SOLITARIO RESOURCES CORP. 10-Q

Item 1. Financial Statements SOLITARIO RESOURCES CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except share and per share amounts) September 30, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 168 $ 316 Short-term investments 3,964 3,951 Investments in marketable equity securities, at fair value 910 949 Prepaid expenses and other 237 38 Total current assets 5,279 5,254 Mineral properties 16,646 16,646 Other assets 186 134 Total assets $ 22,111 $ 22,034 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 295 $ 228 Kinross call option 1 - Operating lease liability 31 35 Total current liabilities 327 263 Long-term liabilities Operating lease liability – Long-term 60 - Asset retirement obligation – Lik 125 125 Total long-term liabilities 185 125 Commitments and contingencies (Note 9) Equity: Shareholders’ equity: Preferred stock, $ 0.01 par value, authorized 10,000,000 shares (none issued and outstanding at September 30, 2023 and December 31, 2022) - - Common stock, $ 0.01 par value, authorized 100,000,000 shares ( 69,163,040 and 64,801,373 shares, respectively, issued and outstanding at September 30, 2023 and December 31, 2022) 692 648 Additional paid-in capital 77,507 74,886 Accumulated deficit ( 56,600 ) ( 53,888 ) Total shareholders’ equity 21,599 21,646 Total liabilities and shareholders’ equity $ 22,111 $ 22,034 See Notes to Unaudited Condensed Consolidated Financial Statements 3 Table of Contents SOLITARIO RESOURCES CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) Three months ended September 30 Nine months ended September 30 2023 2022 2023 2022 Costs, expenses and other: Exploration expense $ 918 $ 655 $ 1,748 $ 1,832 Depreciation 7 7 19 23 General and administrative 282 435 1,073 1,099 Total costs, expenses and other 1,207 1,097 2,840 2,954 Other (loss) income Interest and dividend income 35 29 88 97 Other income - 20 - 20 Gain (loss) on derivative instruments 7 - 30 ( 4 ) Realized loss on sale of marketable equity securities - - - ( 159 ) Unrealized gain (loss) on short-term investments 14 ( 22 ) 49 ( 120 ) Unrealized (loss) gain on marketable equity securities ( 141 ) 13 ( 39 ) ( 142 ) Total other (loss) income ( 85 ) 40 128 ( 308 ) Net loss $ ( 1,292 ) $ ( 1,057 ) $ ( 2,712 ) $ ( 3,262 ) Loss income per common share: Basic and diluted $ ( 0.02 ) $ ( 0.02 ) $ ( 0.04 ) $ ( 0.05 ) Weighted average shares outstanding: Basic and diluted 67,752 64,769 67,625 64,091 See Notes to Unaudited Condensed Consolidated Financial Statements 4 Table of Contents SOLITARIO RESOURCES CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of U.S. dollars) Nine months ended September 30, 2023 2022 Operating activities: Net loss $ ( 2,712 ) $ ( 3,262 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 19 23 Amortization of right-of-use lease asset 30 30 Unrealized loss on marketable equity securities 39 142 Unrealized (gain) loss on short-term investments ( 49 ) 120 Employee stock option expense 184 271 Loss on sale of marketable equity securities - 159 (Gain) loss on derivative instruments ( 30 ) 4 Changes in operating assets and liabilities: - Property abandonment and impairment - Other income Prepaid expenses and other ( 199 ) 266 Accounts payable and other liabilities 34 299 Net cash used in operating activities ( 2,684 ) ( 1,948 ) Investing activities: Sale of short-term investments, net 36 69 Purchase of mineral property - ( 386 ) Purchase of other assets – net ( 12 ) ( 49 ) Cash from sale of marketable equity securities - 53 Sale of derivative instruments – net 31 - Net cash provided (used in) by investing activities 55 ( 313 ) Financing activities: Issuance of common stock – net of issuing costs 2,422 2,023 Stock options exercised for cash 59 20 Net cash provided by financing activities 2,481 2,043 Net increase (decrease) in cash and cash equivalents ( 148 ) ( 218 ) Cash and cash equivalents, beginning of period 316 462 Cash and cash equivalents, end of period $ 168 $ 244 Supplemental Cash Flow information: Acquisition of right to use asset $ 87 $ - See Notes to Unaudited Condensed Consolidated Financial Statements 5 Table of Contents NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Business and Significant Accounting Policies Business and company formation Solitario Resources Corp. (“Solitario,” or the “Company”) is an exploration stage company as defined by rules issued by the United States Securities and Exchange Commission (“SEC”). Solitario was incorporated in the state of Colorado on November 15, 1984 as a wholly-owned subsidiary of Crown Resources Corporation. 