SOLITARIO RESOURCES CORP. 10-K

Item 7. 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 and notes thereto included in Item 8, "Financial Statements and Supplementary Data." Our financial condition and results of operations are not necessarily indicative of what may be expected in future years. (a). Business Overview and Summary We are an exploration stage company as defined by rules issued by the SEC. We were incorporated in the state of Colorado on November 15, 1984. In July 1994, we became a publicly traded company on the TSX through our initial public offering. We have been actively involved in mineral exploration since 1993. Our primary focus is the acquisition and exploration of precious metals and zinc-related exploration mineral properties. We have historically held a portfolio of mineral exploration properties and assets for future sale, for joint venture or to create a royalty up to the development stage of the project (development activities include, among other things, completion of a feasibility study for the identification of proven and probable reserves, as well as permitting and preparing a deposit for mining). At that point, or sometime prior to that point, we would likely attempt to sell a given mineral property, pursue its development either on our own or through a joint venture with a partner that has expertise in mining operations, or obtain a royalty from a third party that continues to advance the property. 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, from time to time we also 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 properties is in North and South America; however, we have conducted property evaluations for potential acquisition in other parts of the world. At December 31, 2024, we consider our Golden Crest project in South Dakota, our carried interest in our Florida Canyon project in Peru, and our interest in the Lik project in Alaska to be our core mineral property assets. We also have an interest in our Cat Creek project in Colorado, an early-stage exploration project. We are conducting independent exploration activities in Peru and through joint ventures operated by our partners in Peru and the United States. We conduct potential acquisition evaluations in other countries in both North and South America. As of December 31, 2024, we have balances of cash and short-term investments that we anticipate using, in part, to fund planned 2025 exploration, to further the exploration of our Lik, Golden Crest and Cat Creek projects, conduct reconnaissance exploration and to potentially acquire additional mineral properties. The fluctuations in commodity prices of base and precious metals have contributed 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. In analyzing our activities, the most significant aspect relates to the results of our exploration and potential development activities and those of our joint venture partners on a property-by-property basis. When our exploration or potential development activities, including drilling, sampling and geologic testing, indicate a project may not be economically feasible or contain sufficient geologic or economic potential we may impair or completely write-off the property. Another significant factor in the success or failure of our activities is the price of commodities. For example, when the price of zinc or gold is down, the value of zinc, gold or other precious metal-bearing mineral properties decreases; however, when the price of zinc or gold is up it may become more difficult and expensive to locate and acquire new zinc, gold or other precious metal-bearing mineral properties with potential to have economic deposits. The potential sale, joint venture or development of our mineral properties will occur, if at all, on an infrequent basis. Historically, we have recorded revenues and met our need for capital in the past through (i) the sale of our investments in, and interest on, money market accounts and our short-term treasury notes and bank certificates of deposit (“CDs”); (ii) issuances of common stock; (iii) sales of our shares of our held marketable equity securities; (iv) sales of covered call options on common stock of Kinross we hold; (v) sale of mineral property interests and assets; (vi) long-term debt secured by our mineral properties; (vii) short-term borrowing; and (viii) joint venture payments, including delay rental payments. During 2024 we issued 1,802,060 shares pursuant to our ATM program, described below, for net proceeds of $1,218,000, after commissions and expenses. During 2023 we issued a total of 13,298,485 shares of our common stock in private transactions for net proceeds of $7,352,000. We did not record any mineral property income from the sale of mineral properties during 2024 or 2023. We have reduced our exposure to the costs of our exploration activities in the past through the use of joint ventures. Although we anticipate the use of funding through our joint venture parties for 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. 