Perpetua Resources Corp 8-K, filed May 12, 2023
Perpetua Resources Corp. (PPTA)
About this 8-K
Perpetua Resources Corp filed this 8-K on May 12, 2023.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
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Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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.
Item 8.01Other Events.
Perpetua Resources Corp. (the “Company”), in connection with the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, is refiling as Exhibit 99.1 hereto its consolidated financial statements that were previously included in its Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) and the related report of the Company’s independent registered public accounting firm.
The financial statements filed as Exhibit 99.1 hereto are identical to those included in the Form 10-K other than an update to Note 1 to the consolidated financial statements to disclose that, due to circumstances arising after the filing of the Form 10-K on March 16, 2023, there was substantial doubt about the Company’s ability to continue as a going concern. The report of the Company’s independent registered public accounting firm included in Exhibit 99.1 hereto also includes a paragraph noting management’s conclusion regarding substantial doubt about the Company’s ability to continue as a going concern. Other than as described in the preceding sentences, Exhibit 99.1 does not revise, modify, update or otherwise affect the Form 10-K, including the consolidated financial statements. See “—Liquidity and Capital Resources” in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2023 for more information.
This Form 8-K is being filed only for the purposes described above, and all other information in the Form 10-K remains unchanged. In order to preserve the nature and character of the disclosures set forth in the Form 10-K, the items included in Exhibit 99.1 of this Form 8-K have been updated solely for the matters described above. No attempt has been made in this Form 8-K to reflect events or occurrences after the date of the filing of the Form 10-K on March 16, 2023, and it should not be read to modify or update other disclosures as presented in the Form 10-K. As a result, this Form 8-K should be read in conjunction with the Form 10-K and the Company’s filings made with the SEC subsequent to the filing of the Form 10-K. References in the attached exhibits to the Form 10-K or parts thereof refer to the Form 10-K for the year ended December 31, 2022, filed on March 16, 2023.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit No. |
| Description |
23.1 | | Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP. |
99.1 | | |
104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document). |
54
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| PERPETUA RESOURCES CORP. | |
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Dated: May 12, 2023 | By: | /s/ Jessica Largent | |
Jessica Largent | |||
Chief Financial Officer | |||
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-266071) and Form S-8 (Nos. 333-255147 and 333-256925) of Perpetua Resources Corp. of our report dated March 16, 2023, except with respect to the matters that raise substantial doubt about the Company’s ability to continue as a going concern discussed in Note 1, as to which the date is May 12, 2023, relating to the financial statements, which appears in this Current Report on Form 8-K.
/s/ PricewaterhouseCoopers LLP | |
Denver, Colorado | |
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May 12, 2023 | |
Exhibit 99.1
Item 8.Financial Statements and Supplementary Data
PERPETUA RESOURCES CORP.
TABLE OF CONTENTS
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F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Perpetua Resources Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Perpetua Resources Corp. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, of changes in shareholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has had continuing net losses and increasing costs of the administrative settlement agreement and order on consent (ASAOC) restoration obligations and other corporate expenses that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
March 16, 2023, except with respect to the matters that raise substantial doubt about the Company's ability to continue as a going concern discussed in Note 1, as to which the date is May 12, 2023
We have served as the Company’s auditor since 2021.
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Perpetua Resources Corp.
CONSOLIDATED BALANCE SHEETS
| | December 31, | | December 31, | ||
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| 2021 | ||
ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents | | $ | | | $ | |
Receivables | |
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Prepaid expenses | |
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NON-CURRENT ASSETS | |
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Buildings and equipment, net (Note 3) | |
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Right-of-use assets (Note 4) | |
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Environmental reclamation bond (Note 11) | | | | | | |
Mineral properties and interest (Note 5) | |
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TOTAL ASSETS | | $ | | | $ | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | |
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CURRENT LIABILITIES | |
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Trade and other payables | | $ | | | $ | |
Lease liabilities (Note 4) | |
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Environmental reclamation liabilities (Note 11) | | | | | | |
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NON-CURRENT LIABILITIES | |
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Warrant derivative (Notes 6) | |
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Environmental reclamation liabilities (Note 11) | |
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TOTAL LIABILITIES | |
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COMMITMENT AND CONTINGENCIES (Note 12) | |
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SHAREHOLDERS’ EQUITY (Note 8) | |
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Common stock, | |
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Additional paid-in capital | | | | | | |
Accumulated deficit | |
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TOTAL SHAREHOLDERS’ EQUITY | |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | | | $ | |
See accompanying notes to the consolidated financial statements
F-3
Perpetua Resources Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Years ended December 31 | ||||
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| 2021 | ||
EXPENSES |
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Corporate salaries and benefits | | $ | | | $ | |
Depreciation | |
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Directors’ fees | |
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Exploration | | | | | | |
Environmental liability expense | | | | | | |
General and administration | |
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Gain on disposal of buildings and equipment | | | ( | | | — |
Professional fees | |
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Shareholder and regulatory | |
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OPERATING LOSS | |
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OTHER EXPENSES (INCOME) | |
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Change in fair value of warrant derivative (Note 6) | |
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Change in fair value of convertible note derivative (Note 7) | |
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Finance costs | |
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Foreign exchange loss | |
