Perpetua Resources(PPTA) - 2025 Q2 - Quarterly Report

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This section defines forward-looking statements as projections based on management's expectations, highlighting inherent risks and uncertainties that could cause actual results to differ materially Forward-Looking Statements Overview This section outlines the nature of forward-looking statements within the report, emphasizing that they are not historical facts but projections based on management's expectations and assumptions - Forward-looking statements are based on management's estimates, beliefs, expectations, and assumptions regarding future operations, financial position, and projected costs, and are not historical facts[8] - Such statements involve unknown risks and uncertainties that could cause actual outcomes to differ materially from those expressed or implied[9] Key Risk Factors for Forward-Looking Statements The company identifies several critical factors that could materially affect its business, financial condition, and operational results, including project financing, permitting, and legal challenges - Key risks include the Company's ability to successfully implement and finance the Stibnite Gold Project, obtain required permits, satisfy financial assurance requirements, and secure financing from U.S. EXIM or other sources[9] - Other significant factors are regulatory and legal changes, requirements for additional capital, the Company's history of losses, and potential challenges related to mineral property title[9] - Assumptions for forward-looking information include timely issuance of permits, approval of U.S. EXIM application, successful royalty financing negotiations, and sustained commodity prices[12] PART I. FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, with explanatory notes Condensed Consolidated Balance Sheets (Unaudited) The balance sheet shows a significant increase in total assets, primarily driven by a substantial rise in cash and cash equivalents due to recent equity offerings | ASSETS/LIABILITIES/EQUITY | June 30, 2025 | December 31, 2024 | Change | % Change | | :------------------------ | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $425,374,589 | $44,104,825 | $381,269,764 | 864.4% | | Total Current Assets | $446,968,649 | $47,352,580 | $399,616,069 | 843.9% | | Total Assets | $518,029,894 | $117,609,997 | $400,419,897 | 340.5% | | Total Current Liabilities | $6,285,870 | $6,751,267 | $(465,397) | -6.9% | | Total Liabilities | $8,285,870 | $8,751,267 | $(465,397) | -5.3% | | Total Shareholders' Equity| $509,744,024 | $108,858,730 | $400,885,294 | 368.3% | Condensed Consolidated Statements of Operations (Unaudited) The company reported an increased net loss for both the three and six months ended June 30, 2025, primarily due to higher exploration expenses and decreased grant income | EXPENSES/INCOME | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploration | $10,965,537 | $10,509,124 | $24,059,966 | $17,081,584 | | Operating Loss | $11,742,782 | $12,189,718 | $26,702,286 | $20,315,053 | | Grant income | $(4,921,179) | $(8,475,643) | $(11,304,569) | $(13,645,381) | | Interest income | $(764,024) | $(42,821) | $(1,141,990) | $(59,358) | | Net Loss | $6,026,329 | $3,673,715 | $14,230,932 | $6,618,240 | | Net Loss Per Share| $0.08 | $0.06 | $0.19 | $0.10 | Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) Shareholders' equity significantly increased from December 31, 2024, to June 30, 2025, primarily due to substantial proceeds from the sale of common shares | Item | December 31, 2024 | June 30, 2025 | | :------------------------ | :---------------- | :------------ | | Common Shares (Amount) | $668,664,443 | $1,089,215,016| | Additional Capital | $35,375,252 | $29,940,905 | | Accumulated Deficit | $(595,180,965) | $(609,411,897)| | Total Shareholders' Equity| $108,858,730 | $509,744,024 | Key Changes (Six Months Ended June 30, 2025) - Shares sold through offerings: $425,010,392 [20] - Share issuance costs: $(13,901,456) [20] - Net loss for the period: $(8,204,603) [20] Condensed Consolidated Statements of Cash Flows (Unaudited) For the six months ended June 30, 2025, the company experienced a significant net increase in cash and cash equivalents, primarily driven by substantial cash provided by financing activities | Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(32,228,404) | $(10,500,460) | | Net cash (used in) provided by investing activities | $(829,616) | $8,170,845 | | Net cash provided by financing activities | $414,320,781 | $986,027 | | Net increase (decrease) in cash and cash equivalents | $381,269,764 | $(1,346,677) | | Cash and cash equivalents, end of period | $425,374,589 | $1,882,785 | Note 1. Nature of Operations and Basis of Presentation Perpetua Resources Corp. is engaged in mineral exploration, primarily focused on the Stibnite Gold Project, with sufficient cash for near-term plans but long-term financing uncertainty - Perpetua Resources operates in one segment: mineral exploration in the United States, with its principal asset being 100% ownership of the Stibnite Gold Project[23] - As of June 30, 2025, the Company had approximately $425.4 million in cash and cash equivalents, with an additional $46.8 million received in July 2025 from equity offerings[26][89] - The Company's liquidity forecast indicates sufficient cash until the Stibnite Gold Project is construction-ready (expected spring 2026), but substantial doubt remains regarding the ability to complete all plans without securing additional