PERPETUA RESOURCES CORP. [PPTA] Filings

10-Q 1 ppta-20240930x10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39918

Perpetua Resources Corp.

(Exact Name of Registrant as Specified in its Charter)

British Columbia, Canada

(State or other jurisdiction of

incorporation or organization)

N/A

(I.R.S. Employer

Identification No.)

405 S. 8th Street, Ste 201

Boise, Idaho

(Address of principal executive offices)

83702

(Zip Code)

(208) 901-3060

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, without par value	PPTA	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, an emerging growth company, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2024, the registrant had 66,726,710 common shares outstanding.

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PERPETUA RESOURCES CORP.

TABLE OF CONTENTS

		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		2

PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report are “forward-looking statements” within the meaning of “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and “forward-looking information” within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” “project,” “outlook,” “may,” “will,” “should,” “would,” “could,” “can,” the negatives thereof, variations thereon and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on certain estimates, beliefs, expectations and assumptions made in light of management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that may be appropriate.

Forward-looking statements necessarily involve unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed or implied in such statements. Due to the risks, uncertainties and assumptions inherent in forward-looking information, you should not place undue reliance on forward-looking statements. Factors that could have a material adverse effect on our business, financial condition, results of operations and growth prospects can be found in Item 1A, Risk Factors, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report and in Item 1A, Risk Factors and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023. These factors include, but are not limited to, the following:

●

planned expenditures and budgets and the execution thereof, including the ability of the Company to discharge its liabilities as they become due and to continue as a going concern;

●

access to capital and suitable financing sources or strategic partners to fund the exploration, permitting, development and construction of the Project (as defined below);

●

permitting timelines and requirements, including with respect to the timing, review process, and outcome of the final Record of Decision (“ROD”) and other permitting processes;

●

the Company’s plans to submit a financing application to the Export-Import Bank of the United States (“U.S. EXIM”), the prospects of successfully securing financing from U.S. EXIM or other sources on acceptable terms, or at all, and the expected timing of, and benefits to the Project (as defined below) of, securing such financing from U.S. EXIM or other sources;

●

the intended environmental and other outcomes of the South Fork Salmon Water Quality Enhancement Fund (the “Fund”) related to the Nez Perce Tribe’s Clean Water Act (“CWA”) lawsuit, good faith discussions between the Company and the Nez Perce Tribe with respect to future permitting and activities at the Project and the anticipated source of funding of the Company’s payments required under the Settlement Agreement (as defined below);

●

regulatory and legal changes, requirements for additional capital, requirements for additional water rights and the potential effect of proposed notices of environmental conditions relating to mineral claims;

●

analyses and other information based on expectations of future performance and planned work programs;

●

possible events, conditions or financial performance that are based on assumptions about future economic conditions and courses of action;

●

assumptions and analysis underlying our mineral reserve estimates and plans for mineral resource exploration and development;

●

timing, costs and potential success of future activities on the Company’s properties, including but not limited to development and operating costs in the event that a production decision is made;

●

potential results of exploration, development and environmental protection and remediation activities;

●

future outlook and goals;

●

current or future litigation or environmental liability;

●

global economic, political and social conditions and financial markets, including any potential regulatory or policy changes resulting from a new administration, inflationary pressures and elevated interest rates;

●

changes in gold and antimony commodity prices;

●

our ability to implement our strategic plan and to maintain and manage growth effectively;

●

loss of key executives or inability to hire or retain key executives or employees to support the construction, permitting and operations;

●

labor shortages and disruptions;

●

cyber-attacks and other security breaches of our information and technology systems; and

●

other factors and risks described under the heading “Risk Factors” in Item 1A of this Quarterly Report.

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Statements concerning mineral resource and mineral reserve estimates may also be deemed to constitute forward-looking information to the extent that such statements involve estimates of the mineralization that may be encountered if a property is developed.