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Grant income | | | ( | | | — |
Interest income | |
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Total other loss (income) | |
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NET LOSS | | $ | | | $ | |
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NET LOSS PER SHARE, BASIC AND DILUTED | | $ | | | $ | |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED | |
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See accompanying notes to the consolidated financial statements
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Perpetua Resources Corp.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the years ended December 31, 2022 and 2021
| | | | | | | Additional Paid | | | | | | | |
| | Common Stock | | in | | Accumulated | | | | |||||
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| Deficit |
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BALANCE, December 31, 2020 |
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Share based compensation |
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Shares sold through stock offering (Note 8) |
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Share issue cost |
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Shares issued upon conversion of convertible notes (Note 7) |
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Shares issued through stock appreciation rights |
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Restricted shares units distributed |
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Exercise of share purchase options |
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Net loss for the year |
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BALANCE, December 31, 2021 | | | | | | | | | | | ( | | | |
Share based compensation | | — | | | — | | | | | | — | | | |
Restricted and performance shares units distributed | | | | | | | | ( | | | — | | | — |
Net loss for the year |
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BALANCE, December 31, 2022 |
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See accompanying notes to the consolidated financial statements
F-5
Perpetua Resources Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Years ended | ||||
| | December 31, 2022 | | December 31, 2021 | ||
OPERATING ACTIVITIES: |
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Net loss | | $ | ( | | $ | ( |
Noncash items included in net loss: | |
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Share based compensation (Note 8) | |
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Depreciation (Note 3) | |
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Accretion of convertible debt discount (Note 7) | |
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Gain on disposal of buildings and equipment | |
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Change in fair value of warrant derivative (Note 6) | |
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Change in fair value of convertible note derivative (Note 7) | |
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Environmental liability expense (Note 11) | | | | | | |
Unrealized foreign exchange loss | |
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Changes in: | |
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Receivables | |
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Prepaid expenses | |
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Trade and other payables | |
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Environmental reclamation liabilities (Note 11) | | | ( | | | ( |
Net cash used in operating activities | |
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INVESTING ACTIVITIES: | |
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Investment in mineral properties and interest (Note 5) | |
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Purchase of buildings and equipment | |
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Proceeds from sale of buildings and equipment | |
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Purchase of surety bond | | | — | | | ( |
Net cash used in investing activities | |
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FINANCING ACTIVITIES: | |
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Proceeds from sale of common stock | | | — | | | |
Payment of shares issue costs (Note 8) | |
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Proceeds from exercise of share purchase options (Note 8) | |
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Net cash provided by financing activities | |
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Effect of foreign exchange on cash and cash equivalents | |
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Net increase (decrease) in cash and cash equivalents | |
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Cash and cash equivalents, beginning of year | |
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Cash and cash equivalents, end of year | | $ | | | $ | |
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SUPPLEMENTAL CASH FLOW INFORMATION: | |
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Cash paid for interest | | $ | | | $ | |
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NONCASH INVESTING AND FINANCING ACTIVITIES | | | | | | |
Recognition of operating lease liability and right-of-use asset | | $ | | $ | — | |
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CASH AND CASH EQUIVALENTS | |
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Cash | | $ | | | $ | |
Investment savings accounts | |
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GIC and term deposits | |
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Total cash and cash equivalents | | $ | | | $ | |
See accompanying notes to the consolidated financial statements
F-6
Perpetua Resources Corp.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.Nature of Operations and Going Concern Assessment
Perpetua Resources Corp. (the “Corporation”, the “Company”, “Perpetua Resources” or “Perpetua”) was incorporated on February 22, 2011 under the Business Corporation Act of 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
The Corporation has had continuing net losses and has an accumulated deficit of approximately $
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 contract terms, 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 as of May 12, 2023.
As of May 12, 2023, the Company’s latest liquidity forecast indicates that available cash resources and other sources of liquidity are expected to be exhausted in the first quarter of 2024 due to these increases to anticipated costs for the Company’s Administrative Settlement and Order on Consent (“ASAOC”) obligations in 2023. Although the Company’s current capital resources and liquidity include up to $
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.
2.Summary of Significant Accounting Policies
Basis of Presentation
These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
a. Basis of Consolidation
These consolidated financial statements include the financial statements of Perpetua Resources and its wholly owned subsidiary companies:
Perpetua Resources Idaho, Inc.;
Idaho Gold Resource Company, LLC; and
Stibnite Gold Company (merged with Idaho Gold Resource Company, LLC in 2021 and liquidated).
F-7
All intercompany transactions, balances, income and expenses have been eliminated.
b. Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuations and share-based compensation. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected.
c. Functional and Reporting Currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The functional and reporting currency of the Company and its subsidiaries is the U.S. Dollar (“USD” or “$”). All amounts in these consolidated financial statements are in USD, unless otherwise stated.