45 Table of Contents (b). Results of Operations Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 We had a net loss of $5,368,000 or $0.07 per basic and diluted share for the year ended December 31, 2024 compared to a net loss of $3,754,000 or $0.05 per basic and diluted share for the year ended December 31, 2023. As explained in more detail below, the primary reasons for the increase in net loss during 2024 compared to 2023 were (i) an increase in our exploration expense to $4,148,000 during 2024 compared to exploration expense of $2,378,000 during 2023; (ii) an increase in general and administrative expense to $1,879,000 during 2024 compared to general and administrative expense of $1,712,000 during 2023; (iii) a loss on derivative instruments of $29,000 during 2024 compared to a gain on derivative instruments of $31,000 during 2023; and (iv) an unrealized gain on short-term investments of $56,000 during 2023 with no similar item in 2024. Partially offsetting these factors that contributed to an increased loss during 2024 compared to 2023 were (i) an increase in interest income to $372,000 during 2024 compared to interest income of $191,000 during 2023; (ii) a gain on sale of marketable equity securities of $54,000 during 2024, compared with no sales of marketable equity securities during 2023; and (iii) an unrealized gain of $289,000 on marketable equity securities during 2024 compared to an unrealized gain on marketable equity securities of $83,000 during 2023. Each of these items is discussed in greater detail below. Our primary exploration activities during 2024 and 2023 were related to our Golden Crest project in South Dakota and our Lik project in Alaska. We recorded exploration costs of $3,884,000 at Golden Crest during 2024 compared to $1,798,000 during 2023. The Golden Crest expenditures during 2024 were primarily related to the drilling program where we completed 11 drill holes during 2024, with direct drilling costs of approximately $2,042,000. During 2023 our Golden Crest expenditures consisted primarily of geologic evaluation of claims for staking, mapping and soil and rock sampling with related assay costs. In addition to these exploration costs, we capitalized $43,000 of mineral acquisition costs at Golden Crest for initial acquisition costs related to leasing, staking and filings on new claims acquired during 2024 compared to 2023 when we had no staking, leasing or other initial acquisition costs and, accordingly we did not capitalize any initial acquisition costs during 2023. All future exploration and filing costs related to our Golden Crest claims will be expensed as incurred. Solitario’s share of exploration expenses at our Lik project in Alaska was $142,000 during 2024 compared to exploration costs at our Lik project of $404,000 during 2023. Teck completed a single drill hole during 2023, and there was no drilling at Lik during 2024 which accounted for the decrease in expenses during 2024 compared to 2023. In addition, Teck performed on-going geologic evaluation of the Lik project during both 2024 and 2023, which included on-site geophysics, mapping and analysis of prior drilling and permitting, as well as on-going site environmental monitoring, evaluation and clean-up as part of a 50/50 exploration program managed by Teck. The geophysical surveys were successful in defining a low-amplitude gravity anomaly that requires further follow-up work. We are planning additional geotechnical work for 2025 as well as further environmental monitoring and clean-up at the site. We spent approximately $35,000 during 2024 at our Cat Creek project, a new early-stage exploration project, with no similar amount during 2023. Given that the exploration program at our Florida Canyon project in Peru is fully funded by our joint venture partner, Nexa, we incurred relatively small exploration expenses at Florida Canyon of $14,000 during 2024 compared to $41,000 in 2023. The remaining exploration expenditures during 2024 and 2023 were reconnaissance work, including the evaluation of potential mineral properties for acquisition. Our planned 2025 total exploration and development budget, excluding any new projects, in which we may acquire an interest, is approximately $3,910,000, which reflects planned work at the Golden Crest project, including $1,911,000 for drilling at the Golden Crest project, depending on permitting. Our planned exploration activities in 2025 may be modified, as necessary for any drilling programs we may undertake at Golden Crest or projects we may acquire, changes related to any number of factors including, potential acquisition of new properties, joint venture funding, commodity prices and changes in the deployment of our capital. Exploration expense (in thousands) by property consisted of the following: (in thousands of dollars) Year ended December 31, Property Name 2024 2023 Golden Crest $ 3,884 $ 1,798 Lik project 142 404 Florida Canyon 14 41 Cat Creek 35 - Reconnaissance exploration activity 73 135 Total exploration expense $ 4,148 $ 2,378 46 Table of Contents We believe a discussion of our general and administrative costs should be viewed without the non-cash stock option compensation expense (discussed below). Excluding these costs, general and administrative costs were $1,213,000 during 2024 compared to $1,465,000 during 2023. The major components of our general and administrative costs