SOLITARIO RESOURCES CORP. 10-K

Item 8. Financial Statements and Supplementary Data Page Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ( Assure CPA, LLC , Spokane, Washington , PCAOB ID 444 ) 55 Consolidated Balance Sheets as of December 31, 2024 and 2023 56 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 57 Consolidated Statements of Shareholders' Equity for the years ended December 31, 2024 and 2023 58 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 59 Notes to Consolidated Financial Statements 60 54 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Solitario Resources Corp. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Solitario Resources Corp. (“the Company”) as of December 31, 2024 and 2023, and the related consolidated statement of operations, statement of shareholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. We have served as the Company’s auditor since July of 2023 Spokane, Washington Firm ID is 444 March 11, 2025 55 Table of Contents SOLITARIO RESOURCES CORP. CONSOLIDATED BALANCE SHEETS (in thousands of U.S. Dollars, except share amounts) December 31, December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 81 $ 200 Short-term investments, at fair value 4,523 8,436 Investments in marketable equity securities, at fair value 1,322 1,032 Prepaid expenses and other 66 273 Total current assets 5,992 9,941 Mineral properties 16,701 16,646 Restricted cash – mineral property reclamation bonds 230 - Other assets 117 170 Total assets $ 23,040 $ 26,757 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 258 $ 593 Kinross call option liability 67 - Operating lease liability 43 39 Total current liabilities 368 632 Long-term liabilities: Asset retirement obligation and reclamation liabilities 145 125 Operating lease liability 7 50 Total long-term liabilities 152 175 Commitments and contingencies (Note 9) Shareholders’ equity: Preferred stock, $ 0.01 par value, authorized 10,000,000 shares (none issued and outstanding at December 31, 2024 and 2023) - - Common stock, $ 0.01 par value, authorized, 100,000,000 shares ( 81,638,418 and 79,586,358 , respectively, shares issued and outstanding at December 31, 2024 and 2023) 816 796 Additional paid-in capital 84,714 82,796 Accumulated deficit ( 63,010 ) ( 57,642 ) Total shareholders' equity 22,520 25,950 Total liabilities and shareholders' equity $ 23,040 $ 26,757 See Notes to Consolidated Financial Statements. 56 Table of Contents SOLITARIO RESOURCES CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of U.S. Dollars, except per share amounts) For the years ended December 31, 2024 2023 Operating expenses Exploration expense $ 4,148 $ 2,378 Depreciation 27 25 General and administrative 1,879 1,712 Total operating expenses 6,054 4,115 Other (expense) income Interest and dividend income 372 191 (Loss) gain on derivative instruments ( 29 ) 31 Gain on sale of marketable equity securities 54 - Unrealized gain on short-term investments - 56 Unrealized gain on marketable equity securities 289 83 Total other income 686 361 Net loss $ ( 5,368 ) $ ( 3,754 ) Net loss per common share Basic and diluted $ ( 0.07 ) $ ( 0.05 ) Weighted average shares outstanding Basic and diluted (in thousands) 81,003 68,743 See Notes to Consolidated Financial Statements. 57 Table of Contents SOLITARIO RESOURCES CORP. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (in thousands of U.S. Dollars) except share amounts) Additional Total Common Stock Paid-in Accumulated Shareholders’ Shares Amount Capital Deficit Equity Balance at December 31, 2022 64,801,373 $ 648 $ 74,886 $ ( 53,888 ) $ 21,646 Stock-based compensation expense 247 247 Issuance of shares – option exercises 1,486,500 15 444 459 Issuance of shares – private placements, net 12,798,485 128 6,969 7,097 Issuance of shares – services 500,000 5 250 255 Net loss - - - ( 3,754 ) ( 3,754 ) Balance at December 31, 2023 79,586,358 $ 796 $ 82,796 $ ( 57,642 ) $ 25,950 Stock-based compensation expense 666 666 Issuance of shares – ATM 1,802,060 18 1,200 1,218 Issuance of shares – option exercises 250,000 2 52 54 Net loss - - - ( 5,368 ) ( 5,368 ) Balance at December 31, 2024 81,638,418 $ 816 $ 84,714 $ ( 63,010 ) $ 22,520 See Notes to Consolidated Financial Statements. 58 Table of Contents SOLITARIO RESOURCES CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. Dollars) For the years ended December 31, 2024 2023 Operating activities: Net loss $ ( 5,368 ) $ ( 3,754 ) Adjustments to reconcile net loss to net cash used in operating activities: Unrealized gain on marketable equity securities ( 289 ) ( 83 ) Unrealized gain on short-term investments - ( 56 ) Gain on sale of marketable equity securities ( 54 ) - Loss (gain) on derivative instruments 29 ( 31 ) Stock-based compensation expense 666 247 Depreciation 27 25 Amortization of right of use lease asset 42 41 Increase in asset retirement and reclamation liabilities 20 - Changes in operating assets and liabilities: Prepaid expenses and other current assets 207 20 Accounts payable and other current liabilities ( 379 ) 328 Net cash used in operating activities ( 5,099 ) ( 3,263 ) Investing activities: Sale (purchase) of short-term investments – net 3,913 ( 4,429 ) Additions to mineral properties ( 55 ) - Sale of marketable equity securities 54 - Sale of derivative instruments – net 38 31 Additions to other assets ( 12 ) ( 11 ) Net cash (used by) provided by investing activities 3,938 ( 4,409 ) Financing activities: Issuance of common stock from private placements – net of issuance costs 1,218 7,097 Issuance of common stock upon exercise of stock options 54 459 Net cash provided by financing activities 1,272 7,556 Net increase (decrease) in cash and cash equivalents 111 ( 116 ) Cash, cash equivalents and restricted cash, beginning of year 200 316 Cash, cash equivalents and restricted cash, end of year $ 311 $ 200 Non-cash financing and investing activities: Issuance of shares of common stock for services - $ 255 Recognition of operating lease liability and right of use asset - $ 87 See Notes to Consolidated Financial Statements. 59 Table of Contents SOLITARIO RESOURCES CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2024 and 2023 1. Business and Summary of Significant Accounting Policies Business and company formation Solitario Resources Corp. (“Solitario,” or the “Company”) is an exploration stage company as defined by rules issued by the United States Securities and Exchange Commission (“SEC”). Solitario was incorporated in the state of Colorado on November 15, 1984 as a wholly-owned subsidiary of Crown Resources Corporation. In July 1994, Solitario became a publicly traded company on the Toronto Stock Exchange (the “TSX”) through its initial public offering. Solitario has been actively involved in mineral exploration since 1993. In June 2023, Solitario’s shareholders approved an amendment to the Company’s Articles of Incorporation to change the Company’s name from Solitario Zinc Corp. to Solitario Resources Corp., and that name change was effected in July 2023. Solitario’s primary business is to acquire exploration mineral properties or royalties and/or discover economic deposits on its mineral properties and advance these deposits, either on its own or through joint ventures, up to the development stage. At or prior to development, Solitario would likely attempt to sell its mineral properties, pursue their development either independently or through a joint venture with a partner that has expertise in mining operations, or create a royalty with a third party that would continue to advance the property. Solitario has never developed a property. Solitario is primarily focused on the acquisition and exploration of precious metal, zinc and other base metal exploration mineral properties. In addition to focusing on its mineral exploration properties and the evaluation of mineral properties for acquisition, Solitario from time to time also evaluates potential strategic transactions for the acquisition of new precious and base metal properties and assets with exploration potential or business combinations that Solitario determines to be favorable to Solitario. Solitario has recorded revenue in the past from the sale of mineral properties, including the sale of certain mineral royalties. Revenues and / or proceeds from the sale or joint venture of properties or assets, although potentially significant when they occur, have not been a consistent annual source of cash and would only occur in the future, if at all, on an infrequent basis. Solitario currently considers its carried interest in the Florida Canyon zinc project in Peru (the “Florida Canyon project"), its interest in the Lik zinc project in Alaska (the “Lik project”), and its Golden Crest project in South Dakota (the “Golden Crest project”) to be its core mineral property assets. Solitario also has its Cat Creek project, an early-stage exploration project in Colorado (the “Cat Creek project”). Nexa Resources, Ltd. (“Nexa”), Solitario’s joint venture partner, is continuing the exploration and furtherance of the Florida Canyon project and Solitario is monitoring progress at the Florida Canyon project. Solitario is working with its 50% joint venture partner in the Lik project, Teck American Incorporated, a wholly-owned subsidiary of Teck Resources Limited (both companies are referred to as “Teck”), to further the exploration and evaluate potential development plans for the Lik project. Solitario is conducting mineral exploration on the Golden Crest project and the Cat Creek project on its own. As of December 31, 2024, Solitario has balances of cash and short-term investments that Solitario anticipates using, in part, to further the development of the Florida Canyon project, the Lik project, the Golden Crest project and the Cat Creek project, and to potentially acquire additional mineral property assets. The fluctuations in precious metal and other commodity prices contribute to a challenging environment for mineral exploration and development, which has created opportunities as well as challenges for the potential acquisition of early-stage and advanced mineral exploration projects or other related assets at potentially attractive terms. Financial reporting The consolidated financial statements include the accounts of Solitario and its wholly owned subsidiaries, the most significant of which are Zazu Metals Corporation, Zazu Metals (AK) Corp., and Minera Solitario Peru, S.A. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("generally accepted accounting principles") and are expressed in US dollars. Revenue recognition Solitario’s policy is to recognize revenue from the sale of its exploration mineral properties (those without reserves) on a property-by-property basis, computed as the cash received and / or collectable receivables less any capitalized cost. Payments received for the sale of exploration property interests that are less than the properties cost are recorded as a reduction of the related property's capitalized cost. In addition, Solitario’s policy is to recognize revenue on any receipts of joint venture property payments in excess of its capitalized costs on a property that Solitario may lease to another mining company. Solitario has not recorded revenue from the sale of exploration mineral properties or joint venture property payments during 2024 or 2023. 60 Table of Contents Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Some of the more significant estimates included in the preparation of Solitario's financial statements pertain to: (i) the recoverability of its mineral properties related to its mineral exploration properties and their future exploration potential; (ii) the fair value of stock option grants to directors, officers, employees and consultants; and (iii) the ability of Solitario to realize its deferred tax assets. Cash and cash equivalents Cash equivalents generally include investments securities with original maturities of three months or less when purchased. Cash equivalents at December 31, 2024 include approximately $ 44,000 held in brokerage accounts and foreign banks, which are not covered under the Federal Deposit Insurance Corporation (“FDIC”) rules for the United States. Money market funds Solitario invests in money market funds that seek to maintain a stable net asset value. These funds invest in high-quality, short-term, diversified money market instruments, short-term treasury bills, federal agency securities, certificates of deposits, and commercial paper. Solitario includes its money market funds in short-term investments. Solitario believes the redemption value of these funds is likely to be the fair value, which is represented by the net asset value. Redemption is permitted daily without written notice. Solitario’s money market funds of $ 4,523,000 and $ 7,738,000 , respectively, at December 31, 2024 and 2023 are included in short-term investments. Restricted cash Solitario’s restricted cash represents investments in certificates of deposit and are restricted primarily for reclamation funding or surety bonds. Restricted cash and cash equivalents balances are carried at fair value. Non-current restricted cash is reported in a separate line on the consolidated balance sheets and totaled $ 230,000 at December 31, 2024. There were no restricted cash amounts at December 31, 2023. Cash, excluding restricted cash, at December 31, 2024 and 2023 was $ 81,000 and $ 200,000 , respectively. Short-term investments Solitario’s short-term investments at December 31, 2024 consists of its investment of $ 4,523,000 in a money market account held in a brokerage firm. At December 31, 2023 Solitario’s short term investments included a money market account of $ 7,738,000 and United States Treasury Securities (“USTS”) of $ 698,000 with maturities between one and two months. Interest income and unrealized gains or losses are recorded in the statement of operations in the period when they occur. During the year ended December 31, 2023 the unrealized gain on USTS (increase) in the fair value of its short-term investments, due primarily to changes in interest rates on held securities, was $ 56,000 . Mineral properties Solitario expenses all exploration costs incurred on its mineral properties prior to the establishment of proven and probable reserves through the completion of a feasibility study. Initial acquisition costs of its mineral properties are capitalized. Solitario regularly performs evaluations of its mineral properties to assess the recoverability and/or the residual value of its 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 established guidelines based upon undiscounted future net cash flows from the asset or upon the determination that certain exploration properties do not have sufficient potential for economic mineralization. 