What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-16 compared with 2022-03-18 · 182 added, 204 removed, 512 unchanged (43% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021

Notes to the Consolidated Financial Statements

2 unchanged sentences

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.

We have audited the accompanying consolidated balance sheets of Perpetua Resources Corp.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, of changes in shareholders’ equity and of cash flows for the years 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, 2022 and 2021, and the results of its operations and its cash flows for the years 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.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

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.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits 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.

As part of our audits 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.

Our audits 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.

Our audits 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 audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

2 unchanged sentences

We have served as the Company’s auditor since 2021.

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.

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.

Perpetua Resources Corp.

14 unchanged sentences

NON-CURRENT LIABILITIES

Convertible notes (Note 7)

Convertible note derivative (Notes 7,8)

Warrant derivative (Notes 6)

Lease liabilities (Note 4)

Environmental reclamation liabilities (Note 11)

16 unchanged sentences

Environmental liability expense

Gain on sale of equipment

Office and administrative

General and administration

Gain on disposal of buildings and equipment

Professional fees

Shareholder and regulatory

Travel and related costs

OPERATING LOSS

18 unchanged sentences

Share based compensation

Shares issued upon conversion of convertible notes

Shares sold through stock offering (Note 8)

Share issue cost

( 3,243,184 )

Shares issued upon conversion of convertible notes (Note 7)

Shares issued through stock appreciation rights

Restricted shares units distributed

Exercise of share purchase options

( 1,066,689 )

Net loss for the year

4 unchanged sentences

Share based compensation

Shares sold through stock offering (Note 9)

Share issue cost

( 3,243,184 )

Shares issued upon conversion of convertible notes (Note 8)

Shares issued through stock appreciation rights

Restricted shares units distributed

Exercise of share purchase options

Restricted and performance shares units distributed

Net loss for the year

3 unchanged sentences

( 561,926,784 )

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

14 unchanged sentences

( 5,710,557 )

Environmental liability expense

Environmental liability expense (Note 11)

Unrealized foreign exchange loss

1 unchanged sentence

Trade and other payables

Environmental reclamation liabilities

Environmental reclamation liabilities (Note 11)

( 3,651,875 )

( 2,310,451 )

Net cash used in operating activities

4 unchanged sentences

Purchase of buildings and equipment

Sale of buildings and equipment

Proceeds from sale of buildings and equipment

Purchase of surety bond

3 unchanged sentences

FINANCING ACTIVITIES:

Proceeds from issuance of Convertible Notes, net (Note 7)

Proceeds from sale of common stock

1 unchanged sentence

( 3,243,184 )

Finance cost deducted as share issue costs

Proceeds from exercise of share purchase options (Note 8)

1 unchanged sentence

Effect of foreign exchange on cash and cash equivalents

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 25,185,799 )

Cash and cash equivalents, beginning of year

2 unchanged sentences

Cash paid for interest

NONCASH INVESTING AND FINANCING ACTIVITIES

Recognition of operating lease liability and right-of-use asset

CASH AND CASH EQUIVALENTS

11 unchanged sentences

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.

The Corporation has had continuing net losses and has an accumulated deficit of approximately $ 561.9 million as of December 31, 2022.

As of December 31, 2022, the Company had cash and cash equivalents totaling approximately $ 22.7 million and net working capital of approximately $ 11.2 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.

It is management’s opinion, based on the Corporation’s current capital resources and liquidity, combined with the up to $ 24.8 million in funding awarded under the Technology Investment Agreement (the “TIA”) pursuant to Title III of the Defense Production Act (“DPA”), 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 at least 12 months from the date these consolidated financial statements are issued.

Summary of Significant Accounting Policies

9 unchanged sentences

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.

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 Consolidated 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.

23 unchanged sentences

Straight-line

Building Leasehold Improvements

Straight-line

3 unchanged sentences

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.

Perpetua Resources is in the development stage based on the Company’s Probable Mineral Reserves as set forth in the Technical Report Summary, dated as of December 31, 2021, and amended as of June 6, 2022 (the “TRS”).

Mineral properties and interest acquisition costs, including indirectly related acquisition costs, are capitalized when incurred.

37 unchanged sentences

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 estimated costs associated with environmental reclamation liabilities are accrued in the period in which the liability is incurred if it is reasonably estimable or known.

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.

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.

5 unchanged sentences

The Company has no asset retirement obligations as of December 31, 2022 and 2021.

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.

