What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-30 compared with 2024-05-02 · 156 added, 104 removed, 87 unchanged (75% of the section changed)

11 unchanged sentences

however, we have conducted property evaluations for potential acquisition in other parts of the world.

At March 31, 2024, 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 in the United States on our own at the Golden Crest Project and through joint ventures operated by our partners in Peru at the Florida Canyon Project and in Alaska at the Lik Project.

At June 30, 2024, 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.

In addition, during 2024 we added the Cat Creek Project in Colorado, which has not been explored to the degree of any of our three core assets, described above.

We are conducting exploration activities in the United States on our own at the Golden Crest and Cat Creek Projects and through joint ventures operated by our partners in Peru at the Florida Canyon Project and in Alaska at the Lik Project.

We also conduct potential acquisition evaluations in other countries located in South and North America.

2 unchanged sentences

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 March 31, 2024, 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.

As of June 30, 2024, 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, Golden Crest and Cat Creek 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 2023 Annual Report.

Please see Item Part I, 1A, “Risk Factors,” in our 2023 Annual Report.

(b) Results of Operations

Comparison of the quarter ended March 31, 2024 to the quarter ended March 31, 2023.

We had a net loss of $730,000 or $0.01 per basic and diluted share for the three months ended March 31, 2024 compared to a net loss of $380,000 or $0.01 per basic and diluted share for the three months ended March 31, 2023.

As explained in more detail below, the primary reasons for the increase in the net loss in the three months ended March 31, 2024 compared to the loss in the three months ended March 31, 2023 were (i) a reduction in unrealized gain on marketable equity securities to $8,000 during the three months ended March 31, 2024 compared to an unrealized gain on marketable equity securities of $329,000 during the three months ended March 31, 2023;

(ii) an increase in exploration expense to $354,000 during the three months ended March 31 2024 compared to exploration expense of $275,000 during the three months ended March 31, 2023;

and (iii) no unrealized gain on short-term investments during the three months ended March 31, 2024 compared to a gain on short-term investments of $21,000 during the three months ended March 31, 2023.

Partially offsetting this increase in the net loss were (i) a decrease in general and administrative expense to $472,000 during the three months ended March 31, 2024 compared to general and administrative expense of $476,000 during the three months ended March 31, 2023;

and (ii) an increase in interest and dividend income to $95,000 during the three months ended March 31, 2024 compared to interest and dividend income of $27,000 during the three months ended March 31, 2023.

Comparison of the three months ended June 30, 2024 to the three months ended June 30, 2023

We had a net loss of $762,000 or $0.01 per basic and diluted share for the three months ended June 30, 2024 compared to a net loss of $1,040,000 or $0.02 per basic and diluted share for the three months ended June 30, 2023.

As explained in more detail below, the primary reasons for the decrease in our net loss in the three months ended June 30, 2024 compared to the net loss during the three months ended June 30, 2023 were (i) an unrealized gain on marketable equity securities of $248,000 during the three months ended June 30, 2024 compared to an unrealized loss on marketable equity securities of $227,000 during the three months ended June 30, 2023;

(ii) interest income of $106,000 during the three months ended June 30, 2024 compared to interest income of $26,000 during the three months ended June 30, 2023;

(iii) a decrease in exploration expense to $487,000 during the three months ended June 30, 2024 compared to exploration expense of $555,000 in the three months ended June 30, 2023;

and (iv) a gain on sale of marketable equity securities of $54,000 during the three months ended June 30, 2024 with no similar gain during the three months ended June 30, 2023.

Partially offsetting these increases in income were (i) an increase in general and administrative expense to $656,000 during the three months ended June 30, 2024 compared to general and administrative expense of $315,000 during the three months ended June 30, 2023;

and (ii) a loss on derivative instruments of $21,000 during the three months ended June 30, 2024 compared to a gain on derivative instruments of $23,000 during the three months ended June 30, 2023.

Each of the major components of these items is discussed in more detail below.

Our exploration expense increased to $354,000 during the three months ended March 31, 2024 compared to exploration expense of $275,000 during the three months ended March 31, 2023.

The increase was primarily a result of an increase in expenses at our Golden Crest Project to $335,000 during the three months ended March 31, 2024 compared to exploration expense of $241,000 during the three months ended March 31, 2023.

These costs were partially offset by a reduction in our reconnaissance exploration expenses to $11,000 during the three months ended March 31, 2024 compared to reconnaissance exploration expenses of $29,000 during the three months ended March 31, 2023.