With respect to forward-looking information contained herein, the Company has applied several material factors or assumptions including, but not limited to, certain assumptions as to production rates, operating cost, recovery and metal costs; that any additional financing needed will be available when needed on reasonable terms; that the current exploration, development, environmental and other objectives concerning the Company’s Stibnite Gold Project (the “Project” or “Stibnite Gold Project”) can be achieved and that the Company’s other corporate activities will proceed as expected; that the formal review process under the National Environmental Policy Act (“NEPA”) (including a joint review process involving the United States Forest Service (“USFS” or “Forest Service”), the State of Idaho and other agencies and regulatory bodies) will proceed in a timely manner and that the ROD will be issued as expected; payment and other settlement conditions under the final Settlement Agreement filed on August 8, 2023 and approved by the United States District Court for the District of Idaho on October 2, 2023 to resolve the CWA litigation (the “Settlement Agreement”) will proceed on the anticipated timeline and terms, the parties will engage in good faith discussions regarding the Project and the Fund, that the Project will receive necessary permits and approvals, that Perpetua will be able to successfully obtain financing for the Project, and that all requisite information will be available in a timely manner; that the current price and demand for gold and other metals will be sustained or will improve; that general business and economic conditions will not change in a materially adverse manner and that all necessary governmental approvals for the planned exploration, development and environmental protection activities on the Project will be obtained in a timely manner and on acceptable terms; and that the continuity of economic and political conditions and operations of the Company will be sustained.

These risks are not exhaustive. Because of these risks and other uncertainties, our actual results, performance or achievement, or industry results, may be materially different from the anticipated or estimated results discussed in the forward-looking statements in this Quarterly Report. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the effects of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. Our past results of operations are not necessarily indicative of our future results. You should not rely on any forward-looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made, as predictions of future events. We undertake no obligation to update these forward-looking statements, even though circumstances may change in the future, except as required under applicable securities laws. We qualify all of our forward-looking statements by these cautionary statements.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Perpetua Resources Corp.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30,		December 31,
	2024		2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	11,210,662	$	3,229,462
Receivables		8,822,428		3,181,152
Prepaid expenses		924,601		443,312
		20,957,691		6,853,926
NON-CURRENT ASSETS
Buildings and equipment, net		474,013		385,049
Right-of-use assets		44,707		27,898
Environmental reclamation bond (Note 5)		3,000,000		3,000,000
Mineral properties and interest (Note 3)		64,818,480		72,820,365
TOTAL ASSETS	$	89,294,891	$	83,087,238

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade and other payables	$	7,295,805	$	4,997,226
Lease liabilities		44,706		27,897
CWA settlement payable (Note 6)		1,500,000		2,000,000
Environmental reclamation liabilities (Note 5)		249,357		764,607
		9,089,868		7,789,730
NON-CURRENT LIABILITIES
CWA settlement payable (Note 6)		3,000,000		3,000,000
TOTAL LIABILITIES		12,089,868		10,789,730

COMMITMENTS AND CONTINGENCIES (Note 6)

SHAREHOLDERS’ EQUITY (Note 4)
Common shares, no par value, unlimited shares authorized, 66,569,376 and 64,123,456 shares outstanding, respectively		632,677,284		618,581,910
Additional paid-in capital		35,408,923		34,413,562
Accumulated deficit		(590,881,184)		(580,697,964)
TOTAL SHAREHOLDERS’ EQUITY		77,205,023		72,297,508

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	89,294,891	$	83,087,238

See accompanying notes to the unaudited condensed consolidated financial statements.

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Perpetua Resources Corp.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2024		2023		2024		2023
EXPENSES
Corporate salaries and benefits	$	572,176	$	393,656	$	1,618,354	$	1,205,824
Depreciation		30,886		23,846		88,639		59,548
Directors’ fees		54,436		30,158		371,518		310,268
Exploration		14,510,853		8,664,205		31,517,250		20,683,257
Environmental liability expense		854,662		22,285		1,422,288		604,222
CWA settlement expense (Note 6)		—		—		—		5,000,000
General and administration		140,829		160,264		403,966		454,543
Professional fees		253,185		230,243		1,046,200		875,327
Shareholder and regulatory		117,880		91,177		381,745		388,307
OPERATING LOSS		16,534,907		9,615,834		36,849,960		29,581,296

OTHER EXPENSES (INCOME)
Grant income		(12,920,417)		(6,905,691)		(26,565,798)		(14,273,148)
Interest income		(41,810)		(92,620)		(101,168)		(418,670)
Other expenses (income)		(7,700)		12,571		226		13,461
Total other expenses (income)		(12,969,927)		(6,985,740)		(26,666,740)		(14,678,357)

NET LOSS	$	3,564,980	$	2,630,094	$	10,183,220	$	14,902,939

NET LOSS PER SHARE, BASIC AND DILUTED	$	0.05	$	0.04	$	0.16	$	0.24

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED		65,537,015		63,176,063		64,735,961		63,120,580

See accompanying notes to the unaudited condensed consolidated financial statements.

