What changed in this filing

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Item 1. Financial Statements

2022-05-04 compared with 2021-11-09 · 108 added, 195 removed, 192 unchanged (61% of the section changed)

3 unchanged sentences

(in thousands of U.S.

September 30,

except share and per share amounts)

dollars, except share and per share amounts)

Current assets:

8 unchanged sentences

Accounts payable

Paycheck protection loan

Operating lease liability

6 unchanged sentences

Shareholders’ equity:

Preferred stock, $ 0.01 par value, authorized 10,000,000 shares (none issued and outstanding at September 30, 2021 and December 31, 2020)

Common stock, $ 0.01 par value, authorized 100,000,000 shares ( 58,633,766 and 58,108,366 shares, respectively, issued and outstanding at September 30, 2021 and December 31, 2020)

Preferred stock, $ 0.01 par value, authorized 10,000,000 shares (none issued and outstanding at March 31, 2022 and December 31, 2021)

Common stock, $ 0.01 par value, authorized 100,000,000 shares ( 64,760,123 and 62,036,399 shares, respectively, issued and outstanding at March 31, 2022 and December 31, 2021)

Additional paid-in capital

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of U.S, dollars, except per share amounts)

(in thousands of U.S.

dollars, except per share amounts)

Three months ended

Nine months ended

Costs, expenses and other:

1 unchanged sentence

General and administrative

Property abandonment and impairment

Total costs, expenses and other

Other (loss) income

Interest income (net)

Interest and dividend income

Loss on derivative instruments

(Loss) gain on sale of marketable equity securities

Unrealized (loss) gain on marketable equity securities

Total other (loss) income

Unrealized loss on short-term investments

Unrealized gain (loss) on marketable equity securities

Total other loss

Loss per common share:

6 unchanged sentences

(in thousands of U.S.

Nine months ended

September 30,

Three months ended

Operating activities:

1 unchanged sentence

Amortization of right of use lease asset

Unrealized loss (gain) on marketable equity securities

Unrealized (gain) loss of marketable equity securities

Unrealized loss on short-term investments

Employee stock option expense

Loss (gain) on sale of marketable equity securities

Property abandonment and impairment

Loss on derivative instruments

Other income PPP loan forgiveness

Changes in operating assets and liabilities:

3 unchanged sentences

Investing activities:

Sale of short-term investments, net

Purchase of mineral property

Purchase of other assets - net

(Purchase) sale of short-term investments, net

Cash from sale of marketable equity securities

Sale (purchase) of derivative instruments – net

Net cash provided by investing activities

Purchase of mineral properties

Net cash (used in) provided by investing activities

Financing activities:

Issuance of common stock – net of acquisition costs

Stock options exercised for cash

Paycheck Protection Loan

Purchase of common stock for cancellation

Issuance of common stock, net

Stock options exercised

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

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

See Notes to Unaudited Condensed Consolidated Financial Statements

5 unchanged sentences

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.

In July 1994, Solitario became a publicly traded company on the Toronto Stock Exchange through its initial public offering.

Solitario has been actively involved in mineral exploration since 1993.

3 unchanged sentences

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 recorded revenue in the past from the sale of mineral properties, including (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.

Solitario has recorded revenue in the past from the sale of mineral properties, including the sale of certain mineral royalties.

Revenues and / or proceeds from the sale or joint venture of properties or assets, although 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.

6 unchanged sentences

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 at potentially attractive terms.

The accompanying interim condensed consolidated financial statements of Solitario for the three and nine months ended September 30, 2021 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”).

The accompanying interim condensed consolidated financial statements of Solitario for the three months ended March 31, 2022 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”).

They do not include all disclosures required by generally accepted accounting principles for annual financial statements, but in the opinion of management, include all adjustments necessary for a fair presentation.

3 unchanged sentences

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 effects of the coronavirus (“COVID-19”) or other epidemics or pandemics.

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 the COVID-19 pandemic on its operations and since the outbreak of the pandemic has taken pro-active steps to address the impact on its operations, including reducing certain costs, 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.

