SOLITARIO RESOURCES CORP. 10-Q

Item 2. 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 of Solitario for the years ended December 31, 2022 and 2021, and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Solitario’s 2022 Annual Report. Solitario's financial condition and results of operations are not necessarily indicative of what may be expected in future periods. Unless otherwise indicated, all references to dollars are to U.S. dollars. (a) Business Overview and Summary We are an exploration stage company as defined by rules issued by the SEC, with a focus on the acquisition of precious and base metal properties with exploration potential and the development or purchase of royalty interests. Currently our primary focus is the acquisition and exploration of precious metal, zinc and other base metal exploration mineral properties. However, we continue to evaluate other mineral properties for acquisition, and we hold a portfolio of mineral exploration properties and assets for future sale, joint venture or on which to create a royalty prior to the establishment of proven and probable reserves. 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 property assets is in North and South America; however, we have conducted property evaluations for potential acquisition in other parts of the world. At June 30, 2023, we consider our Golden Crest project in South Dakota, our carried interest in the Florida Canyon project in Peru, and our interest in the Lik project in Alaska to be our core mineral property assets. We are conducting exploration activities the United States on our own at Golden Crest and through joint ventures operated by our partners in Peru and in Alaska at the Lik project. We also conduct potential acquisition evaluations in other countries located in South and North America. We have recorded revenue in the past from the sale of mineral properties, however revenues and / or proceeds from the sale or joint venture of properties or assets, although generally significant when they have occurred in the past, have not been a consistent source of revenue and would only 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 that the use of joint ventures to fund 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. As of June 30, 2023, we have balances of cash and short-term investments that we anticipate using, in part, to (i) fund costs and activities intended to further the exploration of our Lik, Florida Canyon and Golden Crest projects, (ii) conduct reconnaissance exploration and (iii) 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 advanced mineral exploration projects or other related assets at potentially attractive terms. The extent to which our business, including our exploration and other activities and the market for our securities, may be impacted by public health threats, rising geopolitical tension, general economic uncertainty and market volatility will depend on future developments, which are highly uncertain and cannot be predicted at this time. Please see Item 1A, “Risk Factors,” in our 2022 Annual Report. 14 Table of Contents (b) Results of Operations Comparison of the three months ended June 30, 2023 to the three months ended June 30, 2022 We had a net loss of $1,040,000 or $0.02 per basic and diluted share for the three months ended June 30, 2023 compared to a net loss of $1,691,000 or $0.03 per basic and diluted share for the three months ended June 30, 2022. As explained in more detail below, the primary reasons for the decrease in our net loss in the three months ended June 30, 2023 compared to the net loss during the three months ended June 30, 2022 were (i) a decrease in exploration expense to $555,000 in the three months ended June 30, 2023 compared to exploration expense of $951,000 during the three months ended June 30, 2022; (ii); a decrease in the unrealized loss on marketable equity securities to $227,000 during the three months ended June 30, 2023 compared to an unrealized loss on marketable equity securities of $368,000 during the three months ended June 30, 2022; (iii) recording of a gain on unrealized loss on short-term investments of $14,000 compared to a loss of $47,000 during the three months ended June 30, 2022; (iv) the recording of a loss on the sale of marketable equity securities of $78,000 during the three months ended June 30, 2022, with no similar loss in the three months ended June 30, 2023; and (v) the recording of a gain on derivative instruments of $23,000 during the three months ended June 30, 2023 compared to a loss on derivative instruments of $3,000 during the three months ended June 30, 2022. Partially offsetting the above items were (i) an increase in general and administrative expense to $315,000 in the three months ended June 30, 2023 compared to general and administrative expense of $277,000 during the three months ended June 30, 2022; and (ii) a decrease in interest and dividend income to $26,000 during the three months ended June 30, 2023 compared to interest and dividend income of $41,000 during the three months ended June 30, 2022. Each of the major components of these items is discussed in more detail below. Our net exploration expense decreased to $555,000 during the three months ended June 30, 2023 compared