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Perpetua Resources Corp.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

For the three and nine months ended September 30, 2024 and 2023


	Common Shares			Additional Paid		Accumulated
	Shares	Amount		in Capital		Deficit		Total
BALANCE, December 31, 2022	63,011,777	$	615,553,448	$	32,203,858	$	(561,926,784)	$	85,830,522
Share based compensation	—		—		840,827		—		840,827
Share units distributed	115,256		449,909		(449,909)		—		—
Exercise of options	12,500		64,687		(24,015)		—		40,672
Net loss for the period	—		—		—		(4,600,093)		(4,600,093)
BALANCE, March 31, 2023	63,139,533		616,068,044		32,570,761		(566,526,877)		82,111,928
Share based compensation	—		—		784,282		—		784,282
Share units distributed	13,334		54,936		(54,936)		—		—
Exercise of options	12,500		66,034		(24,515)		—		41,519
Net loss for the period	—		—		—		(7,672,752)		(7,672,752)
BALANCE, June 30,2023	63,165,367		616,189,014		33,275,592	$	(574,199,629)		75,264,977
Share based compensation	—		—		696,066		—		696,066
Share units distributed	5,475		22,064		(22,064)		—		—
Deferred share units distributed	31,566		119,061		(119,061)		—		—
Net loss for the period	—		—		—		(2,630,094)		(2,630,094)
BALANCE, September 30, 2023	63,202,408	$	616,330,139	$	33,830,533	$	(576,829,723)	$	73,330,949

BALANCE, December 31, 2023	64,123,456	$	618,581,910	$	34,413,562	$	(580,697,964)	$	72,297,508
Share based compensation	—		—		1,008,077		—		1,008,077
Share units distributed	228,422		846,107		(846,107)		—		—
Net loss for the period	—		—		—		(2,944,525)		(2,944,525)
BALANCE, March 31, 2024	64,351,878	$	619,428,017	$	34,575,532		(583,642,489)	$	70,361,060
Share based compensation	—		—		950,158		—		950,158
Share units distributed	13,333		54,932		(54,932)		—		—
Exercise of share purchase options	228,341		1,539,900		(553,873)		—		986,027
Net loss for the period	—		—		—		(3,673,715)		(3,673,715)
BALANCE, June 30, 2024	64,593,552		621,022,849		34,916,885		(587,316,204)		68,623,530
Share based compensation	—		—		947,537		—		947,537
Share units distributed	1,395		6,682		(6,682)		—		—
Share sold through offering	1,834,104		11,005,174		—		—		11,005,174
Share issuance costs	—		(606,871)		—		—		(606,871)
Exercise of share purchase options	140,325		1,249,450		(448,817)		—		800,633
Net loss for the period	—		—		—		(3,564,980)		(3,564,980)
BALANCE, September 30, 2024	66,569,376	$	632,677,284	$	35,408,923	$	(590,881,184)	$	77,205,023

See accompanying notes to the unaudited condensed consolidated financial statements.

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Perpetua Resources Corp.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	For the nine months ended September 30,
	2024		2023
OPERATING ACTIVITIES:
Net loss	$	(10,183,220)	$	(14,902,939)
Adjustments to reconcile net loss to net cash used in operating activities:
Share based compensation (Note 4)		2,905,772		2,321,175
Depreciation		88,639		59,548
Change in fair value of warrant derivative		—		(1,732)
Environmental liability expense (Note 5)		1,422,288		604,222
Unrealized foreign exchange loss (gain)		3,193		(160)
Gain on sale of equipment		(13,333)		(25,000)
Changes in:
Receivables		(5,641,276)		(1,698,358)
Prepaid expenses		(281,721)		(738,397)
Trade and other payables		2,298,579		2,792,882
CWA settlement payable		(500,000)		5,000,000
Environmental reclamation liabilities		(1,937,538)		(8,650,891)
Net cash used in operating activities		(11,838,617)		(15,239,650)

INVESTING ACTIVITIES:
Deposit on equipment purchase		(199,568)		—
Proceeds from sale of silver royalty		8,335,115		—
Investment in mineral properties and interest		(333,230)		(275,992)
Purchase of building and equipment		(176,270)		(153,820)
Proceeds from sale of equipment		12,000		25,000
Net cash provided by (used in) investing activities		7,638,047		(404,812)