However, 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 the outbreak and governmental actions taken to contain or treat the coronavirus outbreak.

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 cost reductions included implementing salary reductions and evaluating and reducing 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 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 any new outbreak and the actions taken to contain or treat the COVID-19 pandemic.

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 generally accepted accounting principles and are expressed in US dollars.

Cash equivalents

Cash equivalents include investments in highly liquid money-market securities with original maturities of three months or less when purchased.

As of September 30, 2021, $ 410,000 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.

As of March 31, 2022, $ 309,000 of Solitario’s cash 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

As of September 30, 2021, Solitario has $ 3,283,000 of its current assets in United States Treasury Securities (“USTS”) with maturities of 2 to 12 months.

In addition, at September 30, 2021, Solitario has three bank certificates of deposits (“CDs”) with face values between $ 250,000 and $ 100,000 recorded at their total fair value of $ 601,000 .

The CDs have maturities of 15 days to seven months.

The USTS and CDs are recorded at their fair value, based upon quoted market prices.

As of March 31, 2022, Solitario has $ 6,015,000 of its current assets in United States Treasury Securities (“USTS”) with maturities of 15 days to 19 months .

In addition, at March 31, 2022, Solitario has three bank certificates of deposits (“CD’s”) with face values between $ 100,000 and $ 250,000 recorded at their total fair value of $ 599,000 .

The CD’s have maturities of one month to nine months .

The USTS and CD’s are recorded at their fair value, based upon quoted market prices.

The USTS are not covered under the FDIC insurance rules for United States deposits.

Solitario’s USTS and CDs 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.

Solitario’s 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.

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 three months ended March 31, 2022 and 2021 the non-cash decrease in the fair value of its short-term investments, due primarily to changes in interest rates on held securities, was $ 51,000 and $ 25,000 , respectively.

The 2021 income statement and cash flows have been reclassified for comparability to the 2022 presentation.

Total other income (expense) and net cash used in operations in 2021 was not impacted by the reclassification.

Earnings per share

The calculation of basic earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the three and nine months ended September 30, 2021 and 2020.

Potentially dilutive shares related to outstanding common stock options for 5,513,000 Solitario common shares were excluded from the calculation of diluted loss per share for the three and nine months ended September 30, 2021 because their effects were anti-dilutive.

Potentially dilutive shares related to outstanding common stock options for 5,698,000 Solitario common shares were excluded from the calculation of diluted loss per share for the three and nine months ended September 30, 2020 because their effects were anti-dilutive.

Recently adopted accounting pronouncements

The SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements (the “SEC Modernization Rules”) for issuers whose securities are registered with the SEC.

The SEC Modernization Rules were adopted by Solitario on January 1, 2021.

Under the SEC Modernization Rules, consistent with global standards as embodied by the Committee for Reserves International Reporting Standards (“CRIRSCO”), Solitario will be required to disclose specified information concerning mineral resources that have been identified on one or more of its mineral properties in its annual report for the year ended December 31, 2021.

Consistent with CRIRSCO standards the SEC Modernization Rules have added definitions to recognize “Measured Mineral Resources”, “Indicated Mineral Resources” and “Inferred Mineral Resources.” The adoption of the SEC Modernization Rules is not applicable to 2021 interim financial statements and did not have a material impact on our financial statements or disclosures as of September 30, 2021 or for the three and nine months ended September 30, 2021 and 2020.

Solitario is currently evaluating the effects adoption of the SEC Modernization Rules will have on its annual report for the year ended December 31, 2021.

Mineral Property

The following table details Solitario’s investment in Mineral Property:

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 three months ended March 31, 2022 and 2021.

Potentially dilutive shares related to outstanding common stock options of 5,440,000 and 5,437,650 , respectively, for the three months ended March 31, 2022 and 2021 were excluded from the calculation of diluted loss per share because the effects were anti-dilutive.

Mineral Properties

The following table details Solitario’s investment in Mineral Properties:

(in thousands)

September 30,

Lik project (Alaska – US)

Golden Crest (South Dakota – US)

Gold Coin (Arizona – US)

Total exploration mineral property

Total exploration mineral properties

All exploration costs on our exploration properties, none of which have proven and probable reserves, including any additional costs incurred for subsequent lease payments or exploration activities related to our projects, are expensed as incurred.

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 the nine months ended September 30, 2021 related to these required payments.

In addition, to continue the lease, Solitario has agreed to pay, at its option, the underlying owner annual payments totaling $ 340,000 over a five-year period 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 will retain 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 the nine months ended September 30, 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 $ 393,000 capitalized as initial acquisition costs related to the SRC Claims and the GC Claims.

Teck and Solitario have agreed to an exploration program for 2021 on our jointly-funded Lik project, which includes up to three exploration holes to test the continuity and potential expansion of the current Lik deposit.

The total planned exploration is approximately $1.24 million of which Solitario will be responsible for 50% or approximately $ 622,000 .

Through September 30, 2021 Solitario has incurred approximately $290,000 in exploration expense at Lik during 2021.

Solitario has recorded a current asset of $ 294,000 for cash advanced to Teck for the 2021 Lik exploration program as of September 30, 2021.

Solitario recorded a mineral property write-down of $17,000 during the three and nine months ended September 30, 2021 related to the Gold Coin project.

Solitario did not record any mineral property write-downs during the three and nine months ended September 30, 2020.

As part of the Royalty Sale to SilverStream in 2019, 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, accrued 8 % per annum simple interest, payable on a quarterly basis, and was convertible into common shares of SilverStream, at the discretion of SilverStream, by providing Solitario a notice of conversion.

During the nine months ended September 30, 2020 Solitario recorded interest income of $ 7,000 from the SilverStream Note.

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.

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 the nine months ended September 30, 2020.

Exploration expense

2 unchanged sentences

Three months ended

September 30,

Nine months ended

September 30,

Geologic and field expenses

10 unchanged sentences

The cost of marketable equity securities sold is determined by the specific identification method.

Changes in fair value are recorded in the condensed consolidated statements of operations.

During the three months ended September 30, 2021, Solitario recorded an unrealized gain on marketable equity securities of $ 50,000 .

During the nine months ended September 30, 2021, Solitario recorded an unrealized loss on marketable equity securities of $ 220,000 .

During the three and nine months ended September 30, 2020, Solitario recorded an unrealized gain on marketable equity securities of $ 333,000 and $ 584,000 , respectively.

At September 30, 2021 and December 31, 2020 Solitario owns the following marketable equity securities:

September 30, 2021

Changes in market value are recorded in the condensed consolidated statement of operations.

At March 31, 2022 and December 31, 2021 Solitario owns the following marketable equity securities:

March 31 2022

December 31 2021

2 unchanged sentences

Vox Royalty Corp.

TNR Gold Corp.

The following tables summarize Solitario’s marketable equity securities and adjustments to fair value:

(in thousands)

September 30,

Marketable equity securities at cost

1 unchanged sentence

Marketable equity securities at fair value

The following table represents changes in marketable equity securities:

The following table represents changes in marketable equity securities during the three months ended March 31, 2022 and 2021:

(in thousands)

Three months ended

September 30,

Nine months ended

September 30,

Cost of marketable equity securities sold

1 unchanged sentence

Proceeds from the sale of marketable equity securities sold

Net (loss) gain on marketable equity securities

Additions to marketable equity securities

Net gain (loss) on marketable equity securities

Change in marketable equity securities at fair value

The following table represents the realized and unrealized (loss) gain on marketable equity securities:

The following table represents the realized and unrealized gain (loss) on marketable equity securities:

(in thousands)

Three months ended

September 30,

Nine months ended

September 30,

Unrealized (loss) gain on marketable securities

Unrealized gain (loss) on marketable securities

Realized (loss) gain on marketable equity securities sold

Net (loss) gain on marketable securities

During the nine months ended September 30, 2021, Solitario sold (i) 430,000 shares of TNR Gold Corp.

common stock for proceeds of $ 26,000 and recorded a gain on sale of $ 19,000 ;

(ii) 1,510,000 shares of Vendetta Mining Corp.

(“Vendetta) common stock for proceeds of $ 69,000 and recorded a loss on sale of $ 91,000 ;

and (iii) 3,200 shares of Vox for proceeds of $ 9,000 and recorded a gain on sale of $ 2,000 .

Solitario sold 2,900,000 shares of Vendetta common stock during the nine months ended September 30, 2020 for proceeds of $ 123,000 and recorded a gain on sale of $ 50,000 on the date of sale.

On May 19, 2020, Solitario received 137,255 shares of Vox upon conversion of the SilverStream Note, discussed above, valued at $ 294,000 .

Net gain (loss) on marketable securities

During the three months ended March 31, 2022, Solitario sold 500,000 shares of Vendetta Mining Corp.

(“Vendetta”) common stock for proceeds of $ 26,000 and recorded a loss on sale of $ 81,000 on the date of sale.

During the three months ended March 31, 2021, Solitario sold (i) 1,010,000 shares of Vendetta common stock for proceeds of $ 51,000 and recorded a loss on sale of $ 2,000 ;

(ii) 287,000 shares of TNR Gold Corp.

common stock for proceeds of $ 18,000 and recorded a gain on sale of $ 13,000 and (iii) 3,200 shares of Vox Royalty Corp.

(“Vox”) for proceeds of $ 9,000 and recorded a gain on sale of $ 2,000 .

Solitario accounts for its leases in accordance with ASC 842.

Solitario leases one facility, its Wheat Ridge, Colorado office, that has a term of more than one year.

Solitario leases one facility, its Wheat Ridge, Colorado office (the “WR Lease”), that has a term of more than one year.

Solitario has no other material operating lease costs.

During the nine months ended September 30, 2021, Solitario entered into a new lease for the same facility (both the prior lease and new lease are referred to as the “WR Lease”) and recorded a net increase in the related asset and liability of $ 99,000 .

The WR Lease is classified as an operating lease and has a term of 25 months at September 30, 2021, with no renewal option.

At September 30, 2021 and December 31, 2020, the right-of-use office lease asset for the WR Lease is classified as other long-term assets and the related liability as current and long-term operating lease liabilities in the condensed consolidated balance sheet.

During the three months ended March 31, 2021, Solitario entered into a new lease for the same facility under the WR Lease (both the prior and new lease are referred to as the “WR Lease”) and recorded a net increase in the related asset and liability of $ 99,000 .

The WR Lease is classified as an operating lease and has a term of 19 months at March 31, 2022, with no renewal option.

At March 31, 2022 and December 31, 2021, the right-of-use office lease asset for the WR Lease is classified as other assets and the related liability as current and long-term operating lease liabilities in the condensed consolidated balance sheet.

The amortization of right of use lease asset 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 the three and nine months ended September 30, 2021, Solitario recognized $ 10,000 and $ 30,000 , respectively, of non-cash amortization of right of use lease asset expense for the WR Lease included in general and administrative expense.

During the three and nine months ended September 30, 2020, Solitario recognized $ 9,000 and $ 29,000 , respectively, of non-cash amortization of right of use lease asset expense for the WR Lease included in general and administrative expense.

During the three and nine months ended September 30, 2021, cash lease payments of $ 11,000 and $ 28,000 , respectively, were made on the WR Lease.

During the three and nine months ended September 30, 2020, cash lease payments of $ 10,000 and $ 31,000 , respectively, were made on the WR Lease.

These cash payments, less imputed interest for each period, reduced the related liability on the WR Lease.

During the three months ended March 31, 2022 and 2021, Solitario recognized $ 10,000 and $ 10,000 , respectively, of non-cash amortization of right of use lease asset expense for the WR Lease included in general and administrative expense.

During the three months ended March 31, 2022 and 2021, cash lease payments of $ 11,000 and $ 7,000 , respectively, were made on the WR Lease.

These cash payments, less $ 1,000 of imputed interest for each period, reduced the related liability on the WR Lease.

The discount rate within the WR Lease is not determinable and Solitario has applied a discount rate of 5 % based upon Solitario’s estimate of its cost of capital.

The maturities of Solitario’s lease liability for its WR Lease are as follows at September 30, 2021:

The maturities of Solitario’s lease liability for its WR Lease are as follows at March 31, 2022:

Future lease payments (in thousands)

Total lease payments

Less amount of payments representing interest

Less the portion of lease payments representing interest

Present value of lease payments

Supplemental cash flow information related to our operating lease was as follows for the three and nine months ended September 30, 2021 and 2020:

Supplemental cash flow information related to our operating lease was as follows for the three months ended March 31, 2022 and 2021:

(in thousands)

Three months ended

September 30,

Nine months ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities

Operating cash outflows from the WR Lease payments

Operating cash outflows from WR Lease payments

Non-cash amounts related to the WR lease

Leased assets recorded in exchange for new operating lease liabilities

5 Other Assets

Leased assets recorded in exchange for new operating lease liabilities -net

The following items comprised other assets:

(in thousands)

September 30,

Furniture and fixtures, net of accumulated depreciation

3 unchanged sentences

Exploration bonds and other assets

Derivative Instruments

Vendetta Warrants

2 unchanged sentences

Each Vendetta Warrant entitles the holder to purchase one additional share of Vendetta common stock for a purchase price of Cdn$0.13 per share for a period of three years.

On the purchase date Solitario recorded marketable equity securities of $ 165,000 for the Vendetta shares acquired and $ 68,000 for the Vendetta Warrants based upon an allocation of the purchase price of the Vendetta units, determined by (i) the fair value of the Vendetta common shares received based upon the quoted market price for Vendetta common shares and (ii) the fair value of Vendetta Warrants based upon a Black Scholes model.

During the three and nine months ended September 30, 2021, Solitario charged loss on derivative instruments of $ 2,000 and $ 42,000 , respectively, for the change in the fair value of the Vendetta Warrants based on a Black Scholes model.

During the three and nine months ended September 30, 2020, Solitario recorded a gain on derivative instruments of $ 36,000 and $ 49,000 , respectively, for the change in the fair value of the Vendetta Warrants based on a Black Scholes model.

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 the nine months ended September 30, 2021, Solitario sold covered calls against its holdings of Kinross for cash proceeds of $ 8,000 and recorded a gain on derivative instruments related to those covered calls of $ 1,000 and $ 8,000 , respectively, during the three and nine months ended September 30, 2021.

During the three and nine months ended September 30, 2020 Solitario recorded a loss on derivative instruments related to its Kinross calls of $ 106,000 and $ 139,000 , respectively.

On April 20, 2020, Solitario 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 Company payroll, rent and utilities obligations.

The PPP Loan had a two-year term and bore interest at a rate of 1 .0% per annum.

The Paycheck Protection Program provided 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.

The Small Business Administration retains the right to review the eligibility requirements of Solitario for PPP Loans.

During the nine months ended September 30, 2021, the remaining balance of the PPP Loan of $ 10,000 was forgiven and Solitario recorded $ 10,000 of other income related to the forgiveness of the PPP Loan.

Solitario has no remaining balance due for the PPP Loan as of September 30, 2021.

Solitario accounts for its financial instruments under ASC 820 Fair Value Measurement .

During the three months ended September 30, 2021, 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 September 30, 2021:

On the purchase date Solitario recorded marketable equity securities of $ 165,000 for the Vendetta shares acquired and $ 68,000 for the Vendetta Warrants based upon an allocation of the purchase price of the Vendetta units, based upon (i) the fair value of the Vendetta common shares received, based upon the quoted market price for Vendetta common shares and (ii) the fair value of Vendetta Warrants based upon a Black Scholes model.

During the three months ended March 31, 2022 and 2021, Solitario charged loss on derivative instruments $ 1 ,000 and $ 3 ,000, respectively, for the change in the fair value of the Vendetta Warrants based upon a Black Scholes model.

Solitario accounts for its financial instruments under ASC 820.

For certain of Solitario’s financial instruments, including cash and cash equivalents and payables, the carrying amounts approximate fair value due to their short-term maturities.

Solitario’s short-term investments in USTS, CD’s, and marketable equity securities are carried at their estimated fair value based on quoted market prices.

During the three months ended March 31, 2022 there were no reclassifications in financial assets or liabilities between Level 1, 2 or 3 categories.

(in thousands)

7 unchanged sentences

Vendetta Warrants

Solitario accounts for income taxes in accordance with ASC 740 Accounting for Income Taxes .

Solitario accounts for income taxes in accordance with 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.

2 unchanged sentences

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.

At both September 30, 2021 and December 31, 2020, a valuation allowance has been recorded, which fully offsets Solitario’s net deferred tax assets, because it is more likely than not that the Company will not realize some portion or all of its deferred tax assets.

At both March 31, 2022 and December 31, 2021, a valuation allowance has been recorded, which fully offsets Solitario’s net deferred tax assets, because it is more likely than not that the Company will not realize some portion or all of its deferred tax assets.

The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that the deferred tax assets can be realized prior to their expiration.

During the three and nine months ended September 30, 2021 and 2020, Solitario recorded no deferred tax expense.

During the three months ended March 31, 2022 and 2021, Solitario recorded no deferred tax expense.

Commitments and contingencies

1 unchanged sentence

See Note 2, “Mineral Properties,” above.

Solitario leases office space under a non-cancelable operating lease for the Wheat Ridge, Colorado office which provides for future total minimum rent payments as of September 30, 2021 of $ 86,000 through October of 2023.

Solitario leases office space under the WR Lease which provides for total minimum rent payments of $ 65,000 through October of 2023 .

Employee Stock Compensation Plans

On June 18, 2013, Solitario’s shareholders approved the 2013 Solitario Exploration & Royalty Corp.

Omnibus Stock and Incentive Plan, as amended (the “2013 Plan”).

Under the terms of the 2013 Plan, a total of 5,750,000 shares of Solitario common stock are reserved for awards to directors, officers, employees and consultants.

Omnibus Stock and 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 were 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 of the Company (the “Board of Directors”) or a committee appointed by the Board of Directors.

As of September 30, 2021, and December 31, 2020, there were options outstanding that are exercisable to acquire 5,513,000 and 5,558,000 shares, respectively, of Solitario common stock, with exercise prices between $ 0.20 and $ 0.77 per share.

All of the options have a five-year term from the date of grant, and vest 25 % on the date of grant and 25% on each of the next three anniversary dates.

Solitario amortizes grant date fair value on a straight-line basis over the vesting period.

During the nine months ended September 30, 2021, Solitario granted 140,000 options with an average exercise price of $ 0.68 per share, each having a five-year term and a grant date fair value total of $ 58,000 based upon a Black-Scholes model, with a 76 % volatility and a 0.9 % risk-free interest rate.

During the nine months ended September 30, 2020, Solitario granted 1,325,000 options each with an exercise price of $ 0.20 per share, a five-year term and a grant date fair value of $ 145,000 based upon a Black-Scholes model, with a 66 % volatility and a 0.4 % risk-free interest rate.

During the nine months ended September 30, 2021, options for 185,000 shares were exercised with an average exercise price of $ 0.45 per share, respectively, for proceeds of $ 83,000 .

There were no exercises of options under the 2013 Plan during the three months ended September 30, 2021.

There were no exercises of options under the 2013 Plan during the three and nine months ended September 30, 2020.

During the three and nine months ended September 30, 2021, Solitario recorded stock option compensation expense of $ 32,000 and $ 104,000 , respectively.

During the three and nine months ended September 30, 2020, Solitario recorded stock option compensation expense of $ 72,000 and $ 287,000 , respectively.

At September 30, 2021, the total unrecognized stock option compensation cost related to non-vested options was $ 100,000 and is expected to be recognized over a weighted average period of 22 months.

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.

As of March 31, 2022, and December 31, 2021 there were options outstanding that are exercisable to acquire 5,440,000 and 5,513,000 , respectively, shares of Solitario common stock, with exercise prices between $ 0.20 and $ 0.77 per share.

During the three months ended March 31, 2022 and 2021, Solitario did not grant any options.

During the three months ended March 31, 2022, options for 73,000 shares were exercised with an average exercise price of $ 0.26 per share for proceeds of $ 19 ,000.

During the three months ended March 31, 2021, options for 120,350 shares were exercised with an average exercise price of $ 0.56 per share for proceeds of $ 67,000 .

During the three months ended March 31, 2022 and 2021, Solitario recorded stock option compensation expense of $ 13 ,000 and $ 28 ,000, respectively.

At March 31, 2022, the total unrecognized stock option compensation cost related to non-vested options is $ 67,000 and is expected to be recognized over a weighted average period of 18 months.

Shareholders’ Equity

Shareholders’ Equity for the three months ended September 30, 2021:

(in thousands, except

Share amounts)

Shareholders’

Balance at June 30, 2021

Stock option expense

Issuance of shares – ATM, net

Balance at September 30, 2021

Shareholders’ Equity for the three months ended September 30, 2020:

(in thousands, except

Share amounts)

Shareholders’

Balance at June 30, 2020

Stock option expense

Purchase of shares for cancellation

Balance at September 30, 2020

Shareholders’ Equity for the nine months ended September 30, 2021:

Shareholders’ Equity for the three months ended March 31, 2022:

(in thousands, except

5 unchanged sentences

Issuance of shares - option exercises

Balance at September 30, 2021

Shareholders’ Equity for the nine months ended September 30, 2020:

Balance at March 31, 2022

Shareholders’ Equity for the three months ended March 31, 2021:

(in thousands, except

3 unchanged sentences

Stock option expense

Purchase of shares for cancellation

Balance at September 30, 2020

Issuance of shares – ATM, net

Issuance of shares - option exercises

Balance at March 31, 2021

At the Market Offering Agreement

4 unchanged sentences

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 the nine months ended September 30, 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 the three and nine months ended September 30, 2021, Solitario sold an aggregate of 190,00 and 340,400 shares of common stock, respectively, under the ATM Program at an average price of $ 0.55 and $ 0.82 per share, respectively, for net proceeds of $ 104,000 and $ 137,000 , respectively, after commissions, sale and one-time expenses, discussed above.

During the three months ended March 31, 2022, Solitario sold an aggregate of 2,650,724 shares of common stock under the ATM Agreement at an average price of $ 0.79 per share for net proceeds of $ 2,023,000 after commissions and sale expenses.

During the three months ended March 31, 2021, Solitario sold an aggregate of 150,400 shares of common stock under the ATM Agreement at an average price of $ 1.21 per share for net proceeds of $ 177,000 after commissions and sale expenses.

During the three months ended March 31, 2021, Solitario recorded $ 79,000 as a charge to additional paid-in-capital for one-time expenses related to entering into the ATM Agreement.

Share Repurchase Program

On October 28, 2015, the 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, the Board of Directors extended the expiration date of the share repurchase program through December 31, 2021.

Solitario did not purchase any shares under the share repurchase plan during the three and nine months ended September 30, 2021.

During the three and nine months ended September 30, 2020, Solitario purchased 3,600 and 24,700 shares of Solitario common stock, respectively, for an aggregate purchase price of $ 1,000 and $ 5,000 , respectively.

As of September 30, 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.

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.

Solitario did not purchase any shares under the share repurchase plan during the three months ended March 31, 2022 and 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements