UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
December 31, 2021
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission file number 001-32978
SOLITARIO ZINC CORP.
(Exact name of registrant as specified in charter)
Colorado
(State or other jurisdiction of incorporation or organization)
4251 Kipling St. Suite 390, Wheat Ridge, CO
(Address of principal executive offices)
Registrant's telephone number, including area code
84-1285791
(I.R.S. Employer Identification No.)
80033
(Zip Code)
(303) 534-1030
Title of each class
Common Stock, $0.01 par value
Trading symbol
XPL
Name of exchange on which registered
NYSE American
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES [ ] NO [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES [X] NO [ ]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated
filer [ ]
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.[ ]
Accelerated filer [ ] Non-accelerated filer [X ]
Smaller reporting
company [X]
Emerging growth
company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
YES [ ] NO [X]
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report.
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the last
business day of the registrant's most recently completed second fiscal quarter, based upon the closing sale price of the
registrant's common stock on June 30, 2021 as reported on NYSE American, was approximately $35,379,000.
YES [ ] NO [X]
There were 64,760,123 shares of common stock, $0.01 par value, outstanding on March 30, 2021.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Registrant’s Annual Meeting of Shareholders, which is expected to be filed
by April 30, 2022, have been incorporated by reference into Part III of this Annual Report on Form 10-K.
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TABLE OF CONTENTS
PART 1
Item 1 Business
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2 Properties
Item 3 Legal Proceedings
Item 4 Mine Safety Disclosures
PART II
Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6 [Reserved]
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 7A Quantitative and Qualitative Disclosures about Market Risk
Item 8 Financial Statements and Supplementary Data
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 9A Controls and Procedures
Item 9B Other Information
PART III
Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence
Item 14 Principal Accounting Fees and Services
PART IV
Item 15 Exhibits, Financial Statement Schedules
Item 16 Form 10-K Summary
SIGNATURES
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PART I
This Annual Report on Form 10-K contains statements that constitute "forward-looking statements" within the
meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). These statements can be identified by the fact that they do not relate strictly to historical information and
include the words "expects", "believes", "anticipates", "plans", "may", "will", "intend", "estimate", "continue" or other similar
expressions. These forward-looking statements are subject to various risks and uncertainties that could cause actual results to
differ materially from those currently anticipated. These risks and uncertainties include, but are not limited to, items discussed
below in Item 1A "Risk Factors" in this Form 10-K. Forward-looking statements speak only as of the date made. We undertake
no obligation to publicly release or update forward-looking statements, whether as a result of new information, future events or
otherwise. You are, however, advised to consult any further disclosures we make on related subjects in our quarterly reports on
Form 10-Q and any current reports made on Form 8-K to the United States Securities and Exchange Commission (the "SEC").
Item 1. Business
Business and Company Formation
Solitario Zinc Corp. (“Solitario” or the “Company”) is an exploration stage company as defined by rules issued by the
SEC. Solitario was incorporated in the State of Colorado on November 15, 1984 as a wholly owned subsidiary of Crown
Resources Corporation ("Crown"). In July 1994, Solitario became a publicly traded company on the Toronto Stock Exchange
(the "TSX") through its initial public offering. Solitario has been actively involved in mineral exploration since 1993.
Solitario’s primary business is to acquire exploration mineral properties and/or discover economic deposits on its mineral
properties and advance these deposits, either on its own or through joint ventures, up to the development stage of the project.
At that point, or sometime prior to that point, Solitario would likely attempt to sell its mineral properties, pursue their
development either on its own or through a joint venture with a partner that has expertise in mining operations, or create a
royalty with a third party that continues to advance the property. Solitario has never developed a property. Solitario’s primary
focus is on the acquisition and exploration of precious metal, zinc and other base metal exploration mineral properties. In
addition to focusing on its mineral exploration properties and the evaluation of mineral properties for acquisition, Solitario also
evaluates potential strategic transactions as a means to acquire an interest in new precious and base metal properties and assets
with exploration potential or other potential corporate transactions that Solitario determines to be favorable to Solitario.
Solitario has recorded revenue in the past from the sale of mineral properties, including from (i) the sale of certain
mineral royalty properties to SilverStream SEZC, a private Cayman Island royalty and streaming company (“SilverStream”) for
Cdn$600,000 in January 2019 (the “Royalty Sale”), (ii) the sale of its interest in the royalty on its Yanacocha property in June
of 2018 and (iii) joint venture property payments. Revenues and / or proceeds from the sale or joint venture of properties or
assets, although often significant when they occur, have not been a consistent annual source of cash and would only occur in
the future, if at all, on an infrequent basis.
Solitario currently considers its carried interest in the Florida Canyon project in Peru, its interest in the Lik project in
Alaska and its Golden Crest project in South Dakota to be its core mineral property assets. Nexa Resources, Ltd. (“Nexa”),
Solitario’s joint venture partner at Florida Canyon is continuing the furtherance of the Florida Canyon project and Solitario is
monitoring the progress at Florida Canyon. Solitario is working with its 50% joint venture partner, Teck American Inc., a
wholly-owned subsidiary of Teck Resources Limited (both companies are referred to in this Annual Report as “Teck”) at its
Lik Project. Teck completed a limited exploration program at the Lik project during 2021 consisting of mapping, geophysical
work, relogging of prior drilling core and environmental evaluation. Solitario is conducting mineral exploration on its Golden
Crest project on its own.
As of December 31, 2021, Solitario anticipates using its cash and short-term investments, in part, to fund further the
development of the Florida Canyon, Lik and Golden Crest projects and to potentially acquire additional mineral property assets.
The fluctuations in precious metal and other commodity prices contribute to a challenging environment for mineral exploration
and development, which has created opportunities as well as challenges for the potential acquisition of early-stage and
advanced mineral exploration projects or other related assets on potentially attractive terms.
Human Capital Management
As of December 31, 2021 Solitario had five full-time employees and five part-time seasonal employees. In addition,
we use consultants and contractors with specific skills to assist with exploration activities, administration, due diligence,
environmental and regulatory compliance, corporate governance, and asset and operations management.
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Our compensation programs are designed to align compensation of our employees with Solitario’s corporate
objectives and performance and are designed to provide incentives to attract, retain and motivate our employees and contractors
to achieve their highest potential over both the short-term and long-term.
The health and safety of our employees and others is a priority in how we manage and operate our business. Overall
oversite of the operations is the responsibility of Solitario’s Chief Executive Officer and the Board of Directors. Officers and
employees are required to review Solitario’s Code of Business Conduct and Ethics and acknowledge their understanding of the
content and intent to comply on a periodic basis.
Solitario values the diversity and talents of its employees working together to achieve corporate goals and personal
and professional goals and objectives. We seek to cultivate a culture that is sensitive to the importance of diversity and
inclusion in the workplace and are committed to continuous improvement in these areas.
Environmental, Social and Governance
Solitario has a long history of committed Environmental, Social and Responsible Governance (“ESG”) of its business.
ESG issues are important to Solitario’s investors, employees, and all stakeholders, including communities in which we work.
Solitario is pledged to operate our business in a manner that supports environmental and social initiatives and responsible
corporate governance. We work closely with its employees, government agencies, local communities and other stakeholders in
the areas where we operate to include their interests and concerns to arrive at environmentally sound and socially responsible
outcomes related to all of our operations. We believe our joint venture partners not only value the importance of ESG issues in
the conduct of their activities on our projects but are also industry leaders on these important issues.
Risks and Uncertainties
Solitario faces risks related to health epidemics and other outbreaks of communicable diseases, which could
significantly disrupt its operations and may materially and adversely affect its business and financial conditions.
Solitario’s business could be adversely impacted by the on-going effects of the coronavirus (“COVID-19”) or other
epidemics or pandemics. Solitario has recommended all of its employees and contractors follow government guidelines for
health and safety policies for employees and contractors, including encouraging tele-commuting and working from home where
possible. Solitario has evaluated the effects of the COVID-19 pandemic on its operations and projects and since the outbreak of
the pandemic has taken pro-active steps to address the impact on its operations, including reducing certain activities, in
response to the economic uncertainty associated with potential risks from the COVID-19 pandemic. Solitario will continue to
monitor the effects of the COVID-19 pandemic on its operations, financial condition and liquidity. In the past, the COVID-19
pandemic has contributed to Solitario’s joint venture partners at its Lik and Florida Canyon projects altering exploration
activities. The extent to which the COVID-19 pandemic ultimately impacts Solitario’s business, including our exploration and
other activities and the market for our securities, will depend on future developments, which are highly uncertain and cannot be
predicted at this time, and include the duration, severity and scope of new outbreaks and governmental actions taken to contain
or treat the any such outbreak.
Corporate Structure
Solitario Zinc Corp. [Colorado]
- Zazu Metals Corporation. [Canada] (100%)
- Zazu Metals (AK) Corp. [Alaska] (100%)
- Lik Project (50%)
- Minera Chambara, S.A. [Peru] (85%)
- Chambara Project
- Minera Solitario Peru, S.A. [Peru] (100%)
- Minera Bongará, S.A. [Peru] (39%)
- Florida Canyon Project
- Minera Soloco, S.A. [Peru] (100%)
- Golden Crest Project [South Dakota] (100%)
Mineral Exploration Properties
We hold a 50% operating interest in the Lik zinc-lead-silver property in northwest Alaska, which is estimated to
contain a large tonnage, high-grade deposit potentially mineable by open-pit methods. Teck is a 50% partner with Solitario in
the Lik deposit, with Teck acting as the project manager from 2018 through 2022. In late 2021Solitario engaged Gustavson &
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Associates to complete a S-K 1300 Technical Report Summary on the Lik Project (the “S-K 1300 Lik TRS”). A Preliminary
Economic Assessment (“PEA”) was completed on the Lik deposit in 2014.
Solitario also has a 39% interest in the advanced, high-grade, Florida Canyon zinc project located in northern Peru.
The project has a significant mineral resource and Solitario is fully carried to production by its joint venture partner Nexa,
formerly Votorantim Metais Holdings, SA (“Votorantim”) and Compañía Minera Milpo S.A.A. (“Milpo”). Nexa is one of the
largest zinc producers in Peru. In late 2021Solitario engaged Gustavson & Associates to complete a S-K 1300 Technical
Report Summary on the Florida Canyon Project (the “S-K 1300 Florida Canyon TRS”).Solitario and Nexa completed a PEA
on the Florida Canyon deposit in August 2017. Except for the 2018-2019 drilling program for which Solitario voluntarily
funded $1,580,000 of the 39-hole 17,033-meter drilling program, Nexa has funded 100% of project expenditures since the
inception of the Florida Canyon joint venture in 2006. Nexa will increase its ownership to a 70% interest in the project from its
current ownership of 61%, by continuing to solely fund all project expenditures and committing to place the project into
production based upon a positive feasibility study. After earning 70%, and at the request of Solitario, in the event Nexa makes
the decision to develop the Florida Canyon project, Nexa has agreed to finance Solitario's 30% participating interest for any
development costs through a loan facility to Solitario. Solitario would then repay the loan facility through 50% of its net cash
flow distributions from the project.
During 2021 Solitario entered into a lease agreement (the “Golden Crest Agreement”) whereby Solitario acquired
exclusive exploration rights in certain claims (the “GC Claims”) in the Black Hills region of South Dakota. The GC Claims are
part of Solitario’s Golden Crest project. Terms of the Golden Crest Agreement include scheduled payments by Solitario to the
underlying owner of $65,000 (paid upon signing) and an obligation to pay the underlying owner $60,000 at the first anniversary
date. Solitario recorded an initial acquisition cost of $125,000 during 2021 related to these required payments. In addition, to
continue the lease, Solitario has agreed to pay, at its option, the underlying owner escalating annual payments that over five
years total $340,000 and annual payments of $150,000 thereafter, which will be expensed as paid. Solitario has agreed to pay
the underlying owner an additional success fee of $1.00 per ounce of gold in the event Solitario files a 43-101 qualified
resource of up to 1.5 million ounces of gold or a maximum of $1,500,000. Solitario has agreed to escalating work
commitments, at Solitario’s option, on the GC Claims totaling $3,000,000 during the first five years of the lease, with the first
year totaling $200,000. The term of the Golden Crest Agreement is for twenty years and is automatically extended as long as
Solitario is performing any exploration, development or mining activities on the GC Claims. The underlying owner retained a
2.0% Net Smelter Return royalty. Solitario will have the option, but not the obligation, to reduce the Net Smelter Return
royalty to 1.0% by paying the owner $1,000,000.
In addition, during 2021, Solitario staked additional mineral claims, including some claims included in the area of
interest of the GC Claims and claims not related to the GC Claims (the “SRC Claims”), as part of the Golden Crest project.
Solitario incurred costs for staking, filing fees, legal and other costs totaling $570,000 capitalized as initial acquisition costs
related to the SRC Claims and the GC Claims.
At December 31, 2021, Solitario also holds an 85% interest in the Chambara exploration project in Peru. Nexa holds
the remaining 15%.
We conduct exploration and property evaluation activities in Peru and the United States in Alaska and South Dakota
either on our own using contract geologists, or through joint ventures operated by our partners.
Our exploration activities and those of our joint venture partners are carried out on a property-by-property basis.
These activities may include prospecting, geologic mapping, sampling, geophysics and drilling. When we determine that this
work indicates a project may not be economically feasible or contain sufficient geologic or economic potential, we may impair
or completely write-off the property. A significant factor in the success or failure of our activities is the price of commodities.
For example, when the price of zinc or other commodities is down, we may determine that the value of our mineral exploration
properties decreases; however, during such down markets it may also become easier and less expensive to locate and acquire
new mineral exploration properties.
We have recorded revenue in the past from the sale of mineral properties and assets, joint venture property payments
and the sale of a royalties. Proceeds from the sale or joint venture of properties and royalty sales, although potentially
significant when they occur, have not been a consistent source of cash and may only occur in the future, if at all, on an
infrequent basis. Accordingly, while we conduct exploration activities on our projects, we need to maintain and replenish our
capital resources. Historically, we have met our need for capital through (i) the sale of our investments in, and interest on, our
short-term Treasury Notes and Bank CDs; (ii) issuances of common stock; (iii) sales of our shares of common stock of
Vendetta Mining Corp. (“Vendetta”), Vox Royalty Corp. (“Vox”) and Kinross Gold Corporation (“Kinross”); (iv) sales of
covered call options on our common stock of Kinross we hold; (v) the sale of mineral property royalties to SilverStream for
$408,000 during 2019, (vi) the sale of our Yanacocha royalty to Newmont Mining Corporation for $502,000 during 2018; (vii)
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proceeds received from the sale of our interest in our former Mt. Hamilton project in 2015; and (vii) joint venture delay rental
payments. We have reduced our exposure to the costs of our exploration activities through the use of joint ventures.
We operate in one segment: mineral exploration. We currently conduct exploration activities in Peru, Alaska and
South Dakota and evaluate properties for potential acquisition and evaluation of strategic corporate opportunities throughout
North and South America. As of March 28, 2022, we had five full-time employees located in the United States and no full-
time employees outside of the United States. We utilize contract managers, geologists, administrators and part-time laborers to
execute our Latin American and North American project work and acquisition evaluations.
A large number of companies are engaged in the acquisition, exploration and development of mineral properties, many
of which have substantially greater technical and financial resources than we have and, accordingly, we may be at a
disadvantage in being able to compete effectively for the acquisition, exploration and development of mineral properties. We
are not aware of any single competitor or group of competitors that dominate the exploration and development of mineral
properties. In acquiring mineral properties for exploration and development, we rely on the experience, technical expertise and
knowledge of our employees, contractors and advisors, which is limited by the size of our company compared to many of our
competitors who may have greater resources, including more employees or employees with more specialized knowledge and
experience.
Governmental Regulations
Mineral development and exploration activities are subject to various national, state/provincial, and local laws and
regulations, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health,
waste disposal, protection of the environment, mine safety, hazardous substances and other matters. Similarly, if any of our
properties are developed and/or mined those activities are also subject to significant governmental regulation and oversight. We
are required to obtain licenses, permits and other authorizations in order to conduct our exploration programs.
Environmental Regulations
Our current and planned activities are subject to various national and local laws and regulations governing protection
of the environment. These laws are continually changing and, in general, are becoming more restrictive. We are required to
conduct our operations in compliance with applicable laws and regulations. Changes to current local, state or federal laws and
regulations in each jurisdiction in which we conduct our exploration activities could, in the future, require additional capital
expenditures and increased operating and/or reclamation costs. We have reviewed and considered current federal legislation
relating to climate change and do not believe it to currently have a material effect on our operations. Future changes in U.S.
federal or state laws or regulations could have a material adverse effect upon us and our results of operations. Although we are
unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could
impact the economics of our projects. During 2021, we had no material environmental incidents or non-compliance with any
applicable environmental regulations.
Financial Information about Geographic Areas
Included in the consolidated balance sheets at December 31, 2021 and 2020, are total assets of $19,000 and $20,000,
respectively, related to Solitario's operations located outside of the United States.
Available Information
We file our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, current reports on Form 8-K, and any
amendments to those reports electronically with the SEC. The SEC maintains a website (http://www.sec.gov) that contains
periodic reports, proxy and information statements and other information regarding registrants, including the Company, that file
electronically with the SEC.
Paper copies of our Annual Report to Shareholders, our Annual Report on Form 10-K, our quarterly reports on Form
10-Q, current reports on Form 8-K, and any amendments to those reports are available free of charge by writing to Solitario at
its address on the front of this Form 10-K. In addition, electronic versions of the reports we file with the SEC are available on
our website, www.solitarioxr.com, as soon as practicable, after filing with the SEC.
Item 1A. Risk Factors
In addition to considering the other information in this Form 10-K, you should consider carefully the following
factors. The risks described below are the significant risks we face and include all material risks of which we are aware.
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Additional risks not presently known to us or risks that we currently consider immaterial may also adversely affect our
business.
Risks Related to Our Business and Industry
Our mineral exploration activities involve a high degree of risk, and a significant portion of our business model envisions
the sale or joint venture of mineral properties. If we are unable to sell or joint venture these properties, the money spent on
acquisition and exploration of our mineral properties may never be recovered and we could incur an impairment of our
investments in our projects.
The exploration for mineral deposits involves significant financial and other risks over an extended period of time.
Few properties that are explored are ultimately developed into producing mines. Major expenditures are required to determine
if any of our mineral properties may have the potential to be commercially viable, be salable or joint ventured. From time to
time, we may acquire a mineral property asset and later determine to abandon that project for various reasons (as occurred with
our Gold Coin project), and as a result costs incurred to acquire the asset, and any costs incurred for initial exploration efforts
will be lost. Moreover, significant expense and risks, including drilling and determining the feasibility of a project, are required
prior to the establishment of reserves. It is impossible to ensure that the current or proposed exploration programs on properties
in which we have an interest will be commercially viable or that we will be able to sell, joint venture or develop our properties.
Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are the particular
attributes of the deposit, such as its size and grade, costs and efficiency of the recovery methods that can be employed,
proximity to infrastructure, commodity prices, financing costs and governmental regulations, including regulations relating to
prices, taxes, royalties, infrastructure, land use, importing and exporting of mineral products and environmental protection.
We believe the data obtained from our own exploration activities or our partners' activities to be reliable; however, the
nature of exploration of mineral properties and analysis of geological information is often subjective, and data and conclusions
are subject to uncertainty. Even if exploration activities determine that a project is commercially viable, it is impossible to
ensure that such determination will result in a profitable sale of the project or development either on our own or by a joint
venture in the future and that such project will result in profitable commercial mining operations. If we determine that
capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur an impairment of
our investment in such property interest. All of these factors may result in losses in relation to amounts spent, which are not
recoverable. We have experienced losses of this type from time to time in the past and may record mineral property
impairments in the future.
We have no reported mineral reserves as defined by SEC rules, and our current projects and assets or any projects we may
acquire are not likely to offer the opportunity for near term revenues or sale proceeds. If we are unsuccessful in identifying
mineral reserves in the future, we may not be able to realize any profit from our property interests.
None of our current projects have reported mineral reserves as those terms are used in SEC rules. Any mineral
reserves on these projects will only come from extensive additional exploration, engineering and evaluation of existing or
future mineral properties. The lack of reserves on these mineral properties could prohibit us from any near-term sale or joint
venture of our mineral properties and we would not be able to realize any proceeds and or profit from our interests in such
mineral properties, which could materially adversely affect our financial position or results of operations.
We have mineral resources reported on our Florida Canyon and Lik projects upon which we do not exercise 100% control.
The potential for reported mineral reserves on these projects is dependent on additional geologic work and economic
evaluation which our joint venture partners may or may not conduct, and there can be no assurance that if such activities
are performed that these will result in a positive feasibility or other study to allow the mineral resources to be upgraded to
mineral reserves as defined by SEC rules, and as a result we may not be able to sell or otherwise realize any profit from our
property interests in the Florida Canyon or Lik projects.
Our Florida Canyon and Lik projects have reported mineral resources in accordance with SEC rules. However, these
resources may never be upgraded to mineral reserves without significant additional geologic work, including additional drilling,
economic and environmental analysis, and the completion of a feasibility or other study to demonstrate the mineral potential
and economic viability of these projects. To a significant degree, the completion of this work and a feasibility or other
appropriate study is dependent on our joint venture partners desire to do so, over which we have limited influence. In addition,
there is no assurance that if such work and studies are undertaken and completed, that either or both of these projects will be
determined to be economically viable. The lack of reserves on these mineral properties could prohibit us from any near-term
sale or joint venture of our mineral properties and we would not be able to realize any proceeds and or profit from our interests
in such mineral properties, which could materially adversely affect our financial position or results of operations.
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Our Golden Crest project is an early-stage exploration project with no mineral resources or mineral reserves as defined by
SEC rules. There can be no assurance that additional geologic work will result in reported mineral resources or mineral
reserves in the future. If we are unsuccessful in identifying mineral reserves in the future, we may not be able to sell or
otherwise realize any profit from our property interests.
Our Golden Crest project, which was acquired during 2021, has no reported mineral resources or mineral reserves as
defined by SEC rules. We have conducted limited geologic activities at the Golden Crest project consisting primarily of soil
and rock sampling. Additional geologic, environmental, and economic work would be required to allow us to report mineral
resources at the Golden Crest project, including drilling and completion of a preliminary economic study. Furthermore,
significant additional work would be required to prepare a feasibility or other study to allow us to report mineral reserves at the
Golden Crest project. There can be no assurance that if such work is completed that the results would allow us to report either
mineral resources or mineral reserves in the future. The lack of mineral resources or mineral reserves at the Golden Crest
project could prohibit us from any near-term sale or joint venture of our interest in the Golden Crest project and we may not be
able to realize any proceeds and or profit from our interests in the Golden Crest project, which could materially adversely affect
our financial position or results of operations.
Mineral exploration activities are inherently dangerous and could cause us to incur significant unexpected costs, including
legal liability for loss of life, damage to property and environmental damage, any of which could materially adversely affect
our financial position or results of operations.
Mining exploration operations are subject to the hazards and risks normally related to exploration of a mineral deposit,
including, but not limited to mapping and sampling, drilling, road building, trenching, assaying and analyzing rock samples,
transportation over primitive roads or via small contract aircraft or helicopters and severe weather conditions. Any of the
hazards of mining exploration could result in damage to life or property, and environmental damage, and possible legal liability
for such damage. Any of these risks could cause us to incur significant unexpected costs that could have a material adverse effect
on our financial condition and ability to finance our exploration and development activities.
Our operations outside of the United States of America may be adversely affected by factors outside of our control, such as
changing political, local and economic conditions, any of which could materially adversely affect our financial position or
results of operations.
Our mineral properties located in Latin America consist primarily of mineral concessions granted by national
governmental agencies and are held 100% by us or in conjunction with our joint venture partners, or under lease, option or
purchase agreements. Certain of our mineral properties are located in Peru and we have previously held mineral properties and
royalties on non-producing exploration properties in Peru, Mexico and Brazil. Our current exploration activities and mineral
properties located outside of the United States are subject to the laws of Peru and any other countries in which we may conduct
business. Exploration and potential development activities in other countries we may conduct exploration are potentially subject
to political and economic risks, including:
• cancellation or renegotiation of contracts;
• disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations,
including the U.S. Foreign Corrupt Practices Act (“FCPA”);
• changes in foreign laws or regulations;
• changes in tax laws;
• royalty and tax increases or claims by governmental entities, including retroactive claims;
• expropriation or nationalization of property;
• currency fluctuations (particularly related to a change in the U.S. dollar compared to local currencies);
• foreign exchange controls;
• restrictions on the ability for us to hold U.S. dollars or other foreign currencies in offshore bank accounts;
• import and export regulations;
• environmental controls;
• risks of loss due to community opposition to our activities, civil strife, acts of war, guerrilla activities,
insurrection and terrorism; and
• other risks arising out of foreign sovereignty over the areas in which our exploration activities
are conducted.
Accordingly, our current exploration activities outside of the United States may be substantially affected by factors
beyond our control, any of which could materially adversely affect the value of certain of our assets or results of operations.
Furthermore, in the event of a dispute arising from such activities, we would likely be subject to the exclusive jurisdiction of
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courts outside of the United States or may not be successful in subjecting persons to the jurisdictions of the courts in the United
States, which could adversely affect the outcome of a dispute.
We may not have sufficient funding for exploration and development, which may impair our results of operations and
growth potential.
The capital required for exploration and development of mineral properties is substantial. In the past we have financed
operations through the sale of interests in mineral properties, including the sales of our common stock, and the sale of our
interest in the former Mt. Hamilton project in 2015, the utilization of joint venture arrangements with third parties (generally
providing that the third party will obtain a specified percentage of our interest in a certain property or a subsidiary owning a
property in exchange for the expenditure of a specified amount), the sale of other assets including short-term investments, the
sale of marketable equity securities we hold, and funds from the issuance of long-term debt. We likely will need to raise
additional capital, or enter into new joint venture arrangements, in order to fund our obligations with respect to our properties
and our exploration activities required to determine whether mineral deposits on our projects are commercially viable. New
financing or acceptable joint venture partners may or may not be available on a basis that is acceptable to us. The inability to
obtain new financing or joint venture partners on acceptable terms may prohibit us from continued exploration or development
of our existing mineral properties or any new mineral property assets we may acquire. Without the successful sale or future
development of our mineral properties through joint ventures, or on our own, we will not be able to realize any profit from our
interests in such properties, which could have a material adverse effect on our financial position or results of operations.