We also incurred exploration expenses of $8,000 and $5,000, respectively, at our Lik Project in Alaska during the three months ended March 31, 2024 and 2023.

Our exploration expenditures are normally lower during the first quarter of our fiscal year as a result of weather limitations.

During the three months ended March 31, 2024 we had three contract geologists at our Golden Crest Project along with several part-time employees.

During the three months ended March 31, 2024 and 2023, our Denver personnel spent a significant portion of their time on Golden Crest and various reconnaissance exploration activities described above and related matters.

Our full-year 2024 total exploration and development budget is approximately $3,900,000, which reflects a potential drilling program at Golden Crest during 2024 budgeted at $1,700,000 as well as a proposed limited exploration program at Lik.

Nexa is responsible for all planned 2024 exploration expenditures at Florida Canyon.

The proposed 2024 budget does not reflect any exploration costs for new projects or assets we may acquire during 2024.

Our planned exploration activities in 2024 may be modified, as necessary for any drilling programs we may undertake at Golden Crest, Lik or other projects we may acquire.

Changes may occur to our planned 2024 exploration expenditures related to any number of factors including permitting delays, potential acquisition of new properties, joint venture funding, commodity prices and changes in the deployment of our capital.

We expect our full-year exploration expenditures for 2024 to be higher than the exploration expenditures for full-year 2023.

Exploration expense (in thousands) by project for the three months ended March 31, 2024 and 2023 consisted of the following:

Our net exploration expense decreased to $487,000 during the three months ended June 30, 2024 compared to exploration expense of $555,000 during the three months ended June 30, 2023 primarily as a result of (i) a decrease in exploration expense at our Golden Crest Project to $450,000 during the three months ended June 30, 2024 compared to $486,000 during the three months ended June 30, 2023 as a result of reduced permitting and geologic surface work during the three months ended June 30, 2024 compared to the three months ended June 30, 2023;

(ii) a later start of work at our Lik Project by our joint venture partner, Teck, as Lik exploration expense was $16,000 during the three months ended June 30, 2024 compared to $28,000 of exploration expenditures at Lik during the three months ended June 30, 2023;

and (iii) a reduction in reconnaissance exploration during the three months ended June 30, 2024 to $8,000 compared to reconnaissance exploration of $41,000 during the three months ended June 30, 2023.

Partially offsetting these decreases in exploration expense was initial work at our new Cat Creek Project of $13,000 during the three months ended June 30, 2024, with no similar work during the three months ended June 30, 2023.

With the receipt of drilling permits at our Golden Crest Project during the second quarter of 2024, we anticipate beginning drilling at Golden Crest during the third quarter of 2024 and expect a significant increase in exploration expense related to that planned drilling during the remainder of 2024.

During the three and six months ended June 30, 2024 we had four 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 the Golden Crest Project and reconnaissance exploration activities described above and related matters.

We have budgeted approximately $3,900,000 for the full-year exploration expenditure for 2024, which includes approximately $1,700,000 for drilling at the Golden Crest Project.

We expect our full-year exploration expenditures for 2024 to be above our exploration expenditures for 2023.

Exploration expense (in thousands) by project consisted of the following:

Three months ended

Six months ended

Reconnaissance

Total exploration expense

General and administrative costs, excluding stock option compensation costs, discussed below, were $413,000 during the three months ended March 31, 2024 compared to $409,000 during the three months ended March 31, 2023.

The major components of these costs were related to (i) salaries and benefit expense of $131,000 during the three months ended March 31, 2024 compared to salary and benefit costs of $158,000 during the three months ended March 31, 2023, primarily due to timing of the year-end bonus between 2022 and 2023 of $60,000 charged in 2023, which was partially offset by an increase in salary amounts during 2024 compared to 2023;

(ii) legal and professional expenditures of $71,000 during the three months ended March 31, 2024 compared to legal and professional expenditures of $81,000 during the three months ended March 31, 2023;

(iii) office rent and expenses of $25,000 during the three months ended March 31, 2024 compared to $31,000 during the three months ended March 31, 2023;

and (iv) travel and shareholder relation costs of $186,000 during the three months ended March 31, 2024 compared to $139,000 during the three months ended March 31, 2023.

We anticipate the full-year general and administrative costs will be higher for 2024 compared to 2023 primarily due to increased activity at both our Golden Crest and Lik Projects.

We recorded $59,000 of stock option expense for the amortization of unvested grant date fair value with a credit to additional paid-in-capital during the three months ended March 31, 2024 compared to $67,000 of stock option compensation expense during the three months ended March 31, 2023.

