What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-26 compared with 2023-03-16 · 193 added, 178 removed, 516 unchanged (42% of the section changed)

13 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, 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.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has had continuing net losses and net negative working capital that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

30 unchanged sentences

Lease liabilities (Note 4)

CWA settlement payable (Note 10)

Environmental reclamation liabilities (Note 9)

NON-CURRENT LIABILITIES

Warrant derivative (Notes 6)

Warrant derivative (Note 6)

CWA settlement payable (Note 10)

Environmental reclamation liabilities (Note 9)

2 unchanged sentences

SHAREHOLDERS’ EQUITY (Note 7)

Common stock, no par value, unlimited shares authorized, 63,011,777 and 62,971,859 shares outstanding, respectively

Common shares, without par value, unlimited shares authorized, 64,123,456 and 63,011,777 shares outstanding, respectively

Additional paid-in capital

10 unchanged sentences

Directors’ fees

Environmental liability expense

Environmental liability expense (Note 9)

CWA settlement expense (Note 10)

General and administration

5 unchanged sentences

Change in fair value of warrant derivative (Note 6)

Change in fair value of convertible note derivative (Note 7)

Foreign exchange loss (income)

Grant income (Note 11)

( 21,077,882 )

Finance costs

Foreign exchange loss

Interest income

Total other loss (income)

Total other expenses (income)

( 21,503,028 )

9 unchanged sentences

Share based compensation

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

Share units distributed

Net loss for the year

3 unchanged sentences

( 561,926,784 )

Shares sold through offering

Shares issuance costs

Share based compensation

Restricted and performance shares units distributed

Share unit distributed

Exercise of options

Net loss for the year

6 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

December 31, 2022

December 31, 2021

Years ended December 31,

OPERATING ACTIVITIES:

4 unchanged sentences

Depreciation (Note 3)

Accretion of convertible debt discount (Note 7)

Gain on disposal of buildings and equipment

Change in fair value of warrant derivative (Note 6)

Change in fair value of convertible note derivative (Note 7)

( 5,710,557 )

Environmental liability expense (Note 9)

Unrealized foreign exchange loss

( 2,901,002 )

Prepaid expenses

Trade and other payables

CWA settlement payable (Note 10)

Environmental reclamation liabilities (Note 9)

7 unchanged sentences

Purchase of buildings and equipment

Proceeds from sale of buildings and equipment

Purchase of surety bond

( 3,000,000 )

Proceeds from sale of equipment

Net cash used in investing activities

( 3,325,354 )

FINANCING ACTIVITIES:

Proceeds from sale of common stock

Payment of shares issue costs (Note 8)

( 3,243,184 )

Proceeds from sale of common shares

Share issuance costs

Proceeds from exercise of share purchase options (Note 7)

3 unchanged sentences

( 19,437,585 )

( 25,185,799 )

Cash and cash equivalents, beginning of year

4 unchanged sentences

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

Trade-in value on equipment

CASH AND CASH EQUIVALENTS

5 unchanged sentences

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Nature of Operations

Nature of Operations and Going Concern Assessment

Perpetua Resources Corp.

4 unchanged sentences

The Corporation has had continuing net losses and has an accumulated deficit of approximately $ 580.7 million as of December 31, 2023.

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, 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.

As of December 31, 2023, the Company had cash and cash equivalents totaling approximately $ 3.2 million and net negative working capital of approximately $ 0.9 million.

The Company’s latest liquidity forecast indicates that available cash resources and other sources of liquidity are expected to be exhausted in the fourth quarter of 2024, after giving effect to the silver royalty entered into in March 2024.

Although the Company’s current capital resources and liquidity include up to $ 24.8 million in funding awarded under the Technology Investment Agreement (“TIA”) pursuant to Title III of the Defense Production Act (“DPA”) ($ 59.4 million upon modification of the TIA to effect an additional conditional award of $ 34.6 million), such funding is available only for the specified costs related to permitting, environmental baseline data monitoring, environmental and technical studies, and advancing construction readiness and is not available to fund the Company’s costs pursuant to its Administrative Settlement and Order on Consent (“ASAOC”) obligations, payments and certain corporate expenses, including payments under the Settlement Agreement (as defined below).

Absent additional financing, the Company would no longer be able to meet its ongoing obligations or progress critical permitting efforts.

The Company continues to explore various funding opportunities, which may include the issuance of additional equity, new debt, or project specific debt;

government funding;

and/or other financing opportunities.

However, there can be no assurance that the Company will be successful in obtaining such funding.