A large number of companies are engaged in the exploration and development or sale of mineral properties, many of which
have substantially greater technical and financial resources than us and, accordingly, we may be unable to compete
effectively which could have a material adverse effect on our financial position, prospects, or results of operations.
We are at a disadvantage with respect to many of our competitors in the acquisition, exploration and development or
sale of mineral property assets and mining projects. Our competitors with greater financial resources than us are better able to
withstand the uncertainties and fluctuations associated with sustained downturns in the market and to acquire high quality
exploration and mining properties when market conditions are favorable. In addition, we compete with other companies in the
mineral properties sector to attract and retain key executives and other personnel with technical skills and experience in the
mineral exploration business. There can be no assurance that we will continue to retain skilled and experienced employees or
to acquire additional exploration projects. The realization of any of these risks from competitors could have a material adverse
effect on our financial position or results of operations.
The title to our mineral properties may be defective or challenged which could have a material adverse effect on our
financial position or results of operations.
In connection with the acquisition of our mineral properties, we conduct limited reviews of title and related matters,
and obtain certain representations regarding ownership. These limited reviews and representations do not necessarily preclude
third parties from challenging our title and, furthermore, our title may be defective. Consequently, there can be no assurance
that we hold good and marketable title to all of our mineral interests. Additionally, we have to make annual filings with various
government agencies on all of our mineral properties. If we, or our joint venture partners, fail to make such filings, or
improperly document such filings, the validity of our title to a mineral property could be lost or challenged. If any of our
mineral interests were challenged, we could incur significant costs in defending such a challenge. These costs or an adverse
ruling with regards to any challenge of our titles could have a material adverse effect on our financial position or results of
operations.
Occurrence of events for which we are not insured may materially adversely affect our business.
Mineral exploration is subject to risks of human injury, environmental liability and loss of assets. We maintain limited
insurance coverage to protect ourselves against certain risks related to loss of assets for equipment in our operations and limited
corporate liability coverage; however, we have elected not to have insurance for other risks because of the high premiums
associated with insuring those risks or for various other reasons including those risks where insurance may not be available.
There are additional risks in connection with investments in parts of the world where civil unrest, war, nationalist movements,
political violence or economic crisis are possible. These countries may also pose heightened risks of expropriation of assets,
business interruption, increased taxation and a unilateral modification of concessions and contracts. We do not maintain
insurance against political risk. Occurrence of events for which we are not insured could have a material adverse effect on our
financial position or results of operations.
Severe weather or violent storms could materially affect our operations due to damage or delays caused by such weather.
9
Our exploration activities are subject to normal seasonal weather conditions that often hamper and may temporarily
prevent exploration or development activities. There is a risk that unexpectedly harsh weather or violent storms could affect
areas where we conduct these activities. Delays or damage caused by severe weather could materially affect our operations or
our financial position.
Our operations could be negatively affected by existing laws as well as potential changes in laws and regulatory
requirements to which we are subject, including regulation of mineral exploration and ownership, environmental
regulations and taxation.
The exploration and development of mineral properties is subject to federal, state, provincial and local laws and
regulations in the countries in which they are located in a variety of ways, including regulation of mineral exploration and land
ownership, environmental regulation and taxation. These laws and regulations, as well as future interpretation of or changes to
existing laws and regulations, may require substantial increases in capital and operating costs to us and delays, interruptions, or
a termination of operations.
In the United States and the other countries in which we operate or own assets, in order to obtain permits for
exploration or potential future development of mineral properties, environmental regulations generally require a description of
the existing environment, including but not limited to natural, archeological and socio-economic environments, at the project
site and in the region; an interpretation of the nature and magnitude of potential environmental impacts that might result from
such activities; and a description and evaluation of the effectiveness of the operational measures planned to mitigate the
environmental impacts. Currently, the expenditures to obtain exploration permits to conduct our exploration activities are not
material to our total exploration cost.
The laws and regulations in all the countries in which we operate or own assets are continually changing and are
generally becoming more restrictive, especially environmental laws and regulations. As part of our ongoing exploration
activities, we have made expenditures to comply with such laws and regulations, but such expenditures could substantially
increase our costs to achieve compliance in the future. Delays in obtaining or failure to obtain government permits and
approvals or significant changes in regulation could have a material adverse effect on our exploration activities, our ability to
locate economic mineral deposits, and our potential to sell, joint venture or eventually develop our properties, which could have
a material adverse effect on our financial position or results of operations.
Our operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations
on our mining properties.
Our exploration operations, including any exploration drilling programs and other exploration activities, require
permits from various state and federal governments, including permits for the use of water and for drilling water wells. We may
be unable to obtain these permits in a timely manner, on reasonable terms or on terms that provide us sufficient resources to
develop our properties in any way. Even if we are able to obtain such permits, the time required by the permitting process can
be significant. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our
timetable and business plan for exploration of our properties will be adversely affected, which may in turn adversely affect our
results of operations, financial condition, cash flows and market price of our securities.
Due to increased activity levels of non-governmental, native American, aboriginal, and local groups targeting the
mining industry, the potential for the government or process instituted by these local groups, to delay the issuance of permits or
impose new requirements or conditions upon mining operations may be increased. Any changes in government policies may be
costly to comply with and may delay mining operations. Future changes in such laws and regulations, if any, may adversely
affect our operations, make them prohibitively expensive, or prohibit them altogether. If our interests are materially adversely
affected as a result of a violation of applicable laws, regulations, permitting requirements or a change in applicable law or
regulations, it would have a significant negative impact on the value of our company and could have a significant impact on our
stock price.
Our business is sensitive to nature and climate conditions.
A number of governments have introduced or are moving to introduce climate change legislation and treaties at
the international, national, state/provincial and local levels. Regulations relating to emission levels (such as carbon taxes )
and energy efficiency are becoming more stringent. If the current regulatory trend continues, this may result in increased
costs at some or all of our project locations. In addition, the physical risks of climate change may also have an adverse
effect on our operations and properties. Some of the countries in which we own mineral property assets have implemented,
and are developing, laws and regulations related to climate change and greenhouse gas emissions.
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Legislation and increased regulation and requirements regarding climate change could impose increased costs on us,
our joint venture partners and our suppliers, including increased energy, capital equipment, environmental monitoring and
reporting and other costs to comply with such regulations.
Our business is dependent on the market price of certain commodities, particularly gold and zinc, and currency exchange
rates over which we have no control.
Our operations are significantly affected by changes in the market price of commodities since the evaluation of
whether a mineral deposit is commercially viable is heavily dependent upon the market price of the commodities related to any
specific project. Because our core assets are currently in zinc and gold related projects, the spot price of zinc and gold is
particularly important to the value of our assets and future prospects. The price of commodities also affects the value of
exploration projects we own or may wish to acquire or joint venture. These commodity prices fluctuate on a daily basis and are
affected by numerous factors beyond our control. The supply and demand for commodities, the level of interest rates, the rate
of inflation, investment decisions by large holders of these commodities, including governmental reserves, and stability of
exchange rates can all cause significant fluctuations in prices. Currency exchange rates relative to the United States dollar can
affect the cost of doing business in a foreign country in United States dollar terms, which is our functional currency.
Consequently, the cost of conducting exploration in the countries where we operate, accounted for in United States dollars, can
fluctuate based upon changes in currency exchange rates and may be higher than we anticipate in terms of United States dollars
because of a decrease in the relative strength of the United States dollar to currencies of the countries where we operate. We
currently do not hedge against currency or commodity fluctuations. The prices of commodities as well as currency exchange
rates have fluctuated widely and future significant price declines in commodities or changes in currency exchange rates could
have a material adverse effect on our financial position or results of operations.
Our business is dependent on key executives and the loss of any of our key executives could adversely affect our business,
future operations and financial condition.
We are dependent on the services of key executives, including our Chief Executive Officer, Christopher E. Herald, our
Chief Operating Officer, Walter H. Hunt, and our Chief Financial Officer, James R. Maronick. All of those officers have many
years of experience and an extensive background with Solitario and in the mining industry in general. We may not be able to
replace that experience and knowledge with other individuals. We do not have "Key-Man" life insurance policies on any of our
key executives. The loss of these persons or our inability to attract and retain additional highly skilled employees may adversely
affect our business, future operations and financial condition.
Our business model relies significantly on other companies to joint venture our projects and we anticipate continuing this
practice in the future. Therefore, our results are subject to the additional risks associated with the financial condition,
operational expertise and corporate priorities of our joint venture partners.
The success of projects held under joint ventures or royalty interests that are not operated by us are substantially
dependent on the joint venture partner, over which we have limited or no control. Our Florida Canyon project and our Lik
project are joint ventured with other mining companies that manage the exploration activities on the projects. We are the
minority-interest party at Florida Canyon and a 50% partner at the Lik project. Although our joint venture agreements provide
certain voting rights and other minority-interest safeguards, the majority partner and/or operator not only manages operations,
but controls most decisions, including budgets and scope and pace of exploration and other activities. Consequently, we are
highly dependent on the operational expertise and financial condition of our joint venture partners, as well as their corporate
priorities. For instance, even though our joint venture property may be highly prospective for exploration success, or
economically viable based on feasibility studies, our partner may decide to not fund the further exploration or development of
our project based on their respective financial condition or other corporate priorities. Therefore, our results are subject to the
additional risks associated with the financial condition, operational expertise and corporate priorities of our joint venture
partners, which could have a material adverse effect on our financial position or results of operations. Our Lik project requires
unanimous consent by the joint venture partners for annual budgets in excess of $1.0 million. Consequently, exploration of the
Lik project could be delayed without the unanimous consent of both parties to certain proposed actions or transactions.
We may look to joint venture with another mining company in the future to explore, develop and/or operate our current or
future projects; therefore, in the future, our results may become subject to additional risks associated with development and
production of our foreign mining projects.
We are not currently involved in mining development or operation at any of our properties. In order to realize a profit
from our mineral interests we have to: (1) sell our properties or interests outright at a profit; (2) form a joint venture for the
project with a larger mining company with greater resources, both technical and financial, to further develop and/or operate a
project; (3) develop and operate such projects at a profit on our own; or (4) create and retain a royalty interest in a property with
a third party that agrees to advance the property toward development and mining. In the future, if our exploration results show
11
sufficient promise in a future domestic or foreign project, not currently under joint venture, we may either look to form a joint
venture with another mining company to develop and/or operate the project or sell the property outright and retain partial
ownership or a retained royalty based on the success of such project. Therefore, in the future, our results may become subject to
the additional risks associated with development and production of mining projects in general.
In the future, we may attempt to acquire a new property, or another company and the acquisition may require a substantial
amount of capital or the issuance of our capital stock to complete. Acquisition costs may never be recovered due to changing
market conditions, or our own miscalculation concerning the recoverability of our acquisition investment. Such an
occurrence could adversely affect our business, future operations and financial condition.
We have evaluated a wide variety of acquisition opportunities involving mineral properties and companies for
acquisition and we anticipate evaluating potential acquisition opportunities in the future. Some of these opportunities may
involve a substantial amount of capital or the issuance of our capital stock to successfully acquire. As many of these
opportunities do not have reliable feasibility-level studies, we may have to rely on our own estimates for investment analysis.
Such estimates, by their very nature, contain substantial uncertainty. In addition, economic assumptions, such as future costs
and commodity prices, also contain significant uncertainty. Consequently, if we are successful in acquiring any new
opportunities and our estimates prove to be in error, either through miscalculations or changing market conditions, this could
have a material adverse effect on our financial position or results of operations.
Failure to comply with the FCPA could subject us to penalties and other adverse consequences.
As a Colorado corporation, we are subject to the FCPA and similar worldwide anti-bribery laws, which generally
prohibit United States companies and their intermediaries from engaging in bribery or other improper payments to foreign
officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with our
company, are not subject to U.S. laws and regulations, including the FCPA, and therefore our exploration, and potential future
development, production and mine closure activities are subject to the disadvantage of competing against companies from
countries that are not subject to these prohibitions.
In addition, we could be adversely affected by violations of the FCPA and similar anti-bribery laws in other
jurisdictions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in the
countries outside of the United States in which we operate. Certain of our mineral properties are located in countries that may
have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery
laws may conflict with local customs and practices. Our policies mandate compliance with the FCPA and other anti-bribery
laws; however, we cannot assure you that our internal controls and procedures always will protect us from the reckless or
criminal acts committed by our employees or agents. We can make no assurance that our employees or other agents will not
engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in
such practices or we are found to be liable for FCPA violations, we could suffer severe criminal or civil penalties or other
sanctions and other consequences that may have a material adverse effect on our business, financial condition and results of
operations.
Risks Related to Our Common Stock
The market for shares of our common stock has limited liquidity and the market price of our common stock has fluctuated
and may decline.
An investment in our common stock involves a high degree of risk. The liquidity of our shares, or the ability of a
shareholder to buy or sell our common stock, may be significantly limited for various unforeseeable periods. The average
combined daily volume of our shares traded on the NYSE American and the TSX during 2021 was approximately 1,413,000
shares. The market price of our shares of common stock has historically fluctuated within a wide range. The price of our
common stock may be affected by many factors, including an adverse change in our business, a decline in the price of zinc or
other commodity prices, negative news on our projects, negative investment sentiment for mining and commodity equities and
general economic trends.
We have a history of losses and if we do not operate profitably in the future it could have a material adverse effect on our
financial position or results of operations and the trading price of our common stock would likely decline.
We have reported losses in 25 of our 28 years of operations. We can provide no assurance that we will be able to
operate profitably in the future or begin to generate significant and consistent sources of revenues or cash flows from
operations. We have had net income in only three years in our history; (i) during 2015, as a result of the sale of our former Mt.
Hamilton project; (ii) during 2003, as a result of a $5,438,000 gain on a derivative instrument related to our investment in
certain Crown warrants and (iii) during 2000, when we sold our former Yanacocha property. We cannot predict when, if ever,
12
we will be profitable again or able to begin generating consistent revenues or cash flows from our operations or assets. If we do
not operate profitably or identify and execute on outside sources of funding, we may be unable to fund our current or
contemplated exploration activities, acquire new assets, or otherwise further our business plan.
We have never paid and do not intend to pay cash dividends and, consequently, the ability to achieve a return on any
investment in our common stock will depend on appreciation in the price of our common stock.
We have never paid cash dividends on any of our capital stock, and we currently intend to retain future earnings, if
any, to fund the development and growth of our business. Therefore, a holder of our stock is not likely to receive any dividends
on our common stock for the foreseeable future. Since we do not intend to pay dividends, the ability to receive a return on an
investment in our common stock will depend on any future appreciation in the market value of our common stock. There is no
guarantee that our common stock will appreciate or even maintain the price at which it was purchased.
Issuances of our stock in the future could dilute existing shareholders and adversely affect the market price of our common
stock.
We have the authority to issue up to 100,000,000 shares of common stock, 10,000,000 shares of preferred stock, and
to issue options and warrants to purchase shares of our common stock without shareholder approval. In addition, during 2021
we put an ATM program in place and expect to sell shares of our common stock under that program from time to time. Future
issuances of our securities could be at prices substantially below the price paid for our common stock by our current
shareholders. In addition, we can issue blocks of our common stock in amounts up to 20% of the then-outstanding shares
without further shareholder approval. Sales of a substantial number of shares by the Company in the public market (or
otherwise), or the perception that those sales may occur, could cause the market price of our common stock to decline.
General Risk Factors
The outbreak of pandemics, including the coronavirus (COVID-19) may affect our assets and development plans.
We face risks related to health epidemics and other outbreaks of communicable diseases, which could significantly
disrupt our operations and may materially and adversely affect our business and financial conditions.
Our business still could be adversely impacted by the effects of the COVID-19 or other epidemics or pandemics. In
December 2019, a novel strain of COVID-19 emerged in China and has spread globally, including the areas we operate in
- the western U.S., Alaska, and Peru. How COVID-19 may ultimately impact our business, including our future exploration
and other activities and the market for our securities, will depend on future developments, which are highly uncertain and
cannot be predicted at this time, and include the duration, severity, and any recurrence of various strains of the outbreak and the
actions taken to contain or treat the coronavirus outbreak. In particular, the continuing spread of COVID-19 and travel and
other restrictions established to curb the spread of COVID-19, could materially and adversely impact our business including
without limitation, planned exploration programs at our Florida Canyon, Lik and Golden Crest projects during 2022 and
beyond, employee health, workforce productivity, increased insurance premiums, limitations on travel, labor shortages and the
availability of industry experts and personnel, the timing to process drill, other metallurgical testing, supply chain constraints
that impede exploration operations, and other factors that will depend on future developments beyond our control, which may
have a material and adverse effect on our business, financial condition and results of operations. There can be no assurance
that we will not be impacted by COVID-19 or other pandemic diseases and that we could ultimately see our workforce
productivity reduced or incur increased medical costs or insurance premiums as a result of these health risks. In addition, the
outbreak of COVID-19 has resulted in a widespread global health crisis that contributed to volatility in the economy and
financial markets that could have an adverse effect on the future demand for precious and base metals and, in turn, our
prospects.
A significant portion of our liquid assets consist of U.S. Treasuries and cash held in brokerage accounts. The failure of the
financial institutions that issued or hold these financial instruments or our cash could have a material adverse impact on
the market price of our common stock and our liquidity and capital resources.
At December 31, 2021, we have invested $4,236,000 in United States Treasury securities (“USTS”) held in a
brokerage account, with maturities of between 30 days and 12 months and we have approximately $451,000 of our cash in
uninsured deposit accounts and brokerage accounts which are not covered by FDIC insurance. The failure of a financial
institution holding these funds and assets could have a material impact on the market price of our common stock and our
liquidity and capital resources.
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We are dependent upon information technology systems, which are subject to disruption, damage, failure and risks
associated with implementation and integration.
We are dependent upon information technology systems in the conduct of our operations. Our information technology
systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses,
security breaches, cyber-attacks, natural disasters and defects in design. Cybersecurity incidents, in particular, are evolving and
include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security
breaches that could lead to disruptions in systems, theft of assets, unauthorized release of confidential or otherwise protected
information and the corruption of data. Various measures have been implemented to manage our risks related to information
technology systems and network disruptions. However, given the unpredictability of the timing, nature and scope of
information technology disruptions, we could potentially be subject to operational delays, the compromising of confidential or
otherwise protected information, loss of assets, including our cash, short-term investments, or marketable equity securities,
destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks or
financial losses from remedial actions, any of which could have a material adverse effect on our cash flows, competitive
position, financial condition or results of operations.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
CAUTIONARY NOTE REGARDING DISCLOSURE OF MINERAL PROPERTIES
Mineral Reserves and Resources
We are subject to the reporting requirements of the Exchange Act and applicable Canadian securities laws, and as a
result we report our mineral resources according to two different standards. U.S. reporting requirements, are governed by Item
1300 of Regulation S-K (“S-K 1300”), as issued by the U.S. Securities and Exchange Commission (“SEC”). Canadian reporting
requirements for disclosure of mineral properties are governed by National Instrument 43-101 Standards of Disclosure for
Mineral Projects (“NI 43-101”), as adopted from the definitions provided by the Canadian Institute of Mining, Metallurgy and
Petroleum. Both sets of reporting standards have similar goals in terms of conveying an appropriate level of confidence in the
disclosures being reported, but the standards generally embody slightly different approaches and definitions.
In our public filings in the U.S. and Canada and in certain other announcements not filed with the SEC, we disclose
measured, indicated and inferred resources, each as defined in S-K 1300. The estimation of measured resources and indicated
resources involve greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable
reserves, and therefore investors are cautioned not to assume that all or any part of measured or indicated resources will ever be
converted into S-K 1300-compliant reserves. The estimation of inferred resources involves far greater uncertainty as to their
existence and economic viability than the estimation of other categories of resources, and therefore it cannot be assumed that
all or any part of inferred resources will ever be upgraded to a higher category. Therefore, investors are cautioned not to assume
that all or any part of inferred resources exist, or that they can be mined legally or economically.
Technical Report Summaries and Qualified Persons
The scientific and technical information concerning our mineral projects in this Form 10-K have been reviewed and
approved by “qualified persons” under S-K 1300, including our Chief Operating Officer, Walter Hunt. For a description of the
key assumptions, parameters and methods used to estimate mineral reserves and mineral resources included in this Form 10-K,
as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any
known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the
Technical Report Summaries for each of the Company’s material properties which are included as exhibits to, and incorporated
by reference into, this Annual Report on Form 10-K.
Golden Crest Project (United States)
1. Property Description and Location
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(map of Golden Project)
The Golden Crest Project is in the northern Black Hills of western South Dakota in Lawrence County. A map of the
project location is shown above. The Golden Crest Project is comprised of 1390 unpatented lode claims, with an associated
area of just under 28,000 acres. Two hundred forty-one of the claims are leased from Golden Crest II, LLC , a Wyoming
limited liability company (“GC LLC”) and 27 unpatented claims (“Easter Claims”) are leased from the Easter Project, LLC, a
Wyoming limited liability company (“EP LLC”). All the remaining claims are owned by Solitario and were staked throughout
2021 and early 2022.
Solitario acquired its interest in the GC Claims in May 2021 by entering into the GC Agreement with GC LLC.
Terms of the GC Agreement include scheduled payments to the underlying owner of $65,000 paid upon signing and an
obligation to pay the underlying owner $60,000 at the first anniversary date. To continue the lease, Solitario has agreed to pay,
at its option, the underlying owner escalating annual payments over a five-year period that $340,000 and annual payments of
$150,000 thereafter. Solitario has agreed to pay the underlying owner an additional success fee of $1.00 per ounce of gold in
the event Solitario files a 43-101 qualified resource of up to 1.5 million ounces of gold or a maximum of $1,500,000. Solitario
has agreed to escalating work commitments, at Solitario’s option, on the GC Claims totaling $3,000,000 during the first five
years of the lease, with the first year totaling $200,000. The term of the Golden Crest Agreement is for twenty years and is
automatically extended as long as Solitario is performing any exploration, development or mining activities on the GC Claims.
The underlying owner will retain a 2.0% Net Smelter Return royalty. Solitario has the option, but not the obligation, to reduce
the Net Smelter Return royalty to 1.0% by paying the owner $1,000,000. Golden Crest reserves a three-mile area of interest to
its original claim position.
In February of 2022, Solitario entered into a lease agreement (the “Easter Agreement”) whereby Solitario acquired
exclusive exploration rights to the Easter Claims in the Black Hills region of South Dakota. The Easter Claims are part of
Solitario’s Golden Crest project. Terms of the Easter Agreement include $10,000 paid upon signing, scheduled annual
payments to the underlying owner totaling $180,000 through the tenth anniversary, and $30,000 per year thereafter. Solitario
has agreed to escalating work commitments, at Solitario’s option, on the Easter Claims totaling $660,000 during the first five
years of the lease, with the first year totaling $20,000. All other terms of the Easter Agreement are substantially the same as the
Golden Crest Agreement, except there is no area of interest.
Federal maintenance fees and county registration due in 2022 will be approximately $264,000 for all Golden Crest
claims currently held by Solitario.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiology
Access to the Golden Crest Project by road is by traveling south of the city of Spearfish, SD along several paved
and/or gravel roads. US Highway 14A, and US Highway 85 are near the eastern and southern boundaries of the Golden Crest
Project. Maintained gravel roads extending westward from Highways 14A and 85 as well as numerous unmaintained,
numbered secondary USFS roads provide additional ingress to the Golden Crest Project.
The Golden Crest Project is in forested highlands with subdued relief separated by deep steep-sided canyons.
Elevations in the immediate area range from approximately 1,500 m to 2000 m. Spearfish Creek, a major stream with a year-
round flow, borders the eastern side of the property while most other creeks on the property are dry in the summer months.
Vegetation on the property consists of mixed forest composed of deciduous hardwoods and evergreen pines with sporadic
meadows and locally dense underbrush. Stands of timber of commercial value cover the property at higher elevations and are
managed by the US Forest Service. Logging activities have been heavy on large portions of the property in the past five to ten
years and are ongoing.
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Climate in the Golden Crest Project area is temperate, characterized by hot summers, cold winters and pronounced
seasonal variation in precipitation and temperatures. Average annual temperature, as measured at the Spearfish weather station,
is 55°F with seasonal variation averages highs of 32°F and 80°F in winter and summer respectively. The average amount of
annual rainfall is approximately 66 cm along with 104 cm of snowfall (as measured at the Spearfish recording station). Average
precipitation is greater at the higher elevations of the property itself. The exploration season is from early April to November.
The closest population center is Spearfish, South Dakota (population 11,500), which represents the largest city in
Lawrence County (population: 25,800). Spearfish is located along Interstate Highway 90, linking Rapid City, South Dakota to
Gillette, Wyoming. The city supports light industry and tourism as well as hosts a small university, Black Hills State
University. The nearest towns to the project area are Lead (population 3,000) and the nearby town of Deadwood (population
1,500), which is county seat of Lawrence County and a major tourism and gaming center for the area. The closest regional
airport servicing the area is at Rapid City, situated approximately 80 km southeast along Interstate Highway 90. All major
commercial and industrial services are available in Rapid City. Other mining services are available in Lead due to the legacy of
the Homestake Mining Company (“Homestake”) operations and the currently producing Wharf mine operated by Coeur
Mining. Solitario maintains an office in Spearfish, South Dakota.
3. History
The state of South Dakota ranks third among US states for historic gold production, totaling approximately 51 million
ounces produced through 2020, most of which came from the world class Homestake Mine in Lead. The first documented gold
discovery in the Black Hills was made by prospectors attached to the Custer Expedition of 1874, who found placer gold in
gravel bars along French Creek near the present site of Custer, South Dakota. The first known permanent lode claims in the
Black Hills were located in the spring of 1876 at the head of Gold Run and Deadwood Gulches. Beginning in the 1890’s,
hundreds of mines and mining companies sprang to life in the northern Black Hills, clustered within a relatively small area
measuring 20 km long by 16 km wide, and centered around the cities of Lead and Deadwood. Collectively this area, known as
the Lead District, is one of the richest gold districts in the world. Gold mining has occurred continuously in the district for 145
years, a record unmatched by any other US gold mining district.