The higher costs during the three months ended March 31, 2023 related to the grant date fair value of 2,360,000 option grants made during 2022 which are being amortized over three years.

There were no significant option grants during the 2024 or 2023 periods, and accordingly, the stock option expense in the three months ended March 31, 2024 was reduced compared to the stock option expense in three months ended March 31, 2023.

These non-cash charges for the amortization of grant date fair values are related to vesting of stock options outstanding during the three months ended March 31, 2024 and 2023.

General and administrative costs, excluding stock option compensation costs, discussed below, were $301,000 during the three months ended June 30, 2024 compared to $257,000 during the three months ended June 30, 2023.

The major components of our general and administrative costs were (i) salaries and benefit expense of $83,000 during the three months ended June 30, 2024 compared to salary and benefit costs of $103,000 during the three months ended June 30, 2023 as a result of a reduction in administrative staff costs;

(ii) legal and accounting expenditures of $60,000 in the three months ended June 30, 2024 compared to $66,000 in the three months ended June 30, 2023;

(iii) office rent and expenses of $33,000 during the three months ended June 30, 2024 compared to $23,000 during the three months ended June 30, 2023;

and (iv) travel and shareholder relation costs of $125,000 during the three months ended June 30, 2024 compared to $65,000 during the three months ended June 30, 2023.

We anticipate the full-year general and administrative costs will be comparable for 2024 and 2023.

We recorded $356,000 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, 2024 compared to $59,000 of stock option compensation expense during the three months ended June 30, 2023.

These non-cash charges related to the expense for vesting on stock options outstanding during the three months ended June 30, 2024 and 2023.

The primary reason for the increase in stock option compensation expense during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was as a result of the grant of 2,125,000 options in the second quarter of 2024, which included amortization of 25%, or $280,000 on the grant date of the total grant date fair value of $1,120,000.

The remaining expense related to the amortization of grant date fair values of outstanding unvested options for the three months ended June 30, 2024 and 2023 was comparable.

See Note 10, “Employee Stock Compensation Plans,” above, for additional information on our stock option expense.

We recorded an unrealized gain on marketable equity securities of $8,000 during the three months ended March 31, 2024 compared to an unrealized gain on marketable equity securities of $329,000 during the three months ended March 31, 2023.

The gain during the three months ended March 31, 2024 was primarily related to an increase in the value of our holdings of marketable equity securities discussed above in Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements, of (i) 100,000 shares of Kinross Gold Corp.

(“Kinross”)common stock, which increased from a fair value of $605,000 at December 31, 2023 to a fair value of $613,000 at March 31, 2024;

(ii) 134,055 shares of Vox common stock, which increased from a fair value of $276,000 at December 31, 2023 to a fair value of $280,000 at March 31, 2024;

(iii) 7,750,000 shares of Vendetta common stock, which decreased from a fair value of $118,000 at December 31, 2023 to a fair value of $115,000 at March 31, 2024;

and (iv) a decrease in the fair value of our holdings of Highlander Silver Corp.

from $33,000 at December 31, 2023 to $32,000 at March 31, 2024.

The gain during the three months ended March 31, 2023 was primarily related to an increase in the value of our holdings of marketable equity securities discussed above in Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements, of (i) 100,000 shares of Kinross common stock, which increased from a fair value of $409,000 at December 31, 2022 to a fair value of $471,000 at March 31, 2023;

(ii) 134,055 shares of Vox common stock, which increased from a fair value of $311,000 at December 31, 2022 to a fair value of $412,000 at March 31, 2023;

(iii) 7,750,000 shares of Vendetta common stock, which increased from a fair value of $229,000 at December 31, 2022 to a fair value of $373,000 at March 31, 2023;

and (iv) a gain in the fair value of our holdings of Highlander Silver Corp.

to $22,000 during the three months ended March 31, 2023, which was recorded at a zero fair value at December 31, 2022.

We recorded interest and dividend income of $95,000 during the three months ended March 31, 2024 compared to interest income of $27,000 during the three months ended March 31, 2023.

The increase in interest income is related to an increase in the balances of our short-term investments as a result of the cash invested from two private placements during 2023 of $7.1 million as well as an increase in interest rates in the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

We anticipate our interest income will be higher during 2024 compared to 2023.

However, we anticipate we will use our short-term investments and our cash balances during the remainder of 2024 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 $21,000 during the three months ended March 31, 2023, with no similar gain or loss during the three months ended March 31, 2023.