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. In June 2023, Solitario’s shareholders approved an amendment to the Company’s Articles of Incorporation to change the Company’s name from Solitario Zinc Corp. to Solitario Resources Corp., and that name change was effected in July 2023. Solitario’s primary business is to acquire exploration mineral properties or royalties and/or discover economic deposits on its mineral properties and advance these deposits, either on its own or through joint ventures, up to the development stage. At or prior to development, Solitario would likely attempt to sell its mineral properties, pursue their development either independently or through a joint venture with a partner that has expertise in mining operations, or create a royalty with a third party that would continue to advance the property. Solitario has never developed a property. Solitario is primarily focused on the acquisition and exploration of precious metal, zinc and other base metal exploration mineral properties. In addition to focusing on its mineral exploration properties and the evaluation of mineral properties for acquisition, Solitario also evaluates potential strategic transactions for the acquisition of new precious and base metal properties and assets with exploration potential or business combinations that Solitario determines to be favorable to Solitario. Solitario has 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 potentially 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 zinc project in Peru (the “Florida Canyon Project”), its interest in the Lik zinc project in Alaska (the “Lik Project”), and its Golden Crest project in South Dakota (the “Golden Crest Project”) to be its core mineral property assets. Nexa Resources, Ltd. (“Nexa”), Solitario’s joint venture partner, is continuing the exploration and furtherance of the Florida Canyon Project and Solitario is monitoring progress at Florida Canyon. Solitario is working with its 50% joint venture partner in the Lik Project, Teck American Incorporated, a wholly-owned subsidiary of Teck Resources Limited (both companies are referred to as “Teck”), to further the exploration and evaluate potential development plans for the Lik Project. Solitario is conducting mineral exploration on Golden Crest Project on its own. Solitario anticipates using its cash and short-term investments, in part, to fund costs and activities to further the exploration of the Florida Canyon, Lik and Golden Crest projects, and to potentially acquire additional mineral property assets. The fluctuations in precious metal and other commodity prices contribute to a challenging environment for mineral exploration and development, which has created opportunities as well as challenges for the potential acquisition of early-stage and advanced mineral exploration projects or other related assets at potentially attractive terms. The accompanying interim condensed consolidated financial statements of Solitario for the three months and nine months ended September 30, 2023 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. Interim results are not necessarily indicative of results which may be achieved in the future or for the full year ending December 31, 2023. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto which are included in Solitario’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2023 and amended by that certain Amendment No. 1 to Form 10-K filed with the SEC on March 24, 2023 (as amended our “2022 Annual Report”). The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these condensed consolidated financial statements, except as modified for appropriate interim financial statement presentation. 6 Table of Contents Risks and Uncertainties Solitario is subject to various risks and uncertainties that are specific to the nature of its business and the exploration of its mineral properties. Solitario also faces various macro risks and uncertainties, such as risks related to health epidemics, pandemics, and other outbreaks or resurgences of communicable diseases, the occurrence of natural disasters, rising geopolitical tension and instability, acts of war or terrorism, global economic uncertainty, inflationary pressures, increased interest rates, and volatility and disruption in national and international financial markets. These risks and uncertainties could significantly disrupt Solitario’s operations and may materially and adversely affect its business and financial condition. Certain of these risks and uncertainties are discussed under the heading “Risk Factors” in Item 1A of our 2022 Annual Report and under the heading “Forward-Looking Statements” in Item 2(l) of Part I of this report. Solitario will continue taking proactive steps to monitor and address the impacts of these risks and uncertainties on its operations, financial condition, and liquidity. Such steps may include, for example, modifying the scope of exploration projects to the extent necessary to respond to public-health emergencies, a step Solitario and its joint venture partners