# Perpetua Resources Corp.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Perpetua Resources Corp.](/companies/ppta.md) (CIK 1526243)
- Form: 10-Q
- Filed: 2023-11-09
- Accepted by EDGAR: Nov 9, 2023, 16:30 ET
- Period: 2023-09-30
- Accession: 0001104659-23-116320
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1526243/000110465923116320/ppta-20230930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1526243/000110465923116320/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$9.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$29.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$2.6m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$14.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.04 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.24 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.04 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.24 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 63,176,063 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 63,120,580 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$15.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $153.8k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $7.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $10.4m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $86.7m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $8.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $13.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $73.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,051 characters.

*You should read the following discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2023 and 2022 with our consolidated financial statements and related notes and other financial information appearing in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, operations, and product candidates, includes forward-looking statements that involve risks and uncertainties. You should review the sections of this Quarterly Report captioned “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.*

### Overview

Perpetua Resources (formerly Midas Gold Corp.) was incorporated on February 22, 2011 under the *Business Corporations Act* (British Columbia) (the “BCBCA”). The Corporation 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 Corporation’s principal asset is 100% ownership in subsidiaries that control the Stibnite Gold Project. The Corporation currently operates in one segment, mineral exploration in the United States. The registered office of the Perpetua Resources is Suite 1008-550 Burrard St, Vancouver, BC, V6C 2B5, Canada and the corporate head office is located at 201-405 S 8th St, Boise, ID 83702, USA.

### Recent Key Developments

### 2023 Outlook and Goals

Perpetua Resources’ vision is to provide the United States with a domestic source of the critical mineral antimony, develop one of the largest and highest-grade open pit gold mines in the country and restore an abandoned brownfield site. In 2023, Perpetua Resources continues to focus on advancing the permitting for the Stibnite Gold Project through the National Environmental Policy Act (“NEPA”) process. The NEPA process is intended to ensure that federal agencies and the public are informed of a proposed action’s potential environmental impacts before a final decision is made by the agency regarding the action.

### Third Quarter 2023 Highlights

- Zero lost time incidents or reportable environmental spills.
- Signed definitized TIA for DOD critical minerals award of $24.8 million under DPA.
- Clean Water Act Settlement Agreement with the Nez Perce Tribe filed in the U.S. District Court for the District of Idaho.
- Continued voluntary legacy waste cleanup and water quality improvement actions in historical Stibnite Mining District
- Appointed Vice President of Projects to lead the Stibnite Gold Project.
- Awarded up to $15.5 million in DOD funding to demonstrate a fully domestic antimony trisulfide supply chain.

### Supplemental Draft Environmental Impact Statement (“SDEIS”)

In response to public and agency feedback on the Draft Environmental Impact Statement released by the USFS in August 2020, Perpetua Resources proposed modifications to the mine plan analyzed in Alternative 2 in the DEIS and submitted a refined proposed action to the USFS in December 2020 (the “Modified Mine Plan”). The Modified Mine Plan included refinements to reduce the project footprint, improve water quality, and lower water temperature. The USFS decided to prepare a Supplemental Draft Environmental Impact Statement to further evaluate the project refinements and compare the Company’s proposed site access via Burntlog Route to another action alternative utilizing current roads.

After nearly two years of review of the Modified Mine Plan by the USFS and other agencies, the SDEIS was published on October 28, 2022 for a 75-day public comment period. In the SDEIS, the USFS highlighted the net positive environmental outcomes that the Stibnite Gold Project can provide to the abandoned mine site based on the results of comprehensive scientific analysis conducted over the last six years. The USFS identified Perpetua Resources’ proposed action, the “Modified Mine Plan,” as the Preferred Alternative and also concluded the Preferred Alternative would reasonably accomplish the purpose and need for consideration of approval of the Stibnite Gold Project, while giving consideration to environmental, economic, and technical factors. Under NEPA, a “Preferred Alternative” is identified by a Federal agency in a DEIS to let the public know which action the agency is leaning toward selecting as final. However, identification by an agency of a “Preferred Alternative” does not represent a final decision and the USFS may still select an action based on the Modified Mine Plan or each of the alternatives analyzed in the SDEIS when developing the Final Environmental Impact Statement.