On May 12, 2023, the Company entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) providing for the sale by the Company, from time to time, of its common shares having an aggregate gross offering price of up to $ 20.0 million.

Sales under the program are subject to certain conditions, including market conditions, and there is no assurance that the Company will be able to raise funds under the program, at acceptable share prices or at all.

As of December 31, 2023, $ 17.2 million remains available under the program.

We believe our plans outlined above to obtain sufficient funding will be successful although there is no certainty that these plans will result in needed liquidity for a reasonable period of time.

However, our expectation of incurring ASAOC costs, contributions due under the Settlement Agreement and other costs in the foreseeable future that are not eligible for DPA funding reimbursement and the need for additional funding to further support the development of our planned operations, raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that these consolidated financial statements are issued.

These Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

Summary of Significant Accounting Policies

2 unchanged sentences

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;

Stibnite Gold Company (merged with Idaho Gold Resource Company, LLC in 2021 and liquidated).

These consolidated financial statements include the results of Perpetua Resources and its wholly owned subsidiary companies Perpetua Resources Idaho, Inc.

and Idaho Gold Resource Company, LLC.

All intercompany transactions, balances, income and expenses have been eliminated.

50 unchanged sentences

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.

The Company currently has no financing 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.

10 unchanged sentences

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 total amount recognized as expense is adjusted to reflect the number of share options which ultimately vest.

The Company recognizes forfeitures as they occur.

2 unchanged sentences

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 share-based awards that do not contain market conditions 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.

The fair value of share-based awards with market conditions is estimated using a Monte Carlo simulation model.

Assumptions and estimates utilized in the model include expected share price volatilities and related indices, the interest rate, and the probability of awards expected to vest.

Reclamation and Remediation Costs and Asset Retirement Obligations

22 unchanged sentences

Unobservable inputs that are not corroborated by market data.

At December 31, 2023, the Company has no assets and no liabilities that are remeasured at fair value on a recurring basis.

At December 31, 2022, the Company had no assets and a warrant liability that was remeasured at fair value on a recurring basis.

The warrant liability fair value was determined using Level 3 inputs.

Convertible Debt

27 unchanged sentences

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 (DSUs) and warrants.

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

Potentially dilutive shares as of December 31, 2023 and December 31, 2022 were as follows:

Share purchase options

5 unchanged sentences

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.

The Corporation holds most of 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.

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.

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.

5 unchanged sentences

Recently Issued Accounting Pronouncements

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.

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, 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.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis.

Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively.

Early adoption is permitted.

We are currently evaluating the impact of this update on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively.

Early adoption

and retrospective application of the amendments are permitted.

We are currently evaluating the impact of this update on our consolidated financial statements and disclosures.

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, 2023 and 2022 was $ 83,741 and $ 61,294 , respectively.

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.

During 2023, the Company had 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, 2023 was 0.4 years.

At December 31, 2022, all remaining undiscounted lease payments of $ 73,132 under these lease agreements will be paid in 2023.

At December 31, 2023, all remaining undiscounted lease payments of $ 28,600 will be paid in 2024.

For the years ended December 31, 2023 and 2022, rent expense of $ 195,214 and $ 205,081 , respectively, is included in exploration expense on the Consolidated Statements of Operations.

For the years ended December 31, 2023 and 2022, rent expense of $ nil and $ 2,882 , respectively, is included in general and administration expense on the Consolidated Statements of Operations.

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 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.

Annual payment due under option agreements during 2023 are $ 180,000 .

Annual payment due under option agreements during 2024 are approximately $ 180,000 .

As of December 31, 2023, 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.

1 unchanged sentence

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.

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 development 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.

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;

In May 2013, the Company issued to Franco-Nevada Corporation (“Franco”) 200,000 share purchase warrants (“Franco Warrants”) for gross proceeds of $ 350,000 .

The Franco Warrants were exercisable into 200,000 common shares of the Company at C$ 12.30 per warrant.

The Franco Warrants contained a mandatory conversion feature which required 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 expired on May 9, 2023, unexercised.

The exercise price of the Franco Warrants was denominated in Canadian Dollars;

however, the functional currency of the Company is the U.S.

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.

As a result of this difference in currencies, the proceeds that would be received by the Company were not fixed and varied based on foreign exchange rates and the warrants were a derivative and required to be recognized and measured at fair value at each reporting period.

Any changes in fair value from period to period were recorded as a gain or loss in the Consolidated Statements of Operations.

No circumstances existed in which the Company would be required to pay any cash upon exercise or expiry of the warrants.

