# Perpetua Resources Corp.: Form 10-Q for the period ended Jun 30, 2024

- Company: [Perpetua Resources Corp.](/companies/ppta.md) (CIK 1526243)
- Form: 10-Q
- Filed: 2024-08-09
- Accepted by EDGAR: Aug 9, 2024, 16:30 ET
- Period: 2024-06-30
- Accession: 0001104659-24-087827
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1526243/000110465924087827/ppta-20240630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1526243/000110465924087827/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$12.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | −$20.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$3.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$6.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.06 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | $0.10 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.06 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | $0.10 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 64,514,387 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 64,317,594 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$10.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $176.3k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-06-30 | $1.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $10.2m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $78.3m | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $6.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $9.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $68.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 33,477 characters.

*You should read the following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2024 and 2023 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

### 2024 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 2024, Perpetua Resources will continue to focus on advancing the permitting for the Stibnite Gold Project through the National Environmental Policy Act (“NEPA”) process in addition to state ancillary permits and other federal authorization. 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. The Company is also advancing construction readiness activities in parallel with the permitting process.

### Second Quarter 2024 Highlights

- Zero lost time incidents or reportable environmental spills.
- Awarded additional funding of up to $34.4 million under the TIA.
- Received indication for up to $1.8 billion financing from Export-Import Bank of the United States for the Stibnite Gold Project
- Published 2023 Sustainability Report, the Company’s eleventh annual sustainability report.

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

In response to public and agency feedback on the Draft Environmental Impact Statement (“DEIS”) released by the United States Forest Service (“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, all while considering environmental, economic, and technical factors. Under NEPA, a “Preferred Alternative” is identified by a Federal agency in a DEIS to advise the public 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 a combination of each of the alternatives analyzed in the SDEIS when developing the Final Environmental Impact Statement (“FEIS”). The SDEIS public review period closed on January 10, 2023.

On January 1, 2024, the USFS released an updated schedule for the Project that stated the USFS expected to publish a FEIS and a Draft Record of Decision in the second quarter of 2024 and a Final Record of Decision (“ROD”) in the fourth quarter of 2024. The USFS has confirmed that cooperating agency review of the FEIS is complete and both documents are completing final consultations and reviews in Washington D.C. As a result, management anticipates the publication of a FEIS and Draft Record of Decision in the third quarter of 2024 and a Final Record of Decision (“ROD”) in the fourth quarter of 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

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

- The U.S. Army Corps of Engineers continues to process the Company’s 404 permit application and Compensatory Mitigation Plan after the public comment period ended in October 2023.
- The USFS Biological Assessment was deemed acceptable to begin formal Endangered Species Act Section 7 consultation by the U.S. Fish and Wildlife Service and the National Marine Fisheries Service in April 2024.
- In May 2024, Idaho Department of Environmental Quality (“IDEQ”) issued its final 401 Water Quality Certification for the Project.
- The Company submitted a 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.
- The Company submitted a cyanidation facility permit application in August 2023 to IDEQ. IDEQ issued a letter of incompleteness in September 2023. The Company expects to resubmit an updated permit application in the third quarter of 2024.
- The Idaho Ground Water Management 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 review 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. Regarding the 401 certification discussed above, the U.S. EPA determined not to make a “may affect” finding of downstream neighboring jurisdiction water quality under Section 401(a)(2) of the Clean Water Act, but a state administrative review contested case was filed by petitioners June 28 2024.