The SDEIS public review period closed on January 10, 2023. Following completion of the comment period and analysis, the USFS updated the permitting schedule for the Project with a FEIS and draft Record of Decision expected by the end of 2023 and a Final Record of Decision anticipated in early 2024. The publication of the permitting schedule does not indicate any commitments on the part of the USFS regarding the content or timing of a final decision. In developing the FEIS, the USFS may select an action based on components of each of the alternatives analyzed in the SDEIS. Furthermore, the USFS is not bound by the permitting schedule and anticipated milestones may be delayed materially or not be satisfied.

### Ancillary Permitting Update

The Company continued to advance work on several ancillary permits which are being progressed in parallel with the NEPA process. Recent updates include:

- Submitted the 404 Wetlands & Compensatory Mitigation Plan application to the U.S. Army Corps of Engineers (“USACE”) in April 2023 and USACE provided a 404 permit application completeness determination in July 2023.
- Submitted the formal request to begin the 401 Water Quality Certification process to Idaho Department of Environmental Quality (“IDEQ”) in May 2023.
- Submitted Tailings Storage Facility (“TSF”) dam safety application to Idaho Department of Water Resources (“IDWR”) in July 2023. IDWR sent a letter of conditional approval for the Company’s Stage 1 TSF in October 2023.
- Submitted cyanidation permit application in August 2023 to IDEQ. IDEQ issued a letter of incompleteness in September 2023 and the Company expects to resubmit an updated permit application in the fourth quarter of 2023.
- A Final Point of Compliance determination was issued in August 2023 and the Company submitted the required groundwater sampling and well installation plans in October 2023.

Previously submitted permit applications that are continuing through the administrative process and include Clean Air Act Permit to Construct and Idaho Pollutant Discharge Elimination System industrial outfalls with IDEQ in addition to water rights with IDWR.

### Department of Defense Funding

In September 2022, Perpetua Resources was awarded two funding grants of $100,000 each from the U.S. Department of Defense (“DOD”) Defense Logistics Agency (“DLA”) under DLA’s “Production of Energetic Materials and Associated Precursors” Small Business Innovation Research (“SBIR”) grant solicitation to study the domestic production of military-grade antimony trisulfide, an essential component in ammunition and dozens of other defense materials. As described in the grant’s objective, the program is focused on reducing “foreign reliance and single points of failure for the domestic manufacturing of energetic materials” through the development of a domestic source. After a competitive review process, Perpetua Resources was awarded SBIR Phase 1 funding of $100,000 each for both programs. Under the DLA grants, Perpetua Resources evaluated whether antimony from the Stibnite Gold Project can meet military specifications (“Mil-Spec”) and also evaluated alternate methods for synthesizing antimony trisulfide. Phase 2 funding could be made available for more advanced stage pilot-scale testing within the next year. Together, the Phase 1 and Phase 2 programs could confirm the Project’s ability to provide the domestic antimony source needed to meet the defense procurement demand and support commercial markets. During the three and nine months ended September 30, 2023, $24,999 and $124,997, respectively, was recognized as grant income for these grants. The programs were complete in September 2023 and no further grant income is anticipated under these grants.

In December 2022, Perpetua Resources was awarded a TIA 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 definitized TIA did not change any other material terms of the undefinitized TIA. The funding objective of the TIA, issued by the Air Force Research Laboratory, is to complete environmental and engineering studies necessary to obtain a FEIS, a Final Record of Decision, and other ancillary permits to sustain the domestic production of antimony trisulfide capability for defense energetic materials. The DPA funding allows the Company to advance the construction readiness of the Stibnite Gold Project while the Company continues through the ongoing permitting process, led by the USFS. Under the funding agreement, Perpetua Resources may request reimbursement for certain costs incurred over 24 months 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 process. The TIA contains customary terms and conditions for technology investment agreements, including ongoing reporting obligations. Perpetua Resources is evaluating other U.S. government funding opportunities, including programs available through the DOD. During the three and nine months ended September 30, 2023, $4,655,183 and $11,992,642 respectively, was recognized as grant income related to the TIA. The Company anticipates recognizing approximately $4,400,000 of additional grant income over the next three months. During the nine months ended September 30, 2023, the Company was reimbursed $10,430,060 for certain costs incurred.

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 DOD Ordnance Technology Consortium (“DOTC”). The OTIA will build on research conducted under a previously announced Small Business Innovation Research Grant. 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. During the three and nine months ended September 30, 2023, $2,225,509 and $2,225,509, respectively, was recognized as grant income related to the OTIA. The Company anticipates recognizing approximately $3,450,000 of additional grant income over the next three months.