to exploration expense of $951,000 during the three months ended June 30, 2022 primarily as a result of (i) a later start of work at our Lik project by our joint venture partner, Teck, as Lik exploration was $28,000 during the three months ended June 30, 2023 compared to $444,000 of exploration expenditures at Lik, which included the start of a drilling program in the three months ended June 30, 2022; and (ii) a reduction in reconnaissance exploration during the three months ended June 30, 2023 to $41,000 compared to reconnaissance exploration of $79,000 during the three months ended June 30, 2022. Although our exploration expenditures at our Golden Crest project were generally comparable for the three months ended June 30, 2023 of $486,000 and $428,000 during the three months ended June 30, 2022, our focus during the 2023 period was on permitting a planned drilling program and additional soil and rock sampling program, while in the three months ended June 30, 2022 we conducted an inductive polarization study at our Golden Crest project as well as soil and rock sampling. During the three and six months ended June 30, 2023 we had three contract geologists working at our Golden Crest project, as well as several part-time employees who assisted our contract geologists in collecting, organizing and testing soil and rock samples at Golden Crest. In addition, certain of our Denver-based personnel spent a portion of their time on Golden Crest and reconnaissance exploration activities described above and related matters. We have budgeted approximately $2,000,000 for the full-year exploration expenditure for 2023, which includes approximately $1,723,000 at the Golden Crest project and $574,000 for Solitario’s share of a joint drilling program with Teck at the Lik project. We expect our full-year exploration expenditures for 2023 to be above the exploration expenditures for full-year 2022. Exploration expense (in thousands) by project consisted of the following: Three months ended June 30, Six months ended June 30, Project Name 2023 2022 2023 2022 Golden Crest $ 486 $ 428 $ 727 $ 555 Lik 28 444 33 448 Florida Canyon - - - - Reconnaissance 41 79 70 174 Total exploration expense $ 555 $ 951 $ 830 $ 1,177 General and administrative costs, excluding stock option compensation costs, discussed below, were $257,000 during the three months ended June 30, 2023 compared to $264,000 during the three months ended June 30, 2022. The major components of our general and administrative costs were (i) salaries and benefit expense of $103,000 during the three months ended June 30, 2023 compared to salary and benefit costs of $99,000 during the three months ended June 30, 2022; (ii) legal and accounting expenditures of $66,000 in the three months ended June 30, 2023 compared to $65,000 in the three months ended June 30, 2022; (iii) office rent and expenses of $23,000 during the three months ended June 30, 2023, compared to $32,000 during the three months ended June 30, 2022; and (iv) travel and shareholder relation costs of $65,000 during the three months ended June 30, 2023 compared to $68,000 during the three months ended June 30, 2022. We anticipate the full-year general and administrative costs will be comparable for 2023 and 2022. 15 Table of Contents We recorded $59,000 of stock option compensation expense for the amortization of unvested grant date fair value with a credit to additional paid-in-capital during the three months ended June 30, 2023 compared to $13,000 of stock option compensation expense during the three months ended June 30, 2022. These non-cash charges related to the expense for vesting on stock options outstanding during the three months ended June 30, 2023 and 2022. The primary reason for the increase in stock option compensation expense during the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was as a result of the grant of 2,360,000 options in the third quarter of 2022, which resulted in an increase in the amortization of the grant date fair values during the three months ended June 30, 2023 compared to the same period of 2022. See Note 10, “Employee Stock Compensation Plans,” above, for additional information on our stock option expense. We recorded a non-cash unrealized loss on marketable equity securities of $227,000 during the three months ended June 30, 2023 compared to an unrealized loss on marketable equity securities of $368,000 during the three months ended June 30, 2022. The non-cash unrealized loss during the three months ended June 30, 2023 was primarily related to (i) a decrease in the value of our 7,750,000 shares of Vendetta common stock, which decreased to a fair value of $234,000 at June 30, 2023 from a fair value of $372,000 at March 31, 2023 or a decrease of $138,000, based on quoted market prices; and (ii) a decrease in the value of our 134,055 shares of Vox Royalty Corp. (“Vox”) to $324,000 at June 30, 2023 compared to a value of $412,000 at March 31, 2023 or a decrease of $88,000 based on quoted market prices. The unrealized loss during the three months ended June 30, 2022 was primarily related to (i) a decrease in the value of our holdings of 100,000 shares of Kinross common stock, which decreased to a fair value of $358,000 at June 30, 2022 from a fair value