FINANCING ACTIVITIES:
Proceeds from sale of common stock		11,005,174		—
Payment of share issue costs		(606,871)		—
Proceeds from exercise of share purchase options		1,786,660		82,191
Net cash provided by financing activities		12,184,963		82,191

Effect of foreign exchange on cash and cash equivalents		(3,193)		161

Net increase (decrease) in cash and cash equivalents		7,981,200		(15,562,110)
Cash and cash equivalents, beginning of period		3,229,462		22,667,047
Cash and cash equivalents, end of period	$	11,210,662	$	7,104,937

NONCASH INVESTING AND FINANCING ACTIVITIES
Recognition of operating lease liability and right-of-use asset	$	65,972	$	65,061

CASH AND CASH EQUIVALENTS
Cash	$	6,066,328	$	3,104,628
Investment savings accounts		5,144,334		4,000,309
Total cash and cash equivalents	$	11,210,662	$	7,104,937

See accompanying notes to the unaudited condensed consolidated financial statements.

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Perpetua Resources Corp.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Nature of Operations and Basis of Presentation

Perpetua Resources Corp. (the “Corporation”, the “Company”, “Perpetua Resources” or “Perpetua”) was incorporated on February 22, 2011 under the Business Corporation Act (British Columbia). The Company was organized to hold shares in wholly owned subsidiaries that locate, acquire, develop and restore mineral properties located principally in the Stibnite – Yellow Pine mining district in Valley County, Idaho, USA. The Company’s principal asset is 100% ownership in subsidiaries that control the Stibnite Gold Project (“Stibnite Gold Project” or the “Project”). The Company currently operates in one segment, mineral exploration in the United States.

The unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Perpetua Resources Corp. and its wholly owned subsidiaries, Perpetua Resources Idaho, Inc. and Idaho Gold Resource Company, LLC. Intercompany transactions and balances have been eliminated.

The unaudited condensed consolidated financial statements do not include all disclosures required of annual consolidated financial statements and, accordingly, should be read in conjunction with our annual financial statements for the year ended December 31, 2023. Operating results for the nine months ended September 30, 2024 may not be indicative of results expected for the full year ending December 31, 2024. Management estimates that the Company’s 2024 effective tax rate will be 0% due to the Company’s cumulative loss position, historical net operating losses (“NOLs”), and other available evidence related to the Company’s ability to generate taxable income. Accordingly, there is no income tax provision or benefit for the nine month period ended September 30, 2024.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results for the interim periods reported.

The Company’s latest liquidity forecast indicates that available cash resources and other sources of liquidity are expected to be exhausted in the second quarter of 2025. Although the Company’s current capital resources and liquidity include up to $20.0 million in funding awarded under the modified Technology Investment Agreement (“TIA”) pursuant to Title III of the Defense Production Act (“DPA”) as of September 30, 2024, 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 certain corporate expenses, including 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 strategic and funding opportunities, which may include the issuance of additional equity, new debt, or project specific debt; government funding; and/or other financing or strategic opportunities. The Company has engaged RBC Capital Markets and Endeavour Financial to assist with the evaluation of potential strategic and financing opportunities and to support the Company’s application process in connection with the U.S. EXIM $1.8 billion Letter of Interest received in April 2024. Any such financing or strategic transaction, or any funding commitment from U.S. EXIM, will be subject to due diligence and other conditions. There can be no assurance of the amount, timing or nature of any such financing or strategic transaction, if any.

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 September 30, 2024, $6.2 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 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 unaudited condensed consolidated financial statements are issued.

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These unaudited condensed 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.

Loss per share

Basic loss per share is computed by dividing the net loss by the weighted average number of shares outstanding during the reporting period. Diluted loss per share is computed similar to basic loss per share except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of share purchase options and vesting and distribution of awarded share units, if dilutive. The Company’s potential dilutive common shares include outstanding share purchase options, restricted share units, performance share units, and deferred share units. Potentially dilutive shares as of September 30, 2024 and 2023, are as follows:


	September 30,
	2024	2023
Share purchase options	946,209	1,673,750
Share units	2,260,750	1,375,820
Balance	3,206,959	3,049,570

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

2.Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 do not expect any significant changes to our consolidated financial statements from this update.

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 continue to evaluate the impact of this update however we do not expect any significant changes to 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. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption.

3.Mineral Properties and Interest

The Company’s mineral properties and interest at the Stibnite Gold Project totaled $64,818,480 and $72,820,365 as of September 30, 2024 and December 31, 2023, respectively.