took to address the impacts of the COVID-19 pandemic; reducing costs and increasing operational efficiency in response to inflationary stress and economic downturn; and performing ongoing evaluations of the potential impacts of market volatility, general economic uncertainty, and rising geopolitical tension on Solitario’s ability to access future traditional funding sources on the same or reasonably similar terms as in past periods. While Solitario will continue to monitor and address the effects of these risks and uncertainties, the extent to which they ultimately impact Solitario’s business, including its exploration and other activities and the market for its securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time. Financial reporting The condensed 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 condensed 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, 2023, $ 82,000 of Solitario’s cash is 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, 2023, Solitario has $ 1,391,000 of its current assets in United States Treasury Securities (“USTS”) with maturities of 30 days to 5 months. The USTS 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 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. Included in short-term investments at September 30, 2023 is $ 2,573,000 in a money market fund held in a brokerage account. Earnings per share The calculation of basic and diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the three and nine months ended September 30, 2023 and 2022. Potentially dilutive shares related to outstanding common stock options of 5,195,000 and 5,390,000 , respectively, for the three and nine months ended September 30, 2023 and outstanding common stock options of 5,431,250 and 5,513,000 , respectively, for the three and nine months ended September 30, 2022 were excluded from the calculation of diluted loss per share because the effects were anti-dilutive. 7 Table of Contents 2. Mineral Properties The following table details Solitario’s investment in Mineral Properties: (in thousands) September 30, December 31, 2023 2022 Exploration Lik project (Alaska – US) $ 15,611 $ 15,611 Golden Crest (South Dakota – US) 1,035 1,035 Total exploration mineral properties $ 16,646 $ 16,646 All exploration costs on Solitario’s exploration properties, none of which have proven and probable reserves, including any additional costs incurred for subsequent lease payments or exploration activities related to Solitario’s projects, are expensed as incurred. During the nine months ended September 30, 2023, Solitario advanced $ 350,000 to Teck for planned 2023 exploration expenditures at the Lik project, of which $ 193,000 was in prepaid expenses at September 30, 2023. Exploration expense The following items comprised exploration expense: (in thousands) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Geologic and field expenses $ 895 $ 559 $ 1,630 $ 1,567 Administrative 23 96 118 265 Total exploration costs $ 918 $ 655 $ 1,748 $ 1,832 Asset Retirement Obligation In connection with the acquisition of its interest in the Lik project in 2017, Solitario recorded an asset retirement obligation of $ 125,000 for Solitario’s estimated reclamation cost of the existing disturbance at the Lik project. This disturbance consists of an exploration camp, including certain drill sites and access roads at the camp. The estimate was based upon estimated cash costs for reclamation as determined by the permitting bond required by the State of Alaska for which Solitario has purchased a reclamation bond insurance policy in the event Solitario or its 50% joint venture partner, Teck, do not complete required reclamation. Solitario has not applied a discount rate to the recorded asset retirement obligation as the estimated time frame for reclamation is not currently known, as reclamation is not expected to occur until the end of the Lik project life, which would follow future development and operations, the start of which cannot be estimated or assured at this time. Additionally, no depreciation will be recorded on the related asset for the asset retirement obligation until the Lik project goes into operation, which cannot be assured. 3. Marketable Equity Securities Solitario’s investments in marketable equity securities are carried at fair value, which is based upon quoted prices of the securities owned. The cost of marketable equity securities sold is determined by the specific identification method. Changes in fair value are recorded in the condensed consolidated statement of operations. 