Fair Value Measurements

11 unchanged sentences

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.

7 unchanged sentences

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 has no derivative instruments designated as hedges at December 31, 2022 and 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.

14 unchanged sentences

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:

Potentially diluted shares as of December 31, 2022 and December 31, 2021 were as follows:

Share purchase options

Convertible notes

All potentially dilutive shares were excluded from the calculation of diluted loss per share as their exercise and conversion would be anti-dilutive.

All potentially dilutive shares were excluded from the calculation of diluted loss per share as their impact would be anti-dilutive.

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.

The Company’s financial instruments consist of cash and cash equivalents and the environmental reclamation bond.

The fair values of these instruments approximate their carrying value given their short-term nature unless otherwise noted.

Concentration of Credit Risk

2 unchanged sentences

As part of its cash management process, the Company regularly monitors the relative credit standing of these institutions.

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.

Reclassifications

Certain amounts in prior years have been reclassified to conform with the current period presentation.

From time to time, the Company may be awarded government grants.

US GAAP does not have specific accounting standards covering government grants to business entities.

The Company applies International Accounting Standards 20 (“IAS 20”),

Accounting for Government Grants and Disclosure of Government Assistance by analogy when accounting for government grants.

Under IAS 20, government grants are initially recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received.

After initial recognition, government grants are recognized in earnings on a systematic basis in a manner that mirrors the manner in which the Company recognizes the underlying costs for which the grant is intended to compensate.

A grant receivable is recognized if it compensates for expenses or losses already incurred.

The Company has adopted the disclosure requirements of Accounting Standards Codification (“ASC”) 832 Government Assistance.

Research and Development Costs

Research and development costs are recognized as operating expenses when incurred and are classified as exploration costs.

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

In August 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update(“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.

2 unchanged sentences

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.

The ASU is effective for annual reporting periods beginning after December 15, 2023 for smaller reporting companies, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2021.

The early adoption of this update on January 1, 2022 did not have a material impact on our consolidated 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.

9 unchanged sentences

Depreciation expense on buildings and equipment for the years ended December 31, 2022 and 2021 was $ 61,294 and $ 58,922 , respectively.

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.

At December 31, 2022, the Company has two lease agreements for building space in Donnelly and Boise, Idaho both of which have been determined to be operating leases.

Both leases provide the option for the Company to extend leases for additional time periods of one and two years , respectively, which was not recognized as part of the right to use assets and lease liabilities value.

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.

During the years ended December 31, 2022 and 2021, the Company recognized $ 207,963 and $ 206,200 , respectively, in rent expense which is included in general and administration expense on the Consolidated Statements of Operations.

The weighted average remaining lease term for operating leases as of December 31, 2022 was 0.7 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, 2022, all remaining undiscounted lease payments of $ 73,132 under these lease agreements will be paid in 2023.

Subsequent to December 31, 2021, the Company entered into new agreements to lease building space for the Donnelly and Boise offices.

Mineral Properties and Interest

1 unchanged sentence

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.

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 option to purchase, 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.

1 unchanged sentence

As of December 31, 2022, 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.

Accordingly, development costs related to such reserves will not be 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.

29 unchanged sentences

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:

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.

Both sets of notes, collectively the “Convertible Notes”, had identical features and bore 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.

The holders of the Convertible Notes could 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.

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.

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 the Company.

As of December 31, 2022 and December 31, 2021, the Corporation has no outstanding convertible notes.

During 2021, interest payments were made to note holders in cash, in the amount of $ 7,190 .

The components of the Convertible Notes activity during the years ended December 31, 2022 and 2021, including conversion related activity are as follows:

5 unchanged sentences

Foreign exchange adjustments

Balance, December 31, 2020

( 10,263,119 )

Accretion and interest expense

Interest payments

Foreign exchange adjustments

Balance, December 31, 2021

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:

Balance, December 31, 2021 and December 31, 2022

Each set of Convertible Notes were deemed to contain an embedded derivative (collectively, the “Convertible Note Derivatives”) relating to the conversion option.

Convertible Note Derivatives related to each set of Convertible Notes 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 components of the derivatives, collectively the “Convertible Note Derivatives”, are summarized as follows:

Convertible Note

2 unchanged sentences

Fair value adjustment

Foreign exchange adjustments

Balance, December 31, 2020

( 5,710,557 )

Fair value adjustment

( 5,710,557 )

Foreign exchange adjustments

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

Expected term (in years)

Credit Spread

Implied discount on share price

Expected share price volatility

Balance, December 31, 2021 and 2022

Upon conversion of the remaining Convertible Notes in 2021, 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 in 2021 was considered to be the intrinsic value, which is the share price on the date of conversion minus the conversion price.