Transactions in currencies other than the entity’s functional currency are recorded at the exchange rate prevailing at the dates of the transactions. Monetary assets and liabilities are translated using the period end foreign exchange rate. Non-monetary assets and liabilities are translated using the historical rate. All gains and losses on translation of these foreign currency transactions are included in the Consolidated Statements of Operations.
d. Cash and Cash Equivalents
For the purpose of the Consolidated Balance Sheets and Consolidated Statements of Cash Flows, the Company considers all highly liquid investments readily convertible to a known amount of cash with an original maturity of three months or less and subject to an insignificant risk of changes in value to be cash equivalents.
e. Buildings and Equipment
Buildings and equipment are recorded at cost less depreciation and depletion and accumulated impairment losses, if any. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. When an asset is sold, we recognize a gain (loss) in the Consolidated Statements of Operations based upon the proceeds received on the sale less the net carrying value of the asset. The cost of self-constructed assets includes the cost of materials, direct labor and an appropriate portion of normal overhead. Portions of interest costs incurred on debt is capitalized as a part of the cost of constructing or acquiring certain qualifying assets.
The Company depreciates its assets, less their estimated residual values, as follows:
Category |
| Method |
| Useful life |
Equipment and Vehicles |
| Straight-line |
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Building Leasehold Improvements |
| Straight-line |
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Buildings and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of buildings and equipment, the recoverability test is performed using undiscounted net cash flows related to the assets or asset group. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets or asset group.
f. Mineral Properties and Interest
Perpetua Resources is in the development stage based on the Company’s Probable Mineral Reserves as set forth in the Technical Report Summary, dated as of December 31, 2021, and amended as of June 6, 2022 (the “TRS”). Mineral properties and interest
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acquisition costs, including indirectly related acquisition costs, are capitalized when incurred. Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are capitalized as mineral properties and interest acquisition costs at such time as the payments are made. Exploration costs are expensed as incurred.
When it is determined that a mining deposit can be economically and legally extracted or produced based on established Proven and Probable Mineral Reserves under the United States Securities and Exchange Commission (“SEC”) S-K 1300, development costs related to such reserves and incurred after such determination will be considered for capitalization. The establishment of Proven and Probable Mineral Reserves is based on results of feasibility studies, which indicate whether a property is economically feasible. 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. Capitalized amounts relating to a property that is abandoned or otherwise considered uneconomic for the foreseeable future are written off.
We review and evaluate the net carrying value of mineral properties and interest for impairment upon the occurrence of events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. This would include events and circumstances such as our inability to obtain all the necessary permits, changes in the legal status of our mineral properties, government actions, the results of exploration activities and technical evaluations and changes in economic conditions, including the price of commodities or input prices. Such evaluations compare estimated future net cash flows with our carrying costs and future obligations on an undiscounted basis.
If it is determined that the estimated future undiscounted cash flows are less than the carrying value of the property, an impairment loss will be recorded. Where estimates of future net cash flows are not determinable and where other conditions indicate the potential for impairment, management uses available market information and/or third-party valuation experts to assess if the carrying value can be recovered and to estimate fair value.
The recoverability of the carrying values of mineral properties and interest is dependent upon economic reserves being discovered or developed on the properties, permitting, financing, start-up, and commercial production from, or the sale/lease of, or other strategic transactions related to these properties. Development and/or start-up of a project will depend on, among other things, management’s ability to raise sufficient capital for these purposes.
g. Leases
Upon inception, we determine if a contractual arrangement is, or contains, a lease. Right-of-use (“ROU”) assets and liabilities related to operating leases are separately reported in the Consolidated Balance Sheets. The Company currently has
ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Operating lease ROU assets and liabilities also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.
h. Share Based Compensation
The Company uses its common stock for various forms of share based compensation arrangements entered into with directors, officers, employees and consultants. Share based compensation arrangements are accounted for at fair value on the date of grant. For awards with graded vesting, the fair value of each tranche is measured separately and recognized over its respective vesting period. Total amount recognized as expense is adjusted to reflect the number of share options which ultimately vest. The Company recognizes forfeitures as they occur.
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The fair value of stock options is determined using a Black-Scholes valuation model. Option pricing models require the input of subjective assumptions including the length of time employees will retain their vested stock options before exercising them, expected share price volatility, and interest rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s net loss.
The fair value of other share-based awards is based on the valuation of the common stock on the date of grant. The fair value of time-based awards that are ultimately expected to vest is recognized as an expense on a straight-line basis over the requisite service period. The fair value of performance-based awards is adjusted for the probability of achieving the performance conditions and is recognized on a straight line basis over the term of the award agreement.
i. Reclamation and Remediation Costs and Asset Retirement Obligations
The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration, development and production activities. The estimated costs associated with environmental reclamation liabilities are accrued in the period in which the liability is incurred if it is reasonably estimable or known. Future reclamation and environmental-related expenditures are difficult to estimate in many circumstances due to the early-stage nature of Company’s operations, the uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such reclamation and remediation costs as evidence indicating that the liabilities have potentially changed becomes available. Changes in estimates are reflected in the Consolidated Statements of Operations in the period an estimate is revised.