61 Table of Contents Derivative instruments Solitario accounts for its derivative instruments in accordance with ASC 815, "Derivatives and Hedging” (“ASC 815”). Solitario has entered into covered calls from time to time on its investment in Kinross Gold Corporation (“Kinross”) marketable equity securities. Solitario has not designated its covered calls as hedging instruments and any changes in the fair value of the covered calls are recognized in the statements of operations in the period of the change as gain or loss on derivative instruments. Fair value Financial Accounting Standards Board ASC 820, “Fair Value Measurements” (“ASC 820”) establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: Level 1 : Quoted prices in active markets for identical assets or liabilities; Level 2 : Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Solitario's short-term investments in USTS, money market investments, its marketable equity securities and any covered call options against those marketable equity securities are carried at their estimated fair value based on quoted market prices. See Note 8, “Fair Value of Financial Instruments,” below. Marketable equity securities Solitario's investments in marketable equity securities are carried at fair value, which is based upon quoted prices of the securities owned. Solitario records investments in marketable equity securities for investments in publicly traded marketable equity securities for which it does not exercise significant control and where Solitario has no representation on the board of directors of those companies and exercises no control over the management of those companies. The cost and realized gain or loss on marketable equity securities sold is determined by the specific identification method. Changes in fair value on Solitario’s holdings of marketable equity securities are recorded as unrealized gain or loss in the consolidated statement of operations. Mineral property joint ventures Solitario accounts for investments in companies and joint ventures in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and representation on governing bodies. Under the equity method of accounting, our share of the net earnings or losses of the investee are included in net income (loss) in the consolidated statements of operations. Solitario’s mineral property joint ventures represent cost sharing of project costs. Shared costs are expensed as incurred. Solitario does not apply equity-method accounting nor consolidate the operations of Lik, Florida Canyon or Bongara joint ventures as it does not exercise significant control over these projects. Foreign exchange The United States dollar is the functional currency for Solitario and all of Solitario's foreign subsidiaries. Foreign currency gains and losses are included in the results of operations in the period in which they occur. 62 Table of Contents Income taxes Solitario accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, income tax expense or benefit are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses, carryovers and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accounting for uncertainty in income taxes ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. ASC 740 provides that a company's tax position will be considered settled if the taxing authority has completed its examination, the company does not plan to appeal, and it is remote that the taxing authority would reexamine the tax position in the future. These provisions of ASC 740 had no effect on Solitario's financial position or results of operations. See Note 6, “Income Taxes,” below. Earnings per share The calculation of basic and diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the years ended December 31, 2024 and 2023. Potentially dilutive shares, consisting of outstanding common stock options of 5,348,500 and 3,828,500 , respectively, exercisable for Solitario common shares were excluded from the calculation of diluted loss per share for the year ended December 31, 2024 and 2023 because the effects were anti-dilutive. Employee stock compensation and incentive plans Solitario classifies all of its stock options as equity options in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” Solitario calculates grant date fair value of options based upon a Black-Scholes model utilizing the vesting term of the option, the grant date historical volatility and the risk-free interest rate on the date of grant. The grant date fair value is amortized on a straight-line basis over the vesting term of the option, and the stock-based compensation is charged to the statement of operations and credited to additional-paid-in-capital. Solitario accounts for forfeitures in the year they occur. See Note 10, “Employee Stock Compensation Plans,” below. Reclamation and asset retirement obligations Reclamation obligations associated with Solitario’s exploration activities are recognized when an obligation is incurred, can be reasonably estimated and not concurrently remediated. Expected reclamation costs are periodically reviewed and adjusted to reflect changes related to on-going exploration activities, inflation and on-going activities that reduce potential future reclamation liabilities. Exploration reclamation liabilities on properties without asset retirement obligations are charged to expense