● Unlimited number of common shares without par value.

6 unchanged sentences

The net proceeds of the issuance were $ 54.3 million.

The Company sold no shares of its common stock during the year ended December 31, 2022.

Share based compensation

8 unchanged sentences

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.

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:

Share based compensation for the years ended December 31, 2022 and 2021 was recognized in the Consolidated Statements of Operations as follows:

Professional Fees

Corporate salaries and benefits

3 unchanged sentences

Weighted Average

Number of Options

Exercise Price (C$)

2 unchanged sentences

Options expired

Options terminated via SAR

Options cancelled or forfeited

Options exercised

2 unchanged sentences

Options expired

Options terminated via SAR

Options cancelled or forfeited

Options exercised

2 unchanged sentences

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 grant date fair value of options granted during the year ended December 31, 2021 was approximately $ 5.2 million.

No options were granted during the year ended December 31, 2022.

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

The weighted average inputs used in the Black-Scholes option pricing model for options granted during the year ended December 31, 2021 are:

December 31, 2021

8 unchanged sentences

Range of Exercise

Remaining Life 2

$ 3.50 - $ 5.90

5 unchanged sentences

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, 2022, all unvested options are expected to vest and unvested compensation of approximately $ 331,475 will be recognized over the next year.

As of December 31, 2022, the intrinsic value of outstanding and exercisable share purchase options is $ 14,947 and $ 11,211 , 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.

During the year ended December 31, 2021, the intrinsic value of share purchase options exercised was approximately $ 0.5 million.

No share purchase options were exercised during the year ended December 31, 2022.

Restricted Share Units

1 unchanged sentence

Weighted Average

Unvested, December 31, 2019 and 2020

Unvested, December 31, 2020

Distributed (vested)

Unvested, December 31, 2021

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:

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.

Distributed (vested)

Unvested, December 31, 2022

During the years ended December 31, 2022 and 2021, the Company has recognized $ 949,619 and $ 142,940 , respectively in compensation expense for Restricted Share Units.

The Company expects to record an additional $ 744,231 in compensation expense over the remaining vesting period related to these awards.

Unvested units at December 31, 2022 are scheduled to vest as follows:

Unvested units will be forfeited by participants upon termination of employment in advance of vesting, with the exception of termination by the company not for cause or due to the employee’s death, disability, or retirement if certain criteria are met.

Performance Share Units

The following table summarizes activity for performance share units awarded under the Plan:

The following table summarizes activity for PSUs and market-based performance share units (“MPSUs”) awarded under the Plan:

Weighted Average

Unvested, December 31, 2019 and 2020

Distributed (vested)

Unvested, December 31, 2020

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

Unvested, December 31, 2021

Unvested, December 31, 2022

During the year ended December 31, 2022 and 2021, the Company recognized $ 510,321 and $ 12,008 respectively, in compensation expense related to PSUs and MPSUs.

The Company expects to record an additional $ 1.3 million in compensation expense over the next 2.16 years.

The PSUs and MPSUs are scheduled to vest as follows:

14,806 awards in 2023 and 248,460 in 2025.

These PSUs vest upon completion of the performance period (through September 2023) and specific performance conditions set forth for each individual grant for individually defined reporting and operating measurement objectives.

T he Company determines the factor to be applied to that target number of PSUs, with such percentage based on level of achievement of the performance conditions .

Upon the achievement of the conditions, any unvested PSUs become fully vested.

Certain vesting provisions also apply in the event of the employee’s termination of employment by the company without cause or a termination of employment due to the employee’s death, disability, or retirement if certain criteria are met.

During the year ended December 31, 2022, PSUs awarded had a weighted average grant date fair value of $ 2.97 per PSU, or $ 52,048 in total.

During the year ended December 31, 2021, PSUs awarded had a weighted average grant date fair value of $ 5.66 per PSU, or $ 60,845 in total.

On March 5, 2022, the Company granted MPSUs where vesting is based on the Company’s cumulative total shareholder return (“TSR”) as compared to the constituents that comprise the VanEck Junior Gold Miners ETF (“GDXJ Index”) a group of similar junior gold mining companies, over the period from March 5, 2022 to March 5, 2025 (the “Performance Period”).