The Company’s subsidiaries acquired mineral rights to the Stibnite Gold Project through several transactions. All mineral and surface rights, where applicable, are held by the Company’s subsidiaries through patented and unpatented lode mining claims and mill sites, 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 (“NSR”) royalty upon the sale of project-related gold production.

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On March 21, 2024, Perpetua Resources and its subsidiaries granted a perpetual 100% NSR royalty on the future payable silver production from the Project to Franco-Nevada Idaho Corporation (“Franco-Nevada”) for gross proceeds of $8,500,000. The silver royalty agreement applies to the same properties as the gold royalty previously purchased by Franco-Nevada in 2013. The silver royalty agreement provides a mechanism whereby Franco-Nevada can receive minimum payments equal to 100% of the payable silver from the sale of dore commencing in the seventh calendar year following commercial production and ending upon the completion of the fifteenth calendar year following commercial production. The silver royalty agreement also provides Franco-Nevada an option upon the occurrence of certain conditions precedent (including achieving commercial production) to pay the Company a contingent payment and receive a royalty on any silver payable from the production of antimony concentrate from the Project. The Company incurred costs of $164,835 associated with this transaction. The net proceeds of $8,335,115 were recorded as a reduction to the carrying value of the mineral properties and interests during the nine months ended September 30, 2024.

The Company’s obligations under the gold and silver royalty agreements with Franco-Nevada are secured by a continuing security interest and a first priority lien on certain collateral including the land and mineral interests comprising the Project.

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

As of September 30, 2024, 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 capitalized unless they are incurred after such determination. Upon commencement of commercial production, capitalized costs will be amortized over their estimated useful lives or units of production, whichever is a more reliable measure.

Although the Company has taken steps to review and verify mineral rights to the properties in which it has an interest, in accordance with industry standards for properties in the 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.

4.Shareholders’ Equity

Authorized

●

Unlimited number of common shares without par value.

●

Unlimited number of first preferred shares without par value.

●

Unlimited number of second preferred shares without par value.

ATM Offering

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 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.

During the twelve month period ended 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. During the three and nine months ended September 30, 2024, the Company sold 1,834,104 common shares in exchange for proceeds of approximately $10.4 million which is net of offering costs of approximately $0.6 million. Since its inception and through September 30, 2024, the Company has sold 2,728,986 common shares in exchange for proceeds of approximately $12.5 million which is net of offering costs of approximately $1.3 million under the program. As of September 30, 2024, $6.2 million remained available under the program.

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Share based compensation

Share based compensation was recognized in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023 as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
	2024		2023		2024		2023
Exploration	$	493,871	$	400,306	$	1,441,800	$	1,215,542
Corporate salaries and benefits		399,230		266,349		1,092,454		795,925
Directors’ fees		54,436		29,411		371,518		309,708
Total	$	947,537	$	696,066	$	2,905,772	$	2,321,175

Share purchase options

A summary of share purchase option activity within the Company’s share-based compensation plan (the “Plan”) for the year ended December 31, 2023 and nine months ended September 30, 2024 is as follows:


	Number of	Weighted Average
	Options	Exercise Price (C$)
Balance December 31, 2022	1,945,650	$	9.23
Options exercised	(25,000)		4.40
Options cancelled or forfeited	(35,500)		11.48
Options expired	(219,400)		7.07
Balance December 31, 2023	1,665,750	$	9.54
Options exercised	(368,666)		6.60
Options expired	(350,875)		9.52
Balance September 30, 2024	946,209	$	10.69

During the three and nine months ended September 30, 2024 and 2023, the Company’s total share based compensation from options was $nil (2023: $49,628) and $nil (2023: $213,670), respectively. No options were granted during the nine months ended September 30, 2024 nor 2023. During the three and nine months ended September 30, 2024, the intrinsic value of share purchase options exercised was $456,237 (2023: $nil) and $897,381 (2023: $30,594), respectively.

