFORMATION: ​ ​ Cash paid for interest ​ $ 7,190 ​ $ 32,521 ​ ​ ​ ​ ​ ​ ​ CASH AND CASH EQUIVALENTS ​ ​ Cash ​ $ 2,423,974 ​ $ 2,244,839 Investment savings accounts ​ 24,246,918 ​ 6,588,184 GIC and term deposits ​ 21,181,954 ​ 16,204,743 Total cash and cash equivalents ​ $ 47,852,846 ​ $ 25,037,766 ​ See accompanying notes to the consolidated financial statements ​ ​ F-7 Table of Contents Perpetua Resources Corp. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of Operations Perpetua Resources Corp. (the “Corporation”, the “Company”, “Perpetua Resources” or “Perpetua”) was incorporated on February 22, 2011 under the Business Corporation Act of British Columbia. The Company was organized to hold shares in wholly owned subsidiaries that locate, acquire, develop and restore mineral properties located principally in the Stibnite – Yellow Pine mining district in Valley County, Idaho, USA. The Company’s principal asset is 100 % ownership in subsidiaries that control the Stibnite Gold Project (“Stibnite Gold Project” or the “Project”). The Company currently operates in one segment, mineral exploration in the United States. The Corporation has had continuing net losses and has an accumulated deficit of approximately $ 533.2 million of December 31, 2021. As of December 31, 2021, the Company had cash and cash equivalents totaling approximately $ 47.9 million and net working capital of approximately $ 43.3 million. It is management’s opinion, based on the Corporation’s current capital resources and liquidity, that the Corporation will have sufficient assets to discharge its liabilities as they become due, to continue advancing the regulatory process related to permitting for mine development for a reasonable period of time from the date these consolidated financial statements are issued. ​ 2. Summary of Significant Accounting Policies Basis of Presentation These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). a. Basis of Consolidation These consolidated financial statements include the financial statements of Perpetua Resources and its wholly owned subsidiary companies: Perpetua Resources Idaho, Inc.; Idaho Gold Resource Company, LLC; and Stibnite Gold Company (merged with Idaho Gold Resource Company, LLC in 2021 and liquidated). All intercompany transactions, balances, income and expenses have been eliminated. b. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuations and share-based compensation. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. c. Functional and Reporting Currency Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The functional and reporting currency of the Company and its subsidiaries is the U.S. Dollar (“USD” or “$”). All amounts in these consolidated financial statements are in USD, unless otherwise stated. Transactions in currencies other than the entity’s functional currency are recorded at the exchange rate prevailing at the dates of the transactions. Monetary assets and liabilities are translated using the period end foreign exchange rate. Non-monetary assets and liabilities are translated using the historical rate. All gains and losses on translation of these foreign currency transactions are included in the Consolidated Statements of Operations. F-8 Table of Contents d. Cash and Cash Equivalents For the purpose of the consolidated balance sheets and consolidated statements of cash flows, the Company considers all highly liquid investments readily convertible to a known amount of cash with an original maturity of three months or less and subject to an insignificant risk of changes in value to be cash equivalents. e. Buildings and Equipment Buildings and equipment are recorded at cost less depreciation and depletion and accumulated impairment losses, if any. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. When an asset is sold, we recognize a gain (loss) in the Consolidated Statements of Operations based upon the proceeds received on the sale less the net carrying value of the asset. The cost of self-constructed assets includes the cost of materials, direct labor and an appropriate portion of normal overhead. Portions of interest costs incurred on debt is capitalized as a part of the cost of constructing or acquiring certain qualifying assets. The Company depreciates its assets, less their estimated residual values, as follows: ​ ​ ​ ​ ​ ​ Category Method Useful life Equipment and Vehicles Straight-line 3 to 7 years Buildings Straight-line 5 to 8 years ​ Buildings and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of buildings and equipment, the recoverability test is performed using undiscounted net cash flows related to the assets or asset group. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets or asset group. f. Mineral Properties and Interest Perpetua Resources is in the development stage based on the Company’s Probable Mineral Reserves as set forth in the TRS. Mineral properties and interest acquisition costs, including indirectly related acquisition costs, are capitalized when incurred. Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are capitalized as mineral properties and interest acquisition costs at such time as the payments are made. Exploration costs are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established Proven and Probable Mineral Reserves under the United States Securities and Exchange Commission (“SEC”) S-K 1300, development costs related to such reserves and incurred after such determination will be considered for capitalization. The establishment of Proven and Probable Mineral Reserves is based on results of feasibility studies, which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be amortized over their estimated useful lives or units of production, whichever is a more reliable measure. Capitalized amounts relating to a property that is abandoned or otherwise considered uneconomic for the foreseeable future are written off. We review and evaluate the net carrying value of mineral properties and interest for impairment upon the occurrence of events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. This would include events and circumstances such as our inability to obtain all the necessary permits, changes in the legal status of our mineral properties, government actions, the results of exploration activities and technical evaluations and changes in economic conditions, including the price of commodities or input prices. Such evaluations compare estimated future net cash flows with our