The ultimate number of MPSUs that vest may range from 0 % to 200 % of the original target number of shares depending on the relative achievement of the TSR performance measure at the end of the Performance Period.

Because the number of MPSUs that are earned will be based on the Company’s TSR over the Performance Period, the MPSUs are considered subject to a market condition.

Compensation cost is recognized ratably over the Performance Period regardless as to whether the market condition is actually satisfied;

however, the compensation cost will reverse if an employee terminates employment prior to satisfying the requisite service period and the award is forfeited.

Awards are forfeited upon a termination of employment, with some exceptions in the case of an involuntary termination by the company without cause or a termination of employment due to the employee’s death, disability, or retirement if certain criteria are met.

During the year ended December 31, 2022, the Company awarded 249,951 MPSUs that had a weighted grant date fair value of $ 6.99 per MPSU or approximately $ 1.75 million in total.

The grant date fair value of MPSUs was estimated using a Monte Carlo simulation model.

Assumptions and estimates utilized in the model include expected volatilities of the Corporation’s share price and the GDXJ Index, the Company’s risk-free interest rate and expected dividends.

The probabilities of the actual number of MPSUs expected to vest and resultant actual number of shares of common stock expected to be awarded are reflected in the grant date fair values of the various MPSU awards.

The per MPSU grant date fair value of $ 6.99 for the market condition was based on the following variables:

Risk-free interest rate

Expected term (in years)

Expected share price volatility

Expected dividend yield

The expected volatility utilized is based on the historical volatilities of the Corporation’s common stock and the GDXJ Index in order to model the stock price movements.

The volatility used was calculated over the most recent three year period.

The risk-free interest rates used are based on the implied yield available on a U.S.

Treasury zero-coupon bill with a term equivalent to the Performance Period.

The expected dividend yield of zero was used since it is the mathematical equivalent to reinvesting dividends in each issuing entity over the Performance Period.

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.

The following table summarizes activity for deferred share units (“DSUs”) awarded under the Plan:

Outstanding, December 31, 2020

Outstanding, December 31, 2021

Outstanding, December 31, 2022

Under the Plan, the Company may issue DSUs to non-employee directors.

During the years ended December 31, 2022 and 2021, 116,462 and 29,213 shares, respectively, with a grant date fair value of $ 398,549 and $ 157,495 , respectively, were granted to the non-employee directors and the related compensation expense was charged to directors’ fees in the Consolidated Statements of Operations.

The DSUs are fully vested as of the date of grant.

There was a total of 200,000 warrants outstanding as of December 31, 2022.

These warrants expire in May 2023.

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:

The Company’s financial instruments include the warrant derivative at December 31, 2022 and 2021.

The derivative was valued at fair value at the end of each reporting period.

At December 31, 2022 and 2021, the levels in the fair value hierarchy into which the Company’s financial assets and liabilities are measured and recognized on the Consolidated Balance Sheets at fair value are categorized as follows:

December 31, 2022

1 unchanged sentence

December 31, 2021

Convertible Note Derivative (Note 8)

Warrant Derivative (Note 6)

The Company uses the Black-Scholes Option Pricing Model or other valuation models for valuation of its Convertible Note Derivative and warrant derivative.

The Company uses the Black-Scholes Option Pricing Model or other valuation models for valuation of its Convertible Note Derivatives 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.

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.

No benefit (provision) has been recognized for the years ended December 31, 2022 and 2021.

7 unchanged sentences

( 1,846,137 )

( 12,070,231 )

Difference in foreign tax rates

7 unchanged sentences

Share based compensation

Equity Finance Costs

Income tax provision (benefit)

4 unchanged sentences

Mineral interest and properties

Convertible notes

Financing costs

34 unchanged sentences

Tax returns for years prior to 2019 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.

Environmental Reclamation Liability

Environmental Reclamation Liabilities

On January 15, 2021, the Company agreed to the ASAOC.

5 unchanged sentences

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:

Movements in the environmental reclamation liability during the years ended December 31, 2022 and 2021 are as follows:

Balance, December 31, 2020

Initial estimate

Change in estimate

Work performed on early action items

1 unchanged sentence

Balance, December 31, 2021

Change in estimate

Work performed on early action items

( 3,651,875 )

Balance, December 31, 2022

Current portion

Non-current portion

Balance, December 31, 2022

The Company provided $ 7.5 million in financial assurance for Phase 1 projects under the ASAOC.