8 Table of Contents At September 30, 2023 and December 31, 2022, Solitario owns the following marketable equity securities: September 30, 2023 December 31, 2022 shares Fair value (000’s) Shares Fair value (000’s) Kinross Gold Corp 100,000 $ 456 100,000 $ 409 Vendetta Mining Corp. 7,750,000 172 7,750,000 229 Vox Royalty Corp. 134,055 271 134,055 311 Highlander Silver Corp. 200,000 11 200,000 - Total $ 910 $ 949 The following tables summarize Solitario’s marketable equity securities and adjustments to fair value: (in thousands) September 30, 2023 December 31, 2022 Marketable equity securities at cost $ 1,440 $ 1,440 Cumulative unrealized loss on marketable equity securities ( 530 ) ( 491 ) Marketable equity securities at fair value $ 910 $ 949 The following table represents changes in marketable equity securities: (in thousands) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Cost of marketable equity securities sold $ - $ - $ - $ 212 Realized (loss) on marketable equity securities sold - - - ( 159 ) Proceeds from the sale of marketable equity securities sold - - - ( 53 ) Net (loss) gain on marketable equity securities ( 141 ) 13 ( 39 ) ( 301 ) Change in marketable equity securities at fair value $ ( 141 ) $ 13 $ ( 39 ) $ ( 354 ) The following table represents the realized and unrealized (loss) gain on marketable equity securities: (in thousands) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Unrealized (loss) gain on marketable securities $ ( 141 ) $ 13 $ ( 39 ) $ ( 142 ) Realized (loss) on marketable equity securities sold - - - ( 159 ) Net loss on marketable securities $ ( 141 ) $ 13 $ ( 39 ) $ ( 301 ) During the three and nine months ended September 30, 2023, Solitario did not sell any marketable equity securities. During the three months ended September 30, 2022, Solitario did not sell any marketable equity securities. During the nine months ended September 30, 2022, Solitario sold 1,000,000 shares of Vendetta Mining Corp. (“Vendetta”) common stock for proceeds of $ 53,000 and recorded a loss on sale of $ 159,000 on the date of sale. 4. Leases Solitario accounts for its leases in accordance with ASC 842 Leases . Solitario leases one facility, its Wheat Ridge, Colorado office, that has a term of more than one year. Solitario has no other material operating lease costs. During the nine months ended September 30, 2023, Solitario entered into an extension of the lease as a new lease for the same facility (the prior lease and the new lease are referred to as the “WR Lease”) and recorded a net increase in the related asset and liability of $ 87,000 . The WR Lease is classified as an operating lease and has a term of 29 months at September 30, 2023, with no renewal option. At September 30, 2023 and December 31, 2022, 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. The amortization of right-of-use lease asset expense is recognized over the lease term, with variable lease payments recognized in the period those payments are incurred. 9 Table of Contents During the three and nine months ended September 30, 2023, cash lease payments of $ 11,000 and $ 33,000 , respectively, were made on the WR Lease. During the three and nine months ended September 30, 2022, cash lease payments of $ 11,000 and $ 29,000 , respectively, were made on the WR Lease. During the three and nine months ended September 30, 2023, Solitario recognized $ 10,000 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, 2022, 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. These cash payments, less 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 7% based upon Solitario’s estimate of its cost of capital to determine the asset and liability upon the extension of the WR lease during 2023. The maturities of Solitario’s lease liability for its WR Lease are as follows at September 30, 2023: Future lease payments (in thousands) Remaining payments 2023 $ 4 2024 44 2025 45 2026 8 Total lease payments 101 Less amount of payments representing interest ( 10 ) Present value of lease payments $ 91 5 Other Assets Other assets consisted of the following items: (in thousands) September 30, December 31, 2023 2022 Furniture and fixtures, net of accumulated depreciation $ 90 $ 97 Office lease asset 92 33 Exploration bonds and other assets 4 4 Total other $ 186 $ 134 6. Derivative Instruments Covered call options From time-to-time, Solitario has sold covered call options against its holdings of shares of common stock of Kinross Gold Corporation (“Kinross”) included in marketable equity securities. The business purpose of selling covered calls is to provide additional income on a limited portion of shares of Kinross that Solitario may sell in the near term, which is generally defined as less than one year, and any changes in the fair value of its covered calls are recognized in the statement of operations in the period of the change. At September 30, 2023, Solitario has a liability related to covered calls outstanding on its holdings of Kinross of $ 1,000 . During the nine months ended September 30, 2023, Solitario sold covered calls against its holdings of Kinross for cash proceeds of $ 31,000 and Solitario recorded a gain on derivative instruments related to those covered calls during the three and nine months ended September 30, 2023 of $ 7,000 and $ 30,000 , respectively. Solitario did not sell any covered calls during the three and nine months ended September 30, 2022. Warrants During the three and nine months ended September 30, 2023 Solitario did not hold any Vendetta warrants. During the nine months ended September 30, 2022, Solitario recorded a loss of $ 4,000 related to certain Vendetta warrants it held, which expired unexercised during the nine months ended September 30, 2022. 