### Construction Readiness Activities

The Company is advancing construction readiness activities in parallel with the permitting process and these activities are reimbursable under the DPA funding outlined above. In the third quarter of 2023, Perpetua:

- Appointed Vice President of Projects to lead the Stibnite Gold Project;
- Continued project execution planning and scheduling;
- Continued construction manager general contractor contract negotiations with Ames Construction, while advancing constructability reviews, value engineering studies, and detailed engineering for the Burntlog Route, the Company’s proposed access route, with Ames and the road design consultants; and,
- Continued power line detailed scoping and engineering with Idaho Power, who has now engaged Kiewit, and identified long-lead items required for power line construction.

### Nez Perce Tribe Litigation Settlement

On August 8, 2023, the Company and the Nez Perce Tribe (“Parties”) filed a final Settlement Agreement (“Settlement Agreement”) to resolve a Clean Water Act (“CWA”) lawsuit brought by the Nez Perce Tribe in 2019. The Settlement Agreement provides for total payments of $5 million by Perpetua over a four-year period, which includes $4 million of contributions by Perpetua to a South Fork Salmon Water Quality Enhancement 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. Perpetua intends to fund these payments from cash on hand or funds expected to be raised in connection with construction of the Project. Following a 45-day review period by the United States Justice Department and the U.S. Environmental Protection Agency (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.

See Note 6(e) to the Interim Financial Statements for the three and nine months ended September 30, 2023 for more information regarding the CWA lawsuit and the terms of the settlement.

### Inflation

The U.S. inflation rate increased throughout 2022 and into 2023 but has begun to stabilize in 2023. These inflationary pressures have resulted in and may result in additional increases to the costs of our goods, services and personnel, which in turn cause our capital expenditures and labor costs to rise, including the estimated costs to complete the ASAOC environmental reclamation work. In particular, on April 13, 2023, after conducting a competitive bidding process, the Company announced it selected Iron Woman Construction and Environmental Services to conduct certain environmental improvements pursuant to the Company’s obligations under the ASAOC. The bid, together with scope changes, inflation and increased estimates for fuel usage related to the restoration activities, resulted in an increase to the Company’s forecasted amounts for ASAOC restoration activities in the nine months ended September 30, 2023. Sustained levels of high inflation have likewise caused the U.S. Federal Reserve and other central banks to increase interest rates, which could have the effects of raising the cost of capital and depressing economic growth, either of which—or the combination thereof—could adversely affect our business.

### Liquidity

The Company’s latest liquidity forecast indicates that available cash resources are expected to be exhausted in the first quarter of 2024. Although the Company’s current capital resources and liquidity include $24.8 million in funding awarded under the TIA pursuant to Title III of the DPA, 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 under its ASAOC obligations and certain corporate expenses, including under the Settlement Agreement. Although we expect the DPA funding to provide the Company with sufficient liquidity to complete permitting and environmental monitoring activities on the current timeline as well as additional liquidity to begin advancing construction readiness into 2024, due to costs of the ASAOC restoration obligations, payment obligations under the Settlement Agreement and other corporate expenses, we do not expect the Company will have sufficient assets to discharge its liabilities as they become due for at least 12 months from the date hereof. 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. See “—*Liquidity and Capital Resources”* for more information.

The forward‐looking information contained in this section is subject to the risk factors and assumptions contained in the “*Cautionary Note Regarding Forward-Looking Statements”* section.