The Company recognizes asset retirement obligations for statutory, contractual, or legal obligations associated with buildings and equipment and mineral interests and properties when those obligations result from the acquisition, construction, development or normal operation of the assets. The Company records a liability for the present value of estimated reclamation costs, and the related asset created with it, in the period in which the liability is incurred. The liability is accreted, and the asset is depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation are made in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value of such costs. The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. The Company has
j. Fair Value Measurements
The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
| ● | Level 1: Quoted market prices in active markets for identical assets or liabilities. |
| ● | Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. |
| ● | Level 3: Unobservable inputs that are not corroborated by market data. |
k. Convertible Debt
Upon the issuance of convertible debt, the Company evaluates embedded conversion features within convertible debt to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings.
The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity if they are freestanding and meet the conditions for equity classification. The equity component is treated as a discount on the liability component of the convertible debt, which is amortized over the term of the convertible debt using the effective interest
F-10
rate method. Debt issuance costs related to the convertible debt are allocated to the liability and equity components of the convertible debt based on their relative values. Debt issuance costs allocated to the liability component are amortized over the life of the convertible debt as additional non-cash interest expense. Transaction costs allocated to equity are netted with the equity component of the convertible debt instrument in shareholders’ equity.
l. Derivative Instruments
Derivative instruments are recognized as either assets or liabilities on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivative instruments depends on their intended use and resulting hedge designations. Changes in the fair value of derivative instruments not designated as hedges are recorded in the Consolidated Statements of Operations as a component of other income (expense). The Company has
The Company evaluates and accounts for embedded derivatives in its financial instruments based on three criteria that, if met, require bifurcation of embedded derivatives from their host instruments and accounting for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not required to be re-measured at fair value and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is shown at its fair value at each balance sheet date and recorded as an asset or liability with the change in fair value recorded in the Consolidated Statements of Operations as other income (expense).
The Company uses the Black-Scholes Option Pricing Model or other valuation models for valuation of the conversion option derivative associated with its convertible notes and warrant derivative. Valuation models require the input of subjective assumptions including expected share price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s net loss.
m. Income Taxes
Income taxes are accounted for under the liability method. Under this method deferred income tax liabilities or assets are recorded for expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of those assets and liabilities, as well as operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse. We provide for federal, state and foreign income taxes currently payable, if any. Federal, state and foreign tax benefits are recorded as a reduction of income taxes, when applicable.
A valuation allowance is recorded against deferred tax assets if management does not believe the Company is more likely than not that the asset will be recognized. We evaluate available positive and negative evidence available to determine the amount of valuation allowance required on our deferred tax assets.
We evaluate uncertain tax positions in a two-step process, whereby (i) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority would be recognized.
n. Loss Per Share
Basic loss per share is computed by dividing the net loss available to common shareholders 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 warrants, if dilutive. The Company’s potential dilutive shares of common stock include outstanding share purchase
F-11
options, restricted share units (RSUs), performance share units (PSUs), deferred share units (DSUs) and warrants. Potentially diluted shares as of December 31, 2022 and December 31, 2021 were as follows:
| | December 31, | | December 31, |
|
| 2022 |
| 2021 |
Share purchase options |
| | | |
Shares units | | | | |
Warrants |
| | | |
Total |
| | | |
All potentially dilutive shares were excluded from the calculation of diluted loss per share as their impact would be anti-dilutive.
o. Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents and the environmental reclamation bond. The fair values of these instruments approximate their carrying value given their short-term nature unless otherwise noted.
p. Concentration of Credit Risk
The financial instrument which potentially subjects the Company to credit risk is cash and cash equivalents. The Corporation holds its cash with Canadian chartered banks and the risk of default is considered to be remote. As part of its cash management process, the Company regularly monitors the relative credit standing of these institutions.
q. Reclassifications
Certain amounts in prior years have been reclassified to conform with the current period presentation.
r. Grant income
From time to time, the Company may be awarded government grants. US GAAP does not have specific accounting standards covering government grants to business entities. The Company applies International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance by analogy when accounting for government grants. Under IAS 20, government grants are initially recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. After initial recognition, government grants are recognized in earnings on a systematic basis in a manner that mirrors the manner in which the Company recognizes the underlying costs for which the grant is intended to compensate. A grant receivable is recognized if it compensates for expenses or losses already incurred. The Company has adopted the disclosure requirements of Accounting Standards Codification (“ASC”) 832 Government Assistance.
s. Research and Development Costs
Research and development costs are recognized as operating expenses when incurred and are classified as exploration costs.
t. Recently Issued Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update(“ASU”) No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40),” which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for the exception. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2023 for smaller reporting companies, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2021. The early adoption of this update on January 1, 2022 did not have a material impact on our consolidated financial statements.