carrying costs and future obligations on an undiscounted basis. If it is determined that the estimated future undiscounted cash flows are less than the carrying value of the property, an impairment loss will be recorded. Where estimates of future net cash flows are not determinable and where other conditions indicate the potential for impairment, management uses available market information and/or third-party valuation experts to assess if the carrying value can be recovered and to estimate fair value. The recoverability of the carrying values of mineral properties and interest is dependent upon economic reserves being discovered or developed on the properties, permitting, financing, start-up, and commercial production from, or the sale/lease of, or other strategic transactions related to these properties. Development and/or start-up of a project will depend on, among other things, management’s ability to raise sufficient capital for these purposes. F-9 Table of Contents g. Leases Upon inception, we determine if a contractual arrangement is, or contains, a lease. Right-of-use (“ROU”) assets and liabilities related to operating leases are separately reported in the consolidated balance sheets. The Company currently has no finance leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Operating lease ROU assets and liabilities also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. h. Share Based Compensation The Company uses its common stock for various forms of share based compensation arrangements entered into with directors, officers, employees and consultants. Share based compensation arrangements are accounted for at fair value on the date of grant. For awards with graded vesting, the fair value of each tranche is measured separately and recognized over its respective vesting period. Total amount recognized as expense is adjusted to reflect the number of share options which ultimately vest. The Company recognizes forfeitures as they occur. The fair value of stock options is determined using a Black-Scholes valuation model. Option pricing models require the input of subjective assumptions including the length of time employees will retain their vested stock options before exercising them, expected share price volatility, and interest rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's net loss. The fair value of other share-based awards is based on the valuation of the common stock on the date of grant. The fair value of time-based awards that are ultimately expected to vest is recognized as an expense on a straight-line basis over the requisite service period. The fair value of performance-based awards is adjusted for the probability of achieving the performance conditions and is recognized on a straight line basis over the term of the award agreement. i. Reclamation and Remediation Costs and Asset Retirement Obligations The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration, development and production activities. The estimated costs associated with environmental remediation obligations are accrued in the period in which the liability is incurred if it is reasonably estimable or known. The Company has $ 9,888,200 and $ 0 accrued at December 31, 2021 and 2020, respectively, for such obligations. The Company recognizes asset retirement obligations for statutory, contractual, or legal obligations associated with buildings and equipment and mineral interests and properties when those obligations result from the acquisition, construction, development or normal operation of the assets. The Company records a liability for the present value of estimated reclamation costs, and the related asset created with it, in the period in which the liability is incurred. The liability is accreted, and the asset is depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation are made in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value of such costs. The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. The Company has no asset retirement obligations as of December 31, 2021 and 2020. F-10 Table of Contents Future reclamation and environmental-related expenditures are difficult to estimate in many circumstances due to the early-stage nature of Company’s operations, the uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such reclamation and remediation costs as evidence indicating that the liabilities have potentially changed becomes available. Changes in estimates are reflected in the Consolidated Statements of Operations in the period an estimate is revised. j. Fair Value Measurements The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: ● Level 1: Quoted market prices in active markets for identical assets or liabilities. ● Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. ● Level 3: Unobservable inputs that are not corroborated by market data. k. Convertible Debt Upon the issuance of convertible debt, the Company evaluates embedded conversion features within convertible debt to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment, the instrument is evaluated for consideration of any beneficial conversion features. The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity if they are freestanding and meet the conditions for equity classification. The equity component is treated as a discount on the liability component of the convertible debt, which is amortized over the term of the convertible debt using the effective interest rate method. Debt issuance costs related to the convertible debt are allocated to the liability and equity components of the convertible debt based on their relative values. Debt issuance costs allocated to the liability component are amortized over the life of the convertible debt as additional non-cash interest expense. Transaction costs allocated to equity are netted with the equity component of the convertible debt instrument in shareholders’ equity. l. Derivative Instruments Derivative instruments are recognized as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivative instruments depends on their intended use and resulting hedge designations. Changes in the fair value of derivative instruments not designated as hedges are recorded in the consolidated Statements of Operations as a component of other income (expense). The Company has no derivative instruments designated as hedges at December 31, 2021. The Company evaluates and accounts for embedded derivatives in its financial instruments based on three criteria that, if