when incurred. Solitario does not apply a discount rate to its asset retirement obligation as the estimated time frame for reclamation on its exploration projects is not currently known, as reclamation is not expected to occur until the end of project life, which would follow future development and operations, the start of which cannot be estimated or assured at this time. Additionally, no depreciation will be recorded on the related asset for the asset retirement obligation until the project goes into operation, which cannot be assured. Segment reporting Solitario operates as a single operating segment in accordance with FASB ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . All financial information is presented on a consolidated basis and reviewed by Solitario’s Chief Executive Officer as the Chief Operating Decision Maker (CODM). The CODM uses consolidated net loss, as presented in the consolidated statement of operations, to assess segment performance and allocate resources. The measure of segment assets is reported on the balance sheet as total consolidated assets. 63 Table of Contents Adopted accounting pronouncements The Company has adopted ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This amended guidance applies to all public entities and aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, to enable investors to develop more decision-useful financial analyses. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Recent accounting pronouncements In August 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which clarifies the business combination accounting for joint venture formations. The amendments in the ASU seek to reduce diversity in practice that has resulted from a lack of authoritative guidance regarding the accounting for the formation of joint ventures in separate financial statements. The amendments also seek to clarify the initial measurement of joint venture net assets, including businesses contributed to a joint venture. The guidance is applicable to all entities involved in the formation of a joint venture. The amendments are effective for all joint venture formations with a formation date on or after January 1, 2025. Early adoption and retrospective application of the amendments are permitted. Solitario does not anticipate early adoption. Solitario is evaluating the new guidance and has not yet determined the impact of ASU 2023-05 on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for public business entities for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. Solitario does not anticipate early adoption. Solitario does not expect the adoption of ASU No. 2023-09 to have a material impact on its consolidated financial position or results of operations. Risks and Uncertainties Solitario is subject to various risks and uncertainties that are specific to the nature of its business and the exploration of its mineral properties. Solitario also faces various macro-economic risks and uncertainties, such as risks related to health epidemics, pandemics, and other outbreaks or resurgences of communicable diseases, the occurrence of natural disasters, rising geopolitical tension and instability, acts of war or terrorism, global economic uncertainty, inflationary pressures, interest rate volatility, and volatility and disruption in national and international financial markets. 2. Mineral Properties : The following table details Solitario’s capitalized mineral properties: (in thousands) December 31, 2024 2023 Exploration Lik project (Alaska – US) $ 15,611 $ 15,611 Golden Crest (South Dakota – US) 1,078 1,035 Cat Creek (Colorado – US) 12 - Total exploration mineral properties $ 16,701 $ 16,646 Exploration property Solitario's exploration mineral properties at December 31, 2024 and 2023 consist of use rights related to its exploration properties. The amounts capitalized as mineral properties include initial concession and lease or option acquisition costs. At December 31, 2024, none of Solitario’s exploration properties have production (are operating) or have established proven or probable reserves. Solitario's exploration mineral properties represent interests in properties that Solitario believes have exploration and development potential. 64 Table of Contents Golden Crest On May 27, 2021, Solitario entered into a lease agreement (the “Golden Crest Agreement”) whereby Solitario acquired exclusive exploration rights in certain claims (the “GC Claims”) in the Black Hills region of South Dakota. The GC Claims are part of Solitario’s Golden Crest project. Terms of the Golden Crest Agreement include scheduled payments to the underlying owner of $ 65,000 paid upon signing and a required payment to the underlying owner of $ 60,000 at the first anniversary date during 2022. Solitario recorded an initial acquisition cost of $ 125,000 during 2021 related to these required payments. In addition, to continue the lease, Solitario has agreed to pay, at its option, the underlying owner escalating annual payments over five years that