F-12
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.Buildings and Equipment
At December 31, 2022 and 2021, the Company’s buildings and equipment were as follows:
|
| | ||||
|
| December 31, 2022 |
| December 31, 2021 | ||
Buildings | | $ | | | $ | |
Equipment and Vehicles | |
| | |
| |
| |
| | |
| |
Accumulated Depreciation | |
| ( | |
| ( |
Balance | | $ | | | $ | |
Depreciation expense on buildings and equipment for the years ended December 31, 2022 and 2021 was $
4.Leases
At December 31, 2022, the Company has
5.Mineral Properties and Interest
At December 31, 2022 and 2021, the Company’s mineral properties and interest at the Stibnite Gold Project totaled $
The Company’s subsidiaries acquired mineral rights to the Stibnite Gold Project through several transactions. All mineral rights held by the Company’s subsidiaries are held through patented and unpatented mineral and mill site claims, except the Cinnabar option claims which are held under an option to purchase, and all of the Stibnite Gold Project is subject to a
Included in mineral properties and interest are annual payments made under option agreements, where the Company is entitled to continue to make annual option payments or, ultimately, purchase certain properties. Annual payment due under option agreements during 2023 are $
As of December 31, 2022, it has not yet been determined that the Project’s mining deposits can be economically and legally extracted or produced because the Project’s estimated reserves do not yet meet the definition of proven reserves under the United States SEC Regulation S-K 1300.
Accordingly, development costs related to such reserves will not be 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 exploration 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.
F-13
6.Warrant Derivative
In May 2013, the Company issued to Franco Nevada Company (“Franco”)
The exercise price of the Franco Warrants is denominated in Canadian Dollars; however, the functional currency of the Company is the U.S. Dollar. As a result of this difference in currencies, the proceeds that will be received by the Company are not fixed and will vary based on foreign exchange rates and the warrants are a derivative and are required to be recognized and measured at fair value at each reporting period. Any changes in fair value from period to period are recorded as a gain or loss in the Consolidated Statements of Operations. There are no circumstances in which the Company would be required to pay any cash upon exercise or expiry of the warrants.
A reconciliation of the change in fair values of the derivative is below:
|
| Fair Value of | |
| | Warrant Derivative | |
Balance, December 31, 2020 | | $ | |
Change in fair value of warrant derivative | | | ( |
Balance, December 31, 2021 | | $ | |
Change in fair value of warrant derivative |
| | ( |
Balance, December 31, 2022 | | $ | |
The fair value of the warrants was calculated using the Black-Scholes valuation model. As of December 31, 2022 and 2021, the inputs used in the Black-Scholes valuation model are:
| | Years ended | ||
| | December 31, | | December 31, |
|
| 2022 |
| 2021 |
Share price | | C$ | | C$ |
Exercise price |
| C$ |
| C$ |
Expected term (in years) |
|
| ||
Expected share price volatility |
| | ||
Annual rate of quarterly dividends |
| | ||
Risk-free interest rate |
| | ||
7.Convertible Notes
On March 17, 2016, the Company issued unsecured convertible notes (the “2016 Notes”) for gross proceeds of $
On August 26, 2020, convertible notes in the aggregate principal amount of C$
F-14
As of December 31, 2022 and December 31, 2021, the Corporation has
|
| Convertible Notes | |
Balance, December 31, 2020 | | $ | |
Conversions | |
| ( |
Accretion and interest expense | |
| |
Interest payments | |
| ( |
Foreign exchange adjustments | |
| |
Balance, December 31, 2021 and December 31, 2022 | | $ | — |
Each set of Convertible Notes were deemed to contain an embedded derivative (collectively, the “Convertible Note Derivatives”) relating to the conversion option. Convertible Note Derivatives related to each set of Convertible Notes were valued upon initial recognition at fair value using partial differential equation methods and are subsequently re-measured at fair value at each period end through the Consolidated Statements of Operations. The components of the derivatives, collectively the “Convertible Note Derivatives”, are summarized as follows:
|
| Convertible Note | |
| | Derivative | |
Balance, December 31, 2020 | | $ | |
Conversions | |
| ( |
Fair value adjustment | |
| ( |
Foreign exchange adjustments | |
| |
Balance, December 31, 2021 and 2022 | | $ | |
Upon conversion of the remaining Convertible Notes in 2021, the fair value of the Convertible Note Derivatives and the carrying value of the Convertible Notes, on that date, were reclassified to share capital.
The fair value of the Convertible Note Derivatives at the conversion date in 2021 was considered to be the intrinsic value, which is the share price on the date of conversion minus the conversion price.