were (i) salary and benefits expense which decreased to $399,000 during 2024 compared to $795,000 during 2023, as a result of fewer personnel and a decrease in bonuses to $27,000 in 2024 compared to a bonus of $382,000 during 2023; (ii) legal and accounting costs which decreased to $220,000 during 2024 compared to $253,000 during 2023 primarily due fees related to private placement financings during 2023 compared to 2024 with no corresponding transactions.; (iii) travel and investor relation costs which increased to $450,000 during 2024 compared to $287,000 during 2023 as a result of having an investor relations consulting contract during 2024 as well as additional travel and investor conferences attended during 2024 compared to 2023; and (iv) other costs related to office, insurance and miscellaneous costs which increased to $143,000 during 2024 compared to $130,000 during 2023 as a result of additional activity and general cost increases. We anticipate general and administrative costs for 2025 to be approximately $1,010,000 which would be lower than the costs incurred during 2024; however, this amount may vary significantly during 2025 depending on the outcome of our exploration activity at Golden Crest, Cat Creek and Lik projects and any strategic transactions we may attempt to execute upon. We account for our employee stock options under the provisions of Accounting Standards Codification No. 718 (“ASC No. 718”). We recognize stock option compensation expense on the date of grant for 25% of the grant date fair value, and subsequently, based upon a straight-line amortization of the grant date fair value of each of our outstanding options. During the year ended December 31, 2024, we recorded $666,000 of non-cash stock-based compensation for the amortization of our outstanding options grant date fair value with a credit to additional paid-in-capital compared to $247,000 of non-cash stock option compensation expense during 2023. The amount was higher during 2024 primarily due to the grant of 2,125,000 options with a total grant date fair value of $1,120,000, of which Solitario recognized 25% on the grant date of $280,000 compared to 50,000 options granted during 2023, with a grant date fair value of $16,000. The remaining compensation expense was related to the straight-line amortization of our outstanding options in 2024 and 2023. See Note 10, “Employee Stock Compensation Plans,” to our consolidated financial statements in Item 8, “Financial Statements and Supplementary Data to this Annual Report on Form 10-K” for an analysis of the changes in the fair value of our outstanding stock options and the components that are used to determine the fair value. We recorded an unrealized gain on marketable equity securities of $289,000 during 2024 compared to an unrealized gain on marketable equity securities of $83,000 during 2023. The net gain on marketable equity securities during 2024 was primarily related to a $322,000 unrealized gain related to an increase in the value of our holdings of Kinross common stock and an increase of $38,000 in the value of our holdings of Vox Royalty common stock, which was partially offset by an unrealized loss related to the decrease of $37,000 in the value of our holdings of Vendetta stock and a decrease in the value of our holdings of Highlander Silver common stock of $1,000 during 2024, prior to its sale during 2024. The loss during 2023 was primarily related to an unrealized gain on marketable equity securities of $196,000 due to an increase in the value of our holdings of shares of Kinross common stock and an unrealized gain on marketable equity securities of $33,000 on our holdings of Highlander Silver common stock, partially offset by an unrealized loss on marketable equity securities of $111,000 in the value of our holdings of Vendetta common stock and an unrealized loss on marketable equity securities of $35,000 in the value of our holdings of Vox Royalty common stock. Changes in the unrealized value of our holdings of marketable equity securities are related to the changes in the fair values of those holdings which are dependent on the market prices of the individual securities. During 2024 we sold 100,000 shares of Highlander Silver common stock for proceeds of $54,000 and recorded a realized gain on the sale of $54,000. We had no sales of marketable equity securities during 2023. See Note 3, “Marketable Equity Securities” to our consolidated financial statements in Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional discussion of our marketable equity securities. We may sell some of our marketable equity securities from time to time during 2025 for working capital needs; however, we do not expect to sell all of our holdings of marketable equity securities during 2025. Any proceeds we may receive from sales of marketable equity securities during 2025 will be dependent on the quoted market price of the securities sold on the date of sale and may be at prices below the fair value at December 31, 2024. See “Liquidity and Capital Resources” below. We recorded a loss on derivative instruments of $29,000 during 2024 compared to a gain on derivative instruments of $31,000 during 2023. During 2024, we sold