6 unchanged sentences

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.

Upon formation of the Stibnite Foundation on February 26, 2019, the Company 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 USFS, receipt of all permits and approvals necessary for commencement of construction, commercial production, and of the final reclamation phase.

These payments could begin as early as late 2023 based on the current permitting schedule and individual payments 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 Company 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 Stibnite 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.

1 unchanged sentence

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.

As of December 31, 2022, the option payments due on these properties in 2023 are $ 180,000 , which will be paid next year.

The agreements include options to extend.

1 unchanged sentence

The Corporation has no off-balance sheet arrangements as of December 31, 2022 and the date of this Annual Report.

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.

The Corporation and its subsidiaries are a party to an ongoing legal proceeding with the Nez Perce Tribe for alleged violations of the Clean Water Act (“CWA”) 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.

The Corporation 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.

Subsequently, the Corporation filed an answer denying liability which, later, the court allowed the Corporation to amend and file a third-party complaint against the Forest Service.

The Corporation also filed a separate CWA citizen suit against the United States Forest Service (“USFS” or “Forest Service”) alleging the point source discharges, as alleged by the Nez Perce Tribe in its complaint, were occurring on lands owned and controlled by the United States.

Pursuant to the terms of the voluntary ASAOC executed with the U.S.

EPA and the United States Department of Agriculture, the Corporation agreed to dismiss its pending actions against the Forest Service without prejudice.

The remaining parties to the ongoing legal proceeding agreed to stay the litigation and explore Alternative Dispute Resolution (“ADR”) options through court-ordered mediation.

The stay has been extended on subsequent occasions, and a request to extend the stay through June 30, 2023 was requested jointly by the Company and the Nez Perce Tribe during a February 21, 2023 status conference and subsequently ordered by the court on the same day.

The voluntary CERCLA ASAOC entered into by the Corporation, the U.S.

EPA, and the United States Department of Agriculture requires numerous early cleanup actions to occur over the next several years at the Stibnite Gold Project site (the “Stibnite Site”).

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.

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.

is presently developing and executing the Phase 1 early cleanup actions (known under CERCLA as “time critical removal actions”) that, after final work plan approval by the federal agencies, are being constructed to efficiently improve water quality in a number of areas on the Stibnite Site.

Construction of time critical removal actions began in the summer of 2022, and significant progress was achieved to complete the voluntary Phase 1 Stibnite Site cleanup during the limited work season.

Other longer-term proposed actions relating to Project operations are being evaluated through the NEPA process.

Government Grants:

In September 2022, the Company was awarded two separate funding grants from the U.S.

Department of Defense (“DOD”) Defense Logistics Agency (“DLA”) totaling $ 200,000 to study the domestic production of military-grade antimony trisulfide.

During the year ended December 31, 2022, $ 75,000 was recognized as grant income for these grants.

The Company anticipates receiving $ 125,000 additional grant income over the next 9 months .

On December 16, 2022, the Company entered into an undefinitized Technology Investment Agreement (“TIA”) with the DOD - Air Force Research Laboratory for an award of up to $ 24,800,000 under Title III of the DPA.

The funding objective of the TIA is to complete environmental and engineering studies necessary to obtain a Final Environmental Impact Statement, a Final Record of Decision, and other ancillary permits to sustain the domestic production of antimony trisulfide capability for defense energetic materials at the Stibnite Gold Project.

Proceeds from the grant will be used primarily to reimburse the Company for certain costs incurred over the next 24 months related to environmental baseline data monitoring, environmental and technical studies and other activities related to advancing the Company’s construction readiness and the permitting process for the Stibnite Gold Project.

During the year ended December 31, 2022, $ 0 was recognized as grant income related to the TIA but the Company expects to begin reporting grant income in 2023.

Accounting for these DOD grants does not fall under ASC 606, Revenue from Contracts with Customers, as the DOD does not meet the definition of a customer under this standard.

The DOD grant proceeds, which will be used to reimburse expenses incurred, meet the definition of grants related to expenses as the primary purpose for the payments is to fund research and development on trisulfides and the advancement of the Company’s Stibnite Gold Project.

A total of $ 75,000 grant income was recognized within other income (expense) on the Consolidated Statement of Operations during the year ended December 31, 2022.

No grant income was recognized in 2021.

At December 31, 2022, grant receivable is $ 50,000 and is included in receivables on the consolidated balance sheet.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data