A reconciliation of the change in fair values of the derivative is below:

7 unchanged sentences

The fair value of the warrants was calculated using the Black-Scholes valuation model.

As of December 31, 2022 and 2021, the inputs used in the Black-Scholes valuation model are:

As of December 31, 2022, the inputs used in the Black-Scholes valuation model were:

Exercise price

3 unchanged sentences

Risk-free interest rate

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”, 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 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:

Convertible Notes

Balance, December 31, 2020

( 10,263,119 )

Accretion and interest expense

Interest payments

Foreign exchange adjustments

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

Balance, December 31, 2020

( 20,920,535 )

Fair value adjustment

( 5,710,557 )

Foreign exchange adjustments

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.

1 unchanged sentence

● 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.

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

On May 12, 2023, the Company entered into the Sales Agreement providing for the sale by the Company, from time to time, of the Company’s common shares having an aggregate gross offering price of up to $ 20.0 million (the “ATM Offering”).

The Company expects to raise relatively small amounts of capital from time to time through the ATM Offering for general corporate purposes, which may include, among other things, general corporate, legal and ASAOC expenses.

As of December 31, 2023, the Company sold 894,882 common shares in exchange for proceeds of approximately $ 2.1 million, which is net of offering costs of approximately $ 0.7 million.

As of December 31, 2023, $ 17.2 million remained available under the program.

Share based compensation

6 unchanged sentences

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 for the years ended December 31, 2023 and 2022 was recognized in the Consolidated Statements of Operations as follows:

Professional Fees

Corporate salaries and benefits

1 unchanged sentence

Share Purchase Options

A summary of share purchase option activity within the Company’s share-based compensation plan for the years ended December 31, 2022 and December 31, 2021 is as follows:

A summary of share purchase option activity within the Company’s share-based compensation plan for the years ended December 31, 2023 and 2022 is as follows:

Weighted Average

14 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 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 year ended December 31, 2021 are:

December 31, 2021

Fair value options granted

Risk-free interest rate

Expected term (in years)

Expected share price volatility

Expected dividend yield

No options were granted during the years ended December 31, 2023 and 2022.

An analysis of outstanding share purchase options as of December 31, 2023 is as follows:

9 unchanged sentences

2 Weighted Average Remaining Contractual Life (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, 2023, unvested compensation associated with unvested options is $ nil .

As of December 31, 2023, the intrinsic value of outstanding and exercisable share purchase options is $ 23,738 and $ 23,738 , respectively.

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

During the year ended December 31, 2023, the intrinsic value of share purchase options exercised was $ 30,594 .

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

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.

The following table summarizes activity for restricted share units (“RSUs”) awarded under the Plan that vest over the required service period of the participant.

Weighted Average

4 unchanged sentences

Unvested, December 31, 2023

During the years ended December 31, 2023 and 2022, the Company awarded 385,039 RSUs (2022:

370,098 RSUs) with a weighted average grant date fair value of $ 3.40 per RSU (2022:

During the years ended December 31, 2023 and 2022, the fair value of RSUs distributed was $ 500,500 and $ 112,539 , respectively.

During the years ended December 31, 2023 and 2022, the Company has recognized $ 1,262,926 and $ 949,619 , respectively in compensation expense for Restricted Share Units.

3 unchanged sentences

Performance Share Units

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

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

Weighted Average

2 unchanged sentences

Unvested, December 31, 2023

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.

During the years ended December 31, 2023 and 2022, the Company recognized $ 1,089,214 and $ 510,321 respectively, in compensation expense related to PSUs and MPSUs.

The Company expects to record an additional $ 1,908,770 million in compensation expense over the next 1.82 years.

During the years ended December 31, 2023 and 2022, the fair value of PSUs distributed was $ 41,790 and $ 8,072 , respectively.

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.

PSUs vest upon completion of the performance period 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 .

3 unchanged sentences

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.

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”).

During the years ended December 31, 2023 and 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 a three year period (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.

1 unchanged sentence

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.

however, the compensation cost will reverse if an employee terminates prior to satisfying the requisite service period.

During the year ended December 31, 2023, the Company awarded 277,535 MPSUs (2022:

249,951 MPSUs) that had a weighted grant date fair value of $ 5.98 (2022:

$ 6.99 ) per MPSU or approximately $ 1.66 million (2022:

$ 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:

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

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

Grant date fair value

Risk-free interest rate

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

Weighted Average

Grant Date Fair Value

Outstanding, December 31, 2021

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

During the years ended December 31, 2023 and 2022, the fair value of DSUs distributed was $ 109,534 and $ nil , respectively.