certain Kinross calls against our holdings of Kinross common stock for net proceeds of $38,000 and at December 31, 2024 we have outstanding Kinross covered calls covering our 100,000 shares that expire in May 2025 and have an exercise price of $10.00 per share, for which we have recorded a current liability of $67,000. During 2023 we sold covered calls against our holdings of Kinross common stock for proceeds of $31,000 which expired unexercised during 2023 and we recorded a gain of $31,000 during 2023 related to those calls. See Note 7, “Derivative Instruments” to our consolidated financial statements in Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional discussion of our derivative instruments. We anticipate we may write calls against our holdings of Kinross common stock in 2025 to provide additional income on a limited portion of shares of Kinross that we may sell in the near term, which is generally defined as less than one year. We recorded $27,000 of depreciation and amortization during 2024 compared to $25,000 of depreciation and amortization during 2023. The increase in depreciation and amortization is primarily related the purchase of operating equipment during 2024 with the increased depreciation partially offset as older assets became fully depreciated during 2024 and 2023. We amortize our equipment over a five-year period. We anticipate our 2025 depreciation and amortization expense will be similar to our 2024 depreciation expense. 47 Table of Contents We recorded interest and dividend income of $372,000 during 2024 compared to interest and dividend income of $191,000 during 2023. The increase during 2024 was primarily related to an increase in the outstanding balances of our investments in our money market account during the majority of the year as a result of the net proceeds of $7,352,000 received from private placement sales of our common stock during 2023. In addition, average interest rates on short-term investments were higher during 2024 compared to average interest rates during 2023. We anticipate our interest and dividend income will be lower in 2025 as a result of reduced short-term investment balances during 2025 compared to 2024. During 2023, we recorded an unrealized gain of $56,000 related to the value of our mark-to-market short term investments in United States Treasury securities with no similar gain or loss during 2024. This unrealized gain was as a result of the effects of changing interest rates on our outstanding USTS short-term investments. We anticipate we will not incur unrealized gains and losses related to our mark-to-market short-term investments in 2025 as a result of the use of money market funds rather than short-dated USTS during 2025. See “Liquidity and Capital Resources,” below, for further discussion of our cash and cash equivalent and short-term asset balances. We recorded no deferred tax expense or benefit in either 2024 or 2023 as we provide a valuation allowance for the tax benefit arising out of our net operating losses for all periods presented. See Note 6, “Income Taxes” to our consolidated financial statements in Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional discussion of our income tax valuation allowance, deferred tax assets and our net operating losses for 2024 and 2023. 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. 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 geologic potential of early-stage mineral property and its related value for future sale, joint venture or development by us or others. During 2024 and 2023 we recorded no mineral property impairments. (c). Liquidity and Capital Resources Cash As of December 31, 2024, we had $81,000 in cash. We intend to utilize a portion of this cash and a portion of our short-term investments, discussed below, to fund our ordinary overhead, operational costs, exploration activities and for the evaluation of potential acquisitions of mineral properties and other assets over the next several years. Short-term Investments At December 31, 2024 we had $4,523,000 in our money market account held in a brokerage account. Solitario also held USTS during 2023 which matured during 2024. Solitario has no investment in USTS at December 31, 2024. Our short-term investments in the money market account 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. We anticipate we will roll over that portion of our short-term investments not used for operating costs or mineral property acquisition efforts as they mature during 2025. Marketable Equity Securities Our marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon market quotes of the underlying securities. We owned 100,000 shares of Kinross common stock as of December 31, 2024, which are recorded at their fair value of $927,000. As of December 31, 2024, we own 7,750,000 shares of Vendetta common stock recorded at their fair market value of $81,000, and we own 134,055 shares of Vox Royalty common stock recorded at their fair market value of $314,000. Changes in the fair value of marketable equity securities are recorded as gains and losses in the statements of operations. Working Capital We had working capital of $5,624,000 at December 31, 2024 compared to working capital of $9,309,000 as of December 31, 2023. Our working capital at December 31, 2024 consists primarily of our cash and cash equivalents, our investment in short-term investments and our marketable equity securities, less our current liabilities of $368,000. As of December 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. 