10 Table of Contents 7. Fair Value Solitario accounts for its financial instruments under ASC 820 Fair Value Measurement . During the nine months ended September 30, 2023, 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, 2023: (in thousands) Level 1 Level 2 Level 3 Total Assets Short-term investments $ 3,964 $ - $ - $ 3,964 Marketable equity securities $ 910 $ - $ - $ 910 Liabilities Kinross call options $ 1 $ - $ - $ 1 The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the hierarchy as of December 31, 2022: (in thousands) Level 1 Level 2 Level 3 Total Assets Short-term investments $ 3,951 $ - $ - $ 3,951 Marketable equity securities $ 949 $ - $ - $ 949 8. Income Taxes Solitario accounts for income taxes in accordance with ASC 740 Accounting for Income Taxes . Under ASC 740, income taxes are provided for the tax effects of transactions reported in the condensed consolidated financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized. At both September 30, 2023 and December 31, 2022, 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, 2023 and 2022, Solitario recorded no deferred tax expense. 9. Commitments and contingencies Solitario has recorded an asset retirement obligation of $ 125,000 related to its Lik project in Alaska. 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, 2023 of $ 101,000 through February 2026 . 11 Table of Contents 10. 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”), which expired in April 2023. 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. The 2013 plan permitted the Board of Directors of the Company (the “Board of Directors”) or a committee appointed by the Board of Directors to grant awards in the form of stock options, stock appreciation rights, restricted stock, and restricted stock units. As of September 30, 2023, the 2013 Plan has expired and no additional awards may be granted under the 2013 Plan, although awards made prior to the 2013 Plan’s expiration will remain outstanding in accordance with their terms. The outstanding awards under the 2013 Plan are detailed below. On June 20, 2023, Solitario’s shareholders approved the 2023 Solitario Stock and Incentive Plan (the “2023 Plan”). Under the terms of the 2023 Plan, a total of 5,000,000 shares of Solitario common stock are reserved for awards to directors, officers, employees and consultants. Awards may take the form of stock options, stock appreciation rights, restricted stock and restricted stock units. The terms and conditions of the awards are pursuant to the 2023 Plan and are granted by the Board of Directors or a committee appointed by the Board of Directors. The 2023 Plan has a term of 10 years. As of September 30, 2023, no awards have been granted under the 2023 Plan. As of September 30, 2023 and December 31, 2022, there were options outstanding under the 2013 Plan that are exercisable to acquire 5,195,000 and 5,390,000 , respectively, shares of Solitario common stock, with exercise prices between $ 0.20 and $ 0.60 per share. As of September 30, 2023, the outstanding stock options have an intrinsic value of $ 765,000 and a weighted average life of 2.24 years. During the three and nine months ended September 30, 2023, Solitario did not grant any options. During the three and nine months ended September 30, 2022, Solitario granted options to acquire 2,360,000 shares of Solitario common stock. The options have an exercise price of $ 0.60 per share, a five-year term and a grant date fair value of $ 876,000 based upon a Black-Scholes model, with a 73 % volatility and a 3.4 % risk-free interest rate. During the three and nine months ended September 30, 2023, options for 145,000 and 195,000 shares, respectively, were exercised with exercise prices between $ 0.28 and $ 0.31 per share for proceeds of $ 45,000 and $ 59,000 , respectively, which had intrinsic values of $ 37,000 and $ 52,000 , respectively, on the date of exercise. No options were exercised during the three months ended September 30, 2022. During the nine months ended September 30, 2022, options for 81,750 shares were exercised with an average exercise price of $ 0.25 per share for proceeds of $ 20,000 , which had an intrinsic value of $ 44,000 on the date of exercise. During the three and nine months ended September 30, 2023, Solitario recorded stock option compensation expense of $ 58,000 and $ 184,000 , respectively included in general and administrative expense. During the three and nine months ended September 30, 2022, Solitario recorded stock option compensation expense of $ 245,000 and $ 271,000 , respectively included in general and administrative expense. At September 30, 2023, the total unrecognized stock option compensation cost related to non-vested options was $ 434,000 and is expected to be recognized over a weighted average period of 23 months. 