This unrealized gain is related to the changes in the fair value of USTS as interest rates change.

We had no outstanding USTS during the three months ended March 31, 2024.

We recorded a non-cash unrealized gain on marketable equity securities of $248,000 during the three months ended June 30, 2024 compared to an unrealized loss on marketable equity securities of $227,000 during the three months ended June 30, 2023.

The non-cash unrealized gain during the three months ended June 30, 2024 was primarily related to (i) an increase in the fair value of our 100,000 shares of Kinross common stock to $832,000 at June 30, 2024 from a fair value of $613,000 at March 31, 2024 or an increase of $219,000, based on quoted market prices;

and (ii) an increase in the fair value of our 134,055 shares of Vox Royalty Corp.

(“Vox”) common stock to $371,000 at June 30, 2024 from a fair value of $280,000 at March 31, 2024 or an increase of $91,000 based on quoted market prices.

These increases were partially offset by a decrease in the fair value of our 7,750,000 shares of Vendetta Mining Corp.

(“Vendetta”) common stock to $85,000 at June 30, 2024 compared to a fair value of $115,000 at March 31, 2024 or a decrease of $30,000 based on quoted market prices.

In addition, during the three months ended June 30, 2024, we transferred $32,000 of prior unrecognized gain on the sale of our 100,000 common shares of Highlander common stock to realized gain on the sale of marketable equity securities, discussed below.

The non-cash unrealized loss during the three months ended June 30, 2023 was primarily related to (i) a decrease in the fair value of our 7,750,000 shares of Vendetta common stock to $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 fair value of our 134,055 shares of Vox common stock to $325,000 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.

During the three months ended June 30, 2024, we sold our 100,000 shares of Highlander common shares for proceeds of $54,000 and recorded a gain on sale of marketable equity securities of $54,000.

We did not sell any of our marketable equity securities during the three or six months ended June 30, 2023.

See Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements.

We recorded interest and dividend income of $106,000 during the three months ended June 30, 2024 compared to interest income of $26,000 during the three months ended June 30, 2023.

This increase was primarily due to an increase in our funds held in our money market account during the three months ended June 30, 2024 compared to the funds held in our money market account during the three months ended June 30, 2023.

In addition, the average interest rate paid on our funds held in our money market account during the three months ended June 30, 2024 was higher than the interest rates paid during the three months ended June 30, 2023.

Our dividend income in the three and six months ended June 30, 2024 of $3,000 and $6,000 was comparable to the same periods of 2023.

We anticipate interest income will decrease during the remainder of 2024 from the amounts recorded through the six months ended June 30, 2024 as we expect to utilize the funds in the money market account 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 primarily due to the maturing of our USTS, which are marked-to-market and a reversal of prior reductions in the quoted fair value of our existing USTS that were purchased at lower yield-to-maturities than current market values, as the USTS matured and approached face value.

We held no USTS during the three months ended June 30, 2024 and accordingly there were no similar changes in the marked-to-market values during the three months ended June 30, 2024.

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 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, 2024, we recorded a non-cash loss on derivative instruments of $21,000 related to certain Kinross calls we sold during the three months ended June 30, 2024, compared to a gain on derivative instruments of $23,000 during the three months ended June 30, 2023 related to our holdings of Kinross calls which expired unexercised in August 2023.

See Note 6, “Derivative Instruments,” above for a discussion of our Kinross calls.

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 months ended March 31, 2024 and 2023, we recorded no property impairments.

At March 31, 2024 and 2023, our net operating loss carry-forwards exceed our built-in gains on marketable equity securities resulting in a net tax asset position for which we provide a valuation allowance for all net deferred tax assets.

We recorded no income tax expense or benefit during the three months ended March 31, 2024 or 2023.

As a result of our exploration activities, we anticipate we will not have currently payable income taxes during 2024.

During the three and six months ended June 30, 2024 and 2023, we recorded no property impairments.

We recorded no income tax expense or benefit during the three and six months ended June 30, 2024 or 2023 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 2024.

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 regard to those countries where we operate or until it is more likely than not that we will be able to realize those net operating losses in the future.

We 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, 2024 to the six months ended June 30, 2023

We had a net loss of $1,492,000 or $0.02 per basic and diluted share for the six months ended June 30, 2024 compared to a net loss of $1,420,000 or $0.02 per basic and diluted share for the six months ended June 30, 2023.