met, require bifurcation of embedded derivatives from their host instruments and accounting for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not required to be re-measured at fair value and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is shown at its fair value at each balance sheet date and recorded as an asset or liability with the change in fair value recorded in the Consolidated Statements of Operations as other income (expense). F-11 Table of Contents The Company uses the Black-Scholes Option Pricing Model or other valuation models for valuation of the conversion option derivative associated with its convertible notes and warrant derivative. Valuation models require the input of subjective assumptions including expected share price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s net loss. m. Income Taxes Income taxes are accounted for under the liability method. Under this method deferred income tax liabilities or assets are recorded for expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of those assets and liabilities, as well as operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse. We provide for federal, state and foreign income taxes currently payable, if any. Federal, state and foreign tax benefits are recorded as a reduction of income taxes, when applicable. A valuation allowance is recorded against deferred tax assets if management does not believe the Company is more likely than not that the asset will be recognized. We evaluate available positive and negative evidence available to determine the amount of valuation allowance required on our deferred tax assets. We evaluate uncertain tax positions in a two-step process, whereby (i) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority would be recognized. n. Loss Per Share Basic loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the reporting period. Diluted loss per share is computed similar to basic loss per share except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of share purchase options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding share purchase options were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting periods. The dilutive effect of convertible debt securities is reflected in the diluted earnings (loss) per share calculation using the if-converted method. Conversion of the debt securities is not assumed for purposes of calculating diluted earnings (loss) per share if the effect is anti-dilutive. The Company’s potential dilutive shares of common stock include outstanding share purchase options, restricted share units (RSUs), performance share units (PSUs), deferred share units (DSU), warrants and convertible notes. Potentially diluted shares as of December 31, 2021 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 ​ 2020 Share purchase options 2,497,150 ​ 1,959,588 Share units ​ 82,297 ​ — Warrants 200,000 ​ 200,000 Convertible notes ​ — ​ 4,351,850 Balance 2,779,447 ​ 6,511,438 ​ All potentially dilutive shares were excluded from the calculation of diluted loss per share as their exercise and conversion would be anti-dilutive. o. Financial Instruments The Company’s financial instruments consist of cash and cash equivalents and convertible notes. The fair values of these instruments approximate their carrying value unless otherwise noted. p. Concentration of Credit Risk The financial instrument which potentially subjects the Company to credit risk is cash and cash equivalents. The Corporation holds its cash with Canadian chartered banks and the risk of default is considered to be remote. As part of its cash management process, the Company regularly monitors the relative credit standing of these institutions. F-12 Table of Contents q. COVID-19 In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. Government measures to limit the spread of COVID-19, including the closure of non-essential businesses, did not materially disrupt the Company’s operations during the year. Due to the rapid developments and uncertainty surrounding COVID-19, it is not possible to predict the impact that COVID-19 will have on our business, financial position and operating results in the future. The Company is closely monitoring the impact of the pandemic on all aspects of its business. r. Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40),” which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for the exception. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020. The Company will adopt this ASU on January 1, 2022 and is currently evaluating the potential impact of the new guidance on our financial statements. From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption. ​ 3. Buildings and Equipment At December 31, 2021 and 2020, the Company’s buildings and equipment were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended ​ ​ December 31, 2021 ​ December 31, 2020 Buildings ​ $ 2,320,291 ​ $ 2,320,291 Equipment and Vehicles ​ 4,284,020 ​ 4,249,136 ​ ​ 6,604,311 ​ 6,569,427 Accumulated Depreciation ​ ( 6,439,055 ) ​ ( 6,380,133 ) Balance ​ $ 165,256 ​ $ 189,294 ​ Depreciation expense on buildings and equipment for the years ended December 31, 2021 and 2020 was $ 58,922 and $ 96,605 , respectively. ​ F-13 Table of Contents 4. Leases The Company has various lease agreements for building space for the corporate office in Vancouver, BC, and for the U.S. subsidiaries in Donnelly and Boise, Idaho which have been determined to be operating leases. For measurement of the original lease liability and right of use asset, the Company assumed a discount rate of 10.0 % based on the Company's incremental borrowing rate. The weighted average remaining lease term for operating leases as of December 31, 2021 was 0.5 years. During the years ended December 31, 2021 and 2020, the Company recognized $ 206,200 and $ 275,532 , respectively, in rent expense which is included in office and administrative expense on the Consolidated Statements of Operations. At December 31, 2021, all remaining undiscounted lease payments of $ 66,890 under these lease agreements will be paid in 2022. Subsequent to December 31, 2021, the Company entered into new agreements to lease building space for the Donnelly and Boise offices. ​ ​ 5. Mineral Properties and Interest At December 31, 2021 and 2020, the Company’s mineral properties and interest at the Stibnite Gold Project totaled $ 72,204,334 and $ 71,913,864 , respectively. The Company’s subsidiaries acquired mineral rights to the Stibnite