48 Table of Contents The nature of the mineral exploration business requires significant sources of capital to fund exploration, development and operation of mining projects. We anticipate using our working capital and any additional funds we might acquire to carry out our 2025 planned expenditures. Our existing resources are adequate to fund these expenditures. These expenditures include planned exploration for Golden Crest, including potential drilling, pending the receipt of required permits, as well as planned limited exploration at our Lik project for 2025 of approximately $400,000 at the project of which Solitario will be responsible for 50% of expenditures. We do not expect any significant exploration expenditures at our Florida Canyon project where Nexa is responsible for all 2025 planned expenditures. We also plan on limited exploration expenditure at our Cat Creek project. We expect 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 other exploration projects or assets. Stock-Based Compensation Plans As of December 31, 2024, options to acquire an aggregate of 5,348,500 shares of our common stock were outstanding. Of that amount there are 3,228,500 options that are vested and exercisable at December 31, 2024. As of December 31, 2024, our outstanding options include 1,078,500 options that are in the money with a weighted average exercise price of $0.21 per share, which is below the market price of a share of Solitario common stock at December 31, 2024 of $0.59 per share as quoted on the NYSE American exchange. During 2024, options for 250,000 shares were exercised for cash proceeds of $54,000. See Note 10, “Employee Stock Compensation Plans” to our consolidated financial statements in Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a discussion of the activity in our 2013 Plan and our 2023 Plan during 2024 and 2023. We anticipate that a portion of our outstanding stock options currently in the money at December 31, 2024 will be exercised during 2025. Equity offering private placements We had no private placement of shares during 2024. On July 31, 2023, we 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 (the “Newmont 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 Newmont Shares, we entered into an Investor Rights Agreement with Newmont, which granted Newmont certain additional rights, including a preemptive right, certain anti-dilution protections and certain other rights and notice provisions related to our Golden Crest mineral property assets. On October 13, 2023, we completed a private placement of 8,631,818 shares of our common stock (the “Shares”) at a price of $0.55 per share for net proceeds of $4,727,000 after certain legal and regulatory offering costs of $21,000. The sale of the Shares was made through a subscription agreement between Solitario and each respective investor. The Shares were issued pursuant to an exemption from registration under United States and Canadian securities laws. No officers, directors or other of our affiliates participated in the private placement. Investors in the private placement were provided certain registration rights with respect to the Shares they purchased. We did not engage an underwriter or placement agent for the private placement, and therefore there were no underwriter discounts or commissions or placement agent fees. On November 16, 2023, we entered into a consulting and capital markets advisory contract (the “Consulting Contract”) with an independent advisory firm, in consideration for the issuance of 500,000 shares which were issued on December 6, 2023 at a price of $0.51 per share. The sale of the shares was made through a subscription agreement between us and the advisory firm. The shares were issued pursuant to an exemption from registration under United States and Canadian securities laws. We recorded a pre-paid expense of $255,000 for the issuance of the shares. The pre-paid expense is being amortized over the one-year term of the Consulting Contract and we recorded $223,000 and $32,000, respectively, in general and administrative expense during 2024 and 2023 related to the Consulting Contract. At the Market Offering On February 2, 2021, we put an ATM (“At the Market”) program, in place, which was amended in 2023, to allow us to sell shares of our common stock under that program from time to time through H.C Wainwright and Co. (“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 “ATM Program”). 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 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. During 2024, we sold 1,802,060 shares of our common stock under the ATM Program at an average price of $0.70 per share for net proceeds of $1,218,000 after commissions and sale expenses. We did not sell any shares under the ATM Program during 2023. 