Despite the importance of the Lead Gold District among American mining camps, during the last 140 years very little
regional exploration has been conducted on the property which comprises the Golden Crest Project. Although the Golden Crest
Project is adjacent to the Lead Gold District, the lack of regional exploration is apparently due to the widespread cover of the
gold bearing Precambrian rocks by younger sedimentary formations. The Golden Crest Project is within several kilometers of
district mines with significant historical production, yet only a handful of prospect pits and several old mines and pits occur on
the property. It is also thought that the subdued topography, soil cover and absence of outcrops of the distinctive Precambrian
rocks that host the ore in the main Lead District resulted in the project area being largely overlooked for such a long time.
There is no prior documented work on the property with the exception of three exploration core holes drilled by Homestake in
1993-1994, a small cluster of small mine workings and a very limited stream sediment survey.
GC LLC staked the 241 GC Claims in 2021. Solitario acquired these claims in May of 2021. Prior to Solitario’s
acquisition of the GC Claims, GC LLC completed a minimal amount of work comprised mainly of rock sampling throughout
the area. GC LLC discovered gold bearing rocks, mainly along recently disturbed logging roads, in the area where Homestake
collected and documented gold anomalies in dry stream sediments. The Easter Claims property, previously known as the 11th
Hour Mine, had a longer history with minor production in the early 1900’s where by 1906 nearly 4000 feet of underground
workings had been developed. However, an attempt to mill the mined ore was a technological failure and no further work was
known to have been completed after 1909.
4. Geological Setting
Geologically, the Black Hills consists of Archean and Proterozoic crystalline rocks that are overlain by Paleozoic
rocks ranging in age from Cambrian to Pennsylvanian. Precambrian rocks in the Lead window consist primarily of
Precambrian metasedimentary rocks and minor extrusive metabasalts and intrusive gabbros. The Paleozoic sequence of marine
sedimentary rocks (mainly carbonates and calcareous sediments) resting on this basement contains five formations, dominated
by the Cambro-Ordovician Deadwood Formation at its base and the Mississippian-aged Pahasapa Group (regionally known as
the Madison Group) at its top. Thin stratigraphic units including the Ordovician Winnipeg and Whitewood Formations and
Devonian Englewood Formation are present. The Deadwood Formation is the most important Paleozoic host for Tertiary
replacement gold mineralization. The Mississippian Pahasapa Group contains three recognizable members that correlate to the
Lodgepole Limestone, Mission Canyon Limestone and Charles Formation of the regional Madison Group. The Pahasapa Group
is overlain in stratigraphic unconformity by the Minnelusa Formation, a package of Pennsylvanian-aged shallow marine and
continental red beds and evaporite successions up to 180 m thick. The upper Pahasapa was strongly karsted in the Black Hills
prior to deposition of the Minnelusa, producing the world’s largest known paleo-cave systems.
16
This karsted carbonate package is an important lithologic host for alteration and mineralization across the Golden
Crest Project. The thickness of the Paleozoic sedimentary package varies from east to west across the Lead District from less
than 240 m thick east of Deadwood to over 365 m thick at Tinton in the west. Tertiary igneous rocks preferentially invade
several shale horizons in the Deadwood Formation and have locally inflated the thickness of the Cambro-Ordovician section by
up to 300 m. Igneous rocks rarely intrude higher stratigraphic units except for a few pre-mineralization laccolithic stocks and
plugs.
The Golden Crest Project area is centered on a broad synform separating the Lead and Tinton domes in the west-
central part of the Lead District. Geographically the synform constitutes a broad plateau 40 km long and up to 20 km across
with little structural or topographic relief. The surface of the plateau is dominated by Upper Paleozoic rock units, the
Mississippian Pahasapa Group and the Pennsylvanian Minnelusa Formation. No Precambrian is exposed on the Golden Crest
Project property and only three diamond drill holes have been drilled into these Precambrian rocks.
5. Prior Exploration and Recent Work
The first known mineral exploration work on the property was a limited dry stream sediment survey conducted by
Homestake from 1988 to 1993 over a 250 square kilometer area. The results of this survey pointed to a seven square kilometer
area of anomalous gold values that was subsequently staked by the GC LLC and leased by Solitario. Homestake drilled three
deep exploration core holes in 1993-1994 on Solitario’s current property, but not in the area of the anomalous gold values in
dry stream sediments. The objective of these holes was to test for the presence of the Precambrian Homestake Formation that
hosts the prolific past-producing 42 million-ounce Homestake gold deposit. Two of the three holes intersected the Homestake
Formation. To Solitario’s knowledge, these two holes represent the only area outside of the Lead Precambrian window where
Homestake Formation has been documented.
From approximately 2017 to 2020, GC LLC conducted surface exploration consisting of collecting 251 rock float
samples mainly exposed in and near recently constructed logging roads. Of these, 103 samples contained gold values greater
than 20 parts per billion (“ppb”) gold, with 12 samples containing greater than 1,000 ppb gold. Many of the collected rock
samples were siliceous hydrothermal breccias (jasperoids) that occurred as narrow veinlets cutting the limestone formation at
surface.
In March 2021 Solitario started exploration activities in the area. Exploration largely consisted of widespread
sampling of suspected mineralized and hydrothermally altered rock float, primarily from the Pahasapa and Minnelusa
Formations and systematic soil sampling on a grid. Outcrop or subcrop is rare so rock sampling is often limited to float which
is resistant to weathering. The topography of most of the property is flat to very gently rolling so the lateral transport of the
surficial rocks is minimal.
Apart from the float rock which is highly resistant to weathering, the inference of the subcropping geology is limited
to areas where the topography is less flat and those areas where road cuts or road beds expose “C” horizon soils. The inability
to observe outcrop limits the ability to detect and interpret the geometry and thickness of zones of alteration, so a soil sampling
program was initiated property-wide to assist in the identification of new target areas for mapping and more detailed rock
sampling. Soils are screened and analyzed in-house by x-ray fluorescence to characterize trace element geochemistry. This
method of geochemical exploration has been helpful in focusing mapping and sampling of float. Geochemically anomalous
float has defined fourteen target zones. In total, 972 select reconnaissance grab samples of rock and 5,575 soil samples (B-
horizon) were collected and analyzed.
6. Mineralization
The Black Hills are unique for the remarkable spatial superposition of several genetic styles of gold mineralization
formed over >2 billion years of geologic history. In excess of 85 million ounces of gold (recorded past production + unmined
resources reported from published sources believed to be accurate, but not verified) are contained within five distinct styles of
gold deposits in roughly a 300 square kilometer area. This is thought to represent the greatest endowment per square kilometer
of any gold district in the United States. The repeated formation of large gold deposits over time in the same small geographic
area argues for a fundamentally gold-enriched area of the earth’s crust that has persisted since the Archean time. Solitario’s
property does not contain any historic producing mines nor resources and the presence of nearby gold deposits does not
indicate that economic gold deposits will be present on the Golden Crest Project.
A Laramide-aged igneous belt of alkalic magmatic intrusive centers occurs along a linear WNW-trending belt for
approximately 150 km across the northern Black Hills and includes dozens of intrusive stocks and laccoliths and innumerable
dikes and sills concentrated in five magmatic centers. These Tertiary-aged intrusives have remobilized important orogenic gold
17
mineralization in the Precambrian basement into overlying Paleozoic rocks. In the Ruby Basin camp at the Wharf Mine
Complex, thick pre-mineral igneous sills acted as permeability barriers within the Deadwood Formation.
Alteration, gold and trace element enrichment in the Pahasapa formation at the Golden Crest Project is viewed as a
possible indication of replacement-style epithermal mineralization in stratigraphic units lower in the sedimentary sequence (e.g.
Upper and Lower Deadwood Formation). Ore-forming magmatic hydrothermal fluids ascended from mineralizing centers may
have passed through overlying Paleozoic carbonate sections along subvertical faults and fractures, becoming progressively
cooler and diluted by ground water, and depositing trace elements and gold. This extensive hydrothermal fluid interaction is
interpreted to have resulted in widespread low-temperature alteration of limestones, silicification and geochemical anomalism
+/- gold mineralization in the Pahasapa Formation.
Fourteen gold-enriched target areas have been identified by Solitario by select rock grab sampling. All of these
prospects have returned anomalous gold assays, five of the prospect areas have assays containing multi-gram gold per tonne
and four prospects returned values containing between 0.1 and one-gram gold. The most thoroughly sampled areas to date are
the Whirlwind, Matchstick and Treasure Vault prospects that define a 6.5-kilometer north-south arcuate trend at least 1.5-
kilometers across with significant gold values. A summary table of gold in rock samples by prospect area is provided below:
Target Geochemistry Summary: Select Rock Grab Samples
Prospect
No of Samples
Au ppb (max)
Au ppb (avg)* Ag ppm (max)
Buena Vista
Yellow Jacket
Shoofly
Treasure Vault
Matchstick
Whirlwind
Citadel
Easter
Maurice
Lockout
Downpour
Log Jam
Dustbowl
Lands End
24
26
42
44
119
167
60
12
10
6
16
10
7
21
3246
132
64
3990
8740
7990
30
10
349
61
215
33
18
516
480
399
13
7
85
25
126000
17100
807
62
323
198
62
96
0.8
0.8
2.7
3
1.8
1040
11
0.2
2
11.8
17.3
2.2
0.7
0.7
*Average of those samples with detectible gold. The significance of these samples is limited to determining whether gold is
present within rocks effected by hydrothermal alteration fluids and assay results may not be representative of, nor verify
economically mineable mineralization at depth.
Late in the 2021 field season, Solitario received very high-grade gold values from select surface grab rock samples at the
Downpour target area. Additional surface sampling was conducted in the immediate area of the high-grade samples and eight
continuous three-meter (total 24 meters) rock-chip channel samples were also collected. The location and results of the select
rock grab samples and rock-chip channel samples are presented in the map below.
18
.
Map showing Downpour select grab and chip channel samples with assay values in grams per tonne gold.
7. Drilling: No drilling has been conducted by Solitario
8. Sampling, Analysis and Security of Samples
The collection of all select surface grab rock samples was supervised by project geologists, including
chain of custody. Rock grab samples were reconnaissance select composite samples that usually displayed alteration, typically
silicification, and hydrothermal brecciation. These samples were derived mainly from residually weathered rock fragments,
sub-crop, and less commonly, outcrop. In all cases the samples are composites within a small area of less than one-square
meter or composites of sub-crop or outcrop. The significance of these samples is limited to determining whether gold, or trace
elements usually associated with gold, are present within rocks affected by hydrothermal alteration fluids and assay results may
not be representative of, nor verify economically mineable mineralization at depth.
Chip-channel samples were more systematically collected as a measured continuous sample of bedrock. The chip
channel assays are thought to be more representative of bedrock mineralization in comparison to grab samples. Samples were
analyzed by Skyline Assayers & Laboratories in Tucson, AZ, a laboratory accredited in accordance with the standards of ISO
17025:2017. The samples were crushed and pulverized, and sample pulps were analyzed using industry standard fire assay
methods. A certified reference sample or duplicate was inserted at least every 20th sample.
9. Prefeasibility Studies: No prefeasibility studies have been conducted on the Golden Crest Project.
10. Reserves and Resources: There are no reported mineral reserves or mineral resources on the Golden Crest Project.
12. Planned Exploration and Development
For 2022, Solitario is planning to conduct an aggressive surface exploration program at the Golden Crest Project
consisting of prospecting for new areas of mineralization through the collection of select rock grab samples, systematic soil
sampling and geophysics. A Plan of Operations for drilling has been submitted to the US Forest Service and is currently under
review. If permits to drill are received before the end of the 2022 field season, drilling will also be conducted on select targets.
19
Florida Canyon Zinc Project (Peru)
Gustavson & Associates completed the S-K 1300 Florida Canyon TRS which is entitled S-K 1300 Technical Report
Summary Florida Canyon Zinc Project, Amazonas Department, Peru; Effective Date: February 1, 2022, Report Date: March
15, 2022.
The following summary descriptions of the Florida Canyon Zinc Project does not purport to be a complete description
and is qualified in its entirety by reference to the full text of the S-K 1300 Florida Canyon TRS, which is filed as Exhibit 96.1 to
this Form 10-K report and is incorporated by reference herein.
1. Property Description and Location
(Map of Florida Canyon Property, formerly Bongará)
On August 15, 2006, Solitario signed a Letter Agreement with Votorantim Metais Cajamarquilla, S.A., a wholly-
owned subsidiary of Votorantim (now known as Nexa) (both companies are referred to in this Item 2 as "Nexa”) on Solitario's
100%-owned Florida Canyon zinc project (formerly called the Bongará project), On March 24, 2007, Solitario signed the
Framework Agreement with Votorantim for the Exploration and Potential Development of Mining Properties (the “Framework
Agreement”), pursuant to, and replacing, the Florida Canyon Letter Agreement. In 2015 Votorantim transferred its interest in
the Florida Canyon project to Milpo, an 80%-owned affiliate of Votorantim. In October of 2017, Milpo and Votorantim
merged to form Nexa. Nexa is listed on the NYSE under the trading symbol “NEXA.” For the remainder of this Florida
Canyon property section, all references to Votorantim, Milpo or Nexa are collectively referred to as Nexa.
The Florida Canyon project consists of 16 concessions comprising 12,600 hectares of mineral rights originally granted
to Minera Bongará S.A., our subsidiary incorporated in Peru. The property is located in the Department of Amazonas, northern
Peru. Solitario's and Nexa’s property interests are held through the ownership of shares in Minera Bongará S.A., a joint
operating company that holds a 100% interest in the mineral rights and other project assets. Solitario currently owns a 39%
interest in the Florida Canyon project.
20
During 2015 Nexa completed the steps required to earn a 61% interest in the Florida Canyon project, with Solitario
retaining a 39% interest. Nexa may earn an additional 9% interest (up to a 70% shareholding interest) in Minera Bongará S.A.,
by sole-funding future annual exploration and development expenditures until a production decision is made. The option to
earn the 70% interest can be exercised by Nexa at any time by committing to place the project into production based upon a
completed feasibility study. Nexa is the project manager. Once Nexa has committed to place the project into production based
upon a feasibility study, it has further agreed to finance Solitario's 30% participating interest until production with a loan
facility from Nexa to Solitario. Solitario will repay this loan facility through 50% of Solitario's cash flow distributions from
the joint operating company. Solitario completed the funding of $1,580,000 of the Drilling Program during 2019. Solitario
was not obligated to fund under the terms of the Framework Agreement. The paid funding of the Drilling Program will be
treated as an advance on Solitario’s commitment to fund 30% of any future construction development costs of Florida Canyon
under the original joint venture agreement. Accordingly, in the event the Florida Canyon project is developed, which cannot be
assured at this time, the funds paid to Nexa under this arrangement will reduce the amount of Solitario’s obligation to fund 30%
of future development costs, and/or repay loans from Nexa for future development costs at the Florida Canyon project.
According to Peruvian law, concessions may be held indefinitely, subject only to payment of annual fees to the
government. In June 2022, payments of approximately $327,000 to the Peruvian government will be due in order to maintain
all the Florida Canyon mineral rights of Minera Bongará S.A. Nexa is responsible for paying these costs as part of its earn-in
expenditures. Peru imposes a sliding scale royalty varying from 1% to 12% of the operating profit of a mining operation. The
percentage royalty is determined by rule based on the operating margin; however, the minimum royalty is 1% of the revenues.
From time-to-time Nexa may enter into surface rights agreements with individual landowners to provide access for
exploration work at the Florida Canyon project. Generally, these are short-term agreements. Nexa has an agreement with the
local community which specifies certain obligations and payments that Nexa is required to provide in exchange for community
permissions to perform work.
Environmental permits are required for exploration and development projects in Peru that involve drilling, road
building or underground mining. The requisite environmental and archeological studies were completed for all past work.
Nexa received a permit in 2021 to allow for drilling immediately south and east of the current Florida Canyon drilling area and
is currently working on an additional permit for an expanded drilling program. Although we believe that new permits will be
obtained in a timely fashion, the timing of government approval of permits remains beyond our control.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiology
The Florida Canyon property is accessed from the coastal city of Chiclayo by the paved Carretera Marginal road,
which is a heavily travelled paved national highway that passes approximately eight kilometers south of the deposit. The
nearest town to the project is Pedro Ruiz located 15 kilometers southeast of the property. The area of the majority of past
drilling and the most prospective mineralization, Florida Canyon, was previously inaccessible by road, the work to date having
been done by either foot or helicopter access. Nexa has now completed approximately 40 kilometers of access road and is
planning to complete the road access to local communities and the mineralized area of the project in 2022. Nexa maintains
project field offices in Pedro Ruiz and a drill core processing facility and operations office in the nearby community of
Shipasbamba.
The project area elevation ranges between 1,800 and 3,200 meters above sea level. The climate is tropical with an
average annual temperature of approximately 25oC. Mean annual rainfall exceeds one meter with up to two meters in the cloud
forest at higher elevations. Most precipitation occurs during the rainy season, between November and April. Field work is
considerably more difficult in the rainy season. Topography is steep, consisting of prominent escarpments and deep valleys.
Dense jungle or forest vegetation covers the project area. With the exception of the partially completed access road and
approximately 700 meters of tunneling, no permanent infrastructure facilities have been constructed within the project area. A
private Peruvian power company has proposed building a hydro-electric power plant within 10 kilometers of the Florida
Canyon deposit. Nexa signed a Memorandum of Understanding with the power company that provides for 100% of the power
required for mining and milling operations at low-cost.
3. History
We discovered the Florida Canyon mineralized zone of the Florida Canyon project in 1996. Subsequently, we joint
ventured the property in December 1996 to Cominco (now Teck). Cominco drilled 80 core holes from 1997-2000. Cominco
withdrew from the joint venture in February 2001, and at that time Solitario retained its 100% interest in the project. We
maintained the claims from 2001 to 2006, until the Florida Canyon Letter Agreement was signed. Nexa conducted surface
drilling on an annual basis from 2006 to 2013 and from 2018 to 2019, and underground tunneling and drilling from 2010 to
2013. All significant work on the property has been conducted by our joint venture partners, Cominco and Nexa, and is
described below in Section 5, “Prior Exploration.”
21
4. Geological Setting
The project is located within an extensive belt of Mesozoic carbonate rocks belonging to the Upper Triassic to Lower
Jurassic Pucará Group and equivalents. This belt extends through the central and eastern extent of the Peruvian Andes for
nearly 1,000 km and is the host for many polymetallic and base metal vein and replacement deposits in the Peruvian Mineral
Belt. Among these is the San Vicente Mississippi Valley Type (“MVT”) zinc-lead-silver deposit that has many similarities to
the Florida Canyon deposit and other MVT occurrences in the Project area.
The geology of the Florida Canyon area is relatively simple consisting of a sequence of Jurassic and Triassic clastic
and carbonate rocks which are gently deformed into a broad northwesterly trending domal anticline. The MVT zinc-lead-silver
mineralization occurs in the carbonate facies of the Chambara (rock) Formation. This domal anticline is cut on the west by the
Sam Fault and to the east by the Tesoro-Florida Fault.
5. Prior Exploration and Recent Work
We conducted a regional stream sediment survey and reconnaissance geological surveys leading to the discovery of
the Florida Canyon area in 1996. The discovered outcropping mineralization is located in two deeply incised canyons within
the limestone stratigraphy.
Subsequent to our initial work, Cominco conducted extensive mapping, soil and rock sampling, stream sediment
surveys and drilling. This work was designed to determine the extent and grade of the zinc-lead mineralization, to determine
the controls of mineral deposition and to identify areas of potential new mineralization. Nexa began work in the fall of 2006
and drilled annually from 2006 through 2013, and in 2018-2019. Underground exploration operations were conducted from
2011-2013. Nexa has more recently continued surface exploration work consisting of geologic mapping and sampling that has
identified new surface zinc mineralization to the south and east of Florida Canyon and also 15 kilometers to the north and
northwest in areas called San Jose and Naranjitos (see Chambara Project below).
6. Mineralization
Two important styles of mineralization occur at Florida Canyon: Manto-style with mineralization usually localized in
favorable carbonate strata in a near horizontal orientation; and a second style with mineralization in a near-vertical orientation
occurring within high-angle structural zones. Manto mineralization occurs as both massive to semi-massive replacements and
disseminations of sphalerite and galena localized by specific sedimentary facies (rock strata) within the limestone stratigraphy.
Often manto-style mineralization is laterally associated with near-vertical structural feeders and karst breccias that cut the
carbonate stratigraphy. A total of 11 preferred beds for replacement mineralization have been located within the middle unit of
the Chambara Formation. Mineralization is associated with the conversion of limestone to dolomite, which creates porosity
and permeability within the rock formations. It is believed that mineralizing fluids passed through structurally controlled
vertical feeder zones and into adjacent near-horizontal rock formations to produce mineralized vertical replacement bodies and
stratigraphically controlled near-horizontal manto deposits. Drilling of stratigraphic targets has shown that certain coarser-
grained facies of the stratigraphy are the best hosts for manto mineralization. Stratigraphically controlled mineralization is
typically one to several meters in thickness, but often attains thicknesses of five to ten meters.
Zinc mineralization was originally deposited in the form of sulfide minerals. However, some near-surface mineralization has
been oxidized to varying degrees. Approximately 80% of mineralization defined at Florida Canyon is sulfide-dominant with
the remainder being mixed sulfide-oxide, or oxide-dominant. Processing of sulfide mineralization is commercially more
profitable.
Karst features are localized along the feeder faults and locally produce "breakout zones" where mineralization may
extend vertically across thick stratigraphic intervals where collapse breccias have been replaced by ore minerals. Mineralized
karst structures are up to 50 meters in width (horizontal), up to 900 meters vertically, and up to 1,000 meters along strike.
Evidence for these breakout zones is provided by the following drill holes from various locations on the property:
Breakout
Zone Name
Sam
Karen
V-1021
Drill Hole
Number
GC-17
FC-23
A-1
V-21
Intercepts
(meters)
58.8
81.5
36.2
92.0
Zinc
%
12.0
4.8
12.8
5.5
22
Lead
%
2.8
0.8
2.7
1.7
Zinc+Lead
%
14.8
5.6
15.5
7.2
South Zone
San Jorge
V-44
V-169
V-297
28.3
51.6
56.6
15.2
7.1
22.69
0.8
0.7
1.15
16.0
7.8
23.84
Dolomitization reaches stratigraphic thicknesses in excess of 100 meters locally. This alteration is thought to be
related to the mineralizing event and is an important exploration tool. Continuity of the mineralization is demonstrable in areas
of highest drilling density by correlation of mineralization within characteristic sedimentary facies, typical of specific
stratigraphic intervals or within through-going observable structural zones in drill core. At Florida Canyon the two largest-
sized high-angle zones identified to date are the San Jorge and 1021 zones. These zones represent well-defined north-northeast
structural feeder zones. Less important mineralization occurs along northwest and northeast fracture systems. These structures
occur in conjugate fractures, with N10º-50ºE trends present at a number of mineralized surface outcrops while trends of N50º-
80ºW are identified at other showings.
7. Drilling
From 1997 through 2001, Cominco drilled 80 surface core holes totaling 24,696 meters. From 2006-2013, Nexa
completed 309 surface core holes totaling 77,193 meters. From 2011-2013, Nexa completed 95 underground core holes
totaling 15,144 meters. The underground drilling was conducted from 10 drill stations at generally 40-meter centers (two drill
stations at 20-meter centers) and entirely within the San Jorge mineralized zone. Anywhere from three to 14 holes were drilled
from each of the ten drill stations. The underground drilling was tightly spaced and designed to allow for feasibility-level
reserve estimation.
From November 2018 to October 2019, Nexa completed a 39-hole, 17,033-meter core drilling program. The majority
of holes were drilled in 2019. The program had three major objectives: 1) extend the San Jorge near-vertical replacement body
to the south and the adjacent near-horizontal manto bodies to the east; 2) offset previously drilled hole V-21 in the northern part
of Florida Canyon to determine if it represented a significant near-vertical replacement body with horizontal mantos similar to
the San Jorge Zone; and 3) extend horizontal mantos in the central and northern parts of the Florida Canyon drilling footprint.
All three objectives were successfully achieved.
All past drilling conducted is within a footprint measuring approximately 2.5 kilometers long in a north-south
direction and a little over a kilometer in an east-west direction. The entire drill pattern is within what we have informally
labeled the Florida Canyon district. Within this district, several zones of strong zinc mineralization have been defined. The
three zones with the largest amount of drilling are the San Jorge, the Karen-Milagros and the 1021 zones. Drilling indicates
that, for the most part, the entire Florida Canyon district remains open to expansion and the identified zones are interconnected.
Better 2018-2019 drill-hole intercepts are provided in the table below:
2018-2019 Mineralized Intersections
Drill Hole
Number
PEBGD-03
PEBGD-04
PEBGD-08
PEBGD-10
including
PEBGD-15
PEBGD-24
PEBGD-25
And
PEBGD-30
PEBGD-31
PEBGD-32
PEBGD-33
PEBGD-36
And
PEBGD-38
PEBGD-39
Intercept
Meters
1.3
1.3
4.4
48.9
17.5
12.4
4.1
6.3
8.8
6.7
7.4
9.3
9.9
6.1
1.8
9.7
3.3
Zinc
(%)
42.7
40.5
16.8
5.2
11.3
14.9
18.6
7.7
5.2
18.4
11.3
23.5
5.9
20.1
35.2
22.8
37.7
Lead
(%)
15.0
0.0
1.1
1.0
2.2
0.0
0.9
0.5
1.5
0.0
1.7
2.8
1.6
5.6
0.5
0.2
9.6
Silver
(grams/t)
83.0
4.8
32.1
11.5
25.4
8.9
5.7
3.2
18.1
10.6
14.5
18.1
12.9
42.4
69.7
11.8
65.5
ZnEq*
(%)
56.9
40.6
18.3
6.2
13.7
15.1
19.5
8.2
6.9
18.7
13.1
26.5
7.7
25.6
37.1
23.2
47.1
*Zn-Eq was calculated using the following price assumptions: Zn=$1.10/lb., Pb=$0.91lb., Ag=$16.50/oz.