An analysis of outstanding share purchase options as of September 30, 2024 is as follows:


	Options Outstanding				Options Exercisable
Range of Exercise				Remaining				Remaining
Prices (C$)	Number	Price (C$)¹		Life²	Number	Price (C$)¹		Life²
$3.50 - $5.90	20,000		3.50	0.47	20,000		3.50	0.47
$5.91 - $7.20	96,209		6.21	0.29	96,209		6.20	0.29
$7.21 - $9.70	130,000		9.13	1.45	40,000		9.13	1.45
$9.71 - $11.80	700,000		11.80	1.30	700,000		11.80	1.30
$3.50 - $11.80	946,209		10.69	1.20	856,209		10.85	1.17

Weighted Average Exercise Price (C$)

Weighted Average Remaining Contractual Life (Years)

As of September 30, 2024, all unvested options are expected to vest and there is no unvested compensation. As of September 30, 2024, the intrinsic value of outstanding and exercisable share purchase options is approximately $1.3 million and $1.1 million, respectively.

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Restricted Share Units

A summary of restricted share units (“RSUs”) activity awarded under the Plan for the year ended December 31, 2023 and nine months ended September 30, 2024 is as follows:


		Weighted Average
	Share	Grant Date
	Units	Fair Value
Unvested, December 31, 2022	371,956	$	4.13
Granted	385,039		3.40
Distributed (vested)	(147,506)		4.23
Cancelled	(7,849)		3.72
Unvested, December 31, 2023	601,640		3.64
Granted	515,128		3.02
Distributed (vested)	(241,755)		3.72
Cancelled	(2,285)		3.72
Unvested, September 30, 2024	872,728	$	3.25

During the nine months ended September 30, 2024, the Company awarded 515,128 RSUs (2023: 370,039 RSUs) with a weighted average grant date fair value of $3.02 per RSU (2023: $3.42) or approximately $1.6 million in total (2023: $1.3 million).

During the three and nine months ended September 30, 2024 and 2023, the Company has recognized $367,132 (2023: $306,265) and $1,059,073 (2023: $956,684), respectively, in compensation expense related to RSUs and expects to record an additional $1.2 million in compensation expense over the next 1.43 years. The unvested units of September 30, 2024 are scheduled to vest as follows:


Remainder of 2024		5,000
2025		438,945
2026		249,818
2027		148,023
Total		841,786

Unvested units will be forfeited by participants upon termination of employment in advance of vesting, with the exception of termination due to retirement if certain criteria are met.

Performance Share Units

A summary of performance share units (“PSUs”) and market-based performance share units (“MPSUs”) awarded under the Plan for the year ended December 31, 2023 and nine months ended September 30, 2024 is as follows:


		Weighted Average
	Share	Grant Date
	Units	Fair Value
Unvested, December 31, 2022	263,266	$	6.77
Granted	301,035		5.80
Distributed	(12,725)		2.74
Cancelled	(4,993)		5.03
Unvested, December 31, 2023	546,583	$	6.35
Granted	509,502		4.75
Distributed	(1,395)		4.79
Cancelled	(3,247)		4.92
Unvested, September 30, 2024	1,051,443	$	5.58

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During the three and nine months ended September 30, 2024 and 2023, the Company has recognized $525,969 (2023: $292,971) and $1,439,175 (2023: $801,108), respectively, in compensation expense related to PSUs and MPSUs and expects to record an additional $2.8 million in compensation expense over the next 1.81 years. The unvested units of September 30, 2024 are scheduled to vest as follows:


Remainder of 2024		—
2025		377,233
2026		283,862
2027		328,448
Total		989,543

PSUs: These 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. The 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. During the nine months ended September 30, 2024, the Company awarded 120,000 PSUs (2023: 23,500 PSUs) that had a weighted average grant date fair value of $3.95 (2023: $3.67), or $474,000 (2023: $86,165) in total.

Market-based PSUs: During the nine months ended September 30, 2024 and 2023, 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. 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 prior to satisfying the requisite service period.

During the nine months ended September 30, 2024, the Company awarded 389,502 MPSUs (2023: 277,535 MPSUs) that had a weighted grant date fair value of $5.00 (2023: $5.98) per MPSU or approximately $1.9 million (2023: $1.7 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 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:


		2024			2023
Grant date fair value	$	5.00		$	5.98
Risk-free interest rate		4.38	%		4.15	%
Expected term (in years)		3.0			3.0
Expected share price volatility		57.36	%		65.74	%
Expected dividend yield		—			—

The expected volatility utilized is based on the historical volatilities of the Corporation’s common shares 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.