49 Table of Contents Off-balance sheet arrangements As of December 31, 2024 and 2023, we have no off-balance sheet arrangements. (d). Cash Flows Net cash used in operations during the year ended December 31, 2024 increased to $5,099,000 compared to $3,263,000 for the year ended December 31, 2023 primarily as a result of (i) the increase in exploration expense at our Golden Crest project to $3,884,000 during 2024 compared to $1,798,000 of exploration expense incurred at our Golden Crest project during 2023, primarily related to increased expenditures for the drilling program at Golden Crest completed during 2024; (ii) an increase in general and administrative expense to $1,879,000 during 2024 compared to general and administrative expense of $1,712,000 during 2023; and (iii) a use of cash resulting from a decrease in accounts payable and other current liabilities of $379,000 during 2024 compared to an provision of cash from and increase in accounts payable and other current liabilities of $328,000 during 2023. Partially offsetting these expenditures and the overall uses of cash in operations during 2024 compared to 2023 were (i) an increase in interest and dividend income to $372,000 during 2024 compared to interest and dividend income of $191,000 during 2023; (ii) an increase in the cash provided from a reduction in prepaid expenses and other current assets of $207,000 during 2024 compared to cash provided from a reduction in prepaid expenses and other current assets of $20,000 during 2023; (iii) a decrease in our reconnaissance exploration expenditures to $73,000 during 2024 compared to reconnaissance exploration expenditures of $135,000 during 2023; and (iv) a decrease in our exploration expenditures at our Lik project to $142,000 during 2024 compared to exploration expenditures at the Lik project of $404,000 during 2023. These items are discussed in further detail above under “Results of Operations.” Net cash provided by investing activities was $3,938,000 during 2024 compared to net cash used by investing activities of $4,409,000 during 2023. The primary reasons for the decrease in cash used by investing activities are (i) an increase in the cash provided by the sale of short-term investments of $3,913,000 during 2024 compared to the use of cash from the net purchase of short-term investments of $4,429,000 during 2023; and (ii) cash from the sale of marketable equity securities of $54,000 during 2024 compared with no sales of marketable equity securities during 2023. Partially offsetting these items were (i) additions to mineral properties for initial acquisition costs of $55,000 during 2024 compared to no initial acquisition costs for mineral properties during 2023. We anticipate we will continue to utilize proceeds from the sale of our short-term investments and any proceeds we may derive from potential sales of marketable equity securities to fund our operations during 2025. Our net cash provided by financing activities during 2024 was from (i) the sale of 1,802,060 shares of our common stock under the ATM Program at an average price of $0.70 per share for net proceeds after expenses of $1,218,000, and (ii) the exercise of options for 250,000 shares of our common stock for net proceeds of $54,000. Our net cash provided by financing activities during 2023 was from (i) the sale of 12,798,485 shares of our common stock from private placements for net cash of $7,097,000 discussed above under “Equity offering private placements,” after certain direct costs related to the amendment of certain terms of the ATM Program of $46,000 discussed above; and (ii) the exercise of options for 1,486,500 shares of our common stock for net proceeds of $459,000. We may utilize the ATM Program during 2025 to supplement our existing cash resources, however we intend to only use the ATM Program when we believe the market conditions based upon the quoted price of a share of our common stock is appropriate. Although we anticipate that a portion of our outstanding stock options currently in the money at December 31, 2024 will be exercised during 2025, we have not planned that the exercise of options or the issuance of shares in private placements will be a significant source of cash during 2025. (e). Development Activities, Exploration Activities, Environmental Compliance and Contractual Obligations Development Activities We do not have any ongoing mineral development activities, which are activities for the development of mineral properties with reserves for potential mining. Exploration Activities A historically significant part of our business involves the review of potential property acquisitions and continuing review and analysis of properties in which we have an interest to determine the exploration and development potential of the properties. In analyzing expected levels of expenditures for work commitments and property payments, our obligations to make such payments fluctuate greatly depending on whether, among other things, we make a decision to sell a property interest, convey a property interest to a joint venture, or allow our interest in a property to lapse by not making the work commitment or a required lease or claim payment. In acquiring many of our interests in mining claims and leases, we have entered into agreements, which generally may be canceled at our option. We are often required to make minimum rental and option payments in order to maintain our interest in certain claims and leases. Our net 2024 mineral and surface property filing rental and option payments, included in exploration expense, were $493,000. Our 2025 total exploration property claim fees, rentals and option payments for properties we own, have under joint venture, or operate are estimated to be approximately $1,191,000. Assuming that our joint ventures continue in their current status and that we do not appreciably change our property positions on existing properties, we estimate that our joint venture partners will pay on our behalf or reimburse us approximately $674,000 of these annual payments. These obligations are detailed below under “Contractual Obligations.” In addition, we may be required to make further payments in the future if we elect to exercise our options under those agreements or if we enter into new agreements. 50 Table of Contents Environmental Compliance We are subject to various federal, state and local environmental laws and regulations in the countries where we operate. We are required to obtain permits in advance of initiating certain of our exploration activities, to monitor and report on certain activities to appropriate authorities, and to perform remediation of environmental disturbance as a result of certain of our activities. Historically, the nature of our activities of review, acquisition and exploration of properties prior to the establishment of reserves, which may include mapping, sampling, geochemistry and geophysical studies as well as some limited exploration drilling, has not resulted in significant environmental impacts in the past. We have historically carried on our required environmental remediation expenditures and activities, if any, concurrently with our exploration activities and expenditures. The expenditures to comply with our environmental obligations are included in our exploration expenditures in the statement of operations and have not been material to our capital or exploration expenditures and have not had a material effect on our financial position. For the years ended December 31, 2024 and 2023, we have not capitalized any costs related to environmental control facilities. We do not anticipate our exploration activities will result in any material new or additional environmental expenditures or liabilities in the near future. Contractual Obligations The following table provides an analysis of our contractual obligations: As of December 31, 2024 Payments due by period (in thousands) Total Less than 1 year 1–3 years 4–5 years More than 5 years Operating Lease Obligations (1) $ 56 $ 49 $ 7 $ - $ - Mineral property option and lease payments (2) $ 517 $ 517 $ - $ - $ - (1) Lease obligation payments on our Wheat Ridge, Colorado office. (2) Mineral property payments under lease and property claim and concession payments for the next year, net of joint venture payments. (f). Exploration Joint Ventures, Royalty and Other Properties The following discussion relates to an analysis of our anticipated property exploration plans as of December 31, 2024. Please also see Note 2, “Mineral Properties,” to the consolidated financial statements in Item 8, “Financial Statements and Supplementary Data,” and our discussion of our properties under Item 2, “Properties” of this Annual Report on Form 10-K for a more complete discussion of all of our mineral properties. Golden Crest The Golden Crest project is 100%-owned early-stage exploration project located in the northern Black Hills of western South Dakota in Lawrence County. The Golden Crest project is comprised of 1825 unpatented lode claims, with an associated area of approximately 36,000 acres. Solitario acquired its initial interest in the Golden Crest project during 2021. During 2022 through 2024 Solitario conducted exploration activities on the Golden Crest project including grid soil and grab rock sampling, hand trenching, mapping, induced polarization ground geophysics, permitting and geotechnical work. Over twenty gold-enriched target areas have been identified, with fourteen of these areas containing multi-gram gold per tonne assays. In 2024 Solitario completed drilling of eleven core holes totaling 4,346 meters. The results included several holes with multi-gram gold mineralization as six of the eleven holes intersected gold grades exceeding one gpt. Higher grade paleo-placer grades were intersected as well as Precambrian rock formations, which provide some confirmation of Solitario’s theoretical geologic interpretation of potential economic mineralization at depth at Golden Crest During 2025 Solitario is planning to conduct a phase-one, 4,000-meter drilling program consisting of up to 15 additional exploration core holes. Depending on drilling results and receiving permits Solitario may initiate a phase-two drilling program during 2025 and 2026. In addition, we will be continuing a surface exploration program during 2025 consisting of prospecting for new areas of mineralization through the collection of select rock grab samples, systematic soil sampling and, potentially, geophysics. 