8.Equity
| a. | Authorized |
| ● |
| ● |
| ● |
On January 27, 2021, the Company completed a-for-ten (1:10) reverse share split of all of its issued and outstanding common shares (“Share Consolidation”), resulting in a reduction of the and common shares from
In August 2021, the Company issued
| b. | Share based compensation |
On March 8, 2021, the Company adopted the Omnibus Equity Incentive Plan (the “Plan”) to provide the Corporation with share-related mechanisms to attract, retain and motivate qualified directors, employees and consultants of the Company and its subsidiaries, to reward such of those directors, employees and consultants as may be granted awards under this Plan by the Board from time to time for their contributions toward the long-term goals and success of the Corporation and to enable and
F-15
encourage such directors, employees and consultants to acquire shares as long-term investments and proprietary interests in the Corporation. The Plan was approved by the Corporation’s shareholders on April 16, 2021.
The Plan allows for awards in the following forms: stock purchase option, restricted share unit, performance share unit or deferred share unit. Under the terms of the Plan, the aggregate maximum number of shares that may be issued pursuant to awards granted under the Plan cannot exceed
Prior to adoption of the Plan, the Company had the Evergreen Incentive Stock Option Plan (the “Former Plan”) in place. Under the terms of the Former Plan, options may be exercisable over periods not to exceed
Share based compensation for the years ended December 31, 2022 and 2021 was recognized in the Consolidated Statements of Operations as follows:
| December 31, | |||||
|
| 2022 |
| 2021 | ||
Exploration | | $ | | | $ | |
Professional Fees | |
| — | |
| |
Corporate salaries and benefits | |
| | |
| |
Directors’ fees | |
| | |
| |
Total | | $ | | | $ | |
Share Purchase Options
A summary of share purchase option activity within the Company’s share-based compensation plan for the years ended December 31, 2022 and December 31, 2021 is as follows:
| | | | Weighted Average | |
|
| Number of Options |
| Exercise Price (C$) | |
Balance December 31, 2020 |
| | | $ | |
Options granted |
| | |
| |
Options expired |
| ( | |
| |
Options cancelled or forfeited |
| ( | |
| |
Options exercised |
| ( | |
| |
Balance, December 31, 2021 |
| | | $ | |
Options granted |
| — | |
| — |
Options expired |
| ( | |
| |
Options cancelled or forfeited |
| ( | |
| |
Options exercised |
| — | |
| — |
Balance, December 31, 2022 |
| | | $ | |
During the years ended December 31, 2022 and 2021, the Company’s total share based compensation from options was $
F-16
The fair value of options granted is estimated at the time of the grant using the Black-Scholes option pricing model. The grant date fair value of options granted during the year ended December 31, 2021 was approximately $
The weighted average inputs used in the Black-Scholes option pricing model for options granted during the year ended December 31, 2021 are:
|
| December 31, 2021 |
| |
Fair value options granted | | $ | | |
Risk-free interest rate | |
| | |
Expected term (in years) | |
| | |
Expected share price volatility | |
| | |
Expected dividend yield | |
| — | |
An analysis of outstanding share purchase options as of December 31, 2022 is as follows:
| | Options Outstanding |
| Options Exercisable | ||||||||||
Range of Exercise | | | | | | | Remaining | | | | | | | Remaining |
Prices (C$) |
| Number |
| Price (C$) 1 |
| Life2 |
| Number |
| Price (C$) 1 |
| Life2 | ||
$ |
| | | | |
| | | | | |
| ||
$ |
| | | | |
| | | | | |
| ||
$ |
| | | | |
| | | | | |
| ||
$ |
| | | | |
| | | | | |
| ||
$ |
| | | | |
| | | | | |
| ||
1 Weighted Average Exercise Price (C$)
2 Weighted Average Remaining Contractual Life (Years)
As of December 31, 2022, all unvested options are expected to vest and unvested compensation of approximately $
Restricted Share Units
The following table summarizes activity for restricted share units awarded under the Plan that vest over the required service period of the participant.
| |
|
|
| Weighted Average | |
| | | | | Grant Date | |
| |
| Share Units |
| Fair Value | |
Unvested, December 31, 2020 | |
| |
| $ | — |
Granted | |
| | |
| |
Distributed (vested) | |
| ( | |
| |
Cancelled | |
| — | | | — |
Unvested, December 31, 2021 | |
| | |
| |
Granted | | | | | | |
Distributed (vested) | | | ( | | | |
Cancelled | | | ( | | | |
Unvested, December 31, 2022 | | | | | $ | |
F-17
During the years ended December 31, 2022 and 2021, the Company has recognized $
2023 |
| |
2024 |
| |
2025 | | |
Total |
| |
Unvested units will be forfeited by participants upon termination of employment in advance of vesting, with the exception of termination by the company not for cause or due to the employee’s death, disability, or retirement if certain criteria are met.