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

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

Warrant Derivative (Note 6)

December 31, 2021

Warrant Derivative (Note 6)

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.

These warrants expired on May 9, 2023.

No benefit (provision) has been recognized for the years ended December 31, 2023 and 2022.

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State tax, net of federal tax benefit

( 1,846,137 )

Difference in foreign tax rates

( 1,027,801 )

( 1,920,617 )

Change in state tax rate

Deferred tax adjustments

( 1,414,333 )

Change in valuation allowance

Non-deductible tax items:

Non-deductible (taxable) items:

(Gain) loss on derivative liability

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Environmental obligation

CWA settlement payable

Stock based compensation

Deferred tax assets

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( 6,542,458 )

Valuation allowance movement associated with mineral property acquisition

Valuation allowance movement recognized in equity

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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.

In 2022, 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.

In 2023 and 2022, 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.

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Environmental Reclamation Liabilities

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

On January 15, 2021, the Company agreed to an 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 timing of cash flows is based on the latest 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.

During the year ended December 31, 2023, the Company spent $ 10.9 million on activities designed to improve water quality which included moving more than 325,000 tons of legacy mine waste and tailings away from sensitive waterways on site and relocating it to areas where it can be more safely stored.

The Company completed most of the early action restoration work in 2023 and estimates $ 0.8 million in remaining work to be completed in 2024.

Movements in the environmental reclamation liability during the years ended December 31, 2023 and 2022 are as follows:

Balance, December 31, 2020

Initial estimate

Change in estimate

Years ended December 31,

Balance at beginning of year

Work performed on early action items

( 10,934,502 )

Balance, December 31, 2021

Change in estimate

Work performed on early action items

( 3,651,875 )

Balance, December 31, 2022

Balance at end of year

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.

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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.

These payments could begin as early as the fourth quarter of 2024 based on the current permitting schedule and range from $ 0.1 million to $ 1.0 million (upon commencement of final reclamation phase) in cash and 150,000 common shares of the Company.

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.

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

As of December 31, 2023, the option payments due on these properties in 2024 are approximately $ 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, 2023 and the date of this Annual Report.

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.

The Corporation and its subsidiaries have been parties 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.

1 unchanged sentence

Both motions were denied.

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.

Subsequently, the Corporation filed an answer denying liability and 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 that several of 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 in January 2021 with the U.S.

Environmental Protection Agency (“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.

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

On August 8, 2023, the Company and the Nez Perce Tribe filed a final Settlement Agreement (the “Settlement Agreement”) to resolve the CWA litigation.

The parties jointly asked the court to approve the Settlement Agreement and dismiss the case without prejudice.

The Settlement Agreement provides for total payments of $ 5.0 million by Perpetua over a four-year period.

This includes $ 4.0 million of contributions by Perpetua to a South Fork Salmon Water Quality Enhancement Fund (the “Fund”) to be used by the Nez Perce Tribe to support water quality improvement projects in the South Fork Salmon River watershed and $ 1.0 million of reimbursements to the Nez Perce Tribe for legal expenses.

Following a 45-day review period by the United States Justice Department and the U.S.

EPA, on October 2, 2023 the U.S.

District Court for the District of Idaho approved the Stipulation for Dismissal and entered a Judgment which resulted in the CWA lawsuit being dismissed without prejudice.

Under the Settlement Agreement, a dismissal with prejudice will follow after completion of Perpetua’s required payments.

Once Perpetua has satisfied its payment obligations under the Settlement Agreement, the parties will submit a Stipulation of Dismissal with Prejudice to the court.

The Company recognized an expense of $ 5.0 million during the year ended December 31, 2023.

At December 31, 2023, CWA settlement payable current portion is $ 2,000,000 with the remaining $ 3,000,000 classified as long-term.

The voluntary CERCLA ASAOC entered into by the Company, 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 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.

is executing the Phase 1 early cleanup actions (known under CERCLA as “time critical removal actions”) that, upon final work plan approval by the federal agencies, are designed 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 2023 work season.

During the year ended December 31, 2023, the Company spent $ 10.9 million dedicated to improve water quality which included moving more than 325,000 tons of legacy mine waste and tailings away from sensitive waterways on the Stibnite Site and relocating it to areas where it can be more safely stored.

The Company completed most of the early action restoration work in 2023 and estimates $ 0.8 million in remaining work to be completed in 2024.

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

Government Grants:

The Company has been awarded government grants by the U.S.

Department of Defense (“DOD”) as described below.