Gold Project through several transactions. All mineral rights held by the Company’s subsidiaries are held through patented and unpatented mineral and mill site claims, except the Cinnabar option claims which are held under an OTP, and all of the Stibnite Gold Project is subject to a 1.7 % net smelter returns royalty upon the sale of project-related production. Included in mineral properties and interest are annual payments made under option agreements, where the Company is entitled to continue to make annual option payments or, ultimately, purchase certain properties. Annual payment due under option agreements during 2022 are $ 180,000 . As of December 31, 2021, it has not yet been determined that the Project's mining deposits can be economically and legally extracted or produced because the Project's estimated reserves do not yet meet the definition of proven reserves under the United States SEC Regulation S-K 1300. Accordingly, development costs related to such reserves will not be considered capitalized unless they are incurred after such determination. Upon commencement of commercial production, capitalized costs will be amortized over their estimated useful lives or units of production, whichever is a more reliable measure. Although the Company has taken steps to review and verify mineral rights to the properties in which it has an interest, in accordance with industry standards for properties in the exploration stage, these procedures do not guarantee the Company’s title and interests. Mineral title may be subject to unregistered prior agreements and noncompliance with regulatory requirements. ​ 6. Warrant Derivative In May 2013, the Company issued to Franco Nevada Company (“Franco”) 200,000 share purchase warrants (“Franco Warrants”) for gross proceeds of $ 350,000 . The Franco Warrants are exercisable into 200,000 common shares of the Company at C$ 12.30 per warrant. The Franco Warrants contain a mandatory conversion feature which requires Franco to exercise 100 % of the outstanding warrants if, at any time, the volume weighted average trading price of Perpetua Resources’ common shares is equal to or greater than C$ 32.30 for a period of 30 consecutive trading days. The Franco Warrants expire on May 9, 2023. The exercise price of the Franco Warrants is denominated in Canadian Dollars; however, the functional currency of the Company is the U.S. Dollar. As a result of this difference in currencies, the proceeds that will be received by the Company are not fixed and will vary based on foreign exchange rates and the warrants are a derivative and are required to be recognized and measured at fair value at each reporting period. Any changes in fair value from period to period are recorded as a gain or loss in the Consolidated Statements of Operations. There are no circumstances in which the Company would be required to pay any cash upon exercise or expiry of the warrants. F-14 Table of Contents A reconciliation of the change in fair values of the derivative is below: ​ ​ ​ ​ ​ ​ Fair Value of ​ ​ Warrant Derivative Balance, December 31, 2019 ​ $ 274,723 Change in fair value of warrant derivative ​ ​ 600,141 Balance, December 31, 2020 ​ ​ 874,864 Change in fair value of warrant derivative ​ ( 774,094 ) Balance, December 31, 2021 ​ $ 100,770 ​ The fair value of the warrants was calculated using the Black-Scholes valuation model. As of December 31, 2021 and 2020, the inputs used in the Black-Scholes valuation model are: ​ ​ ​ ​ ​ ​ ​ ​ Years ended ​ ​ December 31, ​ December 31, ​ 2021 2020 Share price ​ C$ 5.65 ​ C$ 12.20 Exercise price C$ 12.30 C$ 12.30 Expected term (in years) 1.4 2.4 Expected share price volatility 72 % ​ 79 % Annual rate of quarterly dividends 0 % ​ 0 % Risk-free interest rate 1.0 % ​ 0.2 % ​ ​ ​ 7. Convertible Notes On March 17, 2016, the Company issued unsecured convertible notes (the “2016 Notes”) for gross proceeds of $ 38.5 (C$ 50.0 ) million and a maturity date of March 17, 2023. On March 17, 2020, the Company issued a second round of unsecured convertible notes (the “2020 Notes”) for gross proceeds of $ 35.0 (C$ 47.6 ) million and a maturity date of March 17, 2027. Both sets of notes, collectively the “Convertible Notes”, have identical features and bear interest at a rate of 0.05 % per annum, payable annually in cash or common shares (at the Company’s election) or added to the principal and payable on maturity. Upon maturity, and for each set of notes, the outstanding principal amount is due and payable in cash unless converted in advance of that date. The holders of the Convertible Notes may convert any portion of their Convertible Notes at any time prior to the maturity date into common shares of the Company, at a price of C$ 3.541 per share for the 2016 Notes and a price of C$ 4.655 for the 2020 Notes. If there is an equity financing completed at 95 % of the conversion price, or below, the conversion price is adjusted downward. The Convertible Notes can be redeemed by the Company after four years with not more than 60-days written notice and not less than 30-days written notice when the Company’s common shares reach a volume weighted average trading price for 20 consecutive trading days of C$ 7.082 or higher for the 2016 Notes and C$ 9.31 or higher for the 2020 Notes. Following the notice of redemption, but prior to the redemption date, the holders may convert their Convertible Notes to be redeemed into common shares at the then-current conversion price. The terms for the 2020 Notes were announced on March 10, 2020, for gross proceeds of $ 35.0 million at a USD:CAD exchange rate of 1: 1.36 (C$ 47.6 million due and payable upon maturity). The 2020 Notes were issued on March 17, 2020, with a USD:CAD exchange rate of 1: 1.42 ; this movement resulted in a foreign exchange gain on the date of issuance. Each set of Convertible Notes are deemed to contain an embedded derivative (collectively, the “Convertible Note Derivatives”) relating to the conversion option. The Convertible Note Derivatives were valued upon initial recognition at fair value using partial differential equation methods. At inception, for each set of notes, the face value of the notes was reduced by the estimated fair value of the related convertible note derivative and the transaction costs. On August 26, 2020, convertible notes in the aggregate principal amount of C$ 82,102,500 (C$ 34,502,500 of the 2016 Notes and C$ 47,600,000 for all 2020 Notes), were converted for 19,969,280 common