Reported intervals are estimated to be at least 80% of the true thickness
23
Numbers in this table may not add exactly as numbers have been rounded to the nearest decimal
8. Sampling, Analysis and Security of Samples
Core recoveries were typically high within mineralized zones, but occasionally karst caves were encountered, and no
core was recovered for intervals generally less than two meters. Core samples were transported from the drill by helicopter in
sealed boxes to the processing facility in Shipasbamba. The entire core obtained from each drill hole, usually NQ and HQ size,
was logged on site at a core storage facility. All of the core containing sulfide mineralization was cut using diamond saws and
half of the core was sent for assay. Intervals of the half-core taken for assay were selected according to geologic criteria under
the supervision of the geologist in charge and shipped in sealed bags by land. Cominco used SGS Laboratories (“SGS”) and
Nexa used ALS-Chemex, both in Lima, Peru, where all samples were analyzed by ICP. Any samples that contained greater
than 1% zinc were then analyzed by wet chemistry assay for zinc and lead to provide a more accurate analysis of grade.
Since 2006, Nexa has been in control of all field activities on the project and is responsible for the security of samples.
Nexa has indicated that there have been no breaches in the security of the samples. We have reviewed, and periodically been
assisted by SRK Consulting (USA) Inc. (“SRK) and Gustavson Associates, both independent international mining engineering
firms, to review Nexa’s sampling procedures and believe that adequate procedures are in place to ensure the future security and
integrity of samples. No breaches of security of samples are known to have occurred prior to Nexa’s work on the project.
9. Prefeasibility Studies
Nexa, either through its engineering staff or contracted independent mining engineering firms, has conducted
prefeasibility-level studies to provide estimates of deposit size and grade, mining and processing recoveries, sizing of
appropriate scale of operations, infrastructure design, and capital and operating cost estimates at a level of detail varying from
preliminary economic assessment to prefeasibility levels.
Solitario and Nexa jointly completed a PEA for the entire project in 2017 that incorporated a variety of Nexa-
generated studies into the analysis. The PEA evaluation included resource estimation, mining and processing recovery
estimates, a preliminary mining and processing plan, infrastructure layout, environmental considerations and an economic
analysis based on certain base case parameters. The PEA envisioned an underground mining operation with a 2,500 tonne per
day floatation mill for processing, resulting in a 12.5-year mine life. It was assumed that concentrates would be trucked to
Nexa’s Cajamarquilla zinc smelter facility in Lima, Peru.
Metallurgical testing to evaluate metal recoveries and various processing options for mineralized material at Florida
Canyon was conducted in 2010, 2011 and 2014. These tests on composited samples indicate zinc recoveries above 90% and
lead recoveries above 80% were generally achieved for sulfide dominant ores. Increasingly lower recoveries of zinc and lead
resulted in direct proportion to the percentage of oxides present in the ore tested. Nexa also conducted a comprehensive
geochemical testing program that demonstrated that zinc (and lead) recoveries were significantly affected by the Zn-sulfide/Zn-
oxide ratio of mineralization. In general, mineralized material with greater than an 80% ratio of Zn-sulfide/Zn-oxide,
recoveries are greater than 90% for Zn. Conversely, for mineralized material, with less than a 20% ratio of Zn-sulfide/Zn-
oxide, recoveries are approximately 40% for Zn. Although sulfide recoveries achieved to date are very good, SRK suggests
that optimization of processing and metallurgical parameters may result in improved recoveries and concentrate grade.
Other prefeasibility work completed by Nexa included drilling 16 diamond core holes in 2013 to evaluate geotechnical
and hydrological parameters of the mineralized areas for both engineering and environmental purposes. In 2016, Nexa
completed a geochemical/metallurgical study that more accurately defined the distribution of sulfide/oxide mineralization
based on re-assaying of nearly all past drill-hole samples. This information was critical in resource estimation and accurately
estimating metal recoveries.
Prior to the 2022 S-K 1300 Florida Canyon TRS filing, Solitario filed on SEDAR in Canada a technical report
entitled: Amended NI 43-101 Technical Report on Resources, Florida Canyon Zinc Project, Amazonas Department, Peru;
Effective Date: February 1, 2021; Report Date: April 5, 2021; and Amended Date: May 27, 2021.
10. Reserves and Resources
There are no reported mineral reserves at the Florida Canyon project. See “Mineral Resources” detailed below for the
mineral resources at the Florida Canyon Project.
11. Mining Operations
24
No commercial mining operations to recover metals have occurred on the project. However, in September 2010 Nexa
initiated an underground tunneling program to access mineralization and completed its underground work in 2013. As of
December 31, 2021, 700 meters of tunneling were completed.
12. Planned Exploration and Development
During 2021, Nexa worked on two separate drilling permits. The first of these permits (4MEIAsd) was approved and
allows additional drilling immediately to the south and east of the current Florida Canyon drilling footprint. The second permit
(5MEIAsd) greatly expands the area in which drilling is permitted to the south and east. The second permit is expected to be
granted before the 2023 field season.
A robust metallurgical testing program is underway to better quantify recoveries of zinc, lead and silver and to better
determine the quality of concentrate that the Florida Canyon ores can produce. Surface exploration consisting of geological
mapping and sampling will continue throughout the project area. Nexa plans to complete road construction to local
communities that currently do not have vehicle access as part of their ESG commitment. The access road could also serve as a
support road to project activities.
Lik Zinc Project (Alaska)
Gustavson & Associates completed the S-K 1300 Lik TRS which is entitled S-K 1300 Technical Report Summary Lik
Zinc Project, Northwest Arctic Borough, Alaska, USA: Effective Date: December 31, 2021, Report Date: March 11, 2022.
The following summary descriptions of the Lik Zinc Project does not purport to be a complete description and is qualified
in its entirety by reference to the full text of the S-K 1300 Lik TRS, which is filed as Exhibit 96.2 to this Form 10-K and is
incorporated by reference herein.
1. Property Description and Location
(Map of Lik Property) Lik.jpg
The Lik property consists of 47 contiguous Alaska state mining claims. The contiguous claims have been grouped
together for the purpose of working and operating under a common plan of development for the benefit of all of the claims. The
claims cover an area of approximately 6,075 acres (2,460 ha). The claims are located in the southwestern DeLong Mountains in
the Wulik River drainage.
To retain the state claims, the Company is required to make annual rental payments to the State of Alaska. The
estimated rental payments for 2022 are $9,000. Property holders are also required to perform assessment work with the amount
25
dependent on the area of the State claims. Excess assessment expenditure credits may be carried forward for a maximum of
four years. If required, payments may be made in lieu of work to allow retention of the property for a period of five consecutive
years. The geographical coordinates of the Lik deposit are approximately 163o 12’ W and 68o 10’ N. The figure above
illustrates the location of the Lik property.
2. Acquisition History and Joint Venture Arrangement
Solitario acquired its 50% interest in the Lik property from the acquisition of Zazu Metals Corp (“Zazu”) on July 12,
2017. As a result of the acquisition, Zazu became a wholly owned subsidiary of Solitario. Prior to that, Zazu acquired its 50%
interest in the Lik property from GCO Minerals Company, a wholly owned subsidiary of the International Paper Company
(“GCO”), on June 28, 2007 by making a cash payment to GCO of $20,000,000 and granting GCO a 2% net proceeds interest.
GCO also owns an additional 1% net profits interest in the Lik property from a 1997 agreement.
The Company is participating in the exploration and possible development of the Lik property through a joint venture
with Teck. The terms of the joint venture were governed by the Lik Block Agreement, made as of January 27, 1983, between
Houston Oil & Minerals Exploration Company (“HOMEX”) and GCO. HOMEX assigned its interest in the Lik Block
Agreement to Echo Bay Mines Ltd., which, in turn, assigned such interest to Teck. The Lik Block Agreement terminated on
January 27, 2018 and the joint venture is now governed under the Joint Operating Agreement (“JOA”) that was attached to the
Lik Block Agreement. Since 2018, Teck and Solitario have agreed to annual exploration funding to advance the Lik project.
The JOA requires unanimous approval by the parties for annual expenditures in excess of $1 million. Solitario is the operator
of the joint venture. Solitario and Teck each retain a 50% interest in the Lik property.
In July 2018, the Company and Teck signed a Joint Exploration Agreement (“JEA”) whereby both parties agreed to
fund a surface exploration program on a 50%/50% basis for 2018. Addendums extending the JEA and providing funding for
continued exploration were signed in 2019, 2020, 2021 and a fourth Addendum to the JEA is expected to be signed in 2022.
Teck has acted as manager of the exploration programs for the past four years.
3. Accessibility, Climate, Local Resources, Infrastructure and Physiology
Access to the Lik property is by air to a gravel surfaced airstrip located on the property. The airstrip is capable of
handling multi-engine cargo planes. Charter flights may be arranged from a number of sites in northwestern Alaska. The town
of Kotzebue, which is located about 90 miles from the deposit, is a seaport with commercial air service from Anchorage.
Kotzebue is the center for access to the nearby Red Dog mine operated by Teck.
The nearest location for which climatic data is available is the town of Kotzebue. The average annual temperature at
Kotzebue is 21.6oF, with seasonal extremes ranging between 77oF in summer to -58oF in winter. There is an average of nine
inches of rain and 47 inches of snowfall per year. Snow falls are not extreme but blowing snow may form significant drifts.
Strong winds are common in most parts of Alaska. Diamond drilling is possible at the Lik property between June and October.
The exposures of mineralization at the Lik property are located at about 800 feet above sea level. West of the deposit,
the land rises steeply to peaks about 2,300 feet above sea level. To the southeast, the land slopes down to the Wulik River
where the bottom of the valley is about 700 feet above sea level. There is sufficient space for tailings and waste rock disposal,
and sufficient water is expected to be available for any proposed processing. Locally, there is vegetation on the property
consisting of tundra grasses and low brush made up of willow, dwarf birch, and alder.
There is a camp located on the Lik property. The camp has been used periodically over the last fifteen years. The
supply of electric power and workforce accommodation will have to be developed. There are no local resources adjacent to the
Lik property. The Red Dog mine, operated by Teck, is located about 13.6 miles southeast of the deposit. Potentially,
concentrates could be moved along the access road from the Red Dog mine to the port on the Chukchi Sea. Construction of a
road would be required to connect the Lik deposit to the haul road from Red Dog to the port. The port has a shipping season in
excess of 100 days.
4. History
The Red Dog ore deposit was originally discovered in 1970 by a geologist undertaking mapping in the De Long
Mountains area on behalf of the United States Geological Survey. GCO, in joint venture with New Jersey Zinc Company and
WGM Inc., carried out stream geochemical sampling and reconnaissance for color anomalies. Claims were staked in July 1976
to cover a stream geochemical anomaly on Lik Creek. HOMEX replaced New Jersey Zinc Company in the joint venture in
1976/1977.
26
Diamond drilling on the Lik property commenced in 1977 and targeted a gossan with a coincident soil and
electromagnetic anomaly. The first hole encountered massive lead-zinc-silver-bearing sulfides. By the end of 1977, the joint
venture had completed 25 line-miles of ground geophysics, a soil sampling program, and ten diamond drill holes with an
aggregate depth of 5,260 feet. In 1978 and 1979, further geological, geochemical and geophysical surveys were carried out,
together with the drilling of another 93 diamond drill holes aggregating 51,200 feet. A mineral resource was estimated. The
joint venture continued to work in the district in the period 1980 to 1983. However, only limited diamond drilling activity
continued on the Lik property. The Lik Block Agreement was signed in 1984.
In 1984, Noranda optioned the GCO holding of the Lik property. Much of Noranda’s activity was concentrated in the
Lik North Area where ten diamond drill holes with an aggregate depth of 13,710 feet were completed on four sections.
Noranda also drilled holes in the Lik South deposit to better define the deposit. Noranda released its interest in the Lik property
after a re-organization of its holdings in the United States. From 1985 through June of 2007, when Zazu acquired its interest in
the Lik property, only a limited amount of work was conducted at Lik.
Zazu completed diamond drilling programs during the 2007, 2008 and 2011 summer field seasons. From 2009
through 2014, Zazu conducted a suite of economic, engineering, environmental and metallurgical studies on the Lik property,
culminating with the completion of a PEA in 2014.
5. Geological Setting
The regional geology of the Western Brooks Range area is structurally complex. The sedimentary rocks of the area
have been significantly disrupted by thrust sheets. The Lik property and the other zinc-lead deposits of the Brooks Range,
including Red Dog, are hosted in the Kuna Formation of the Lisburne Group. In the Western Brooks Range, the Lisburne
Group includes both deep and shallow water sedimentary facies and local volcanic rocks. The deep-water facies of the Lisburne
Group, the Kuna Formation, are exposed chiefly in the Endicott Mountains.
On a district scale, the Lik property is hosted in the Red Dog plate of the Endicott Mountains thrust sheet. The
stratigraphically lowest rocks within the Red Dog plate belong to the Kayak Shale. The top of the Kayak Shale is interbedded
with rocks of the Kuna Formation. The Ikalukrok Unit has been divided into a lower laminated black shale sub-unit and an
upper medium- to thick-bedded black chert sub-unit. The Ikalukrok Unit hosts all of the known massive sulfide deposits in the
area.
Locally, the Lik property is hosted in the upper part of the Ikalukrok Unit of the Kuna Formation. The host rocks are
carbonaceous and siliceous black shale, with subordinate black chert and fine-grained limestone. These rocks strike broadly
north-south and dip at about 25o to 40o to the west. The massive sulfides are overlain conformably by rocks of the Siksikpuk
Formation. The sequence is overridden by allochthonous rocks that form high hills north and west of the deposits.
The mineralized sequence is cut by a number of faults. The most significant disruption is the Main Break Fault, which
drops the northern end of the Lik deposit down about 500 feet. It is unclear whether there is a change in strike north of the fault,
or whether the change is more apparent due to topography. The Main Break Fault strikes east-west and dips north at about 60o.
There is another group of steeper faults that tend to strike northerly or northwesterly and which are interpreted as being both
normal and reverse with throws of up to 330 feet.
Low angle thrust faults also cut the rocks at Lik and regionally. These faults are known to cut and displace massive
sulfide mineralization at the Red Dog deposits and others in the district.
6. Prior Exploration and Recent Work
The Lik deposit was discovered by GCO in the mid-1970’s by following up on soil color and stream geochemical
anomalies. From the late 1970’s to 2011, various geochemical, geophysical, and geologic activities were intermittently
conducted to define drill targets. The Lik property was drill tested from the late-1970’s to 2011 by seven different companies.
Details of these historical drilling campaigns are discussed above under the heading “History” and below under the heading
“Drilling.”
Teck conducted a soil sampling survey, an Induced Polarization (“IP”) geophysical survey and geologic mapping in
2021. The majority of this work was conducted northeast of the Lik deposit looking for indications of potential new zinc
deposits on trend with the Lik deposit in favorable strataigraphy. A total of 381 soil samples were collected. Results of the soil
survey are still being processed. The IP geophysical survey consisted of six survey lines totaling eight kilometers. The results
of the IP survey suggested that the rock formation that hosts the Lik deposit may flatten out to the west and be at drillable
depths, opening up a whole new area for potential drill testing.
27
7. Mineralization
The Lik deposit is a black shale-hosted stratiform zinc-lead-silver sedimentary-exhalative (SEDEX) deposit.
Mineralization is syngenetic with respect to sediment deposition. Silicification occurs within and peripheral to the main mass of
sulfides. Major sulfides in decreasing order of abundance are pyrite-marcasite, sphalerite and galena. The ore textures are
massive, fragmental, chaotic, and veined; they rarely show typical sedimentary layering. The portion of the ore body near the
surface is oxidized. The deposit is continuous outside the Lik property onto the adjacent 100%-owned Teck property to the
south. The southern continuation of the Lik deposit is referred to as the Su deposit, lying on Teck’s Su property.
Within the Lik property, the deposit is divided into two parts by the Main Break Fault. The main part of the deposit
within the existing claims is referred to as the Lik South deposit. As presently tested, the Lik South deposit has a surface
footprint of about 3,600 feet long and about 2,000 feet wide. It has been tested down dip to a depth of about 650 feet. The Lik
South deposit remains open down dip. North of the Main Break Fault, the Lik North deposit has a surface footprint of about
2,300 feet long and about 1,150 feet wide. It has been tested down dip to a depth of about 1,000 feet. The Lik North deposit
remains strongly open down dip and to the north.
The deposits strike northerly and dip westerly at about 25o to 40o. The mineralization comprises irregular, stratiform
lenses. The mineralogy of the sulfides is simple and comprises pyrite, marcasite, sphalerite, and galena. Gangue minerals
include quartz (as chert), clay minerals, carbonate and barite. Noranda recognized six different ore types in its logging of drill
core. Typical grades of mineralized intersections within the Lik deposit are listed in the table below:
Typical Mineralized Intersections
Hole
No.
From
(m)
To
(m)
Length
(m)
Zn
(%)
Pb
(%)
Ag
(g/t)
5
16
21
24
38
38
43
43
43
68
54.56
78.79
24.23
19.72
6.27
126.5
80.16
94.49
14.33
21.67
7.01
230.4
129.54
135.33
5.79
7.07
1.88
40.87
50.14
9.27
11.09
1.44
45.90
63.76
17.86
8.13
1.80
70.53
87.75
17.22
8.92
2.08
35.66
40.69
5.03
17.66
3.62
8.6
51.1
48.0
28.8
8.6
60.96
80.28
19.32
9.07
2.49
47.7
84.73
91.04
6.31
21.07
5.95
111.4
32.31
53.43
21.12
13.34
2.85
56.9
Previous work by GCO determined that sulfides were deposited in four distinct cycles. Individual cycles may be quite
thin near the margins of the deposit and the thickest accumulation in a single cycle noted to date is about 45 feet thick. The
base of a sulfide cycle begins abruptly with the deposition of sphalerite, galena and pyrite. Typically, the highest grades are
found at or within 5-10 feet of the base of a sulfide cycle. In the central portion of the deposit several cycles are stacked and
comprise a cumulative thickness of up to 100 feet of mineralization.
8. Drilling
All diamond drill programs are summarized in the following table.
Historical Diamond Drilling Campaigns
Year
1977
1978
Number
of Holes
Aggregate
Depth (m)
Company
10
79
1,603.3 Managed by WGM
10,680.2 Managed by WGM
28
Historical Diamond Drilling Campaigns
Number
of Holes
Aggregate
Depth (m)
Company
14
3
1
6
16
1
3
2
11
58
25
229
4,931.1 Managed by GCO
202.1 Managed by GCO
835.2 Managed by GCO
1,643.5 Managed by GCO
4,883.1 Managed by Noranda
696.5 Managed by GCO
263.4 Managed by Moneta
283.5 Managed by GCO
1,393.5 Managed by Zazu
6,827.5 Managed by Zazu
3,871.0 Managed by Zazu
38,328.6
Year
1979
1980
1983
1984
1985
1987
1990
1992
2007
2008
2011
Totals
Zazu completed two diamond drilling programs during 2007 and 2008 to further test the Lik South deposit and to
obtain samples for metallurgical testing. At the end of 2008, most of the Lik South deposit had been tested on lines spaced at
200 ft. with holes spaced at about 100 ft.
The 2011 drilling program at Lik combined exploration and development drilling. The exploration drilling focused on
improving resource definition, in particular near the transition zone between Lik South and Lik North and also Lik North. The
development drilling focused on obtaining additional metallurgical samples and geotechnical drilling for the open pit design
and foundation information to assist in infrastructure design. By the end of 2011, a total of approximately 38,328 meters
(125,700 feet) of drilling in 229 holes had been completed on the Lik property by the Company (Zazu) and the previous
owners. No drilling has been completed on the Lik project since 2011.
9. Sampling, Analysis and Security of Samples
Pre-Zazu Drilling
Core recoveries were typically high within the massive sulfides, but lower, more variable recoveries were obtained in
the unmineralized and weakly mineralized sections. The entire core obtained from the Lik deposit, usually NQ-size, was
logged on site. All of the core containing sulfide mineralization was cut using diamond saws and half of the core was sent for
assay. Reference samples were not included in the sample stream. Sample lengths in massive sulfides were typically from two
to three feet, but occasionally up to nine feet. Sample lengths were controlled by geology and the location of depth markers in
the core boxes.
Most of the samples were assayed by Bondar Clegg Laboratory Group (“Bondar Clegg”) of Vancouver British
Columbia. At various times, the laboratory-maintained preparation facilities in Anchorage and Fairbanks Alaska. In the initial
years, when the bulk of the drilling was completed, it is believed that sample preparation and analysis were carried out in
Vancouver. Bondar Clegg was not a registered laboratory at that time. However, Bondar Clegg was a recognized, reputable
laboratory and was experienced in the use of atomic absorption spectrophotometry.
As the entire core was logged and sampled in an isolated field camp, security was not a major concern because access
to the camp was closely controlled. It is noted that four different companies (WGM, GCO, Noranda and Moneta) have
completed drilling programs at the Lik property and all of them have obtained consistent results. The work was considered
completed to industry standards in use at the time of the work. Sample preparation was completed in the assay laboratory.
Zazu Drilling
Drill core obtained during the 2007, 2008 and 2011 drilling campaigns was logged on site. The entire core containing
sulfide mineralization was sawn using diamond saws and half of the core was sent for assay. All massive and high-sulfide cores
29
were sampled. Visual methods were used to select sample boundaries and lengths. The mineralization at Lik is considered to
be appropriately logged and sampled. It is not evident that logging or sampling is leading to any bias in the sample results. An
examination of logging showed that core recovery in sulfide areas was generally very high.
Core drilled in 2007 was placed in the sample bags, the air was evacuated and replaced with nitrogen. The samples
were sent to Kotzebue by charter and then by licensed carrier to Anchorage. The samples were stored under refrigeration in
Anchorage. The samples were dispatched to G & T Metallurgical Services Ltd. (“G & T”) of Kamloops, British Columbia, an
ISO 9001:2000 certified laboratory for precious metals and base metals. As well as completing metallurgical testing, G & T
crushed and analyzed the samples. The 2008 diamond drill core was not required for metallurgical testing and core was
handled normally. Sawn samples were securely bagged and boxed on site and dispatched to a facility of ALS Laboratory Group
(“ALS Chemex”) located in Fairbanks, Alaska, for sample preparation. Transportation of the samples was through third-party
companies that provided secure transportation services. The pulps were analyzed at ALS Chemex located in Fairbanks or Elko,
Nevada. Zazu did not participate in any part of the sample preparation or analysis except for cutting core and selecting sample
intervals.
Check samples from the 2007 drilling program and all samples from the 2008 drilling campaign were sent to the
preparation and assaying facilities of ALS Chemex (ISO 17025 accreditation). Other QA/QC procedures employed by Zazu
included the use of blanks (unmineralized core from outside of the mineralized zone) and quartered core duplicates. Zazu was
unable to obtain acceptable reference samples for the 2007 field season and reference samples were not included as part of the
2007 ongoing QA/QC program. Reproducibility between G & T and ALS Chemex was found to be good.
.
10. Prefeasibility Studies
Zazu completed a PEA in 2014 that incorporated a variety of prefeasibility level studies into the analysis. These
studies included resource estimation, mining and processing recovery estimates, a preliminary mining and processing plan,
infrastructure layout, environmental considerations and an economic analysis based on the base case parameters. The PEA
envisioned an open pit mining operation with a 5,500 ton per day floatation mill for processing resulting in a nine-year mine
life. Concentrates would be handled through the DeLong Mountain Regional Transportation System (the “DMTS”) road and
port system that currently handles all concentrate produced by the nearby Red Dog zinc mine of Teck. A summary of
metallurgical testing and mineral processing is provided below. The PEA analyzed the Lik project as a stand-alone operation
and assumes construction of its own independent processing, tailings and port facilities. Alternate development scenarios might
be developed utilizing infrastructure under the control of the nearby Red Dog operation. However, no agreements are in place
to develop such plans and are therefore hypothetical.
Prior to the S-K 1300 Lik TRS report, Solitario filed on SEDAR in Canada: Technical Report; Zazu Metals
Corporation, Lik Deposit, Alaska, USA; Report Date: April 23, 2014; Effective Date: March 3, 2014; prepared by JDS Energy
and Mining Inc (“JDS”).
11. Metallurgical Testing and Mineral Processing
There have been five metallurgical test work reports issued to date on the Lik ores. The most recent and
comprehensive processing and metallurgical testing programs include work performed by G&T and by SGS. Samples
collected during drilling in 2007 and 2008 were composited into one Master Composite for testing at G&T in 2008, and later
testing by SGS was carried out in 2010 on the remainder of the Master Composite. These key testing results have formed the
basis for this economic evaluation of the Lik deposit. Results are summarized in the table below:
Summary of SGS 2010 and G&T 2008 Metallurgical Test Results
Test
Element
Feed
Lead Concentrate
Zinc Concentrate
Grade Grade Recovery Grade Recovery
52.00
69.10
SGS 2010
G&T 2008
Pb%
Zn%
Ag gpt
Pb%
Zn%
Ag gpt
2.83
9.56
37
2.36
8.47
34
7.39
55
70.30
4.17
68
1.88
54.60
68
1.57
52.20
64
1.73
9.70
83.10
26.6
9.4
86.9
26.9
9.6
2.91
5.5
70.3
1.20
4.8
69.7
Pb%
2.60
61.15
30
Average Used for
Mass Balance and
NSR Estimates
Zn%
9.02
5.78
Ag gpt
36
62
2.06
5.2
53.40
66
85.0
26.8
The metallurgical flowsheet for this PEA includes conventional crushing, grinding, and floatation processing methods.
Run-of–Mine (ROM) ore will be delivered to a primary crushing plant and stored in a coarse ore stockpile awaiting reclaim
into the grinding circuit. Crusher ore will be reclaimed and delivered to a two-stage grinding circuit equipped with a Semi-
Autogenous Grinding (SAG) mill and a ball mill in closed circuit with cyclones.
Recoveries from these modeled methods and metallurgical testing conducted to date are anticipated to be 85% of zinc
to the zinc concentrate and 69.7% of the lead to the lead concentrate. Silver may also be recovered and payable at times in the
zinc concentrate and, more significantly, in the lead concentrate.
12. Reserves and Resources
There are no reported mineral reserves at the Lik project. See “Mineral Resources” below for the mineral resources at
the Lik project.
13. Mining Operations
No commercial mining operations to recover metals have occurred on the project.
14. Planned Exploration and Development
Solitario and Teck are in final discussions to jointly fund a 2022 exploration program, with Teck acting as project
manager. The program, if approved, consists of drilling three core holes totaling approximately 2,130 feet. Drill targets under
consideration are extensions to the currently defined Lik deposit on the northwest and southern limits of the deposit, including
one hole to test for stacked mineralized horizons. Drilling is expected to begin during the 2022 summer field season. Besides
drilling, a gravity geophysical survey west of the Lik deposit is planned where favorable stratigraphy to host zinc
mineralization similar to Lik is thought to exist at shallow depths. Gravity geophysics have proven very effective in detecting
zinc mineralization at depth. We expect to reach a final decision on this program early in the second quarter of 2022. Timing
of this program could be impacted by COVID-19 restrictions.
Chambara Zinc Property (Peru)
In April 2008, we signed the Minera Chambara shareholders’ agreement with Votorantim on Solitario's 100%-owned
Chambara zinc project. In 2015 Votorantim transferred its interest in the Chambara project to Milpo. In October of 2017,
Milpo and Votorantim merged to form Nexa. For the remainder of this Chambara property section, all references to
Votorantim, Milpo or Nexa are collectively referred to as “Nexa.”
The original purpose of the Chambara joint venture was to collectively pool independently owned Solitario
and Nexa properties into a jointly held joint venture. These properties were located within a large area of interest in northern
Peru measuring approximately 200 by 85 kilometers, but outside of the Florida Canyon property position. Nexa originally
contributed 52 mineral concessions within the area of interest totaling 52,000 hectares to Minera Chambara for a 15% interest
in Minera Chambara. We contributed 9,600 hectares of mineral claims and an extensive exploration data base in our
possession for an 85% interest in Minera Chambara. Existing and future acquired properties subject to the terms of the
shareholders’ agreement will be controlled by Minera Chambara. Minera Chambara dropped selected concessions in 2013 and
2016 and acquired the rights to 13 new concessions totaling 11,600 hectares in 2017. The current claim holdings of Minera
Chambara are 48 concessions totaling 36,080 hectares of valid concessions that completely surround the Florida Canyon
project area held by Minera Bongará. As of December 31, 2021, Minera Chambara’s only assets are the properties and Minera
Chambara has no debt. Nexa may increase its shareholding interest to 49% through cumulative spending of $6,250,000 and
may further increase its interest to 70% by funding a feasibility study and providing construction financing for Solitario's
interest. If Nexa provides such construction financing, we would repay that financing, including interest, from 80% of
Solitario's portion of the project cash flow.
Significant geochemical anomalies and outcropping mineralization have been identified at several locations on the
Chambara property. During 2021 Nexa conducted geologic mapping and geochemical sampling at the San Jose and Naranjitos
prospects which were initially discovered by Solitario in the 1990’s. Significant new geologic information collected reveal that
at least some of the San Jose mineralization is found in the same stratigraphic location as the Florida Canyon deposit which
indicates that the target for future drilling is closer to the surface than previously thought. It is known that the size and strength
31
of the geochemical signature at San Jose is similar to that at Florida Canyon even though surface exploration is still at a very
early stage. Even less work has been done at Naranjitos but that project also appears to be very prospective.
There are no reported mineral reserves or mineral resources at the Chambara project.
Discontinued Projects
During 2021 we recorded $17,000 of mineral property impairment related our its decision to abandon the Gold Coin
project in Arizona. During 2020 we recorded $6,000 of mineral property impairment related to our decision to abandon its La
Promesa project in Peru.
Mineral Resources
The following mineral resources summary represents Solitario’s interest in the mineral resources as provided in the S-
K 1300 Florida Canyon TRS at Solitario’s current 39% interest at the Florida Canyon Project in Peru and Solitario’s interest in
the mineral resources provided in the S-K 1300 Lik TRS at Solitario’s current 50% interest at the Lik Project in Alaska, in each
case as of the end of the fiscal year ended December 31, 2021.
Lik (1)(3)(5)
Tonnes
(000)
Zinc %
Zinc lbs
(000)
silver (g/t)
Oz
(000)
Lead %
Lead lbs
(000)
Measured Mineral Resources
-
-
-
-
-
-
-
Indicated Mineral Resources
8,800
8.07
1,565,903
50.10
14,175
2.68
520,027
Measured+Indicated Resources
8,800
8.07
1,565,903
50.10
14,175
2.68
520,027
Inferred Mineral Resources.
1,400
8.64
266,717
38.90
1,751
2.73
84,275
Florida Canyon (2)(4)
Measured Mineral Resources
315
11.32
78,553
15.42
156
1.39
9,646
Indicated Mineral Resources
638
10.28
144,512
14.87
305
1.31
18,415
Measured+Indicated Resources
952
10.62
222,988
15.05
461
1.33
27,926
Inferred Mineral Resources.
5,795
9.63
1,230,499
11.28
2,102
1.26
161,000
Total
Measured Mineral Resources
315
11.32
78,553
15.42
156
1.39
9,646
Indicated Mineral Resources
9,438
8.22
1,710,415
47.72
14,480
2.59
538,443
Measured+Indicated Resources
9,752
8.32
1,788,890
46.68
14,636
2.55
547,953
Inferred Mineral Resources.
7,195
9.44
1,497,216
16.65
3,853
1.55
245,275
(1) Price assumptions for Lik: Zn: $0.92/lb.; Pb: $1.01/lb.: Ag: $19.43/oz
(2) Price assumptions for Florida Canyon: Zn: $1.20/lb.; Pb: $1.00/lb.: Ag: $16.50/oz
(3) Mineral resource recoveries for Lik: Zn: 85.0%; Pb: 69.7%; Ag:26.87%
(4) Mineral resource recoveries for Florida Canyon: Zn: 79.8%; Pb: 74.3%; Ag: 51.7%
(5) Mineral resource for Lik is reported at a cutoff grade of 5% Pb%+Zn%.
(6) Mineral resource cut-offs for Florida Canyon are NSR $41.40/t for sub-level stoping, $42.93/t for cut and fill stoping and $40.61/t for
room and pillar.
Internal controls
32
Solitario’s internal controls are designed to provide reasonable assurance that information and processes utilized in
assessing its exploration results as well as mineral resource estimation are reasonable and in line with industry best practices.
These internal controls include quality assurance and quality control (“QA/QC”) programs in the collection, analysis,
verification, storage, reporting and use of drillhole, assay, metallurgical and other technical and scientific information,
including the following:
• Review of joint venture analysis/data/and programs by Solitario qualified personnel, including approval of budgets
and annual review of geologic and financial results of programs.
• All mineral resource calculations are prepared by independent third-party engineering firms and reviewed by
Solitario’s qualified person prior to final publication;
• Maintenance of a complete chain-of-custody, ensuring the traceability and integrity of the samples at all handling
stages from collection, transportation, sample preparation and analysis to long-term sample storage;
• Third-party fully certified labs are used for assays used in public disclosure or resource models; and
• QA/QC data are regularly verified to ensure that outliers sample mix-ups, contamination, or laboratory biases during
the sample preparation and analysis steps are correctly identified, mitigated or remediated.
Mineral resources and mineral reserves are estimates that contain inherent risk and depend upon geologic
interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. See Risk
Factors in Item 1A for additional information.
“Allochthonous” means originating in a place other than a place where it was formed.
GLOSSARY OF MINING TERMS
“Assay” means to test minerals by chemical or other methods for the purpose of determining the amount of valuable metals
contained.
“Amphiobile” means any of a class of rock-forming silicate or aluminosilicate minerals typically occurring as fibrous or
columnar crystals.
“Anticline” means folds in which each half of the fold dips away front the crest.
“Biotite” means a black, dark brown, or greenish black variety of mica, occurring in many igneous and metamorphic rocks.
“Breccia” means rock consisting of fragments, more or less angular, in a matrix of finer-grained material or of cementing
material.
“Carbonaceous” means a compound relating to or containing carbon.
“Chert” means a sedimentary rock of microcrystalline quartz (the mineral form Silicon dioxide - SiO2).
“Claim” or “Concession” means a mining interest giving its holder the right to prospect, explore for and exploit minerals
within a defined area.
“Clastic” means pertaining to rock or rocks composed of fragments or particles of older rocks or previously existing solid
matter; fragmental.
“Deposit” means an informal term for an accumulation of mineral ores.
“Development” means work carried out for the purpose of opening up a mineral deposit and making the actual ore extraction
possible.
“Domal” means of a dome shape.
“Dolomite” means calcium magnesium carbonate, CaMg (CO3)2, occurring in crystals and in masses.
“Facies” means the appearance and characteristics of a sedimentary deposit, especially as they reflect the conditions and
environment of deposition and serve to distinguish the deposit from contiguous deposits.
“Fault” means a fracture in rock along which there has been displacement of the two sides parallel to the fracture.
“Galena” means a bluish gray or black mineral of metallic appearance, generally the chief ore of lead sulfide.
“Gabbros” means a granular igneous rock composed essentially of calcic plagioclase, a ferromagnesian mineral, and accessory
minerals.
“gpt” means grams per tonne.
“Indicated Mineral Resource” means that part of a mineral resource for which quantity and grade or quality are estimated on
the basis of adequate geological evidence and sampling.
33
“Inferred Mineral Resource” means that part of a mineral resource for which quantity and grade or quality are estimated on
the basis of limited geological evidence and sampling.
“Karst” means a landscape that is characterized by the features of solution weathering and erosion in the subsurface. These
features include caves, sinkholes, disappearing streams, subsurface drainage and deeply incised narrow canyons.
“Manto deposits” means replacement ore bodies that are strata bound, irregular to rod shaped ore occurrences usually
horizontal or near horizontal in attitude.
“Metabasalts” means generally fine to medium grained basalts, dominated by plagioclase, quartz, amphibole, and biotite rock.
“Measured Mineral Resource” means that part of a mineral resource for which quantity and grade or quality are estimated on
the basis of conclusive geological evidence and sampling.
“Mineral Resource” means as a concentration or occurrence of material of economic interest in or on the earth’s crust in such
form, grade or quality, and quantity that there are reasonable prospects for its economic extraction.
“Mineralization” means the concentration of metals within a body of rock.
“NSR” means net smelter return royalty.
“Ore” means material containing minerals that can be economically extracted.
“Ounce” means a troy ounce.
“Oxide” means a mineral class in which the chemical compound that typically contains an 0 -2 oxygen atom in its chemical
formula.
”Plagioclaste” means a group of feldspar minerals that form a solid solution series ranging from pure albite, Na(AlSi3O8), to
pure anorthite, Ca(Al2Si2O8).
“Pyrite” means a compound of iron sulfide (FeSO2) commonly found in mineral rich areas.
“Reserves” or “Mineral Reserve” means that part of a mineral deposit, which could be economically and legally extracted or
produced at the time of the reserve determination.
“Sampling” means selecting a fractional, but representative, part of a mineral deposit for analysis.
“Shale” means a fine-grained sedimentary rock that forms from the compaction of silt and clay commonly referred to as mud.
“Sediment” means solid material settled from suspension in a liquid.
“Sedimentary Exhalative Deposits (SEDEX)” means ore deposits which have been formed by the release of ore-bearing
hydrothermal fluids into a water reservoir.
“Silicification” means the process in which organic matter becomes saturated with silica (silicon dioxide).
“Sphalerite” means a very common mineral, zinc sulfide, usually containing some iron and a little cadmium, occurring in
yellow, brown, or black crystals or cleavable masses with resinous luster and it is the principal ore of zinc.
“Spectrophotometry” means the quantitative measurement of the reflection properties of a material as a function of its
wavelength.
“Stratiform” means formed parallel to the bedding places of surrounding rock.
“Stratigraphy” means the arrangement of rock strata, especially as to the geographic, chronologic order of sequence (age),
classification, characteristics and formation.
“Strike” when used as a noun, means the direction, course or bearing of a vein or rock formation measured on a level surface
and, when used as a verb, means to take such direction, course or bearing.
“Subcrop” means an occurrence of strata beneath the subsurface of an inclusive stratigraphic unit that succeeds an
unconformity on which there is marked overstep.
“Sulfide” means a compound of sulfur and some other element.
“Synform” means A topographic feature which is composed of sedimentary layers in a concave formation.
“Syngenetic” means a mineral deposit that forms at the same time as the surrounding rock.
“Ton” means a short ton (2,000 pounds).
“Tonne” means a metric measure that contains 2,204.6 pounds or 1,000 kilograms.
“Vein” means a fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source.
Item 3. Legal Proceedings
None
34
Item 4. Mine Safety Disclosures
Not applicable
35
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock trades on the NYSE American exchange under the symbol “XPL” and on the TSX under the
symbol “SLR.” Since 2008 trading volume of our common stock on the NYSE American exchange has exceeded the trading
volume of our stock on the TSX by a substantial margin.
Shares authorized for issuance under equity compensation plans
On June 18, 2013 Solitario’s shareholders approved the 2013 Solitario Exploration & Royalty Corp. Omnibus Stock
and Incentive Plan (the “2013 Plan”). On June 29, 2017, Solitario shareholders approved an amendment to the 2013 Plan,
which increased the number of shares of common stock available for issuance under the 2013 Plan from 1,750,000 to
5,750,000. Under the terms of the 2013 Plan, the Board of Directors may grant awards to directors, officers, employees and
consultants. Such awards may take the form of stock options, stock appreciation rights, restricted stock, and restricted stock
units. The terms and conditions of the awards are pursuant to the 2013 Plan and options are granted by the Board of Directors
or a committee appointed by the Board of Directors.
On May 5, 2021, the Board of Directors granted 90,000 stock options under the 2013 Plan. These options have a five-
year life, vested 25% on the date of grant and vest 25% on each of the next three anniversary dates of the date of grant, have an
exercise price of $0.67 per share, and a grant date fair value of $37,000, based upon a Black-Scholes model with an expected
volatility of 76%, and a risk-free interest rate of 0.9%. On June 10, 2021, the Board of Directors granted 50,000 stock options
under the 2013 Plan. These options have a five-year life, vested 25% on the date of grant and vest 25% on each of the next
three anniversary dates of the date of grant, have an exercise price of $0.69 per share, and a grant date fair value of $20,000,
based upon a Black-Scholes model with an expected volatility of 76%, and a risk-free interest rate of 0.9%.
On April 2, 2020, the Board of Directors granted 1,325,000 stock options under the 2013 Plan. These options have a
five-year life, vested 25% on the date of grant and vest 25% on each of the next three anniversary dates of the date of grant,
have an exercise price of $0.20 per share, and a grant date fair value of $145,000, based upon a Black-Scholes model with an
expected volatility of 67%, and a risk-free interest rate of 0.4%.
Equity Compensation Plan Information as of December 31, 2021:
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(a)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(2013 Plan – US$)
(b)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
5,513,000
-
5,513,000
0.49
N/A
0.49
1,438
-
1,438
Plan category
2013 Plan
Equity compensation plans approved by
security holders
Equity compensation plans not approved
by security holders
Total 2013 Plan
Holders of our common stock
As of March 30, 2021, we have approximately 14,500 holders of our common stock.
Dividend policy
We have not paid a dividend in our history and do not anticipate paying a dividend in the foreseeable future.
Issuer purchases of equity securities
On October 28, 2015, the Board of Directors authorized a share repurchase program pursuant to which Solitario may
acquire up to 2 million of its common shares. All purchases were made in open-market transactions through a broker dealer.
36
During 2020 the Board of Directors extended the termination date of the repurchase program to December 31, 2021; however,
the repurchase program did not obligate us to acquire any particular amount of our shares. We did not purchase any shares
under the share repurchase program during the year ended December 31, 2021. During the year ended December 31, 2020 we
purchased a total of 24,700 shares of our common stock under the program for an aggregate purchase price of $5,000. As of
December 31, 2021, we have purchased a total of 994,000 shares of our common stock for an aggregate purchase price of
$467,000 under the share repurchase program since its inception. The share repurchase program expired on December 31,
2021.
Item 6. Selected Financial Data [Reserved]
37
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the information contained in the consolidated financial
statements and notes thereto included in Item 8, "Financial Statements and Supplementary Data." Our financial condition and
results of operations are not necessarily indicative of what may be expected in future years.
(a). Effects of COVID-19
As of December 31, 2021, the effects of COVID-19 have not had a material adverse effect on Solitario’s administrative
activities as we have only three full-time employees, all of whom can work remotely, and are not required to meet in person on a
regular basis. We use part-time and contract geologists at our South Dakota project and to date, the effects of COVID-19 have
not had a material impact on our operations at the Golden Crest project. However, as a result of the on-going pandemic our
joint-venture partners, Teck at our Lik project and Nexa at our Florida Canyon project, reduced, with our concurrence, the
planned exploration activities on these projects for 2021 and are reviewing their 2022 exploration plans on our projects due to
several factors. These factors include, but are not limited, to; (i) our partners’ limited exploration staffing; (ii) the need to put
into place safety and operational protocols for COVID-19 and other potential pandemics related to their exploration activities;
(iii) the ability to reallocate exploration resources to non-site specific tasks, such as data and resource review, and planning for
future drilling; and (iv) the ability to modify and or postpone 2022 exploration activities using the interim period to enhance
future potential exploration programs. Solitario does not believe these steps by our joint venture partners with regard to 2021
exploration activities or plans for 2022 exploration reflects on the long-term economic potential of either its Lik or Florida
Canyon projects.
During 2020 and 2021 as a result of the uncertainty caused by COVID-19, and the resulting market volatility and
unknown long-term effects of COVID-19, Solitario took steps to reduce the potential impact of COVID-19 on its liquidity and
capital resources by; (i) obtaining the PPP Loan (defined below); (ii) effecting salary reductions for all of its employees; (iii)
reducing its contractual amounts owed to contractors; (iv) reducing certain non-core activities such as travel and investor
relations; and (v) reducing or delaying certain capital costs such as equipment replacement. We do not anticipate taking further
similar steps during 2022 and are currently planning expanded exploration at our Golden Crest project. Solitario believes its
current cash and short-term assets together with potential access to capital under its ATM program or otherwise, provide
Solitario with the flexibility to continue its short and mid-term operations.
Nonetheless, the extent to which COVID-19 impacts our business, including our exploration and other activities and the
market for our securities, will depend on future developments, which are highly uncertain and cannot be accurately predicted at
this time. Please see Item 1A, “Risk Factors” contained in this Form 10-K.
(b). Business Overview and Summary
We are an exploration stage company as defined by rules issued by the SEC. We were incorporated in the state of
Colorado on November 15, 1984 as a wholly owned subsidiary of Crown. In July 1994, we became a publicly traded company
on the TSX through our initial public offering. We have been actively involved in mineral exploration since 1993. Our primary
focus is the acquisition and exploration of zinc-related and precious metals exploration mineral properties. We have historically
held a portfolio of mineral exploration properties and assets for future sale, for joint venture or to create a royalty up to the
development stage of the project (development activities include, among other things, completion of a feasibility study for the
identification of proven and probable reserves, as well as permitting and preparing a deposit for mining). At that point, or
sometime prior to that point, we would likely attempt to sell a given mineral property, pursue its development either on our own
or through a joint venture with a partner that has expertise in mining operations, or obtain a royalty from a third party that
continues to advance the property. Although our mineral properties may be developed in the future by us, through a joint
venture or by a third party, we have never developed a mineral property. In addition to focusing on our current mineral
exploration properties, we also from time to time evaluate potential strategic transactions for the acquisition of new precious and
base metal properties and assets with exploration potential.
Our current geographic focus for the evaluation of potential mineral properties is in North and South America;
however, we have conducted property evaluations for potential acquisition in other parts of the world. At December 31, 2021,
we consider our carried interest in our Florida Canyon project in Peru, our interest in the Lik project in Alaska and our Golden
Crest project in South Dakota to be our core mineral property assets. We are conducting independent exploration activities in
Peru and through joint ventures operated by our partners in Peru and the United States. We conduct potential acquisition
evaluations in other countries of both North and South America.
As of December 31, 2021, we have balances of cash and short-term investments that we anticipate using, in part, to
fund planned 2022 exploration, to further the exploration of our Lik and Golden Crest projects, conduct reconnaissance
exploration and to potentially acquire additional mineral properties. The fluctuations in commodity prices of base and precious
38
metals have contributed to a challenging environment for mineral exploration and development, which has created
opportunities as well as challenges for the potential acquisition of advanced mineral exploration projects or other related assets
at potentially attractive terms.
In analyzing our activities, the most significant aspect relates to results of our exploration and potential development
activities and those of our joint venture partners on a property-by-property basis. When our exploration or potential
development activities, including drilling, sampling and geologic testing, indicate a project may not be economically feasible or
contain sufficient geologic or economic potential we may impair or completely write-off the property. Another significant
factor in the success or failure of our activities is the price of commodities. For example, when the price of zinc or gold is
down, the value of zinc, gold or other precious metal-bearing mineral properties, respectively, decreases; however, when the
price of zinc or gold is up it may become more difficult and expensive to locate and acquire new zinc, gold or other precious
metal-bearing mineral properties with potential to have economic deposits.
The potential sale, joint venture or development of our mineral properties will occur, if at all, on an infrequent basis.
Historically, we have recorded revenues and met our need for capital in the past through (i) the issuance of common stock, (ii)
the sale of properties and assets; (iii) a royalty sale on our former Mt. Hamilton property; (iv) the sale of our shares of Vendetta
and Kinross common stock; (v) long-term debt secured by our mineral properties; (vi) short-term borrowing; and (vii) joint
venture payments, including delay rental payments. During 2021 we issued 3,100,000 shares of common stock in a directed
registered offering for net proceeds of $1,542,000 and also sold 643,033 shares of common stock pursuant to an ATM program
for net proceeds of $299,000. We did not record any mineral property income from the sale of mineral properties during 2021
or 2020. Although we sold certain royalty properties to SilverStream for Cdn$600,000 and recorded $408,000 in mineral
property revenue in January 2019, our last major property asset sale occurred in 2015, when we recorded a gain on the sale of
our former interest in Mount Hamilton LLC of $12,309,000. During June 2012, we sold a royalty interest in our Mt. Hamilton
project to Sandstorm Gold Ltd. for $10,000,000. Prior to the sale of our interest in Mt. Hamilton LLC, our last significant cash
proceeds from a property or asset sale were recorded in 2000 upon the sale of our former Yanacocha property for
$6,000,000. Proceeds from the sale or joint venture of properties, although potentially significant when they occur, have not
been a consistent annual source of cash and would occur in the future, if at all, on an infrequent basis. We have reduced our
exposure to the costs of our exploration activities in the past through the use of joint ventures. Although we anticipate the use
of joint venture funding for some of our exploration activities will continue for the foreseeable future, we can provide no
assurance that these or other sources of capital will be available in sufficient amounts to meet our needs, if at all.
2019 Royalty sale
As part of the Royalty Sale, Solitario received a Cdn$350,000 convertible note (the “SilverStream Note”) from the
purchaser, SilverStream. The SilverStream Note was convertible into common shares of SilverStream, at the discretion of
SilverStream, by providing us a notice of conversion.
On May 19, 2020, SilverStream completed an initial public offering, including changing its name to Vox Royalty
Corp., and, in accordance with the terms of the SilverStream Note, issued Solitario 137,255 shares of common stock of Vox in
full satisfaction of obligations owed under the SilverStream Note. Solitario recorded its initial investment in the Vox common
shares at the initial public offering price, or a total of Cdn$412,000 or $294,000. Solitario recorded other income of $44,000
for the gain on the conversion of the SilverStream Note during 2020. Solitario recorded interest income from the SilverStream
Note of $7,000 during 2020.
(c). Results of Operations
Comparison of the year ended December 31, 2021 to the year ended December 31, 2020
We had a net loss of $2,367,000 or $0.04 per basic and diluted share for the year ended December 31, 2021 compared
to a loss of $939,000 or $0.02 per basic and diluted share for the year ended December 31, 2020. As explained in more detail
below, the primary reasons for the increase in net loss during 2021 compared to 2020 was (i) an increase in exploration expense
to $1,198,000 during 2021 compared to exploration expense of $413,000 during 2020; (ii) a realized loss on sale of marketable
equity securities of $248,000 during 2021 compared to a realized gain of $50,000 during 2020; (iii) a reduction in interest and
dividend income to $123,000 during 2021 compared to interest and dividend income of $184,000 during 2020; (iv) a reduction
in other income to $10,000 during 2021 compared to other income of $104,000 during 2020; (v) a reduction in the unrealized
gain on marketable equity securities during 2021 to $82,000 compared to an unrealized gain of $360,000 during 2020; (vi)
mineral property impairment of $17,000 during 2021 compared to mineral property impairment of $6,000 during 2020 and an
increase in unrealized loss on short-term investments to $102,000 in 2021 compared to a $57,000 in 2020. Partially offsetting
these factors that contributed to the increase in our net loss in 2021 were the following (i) a decrease in general and
administrative expense to $952,000 during 2021 compared to general and administrative expense of $1,044,000 during 2020;
39
and (ii) a reduction in the loss on derivative instruments to $38,000 during 2021 compared to a loss on derivative instruments
of $92,000 during 2020. Each of these items is discussed in greater detail below.
Our primary exploration activities during 2021 were related to our Golden Crest project in South Dakota and our Lik
project in Alaska. We recorded $420,000 of exploration costs at Golden Crest during 2021, which consisted primarily of
geologic evaluation of claims for staking, mapping and soil and rock sampling with related assay costs. There were no similar
costs during 2020 related to Golden Crest as we acquired the property during 2021. In addition to these exploration costs, we
also capitalized $695,000 of mineral acquisition costs at Golden Crest for our initial acquisition costs related to leasing, staking
and filings on claims acquired during 2021. All future exploration and filing costs related to these claims will be expensed as
incurred. Solitario’s share of exploration expenses at our Lik project in Alaska were $362,000 during 2021 compared to
$14,000 of exploration expense at the Lik project 2020. Teck undertook a geologic evaluation of the Lik project which
included on-site work of mapping and analysis of prior drilling and planning for drilling during 2022 as part of a 50/50
exploration program managed by Teck. We are evaluating, along with Teck, a drilling program for 2022, which was originally
planned for 2021, but was delayed due to Teck staffing availability and extended permitting. The program, if approved,
consists of drilling two or three core holes totaling approximately 1,000 meters. Drill targets under consideration include an
area approximately one kilometer north of the Lik deposit and also below the Lik deposit to test for stacked mineralized
horizons. Solitario would be responsible for 50% of the expenditures. Given that the exploration program at our Florida
Canyon project in Peru is fully funded by our joint venture partner, Nexa, we had relatively small exploration expenses at
Florida Canyon of $85,000 during 2021 compared to $22,000 in 2020. During 2021 we made the decision to abandon our Gold
Coin project in Arizona after initial exploration efforts did not provide sufficient encouragement to move the project forward.
The remaining exploration expenditures during 2021 and 2020 were reconnaissance work, including the evaluation of potential
mineral properties for acquisition, including work at Golden Crest, prior to its acquisition. Our 2022 total exploration and
development budget, excluding any new projects, in which we may acquire an interest, is approximately $2,350,000, which
reflects a significant increase in the anticipated activities at the Golden Crest project as well as the proposed exploration and
drilling program at Lik. The proposed 2022 budget does not reflect any costs for drilling the Golden Crest project or any
exploration costs for projects or assets we may acquire during 2022. Our planned exploration activities in 2022 may be
modified, as necessary for any drilling programs we may undertake at Golden Crest or projects we may acquire, changes
related to any number of factors including COVID-19 adjustments and delays, potential acquisition of new properties, joint
venture funding, commodity prices and changes in the deployment of our capital.
Exploration expense (in thousands) by property consisted of the following:
(in thousands of dollars)
Property Name
Golden Crest
Florida Canyon
Lik project
Gold Coin
Reconnaissance exploration activity
Total exploration expense
Year ended
December 31,
2021
2020
$420
85
362
25
306
$1,198
$ -
22
14
-
377
$413
We believe a discussion of our general and administrative costs should be viewed without the non-cash stock option
compensation expense (discussed below). Excluding these costs, general and administrative costs were $828,000 during 2021
compared to $729,000 during 2020. Salary and benefits expense increased to $301,000 during 2021 compared to $291,000
during 2020. In addition, (i) legal and accounting costs increased to $199,000 during 2021 compared to $131,000 during 2020,
primarily due to increased activity, including the ATM financing and the private placement of 3,100,000 common stock for
proceeds of $1,542,000; (ii) travel and investor relation costs increased to $234,000 during 2021 compared to $200,000 during
2020 as a result of increased investor relations costs related to the Golden Crest project and other investor out-reach during
2021 compared to 2020; and (iii) other costs related to office, insurance and miscellaneous costs decreased to $94,000 during
2021 compared to $107,000 during 2020. We anticipate general and administrative costs for 2022 will be somewhat higher
than the costs incurred during 2021; however, this amount may vary significantly during 2022 depending on the outcome of our
exploration activity at Golden Crest and Lik and any strategic transactions we may attempt to execute upon. We have forecast
2022 general and administrative costs to be approximately $966,000, excluding non-cash stock option compensation expense.
We account for our employee stock options under the provisions of Accounting Standards Codification No. 718
(“ASC No. 718”). We recognize stock option compensation expense on the date of grant for 25% of the grant date fair value,
and subsequently, based upon a straight-line amortization of the grant date fair value of each of our outstanding options.
During the year ended December 31, 2021, we recorded $124,000 of non-cash stock option expense for the amortization of our
outstanding options grant date fair value with a credit to additional paid-in-capital compared to $315,000 of non-cash stock
option compensation expense during 2020. The amount was
40
lower during 2021 primarily due to the amortization of options which became fully vested during 2021 and a lower grant date
fair value amortization during 2021. During 2020 we charged general and administrative expense $36,000 for the amortization
of 25% of the grant date fair value of 1,325,000 new options granted during 2020 compared to expense of $23,000 for the
amortization of 25% of the grant date fair value of the 140,000 new options granted during 2021. Most of our remaining stock
option compensation during 2021 and 2020 related to the normal vesting of other outstanding options. See Note 11,
“Employee Stock Compensation Plans,” to our consolidated financial statements in Item 8, “Financial Statements and
Supplementary Data to this Form 10-K” for an analysis of the changes in the fair value of our outstanding stock options and the
components that are used to determine the fair value.
We recorded an unrealized gain on marketable equity securities of $82,000 during 2021 compared to an unrealized
gain on marketable equity securities of $360,000 during 2020. The net gain during 2021 was primarily related to an unrealized
gain on marketable equity securities of $193,000 due to an increase in the value of our holdings of shares of Vendetta common
stock, and an unrealized gain on marketable equity securities of $53,000 on our holdings of Vox common stock offset by an
unrealized loss on marketable equity securities of $153,000 in the value of our holdings of Kinross common stock and an
unrealized loss on the value of our holdings of TNR of $11,000 during 2021. This compared to an unrealized gain in the value
of our holdings of (i) Vendetta common stock during 2020 of $60,000 along with (ii) $260,0000 on the value of our holdings of
Kinross common stock; (iii) $10,000 on our holdings of TNR common stock; and (iv) $30,000 on our holdings of TNR
common stock during 2020. Changes in the unrealized value of our holdings of marketable equity securities are related to the
changes in the fair values of those holdings which is dependent on the market prices of the individual securities.
During 2021 we sold 2,550,000 shares of Vendetta common stock for proceeds of $112,000 and recorded a realized
loss on the sales of $269,000 and we sold 430,000 shares of TNR common stock for proceeds of $27,000 and recorded a gain
on the sale of $19,000 and we sold 3,200 shares of Vox for proceeds of $8,000 and recorded a gain on the sale of $2,000.
During 2020 we acquired 137,255 shares of Vox recorded at $294,000 as part of the Royalty Sale in 2019 in exchange for the
SilverStream Note and we sold 2,900,000 shares of Vendetta for cash proceeds of $123,000 and a realized gain of $50,000.
See Note 3, “Marketable Equity Securities” to our consolidated financial statements in Item 8, “Financial Statements and
Supplementary Data” of this Form 10-K for additional discussion of our marketable equity securities. We may sell some of our
marketable equity securities from time to time during 2022 for working capital needs; however, we do not expect to sell all of
our holdings of marketable equity securities during 2022. Any proceeds we may receive from sales of marketable equity
securities during 2022 will be dependent on the quoted market price of the securities sold on the date of sale and may be at
prices below the fair value at December 31, 2021. See “Liquidity and Capital Resources” below.
We recorded a loss on derivative instruments of $38,000 during 2021 compared to a loss on derivative instruments of
$92,000 during 2020. The loss during 2021 was primarily related to a $46,000 loss on our Vendetta Warrants offset by a gain
on certain Kinross calls we sold for $8,000, which expired unexercised. The loss during 2020 was primarily related to certain
covered calls we sold against our holdings of Kinross common stock for cash proceeds of $103,000 and repurchases of those
calls prior to their expiration of $224,000 for a loss on derivative instruments of $121,000, which was partially offset by a gain
on derivative instruments during 2020 of $29,000 related to our Vendetta Warrants. See Note 7, “Derivative Instruments” to
our consolidated financial statements in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for
additional discussion of our derivative instruments. We anticipate we will continue to write calls against our holdings of
Kinross common stock in 2022 to provide additional income on a limited portion of shares of Kinross that Solitario may sell in
the near term, which is generally defined as less than one year.
We recorded $27,000 of depreciation and amortization during 2021 compared to $25,000 of depreciation and
amortization during 2020. The majority of our depreciation relates to depreciation on equipment acquired in 2017 as part of the
acquisition at the Lik project. We amortize these assets over a five-year period. We anticipate our 2022 depreciation and
amortization expense will be similar to our 2021 depreciation expense.
We recorded interest income of $123,000 during 2021 compared to interest income of $184,000 during 2020. The
decrease during 2021 was primarily related to a reduction in the outstanding balances of our investments in United States
Treasury securities and Bank Certificates of Deposit, which decreased to $5,087,000 at December 31, 2021 from a balance of
$5,798,000 at December 31, 2020. In addition, during 2021 we recorded an unrealized loss of $102,000 during 2021 the value
of our mark-to-market short term investments in United States Treasury securities compared to an unrealized loss of $57,000
during 2020as a result of declining interest rates. We anticipate our interest income will decrease in 2022 compared to 2021 as
a result of the use of our short-term investments and our cash balances for ordinary overhead, operational costs, and the
exploration, evaluation and or acquisition of mineral properties discussed above. See “Liquidity and Capital Resources,”
below, for further discussion of our cash and cash equivalent balances.
Our other income of $10,000 during 2021 related to the forgiveness of $10,000 remaining balance on our Paycheck
Protection Program loan (the “PPP Loan”) that originated in 2019 with an original balance of $70,000. Our other income
during 2020 of $104,000 related to (i) $44,000 of gain on the conversion of the SilverStream Note to Vox shares, and (ii)
41
forgiveness of $60,000 from the PPP Loan during 2020. See Note 8, “Paycheck Protection Program Loan” to our consolidated
financial statements in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for additional discussion of
the PPP Loan.
We recorded no deferred tax expense or benefit in either 2021 or 2020 as we provide a valuation allowance for the tax
benefit arising out of our net operating losses for all periods presented. See Note 6, “Income Taxes” to our consolidated
financial statements in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for additional discussion of
our income tax valuation allowance, deferred tax assets and our net operating losses for 2021 and 2020. We anticipate we will
continue to provide a valuation allowance for these net operating losses until we are in a net tax liability position with regards
to those countries where we operate or until it is more likely than not that we will be able to realize those net operating losses in
the future.
We regularly perform evaluations of our mineral property assets to assess the recoverability of our investments in
these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the
carrying amount of an asset may not be recoverable utilizing guidelines based upon future net cash flows from the asset as well
as our estimates of the geologic potential of early-stage mineral property and its related value for future sale, joint venture or
development by us or others. During 2021 we recorded $17,000 of mineral property impairment related to our decision to
abandon our Gold Coin project in Arizona. During 2020 we recorded $6,000 of mineral property impairment related to our
decision to abandon our La Promesa project in Peru.
(d). Liquidity and Capital Resources
Cash
As of December 31, 2021, we had $462,000 in cash. We intend to utilize a portion of this cash and a portion of our
short-term investments, discussed below, to fund our ordinary overhead, operational costs, exploration activities and for the
potential acquisition of additional mineral properties and other assets over the next several years.
Short-term Investments
As of December 31, 2021, we have USTS with maturities of 15 days to one year, recorded at their fair value of
$4,236,000. Solitario also holds FDIC insured bank certificates of deposit (“CD’s”) with face values between $100,000 and
$250,000 and maturities of three months to one year, which are recorded at their fair value of $851,000 as of December 31,
2021. The USTS and CD’s are recorded at their fair value based upon quoted market prices. Our short-term investments in
USTS and CD’s are highly liquid and may be sold in their entirety at any time at their quoted market price and are classified as
a current asset. We anticipate we will roll over that portion of our short-term investments not used for operating costs or
mineral property acquisitions as they mature during 2022.
Marketable Equity Securities
Our marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon
market quotes of the underlying securities. We owned 100,000 shares of Kinross common stock as of December 31, 2021,
which are recorded at their fair value of $581,000. As of December 31, 2021, we own 9,000,000 shares of Vendetta common
stock recorded at their fair market value of $356,000 and we own 134,055 shares of Vox common stock recorded at their fair
market value of $370,000. Changes in the fair value of marketable equity securities are recorded as gains and losses in the
statements of operations.
Working Capital
We had working capital of $6,883,000 at December 31, 2021 compared to working capital of $7,875,000 as of
December 31, 2020. Our working capital at December 31, 2021 consists primarily of our cash and cash equivalents, our
investment in short-term investments and our marketable equity securities, less our current liabilities of $276,000. As of
December 31, 2021, our cash balances along with our short-term investments and marketable equity securities are adequate to
fund our expected expenditures over the next year.
The nature of the mineral exploration business requires significant sources of capital to fund exploration, development
and operation of mining projects. We expect we will need additional capital if we decide to develop or operate any of our
current exploration projects or any projects or assets we may acquire. We anticipate we would finance any such development
through the use of our cash reserves, short-term investments, joint ventures, issuance of debt or equity, or the sale of other
exploration projects or assets.
42
Stock-Based Compensation Plans
As of December 31, 2021, options to acquire 5,513,000 shares of our common stock were outstanding. There are
4,718,000 options that are vested and exercisable at December 31, 2021. As of December 31, 2021, our outstanding options
include 3,013,000 options that are in the money with a weighted average exercise price of $0.26 per share, which is below the
market price of a share of Solitario common stock at December 31, 2021 of $0.50 per share as quoted on the NYSE American
exchange. See Note 11, “Employee Stock Compensation Plans” to our consolidated financial statements in Item 8, “Financial
Statements and Supplementary Data of this Form 10-K for a discussion of the activity in our 2013 Plan during 2021 and 2020.
We do not anticipate that stock option exercises will be a significant source of cash during 2021.
December 2021 Equity Offering
On December 6, 2021 we completed the sale of 3,100,000 shares of common stock (the “Shares”), at a price of $0.50
per share (the “Offering”) for net proceeds after expenses of $1,542,000. We did not engage an underwriter or placement agent
for the Offering, and therefore there were no underwriter discounts or commissions or placement agent fees. The sale of the
Shares was made through a subscription agreement between Solitario and each respective investor. The Shares were offered
and sold pursuant to our existing shelf registration statement on Form S-3 (File No. 333-249129). We filed a prospectus
supplement, dated December 1, 2021, with the SEC in connection with the sale of the Shares in the Offering. Three of our
executive officers participated in the Offering, purchasing 50,000 Shares each, on the same terms as the other investors. The
Offering was unanimously approved by our Board of Directors and the participation by our executive officers was also
unanimously approved by the Audit Committee of our Board of Directors.
At the Market Offering
On February 2, 2021, we entered into an at-the-market offering agreement (the “ATM Agreement”) with H. C.
Wainwright & Co., LLC (“Wainwright”), under which we may, from time to time, issue and sell shares of our common stock
through Wainwright as sales manager in an at-the-market offering under a prospectus supplement for aggregate sales proceeds
of up to $9.0 million (the “ATM Program”). The common stock is distributed at the market prices prevailing at the time of
sale. As a result, prices of the common stock sold under the ATM Program may vary as between purchasers and during the
period of distribution. The ATM Agreement provides that Wainwright is entitled to compensation for its services at a
commission rate of 3.0% of the gross sales price per share of common stock sold. During 2021, we recorded $144,000 as a
charge to additional paid-in-capital for one-time expenses related to entering into the ATM Agreement. During 2021, we sold
an aggregate of 643,033 shares of our common stock under the ATM Program at an average price of $0.68 per share for net
proceeds of $299,000 after commissions, sale, and one-time expenses. In March 2022, we sold 2,650,724 shares of our
common stock under the ATM program at a price of $0.79 per share for net proceeds of $2,023,000 after commissions and sale
expenses.
Share Repurchase Program
On October 28, 2015, our Board of Directors approved a share repurchase program that authorized us to purchase up
to two million shares of our outstanding common stock. During 2020 our Board of Directors extended the expiration date of
the share repurchase program through December 31, 2021. During 2021, we did not purchase any shares pursuant to the share
repurchase program. During the year ended December 31, 2020, we purchased 24,700 shares of Solitario common stock for an
aggregate purchase price of $5,000. As of December 31, 2021, we have purchased a total of 994,000 shares for an aggregate
purchase price of $467,000 under the share repurchase program since its inception. The share repurchase plan expired on
December 31, 2021.
Off-balance sheet arrangements
As of December 31, 2021, and 2020, we have no off-balance sheet arrangements.
(e). Cash Flows
Net cash used in operations during the year ended December 31, 2021 increased to $2,157,000 compared to
$1,010,000 for the year ended December 31, 2020 primarily as a result of (i) the exploration expense at our Golden Crest
project of $420,000 during 2021 with no similar expense in 2020 and the increase in exploration expense at our Lik project to
$362,000 during 2021 compared to $14,000 during 2020; (ii) a reduction in interest income to $123,000 during 2021 compared
to interest income of $184,000 recorded during 2020, the majority of which was a reduction in the cash balances during each of
the years ending December 31, 2021 and 2020; and (iii) a net use of cash from changes in prepaid expenses and other current
assets of $277,000 during 2021 compared to a net source of cash from changes in prepaid expenses and other current assets of
$38,000 during 2020. Partially offsetting this increased use of cash in operations was a reduction in the use of cash from the
43
net change in accounts payable and other current liabilities to $17,000 during 2021 compared to a use of cash of $128,000 from
the net change in accounts payable and other current liabilities during 2020. These items are discussed in further detail above
under “Results of Operations.”
Net cash provided by investing activities decreased to $90,000 during 2021 compared to net cash provided of
$976,000 during 2020. In addition to the reduction in the cash provided from the sale of short-term investments to $609,000
during 2021 compared to $974,000 during 2020, we (i) capitalized $635,000 of initial costs on the Golden Crest claims and
lease acquired during 2021, with no similar expenditure in 2020 and (ii) we acquired other assets related to the Golden Crest
project of $39,000 during 2021 with no similar items acquired during 2020. Partially offsetting these reductions in cash
provided by investing activities were (i) an increase in cash from the sale of marketable equity securities to $147,000 during
2021 compared to $123,000 during 2020; and (ii) the receipt of cash from the sale of derivative instruments of $8,000 during
2021 compared to the net use of cash of $121,000 from the sale and repurchase of derivative instruments during 2020. We
anticipate we will continue to utilize proceeds from the sale of our short-term investments and any proceeds we may derive
from potential sales of marketable equity securities to fund our operations during 2022.
Our net cash provided by financing activities during 2021 was from (i) the sale of 3,100,000 shares in December 2021
of our common stock for net proceeds of $1,542,000; (ii) the issuance of 643,033 shares of our common stock under the ATM
program for net proceeds of $299,000 and (ii) the exercise of options for 185,000 shares of our common stock for net proceeds
of $83,000. Our net cash provided by financing activities in 2020 included $70,000 from the PPP Loan, with no similar item
during 2021. We used cash of $5,000 during 2020 for the repurchase of common stock for cancellation. We may utilize the
ATM program during 2022 to supplement our existing cash resources however we have will only use the ATM when we
believe the market conditions based upon the quoted price of a share of our common stock are appropriate. Our share
repurchase program expired on December 31, 2021 and thus we will not repurchase shares of common stock under the share
repurchase plan during 2022.
(f). Development Activities, Exploration Activities, Environmental Compliance and Contractual Obligations
Development Activities
We do not have any ongoing mineral development activities, which are activities for the development of mineral
properties with reserves for potential mining.
Exploration Activities
A historically significant part of our business involves the review of potential property acquisitions and continuing
review and analysis of properties in which we have an interest to determine the exploration and development potential of the
properties. In analyzing expected levels of expenditures for work commitments and property payments, our obligations to
make such payments fluctuate greatly depending on whether, among other things, we make a decision to sell a property
interest, convey a property interest to a joint venture, or allow our interest in a property to lapse by not making the work
commitment or payment required. In acquiring many of our interests in mining claims and leases, we have entered into
agreements, which generally may be canceled at our option. We are often required to make minimum rental and option
payments in order to maintain our interest in certain claims and leases. Our net 2021 mineral and surface property rental and
option payments, included in exploration expense, were $9,000. Our 2022 total exploration property rentals and option
payments for properties we own, have under joint venture, or operate are estimated to be approximately $1,116,000. Assuming
that our joint ventures continue in their current status and that we do not appreciably change our property positions on existing
properties, we estimate that our joint venture partners will pay on our behalf or reimburse us approximately $777,000 of these
annual payments. These obligations are detailed below under “Contractual Obligations.” In addition, we may be required to
make further payments in the future if we elect to exercise our options under those agreements or if we enter into new
agreements.
Environmental Compliance
We are subject to various federal, state and local environmental laws and regulations in the countries where we
operate. We are required to obtain permits in advance of initiating certain of our exploration activities, to monitor and report
on certain activities to appropriate authorities, and to perform remediation of environmental disturbance as a result of certain of
our activities. Historically, the nature of our activities of review, acquisition and exploration of properties prior to the
establishment of reserves, which may include mapping, sampling, geochemistry and geophysical studies as well as some
limited exploration drilling, has not resulted in significant environmental impacts in the past. We have historically carried on
our required environmental remediation expenditures and activities, if any, concurrently with our exploration activities and
expenditures. The expenditures to comply with our environmental obligations are included in our exploration expenditures in
the statement of operations and have not been material to our capital or exploration expenditures and have not had a material
44
effect on our financial position. For the years ended December 31, 2021 and 2019, we have not capitalized any costs related to
environmental control facilities. We do not anticipate our exploration activities will result in any material new or additional
environmental expenditures or liabilities in the near future.
Contractual Obligations
The following table provides an analysis of our contractual obligations:
As of December 31, 2021
Payments due by period
(in thousands)
Operating Lease Obligations (1)
Mineral property option and lease payments (2)
Total
$ 75
$ 339
Less than
1 year
$ 39
$ 339
1–3 years
$ 36
$ -
4–5 years
$ -
$ -
More than
5 years
$ -
$ -
(1) Lease obligation on our Wheat Ridge, Colorado office.
(2) Mineral property payments under lease and property claim and concession payments for the next year, net of joint venture payments.
(g). Exploration Joint Ventures, Royalty and Other Properties
The following discussion relates to an analysis of our anticipated property exploration plans as of December 31, 2021.
Please also see Note 2, “Mineral Properties,” to the consolidated financial statements in Item 8, “Financial Statements and
Supplementary Data,” and our discussion of our properties under Item 2, “Properties” of this Annual Report on Form 10-K for
a more complete discussion of all of our mineral properties.
Golden Crest
The Golden Crest Project is 100%-owned early-stage exploration project located in the northern Black Hills of
western South Dakota in Lawrence County. The Golden Crest Project is comprised of 1390 unpatented lode claims, with an
associated area of just under 28,000 acres. Solitario acquired its initial interest in the Golden Crest Project during 2021.
During 2021 Solitario conducted exploration activities on the Golden Crest Project including soil and rock sampling,
mapping and geotechnical work.
Solitario is planning to conduct an aggressive surface exploration program during 2022 at the Golden Crest Project
consisting of prospecting for new areas of mineralization through the collection of select rock grab samples, systematic soil
sampling and geophysics. A Plan of Operations for drilling has been submitted to the US Forest Service and is currently under
review. If permits to drill are received before the end of the 2022 field season, drilling will also likely be conducted on select
targets.
Florida Canyon
The Florida Canyon project is an advanced-stage high-grade zinc project in Peru. Based on extensive exploration and
development work conducted to date, we believe the property has potential to be developed into a mine over the next several
years. The project is held in a joint venture between Nexa (61%) and Solitario (39%).
Solitario and Nexa jointly completed a PEA in 2017 that incorporated a variety of Nexa-generated prefeasibility
studies into the analysis. The PEA evaluation included resource estimation, mining and processing recovery estimates, a
preliminary mining and processing plan, infrastructure layout, environmental considerations and an economic analysis based on
certain base case parameters. The PEA envisioned an underground mining operation with a 2,500 tonne per day floatation mill
for processing, resulting in a 12.5-year mine life. Concentrates would be trucked to Nexa’s Cajamarquilla zinc smelter facility
in Lima, Peru.
The terrain at Florida Canyon is steep and previous project access supporting surface and underground work programs
was conducted by helicopter. The lack of road access restricted the scope of field activities to further advance the project.
During 2021 and 2020 limited work was undertaken on road access to the project, and Nexa expects to continue to work on
completing the road access during 2022. During 2019, Nexa completed the Drilling Program and several significant drill
intercepts were encountered. Solitario reported the results of the drill intercepts in February 2021.
During 2021, Nexa worked on two separate drilling permits. The first of these permits (4MEIAsd) was approved and
allows additional drilling immediately to the south and east of the current Florida Canyon drilling footprint. The second permit
(5MEIAsd) greatly expands the area in which drilling is permitted to the south and east. The second permit is expected to be
45
granted before the 2023 field season. A robust metallurgical testing program is underway to better quantify recoveries of zinc,
lead and silver and to better determine the quality of concentrate that the Florida Canyon ores can produce. Surface exploration
consisting of geological mapping and sampling will continue throughout the project area. Nexa plans to complete road
construction to local communities that currently do not have vehicle access as part of their ESG commitment. The access road
could also serve as a support road to project activities.
Lik project
The Lik project is an advanced-staged high-grade zinc project. The project is held in a joint venture between Teck
(50%) and Solitario (50%).
Zazu completed a PEA in 2014 that incorporated a variety of prefeasibility studies into the analysis. These studies
included resource estimation, mining and processing recovery estimates, a preliminary mining and processing plan,
infrastructure layout, environmental considerations and an economic analysis based on the base case parameters. The PEA
envisioned an open pit mining operation with a 5,500 ton per day floatation mill for processing resulting in a nine-year mine
life. Concentrates would be handled through the DMTS road and port system that currently handles all concentrate produced
by the nearby Red Dog zinc mine of Teck. The PEA analyzed the Lik project as a stand-alone operation building its own
independent processing, tailings and port facilities.
Solitario and Teck are in final discussions to jointly fund a 2022 exploration program, with Teck acting as project
manager. The program, if approved, consists of drilling three core holes totaling approximately 2,130 feet. Drill targets under
consideration are extensions to the currently defined Lik deposit on the northwest and southern limits of the deposit, including
one-hole testing for stacked mineralized horizons. Drilling is expected to begin during the 2022 summer field season. Besides
drilling, a gravity geophysical survey west of the Lik deposit is planned where favorable stratigraphy to host zinc mineralization
similar to Lik is thought to exist at shallow depths. Gravity geophysics have proven very effective in detecting zinc
mineralization at depth. We expect to reach a final decision on this program early in the second quarter of 2022.
Other Properties
Chambara
The current claim holdings of Minera Chambara are 48 concessions totaling 36,080 hectares of valid concessions that
surround the Florida Canyon project area held by Minera Bongará. The project has been on care and maintenance in recent
years. Significant geochemical anomalies and outcropping mineralization have been identified at several locations on the
Chambara property. Nexa is responsible for maintaining the property in good standing and making all concession payments to
the Peruvian government. .
2022 Planned Expenditures
Our 2022 total exploration and development budget is approximately $2,350,000 for our planned exploration
expenditures. This amount includes the proposed drilling program and evaluation of the Lik project, where we are responsible
for 50% of the exploration expenditures. This amount does not include any significant expenditures for our Florida Canyon
project where our joint venture partner, Nexa, is responsible for 100% of exploration costs. It includes $1,723,000 planned
exploration expense at our Golden Crest project, which does not include any significant drilling expenditures, which are
dependent on receiving permits during 2022. We will continue the evaluation of potential new acquisitions of properties
primarily in the United States around the Golden Crest project as well as other regions of North and South America. We expect
to carry out our exploration activities during 2022 utilizing Teck at Lik, Nexa at Florida Canyon, and our own employees and
contract geologists at Golden Crest and other projects.
(h). Discontinued Projects
During 2021 we recorded $17,000 of mineral property impairment related to our decision to abandon the Gold Coin
project in Arizona. During 2020 we recorded $6,000 of mineral property impairment related to our decision to abandon the La
Promesa project in Peru.
(i). Significant Accounting Policies and Critical Accounting Estimates
See Note 1, “Business and Summary of Significant Accounting Policies,” in Item 8, “Financial Statements and
Supplementary Data” of this Form 10-K for a discussion of our significant accounting policies.
46
Solitario’s valuation of mineral properties is a critical accounting estimate. We review and evaluate our mineral
properties for impairment when events or changes in circumstances indicate that the related carrying amounts may not be
recoverable. Significant negative industry or economic trends, adverse social or political developments, geologic results, geo-
technical difficulties, or other disruptions to our business are a few examples of events that we monitor, as they could indicate
that the carrying value of the mineral properties may not be recoverable. In such cases, a recoverability test may be necessary to
determine if an impairment charge is required. There has been no change to our assumptions estimates or calculations during
the year ended December 31, 2021.
(j). Related Party Transactions
None
(k). Recent Accounting Pronouncements
See Note 1, “Business and Summary of Significant Accounting Policies,” in Item 8 “Financial Statements and
Supplementary Data” of this Form 10-K for a discussion of recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Smaller reporting companies are not required to provide the information required by this item.
47
Item 8. Financial Statements and Supplementary Data
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
(Plante & Moran, PLLC, Denver, Colorado, PCAOB ID 166)
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the years ended December 31, 2021 and 2020
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2021 and
2020
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
Notes to Consolidated Financial Statements
Page
48
49
50
51
52
53
48
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Solitario Zinc Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Solitario Zinc Corp. (the “Company”) as of December 31,
2021 and 2020, the related statements of operations, shareholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion,
the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period
ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the
Company’s 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 in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the 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 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 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 financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved especially challenging, subjective, or complex judgments. We determined that there are
no critical audit matters.
/s/ Plante & Moran, PLLC
We have served as the Company’s auditor since 2004.
Denver, Colorado
March 30, 2022
49
SOLITARIO ZINC CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share and per share amounts)
December 31,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents
Short-term investments, at fair value
Investments in marketable equity securities, at fair value
Prepaid expenses and other
Total current assets
Mineral properties
Other assets
Total assets
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
Paycheck Protection Loan
Operating lease liability
Total current liabilities
Long-term liabilities
Asset retirement obligation – Lik
Operating lease liability
Total long-term liabilities
Commitments and contingencies (Note 10)
Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 10,000,000 shares (none issued
and outstanding at December 31, 2021 and 2020)
Common stock, $0.01 par value, authorized, 100,000,000 shares
(62,036,399 and 58,108,366, respectively, shares issued and outstanding
at December 31, 2021 and 2020)
Additional paid-in capital
Accumulated deficit
Total shareholders' equity
Total liabilities and shareholders' equity
See Notes to Consolidated Financial Statements.
$ 462
5,087
1,307
303
7,159
16,306
154
$23,619
$239
-
37
276
125
35
160
$ 605
5,798
1,620
26
8,049
15,628
124
$23,801
$157
10
7
174
125
-
125
-
-
620
72,523
(49,960)
23,183
$23,619
581
70,514
(47,593)
23,502
$23,801
50
SOLITARIO ZINC CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Costs, expenses and other
Exploration expense
Depreciation and amortization
Mineral property impairment
General and administrative
Total costs, expenses and other
Other (expense) income
Interest and dividend income (net)
Other income
Loss on derivative instruments
(Loss) gain on sale of marketable equity securities
Unrealized loss on short-term investments
Unrealized gain on marketable equity securities
Total other income (expense)
Net loss
Loss per common share
basic and diluted
Weighted average shares outstanding
Basic and diluted
See Notes to Consolidated Financial Statements.
For the years ended
December 31,
2021
2020
$ 1,198
27
17
952
2,194
123
10
(38)
(248)
(102)
82
(173)
$(2,367)
$ 413
25
6
1,044
1,488
184
104
(92)
50
(57)
360
549
$(939)
$(0.04)
$(0.02)
58,709
58,116
51
SOLITARIO ZINC CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands, of U.S. Dollars
except share amounts)
Balance at December 31, 2019
Stock option expense
Repurchase of shares for cancellation
Net loss
Balance at December 31, 2020
Stock option expense
Issuance of shares – option exercises
Issuance of shares – ATM, net
Issuance of shares – private placement
Net loss
Balance at December 31, 2021
Common Stock
Shares
58,133,066
Amount
$581
Additional
Paid-in
Capital
$70,204
Accumulated
Deficit
$(46,654)
Total
Shareholders’
Equity
$24,131
-
(24,700)
-
58,108,366
-
185,000
643,033
3,100,000
-
62,036,399
-
-
-
$581
-
2
6
31
-
$620
315
(5)
-
$70,514
124
81
293
1,511
-
$72,523
-
(939)
$(47,593)
-
(2,367)
$(49,960)
315
(5)
(939)
$23,502
124
83
299
1,542
(2,367)
$23,183
See Notes to Consolidated Financial Statements.
52
SOLITARIO ZINC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands of U.S. Dollars)
Operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Unrealized gain on marketable equity securities
Unrealized loss on short-term investments
Loss (gain) on sale of marketable equity securities
Loss on derivative instruments
Other income – Paycheck Protection Program loan forgiveness
Other income – gain on conversion of SilverStream note
Mineral property impairment
Employee stock option expense
Depreciation
Amortization of right of use lease asset
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
Accounts payable and other current liabilities
Net cash used in operating activities
Investing activities:
Sale of short-term investments – net
Additions to mineral property
Sale of marketable equity securities
Sale (Purchase) of derivative instruments – net
Additions to other assets
Net cash provided by investing activities
Financing activities:
Issuance of common stock – net of acquisition costs
Stock options exercised for cash
Paycheck Protection Program loan
Repurchase of Solitario common stock for cancellation
Net cash provided in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental Cash Flow information:
Accrued mineral property acquisition costs included in accounts payable
Acquisition of right to use asset
Conversion of SilverStream note to Marketable equity securities
Acquisition of Gold Coin property included in accounts payable
See Notes to Consolidated Financial Statements.
53
For the year ended
December 31,
2021
2020
$ (2,367)
$ (939)
(82)
102
248
38
(10)
-
17
124
27
40
(360)
57
(50)
92
(60)
(44)
6
315
25
38
(277)
(17)
(2,157)
38
(128)
(1,010)
609
(635)
147
8
(39)
90
1,841
83
-
-
1,924
974
123
(121)
-
976
70
(5)
65
(143)
605
$ 462
31
574
$ 605
$60
$99
$ -
$ -
$ -
$ -
$294
$ 17
SOLITARIO ZINC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
1. Business and Summary of Significant Accounting Policies
Business and company formation
Solitario Zinc Corp. (“Solitario,” or the “Company”) is an exploration stage company as defined by rules issued by the
United States Securities and Exchange Commission (“SEC”). Solitario was incorporated in the state of Colorado on November
15, 1984 as a wholly-owned subsidiary of Crown Resources Corporation ("Crown"). In July 1994, Solitario became a publicly
traded company on the Toronto Stock Exchange (the "TSX") through its initial public offering. Solitario has been actively
involved in mineral exploration since 1993. Solitario’s primary business is to acquire exploration mineral properties or
royalties and/or discover economic deposits on its mineral properties and advance these deposits, either on its own or through
joint ventures, up to the development stage. At that point, or sometime prior to that point, Solitario would likely attempt to sell
its mineral properties, pursue their development either on its own or through a joint venture with a partner that has expertise in
mining operations, or create a royalty with a third party that continues to advance the property. Solitario is primarily focused
on the acquisition and exploration of precious metal, zinc and other base metal exploration mineral properties. In addition to
focusing on its mineral exploration properties and the evaluation of mineral properties for acquisition, Solitario also evaluates
potential strategic transactions for the acquisition of new precious and base metal properties and assets with exploration
potential or business combinations that Solitario determines to be favorable to Solitario.
Solitario has previously recorded revenue in the past from the sale of mineral properties. Revenues and / or proceeds
from the sale or joint venture of properties or assets have not been a consistent annual source of cash and would only occur in
the future, if at all, on an infrequent basis.
Solitario currently considers its carried interest in the Florida Canyon project, its interest in the Lik project and its
interest in the Golden Crest project in South Dakota to be its core mineral property assets. Nexa Resources, Ltd. (“Nexa”),
Solitario’s joint venture partner, is continuing the exploration and furtherance of the Florida Canyon project and Solitario is
monitoring progress at Florida Canyon. Solitario is working with its 50% joint venture partner, Teck American Incorporated, a
wholly owned subsidiary of Teck Resources Limited (both companies are referred to as “Teck”), in the Lik deposit to further
the exploration of the Lik project, and to evaluate potential development plans for the Lik project. During 2021 Solitario
entered into a lease for exclusive exploration and mining rights to certain mineral claims (the “GC Claims”) in the Black Hills
region of South Dakota. The GC claims along with certain other claims (the “SRC Claims”) which Solitario acquired through
staking during 2021 form the Golden Crest project, which is further described below. Solitario capitalized $695,000 as initial
acquisition costs on the Golden Crest project during 2021. All future exploration expenditures for the Golden Crest project will
be expensed as incurred as until such time Solitario establishes proven and probable reserves, which cannot be assured.
As of December 31, 2021 and 2020, Solitario has balances of cash and short-term investments that Solitario anticipates
using, in part, to further the development of the Florida Canyon project, the Lik project and the Golden Crest project and to
potentially acquire additional mineral property assets. If Solitario establishes proven and probable reserves in the future,
subsequent expenditures would be evaluated to determine appropriate accounting treatment. The fluctuations in precious metal
and other commodity prices have contributed to a challenging environment for mineral exploration and development, which has
created opportunities as well as challenges for the potential acquisition of early-stage and advanced mineral exploration projects
or other related assets at potentially attractive terms.
Financial reporting
The consolidated financial statements include the accounts of Solitario and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial
statements are prepared in accordance with accounting principles generally accepted in the United States of America
("generally accepted accounting principles") and are expressed in US dollars.
Revenue recognition
Solitario has recorded revenue from the sale of exploration mineral properties and joint venture property payments.
Solitario’s policy is to recognize revenue from the sale of its exploration mineral properties (those without reserves) on a
property-by-property basis, computed as the cash received and / or collectable receivables less any capitalized cost. Payments
54
received for the sale of exploration property interests that are less than the properties cost are recorded as a reduction of the
related property's capitalized cost. In addition, Solitario’s policy is to recognize revenue on any receipts of joint venture
property payments in excess of its capitalized costs on a property that Solitario may lease to another mining company.
Solitario has not recognized any revenue during 2021 or 2020. Solitario expects any property sales in the future to be
on an infrequent basis. Solitario last recognized revenue in 2019 from the sale of certain royalties and in 2018 from the sale of
its royalty in the Yanacocha property. Solitario does not expect to record joint venture property payments on any of its
currently held properties for the foreseeable future. Historically, Solitario’s revenues have been infrequent and significant
individual transactions have only been from sales to well known or vetted mining companies. Solitario has never had a return
on any of its sales recorded as revenue in its history and does not anticipate it will recognize any estimated returns on its future
recorded revenues.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Some of the more significant estimates included
in the preparation of Solitario's financial statements pertain to: (i) the recoverability of its investment in mineral properties
related to its mineral exploration properties and their future exploration potential; (ii) the fair value of stock option grants to
employees; (iii) the ability of Solitario to realize its deferred tax assets; and (iv) Solitario's investment in marketable equity
securities.
In performing its activities, Solitario has incurred certain costs for mineral properties. The recovery of these costs is
ultimately dependent upon the sale of mineral property interests or the development of economically recoverable mineral
reserves and the ability of Solitario to obtain the necessary permits and financing to successfully place the properties into
production, and upon future profitable operations, none of which is assured.
Cash and cash equivalents
Cash equivalents include investments in highly liquid money-market securities with original maturities of three
months or less when purchased. At December 31, 2021, approximately $451,000 of Solitario’s cash and cash equivalents are
held in brokerage accounts and foreign banks, which are not covered under the Federal Deposit Insurance Corporation
(“FDIC”) rules for the United States.
Short-term investments
At December 31, 2021, Solitario has United States Treasury securities (“USTS”) with maturities of 15 days to one
year, recorded at their fair value of $4,236,000 compared to USTS recorded at their fair value of $3,989,000 at December 31,
2020. Solitario also holds FDIC insured bank certificates of deposit (“CD’s”) with face values between $100,000 and
$250,000 and maturities of three months to one year, which are recorded at their fair value of $851,000 at December 31, 2021
compared to the fair value of Solitario’s CD’s of $1,809,000 at December 31, 2020. Solitario’s short-term investments are
recorded at their fair value based upon quoted market prices. The short-term investments are highly liquid and may be sold in
their entirety at any time at their quoted market price and are classified as a current asset.
Mineral properties
Solitario expenses all exploration costs incurred on its mineral properties prior to the establishment of proven and
probable reserves through the completion of a feasibility study. Initial acquisition costs of its mineral properties are
capitalized. Solitario regularly performs evaluations of its investment in mineral properties to assess the recoverability and/or
the residual value of its investments in these assets. All long-lived assets are reviewed for impairment whenever events or
circumstances change which indicate the carrying amount of an asset may not be recoverable, utilizing established guidelines
based upon undiscounted future net cash flows from the asset or upon the determination that certain exploration properties do
not have sufficient potential for economic mineralization.
Derivative instruments
55
Solitario accounts for its derivative instruments in accordance with ASC 815, "Accounting for Derivative Instruments
and Hedging Activities" (“ASC 815”). During 2019, Solitario acquired certain Vendetta Mining Corp. (“Vendetta”) units,
which included Vendetta Warrants (defined below). Changes in fair value of the Vendetta Warrants are recognized in the
statements of operations in the period of change as gain or loss on derivative instruments. Solitario has entered into covered
calls from time to time on its investment in Kinross marketable equity securities. Solitario has not designated its covered calls
as hedging instruments and any changes in the fair value of the covered calls are recognized in the statements of operations in
the period of the change as gain or loss on derivative instruments.
Fair value
Financial Accounting Standards Board ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”)
establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. ASC 820
clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants. Solitario's short-term investments in USTS and CD’s, its
marketable equity securities and any covered call options against those marketable equity securities are carried at their
estimated fair value based on quoted market prices. See Note 9, “Fair Value of Financial Instruments,” below.
Marketable equity securities
Solitario's investments in marketable equity securities are carried at fair value, which is based upon quoted prices of
the securities owned. Solitario records investments in marketable equity securities for investments in publicly traded
marketable equity securities for which it does not exercise significant control and where Solitario has no representation on the
board of directors of those companies and exercises no control over the management of those companies. The cost and
realized gain or loss on marketable equity securities sold is determined by the specific identification method. Changes in fair
value on Solitario’s holdings of marketable equity securities are recorded as unrealized gain or loss in the consolidated
statement of operations.
Financial statement classification
Solitario separately shows its classification of changes in the fair value of its short-term investment in USTS and CD’s
as unrealized gain or loss on short-term investments in the statement of operations rather than a portion of interest and dividend
income (net). During the year ended December 31, 2021 and 2020 the non-cash decrease in the fair value of its short-term
investments, due primarily to changes in interest rates on held securities, was $102,000 and $57,000, respectively. The 2020
income statement and cash flows have been reclassified for comparability to the 2021 presentation. Total other income
(expense) and net cash used in operations was not impacted.
Foreign exchange
The United States dollar is the functional currency for all of Solitario's foreign subsidiaries. Although Solitario's
South American exploration activities during 2021 and 2020 were conducted primarily in Peru, a portion of the payments for
the land, leasehold and exploration agreements as well as certain exploration activities are denominated in United States
dollars. Inter-company funding is transacted in United States dollars. Foreign currency gains and losses are included in the
results of operations in the period in which they occur.
Income taxes
Solitario accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes” (“ASC 740”).
Under ASC 740, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of
taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and
income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes
are also recognized for operating losses and tax credits that are available to offset future taxable income and income taxes,
respectively. A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets
will not be realized.
Accounting for uncertainty in income taxes
56
ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements. ASC
740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and transition. ASC 740 provides that a company's tax position
will be considered settled if the taxing authority has completed its examination, the company does not plan to appeal, and it is
remote that the taxing authority would reexamine the tax position in the future. These provisions of ASC 740 had no effect on
Solitario's financial position or results of operations. See Note 6, “Income Taxes,” below.
Earnings per share
The calculation of basic and diluted earnings (loss) per share is based on the weighted average number of shares of
common stock outstanding during the years ended December 31, 2021 and 2020. Potentially dilutive shares, consisting of
outstanding common stock options of 5,513,000 and 5,558,000, respectively, exercisable for Solitario common shares were
excluded from the calculation of diluted loss per share for the year ended December 31, 2021 and 2020 because the effects
were anti-dilutive.
Employee stock compensation and incentive plans
Solitario classifies all of its stock options as equity options in accordance with the provisions of ASC 718,
“Compensation – Stock Compensation.” See Note 11, “Employee Stock Compensation Plans,” below.
Risks and Uncertainties
Solitario faces risks related to health epidemics and other outbreaks of communicable diseases, which could
significantly disrupt its operations and may materially and adversely affect its business and financial conditions.
Solitario’s business still could be adversely impacted by the effects of the coronavirus (“COVID-19”) or other
epidemics or pandemics. Solitario has recommended all of its employees and contractors follow government guidelines
for health and safety policies for employees and contractors, including encouraging tele-commuting and working from
home where possible. Solitario has evaluated the effects of COVID-19 on its operations and taken pro-active steps to
address the impacts on its operations, including at times reducing costs, in response to the economic uncertainty
associated with potential risks from COVID-19. These prior reductions included implementing salary reductions and
evaluation and reduction in certain planned 2021 exploration programs through its joint venture partners at the Florida
Canyon and Lik exploration projects. Also, Solitairo has evaluated the potential impacts on its ability to access future
traditional funding sources on the same or reasonably similar terms as in past periods. Solitario will continue to
monitor the effects of COVID-19 on its operations, financial condition and liquidity. However, the extent to which
COVID-19 impacts Solitario’s business, including our exploration and other activities and the market for its securities,
will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the
duration, severity and scope of any new outbreak and the actions taken to contain or treat the COVID-19 pandemic.
2. Mineral Properties:
The following table details Solitario’s capitalized investment in exploration mineral property:
(in thousands)
Exploration
Lik project (Alaska – US)
Golden Crest (South Dakota – US)
Gold Coin (Arizona – US)
Total exploration mineral property
Exploration property
December 31,
2021
2020
$15,611
695
-
$16,306
$15,611
-
17
$15,628
Solitario's exploration mineral properties at December 31, 2021 and 2020 consist of use rights related to its
exploration properties, and the value of such assets is primarily driven by the nature and amount of economic mineral ore
believed to be contained, or potentially contained, in such properties. The amounts capitalized as mineral properties include
concession and lease or option acquisition costs. Capitalized costs related to a mineral property represent its fair value at the
time it was acquired or the cost to acquire the property, as appropriate. At December 31, 2021, none of Solitario’s exploration
57
properties have production (are operating) or contain proven or probable reserves. Solitario's exploration mineral properties
represent interests in properties that Solitario believes have exploration and development potential. Solitario's mineral use
rights generally are enforceable regardless of whether proven and probable reserves have been established.
Golden Crest
On May 27, 2021 Solitario entered into a lease agreement (the “Golden Crest Agreement”) whereby Solitario acquired
exclusive exploration rights in certain claims (the “GC Claims”) in the Black Hills region of South Dakota. The GC Claims are
part of Solitario’s Golden Crest project. Terms of the Golden Crest Agreement include scheduled payments to the underlying
owner of $65,000 paid upon signing and an obligation to pay the underlying owner $60,000 at the first anniversary date.
Solitario recorded an initial acquisition cost of $125,000 during 2021 related to these required payments. In addition, to
continue the lease, Solitario has agreed to pay, at its option, the underlying owner escalating annual payments over five years
that total $340,000 and annual payments of $150,000 thereafter, which will be expensed as paid. Solitario has agreed to pay
the underlying owner an additional success fee of $1.00 per ounce of gold in the event Solitario files a 43-101 qualified
resource of up to 1.5 million ounces of gold or a maximum of $1,500,000. Solitario has agreed to escalating work
commitments, at Solitario’s option, on the GC Claims totaling $3,000,000 during the first five years of the lease, with the first
year totaling $200,000. The term of the Golden Crest Agreement is for twenty years and is automatically extended as long as
Solitario is performing any exploration, development or mining activities on the GC Claims. The underlying owner retained a
2.0% Net Smelter Return royalty. Solitario will have the option, but not the obligation, to reduce the Net Smelter Return
royalty to 1.0% by paying the owner $1,000,000.
In addition, during 2021 Solitario staked additional mineral claims, including some claims included in the area of
interest of the GC Claims and claims not related to the GC Claims (the “SRC Claims”), as part of the Golden Crest project.
Solitario incurred costs for staking, filing fees, legal and other costs totaling $570,000 capitalized as initial acquisition costs
related to the SRC Claims and the GC Claims.
Lik Property
Solitario holds a 50% operating interest in the Lik zinc-lead sliver property in northwest Alaska, which we acquired as
part of the acquisition of Zazu metals corporation (“Zazu”) in July 2017. Solitario recorded its acquisition cost of $15,611,000
as mineral property at the date of acquisition. Teck is Solitario’s 50% partner on the Lik Project and acted as the project
manager during 2021 and 2020.
Florida Canyon
In addition to its capitalized exploration properties, Solitario has an interest in its Florida Canyon exploration
concessions, which are currently subject to a joint venture agreement where joint venture partners made stand-by joint venture
payments to Solitario prior to January 1, 2015. Solitario previously recorded joint venture property payment revenue received
in excess of capitalized costs. Per the joint venture agreement, as of December 31, 2021, no further standby joint-venture
payments are due to Solitario on the Florida Canyon project. At December 31, 2021 and 2020, Solitario has no remaining
capitalized costs related to its Florida Canyon joint venture. Per the joint venture agreement with Nexa covering the Florida
Canyon project, Solitario currently holds a 39% interest in the Florida Canyon zinc project. Nexa is required to fund 100% of
exploration expenditures at Florida Canyon, until Nexa commits to put the project into production based upon a positive
feasibility study, at which time Nexa’s interest will increase from its current 61% interest to a 70% interest.
Royalty sale
On January 22, 2019, Solitario completed a sale of certain royalties to SilverStream SEZC (“SilverStream”), for
Cdn$600,000. On closing of the sale, Solitario received Cdn$250,000 in cash and a convertible note from SilverStream in the
principal amount of Cdn$350,000 (the “SilverStream Note”). The SilverStream Note, as amended, was due on June 30, 2020
and was convertible into common shares of SilverStream, at the option of SilverStream, by providing Solitario a notice of
conversion. On May 19, 2020, SilverStream completed an initial public offering, including changing its name to Vox Royalty
Corp. (“Vox”) and, in accordance with the terms of the SilverStream Note, issued Solitario 137,255 shares of common stock of
Vox in full satisfaction of obligations owed under the SilverStream Note. In accordance with the terms of the SilverStream
Note, the 137,255 Vox shares were issued at a price of Cdn$2.55 per share, which was at a 15% discount to the initial public
offering price of Cdn$3.00 per share. Solitario recorded its initial investment in the Vox common shares at the initial public
offering price, or a total of Cdn$412,000 or $294,000. Solitario recorded other income of $44,000 for the gain on the
58
conversion of the SilverStream Note during 2020. Solitario recorded interest income from the SilverStream Note of $7,000
during 2020.
Discontinued projects
During 2021 Solitario recorded $17,000 of mineral property impairment related to its decision to abandon its Gold
Coin project in Arizona. During 2020 Solitario recorded $6,000 of mineral property impairment related to its decision to
abandon its La Promesa project in Peru.
Exploration Expense
The following items comprised exploration expense:
(in thousands)
Geologic and field expenses
Administrative
Total exploration expense
Asset Retirement Obligation
For the year ended
December 31,
2021
2020
$1,092
106
$1,198
$326
87
$413
Solitario recorded an asset retirement obligation of $125,000 for Solitario’s estimated reclamation cost of the existing
disturbance at the Lik project. This disturbance consists of an exploration camp including certain drill sites and access roads at
the camp. The estimate was based upon estimated cash costs for reclamation as determined by the permitting bond required by
the State of Alaska, for which Solitario has retained a reclamation bond insurance policy in the event Solitario or its 50%
partner, Teck, do not complete required reclamation.
Solitario has not applied a discount rate to the recorded asset retirement obligation as the estimated time frame for
reclamation is not currently known, as reclamation is not expected to occur until the end of the Lik project life, which would
follow future development and operations, the start of which cannot be estimated or assured at this time. Additionally, no
depreciation will be recorded on the related asset for the asset retirement obligation until the Lik project goes into operation,
which cannot be assured.
As of December 31, 2021, Solitario has no reclamation liability at its Florida Canyon project as Nexa is responsible
for the costs at Florida Canyon, including reclamation, if any. In addition, the activities to date at Solitario’s Golden Crest
project of staking claims and mapping, soil sampling, and assaying have not created any material environmental or other
disturbances. Historically Solitario’s exploration activities have not resulted in any long-term environmental disturbances or
liabilities and where there have been required restoration of disturbances, these have been completed contemporaneously with
the completion of our mineral exploration activities.
3. Marketable Equity Securities
During 2021, Solitario sold (i) 2,550,000 shares of Vendetta Mining Corp. (“Vendetta”) for proceeds of $112,000 and
recorded a realized loss on the sale of $269,000; (ii) 430,000 shares of TNR Gold Corp. (“TNR”) for proceeds of $27,000 and
recorded a realized gain on the sale of $19,000; and (iii) 3,200 shares of Vox for proceeds of $8,000 and recorded a realized
gain on the sale of $2,000. During 2020 Solitario sold 2,900,000 shares of Vendetta common stock for proceeds of $123,000
and recorded a realized gain on sale of $50,000. During 2020, Solitario received 137,255 shares of Vox upon conversion of the
SilverStream Note valued at $294,000.
On July 31, 2019, Solitario purchased 3,450,000 Vendetta units for aggregate consideration of $233,000. Each unit
consisted of one share of Vendetta common stock and one warrant which allows the holder to purchase one additional share of
Vendetta common stock at a purchase price of Cdn$0.13 per share for a period of three years (the “Vendetta Warrants”). The
purchase of the units increased Solitario’s holdings of Vendetta common shares to 14,450,000 shares. During 2021, Solitario
charged loss on derivative instruments of $46,000 for the change in the value of the Vendetta Warrants. During 2020, Solitario
charged gain on derivative instruments of $29,000 for the change in the value of the Vendetta Warrants.
At December 31, 2021 Solitario owns the following marketable equity securities:
59
Kinross Gold Corp
Vendetta Mining Corp.
Vox Royalty Corp.
Total
Year ended
December 31, 2021
shares
100,000
9,000,000
134,055
Fair value
(000’s)
$581
356
370
$1,307
The following tables summarize Solitario’s marketable equity securities and adjustments to fair value:
Year ended
December 31,
(in thousands)
Marketable equity securities at cost
Cumulative unrealized (loss) gain on marketable equity securities
Marketable equity securities at fair value
The following table represents changes in marketable equity securities:
(in thousands)
Cost of marketable equity securities sold
Realized (loss) gain on marketable equity securities sold
Proceeds from the sale of marketable equity securities sold
Net gain (loss) on marketable equity securities
Additions to marketable equity securities
Change in marketable equity securities at fair value
2021
2020
$1,704
(397)
$1,307
$2,099
(479)
$1,620
Year ended
December 31,
2021
2020
$ 395
(248)
(147)
(166)
-
$(313)
$ 73
50
(123)
410
294
$581
The following table represents the realized and unrealized gain (loss) on marketable equity securities:
(in thousands)
Unrealized gain on marketable equity securities
Realized (loss) gain on marketable equity securities sold
Net (loss) gain on marketable equity securities
4. Operating Lease
Year ended
December 31,
2021
2020
$ 82
(248)
$(166)
$360
50
$410
Solitario accounts for its leases in accordance with ASC 842. Solitario leases one facility, its Wheat Ridge, Colorado
administrative office (the “WR Lease”), that has a term of more than one year. Solitario has no other material operating lease
costs. The WR Lease was extended to October 2023 during 2021 and Solitario recorded a net increase in right of use assets of
$99,000 during 2021 upon the extension of the WR Lease. The WR Lease is classified as an operating lease and has a
remaining term of 22 months at December 31, 2021. The right-of-use office lease asset for the WR Lease is classified as other
assets and the related liability as a current office lease liability in the consolidated balance sheet. Lease expense is recognized
on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.
During 2021 and 2020, Solitario recognized $40,000 and $40,000, respectively, of non-cash lease expense for the WR
Lease included in general and administrative expense. Cash lease payments of $39,000 and $42,000, respectively, were made
on the WR Lease during 2021 and 2020 and this amount, less $4,000 and $4,000, respectively, of imputed interest during 2021
and 2020, reduced the related liability on the WR Lease. The discount rate within the WR Lease is not determinable and
Solitario applied a discount rate of 5% based upon Solitario’s estimate of its cost of capital in recording the WR Lease.
Solitario has $75,000 remaining cash payments as of December 31, 2021.
The following is supplemental cash flow information related to our operating lease for 2021 and 2020:
60
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from WR Lease payments
Non-cash amounts related to the WR lease
Right of use assets recorded in exchange for new operating lease
liabilities
5. Other Assets
The following items comprised other assets:
(in thousands)
Furniture and fixtures, net of accumulated depreciation
Lik project equipment, net of accumulated depreciation
Office lease asset
Vendetta warrants
Exploration bonds and other assets
Total other assets
6. Income Taxes:
Year ended
December 31,
2021
Year ended
December 31,
2020
$39
$99
$42
$ -
December 31,
2021
2020
$ 65
10
72
3
4
$154
$ 34
30
7
49
4
$124
Consolidated loss before income taxes includes losses from foreign operations of $136,000 and $79,000 in 2021 and
2020, respectively.
The net deferred tax assets/liabilities in the December 31, 2021 and 2020 consolidated balance sheets include the
following components:
(in thousands)
Deferred tax assets:
Loss carryovers
Investment in Mineral Property
Capitalized Exploration Costs
Stock option compensation expense
Unrealized loss on derivative securities
Other
Lease Liability
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on marketable equity securities
Lease Asset
Other
Total deferred tax liabilities
Net deferred tax liabilities
2021
2020
$12,148
1,669
418
309
98
91
18
(14,561)
190
$12,636
1,669
410
286
148
110
-
(15,050)
209
173
17
-
190
$ -
207
-
2
209
$ -
A reconciliation of expected federal income taxes on income (loss) from continuing operations at statutory rates, with
the expense for income taxes is as follows:
(in thousands)
2021
2020
61
Expected income tax benefit
Equity based compensation
Foreign tax rate differences
State income tax
Expiration of Capital Loss and Foreign Tax Credit Carryovers
Adjustment to Deferred Taxes
Change in valuation allowance
Change in Tax Rates
Permanent differences and other
Income tax (benefit) expense
$(497)
4
(12)
(98)
1,385
(114)
(489)
(194)
15
$ -
$(197)
7
(8)
(37)
1,225
(23)
(949)
-
(18)
$ -
During 2021 and 2020, the valuation allowance decreased primarily due to the expiration of Capital Loss carryovers.
At December 31, 2021, Solitario has unused US Federal Net Operating Loss carryovers of $21,106,000 and unused US
State Net Operating Loss carryovers of $22,974,000 which begin expiring in 2027. As a result of the ownership change of
Zazu Metals (Alaska) Corp, utilization of some of these federal and state losses will be limited due to the annual limitation
provided by Section 382 of the Internal Revenue Code. Solitario has unused Capital Loss carryovers of $319,000 for US
Federal and US State purposes which begin expiring in 2025. Solitario has Canadian loss carryforwards of $9,944,000 which
begin expiring in 2027. Other foreign loss carryforwards for which Solitario has provided a full valuation allowance related to
Solitario’s exploration activities in Peru. The Peru losses do not expire.
Solitario adopted ASC 740, which prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 requires that
Solitario recognize in its consolidated financial statements, only those tax positions that are “more-likely-than-not” of being
sustained as of the adoption date, based on the technical merits of the position. As a result of the implementation of ASC 740,
Solitario performed a comprehensive review of its material tax positions in accordance with recognition and measurement
standards established by ASC 740. The provisions of ASC 740 had no effect on Solitario’s financial position, cash flows or
results of operations at December 31, 2021 or December 31, 2020, or for the years then ended as Solitario had no unrecognized
tax benefits.
Solitario and its subsidiaries are subject to the following material taxing jurisdictions: United States Federal, State of
Colorado, State of Alaska, State of South Dakota, Canada and Peru. Solitario’s United States federal, Canada and State of
Alaska returns for years 2018 and forward and Solitario’s Peru and State of Colorado returns for tax years 2017 and forward
are subject to examination. Solitario’s policy is to recognize interest and penalties related to uncertain tax benefits in income
tax expense. Solitario has no accrued interest or penalties related to uncertain tax positions as of December 31, 2021, or
December 31, 2020 or for the years then ended.
7. Derivative Instruments:
Covered call options
From time-to-time Solitario has sold covered call options against its holdings of shares of common stock of Kinross
Gold Corporation (“Kinross”) included in Marketable Equity Securities. The business purpose of selling covered calls is to
provide additional income on a limited portion of shares of Kinross that Solitario may sell in the near term, which is generally
defined as less than one year and any changes in the fair value of its covered calls are recognized in the statement of operations
in the period of the change. During 2021, Solitario sold covered calls against its holdings of Kinross for cash proceeds of
$8,000 all of which expired unexercised. During 2020, Solitario sold covered calls against its holdings of Kinross for cash
proceeds of $103,000, and repurchased certain of its covered calls prior to expiration for $224,000. As of December 31, 2021,
Solitario has no remaining liability related to Kinross call options.
Vendetta Warrants
At both December 31, 2021 and 2020 Solitario held Vendetta Warrants which give Solitario the right to purchase
3,450,000 Vendetta common shares for Cdn$0.13 per share through July 31, 2022. At December 31, 2021, and 2020 Solitario
recorded Vendetta Warrants at their fair value of $3,000 and $49,000, respectively, based upon a Black Scholes model.
62
The following items comprise gain (loss) on derivative instruments:
(in thousands)
Gain (loss) on Kinross calls – realized
Gain (loss) on Vendetta Warrants – unrealized
8. Paycheck Protection Program Loan
Year ended
December 31,
2021
$ 8
(46)
$ (38)
2020
$(121)
29
$ (92)
On April 20, 2020, in response to significant market volatility and uncertainty, our general history of operating losses,
and the resulting need for Solitario to conserve its financial resources, Solitario applied for and received a loan in the amount of
$70,000 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”) to help fund payroll, rent and utilities obligations. The PPP Loan had a two-year term and an
interest at a rate of 1.0% per annum. Monthly principal and interest payments were deferred for six months after the date of the
loan. The Paycheck Protection Program provides that the PPP Loan may be partially or wholly forgiven if the funds are used
for certain qualifying expenses as described in the CARES Act. Solitario believes it used the proceeds from the PPP Loan for
qualifying expenses and applied for forgiveness of the PPP Loan in accordance with the terms of the CARES Act. During
2021 and 2020, $10,000 and $60,000, respectively, of the PPP Loan was forgiven, and Solitario recorded $10,000 and $60,000,
respectively, of other income related to the forgiveness of the PPP Loan. The Small Business Administration retains the right
to review the eligibility requirements of Solitario for its PPP Loan. As of December 31, 2021, Solitario has no remaining
balance due on the PPP Loan.
9. Fair Value of Financial Instruments:
For certain of Solitario's financial instruments, including cash and cash equivalents, payables and short-term debt, the
carrying amounts approximate fair value due to their short maturities. Solitario's marketable equity securities, including its
investment in shares of Kinross common stock, Vendetta common stock, Vox common stock and TNR common stock are
carried at their estimated fair value based on publicly available quoted market prices.
Solitario applies ASC 820 that establishes a framework for measuring fair value and requires enhanced disclosures
about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 also
requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these
assets and liabilities must be grouped, based on significant levels of inputs as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for
the asset or liability; or
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to
develop its own assumptions.
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that
is significant to the fair value measurement. During the years ended December 31, 2021 and 2020, there were no
reclassifications in financial assets or liabilities between Level 1, 2 or 3 categories.
The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a
recurring basis and where they are classified within the hierarchy as of December 31, 2021:
(in thousands)
Assets
Short-term investments
Marketable equity securities
Vendetta Warrants
Level 1
Level 2
Level 3
Total
$ -
$ -
$ 3
$ -
$ -
$ -
$5,087
$1,307
$ 3
$5,087
$1,307
$ -
63
The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a
recurring basis and where they are classified within the hierarchy as of December 31, 2020:
(in thousands)
Assets
Short-term investments
Marketable equity securities
Vendetta Warrants
Level 1
Level 2
Level 3
Total
$5,798
$1,620
$ -
$ -
$ -
$ 49
$ -
$ -
$ -
$5,798
$1,620
$ 49
Items measured at fair value on a recurring basis:
Short-term investments: At December 31, 2021 and 2020, Solitario’s holdings of short-term investments consist of USTS and
CD’s recorded at their fair value based upon quoted market prices.
Marketable equity securities: At December 31, 2021 and 2020, the fair value of Solitario’s holdings in shares of Vendetta,
Kinross, Vox, and TNR (in 2020) marketable equity securities are based upon quoted market prices.
Vendetta Warrants: At December 31, 2021 and 2020 the fair value of Solitario’s Vendetta Warrants is based upon a Black
Scholes model, using market inputs.
During the year ended December 31, 2021, Solitario did not change any of the valuation techniques used to measure
its financial assets and liabilities at fair value.
10. Commitments and Contingencies:
In acquiring its interests in mineral claims and leases, Solitario has entered into lease agreements, which may be
canceled at its option without penalty. Solitario is required to make minimum rental and option payments in order to maintain
its interests in certain claims and leases. See Note 2, “Mineral Properties,” above. Solitario estimates its 2022 property claim,
lease and option payments for properties Solitario owns, has under joint venture or Solitario operates to be approximately
$1,046,000. Assuming that Solitario’s joint ventures continue in their current status and that Solitario does not appreciably
change its property positions on existing properties, approximately $777,000 of these estimated 2022 property claim, lease and
rental payments are paid or are reimbursable to us by Solitario’s joint venture partners. Solitario may be required to make
further payments in the future if it acquires new properties or enters into new agreements.
11. Employee Stock Compensation Plans:
On June 18, 2013, Solitario’s shareholders approved the Solitario Exploration & Royalty Corp. Omnibus Stock
Incentive Plan (the “2013 Plan”). Under the terms of the 2013 Plan, as amended, a total of 5,750,000 shares of Solitario
common stock are reserved for awards to directors, officers, employees and consultants. Awards granted under the 2013 Plan
may take the form of stock options, stock appreciation rights, restricted stock, and restricted stock units. The terms and
conditions of the awards are pursuant to the 2013 Plan and are granted by the Board of Directors or a committee appointed by
the Board of Directors.
a.) 2013 Plan stock option grants
The following table shows the grant date fair value of Solitario’s awards during 2021 and 2020 pursuant to the 2013
Plan:
Grant Date
Option – grant date price
Options granted
Expected life years
Expected volatility
Risk free interest rate
Weighted average fair
value
Grant date fair value
5/5/21 (1)
6/10/21 (1)
4/2/20 (1)
$0.67
90,000
5.0
76%
0.9%
$0.69
50,000
5.0
76%
0.9%
$0.20
1,325,000
5.0
67%
0.4%
$0.41
$20,000
(1) Option grants have a five-year term, and vest 25% on date of grant and 25% on each of the next three anniversary dates.
$0.11
$145,000
$0.41
$37,000
64
b.) Stock option activity
During 2021, options for 185,000 shares of common stock were exercised for proceeds of $83,000. During 2020 no
options granted from the 2013 Plan were exercised. The following table summarizes the activity for stock options outstanding
under the 2013 Plan for the years ended December 31, 2021 and 2020:
2021
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value (1)
$0.58
$0.67
$0.45
-
-
$0.49
$0.53
$718,000
$506,000
RSUs/
Options
5,558,000
140,000
(185,000)
-
-
5,513,000
4,718,000
RSUs/
Options
4,373,000
1,325,000
-
-
(140,000)
5,558,000
4,083,500
2020
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value (1)
$0.58
$0.20
-
-
$0.77
$0.48
$0.57
$925,000
$446,000
Outstanding, beginning of year
Granted
Exercised
Expired
Forfeited
Outstanding, end of year
Exercisable, end of year
(1) Intrinsic value based upon December 31, 2021 and 2020 price of a share of Solitario common stock as quoted on the NYSE American exchange
of $0.50 and $0.56, respectively, per share.
During the years ended December 31, 2021 and 2020, Solitario recorded $124,000 and $315,000, respectively, of
stock option expense under the 2013 Plan for the amortization of the grant date fair value of each of its outstanding options
with a credit to additional paid-in-capital. At December 31, 2021, the total unrecognized stock option compensation cost
related to non-vested options is $80,000 and is expected to be recognized over a weighted average period of 21 months.
12. Shareholders’ Equity
At the Market Offering Agreement
On February 2, 2021, Solitario entered into an at-the-market offering agreement (the “ATM Agreement”) with H. C.
Wainwright & Co., LLC (“Wainwright”), under which Solitario may, from time to time, issue and sell shares of Solitario’s
common stock through Wainwright as sales manager in an at-the-market offering under a prospectus supplement for aggregate
sales proceeds of up to $9.0 million (the “ATM Program”). The common stock is distributed at the market prices prevailing at
the time of sale. As a result, prices of the common stock sold under the ATM Program may vary as between purchasers and
during the period of distribution. The ATM Agreement provides that Wainwright is entitled to compensation for its services at
a commission rate of 3.0% of the gross sales price per share of common stock sold. During 2021, Solitario recorded $144,000
as a charge to additional paid-in-capital for one-time expenses related to entering into the ATM Agreement.
During 2021, Solitario sold an aggregate of 643,033 shares of common stock under the ATM Program at an average
price of $0.68 per share for net proceeds of $299,000 after commissions, sale, and one-time expenses.
Share Repurchase Program
On October 28, 2015, Solitario’s Board of Directors approved a share repurchase program that authorized Solitario to
purchase up to two million shares of its outstanding common stock. During 2020 Solitario’s Board of Directors extended the
expiration date of the share repurchase program through December 31, 2021. During 2021, Solitario did not purchase any
shares pursuant to the share repurchase program. During the year ended December 31, 2020, Solitario purchased 24,700 shares
of Solitario common stock for an aggregate purchase price of $5,000. As of December 31, 2021, Solitario has purchased a
total of 994,000 shares for an aggregate purchase price of $467,000 under the share repurchase program since its inception.
The share repurchase plan expired on December 31, 2021 and no additional shares will be purchased under the plan in the
future.
December 2021 Equity Offering
On December 6, 2021 Solitario completed the sale of 3,100,000 shares of common stock (the “Shares”), at a price of
$0.50 per share (the “Offering”) for net proceeds after expenses of $1,542,000. Solitario did not engage an underwriter or
65
placement agent for the Offering, and therefore there were no underwriter discounts or commissions or placement agent fees.
The sale of the Shares was made through a subscription agreement between Solitario and each respective investor. The Shares
were offered and sold pursuant to the Company’s existing shelf registration statement on Form S-3 (File No. 333-249129).
Solitario filed a prospectus supplement, dated December 1, 2021, with the SEC in connection with the sale of the securities in
the Offering. Three of Solitario’s executive officers participated in the Offering, purchasing 50,000 Shares each, on the same
terms as the other investors. The Offering was unanimously approved by Solitario’s Board of Directors and the participation
by our executive officers was also unanimously approved by the Audit Committee of the Board of Directors.
13. Subsequent Events
Solitario has evaluated events subsequent to December 31, 2021 to assess the need for potential recognition or
disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued.
In February of 2022, Solitario entered into a lease agreement (the “Easter Agreement”) whereby Solitario acquired
exclusive exploration rights in certain claims (the “Easter Claims”) in the Black Hills region of South Dakota. The Easter
Claims are part of Solitario’s Golden Crest project. Terms of the Easter Agreement include $10,000 paid upon signing,
scheduled annual payments to the underlying owner totaling $180,000 through the tenth anniversary, and $30,000 per year
thereafter. Solitario has agreed to escalating work commitments, at Solitario’s option, on the Easter Claims totaling $660,000
during the first five years of the lease, with the first year totaling $20,000.
In March 2022, we sold 2,650,724 shares of our common stock under the ATM program at a price of $0.79 per share
for net proceeds of $2,023,000 after commissions and sale expenses.
66
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
The management of Solitario is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). During the
fiscal period covered by this report, Solitario's management, with the participation of the Chief Executive Officer and Chief
Financial Officer, carried out an evaluation of the effectiveness of Solitario’s internal control over financial reporting and the
design and operation of Solitario’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). This
evaluation of the effectiveness of our internal control over financial reporting was based on the framework and criteria
established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on such evaluations, Solitario’s Chief Executive Officer and Chief Financial Officer have
concluded that, as of December 31, 2021, Solitario’s internal control over financial reporting is effective and that its disclosure
controls and procedures are effective to ensure that information required to be disclosed by Solitario in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods and are
designed to ensure that information required to be disclosed in its reports is accumulated and communicated to Solitario’s
management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure. There were no changes in internal control over financial reporting during the three months
ended December 31, 2021.
This Annual Report does not include an attestation report of our independent registered public accounting firm
regarding internal control over financial reporting. As a smaller reporting company, Solitario’s management’s report was not
subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to
provide only management’s report in this annual report.
Item 9B. Other Information
None
Item 9B. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable
67
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required under Item 10 is incorporated herein by reference to the information set forth in our definitive
proxy statement in connection with the annual meeting of shareholders to be filed with the SEC within 120 days after the end
of our fiscal year ended December 31, 2021 pursuant to Section 14(a) of the Exchange Act (the "2022 Proxy").
Item 11. Executive Compensation
The information required under Item 11 is incorporated herein by reference to the information set forth in the 2022
Proxy.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information with respect to Item 12 is incorporated herein by reference to the information set forth in the 2022
Proxy.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information with respect to Item 13 is incorporated herein by reference to the information set forth in the 2022
Proxy.
Item 14. Principal Accounting Fees and Services
The information required under Item 14 is incorporated herein by reference to the information set forth in the 2022
Proxy.
68
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as a part of this Annual Report on Form 10-K:
PART IV
1. Financial Statements
The following financial statements contained in Part II, Item 8 are filed as part of this Annual Report on Form 10-K:
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the years ended December 31, 2021 and 2020
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
Financial statement schedules are omitted because they are not required or are not applicable, or the required information
is provided in the consolidated financial statements or notes thereto described in Item 15(1) above.
3. Exhibits
The Exhibits listed in the Index to Exhibits, which appears immediately following the signature page and is incorporated
herein by reference, are filed as part of this Annual Report on Form 10-K.
Item 16. Form 10-K Summary
None.
69
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
SOLITARIO ZINC CORP.
By:
/s/ James R. Maronick
Chief Financial Officer
Date: March 30, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
Principal Executive Officer and Director
March 30, 2022
Principal Financial and Accounting Officer
March 30, 2022
A majority of
the Board of
Directors
March 30, 2022
/s/
Christopher E. Herald,
Chief Executive Officer
/s/
James R. Maronick,
Chief Financial Officer
/s/
John Labate
/s/
Brian Labadie
/s/
James Hesketh
/s/
Gil Atzmon
/s/
Joshua D. Crumb
By: /s/
James R. Maronick,
Attorney-in-fact
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70
Description
INDEX TO EXHIBITS
3.1
3.1.1
3.2
4.1
4.2
10.1#
10.2#
10.3#
10.4#
10.5
Amended and Restated Articles of Incorporation of Solitario Exploration & Royalty Corp., as Amended
(incorporated by reference to Exhibit 3.1 to Solitario’s Form 10-Q filed on August 10, 2010)
Articles of Amendment to Restated Articles of Incorporation of Solitario Zinc Corp. (incorporated by reference
to Exhibit 3.1 to Solitario’s Current Report on Form 8-K filed on July 14, 2017)
Amended and Restated By-laws of Solitario Zinc Corp., as amended (incorporated by reference to Exhibit 3.1 to
Solitario’s Form 8-K filed on April 23, 2021)
Form of Common Stock Certificate of Solitario Zinc (incorporated by reference to Exhibit 4.1 to Solitario’s
Form 10-Q filed on November 8, 2017)
Description of Common Stock (incorporated by reference to Exhibit 4.2 to Solitario’s Form 10-K filed on March
2, 2020)
2013 Solitario Exploration & Royalty Corp. Omnibus Stock and Incentive Plan (incorporated by reference to
Exhibit 10.2 to Solitario’s Form 8-K filed on June 20, 2013)
Change in Control Severance Benefits Agreement between Solitario Resources Corporation and Christopher E.
Herald, dated as of March 14, 2007 (incorporated by reference to Exhibit 99.1 to Solitario's Form 8-K filed on
March 14, 2007)
Change in Control Severance Benefits Agreement between Solitario Resources Corporation and James R.
Maronick, dated as of March 14, 2007 (incorporated by reference to Exhibit 99.2 to Solitario's Form 8-K filed on
March 14, 2007)
Change in Control Severance Benefits Agreement between Solitario Resources Corporation and Walter W. Hunt,
dated as of March 14, 2007 (incorporated by reference to Exhibit 99.3 to Solitario's Form 8-K filed on March 14,
2007)
Framework Agreement for the Exploration and Development of Potential Mining Properties, related to Solitario's
100% owned Florida Canyon project in Peru between Minera Florida Canyon S.A., Minera Solitario Peru S.A.C.,
Solitario Resources Corporation, and Votorantim Metais – Cajamarquilla S.A., dated March 24, 2007
(incorporated by reference to Exhibit 10.2 to Solitario's Form 8-K filed on October 4, 2007)
10.6
Performance Agreement for Funding of Drilling Program between Compañía Minera Milpo, S.A.A. and Minera
Solitario Peru S.A.C, related to the Framework Agreement for the Development of Mining Properties dated
August 1, 2019 (incorporated by reference to Exhibit 10.7 to Solitario’s Form 10-K filed on March 3, 2020)
10.7#
First Amendment to the 2013 Solitario Exploration & Royalty Corp. Omnibus Stock and Incentive Plan
(incorporated by reference to Exhibit 10.1 to Solitario’s Form 8-K filed on June 29, 2017)
10.8
14.1
At The Market Offering Agreement between Solitario Zinc Corp. and H.C. Wainwright & Co., LLC, dated
February 2, 2021 (incorporated by reference to Solitario’s Form 8-K filed on February 2, 2021)
Code of Ethics for the Chief Executive Officer and Senior Financial Officer (incorporated by reference to Exhibit
99.1 to Solitario's Form 8-K filed on July 18, 2006)
21.1*
Subsidiaries of Solitario Zinc Corp.
23.1*
Consent of Plante & Moran, PLLC
23.2*
Consent of Donald E Hulst with respect to the Technical Report Summary of the Florida Canyon Project
71
23.3*
Consent of Sarah Milne with respect to the Technical Report Summary of the Florida Canyon Project
23.4*
Consent of Donald E Hulst with respect to the Technical Report Summary of the Lik Project
23.5*
Consent of Christopher Emanuel with respect to the Technical Report Summary of the Lik Project
23.6*
Consent of Mark Shutty with respect to the Technical Report Summary of the Lik Project
24.1*
Power of Attorney
31.1*
31.2*
32.1*
Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)/15d-14(a) as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
96.1*
Technical Report Summary for the Florida Canyon Project
96.2*
Technical Report Summary for the Lik Project
101*
The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31,
2021 formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) Condensed Consolidated
Balance Sheets as of December 31, 2021 and 2020, (ii) Condensed Consolidated Statements of Operations for the
years ended December 31, 2021 and 2020, (iii) Condensed Consolidated Statements of Cash Flows for the years
ended December 31, 2021 and 2020; and (iv) Notes to the Condensed Unaudited Consolidated Financial
Statements.
* Filed herewith
# Designates a management contract, or a compensatory plan or arrangement.
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