11. Shareholders’ Equity Shareholders’ Equity for the nine months ended September 30, 2023: (in thousands, except Share amounts) Common Common Additional Total Stock Stock Paid-in Accumulated Shareholders’ Shares Amount Capital Deficit Equity Balance at December 31, 2022 64,801,373 $ 648 $ 74,886 $ ( 53,888 ) $ 21,646 Stock option expense - - 67 - 67 Net loss - - - ( 380 ) ( 380 ) Balance at March 31, 2023 64,801,373 $ 64 8 $ 74,953 $ ( 54,268 ) $ 21,333 Stock option expense - - 59 - 59 Issuance of shares - option exercises 50,000 1 13 - 14 Net loss - - - ( 1,040 ) ( 1,040 ) Balance at June 30, 2023 64,851,373 $ 649 $ 75,025 $ ( 55,308 ) $ 20,366 Stock option expense - - 58 - 58 Issuance of shares - option exercises 145,000 1 44 - 45 Private placement 4,166,667 42 2,380 2,422 Net loss - - - ( 1,292 ) ( 1,292 ) Balance at September 30, 2023 69,163,040 $ 692 $ 77,507 $ ( 56,600 ) $ 21,599 12 Table of Contents Shareholders’ Equity for the nine months ended September 30, 2022: (in thousands, except Share amounts) Common Common Additional Total Stock Stock Paid-in Accumulated Shareholders’ Shares Amount Capital Deficit Equity Balance at December 31, 2021 62,036,399 $ 620 $ 72,523 $ ( 49,960 ) $ 23,183 Stock option expense - - 13 - 13 Issuance of shares – ATM, net 2,650,724 27 1,996 - 2,023 Issuance of shares - option exercises 73,000 1 18 - 19 Net loss - - - ( 514 ) ( 514 ) Balance at March 31, 2022 64,760,123 $ 648 $ 74,550 $ ( 50,474 ) $ 24,724 Stock option expense - - 13 - 13 Issuance of shares - option exercises 8,750 - 1 - 1 Net loss - - - ( 1,691 ) ( 1,691 ) Balance at June 30, 2022 64,768,873 $ 648 $ 74,564 $ ( 52,165 ) $ 23,047 Stock option expense - - 245 - 245 Net loss - - - ( 1,057 ) ( 1,057 ) Balance at September 30, 2022 64,768,873 $ 648 $ 74,809 $ ( 53,222 ) $ 22,235 Private Placement On July 31, 2023, Solitario entered into a Stock Purchase Agreement (the “SPA”) with Newmont Overseas Exploration Ltd. (“Newmont”), for the purchase and sale of 4,166,667 shares of Solitario common stock of Solitario (the “Shares”), at a price of $ 0.60 per share for net proceeds of $ 2,422,000 after certain legal and regulatory offering costs of $ 78,000 . In connection with the sale of the Shares Solitario and Newmont entered into an Investor Rights Agreement, which granted Newmont certain additional rights, including a preemptive right, certain anti-dilution protections and certain other rights and notice provisions related to Solitario’s Gold Crest mineral property assets. At the Market Offering Agreement On February 2, 2021, Solitario entered into an at-the-market offering agreement (the “ATM Agreement”) with H. C. Wainwright & Co., LLC (“Wainwright”), under which Solitario may, from time to time, issue and sell shares of Solitario’s common stock through Wainwright as sales manager in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $ 9.0 million (the “ATM Program”). The common stock sold under the ATM Program is distributed at the market prices prevailing at the time of sale. As a result, prices of the common stock sold under the ATM Program may vary as between purchasers and during the period of distribution. The ATM Agreement provides that Wainwright is entitled to compensation for its services as sales manager 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, 2023, Solitario did not sell any shares under the ATM Agreement. During the nine months ended September 30, 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. 12. Subsequent Events On October 13, 2023, Solitario completed a private placement of 8,631,818 shares of Solitario common stock, at a price of US$ 0.55 per share for total net proceeds of US$ 4,747,500 (the “Offering”). The Offering involved qualified non-US investors and was pursuant to one or more exemptions from registration under U.S., Canadian and other applicable law. The Company did not engage an underwriter or placement agent for the Offering, and there were no underwriter discounts or commissions or placement agent fees, and no warrants were issued. The net proceeds of the Offering will be used to advance the Company’s exploration activities at its core projects and for general corporate purposes. 13 Table of Contents