Performance Share Units
The following table summarizes activity for PSUs and market-based performance share units (“MPSUs”) awarded under the Plan:
|
|
|
| Weighted Average | |
| | Share | | Grant Date | |
| | Units | | Fair Value | |
Unvested, December 31, 2020 |
| |
| $ | — |
Granted |
| |
|
| |
Unvested, December 31, 2021 |
| |
|
| |
Granted | | | | | |
Distributed | | ( | | | |
Cancelled |
| ( |
|
| |
Unvested, December 31, 2022 |
| |
| $ | |
During the year ended December 31, 2022 and 2021, the Company recognized $
The Company expects to record an additional $
PSUs: These PSUs vest upon completion of the performance period (through September 2023) and specific performance conditions set forth for each individual grant for individually defined reporting and operating measurement objectives. 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. Certain vesting provisions also apply in the event of the employee’s termination of employment by the company without cause or a termination of employment due to the employee’s death, disability, or retirement if certain criteria are met. During the year ended December 31, 2022, PSUs awarded had a weighted average grant date fair value of $
MPSUs: On March 5, 2022, the Company granted MPSUs where vesting is based on the Company’s cumulative total shareholder return (“TSR”) as compared to the constituents that comprise the VanEck Junior Gold Miners ETF (“GDXJ Index”) a group of similar junior gold mining companies, over the period from March 5, 2022 to March 5, 2025 (the “Performance Period”). The ultimate number of MPSUs that vest may range from
F-18
During the year ended December 31, 2022, the Company awarded
Risk-free interest rate |
| % | |
Expected term (in years) |
| | |
Expected share price volatility |
| | % |
Expected dividend yield |
| — | |
The expected volatility utilized is based on the historical volatilities of the Corporation’s common stock and the GDXJ Index in order to model the stock price movements. The volatility used was calculated over the most recent three year period. The risk-free interest rates used are based on the implied yield available on a U.S. Treasury zero-coupon bill with a term equivalent to the Performance Period. The expected dividend yield of zero was used since it is the mathematical equivalent to reinvesting dividends in each issuing entity over the Performance Period.
Deferred Share Units
The following table summarizes activity for deferred share units (“DSUs”) awarded under the Plan:
|
| |
| Weighted | |
|
| |
| Average | |
| | Share |
| Grant Date | |
| | Units |
| Fair Value | |
Outstanding, December 31, 2020 |
| — | | $ | — |
Granted |
| | |
| |
Outstanding, December 31, 2021 |
| | |
| |
Granted |
| | |
| |
Outstanding, December 31, 2022 |
| | | $ | |
Under the Plan, the Company may issue DSUs to non-employee directors. During the years ended December 31, 2022 and 2021,
| c. | Warrants |
There was a total of
9.Financial Instruments and Fair Value Measurements
The Company’s financial instruments include the warrant derivative at December 31, 2022 and 2021. The derivative was valued at fair value at the end of each reporting period. At December 31, 2022 and 2021, the levels in the fair value hierarchy into which the Company’s financial assets and liabilities are measured and recognized on the Consolidated Balance Sheets at fair value are categorized as follows:
|
| Level 1 |
| Level 2 |
| Level 3 | |||
|
| December 31, 2022 | |||||||
Warrant Derivative (Note 6) | | $ | — | | $ | — | | $ | |
Total | | $ | — | | $ | — | | $ | |
| | December 31, 2021 | |||||||
Warrant Derivative (Note 6) | | | — | | | — | | $ | |
Total | | $ | — | | $ | — | | $ | |
F-19
The Company uses the Black-Scholes Option Pricing Model or other valuation models for valuation of its Convertible Note Derivatives and warrant derivative. Valuation models require the input of subjective assumptions including expected share price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s net loss.
10.Income taxes
No benefit (provision) has been recognized for the years ended December 31, 2022 and 2021. The United States and Canada components of net loss for the years ended December 31, 2022 and 2021 are as follows:
| | December 31, | ||||
|
| 2022 |
| 2021 | ||
United States | | $ | | | $ | |
Canada | |
| | |
| |
Total | | $ | | | $ | |
The benefit (provision) for income taxes reported differs from the amount computed by applying the applicable income tax rates to the loss before the tax provision due to the following:
|
| December 31, | ||||
|
| 2022 |
| 2021 | ||
Income tax benefit computed at statutory rate of | | $ | ( | | $ | ( |
State tax, net of federal tax benefit | |
| ( | |
| ( |
Difference in foreign tax rates | |
| ( | |
| ( |
Change in state tax rate | |
| | |
| |
Deferred tax adjustments | | | ( | | | |
Change in valuation allowance | |
| | |
| |
Non-deductible tax items: | |
| | |
| |
(Gain) loss on derivative liability | |
| ( | |
| ( |
Share based compensation | |
| | |
| |
Equity Finance Costs | | | ( | | | — |
Other | |
| | |
| |
Income tax provision (benefit) | | $ | — | | $ | — |
The significant components of the Company’s deferred tax assets are as follows:
| | December 31, | ||||
|
| 2022 |
| 2021 | ||
Net operating loss carryforward – U.S. | | $ | | | $ | |
Net operating loss carryforward – CAD | |
| | |
| |
Buildings and equipment | |
| | |
| |
Mineral interest and properties | |
| | |
| |
Financing costs | | | | | | |
Environmental obligation | | | | | | |
Other | |
| | |
| |
Deferred tax assets | |
| | |
| |
Less valuation allowance | |
| ( | |
| ( |
Net deferred tax assets | | $ | — | | $ | — |
F-20
The Company records a valuation allowance if, based on the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2022 and 2021, the Company has determined that a full valuation allowance is necessary against its net deferred tax assets based on the weight of all available evidence. The resulting valuation allowance recorded against the net deferred tax assets of the Company is approximately $
| | December 31, | ||||
|
| 2022 |
| 2021 | ||
Valuation allowance on deferred tax assets, beginning of year | | $ | ( | | $ | ( |
Change related to: | | | | | | |
Valuation allowance movement recognized in continuing operations | |
| ( | |
| ( |
Valuation allowance movement recognized in equity | |
| ( | |
| |
Valuation allowance on deferred tax assets, end of year | | $ | ( | | $ | ( |
As of December 31, 2022, the Company has U.S. loss carryforwards of approximately $
In 2022, the Company evaluated its tax positions for years which remain subject to examination by major tax jurisdictions and as a result concluded no adjustment was necessary. The Company files income tax returns in the U.S. and Canada federal jurisdictions, the state of Idaho jurisdiction, and the province of British Columbia jurisdiction. The Company had
F-21
11.Environmental Reclamation Liabilities
On January 15, 2021, the Company agreed to the ASAOC. The Company has accounted for its obligation under the ASAOC as an environmental reclamation liability. The aggregate cost of the obligation was estimated to be approximately $
| $ | | |
Initial estimate | |
| |
Change in estimate | |
| |
Work performed on early action items | |
| ( |
Balance, December 31, 2021 | | | |
Change in estimate | |
| |
Work performed on early action items | | | ( |
Balance, December 31, 2022 | | $ | |
| | | |
Current portion | | $ | |
Non-current portion | | | |
Balance, December 31, 2022 | | $ | |
The Company provided $
12.Commitments and Contingencies
| a. | Mining Claim Assessments |
The Company currently holds mining claims on which it has an annual assessment obligation of $
| b. | 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 issued by the USFS, receipt of all permits and approvals necessary for commencement of construction, commercial production, and of the final reclamation phase. These payments could begin as early as late 2023 based on the current permitting schedule and individual payments range from $
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
| c. | 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 December 31, 2022, the option payments due on these properties in 2023 are $
F-22
| d. | Off balance sheet arrangements |
The Corporation has
e.Legal Update
The Corporation and its subsidiaries are a party to an ongoing legal proceeding with the Nez Perce Tribe for alleged violations of the Clean Water Act (“CWA”) related to historical mining activities. In August 2019, the Nez Perce Tribe filed suit in the United States District Court for the District of Idaho. The Corporation promptly filed a motion to dismiss and, in the alternative, a motion to stay the litigation. Both motions were denied. Subsequently, the Corporation filed an answer denying liability which, later, the court allowed the Corporation to amend and file a third-party complaint against the Forest Service. The Corporation also filed a separate CWA citizen suit against the United States Forest Service (“USFS” or “Forest Service”) alleging the point source discharges, as alleged by the Nez Perce Tribe in its complaint, were occurring on lands owned and controlled by the United States. Pursuant to the terms of the voluntary ASAOC executed with the U.S. EPA and the United States Department of Agriculture, the Corporation agreed to dismiss its pending actions against the Forest Service without prejudice. The remaining parties to the ongoing legal proceeding agreed to stay the litigation and explore Alternative Dispute Resolution (“ADR”) options through court-ordered mediation. The stay has been extended on subsequent occasions, and a request to extend the stay through June 30, 2023 was requested jointly by the Company and the Nez Perce Tribe during a February 21, 2023 status conference and subsequently ordered by the court on the same day.
The voluntary CERCLA ASAOC entered into by the Corporation, the U.S. EPA, and the United States Department of Agriculture requires numerous early cleanup actions to occur over the next several years at the Stibnite Gold Project site (the “Stibnite Site”). Perpetua Resources Idaho, Inc. is presently developing and executing the Phase 1 early cleanup actions (known under CERCLA as “time critical removal actions”) that, after final work plan approval by the federal agencies, are being constructed to efficiently improve water quality in a number of areas on the Stibnite Site. Construction of time critical removal actions began in the summer of 2022, and significant progress was achieved to complete the voluntary Phase 1 Stibnite Site cleanup during the limited work season. Other longer-term proposed actions relating to Project operations are being evaluated through the NEPA process.
13.Government Grants:
In September 2022, the Company was awarded
On December 16, 2022, the Company entered into an undefinitized Technology Investment Agreement (“TIA”) with the DOD - Air Force Research Laboratory for an award of up to $
Accounting for these DOD grants does not fall under ASC 606, Revenue from Contracts with Customers, as the DOD does not meet the definition of a customer under this standard. The DOD grant proceeds, which will be used to reimburse expenses incurred, meet the definition of grants related to expenses as the primary purpose for the payments is to fund research and development on trisulfides and the advancement of the Company’s Stibnite Gold Project.
A total of $
F-23