financing[27][28] Note 2. Recently Issued Accounting Pronouncements The company is evaluating the impact of recently issued accounting pronouncements, ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) - ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, and is not expected to have a material impact[31] - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and its impact is currently being evaluated[32] Note 3. Mineral Properties and Interest The company's mineral properties and interest in the Stibnite Gold Project remained constant, subject to NSR royalties on gold and silver production - Mineral properties and interest for the Stibnite Gold Project totaled $66,786,048 as of June 30, 2025, and December 31, 2024[34] - The Project is subject to a 1.7% NSR royalty on gold production and a perpetual 100% NSR royalty on future payable silver production granted to Franco-Nevada Idaho Corporation for $8.5 million in gross proceeds[35][36] - Development costs are not capitalized as the Project's estimated reserves do not yet meet the definition of proven reserves under SEC Regulation S-K 1300[38] Note 4. Shareholders' Equity The company completed a significant equity offering in June 2025, raising approximately $411.1 million net, with additional funds from an underwriter option in July 2025 - In June 2025, the Corporation completed an equity offering of 24,622,000 shares at $13.20 per share, along with a concurrent private placement of 7,575,757 shares to Paulson & Co. Inc., raising approximately $411.1 million net[41] - An additional $46.8 million net was received in July 2025 from the full exercise of an underwriter option for 3,693,300 shares[43] Share-based Compensation | Share-based Compensation | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :----------------------- | :------------------------------- | :----------------------------- | | Exploration | $582,321 | $1,124,958 | | Corporate salaries & benefits | $(154,228) | $278,344 | | Directors' fees | $47,464 | $288,083 | | Total | $475,557 | $1,691,385 | Note 5. Environmental Reclamation Liability The company's environmental reclamation liability balance was nil as of June 30, 2025, as all Phase 1 response actions were completed in late 2024 - Environmental reclamation liability was $nil as of June 30, 2025, compared to $786,972 as of June 30, 2024[62] - The Company determined it completed all Phase 1 response actions under the ASAOC in late 2024, with no further costs accrued for this liability as of June 30, 2025[76] Note 6. Commitments and Contingencies The company has various commitments including mining claim assessments and a significant deposit for electrical equipment, and is involved in legal proceedings concerning permits and capital expenditures - The Company has an annual assessment obligation of $334,800 for mining claims[63] - An initial payment of $18.8 million was made to Idaho Power Company for long-lead electrical equipment procurement, part of an estimated total cost of $90.2 million[66][67] - The CWA lawsuit with the Nez Perce Tribe was settled for $5 million, with $1 million current and $2 million long-term payable as of June 30, 2025[75] - Legal challenges have been filed against the USFS and other federal agencies regarding the Stibnite Gold Project's ROD and FEIS, and against IDEQ and IBEQ concerning the air permit to construct[77][78][79] - A federal class action lawsuit was filed alleging false/misleading statements regarding expected capital expenditures for the Stibnite Gold Project[80] Note 7. Government Grants The company receives government grants for antimony trisulfide production and environmental studies, with grant income decreasing in Q2 2025 due to the DPA grant funding being exhausted Government Grant | Government Grant | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | DPA | $3,902,209 | $8,440,373 | $10,003,859 | $11,049,634 | | DOTC | $1,018,970 | $35,270 | $1,300,710 | $2,595,747 | | Total | $4,921,179 | $8,475,643 | $11,304,569 | $13,645,381 | - The DPA grant, totaling $59.2 million, expired on June 16, 2025, with no additional funds available except for a $0.6 million receivable[82] - The DOTC grant was increased by $6.9 million to a total of $22.4 million, aimed at demonstrating a fully domestic antimony trisulfide supply chain[83] Note 8. Segment Reporting The company operates as a single reportable segment focused on mineral exploration in Idaho, with performance evaluated based on consolidated net loss and exploration costs - The Company operates as a single reportable segment: mineral exploration in Idaho, United States[86] - The CEO, as the Chief Operating Decision Maker, evaluates performance based on consolidated net loss and reviews exploration costs by major category[87][88] Note 9. Subsequent Event Subsequent to quarter-end, underwriters fully exercised their option to purchase additional common shares, resulting in approximately $46.8 million in net proceeds in July 2025 - Underwriters exercised their option in full on July 10, 2025, to purchase an additional 3,693,300 common shares at $13.20 per share[89] - This resulted in approximately $46.8 million in net proceeds received by the Company on July 14, 2025[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, covering strategic outlook, financing, permitting, and detailed financial analysis Overview Perpetua Resources, incorporated in 2011, focuses on mineral exploration in Idaho, with its primary asset being the Stibnite Gold Project, operating as a single segment - Perpetua Resources was incorporated in 2011 and