### Department of Defense Funding

In December 2022, Perpetua Resources was awarded an undefinitized 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 and on May 2, 2024, the TIA was modified with an additional $34.4 million in funding, bringing the total amount of the TIA to $59.2 million. 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 ROD, 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 through June 16, 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 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 months and six months ended June 30, 2024, $8,440,373 and $11,049,634, respectively, was recognized as grant income related to the TIA. The Company anticipates recognizing approximately $15,000,000 of additional grant income for the three months ended September 30, 2024. During the three and six months ended June 30, 2024, the Company was reimbursed $1,793,364 (2023: $2,184,944) and $4,750,495 (2023: $4,244,605), respectively, 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 months and six months ended June 30, 2024, $35,270 and $2,595,747, respectively, was recognized as grant income related to the OTIA. The Company anticipates recognizing approximately $900,000 of additional grant income for the next three months ended September 30, 2024. During the three and six months ended June 30, 2024, the Company received cash from this grant of $976,352 and $4,466,493 respectively, for reimbursement of certain costs incurred of $871,743 and $3,987,940 and 12% fee income of $104,609 and $478,553, respectively. During the three month and six months ended June 30, 2024, grant income includes $3,779 and $278,116, respectively, of 12% fee income earned on costs incurred. No grant income was earned during the six months ended June 30, 2023.

### 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. Recent updates include:

- Appointed mining veteran Jonathan Cherry as new President and CEO,
- Appointed Vice President of Projects to lead the Stibnite Gold Project,
- Executed construction manager general contractor contract 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,
- 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,
- Ausenco was awarded Basic and Value Engineering Scope for the Stibnite Gold Project,
- Hired key subject matter experts for the Owner’s Team to guide Basic Engineering and overall construction readiness, and
- Ausenco and supporting consultants progressed basic and value engineering for their respective work streams.

### Franco-Nevada Silver Royalty

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. Silver represents less than 0.3% of projected life-of-mine revenue in the 2020 Feasibility Study. 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.

### 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 $5.0 million by Perpetua over a four-year period, which includes $4.0 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 $1.0 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 and operation 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 six months ended June 30, 2024 for more information regarding the CWA lawsuit and the terms of the settlement.

### Liquidity

After giving effect to the receipt of the $8.5 million upfront payment from Franco-Nevada under the silver royalty on March 21, 2024, the Company’s latest liquidity forecast indicates that available cash resources are expected to be exhausted in the fourth quarter of 2024. Although the Company’s current capital resources and liquidity include up to $59.2 million in funding awarded under the modified 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 in 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 six months ended June 30, 2024 compared to three and six months ended June 30, 2023

| ​ ​ ​ EXPENSES | ​ ​ ​ | ​ ​ For the three months ended June 30, 2024 ​ | ​ | ​ ​ 2023 ​ | ​ ​ ​ | ​ ​ For the six months ended June 30, 2024 ​ | ​ | ​ ​ 2023 ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Corporate salaries and benefits | ​ | $579,431 | ​ | $421,185 | ​ | $1,046,178 | ​ | $812,168 |
| Depreciation | ​ | 31,392 | ​ | 18,748 | ​ | 57,753 | ​ | 35,702 |
| Directors’ fees | ​ | 54,449 | ​ | 58,848 | ​ | 317,082 | ​ | 280,110 |
| Exploration | ​ | 10,464,037 | ​ | 6,312,627 | ​ | 17,006,397 | ​ | 12,019,052 |
| Environmental liability expense | ​ | 414,197 | ​ | (536,366) | ​ | 567,626 | ​ | 581,937 |
| CWA settlement expense (Note 6) | ​ | ​ — | ​ | ​ 5,000,000 | ​ | ​ — | ​ | ​ 5,000,000 |
| General and administration | ​ | 121,353 | ​ | 131,791 | ​ | 263,137 | ​ | 294,279 |
| Professional fees | ​ | 385,536 | ​ | 367,601 | ​ | 793,015 | ​ | 645,084 |
| Shareholder and regulatory | ​ | 139,323 | ​ | 145,717 | ​ | 263,865 | ​ | 297,130 |
| **OPERATING LOSS** | ​ | ​ 12,189,718 | ​ | ​ 11,920,151 | ​ | ​ 20,315,053 | ​ | ​ 19,965,462 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **OTHER EXPENSES (INCOME)** | ​ |  | ​ |  | ​ |  | ​ |  |
| Grant income | ​ | (8,475,643) | ​ | (4,085,746) | ​ | (13,645,381) | ​ | (7,367,457) |
| Interest income | ​ | (42,821) | ​ | (163,587) | ​ | (59,358) | ​ | (326,050) |
| Other expenses (income) | ​ | ​ 2,461 | ​ | ​ 1,934 | ​ | ​ 7,926 | ​ | ​ 890 |
| Total other expenses (income) | ​ | ​ (8,516,003) | ​ | ​ (4,247,399) | ​ | ​ (13,696,813) | ​ | ​ (7,692,617) |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **NET LOSS** | ​ | $3,673,715 | ​ | $7,672,752 | ​ | $6,618,240 | ​ | $12,272,845 |