As explained in more detail below, the primary reasons for the increase in our net loss were (i) an increase in exploration expense to $841,000 during the six months ended June 30, 2024 compared to exploration expense of $830,000 during the six months ended June 30, 2023;

(ii) an increase in general and administrative expense to $1,128,000 during the six months ended June 30, 2024 compared to general and administrative expense of $791,000 during the six months ended June 30, 2023;

and (iii) the recording of a loss on derivative instruments of $21,000 during the six months ended June 30, 2024 compared to a gain on derivative instruments of $23,000 during the six months ended June 30, 2023.

Partially offsetting these increases in the net loss during the six months ended June 30, 2024 compared to the net loss during the six months ended June 30, 2023 were (i) a realized gain of $54,000 on the sale of marketable equity securities during the six months ended June 30, 2024, with no comparable sales of marketable equity securities during the six months ended June 30, 2023;

an unrealized gain of $256,000 on marketable equity securities during the six months ended June 30, 2024 compared to an unrealized gain on marketable equity securities of $102,000 during the six months ended June 30, 2023;

and (iii) an increase in interest and dividend income to $201,000 during the six months ended June 30, 2024 compared to interest income of $53,000 during the six months ended June 30, 2023.

The significant changes for these items are discussed in more detail below.

Our net exploration expense increased to $841,000 during the six months ended June 30, 2024 compared to $830,000 during the six months ended June 30, 2023.

The primary reasons for the increase were (i) the exploration expenditures at our Golden Crest Project increased to $785,000 during the six months ended June 30, 2024 compared to $727,000 during the six months ended June 30, 2023;

and (ii) we initiated exploration activities at our new Cat Creek Project in Colorado with $13,000 in exploration expenditures during the six months ended June 30, 2024, with no similar expenditures during the six months ended June 30, 2023.

Partially offsetting these increases in exploration expenditures were (i) a reduction in the expenditures at our Lik Project in Alaska to $24,000 during the six months ended June 30, 2024 compared to exploration expenditures of $33,000 during the six months ended June 30, 2023 and (ii) a reduction in reconnaissance exploration expenditures to $19,000 during the six months ended June 30, 2024 compared to reconnaissance exploration expenditures of $70,000 during the six months ended June 30, 2023.

We anticipate a significant increase in exploration expenditures at our Golden Crest Project in the second half of 2024 primarily due to planned drilling on the project as discussed above.

General and administrative costs, excluding stock option compensation costs discussed below, were $713,000 during the six months ended June 30, 2024 compared to $665,000 during the six months ended June 30, 2023.

The major components of the costs were (i) salary and benefit expense during the six months ended June 30, 2024 of $214,000 compared to salary and benefit expense of $263,000 during the six months ended June 30, 2023 as a result of salary reductions during 2024;

(ii) legal and accounting expenditures of $129,000 during the six months ended June 30, 2024, compared to $146,000 during the six months ended June 30, 2023;

(iii) office and other costs of $57,000 during the six months ended June 30, 2024 compared to $52,000 during the six months ended June 30, 2023;

and (iv) travel and shareholder relation costs of $313,000 during the six months ended June 30, 2024 compared to $204,000 during the six months ended June 30, 2023.

During the six months ended June 30, 2024 and 2023, Solitario recorded $415,000 and $126,000, 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, 2024 was primarily related to the grant of options for 2,125,000 shares of our common stock during June of 2024, which resulted in the amortization of $280,000 of grant date fair value on the date of grant of those options, as discuss above.

We recorded an unrealized gain on marketable equity securities of $256,000 during the six months ended June 30, 2024 compared to an unrealized gain on marketable equity securities of $102,000 during the six months ended June 30, 2023.

The non-cash unrealized gain during the six months ended June 30, 2024 was primarily related to (i) an increase in the fair value of our holdings of 100,000 shares of Kinross common stock at June 30, 2024 to $832,000 compared to a fair value of $605,000 at December 31, 2023, or an increase of $227,000 based on quoted market prices;

(ii) an increase in the fair value of our holdings of 134,055 shares of Vox common stock to $371,000 at June 30, 2024 compared to a fair value of $276,000 at December 31, 2023, or an increase of $95,000 based on quoted market prices;

and (iii) an increase of $21,000 in the fair value of our holdings of 100,000 shares of Highlander common stock from the fair value at December 31, 2023 to the date of the sale of our holdings.

These unrealized increases in the value of our marketable equity securities were partially offset by (i) a decrease in the value of our holdings of Vendetta common stock to $85,000 at June 30, 2024 compared to a fair value of $118,000 at December 31, 2023 or a decrease of $33,000 based on quoted market prices;

and (ii) the transfer of $54,000 of unrealized gain to realized gain on the sale of our 100,000 shares of Highlander common shares upon the sale of those shares during the six months ended June 30, 2024.

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 $234,000 at June 30, 2023 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 common stock to $325,000 at June 30, 2023 compared to a fair value of $311,000 at December 31, 2022 based on quoted market prices.

We recorded interest and dividend income of $201,000 during the six months ended June 30, 2024 compared to interest and dividend income of $53,000 during the six months ended June 30, 2023.

The increase in interest income was primarily related to an increase in our average outstanding balance of money market holdings during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 as well as an increase in the average interest rate and income earned on our money market account during the six months ended June 30, 2024 compared to the average interest rate and income earned during the six months ended June 30, 2023.

We anticipate our interest income will decrease during the remainder of 2024 compared to the first six months of 2024 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 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 of our USTS at the time the USTS were acquired.

We did not hold significant investments of USTS during 2024 and did not have a non-cash unrealized gain or loss during the six months ended June 30, 2024.

During the six months ended June 30, 2024, we sold 100,000 shares of our holdings of Highlander common stock for proceeds of $54,000 and recorded a gain on sale of marketable equity securities of $54,000.

We did not sell any marketable equity securities during the six months ended June 30, 2023.

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, 2024, we recorded a non-cash loss on derivative instruments of $21,000 related to certain Kinross calls we sold during the three months ended June 30, 2024 as a result of the increase in the underlying value of our holdings of Kinross common stock, discussed above.

These calls have a strike price of $9.00 per share and expire in November 2024.

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.

Cash and Short-term Investments

As of March 31, 2024, we have $7,659,000 in cash and short-term investments.

Our short-term investment is comprised of $7,518,000 invested in a money market account with a brokerage firm.

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 2024.

As of June 30, 2024, we have $8,224,000 in cash and short-term investments.

The bulk of this, $8,048,000, is held in a money market account at a brokerage firm.

We anticipate we will continue to invest our cash and short-term investments in the money market account for that portion not used for exploration expenditures, operating costs or mineral property acquisitions during the remainder of 2024.

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.

1 unchanged sentence

Our marketable equity securities are carried at fair value, which is based upon market quotes of the underlying securities.

At March 31, 2024, 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 March 31, 2024, the Vendetta shares are recorded at their fair value of $115,000, the Kinross shares are recorded at their fair value of $613,000;

the Vox shares are recorded at their fair value of $280,000 and the Highlander Silver Corp.

shares are recorded at their fair value of $32,000.

We did not sell any of our marketable equity securities during the three months ended March 31, 2024 or 2023.

At June 30, 2024 we own 7,750,000 shares of Vendetta common stock, 100,000 shares of Kinross common stock, and 134,055 shares of Vox common stock.

At June 30, 2024, the Vendetta shares are recorded at their fair value of $85,000, the Kinross shares are recorded at their fair value of $832,000;

and the Vox shares are recorded at their fair value of $371,000.

We sold all of our holdings of Highlander common stock during the six months ended June 30, 2024 for proceeds of $54,000, as discussed above.

We did not sell any of our marketable equity securities during the six months ended June 30, 2023.

See Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements.

We anticipate we may sell some portion of our holdings of marketable equity securities during the remainder of 2024 depending on cash needs and market conditions.

Working Capital

We had working capital of $8,657,000 at March 31, 2024 compared to working capital of $9,309,000 as of December 31, 2023.

Our working capital at March 31, 2024 consists primarily of our cash and cash equivalents, our investment in short-term investments, discussed above, our investment in marketable equity securities of $1,040,000, and other current assets of $205,000, less our accounts payable of $207,000 and other current liabilities of $40,000.

As of March 31, 2024, 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 had working capital of $9,307,000 at June 30, 2024 compared to working capital of $9,309,000 as of December 31, 2023.

Our working capital at June 30, 2024 consists primarily of our cash and short-term investments, discussed above, our investment in marketable equity securities of $1,288,000, and other current assets of $147,000, less our accounts payable of $251,000 and other current liabilities of $101,000.

As of June 30, 2024, 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 the 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.

1 unchanged sentence

Stock-Based Compensation Plans

As of March 31, 2024 and December 31, 2023, there were options outstanding from the 2013 Plan to acquire 3,728,500 and 3,778,500 shares, respectively, of Solitario common stock.