focuses on mineral exploration, primarily the Stibnite Gold Project in Idaho[91] - The Corporation operates in one segment: mineral exploration in the United States[91] 2025 Outlook and Goals Perpetua Resources aims to provide a domestic source of antimony, develop a high-grade gold mine, and restore a brownfield site, with 2025 goals focused on permitting, financing, and construction readiness - Perpetua Resources' vision is to provide a domestic source of antimony, develop a large, high-grade open pit gold mine, and restore an abandoned brownfield site[92] - 2025 goals include finalizing permits for early works construction (fall 2025), advancing project financing, and detailed engineering for full construction readiness by spring 2026[93] Second Quarter 2025 Key Highlights Key Q2 2025 highlights include the issuance of the Section 404 permit, submission of a U.S. EXIM debt financing application, and closing a significant equity financing - U.S. Army Corps of Engineers issued the Section 404 permit for the Project[93] - Submitted formal application to U.S. EXIM for potential Project debt financing of up to $2.0 billion[93] - Closed $425 million in gross proceeds from equity financing, with an additional $49 million from an underwriter option, totaling approximately $474 million gross proceeds[93] - The IBEQ issued a final order rejecting challenges to the air permit to construct (PTC) for the Project[93] Financing Update The company announced a comprehensive project financing plan including $459 million from equity, up to $2.0 billion from U.S. EXIM, and targeting $200-$250 million from a gold royalty or streaming agreement - Secured $459 million in aggregate net proceeds from a registered equity offering and concurrent private placement, with proceeds intended for early construction costs and U.S. EXIM debt finance equity requirements[93] - Formal application submitted to U.S. EXIM for up to $2.0 billion project finance debt facility, with due diligence ongoing[93] - Targeting $200 million to $250 million in net proceeds from a gold NSR royalty (not to exceed 3.9%) or a gold stream, with negotiations in advanced stages[98] - The potential gold royalty/streaming agreement is expected to include a guarantee and indemnification of approximately $155 million of the Company's construction-phase financial assurance obligations[98] Construction Readiness and Early Works Activities Perpetua Resources is advancing construction readiness, including hiring experts, completing basic engineering, and initiating procurement for power line construction, with early works anticipated in fall 2025 - Hired key subject matter experts and completed basic engineering work with updated capital and operating costs[99] - Initiated procurement of long-lead items for power line construction through an agreement with Idaho Power Company, with an initial $18.8 million payment made[99] - Early works construction activities are anticipated to commence in the fall of 2025 upon receipt of all necessary permits and approvals[95] NEPA Permitting Update The USFS published the ROD and FEIS authorizing the Modified Mine Plan in January 2025, and while the Plan of Operations was deemed complete, legal challenges have been filed alleging NEPA violations - The USFS published the ROD and FEIS authorizing the Modified Mine Plan for the Project on January 3, 2025[96] - Perpetua received notice from the USFS on July 31, 2025, that the Plan of Operations was considered complete[96] - Legal challenges were filed in February 2025 against federal agencies, alleging NEPA and other federal law violations, seeking to vacate Project approvals and enjoin further implementation[97] Ancillary Permitting Update With all federal permits received, the company is focused on finalizing remaining state permits, including the USACE CWA Section 404 permit and IBEQ's rejection of air permit challenges - The USACE issued the CWA Section 404 permit for the Project on May 19, 2025, which was the last remaining federal permit[101] - The IBEQ rejected petitioners' appeal and reconsideration motion regarding the air permit to construct (PTC) issued by IDEQ[103] - The Idaho Department of Lands approved the cyanidation facility permanent closure plan, reclamation plan, and associated financial assurance model estimate on March 31, 2025[103] Results of Operations The company's net loss increased for both the three and six months ended June 30, 2025, primarily due to decreased grant income and increased exploration expenses Item | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $6,026,329 | $3,673,715 | $14,230,932 | $6,618,240 | | Exploration | $10,965,537 | $10,509,124 | $24,059,966 | $17,081,584 | | Environmental liability expense | $0 | $414,197 | $0 | $567,626 | | Grant income | $(4,921,179) | $(8,475,643) | $(11,304,569) | $(13,645,381) | | Interest income | $(764,024) | $(42,821) | $(1,141,990) | $(59,358) | - The $2.3 million increase in net loss for the three months ended June 30, 2025, was mainly due to a $3.6 million decrease in grant income, partially offset by a $0.7 million increase in interest income and a $0.6 million decrease in corporate salaries and benefits[105] - The $7.6 million increase in net loss for the six months ended June 30, 2025, was primarily due to a $7.0 million increase in exploration expense and a $2.3 million decrease in grant income, partially offset by a $0.6 million decrease in environmental costs and a $1.1 million increase in interest income[106] Liquidity and Capital Resources The company's liquidity significantly