### Net Loss

Net loss for the three months ended June 30, 2024 was $3.7 million compared with a net loss of $7.7 million for the three months ended June 30, 2023. This $4.0 million decrease compared to the prior year period was primarily attributable to $5.0 million recognized for CWA settlement expense in the 2023 period and an increase of $4.2 million in exploration expense in the 2024 period offset by a $4.4 million increase in grant income and a $1.0 million increase in environmental liability expenses during the three months ended June 30, 2024.

Net loss for the six months ended June 30, 2024 was $6.6 million compared with a net loss of $12.3 million for the six months ended June 30, 2023. This $5.7 million decrease compared to the prior year period was primarily attributable to a $6.3 million increase in grant income, a $5.0 million decrease in CWA settlement expense, and a $0.3 million decrease in interest income offset by a $5.0 million increase in exploration expenses. As noted above, for the six months ended June 30, 2024, 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 six months ended June 30, 2024 were 38% and 29% higher than the 2023 comparative periods primarily due to increased share-based compensation and higher salaries.

### 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 months ended June 30, 2024 was 7% lower than the 2023 comparative period due to slightly lower share-based compensation. This expense for the six months ended June 30, 2024 was 13% higher than the 2023 comparative periods due to higher 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 $10.5 million during the three months ended June 30, 2024 were $4.2 million, or 66%, higher than the three months ended June 30, 2023 primarily due to a $4.0 million increase in engineering and a $0.4 million increase in consulting and labor costs. These increases were offset by a decrease of $0.5 million in permitting costs.

The Company’s exploration expenses of $17.0 million during the six months ended June 30, 2024 were $5.0 million, or 41%, higher than the six months ended June 30, 2023 primarily due to a $6.5 million increase in engineering, $0.5 million increase in consulting and labor costs. These increases were offset by a decrease of $2.1 million in permitting costs. Additional details of expenditures incurred are as follows:

| ​ ​ ​ | ​ ​ | ​ ​ For the three months ended June 30, 2024 | ​ | ​ ​ 2023 | ​ ​ | ​ ​ For the six months ended June 30, 2024 | ​ | ​ ​ 2023 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Consulting and labor cost | ​ | $1,891,906 | ​ | $1,489,251 | ​ | $3,571,274 | ​ | $3,029,752 |
| Engineering | ​ | 5,405,689 | ​ | 1,379,022 | ​ | 8,246,488 | ​ | 1,746,590 |
| Environmental and reclamation | ​ | 68,904 | ​ | 40,672 | ​ | 170,323 | ​ | 81,767 |
| Field operations and drilling support | ​ | 937,863 | ​ | 642,305 | ​ | 1,355,236 | ​ | 1,099,223 |
| Legal and sustainability | ​ | 327,848 | ​ | 415,916 | ​ | 585,994 | ​ | 922,100 |
| Permitting | ​ | 1,831,827 | ​ | 2,345,461 | ​ | 3,077,082 | ​ | 5,139,620 |
| **TOTAL EXPLORATION** | ​ | $10,464,037 | ​ | $6,312,627 | ​ | $17,006,397 | ​ | $12,019,052 |

### 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 months ended June 30, 2024, the total cost estimate to complete Phase 1 early cleanup actions increased $1.0 million compared to the same period in 2023 driven by an increase in estimated costs for a required lake tank storage solution coupled with a negative $0.5 million recognized in the comparable period ended June 30, 2023 that resulted from a decrease in total estimated costs. The expense recognized during the six month periods ended June 30, 2024 was comparable to the same period in 2023. As of June 30, 2024, the estimate for the remaining environmental liability was $0.8 million, all of which is expected to be incurred in 2024.