As of June 30, 2024 and December 31, 2023, there were options outstanding to acquire 3,728,500 and 3,778,500 shares of our common stock under the 2013 Plan.

The outstanding options have exercise prices between $0.69 per share and $0.20 per share.

During the three months ended March 31, 2024, options for 50,000 shares were exercised with an exercise price of $0.28 per share for proceeds of $14,000.

No options were exercised during the three months ended March 31, 2023.

During the six months ended June 30, 2024, 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, 2023, options for 50,000 shares were exercised with an exercise price of $0.28 per share for proceeds of $14,000.

As of June 30, 2024 and December 31, 2023, there were options outstanding to acquire 2,175,000 and 50,000 shares of our common stock under the 2023 Plan.

The outstanding options at June 30, 2024 have exercise prices between $0.85 per share and $0.51 per share.

No options have been exercised under the 2023 Plan during the six months ended June 30, 2024 or 2023.

We do not anticipate the exercise of options to be a significant source of cash flow during the remainder of 2024.

At the Market Offering Agreement

On December 19, 2023, we entered into an amendment to our ATM Agreement that was originally entered into in 2021 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 $10.0 million.

The common stock is distributed at the market prices prevailing at the time of sale.

As a result, prices of the common stock sold under the ATM Program may vary as between purchasers and during the period of distribution.

The ATM Agreement provides that Wainwright is entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold.

We did not sell any shares under the ATM program during the three months ended March 31, 2024 and 2023.

Subsequent to March 31, 2024, we sold 1,651,309 shares of our common stock under the ATM program for net proceeds of $1,085,000.

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 $10.0 million.

During the six months ended June 30, 2024, we sold an aggregate of 1,802,060 shares of common stock under the ATM Agreement at an average price of $0.70 per share for net proceeds of $1,218,000, after commissions and sale expenses.

There were no sales of shares of common stock under the ATM Program during the six months ended June 30, 2023.

We may sell additional shares under the ATM Program during the remainder of 2024 if market conditions warrant such sales.

(d) Cash Flows

Net cash used in operations during the three months ended March 31, 2024 increased to $991,000 compared to $685,000 of net cash used in operations for the three months ended March 31, 2023 primarily as a result of (i) increase in exploration expense during the three months ended March 31, 2024 to $354,000 compared to $275,000 during the three months ended March 31, 2023;

and (ii) a decrease in current liabilities during the three months ended March 31, 2024 of $396,000 compared to a decrease in current liabilities of $50,000 during the three months ended March 31, 2023.

There were additional accruals at the end of December 2023, including the 2023 bonus, and certain Golden Crest exploration expense accruals which were paid in the three months ended March 31, 2024, which accounted for the large use of funds in 2024 compared to 2023.

Partially offsetting this use of cash was an increase in the cash received for interest during the 2024 period to $95,000 compared to cash received for interest and dividends from interest income of $27,000 during the comparable 2023 period.

Based upon projected expenditures in our 2024 budget, we anticipate continued use of funds from operations through the remainder of 2024, primarily for exploration related to our Golden Crest and Lik Projects and reconnaissance exploration.

Net cash used in operations during the six months ended June 30, 2024 decreased to $1,570,000 compared to $1,765,000 of net cash used in operations for the six months ended June 30, 2023 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, with no similar item during the six months ended June 30, 2024;

and (ii) an increase in the use of cash from changes in other prepaid expenses and other current assets of $36,000 to a total change to a use of $364,000 during the six months ended June 30, 2024 compared to the use of cash of $328,000 during the six months ended June 30, 2023.

Partially offsetting this decrease in the use of cash during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was (i) the provision of cash of $126,000 from an increase in accounts payable and other current liabilities during the six months ended June 30, 2024 compared to a use of cash of $15,000 from an increased in accounts payable and other current liabilities during the six months ended June 30, 2023, primarily as a result of the timing of payments in accounts payable at June 30, 2024 compared to June 30, 2023;

(ii) an increase in non-stock option general and administrative expense to $713,000 during the six months ended June 30, 2024 compared to $665,000 during the six months ended June 30, 2023, discussed above;

and (iii) an increase in exploration expense to $841,000 during the six months ended June 30, 2024 compared to exploration expenses of $830,000 during the six months ended June 30, 2023;.

Based upon projected expenditures in our 2024 budget, we anticipate continued use of funds from operations through the remainder of 2024, primarily for drilling expenditures and other exploration related to our Golden Crest and Lik Projects in the second half of 2024.

See “Results of Operations” discussed above for further explanation of some of these variances.