of $588,000 at March 31, 2022 or a decrease of $230,000 based on quoted market prices; (ii) a decrease in the value of our then 8,000,000 shares of Vendetta common stock to $279,000 at June 30, 2022 from a value of $442,000 at March 31, 2022 or a decrease of $163,000 based on quoted market prices and (iii) a decrease in the value of our 134,055 shares of Vox to $303,000 at June 30, 2022 compared to a value of $383,000 at March 31, 2022 or a decrease of $80,000 based on quoted market prices. In addition, during the three months ended June 30, 2022, we transferred $78,000 of prior unrecognized loss on the sale of Vendetta common stock to realized loss on the sale of marketable equity securities, discussed below. We did not sell any of our marketable equity securities during the three or six months ended June 30, 2023. During the three months ended June 30, 2022, we sold 500,000 shares of our holdings of Vendetta common stock for proceeds of $27,000 and recorded a loss on sale of marketable equity securities of $78,000. See Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements for a discussion of the sales of Vendetta and Vox common stock. We recorded interest and dividend income of $26,000 during the three months ended June 30, 2023 compared to interest income of $41,000 during the three months ended June 30, 2022. This decrease was primarily due to a decrease in the amount of USTS we held during the three months ended June 30, 2023 compared to the amount of USTS we held during the three months ended June 30, 2022. Partially offsetting the decrease in the outstanding balance of USTS on our interest income was an increase in the average interest rate earned on our short-term investments in USTS during the three months ended June 30, 2023 compared to the three months ended June 30, 2022. We anticipate interest income will decrease during the remainder of 2023 from the amounts recorded through the six months ended June 30, 2023 as we expect to utilize the proceeds from maturing USTS to fund our exploration and general and administrative expenditures. We recorded a non-cash unrealized gain on our short-term investments of $14,000 during the three months ended June 30, 2023 compared to an unrealized loss on our short-term investments of $47,000 during the three months ended June 30, 2022 primarily due to the maturing of our USTS, which are marked-to-market and prior reductions in the quoted fair value of our existing USTS that were purchased at lower yield to maturities than current market values were reversed as the USTS matured and approached face value. These changes in interest rates are a result of many factors that are not related to our business and do not affect the yield-to-maturity quoted for our investments in USTS or CDs at the time we acquire these short-term investments, to the extent we hold the investments to maturity. During the three months ended June 30, 2023, we recorded a non-cash gain on derivative instruments of $23,000 related to certain Kinross calls we sold during the three months ended June 30, 2023, compared to a loss on derivative instruments of $3,000 during the three months ended June 30, 2022 related to a reduction in the value of our holdings of Vendetta Warrants which will expired in August 2022. See Note 6 “Derivative Instruments,” above for a discussion of our Kinross calls. 16 Table of Contents 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 geological potential of an early-stage mineral property and its related value for future sale, joint venture or development by us or others. During the three and six months ended June 30, 2023 and 2022, we recorded no property impairments. We recorded no income tax expense or benefit during the three and six months ended June 30, 2023 or 2022 as we provide a valuation allowance for the tax benefit arising out of our net operating losses for all periods presented. As a result of our administrative expenses and exploration activities, we anticipate we will not have currently payable income taxes during 2023. In addition to the valuation allowance discussed above, we provide a valuation allowance for our foreign net operating losses, which are primarily related to our exploration activities in Peru. 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. Comparison of the six months ended June 30, 2023 to the six months ended June 30, 2022 We had a net loss of $1,420,000 or $0.02 per basic and diluted share for the six months ended June 30, 2023 compared to a net loss of $2,205,000 or $0.03 per basic and diluted share for the six months ended June 30, 2022. As explained in more detail below, the primary reasons for the decrease in our net loss were (i) an decrease in exploration expense to $830,000 during the six months ended June 30, 2023 compared to exploration expense of $1,177,000 during the six months ended June 30, 2022; (ii) a gain on derivative instruments of $23,000 during the six months ended June 30, 2023 compared to a loss on derivative instruments of $4,000 during the three months ended June 30, 2022; (iii) a realized loss of $159,000 on the sale of marketable equity securities during the six months ended June 30, 2022, with no comparable sales of marketable equity securities during the six months ended