shares of the Company. During the year ended December 31, 2021, the remaining 2016 Notes in the aggregate principal amount of C$ 15,409,901 were converted for 4,351,850 common shares of Perpetua Resources. As of December 31, 2021, the Corporation has no outstanding convertible notes. During 2021 and 2020, interest payments were made to note holders in cash, in the amount of $ 7,190 and $ 32,521 , respectively. F-15 Table of Contents The components of the Convertible Notes activity during the years ended December 31, 2021 and 2020, including conversion related activity are as follows: ​ ​ ​ ​ ​ ​ Convertible Notes Balance, December 31, 2019 ​ $ 27,336,373 Additions ​ ​ 16,168,678 Conversions ​ ​ ( 38,674,790 ) Accretion and interest expense ​ ​ 3,129,157 Interest payments ​ ​ ( 32,521 ) Foreign exchange adjustments ​ ​ 1,635,396 Balance, December 31, 2020 ​ ​ 9,562,293 Conversions ​ ( 10,263,119 ) Accretion and interest expense ​ 362,545 Interest payments ​ ( 7,190 ) Foreign exchange adjustments ​ 345,471 Balance, December 31, 2021 ​ $ — ​ ​ ​ 8. Convertible Note Derivative Convertible Note Derivatives related to each set of Convertible Notes (Note 7) were valued upon initial recognition at fair value using partial differential equation methods and are subsequently re-measured at fair value at each period end through the Consolidated Statements of Operations. The convertible note derivative related to the 2016 Notes (the “2016 Derivative”) had an initial fair value of $ 19.8 million. The convertible note derivative related to the 2020 Notes (the “2020 Derivative”) had an initial fair value of $ 17.2 million. The components of the derivatives, collectively the “Convertible Note Derivatives”, are summarized as follows and include activity related to the note conversions as discussed in Note 7: ​ ​ ​ ​ ​ ​ Convertible Note ​ ​ Derivative Balance, December 31, 2019 ​ $ 25,478,212 Additions ​ ​ 17,197,994 Conversions ​ ​ ( 203,468,010 ) Fair value adjustment ​ ​ 179,133,742 Foreign exchange adjustments ​ ​ 7,718,508 Balance, December 31, 2020 ​ $ 26,060,446 Conversions ​ ( 20,920,535 ) Fair value adjustment ​ ( 5,710,557 ) Foreign exchange adjustments ​ 570,646 Balance, December 31, 2021 ​ $ — ​ Upon conversion of the remaining Convertible Notes the fair value of the Convertible Note Derivatives and the carrying value of the Convertible Notes, on that date, were reclassified to share capital. The fair value of the Convertible Note Derivatives at the conversion date is considered to be the intrinsic value, which is the share price on the date of conversion minus the conversion price. The fair value of the remaining Convertible Note Derivative was calculated using partial differential equation methods. The assumptions used in the valuation model include the following, with a change in share price having the most significant impact on the valuation: ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 Risk-free interest rate — 0.2 % Expected term (in years) — 2.2 Share Price — C$ 12.20 Credit Spread — 10 % Implied discount on share price — 21 % - 9 % Expected share price volatility — 77 % ​ ​ ​ F-16 Table of Contents 9. Equity a. Authorized ● Unlimited number of common shares without par value. ● Unlimited number of first preferred shares without par value. ● Unlimited number of second preferred shares without par value. On January 27, 2021, the Company completed a one -for-ten (1:10) reverse share split of all of its issued and outstanding common shares (“Share Consolidation”), resulting in a reduction of the issued and outstanding common shares from 475,227,060 to 47,522,706 . The number of shares reserved under the Company’s equity and incentive plans were adjusted to reflect the Share Consolidation. All share, per share data, and warrant and option exercise prices presented in the Company’s consolidated financial statements have been retroactively adjusted to reflect the Share Consolidation unless otherwise noted. In August 2021, the Company issued 10,952,382 common shares at a price of $ 5.25 per common share for gross proceeds of approximately $ 57.5 million with transaction costs of $ 3.2 million. The net proceeds of the issuance were $ 54.3 million. b. Share based compensation On March 8, 2021, the Company adopted the Omnibus Equity Incentive Plan (the “Plan”) to provide the Corporation with share-related mechanisms to attract, retain and motivate qualified directors, employees and consultants of the Company and its subsidiaries, to reward such of those directors, employees and consultants as may be granted awards under this Plan by the Board from time to time for their contributions toward the long-term goals and success of the Corporation and to enable and encourage such directors, employees and consultants to acquire shares as long-term investments and proprietary interests in the Corporation. The Plan was approved by the Corporation’s shareholders on April 16, 2021. The Plan allows for awards in the following forms: stock purchase option, restricted share unit, performance share unit or deferred share unit. Under the terms of the Plan, the aggregate maximum number of shares that may be issued pursuant to awards granted under the Plan cannot exceed 4,280,530 shares. Shares delivered under the Plan can be: 1) authorized but unissued shares, 2) treasury shares, or 3) shares purchased on the open market or by private purchase. Prior to adoption of the Plan, the Company had the Evergreen Incentive Stock Option Plan (the “Former Plan”) in place. Under the terms of the Former Plan, options may be exercisable over periods not to exceed ten years as determined by the Board of Directors of the Corporation and the exercise price could not be less than the five-day weighted-average share price on the day preceding the award date, subject to regulatory approval. The Former Plan included a Stock Appreciation Rights (“SAR”) clause which allows individuals the option to terminate vested options and receive shares in lieu of the benefits which would have been received had the options been exercised. Stock options granted were subject to vesting, typically with one quarter vesting upon issuance and one quarter vesting on each anniversary from the date of grant. Share based compensation was recognized in the Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 Exploration ​ $ 2,167,722 ​ $ 1,158,967 Consulting ​ 8,080 ​ 28,279 Corporate salaries and benefits ​ 1,006,389 ​ 227,492 Directors’ fees ​ 767,013 ​ 178,801 Total ​ $ 3,949,204 ​ $ 1,593,539 ​ F-17 Table of Contents Share purchase options A summary of share purchase option activity within the Company’s share-based compensation plan for the years ended December 31, 2021 and December 31, 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Weighted Average ​ Options Exercise Price (C$) Balance December 31, 2019 1,972,625 ​ $ 7.72 Options granted 442,500 ​ 5.72 Options expired ( 20,125 ) ​ 5.44 Options terminated via SAR ( 60,250 ) ​ 6.91 Options exercised ( 375,162 ) ​ 6.54 Balance, December 31, 2020 1,959,588 ​ $ 7.40 Options granted 1,013,500 ​ 11.40 Options expired ( 240,550 ) ​ 9.17 Options terminated via SAR ( 109,850 ) ​ 6.00 Options exercised ( 125,538 ) ​ 4.99 Balance, December 31, 2021 2,497,150 ​ $ 9.15 ​ During the years ended December 31, 2021 and 2020, the Company’s total share based compensation from options was $ 3,636,761 and $ 1,593,539 , respectively. ​ The fair value of options granted is estimated at the time of the grant using the Black-Scholes option pricing model. The grant date fair value of options granted during the years ended December 31, 2021 and 2020 was approximately $ 5.2 million and $ 1.1 million, respectively. The Company uses the Black-Scholes option valuation model. The risk-free interest rate is based on the government security rate with an equivalent term in effect as of the date of grant. The expected option lives and volatility assumptions are based on historical data of the Company. The weighted average inputs used in the Black-Scholes option pricing model for options granted during the years ended December 31, 2021 and 2020 are: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 Fair value options granted ​ $ 5.14 ​ $ 3.23 ​ Risk-free interest rate ​ 0.5 % ​ ​ 1.4 % ​ Expected term (in years) ​ 5.0 ​ ​ 5.0 ​ Expected share price volatility ​ 72 % ​ ​ 65 % ​ Expected dividend yield ​ — ​ ​ — ​ ​ An analysis of outstanding share purchase options as of December 31, 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding Options Exercisable Range of Exercise ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices (C$) Number Price (C$) 1 Remaining Life 2 Number Price (C$) 1 Remaining Life 2 $ 3.50 - $ 5.90 239,150 ​ ​ 5.29 1.65 ​ 191,650 ​ ​ 5.62 1.26 $ 5.90 - $ 7.20 494,375 ​ ​ 6.31 2.85 ​ 286,000 ​ ​ 6.36 2.72 $ 7.21 - $ 9.70 888,125 ​ ​ 9.27 1.66 ​ 611,625 ​ ​ 9.25 1.11 $ 9.71 - $ 11.80 875,500 ​ ​ 11.69 3.90 ​ 256,375 ​ ​ 11.41 3.52 $ 3.50 - $ 11.80 2,497,150 ​ ​ 9.15 2.68 ​ 1,345,650 ​ ​ 8.53 1.93 1 Weighted Average Exercise Price (C$) 2 Weighted Average Remaining Contractual Life (Years) As of December 31, 2021, all unvested options are expected to vest and unvested compensation of approximately $ 1,660,690 will be recognized over the next 2.7 years. As of December 31, 2021, the intrinsic value of outstanding and exercisable share purchase options is $ 139,771 and $ 62,461 , respectively. During the years ended December 31, 2021 and 2020, the intrinsic value of share purchase options exercised was approximately $ 0.5 million and $ 2.6 million, respectively. F-18 Table of Contents Restricted Share Units The following table summarizes activity for restricted share units awarded under the Plan that vest over the required service period of the participant. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ ​ Grant Date ​ ​ Share Units Fair Value Unvested, December 31, 2019 and 2020 ​ — $ — Granted ​ 63,500 ​ 5.66 Distributed (vested) ​ ( 21,166 ) ​ 5.66 Cancelled ​ — ​ — Unvested, December 31, 2021 ​ 42,334 ​ 5.66 ​ For awards granted to date in 2021, the Company has recognized approximately $ 142,940 in compensation expense and expect to record an additional $ 216,469 in compensation expense over the remaining vesting period related to these awards. The 42,334 unvested units at December 31, 2021 are scheduled to vest as follows: ​ ​ ​ ​ 2022 21,167 2023 21,167 Total 42,334 ​ Unvested units will be forfeited by participants upon termination of employment in advance of vesting, with the exception of termination due to retirement if certain criteria are met. ​ Performance Share Units The following table summarizes activity for performance share units awarded under the Plan: ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant Date ​ ​ Share Units ​ Fair Value Unvested, December 31, 2019 and 2020 — $ — Granted 10,750 5.66 Distributed (vested) — — Cancelled — — Unvested, December 31, 2021 10,750 5.66 ​ These performance share units vest upon completion of the performance period (through 2022) and specific performance conditions set forth for each individual grant for individually defined reporting and operating measurement objectives. The Corporation determines the factor to be applied to that target number of PSUs, with such percentage based on level of achievement of the performance conditions. The share based compensation cost is measured using the grant date fair value. The expense related to the performance share units (if any) is recognized on a straight-line basis over the vesting period following that date of the award based on the probability of the criteria being achieved. Upon the achievement of the conditions, any unvested performance share units become fully vested. Unvested units will be forfeited by participants upon termination of employment in advance of vesting. For awards granted to date in 2021, the Company has recognized approximately $ 12,008 in compensation expense and expect to record an additional $ 48,836 in compensation expense over the remaining vesting period related to these awards. The latest vesting date for unvested units as of December 31, 2021 is September 2022 Deferred Share Units Under the Plan, the Company may issue deferred share units to non-employee directors. Directors may be given the right to elect between 0 % and 100 % of any director fees to be paid in form of such units. Settlement of the shares occurs upon the cessation of the director’s service. During 2021, 29,213 shares with a fair value of $ 157,495 were credited to the non-employee directors and the related compensation expense was charged to Directors’ fees in the Consolidated Statements of Operations. F-19 Table of Contents c. Warrants There was a total of 200,000 warrants outstanding as of December 31, 2021. See Note 6. 10. Financial Instruments and Fair Value Measurements At December 31, 2021, the Company’s financial instruments consist of cash and cash equivalents, receivables, environmental reclamation bond and trade and other payables, and all approximate their fair value due to their short-term nature. The Company’s financial instruments also consist of the warrant derivative at December 31, 2021 and 2020 and the convertible note derivatives at December 31, 2020. The derivatives are valued at fair value at the end of each reporting period. At December 31, 2021 and 2020, the levels in the Fair Value hierarchy into which the Company’s financial assets and liabilities are measured and recognized on the balance sheet at fair value are categorized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 1 Level 2 Level 3 ​ December 31, 2021 Warrant Derivative (Note 6) ​ $ — ​ $ — ​ $ 100,770 Total ​ $ — ​ $ — ​ $ 100,770 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 Convertible Note Derivative (Note 8) $ — $ — $ 26,060,446 Warrant Derivative (Note 6) ​ — ​ — ​ 874,864 Total ​ $ — ​ $ — ​ $ 26,935,310 ​ The Company uses the Black-Scholes Option Pricing Model or other valuation models for valuation of its Convertible Note Derivative and warrant derivative. Valuation models require the input of subjective assumptions including expected share price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s net loss. ​ 11. Related Party Transactions At December 31, 2020, the Company owed $ 140,000 to Paulson & Co., Inc., a major shareholder of the Company, related to the reimbursement of expenses they incurred on the requisition of a shareholder meeting in November 2020. This amount is included in Trade and other payables on the consolidated balance sheet as of December 31, 2020 and was paid in September 2021. ​ 12. Income taxes No benefit (provision) has been recognized for the years ended December 31, 2021 and 2020. The United States and Canada components of net loss for the years ended December 31, 2021, and 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 United States ​ $ 28,838,629 ​ $ 215,916,677 Canada ​ 7,113,397 ​ 4,715,430 Total ​ $ 35,952,026 ​ $ 220,632,107 ​ F-20 Table of Contents The benefit (provision) for income taxes reported differs from the amount computed by applying the applicable income tax rates to the loss before the tax provision due to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 ​ 2020 Income tax benefit computed at statutory rate of 21 % ​ $ ( 7,549,925 ) ​ $ ( 46,332,742 ) State tax, net of federal tax benefit ​ ( 1,846,137 ) ​ ( 12,070,231 ) Difference in foreign tax rates ​ ( 1,920,617 ) ​ ( 1,273,166 ) Change in state tax rate ​ 979,799 ​ ( 692,519 ) Deferred tax adjustments ​ ​ 2,320,679 ​ ​ ​ Change in valuation allowance ​ 6,190,063 ​ 12,330,810 Non-deductible tax items: ​ ​ ​ ​ (Gain) loss on derivative liability ​ ( 209,005 ) ​ 47,418,045 Share based compensation ​ 2,010,440 ​ 430,256 Other ​ 24,703 ​ 189,547 Income tax provision (benefit) ​ $ — ​ $ — ​ The significant components of the Company’s deferred tax assets are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 ​ 2020 Net operating loss carryforward – U.S. ​ $ 37,457,055 ​ $ 35,390,672 Net operating loss carryforward – CAD ​ 8,641,690 ​ 7,271,143 Buildings and equipment ​ 480,916 ​ 496,121 Mineral interest and properties ​ 35,889,391 ​ 33,857,575 Convertible notes ​ — ​ 6,811,890 Financing costs ​ ​ 824,691 ​ ​ — Environmental obligation ​ ​ 2,584,281 ​ ​ — Other ​ 532,992 ​ 985,435 Deferred tax assets ​ 86,411,016 ​ 84,812,836 Less valuation allowance ​ ( 86,411,016 ) ​ ( 84,812,836 ) Net deferred tax assets ​ $ — ​ $ — ​ The Company records a valuation allowance if, based on the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2021 and 2020, the Company has determined that a full valuation allowance is necessary against its net deferred tax assets based on the weight of all available evidence. The resulting valuation allowance recorded against the net deferred tax assets of the Company is approximately $ 86.4 million and $ 84.8 million as of December 31, 2021 and 2020, respectively. At December 31, 2021, approximately $ 825,000 of the allowance balance relates to future tax benefits that will be credited directly to equity once it is recognized. The changes in the valuation allowance for the years ended December 31, 2021 and 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 Valuation allowance on deferred tax assets, beginning of year ​ $ ( 84,812,836 ) ​ $ ( 72,482,026 ) Change related to: ​ ​ ​ ​ ​ ​ Valuation allowance movement recognized in continuing operations ​ ( 6,190,063 ) ​ ( 12,330,810 ) Valuation allowance movement recognized in equity ​ 4,591,883 ​ — Valuation allowance on deferred tax assets, end of year ​ $ ( 86,411,016 ) ​ $ ( 84,812,836 ) ​ As of December 31, 2021, the Company has U.S. loss carryforwards of approximately $ 82.3 million that expire in 2029 through 2037 and approximately $ 69.9 million with no expiration but which are subject to an 80 % limitation upon utilization. The Company has state net operating loss carryforwards of approximately $ 107.0 million that expire in 2031 through 2041 and Canadian loss carryforwards of approximately $ 32.0 million that expire in 2031 through 2041 available to reduce future years’ income for tax purposes. The deferred tax asset table above reflects the tax-effected balances of the Company’s net operating loss carryforwards using a 26.14 % rate for U.S.-based carryforwards and 27.00 % rate for Canada-based carryforwards. Our utilization of U.S. net operating loss carryforwards may be subject to annual limitations under Section 382 of the Code due to changes in control that may have occurred as a result of recent capital transactions. F-21 Table of Contents In 2021, the Company evaluated its tax positions for years which remain subject to examination by major tax jurisdictions and as a result concluded no adjustment was necessary. The Company files income tax returns in the U.S. and Canada federal jurisdictions, the state of Idaho jurisdiction, and the province of British Columbia jurisdiction. The Company had no unrecognized tax benefits as of December 31, 2021 and 2020. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in its income tax provision. U.S. tax returns for the years 2018 to 2020 and Canadian tax returns for the years 2017 to 2020 remain subject to examination but there are currently no ongoing exams in any taxing jurisdictions. Tax returns for years prior to 2018 may remain open with respect to net operating loss carryforwards that are utilized in a later year, as tax attributes from prior years can be adjusted during an audit of a later year. ​ 13. Environmental Reclamation Liability On January 15, 2021, the Company agreed to the ASAOC. The Company has accounted for its obligation under the ASAOC as an environmental reclamation liability. The aggregate cost of the obligation was estimated to be approximately $ 7,473,805 . Upon the signing of the ASAOC, the Company recorded an immediate expense of $ 7,473,805 and a corresponding environmental reclamation liability. The provision for the liability associated with the terms of the ASAOC is based on cost estimates developed with the use of engineering consultants, independent contractor quotes and the Company’s internal development team. The timing of cash flows is based on the current schedule for early action items. The estimated environmental reclamation liability may be subject to change based on changes to cost estimates and is adjusted for actual work performed. In 2021, the total cost estimate to voluntarily address environmental conditions increased to $ 12,198,651 . As of December 31, 2021, the corresponding environmental liability was estimated to be $ 9,888,200 . Movements in the environmental reclamation liability during the year ended December 31, 2021, are as follows: ​ ​ ​ ​ ​ Balance, December 31, 2020 $ — Additions 12,198,651 Work performed on early action items ( 2,310,451 ) Balance, December 31, 2021 $ 9,888,200 Current portion 2,835,000 Non-current portion ​ ​ 7,053,200 ​ The Company provided $ 7.5 million in financial assurance for Phase 1 projects under the ASAOC. The Company paid $ 3 million in cash collateral for a surety bond related to the ASAOC statement of work in early 2021. ​ 14. Commitments and Contingencies a. Mining Claim Assessments The Company currently holds mining claims on which it has an annual assessment obligation of $ 250,470 to maintain the claims in good standing. The Company is committed to these payments indefinitely. Related to the Mining Claims Assessments is a $ 335,000 bond related to the Company’s exploration activities. b. Stibnite Foundation Upon formation of the Stibnite Foundation on February 26, 2019, the Corporation became contractually liable for certain future payments to the Stibnite Foundation based on several triggering events, including receipt of a final Record of Decision issued by the U.S. Forest Service, receipt of all permits and approvals necessary for commencement of construction, commencement of construction, commencement of commercial production, and commencement of the final reclamation phase. These payments could begin as early as Q2 2023 based on the current permitting schedule and range from $ 0.1 million to $ 1 million (upon commencement of final reclamation phase) in cash and 150,000 shares of the Corporation’s common stock. During commercial production, the Corporation will make payments to the Stibnite Foundation equal to 1 % of Total Comprehensive Income less debt repayments or a minimum of $ 0.5 million each year. The Foundation will support projects that benefit the communities surrounding the Stibnite Gold Project and was created through the establishment of the Community Agreement between Perpetua Resources Idaho, Inc. and eight communities and counties throughout the West Central Mountains region of Idaho. F-22 Table of Contents c. Option Payments on Other Properties The Company is obligated to make option payments on mineral properties in order to maintain an option to purchase these properties. As of December 31, 2021, the option payments due on these properties in 2022 are $ 180,000 , which will be paid in the next year. The agreements include options to extend. d. Off balance sheet arrangements The Corporation has no off-balance sheet arrangements as of December 31, 2021 and the date of this Annual Report. e. Legal Update The Company is a party to ongoing legal proceedings with the Nez Perce Tribe for alleged violations of the Clean Water Act related to historical mining activities. In August 2019, the Nez Perce Tribe filed suit in the United States District Court for the District of Idaho. The Company promptly filed a motion to dismiss and, in the alternative, a motion to stay the litigation. Both motions were denied. Later, the court allowed the Company to amend its answer and file a third-party complaint and the Company also filed a separate citizen suit against the USFS alleging the point source discharges, referred to by the Nez Perce Tribe in its complaint, were alleged to be occurring on lands owned and controlled by the United States. Pursuant to the consummation of an Administrative Settlement Agreement and Order on Consent (“ASAOC”) with the U.S. EPA and the United States Department of Agriculture, the Company dismissed its pending actions against USFS. The remaining parties to the ongoing legal proceeding agreed to stay the litigation and explore ADR options. A stay was entered by the court in February 2021 and has been subsequently extended a number of times while the ADR process continues. The ASAOC entered into by the Company, the U.S. EPA, and the United States Department of Agriculture requires numerous voluntary early actions to occur over the next several years. Perpetua Resources Idaho, Inc. is presently executing the development of the Phase 1 early cleanup actions (known as “time critical removal actions”) that, upon final work plan approval by the federal agencies, will be designed and constructed to efficiently improve water quality in a number of areas on the Site while other, longer-term proposed actions relating to Project operations are being evaluated through the NEPA process. ​ 15. Subsequent Events On February 22, 2022, the Company announced that it expects the USFS to publish a supplemental draft environmental impact statement (“SDEIS” or “supplemental DEIS”) for public review and comment in the third quarter of 2022. During the last 18 months, the USFS and cooperating agencies have performed an extensive review of Perpetua's refined proposed action. Perpetua anticipates the preliminary SDEIS will be circulated for cooperating agency review in the second quarter of 2022 with a public release of the SDEIS to follow shortly thereafter. The USFS is expected to provide a formal schedule update later this year and Perpetua remains committed to supporting a thorough and efficient NEPA process by the USFS. ​ ​ F-23 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None. ​