Accounting for these DOD grants does not fall under Accounting Standard Codification 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.

During the years ended December 31, 2023 and 2022, grant income, which is included within other income (expense) on the Consolidated Statements of Operations, included the following:

Years ended December 31,

Government Grant

At December 31, 2023 and 2022, grant receivable, which is included in receivables on the Consolidated Balance Sheets, include the following:

As at December 31,

Government Grant

Information regarding each individual grant is as follows:

Small Business Innovation Research (“SBIR”) Grant :

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 programs were complete in September 2023 so no additional grant income is anticipated under the program.

Defense Production Act (“DPA”) Grant :

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 $ 24.8 million under Title III of the DPA.

On July 25, 2023, the TIA was definitized with the DOD, establishing the full not-to-exceed amount of $ 24.8 million.

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.

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.

The Company anticipates recognizing approximately $ 37,000,000 of additional grant income in 2024.

During the years ended December 31, 2023 and 2022, the Company was reimbursed $ 14,369,177 and $ nil , respectively, for certain costs incurred.

DOD Ordnance Technology Consortium (“DOTC”) Grant :

On August 18, 2023, the Company’s wholly owned subsidiary, Perpetua Resources Idaho, Inc., was awarded an Ordnance Technology Initiative Agreement (“OTIA”) of up to $ 15.5 million under the Prototype Other Transaction authority of the DOD through the DOTC.

The funding objective of the OTIA is to demonstrate a fully domestic antimony trisulfide supply chain using ore from the Stibnite Gold Project site.

The OTIA designates funding to the Company to conduct activities to meet this objective, including obtaining additional core samples from the Project site, conducting a pilot plant study to produce mil-spec antimony trisulfide from the samples, designing a full-scale process circuit, and delivering a modular pilot plant for the DOD to use in further investigations.

Under the OTIA, the Company will be reimbursed for these activities on a cost-plus fixed fee basis over the 24-month period of performance.

The current estimated amount is $ 15.5 million, which is subject to adjustment by the DOD based on scope, costs, budget, or other factors as the program advances.

Perpetua will be entitled to reimbursement for all costs incurred under the agreement, with the negotiated fee being 12 %.

The OTIA contains customary terms and conditions for OTIAs, including ongoing reporting obligations.

The Company anticipates recognizing approximately $ 6,800,000 of additional grant income in 2024.

During the year ended December 31, 2023, the Company received cash from this grant of $ 3,455,934 , for reimbursement of certain costs incurred of $ 3,085,656 and 12% fee income of $ 370,278 .

During the year ended December 31, 2023, grant income includes $ 573,394 of 12% fee income earned on costs incurred.

Subsequent Events:

On February 12, 2024, the Company announced it was conditionally awarded up to $ 34.6 million in additional funding under the existing TIA.

Full funding of the additional award is conditioned on modifying the existing TIA to expand the in-scope work for advancing permits and construction readiness.

The amendment will not change any other material terms of the definitized TIA.

The modification is anticipated to be completed in the first quarter of 2024.

Under the modified TIA, Perpetua

may request reimbursement for certain costs incurred through June 30, 2025 related to environmental baseline data monitoring, environmental and technical studies and other activities related to advancing Perpetua’s construction readiness and permitting process for the Stibnite Gold Project.

The DPA funding does not interrupt the ongoing NEPA review.

On March 13, 2024, Laurel Sayer tendered her notice of resignation to the Board, notifying the Company of her resignation as President and Chief Executive Officer and as a Director of the Company, effective March 14, 2024, and retirement from the Company on April 1, 2025 (the “Retirement Date”).

Sayer will serve as Senior Advisor to the Chief Executive Officer effective March 14, 2024 until the Retirement Date.

On March 14, 2024, the Company announced that the Board appointed (i) Jonathan Cherry to serve as President and Chief Executive Officer of the Company and as a Director of the Company to fill the vacancy created by Ms.

Sayer’s resignation and (ii) Jessica Largent, Chief Financial Officer of the Company, as an additional Director of the Company, in each case, effective March 14, 2024.

On March 21, 2024, the Company entered into a royalty agreement with a wholly-owned subsidiary of Franco-Nevada Corporation (“Franco-Nevada”) pursuant to which Perpetua, through its subsidiaries, sold Franco-Nevada a royalty on the future payable silver production from the Project in exchange for a cash payment of $ 8.5 million.

Under the agreement, Franco-Nevada will receive all of the payable silver by-product revenue over the life-of-mine, subject to the terms of the agreement.

Perpetua intends to use the proceeds for general corporate purposes.

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