June 30, 2023; (iv); an unrealized gain on short-term investments of $35,000 during the six months ended June 30, 2023 compared to an unrealized loss on short-term investments of $98,000 during the six months ended June 30, 2022 and (v) an unrealized gain of $102,000 on marketable equity securities during the six months ended June 30, 2023 compared to an unrealized loss on marketable equity securities of $155,000 during the six months ended June 30, 2022. Partially offsetting these reductions in the loss for the six month period ended June 30, 203 compared to the six month period ended June 30, 2023 were (i) an increase in general and administrative expenses to $791,000 during the six months ended June 30, 2023 compared to general and administrative expenses of $664,000 during the six months ended June 30, 2022 and; (ii) a decrease in interest and dividend income to $53,000 during the six months ended June 30, 2023 compared to interest income of $68,000 during the six months ended June 30, 2022. The significant changes for these items are discussed in more detail below. Our net exploration expense decreased to $830,000 during the six months ended June 30, 2023 compared to $1,177,000 during the six months ended June 30, 2022. The primary reason for the decrease was that the exploration expenditures at our Lik project in Alaska were $33,000 during the six months ended June 30, 2023 compared to exploration expenditures of $448,000 during the six months ended June 30, 2022, where our joint venture partner, Teck, completed a portion of a planned $1.3 million (total) exploration program for 2022, including drilling, of which we are responsible for one-half of the total costs incurred. We have agreed with Teck to complete a $1.1 million exploration program at Lik for 2023, of which we are responsible for one-half of that or approximately $550,000 for the full year of 2023, however due to timing of expenditures, we anticipate the bulk of those expenditures will occur in the third and fourth quarters of 2023. Partially offsetting this decrease in exploration expenditures during the 2023 period compared to the 2022 period was an increase in our expenditures at the Golden Crest project to $727,000 during the six months ended June 30, 2023 compared to Golden Crest exploration expenditures of $555,000 during the six months ended June 30, 2022, as a result of additional permitting work and soil and rock sampling during 2023 compared to 2022. 17 Table of Contents General and administrative costs, excluding stock option compensation costs discussed below, were $664,000 during the six months ended June 30, 2023 compared to $638,000 during the six months ended June 30, 2022. The major components of the costs were (i) salary and benefit expense during the six months ended June 30, 2023 of $263,000 compared to salary and benefit expense of $218,000 during the six months ended June 30, 2022, with these increases as a result of increased personnel and salaries in 2023; (ii) legal and accounting expenditures of $145,000 during the six months ended June 30, 2023, compared to $197,000 during the six months ended June 30, 2022; (iii) office and other costs of $51,000 during the six months ended June 30, 2023 compared to $53,000 during the six months ended June 30, 2022; and (iv) travel and shareholder relation costs of $205,000 during the six months ended June 30, 2023 compared to $170,000 during the six months ended June 30, 2022. During the six months ended June 30, 2023 and 2022, Solitario recorded $126,000 and $26,000, respectively, of stock option expense for the amortization of unvested grant date fair value with a credit to additional paid-in capital. The increase during the six months ended June 30, 2023 was primarily related to the addition of 2,360,000 options granted during the third quarter of 2022 with a grant date fair value of $876,000, which increased the amortization of unvested options’ grant date fair value during the six months ended June 30, 2023 compared to the six months ended June 30, 2022. We recorded an unrealized gain on marketable equity securities of $102,000 during the six months ended June 30, 2023 compared to an unrealized loss on marketable equity securities of $155,000 during the six months ended June 30, 2022. The non-cash unrealized gain during the six months ended June 30, 2023 was primarily related to (i) an increase in the fair value of our holdings of 7,750,000 shares of Vendetta common stock to $235,000 at June 30, 2022 compared to a fair value of $229,000 at December 31, 2022, based on quoted market prices; (ii) an increase in the fair value of our holdings of 100,000 shares of Kinross common stock at June 30, 2023 to $477,000 compared to a fair value of $409,000 at December 31, 2022, based on quoted market prices; and (iii) an increase in the fair value of our holdings of 134,055 shares of Vox to $324,000 at June 30, 2022 compared to a fair value of $309,000 at December 31, 2022 based on quoted market prices. The non-cash unrealized loss during the six months ended June 30, 2022 was primarily related to (i) a decrease in the fair value of our holdings of our then 8,000,000 shares of Vendetta common stock to $279,000 at June 30, 2022 compared to a fair value of $317,000 at