51 Table of Contents Florida Canyon The Florida Canyon project is an advanced-stage high-grade zinc project in Peru. Based on extensive exploration and development work conducted to date, we believe the property has potential to be developed into a mine in the future. The project is held in a joint venture between Nexa (61%) and Solitario (39%). Solitario and Nexa jointly completed a PEA in 2017 that incorporated resource estimation, mining and processing recovery estimates, a preliminary mining and processing plan, infrastructure layout, environmental considerations and an economic analysis based on certain base case parameters. The PEA envisioned an underground mining operation with a 2,500 tonne per day floatation mill for processing, resulting in a 12.5-year-mine life. Concentrates would be trucked to Nexa’s Cajamarquilla zinc smelter facility in Lima, Peru. During 2024 Nexa spent approximately $2.0 million on the Florida Canyon project including an upgrade to the access road to the project, social and community projects in the areas of health, education and commercial opportunities. Nexa also began a re-evaluation of the Florida Canyon resource model, which will continue through 2025. This re-evaluation is intended to evaluate the upside potential as well as identify new high-priority drill targets within the current footprint of the deposit. Lik project The Lik project is an advanced-staged high-grade zinc project consisting of 47 contiguous Alaska state mining claims. The project is held in a joint venture between Teck (50%) and Solitario (50%). A PEA was completed in 2014 on the Lik deposit that envisioned an open pit mining operation with a 5,500 ton per day floatation mill for processing resulting in a nine-year mine life. Concentrates would be handled through the DeLong Mountain Regional Transportation System road and port system that currently handles all concentrate produced by the nearby Red Dog zinc mine of Teck. Alternate development scenarios might be developed utilizing Red Dog infrastructure under the control of Teck. However, no agreements are in place to develop such plans and are therefore hypothetical. During 2024, Teck completed its ZTEM inversion process and an airborne geophysical program it completed in 2024. Teck also worked on a 3D geologic model and previously completed ground gravity geophysical survey as well as ongoing environmental site work. Teck believes there is potential for additional drill targets, based on ZTEM inversion modelling, geologic mapping, and ground gravity. Solitario and Teck are in final discussions to fund a 2025 work program, with Teck acting as project manager. Currently, no drilling is anticipated for 2025 at the Lik project. Other Properties Chambara The current claim holdings of Minera Chambara are 12 concessions totaling 9,661 hectares of valid concessions that surround the Florida Canyon project area held by Minera Bongará. A limited amount of surface exploration has been conducted in recent years. Significant geochemical anomalies and outcropping mineralization have been identified at several locations on the Chambara property. Nexa is responsible for maintaining the property in good standing and making all concession payments to the Peruvian government. Cat Creek Solitario leased a 100% interest in the Cat Creek project in south-central Colorado from a private third party in 2023. Solitario has only conducted very limited work on the property to date and during 2024 secured permits for two drill hole locations. Solitario is planning a limited exploration program at Cat Creek for 2025 and currently although no decision has been made to drill at Cat Creek during 2025. 2025 Planned Expenditures Our 2025 total exploration budget is approximately $3,910,000 for our planned exploration expenditures. This amount does not include any significant expenditures for our Florida Canyon project where our joint venture partner, Nexa, is responsible for 100% of exploration costs. It includes $3,557,000 planned exploration expense at our Golden Crest project, including approximately $1,911,000 for drilling, pending permitting. We will continue the evaluation of potential new acquisitions of properties primarily in the United States around the Golden Crest project as well as other regions of North and South America. We expect to carry out our exploration activities during 2025 utilizing Teck at Lik, Nexa at Florida Canyon, and our own employees and contract geologists at Golden Crest and Cat Creek projects. 52 Table of Contents (g). Discontinued Projects We recorded no mineral property impairments during 2024 or 2023. ( h). Significant Accounting Policies and Critical Accounting Estimates See Note 1, “Business and Summary of Significant Accounting Policies,” in Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K 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 year ended December 31, 2024. (i). Related Party Transactions None (j). Recent Accounting Pronouncements See Note 1, “Business and Summary of Significant Accounting Policies,” in Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Smaller reporting companies are not required to provide the information required by this item. 53 Table of Contents