improved with $425.4 million in cash, supplemented by additional equity, and is pursuing a comprehensive financing package for the Stibnite Gold Project's estimated $2,215 million capital costs - As of June 30, 2025, Perpetua Resources had approximately $425.4 million in cash and cash equivalents, with an additional $46.8 million received in July 2025 from equity offerings[116] - The company's 2025 anticipated expenditures are approximately $240.0 million, including permitting, general corporate, engineering, and early works construction activities[123] - Long-term liquidity requirements include project financing for the Stibnite Gold Project's estimated capital cost of $2,215 million and reclamation financial assurance[117][124] - The comprehensive Project financing package is expected to include U.S. EXIM debt (up to $2.0 billion application submitted), proceeds from recent equity offerings, and a royalty or streaming arrangement (targeting $200-$250 million)[125][119][121] - A financial assurance guarantee for approximately $155 million of reclamation bonds is expected to be part of the royalty/streaming agreement[120] Critical Accounting Estimates There have been no material changes to the company's critical accounting estimates since December 31, 2024, with further details available in the Annual Report on Form 10-K - No material changes to critical accounting estimates occurred subsequent to December 31, 2024[129] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reported period - Not applicable for this reporting period[130] Item 4. Controls and Procedures Management evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective, with no material changes in internal control - The Company's disclosure controls and procedures were effective as of June 30, 2025[131] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[132] PART II. OTHER INFORMATION This part details legal proceedings, updated risk factors, equity sales, defaults, mine safety disclosures, and a list of exhibits Item 1. Legal Proceedings Perpetua Resources is involved in several legal proceedings, including a settled CWA lawsuit, ongoing challenges to permits, and a federal class action lawsuit regarding capital expenditures - The CWA lawsuit with the Nez Perce Tribe was settled for $5.0 million, with payments ongoing and dismissal with prejudice anticipated upon completion of payments[136] - Legal challenges were filed against federal agencies (USFS, USDA) in February 2025, alleging NEPA violations and seeking to vacate Project approvals for the Stibnite Gold Project[138] - A federal class action lawsuit was filed on March 20, 2025, alleging violations of the Exchange Act regarding statements on expected capital expenditures for the Stibnite Gold Project[139] - The Idaho Board of Environmental Quality (IBEQ) upheld the air permit to construct (PTC), but petitioners filed a petition for judicial review in Idaho state court in July 2025[141] Item 1A. Risk Factors This section updates key risks, including Paulson & Co. Inc.'s significant influence, lack of committed project financing, uncertainties in U.S. EXIM funding, permitting challenges, and increased compliance costs - Paulson & Co. Inc. holds 30.1% of outstanding shares, giving it significant influence over corporate transactions and Board member appointments[143] - The Company lacks sufficient committed financing for the Stibnite Gold Project's estimated $2,215 million capital cost and required $160 million in financial assurance, posing a risk of delays or economic unviability[145][146] - U.S. EXIM financing (up to $2.0 billion application) is subject to underwriting criteria, authorization, and conditions, with uncertain timing and amount[150][151] - Delays or failure to obtain remaining state and local permits, or successful legal challenges to existing permits, could materially impact the Project[152][154] - Operations are subject to legal challenges, including those against federal agencies for NEPA violations and a class action lawsuit regarding capital expenditures[160][161] - General economic conditions, commodity price volatility, supply chain disruptions, and changes in U.S. trade and tax policies (e.g., OBBBA phasing out Section 45X tax credits) could adversely affect the business[165][166][167][168][169] - The Company expects to lose its 'emerging growth company' and 'smaller reporting company' status by December 31, 2025, leading to increased regulatory compliance costs and demands on management starting in 2026[170][171] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or issuer's purchases of equity securities during the reported period - None[173] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reported period - None[174] Item 4. Mine Safety Disclosures The company and its subsidiaries were not subject to MSHA regulation during the six months ended June 30, 2025, therefore no mine safety disclosures are required - The Company and its subsidiaries were not subject to MSHA regulation during the six months ended June 30, 2025, thus no disclosure is required[175] Item 5. Other Information This section indicates that there is no other information to report for the period - None[176] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate organizational documents, descriptions of common shares, a subscription agreement, and certifications - Exhibits include Certificate of Incorporation, Notice of Articles, Certificate of Change of Name, Amendment to Articles, Description of Common Shares, Subscription Agreement, and CEO/CFO Certifications[178]