December 31, 2021, based on quoted market prices; (ii) a decrease in the fair value of our holdings of 100,000 shares of Kinross common stock to $358,000 compared to a fair value of $581,000 at December 31, 2021, based on quoted market prices; and (iii) a decrease in the fair value of our holdings of 134,055 shares of Vox to $303,000 at June 30, 2022 compared to a fair value of $370,000 at December 31, 2021 based on quoted market prices. We may reduce our holdings of marketable equity securities depending on cash needs and market conditions, which may reduce the volatility of the changes in unrealized gains and losses in marketable equity securities during the remainder of 2023. We recorded interest and dividend income of $53,000 during the six months ended June 30, 2023 compared to interest and dividend income of $68,000 during the six months ended June 30, 2022. The reduction in interest income was primarily related to a reduction in our average outstanding balance of USTS during the six months ended June 30, 2023 compared to the six months ended June 30, 2022, which was partially offset by an increase in the average interest rate and income earned on our USTS during the six months ended June 30, 2023 compared to the average interest rate during the six months ended June 30, 2022. We anticipate our interest income will decrease in 2023 compared to 2022 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. We recorded a non-cash unrealized gain on our short-term investments of $35,000 during the six months ended June 30, 2023 compared to an unrealized loss on our short-term investments of $98,000 during the six months ended June 30, 2021 primarily due to certain of our USTS increasing in value as they approached maturity, which were previously recorded at a mark-to-market amount that was below their face value as a result of then current interest rates being higher than the yield-to-maturity rates our USTS at the time the USTS were acquired. We did not sell any marketable equity securities during the six months ended June 30, 2023. During the six months ended June 30, 2022, we sold 1,000,000 shares of our holdings of Vendetta common stock for proceeds of $53,000 and recorded a loss on sale of marketable equity securities of $159,000. See Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements for a discussion of the sale of marketable equity securities. During the six months ended June 30, 2023, we recorded a non-cash gain on derivative instruments of $23,000 related to certain Kinross calls we sold during the three months ended June 30, 2023. During the six months ended June 30, 2022 we recorded a non-cash loss of $4,000 on our Vendetta Warrants. 18 Table of Contents (c) Liquidity and Capital Resources Cash and Short-term Investments As of June 30, 2023, we have $2,573,000 in cash and short-term investments. As of June 30, 2023, we have $2,077,000 of our current assets in USTS with maturities of 30 days to 8 months. The USTS are recorded at their fair value based upon quoted market prices. We anticipate we will roll over that portion of our short-term investments not used for exploration expenditures, operating costs or mineral property acquisitions as they become due during the remainder of 2023. We intend to utilize a portion of our cash and short-term investments in our exploration activities and the potential acquisition of mineral assets over the next several years. Investment in Marketable Equity Securities Our marketable equity securities are carried at fair value, which is based upon market quotes of the underlying securities. At June 30, 2023 we own 7,750,000 shares of Vendetta common stock, 100,000 shares of Kinross common stock, 134,055 shares of Vox common stock and 200,000 shares of Highlander Silver Corp. common stock. At June 30, 2023, the Vendetta shares are recorded at their fair value of $234,000, the Kinross shares are recorded at their fair value of $477,000; the Vox shares are recorded at their fair value of $325,000 and the Highlander Silver Corp. shares are recorded at their fair value of $15,000. We did not sell any of our marketable equity securities during the six months ended June 30, 2023. During the six months ended June 30, 2022 we sold 1,000,000 shares of Vendetta common stock, as discussed above. See Note 3 “Marketable Equity Securities” in the condensed consolidated financial statements. We anticipate we may sell some portion of our holdings of marketable equity securities during the remainder of 2023 depending on cash needs and market conditions. Working Capital We had working capital of $3,716,000 at June 30, 2023 compared to working capital of $4,991,000 as of December 31, 2022. Our working capital at June 30, 2023 consists primarily of our cash and cash equivalents, our investment in USTS, discussed above, our investment in marketable equity securities of $1,051,000, and other current assets of $366,000, less our accounts payable of $235,000 and other current liabilities of $39,000. As of June 30, 2023, 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 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 our interests in other exploration projects or assets. Stock-Based Compensation Plans As of June 30, 2023, and December 31, 2022 there were