### 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 $5.0 million by Perpetua over a four-year period. The Company recognized $5.0 million in the second quarter of 2023 for this settlement. No amount was recognized during the three and six month periods ended June 30, 2024.

### General and Administrative

This expense is predominantly insurance policies for the U.S. offices. This expense for the three and six months ended June 30, 2024 was 8% and 11% lower than the 2023 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 months ended June 30, 2024 was 5% higher than the 2023 comparative period primarily due to an increase in legal fees. This expense for the six month ended June 30, 2024 was 23% higher than the 2023 comparative period primarily due to an increase in accounting and project financing related fees.

### Shareholder and Regulatory

This expense relates to marketing, licenses and fees, and shareholder communications. This expense for the three and six months ended June 30, 2024 was 4% and 11% lower than the 2023 comparative periods primarily due to lower marketing costs.

### 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 $4.4 million and $6.3 million for the three and six months ended June 30, 2024, compared to the comparable periods in 2023 due to the modified scope of the DPA grant in 2024.

### Interest Income

This income results from interest received on the Company’s cash balances. Interest income decreased $120,766 and $266,692 in the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 as a result of lower cash balances in 2024 compared to 2023.

### Liquidity and Capital Resources

Capital resources of Perpetua Resources consist primarily of cash and liquid short-term investments. As of June 30, 2024, Perpetua Resources had cash and cash equivalents totaling approximately $1.9 million, approximately $7.6 million in receivables, principally from DOD grants, $0.8 million in prepaid assets, and $4.3 million in trade and other payables.

In December 2022, the Company was awarded an undefinitized 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 and on May 2, 2024, the TIA was modified with an additional $34.4 million in funding, bringing the total amount of the TIA to $59.2 million. Under the funding agreement, Perpetua Resources may request reimbursement for certain costs incurred through June 16, 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, which includes reimbursement of employee wages for activities included in the scope of the TIA. During the three and six months ended June 30, 2024, $8.4 million and $11.0 million, respectively, was recognized as grant income related to the TIA. During the six months ended June 30, 2024, the Company was reimbursed $4.8 million for certain costs incurred, and received reimbursement of an additional $3.9 million in July 2024 and anticipates receipt of $3.7 million in August 2024, under the TIA with respect to expenses incurred in the three months ended June 30, 2024.

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 up to $59.2 million in funding awarded under the modified 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 in 2024, due to costs of the ASAOC restoration obligations, payments 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.

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 fourth quarter of 2024. 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 $20.0 million. As of June 30, 2024, $17.2 million remained available under the program. 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 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 the 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 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.

Our anticipated expenditures for the fiscal year 2024 are approximately $48.0 million, of which approximately $40.0 million are expected to be funded from the DPA reimbursements and the remainder from cash on hand. These expenditures include an estimated $11.2 million to fund permitting of the Stibnite Gold Project, $13.4 million for general corporate purposes, project financing and administrative costs, $17.6 million for engineering and design work, $4.4 million for field operations and approximately $1.4 million to advance early restoration under the ASAOC. 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 was estimated to be approximately $1,263 million as of the third quarter of 2020 according to the TRS.

## Controls and procedures

As filed, 836 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 June 30, 2024 (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 June 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 564 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, 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.

Filed Aug 9, 2024.
Source: SEC EDGAR, the filing index for accession 0001104659-24-087827. Last ingested by Listed: Oct 26, 2026, 17:31 ET. No prices; not investment advice.