### Results of Operations

### Three and nine months ended September 30, 2023 compared to three and nine months ended September 30, 2022

| ​ ​ ​ EXPENSES | ​ ​ | ​ ​ For the three months ended September 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ For the nine months ended September 30, 2023 ​ | ​ | ​ ​ 2022 ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Corporate salaries and benefits | ​ | $393,656 | ​ | $453,330 | ​ | $1,205,824 | ​ | $1,281,617 |
| Depreciation | ​ | 23,846 | ​ | 15,318 | ​ | 59,548 | ​ | 41,654 |
| Directors’ fees | ​ | 30,158 | ​ | 92,874 | ​ | 310,268 | ​ | 445,348 |
| Exploration | ​ | 8,664,205 | ​ | 4,589,966 | ​ | 20,683,257 | ​ | 13,456,304 |
| Environmental liability expense | ​ | 22,285 | ​ | 232,776 | ​ | 604,222 | ​ | 898,146 |
| CWA settlement expense | ​ | ​ — | ​ | ​ — | ​ | ​ 5,000,000 | ​ | ​ — |
| General and administration | ​ | 160,264 | ​ | 187,733 | ​ | 454,543 | ​ | 570,355 |
| Professional fees | ​ | 230,243 | ​ | 223,160 | ​ | 875,327 | ​ | 1,474,356 |
| Shareholder and regulatory | ​ | 91,177 | ​ | 142,984 | ​ | 388,307 | ​ | 418,050 |
| **OPERATING LOSS** | ​ | ​ 9,615,834 | ​ | ​ 5,938,141 | ​ | ​ 29,581,296 | ​ | ​ 18,585,830 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **OTHER EXPENSES (INCOME)** | ​ |  | ​ |  | ​ |  | ​ |  |
| Change in fair value of warrant derivative | ​ | — | ​ | (6,021) | ​ | (1,732) | ​ | (100,766) |
| Foreign exchange loss (income) | ​ | 12,571 | ​ | (7,136) | ​ | 15,193 | ​ | 26,210 |
| Grant income | ​ | (6,905,691) | ​ | — | ​ | (14,273,148) | ​ | — |
| Interest income | ​ | (92,620) | ​ | (170,658) | ​ | (418,670) | ​ | (254,683) |
| Total other loss (income) | ​ | ​ (6,985,740) | ​ | ​ (183,815) | ​ | ​ (14,678,357) | ​ | ​ (329,239) |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **NET LOSS** | ​ | $2,630,094 | ​ | $5,754,326 | ​ | $14,902,939 | ​ | $18,256,591 |

### Net Loss

Net loss for the three months ended September 30, 2023 was $2.6 million compared with a net loss of $5.8 million for the three months ended September 30, 2022. This $3.2 million decrease compared to the prior year period was primarily attributable to a $6.9 million increase in grant income, partially offset by an increase of $4.1 million in exploration expense. Net loss for the nine months ended September 30, 2023 was $14.9 million compared with a net loss of $18.3 million for the nine months ended September 30, 2022. This $3.4 million decrease compared to the prior year period was primarily attributable to a $14.3 million increase in grant income, a $0.6 million decrease in professional fees and a $0.3 million decrease in environmental liability expense. These changes were offset by $5.0 million recognized in the 2023 period for CWA settlement expense and an increase of $7.2 million in exploration expense. As noted above, for the nine months ended September 30, 2023, the Company’s main focus was the continued evaluation and advancement of the Stibnite Gold Project.

### Corporate Salaries and Benefits

This expense results from salaries and benefits of the employees that are not directly related to the exploration and evaluation of the Stibnite Gold Project, primarily corporate employees. Salaries and benefits for the three and nine months ended September 30, 2023 were 13% and 6% lower than the 2022 comparative periods due to lower share-based compensation.

### Directors’ Fees

Each of the Corporation’s non-executive directors is entitled to annual base fees paid in quarterly installments, with the independent Lead Director, Chairs of Board Committees and Members of Board Committees receiving additional fees commensurate with each role. Directors’ fees are inclusive of cash fees and share-based compensation (deferred share units). This expense for the three and nine months ended September 30, 2023 was 68% and 30% lower than the 2022 comparative periods due to lower share-based compensation.

### Exploration

This expense relates to all exploration and evaluation expenditures related to the Stibnite Gold Project, including labor, drilling, field operations, engineering, permitting, environmental, legal and sustainability costs. The Company’s exploration expenses of $8.7 million during the three months ended September 30, 2023 were $4.1 million, or 89%, higher than the three months ended September 30, 2022 primarily due to a $3.4 million increase in engineering and a $0.4 million increase in field operations and drilling support. The Company’s exploration expenses of $20.7 million during the nine months ended September 30, 2023 were $7.2 million, or 54%, higher than the nine months ended September 30, 2022 primarily due to a $4.9 million increase in engineering, $1.4 million increase in permitting, and a $0.6 million increase in consulting and labor cost.

Additional details of expenditures incurred are as follows:

| ​ ​ ​ | ​ ​ | ​ ​ For the three months ended September 30, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ For the nine months ended September 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Consulting and labor cost | ​ | $1,582,265 | ​ | $1,358,601 | ​ | $4,612,015 | ​ | $4,049,676 |
| Engineering | ​ | 3,664,528 | ​ | 229,049 | ​ | 5,411,118 | ​ | 527,519 |
| Environmental and reclamation | ​ | 52,686 | ​ | 22,631 | ​ | 134,453 | ​ | 111,012 |
| Field operations and drilling support | ​ | 840,814 | ​ | 490,152 | ​ | 1,940,037 | ​ | 1,508,714 |
| Legal and sustainability | ​ | 362,718 | ​ | 468,120 | ​ | 1,284,819 | ​ | 1,309,780 |
| Permitting | ​ | 2,161,194 | ​ | 2,021,413 | ​ | 7,300,815 | ​ | 5,949,603 |
| **TOTAL EXPLORATION** | ​ | $8,664,205 | ​ | $4,589,966 | ​ | $20,683,257 | ​ | $13,456,304 |

### Environmental Liability Expense

This expense relates to the ASAOC signed in January 2021 to voluntarily address environmental conditions at the abandoned mine site. Cost estimates were developed with the use of engineering consultants, independent contractor quotes and the Company’s internal development team, and the timing of cash flows is based on the current schedule for early action items. In the three and nine months ended September 30, 2023, the total cost estimate to complete Phase 1 early cleanup actions decreased $0.2 million and $0.3 million, respectively over the same periods in 2022 driven by lower estimated increases in the current period for the remaining work to be performed. During the three months ended September 30, 2023, the estimated cost to complete was increased by $22,285 driven by slightly higher fuel prices. As of September 30, 2023, the estimate for the remaining environmental liability was $2.8 million, most of which is expected to be incurred in the three months ended December 31, 2023.

### CWA Settlement Expense

This expense relates to the settlement with the Nez Perce Tribe to resolve the CWA litigation. The Settlement Agreement provides for total payments of $5 million by Perpetua over a four-year period. The Company recognized $5.0 million in the second quarter of 2023 for this settlement.

### General and Administrative

This expense is predominantly insurance policies for the U.S. offices. This expense for the three and nine months ended September 30, 2023 was 15% and 20% lower than the 2022 comparative periods primarily due to lower insurance premiums.

### Professional Fees

This expense relates to the legal, accounting and consulting costs of the Corporation. This expense for the three and nine months ended September 30, 2023 was 3% higher and 41% lower than the 2022 comparative periods with the decrease driven by lower legal and accounting fees. During the first quarter 2022, higher legal fees were incurred to support the Company’s transition to a U.S. Domestic Issuer.

### Shareholder and Regulatory

This expense relates to marketing, licenses and fees, and shareholder communications. This expense for the three and nine months ended September 30, 2023 was 36% and 7% lower than the 2022 comparative periods primarily due to a larger number of public Company filings in the third quarter of 2022 resulting in higher fees.

### Change in Fair Value of Warrant Derivative

The Corporation issued 200,000 warrants in a financing transaction in May 2013 with an exercise price denominated in Canadian dollars. The Company determined that warrants with an exercise price denominated in a currency that is different from the entity’s functional currency should be classified as a derivative and carried at their fair value. Any changes in their fair value from period to period have been recorded as a gain or loss. The warrants expired in May 2023.

### Foreign Exchange Loss

Changes in foreign exchange are driven by the change in value of the Canadian Dollar compared to the U.S. Dollar and the impact the change has on transactions associated with the Corporation’s Canadian dollar denominated balances. The impact was less in the three and nine month periods ended September 30, 2023 compared to the same periods of 2022 primarily due to less cash being held in Canadian currency during the 2023 period.

### Grant Income

This income results from funding grants awarded to the Company from the DOD to study the domestic production of military-grade antimony trisulfide and to complete environmental and engineering studies necessary to obtain a FEIS, a ROD, and other ancillary permits to sustain the domestic production of antimony trisulfide capability for defense energetic materials. Grant income increased $6.9 million and $14.3 million for the three and nine months ended September 30, 2023, compared to the previous year as the grants were awarded in September 2022, December 2022 and August 2023. No grant income was recognized during the same periods in 2022.

### Interest Income

This income results from interest received on the Company’s cash balances. Interest income decreased $78,038 in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 as a result of lower cash balances and increased $163,987 in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 as a result of higher interest rates in the first nine months of 2023.

### Liquidity and Capital Resources

Capital resources of Perpetua Resources consist primarily of cash and liquid short-term investments. As of September 30, 2023, Perpetua Resources had cash and cash equivalents totaling approximately $7.1 million, approximately $3.3 million in other current assets and $6.0 million in trade and other payables. As of October 31, 2023, Perpetua Resources had cash and cash equivalents totaling approximately $2.7 million.