options outstanding from the 2013 Plan to acquire 5,340,000 and 5,390,000 shares, respectively, of Solitario common stock. The outstanding options have exercise prices between $0.60 per share and $0.20 per share. During the six months ended June 30, 2023, options for 50,000 shares were exercised with an exercise price of $0.28 per share for proceeds of $14,000. During the six months ended June 30, 2022, options for 81,750 shares were exercised with an average exercise price of $0.25 per share for proceeds of $20,000. We do not anticipate the exercise of options to be a significant source of cash flow during the remainder of 2023. At the Market Offering Agreement On February 2, 2021, we entered into the ATM Agreement with 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. There were no sales of shares of common stock during the six months ended June 30, 2023. During the six months ended June 30, 2022, we sold an aggregate of 2,650,724 shares of common stock under the ATM Program at an average price of $0.76 per share of common stock for net proceeds after commissions and expenses of approximately $2,023,000. Solitario may sell additional shares under the ATM program during the remainder of 2023 if market conditions warrant such sales. 19 Table of Contents (d) Cash Flows Net cash used in operations during the six months ended June 30, 2023 increased to $1,765,000 compared to $1,272,000 of net cash used in operations for the six months ended June 30, 2022 primarily as a result of (i) the pre-payment of $350,000 during the second quarter of 2023 to our joint venture partner Teck for an advance on planned 2023 exploration program at the Lik project in Alaska, of which $332,000 remained in pre-paid expense at June 30, 2023 and is included in the changes in prepaid expenses and other current assets as a use of cash; (ii) an increase in non-stock option general and administrative expense to $665,000 during the six months ended June 30, 2023 compared to $638,000 during the six months ended June 30, 2022, discussed above; and (iii) a reduction in the provision of cash from changes in other prepaid expenses and other current assets of $4,000 to a total change of $228,000 during the six months ended June 30, 2023 compared to the provision of cash of $222,000 during the six months ended June 30, 2023, which was primarily due to the use of a prepaid balance of $221,000 due from Teck at December 31, 2021 during the six months ended June 30, 2022; and (iv) the use of cash of $15,000 from a decrease in accounts payable and other current liabilities during the six months ended June 30, 2023 compared to the provision of cash of $234,000 from an increased in accounts payable and other current liabilities during the six months ended June 30, 2022 as a result of increased exploration activity at our Golden Crest project during the six months ended June 30, 2022. These uses of cash were partially offset by (i) a decrease in exploration expense to $830,000 during the six months ended June 30, 2023 compared to exploration expense of $1,177,000 during the six months ended June 30, 2023; and (ii) a reduction in interest and dividend income to $53,000 during the six months ended June 30, 2023 compared to interest and dividend income of $68,000 during the six months ended June 30, 2022. Based upon projected expenditures in our 2023 budget, we anticipate continued use of funds from operations through the remainder of 2023, primarily for exploration related to our Golden Crest and Lik projects and reconnaissance exploration. See “Results of Operations” discussed above for further explanation of some of these variances. During the six months ended June 30, 2023, we provided $1,909,000 of cash from the sale of short-term investments compared to the use of $881,000 in cash during the six months ended June 30, 2022 from the net investment in short-term investments. During the six months ended June 30, 2023 we acquired equipment and other assets used in our exploration activities of $9,000 compared to $49,000 of equipment acquired during the six months ended June 30, 2022. We received cash proceeds of $31,000 from the sale of Kinross calls during the six months ended June 30, 2023 with no similar sales during the six months ended June 30, 2022. During the six months ended June 30, 2022 we sold certain marketable equity securities for proceeds of $53,000, with no similar sales during the six months ended June 30, 2023. We also used $10,000 of our cash to acquire additional mineral claims at our Golden Crest project during the six months ended June 30, 2022 with no similar mineral property additions during the six months ended June 30, 2023. We may sell a portion of our marketable equity securities during the remainder of 2023; however, we do not anticipate the sale of marketable equity securities will be a significant source of cash during the remainder of 2023. We will continue to liquidate a portion of our short-term investments as needed to fund our operations and our potential mineral property acquisitions during the remainder of 2023. Any potential mineral property acquisition or strategic corporate investment during the remainder of 2023, discussed above, could involve a significant change in our cash provided or used for investing activities, depending on the structure of any potential transaction. During the six months ended June 30, 2022, we received net cash of $2,023,000 from the issuance of common stock under the ATM Program, discussed above. In addition, during the six months ended June 30, 2023 and 2022 we received $14,000 and $20,000, respectively, from the issuance of common stock from the exercise of stock options, discussed above in Note 10, “Employee Stock Compensation Plans” to the condensed consolidated financial statements. 20 Table of Contents (e) Mineral Resources CAUTIONARY NOTE REGARDING DISCLOSURE OF MINERAL PROPERTIES Mineral Reserves and Resources We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 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”) issued by the 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”) 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. (f) Off-balance sheet arrangements As of June 30, 2023 and December 31, 2022 we had no off-balance sheet obligations. (g) Development Activities, Exploration Activities, Environmental Compliance and Contractual Obligations We are not involved in any development activities, nor do we have any contractual obligations related to any potential development activities as of June 30, 2023. As of June 30, 2023, there have been no material changes to our contractual obligations for exploration activities, environmental compliance or other obligations from those disclosed in our Management’s Discussion and Analysis included in our 2022 Annual Report. (h) Discontinued Projects We did not record any mineral property write-downs during the three and six months ended June 30, 2023 and 2022. (i) Significant Accounting Policies and Critical Accounting Estimates See Note 1 to the condensed consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of our significant accounting policies. 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 three and six months ended June 30, 2023. (j) Related Party Transactions As of June 30, 2023, and for the three and six months ended June 30, 2023, we have no related party transactions or balances. 21 Table of Contents (k) Recent Accounting Pronouncements See Note 1, “Business and Summary of Significant Accounting Policies,” to the unaudited condensed consolidated financial statements under Recent Accounting Pronouncements” above for a discussion of our significant accounting policies. (l) Forward Looking Statements This Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the 1934 Act , with respect to our financial condition, results of operations, business prospects, plans, objectives, goals, strategies, future events, capital expenditures, and exploration and development efforts. Words such as “anticipates,” “expects,” “intends,” “forecasts,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” and similar expressions identify forward-looking statements. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described herein and under the heading "Risk Factors" included in Item 1A of Part I of our 2022 Annual Report. These forward-looking statements appear in a number of places in this report and include statements with respect to, among other things: · Our estimates of the value and recovery of our short-term investments; · Our estimates of future exploration, development, general and administrative and other costs; · Our ability to realize a return on our investment in the Lik and Golden Crest projects; · Our ability to successfully identify, and execute on transactions to acquire new mineral exploration properties and other related assets; · Our ability to secure financing in the credit or capital markets in amounts and on terms that will allow us tu execute our business strategy, invest in new projects, and maintain adequate liquidity; · Our estimates of fair value of our investment in shares of Vendetta, Vox and Kinross; · Our expectations regarding development and exploration of our properties including those subject to joint venture and shareholder agreements; · The impact of political and regulatory developments; · The impact of technological changes, system failures, or breaches of our network security as well as other cyber security risks that could subject us to increased operating costs, litigation and other liabilities: · The effects of volatile economic conditions, including financial market volatility, the effects of inflation, rising interest rates, and labor and supply shortages; · Our future financial condition or results of operations and our future revenues and expenses; · Our business strategy and other plans and objectives for future operations; and · Risks related to natural disasters or adverse external events such as endemics or pandemics, including the on-going effects from the COVID-19 pandemic. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that these statements will prove to be accurate as actual results and future events could differ materially from those anticipated in the statements. Except as required by law, we assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Item 3. Quantitative and Qualitative Disclosures about Market Risk Smaller Reporting Companies are not required to provide the information required by this item. 22 Table of Contents