During the three months ended March 31, 2024, $918,000 was provided from the net sales of our short-term investments compared to $809,000 in cash provided from the sale of short-term investments during the three months ended March 31, 2023.

There were no other significant provisions or use of cash during the three months ended March 31, 2024 or 2023.

We did not sell any marketable equity securities during the three months ended March 31 2024 or 2023.

During the six months ended June 30, 2024, we provided $388,000 of cash from the sale of short-term investments compared to the provision of $1,909,000 in cash during the six months ended June 30, 2023 from the net investment in short-term investments.

During the six months ended June 30, 2024, we purchased a certificate of deposit for $100,000 that is restricted for reclamation in the event of any un-reclaimed areas of our planned drilling at Golden Crest.

This certificate of deposit is shown separately on our balance sheet as restricted cash at June 30, 2024.

There was no similar restricted cash item at December 31, 2023.

During the six months ended June 30, 2024, we acquired equipment and other assets used in our exploration activities of $12,000 compared to $9,000 of equipment acquired during the six months ended June 30, 2023.

We received cash proceeds of $39,000 from the sale of Kinross calls during the six months ended June 30, 2024 compared to cash proceeds of $31,000 during the six months ended June 30, 2023.

During the six months ended June 30, 2024 we sold marketable equity securities for proceeds of $54,000, with no similar sales during the six months ended June 30, 2023.

We also used $43,000 of our cash to acquire additional mineral claims, at our Golden Crest Project, and $12,000 for initial acquisition costs of our new Cat Creek Project during the six months ended June 30, 2024 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 2024;

2 unchanged sentences

Any potential mineral property acquisition or strategic corporate investment during the remainder of 2024, 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 three months ended March 31, 2024 we received $14,000 from the issuance of common stock from the exercise of stock options, discussed above in Note 9, “Employee Stock Compensation Plans,” to the condensed consolidated financial statements.

No options were exercised during the three months ending March 31, 2023.

During the six months ended June 30, 2024, we received net cash of $1,218,000 from the issuance of common stock under the ATM Program, discussed above.

In addition, during the six months ended June 30, 2024 and 2023 we received $14,000 during both periods 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.

(e) Mineral Resources

3 unchanged sentences

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 adopted from the definitions provided by the Canadian Institute of Mining, Metallurgy and Petroleum.

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.

5 unchanged sentences

(f) Off-balance sheet arrangements

As of March 31, 2024 and December 31, 2023, we had no off-balance sheet obligations.

As of June 30, 2024 and December 31, 2023.

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 March 31, 2024.

As of March 31, 2024, 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 2023 Annual Report.

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, 2024.

As of June 30, 2024, 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 2023 Annual Report.

(h) Discontinued Projects

We did not record any mineral property write-downs during the three months ended March 31, 2024 and 2023.

We did not record any mineral property write-downs during the three and six months ended June 30, 2024 and 2023.

(i) Significant Accounting Policies and Critical Accounting Estimates

See Note 1 to the consolidated Financial Statements included in our 2023 Annual Report for a discussion of our significant accounting policies.

See Note 1 to the condensed consolidated Financial Statements included in our Annual Report for a discussion of our significant accounting policies.

Solitario’s valuation of mineral properties is a critical accounting estimate.

2 unchanged sentences

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 months ended March 31, 2024.

There has been no change to our assumptions, estimates or calculations during the three and six months ended June 30, 2024.

(j) Related Party Transactions

As of March 31, 2024, and for the three months ended March 31, 2024, we have no related party transactions or balances.

As of June 30, 2024, and for the three and six months ended June 30, 2024, we have no related party transactions or balances.

(k) Recent Accounting Pronouncements

No recent accounting pronouncements are applicable to Solitario at this time.

See Note 1, “Business and Significant Accounting Policies,” to the unaudited condensed consolidated financial statements under Recent Accounting Pronouncements” above for a discussion of recent accounting pronouncements.

(l) Forward-Looking Statements

2 unchanged sentences

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 the risk factors included under the heading "Risk Factors" in Item 1A of our 2023 Annual Report to which there have been no material changes.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described herein and the risk factors included under the heading "Risk Factors" in Part I, Item 1A of our 2023 Annual Report to which there have been no material changes.

These forward-looking statements appear in a number of places in this report and include statements with respect to, among other things:

1 unchanged sentence

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 realize a return on our investment in the Lik Golden Crest and Cat Creek 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 to 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, Highlander and Kinross;

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;

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis