What changed in this filing

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Item 1. Business

2023-03-16 compared with 2022-03-30 · 34 added, 34 removed, 103 unchanged (40% of the section changed)

10 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 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.

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.

Solitario currently considers its Golden Crest project in South Dakota, its carried interest in the Florida Canyon project in Peru, and its interest in the Lik project in Alaska to be its core mineral property assets.

Nexa Resources, Ltd.

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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.

Teck completed a drilling program and conducted mapping and ground gravity geophysical activities at the Lik project during 2022.

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.

As of December 31, 2022, Solitario anticipates using its cash and short-term investments, in part, to further fund the exploration of its Golden Crest, Florida Canyon, and Lik 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.

As of December 31, 2022, Solitario had three full-time employees and three 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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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.

ESG issues are important to Solitario’s investors, employees, and stakeholders, including communities in which we work.

Solitario pledges to operate our business in a manner that supports environmental and social initiatives and responsible corporate governance.

We work closely with our 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.

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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.

Solitario continues to evaluate the effects of COVID-19 on its operations and at times during the pandemic took 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 our joint venture partners at the Florida Canyon and Lik exploration projects.

Certain of Solitario’s joint venture partners have, from time to time, modified plans with respect to the projects in which Solitario holds an interest in response to the COVID-19 pandemic.

Also, Solitario 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 the COVID-19 pandemic or other epidemics or pandemics 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 any such outbreak.

Corporate Structure

Solitario Zinc Corp.

- Golden Crest Project [South Dakota]

- Zazu Metals Corporation.

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[Peru] (100%)

Golden Crest Project [South Dakota] (100%)

Mineral Exploration Properties

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Teck is a 50% partner with Solitario in the Lik deposit, with Teck acting as the project manager from 2018 through 2023.

In late 2021Solitario engaged Gustavson & Associates to complete a S-K 1300 Technical Report Summary on the Lik Project (the “S-K 1300 Lik TRS” ).

In late 2021 Solitario engaged Gustavson & Associates to complete a S-K 1300 Technical Report Summary on the Lik project (the “S-K 1300 Lik TRS” ) which was completed in March 2022.

A Preliminary Economic Assessment (“PEA”) was completed on the Lik deposit in 2014.

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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.

In late 2021 Solitario engaged Gustavson & Associates to complete a S-K 1300 Technical Report Summary on the Florida Canyon Project (the “S-K 1300 Florida Canyon TRS”) which was completed in March 2022.

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.

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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.

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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.

Solitario has agreed to escalating work commitments, at Solitario’s option, on the GC Claims and a related area of interest around the GC Claims totaling $3,000,000 during the first five years of the lease, with the first-year minimum expenditures totaling $200,000 ending June 2022.

Solitario has exceeded the minimum exploration expenditures required in 2022.

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.

1 unchanged sentence

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.

In addition, 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, as part of the Golden Crest project.

As of December 31, 2022, Solitario has incurred costs for staking, filing fees, legal and other costs totaling $1,035,000 capitalized as initial acquisition costs related to claims on the Golden Crest project.

At December 31, 2022, 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.

We conduct exploration and property evaluation activities in Peru and in 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.

4 unchanged sentences

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.

We have recorded revenue in the past from the sale of mineral properties and assets, joint venture property payments and the sale of 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;

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 certificates of deposit (“CDs”);

(ii) issuances of common stock;

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(“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) 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.

(iv) sales of covered call options on common stock of Kinross we hold;

and (v) sale of mineral property interests and assets.

In certain cases, we have reduced our exposure to the costs of our exploration activities through the use of joint ventures.

We operate in one segment:

1 unchanged sentence

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.

As of March 15, 2023, we had three 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.

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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.

During 2022, we had no material environmental incidents or known non-compliance with any applicable environmental regulations.

Financial Information about Geographic Areas

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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.

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-K

Item 1. Business