In August 2021, the Corporation completed a public offering for total gross proceeds of $57.5 million to be used to continue permitting, early restoration and field operations, engineering and design and general corporate purposes. In December 2022, the Corporation was awarded a TIA 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. Under the funding agreement, Perpetua Resources may request reimbursement for certain costs incurred over 24 months 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, which includes reimbursement of employee wages for activities included in the scope of the TIA. During the three and nine months ended September 30, 2023, $4.7 million and $11.9 million was recognized as grant income related to the TIA. The Company anticipates recognizing approximately $4.4 million of additional grant income over the next three months. During the three and nine months ended September 30, 2023, the Company was reimbursed $6.2 million and $10.4 million for certain costs incurred and received reimbursement of an additional $1.5 million in November 2023 with respect to expenses incurred in the three and nine months ended September 30, 2023.

Perpetua Resources’ current liquidity needs relate to its plans to:

- Continue to advance the regulatory process for the restoration and redevelopment of the Project;
- Continue engaging with Project stakeholders to provide those stakeholders with the opportunity for a better understanding of the Project concepts and to provide a forum for such stakeholders to provide further input into the Project;
- Continue to collect environmental baseline data in support of the ongoing regulatory processes related to permitting for site restoration and redevelopment of the Project;
- Continue to advance the voluntary early cleanup actions under the ASAOC; and
- Advance construction readiness for the Project.

Although the Company’s current capital resources and liquidity include $24.8 million in funding awarded under the TIA pursuant to Title III of the DPA, such funding is available only for the specified costs described above and is not available to fund the Company’s costs under its ASAOC obligations and certain corporate expenses, including payments under the Settlement Agreement. Although we expect the DPA funding to provide the Company with sufficient liquidity to complete permitting on the current timeline as well as additional liquidity to begin advancing construction readiness into 2024, due to costs of the ASAOC restoration obligations and other corporate expenses, we do not expect the Company will have sufficient assets to discharge its liabilities as they become due for at least 12 months from the date hereof.

The Company’s latest liquidity forecast indicates that available cash resources for expenses not eligible for reimbursement under the DPA funding are expected to be exhausted in the first quarter of 2024. In addition, the Company’s payment obligations under the Settlement Agreement will commence in the first half of 2024. The Company intends to fund these payments from cash on hand or funds expected to be raised in connection with construction of the Project. 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. On May 12, 2023, the Company entered into a Controlled Equity OfferingSM 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 million. As of September 30, 2023, $20 million remained available under the program. Subsequent to September 30, 2023 and as of October 27, 2023, the Company sold 65,375 common shares in exchange for net proceeds of approximately $235,234. Future 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 additional funds under the program, at acceptable share prices or at all.

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 significant 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 unaudited condensed consolidated financial statements are issued. The future receipt of potential funding from equity, debt, pursuit of additional government funding opportunities and/or other means cannot be considered probable at this time because these plans are not entirely within our control as of the date hereof.

These 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.

Our anticipated expenditures for the fiscal year 2023 are approximately $37.7 million, of which approximately $16.3 million are expected to be funded from the DPA reimbursements and the remainder from cash on hand. These expenditures include an estimated $10.5 million to fund permitting of the Stibnite Gold Project, $9.3 million for general corporate purposes and administrative costs, $5.4 million for engineering and design work and $12.5 million to advance early restoration under the ASAOC and continue field operations. These costs are subject to change due to cost over-runs, delays or other unbudgeted events, such as effects of inflation. Our long-term liquidity requirements will require project financing to fund the capital costs to develop the Project, which is estimated to be approximately $1,263 million according to the TRS.

## Controls and procedures

As filed, 846 characters.

### Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2023 (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the Evaluation Date.

### Changes in Internal Control Over Financial Reporting.

As of the Evaluation Date, there were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 891 characters.

In addition to other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors and other cautionary statements described under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which could materially affect our businesses, financial condition, or future results. Additional risks and uncertainties currently unknown to us, or that we currently deem to be immaterial, also may materially adversely affect our business, financial condition, or future results. Except as described below, there have been no material changes in our risk factors from those described in the Annual Report on Form 10-K for the year ended December 31, 2022 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

Filed Nov 9, 2023.
Source: SEC EDGAR, the filing index for accession 0001104659-23-116320. Last ingested by Listed: Oct 26, 2026, 17:31 ET. No prices; not investment advice.