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Deferred Share Units

A summary of deferred share units (“DSUs”) awarded under the Plan for the year ended December 31, 2023 and nine months ended September 30, 2024 is as follows:


		Weighted Average
	Share	Grant Date
	Units	Fair Value
Outstanding, December 31, 2022	145,675	$	3.82
Granted	112,465		3.53
Distributed	(31,566)		3.77
Outstanding, December 31, 2023	226,574		3.68
Granted	110,005		3.70
Outstanding, September 30, 2024	336,579	$	3.69

Under the Plan, the Company may issue DSUs to non-employee directors. During the three and nine months ended September 30, 2024, 5,822 (2023: 14,479) and 110,005 (2023: 97,577) share units, respectively, with a fair value of $54,436 (2023: $47,202) and $407,523 (2023: $349,713) were granted to the non-employee directors and the related compensation expense was charged to directors’ fees in the unaudited condensed consolidated statements of operations.

Warrants

There was a total of 200,000 warrants outstanding as of December 31, 2022 that expired on May 9, 2023.

5.Environmental Reclamation Liability

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 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 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 nine months ended September 30, 2024, the Company spent $1.9 million on ASAOC activities and estimates a remaining environmental liability of $0.2 million, all of which is expected to be incurred in 2024. Movements in the environmental reclamation liability during the nine months ended September 30, 2024 and 2023 are as follows:


	Nine months ended September 30,
	2024		2023
Balance at beginning of period	$	764,607	$	10,800,936
Additions		1,422,288		604,222
Work performed on early action items		(1,937,538)		(8,650,891)
Balance at end of period	$	249,357	$	2,754,267

Current portion	$	249,357	$	2,297,523
Non-current portion		—		456,744
Balance at end of period	$	249,357	$	2,754,267

In 2021, the Company provided $7.5 million in financial assurance for Phase 1 projects under the ASAOC. The Company paid $3.0 million in cash collateral for a surety bond related to the ASAOC statement of work in early 2021.

6.Commitments and Contingencies

a.Mining Claim Assessments

The Company currently holds mining claims and mill sites for which it has an annual assessment obligation of $335,000 to maintain the claims in good standing. The Company is committed to these payments indefinitely. Related to the mining claims assessments is a $335,000 bond related to the Company’s exploration activities.

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Stibnite Foundation

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 (“ROD”) 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 the fourth quarter of 2024 based on the current permitting schedule and range from $0.1 million (upon receipt of the ROD) to $1 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.

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.

Option Payments on Other Properties

The Company is obligated to make option payments on mineral properties in order to maintain an option to purchase these properties. As of September 30, 2024, the option payments due on these properties in 2024 are approximately $180,000, which will be paid this year. The agreements include options to extend.

Off Balance Sheet Arrangements

The Company has no off-balance sheet arrangements as of September 30, 2024 and the date of this Quarterly Report.

e.Legal Update

The Corporation and its subsidiaries have been parties to an ongoing legal proceeding with the Nez Perce Tribe for claimed violations of the Clean Water Act (“CWA”) allegedly linked 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 Corporation filed an answer generally 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 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 government. 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.

On August 8, 2023, the Company and the Nez Perce Tribe filed a final Settlement Agreement (the “Settlement Agreement”) to resolve the Tribe’s 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 million by Perpetua over a four-year period. This includes $4 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 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, the U.S. District Court for the District of Idaho approved the Stipulation for Dismissal and entered a Judgment on October 2, 2023 which resulted in the CWA lawsuit being dismissed without prejudice. Under the Settlement Agreement, a dismissal with full 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 District Court. The Company recognized an expense of $5 million during the second quarter of 2023. During the nine month period ended September 30, 2024, the Company made the initial $500,000 legal expense payment. As of September 30, 2024, CWA settlement payable current portion is $1,500,000 with the remaining $3,000,000 classified as long-term.

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The voluntary CERCLA ASAOC entered into by the Corporation, the U.S. EPA, and the United States Department of Agriculture (the “signatory federal agencies”) 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 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 subsequent and limited work seasons. During the nine months ended September 30, 2024, the Company spent $1.9 million on ASAOC activities and estimates $0.2 million in remaining work to be completed in 2024. The ASAOC includes a process under which the Corporation and the signatory federal agencies will evaluate whether the Corporation will proceed with additional response actions after the Phase I work has been completed. The scope of any such potential additional actions and their costs have not yet been determined.

7.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 antimony trisulfide and the advancement of the Company’s Stibnite Gold Project.

During the three and nine months ended September 30, 2024 and 2023, grant income, which is included within other income (expense) on the Consolidated Statements of Operations, included the following:

Three months ended September 30,

Nine months ended September 30,

Government Grant

2024

2023

2024

2023