total $ 340,000 and annual payments of $ 150,000 thereafter, which will be expensed as paid. All required payments have been made through December 31, 2024 and 2023. Solitario has agreed to pay the underlying owner an additional success fee of $ 1.00 per ounce of gold in the event Solitario files a 43-101 qualified resource of up to 1.5 million ounces of gold or a maximum of $ 1,500,000 . In order to maintain the leases in good standing, Solitario has agreed to escalating work commitments on the GC Claims and an area of interest around the GC claims totaling $ 3,000,000 during the first five years of the lease, with first and second-year minimum exploration expenditures of $ 400,000 during 2023, and $ 600,000 during 2024, which Solitario exceeded during both 2023 and 2024. The term of the Golden Crest Agreement is for twenty years and is automatically extended as long as Solitario is performing any exploration, development or mining activities on the GC Claims. The underlying owner retained a 2.0 % Net Smelter Return royalty. Solitario will have the option, but not the obligation, to reduce the Net Smelter Return royalty to 1.0 % by paying the owner $ 1,000,000 . Through December 31, 2024, Solitario has staked additional mineral claims, including some claims included in an area of interest of the GC Claims and claims not related to the GC Claims, as part of the Golden Crest project. As of December 31, 2024, Solitario has capitalized costs for staking, initial filing fees, legal and other costs of $ 1,078,000 as initial acquisition costs related to the Golden Crest project. During 2024 Solitario purchased a certificate of deposit of $ 100,000 for reclamation bonding as part of the Golden Crest drilling permit received and is recorded as restricted cash in the consolidated balance sheet at December 31, 2024. Lik Property Solitario holds a 50% operating interest in the Lik zinc-lead sliver property in northwest Alaska, which we acquired as part of the acquisition of Zazu Metals Corporation (“Zazu”) in July 2017. Solitario recorded its acquisition cost of $ 15,611,000 as mineral property at the date of acquisition. Teck is Solitario’s 50% partner on the Lik project and acted as the project manager during 2024 and 2023. Teck and Solitario share exploration expenditures at Lik on a 50/50 basis, with Teck earning a manager’s fee of ten percent of the total expenditures of which Solitario contributes one-half to Teck. All of Solitario’s share of expenditures at Lik are included in exploration expense for the years ended December 31, 2024 and 2023. Florida Canyon Solitario has an interest in its Florida Canyon exploration concessions, which are currently subject to a joint venture agreement where joint venture partners made stand-by joint venture payments to Solitario prior to January 1, 2015. Solitario previously recorded joint venture property payment revenue received in excess of capitalized costs. Per the joint venture agreement, as of December 31, 2024 and 2023, no further standby joint-venture payments are due to Solitario on the Florida Canyon project. At December 31, 2024 and 2023, Solitario has no remaining capitalized costs related to its Florida Canyon joint venture. Per the joint venture agreement with Nexa covering the Florida Canyon project, Solitario currently holds a 39% interest in the Florida Canyon project. Nexa is required to fund 100% of exploration expenditures at the Florida Canyon project, until Nexa commits to put the project into production based upon a positive feasibility study, at which time Nexa’s interest will increase from its current 61% interest to a 70% interest. Cat Creek During 2023 Solitario entered into a lease agreement with Cat Creek LLC, the underlying owner of certain mineral claims in Colorado covering the Cat Creek project (the “Cat Creek Agreement”). During 2024 Solitario capitalized its initial payments of $ 12,000 related to the Cat Creek project. Per the terms of the Cat Creek Agreement, to maintain the lease, Solitario has agreed to pay, at its option, additional annual payments totaling $ 127,000 through July 2028, of which $ 12,000 has been paid through December 31, 2024. In addition, to maintain the lease, Solitario has agreed to escalating work commitments on the Cat Creek claims and the related area of interest around the Cat Creek claims totaling $ 2,270,000 through December 31, 2029, with additional work commitments totaling $ 750,000 per year until December 2033. Solitario has exceeded the minimum exploration expenditure required through December 31, 2024. The underlying owner retained a 2.0 % Net Smelter Return royalty. Solitario will have the option, but not the obligation, to reduce the Net Smelter Return royalty to 1.0 % by paying the owner $ 1,000,000 . During 2024 Solitario purchased a certificate of deposit of $ 130,000 for reclamation bonding as part of the Cat Creek drilling permit received and is recorded as restricted cash in the consolidated balance sheet at December 31, 2024. 65 Table of Contents Exploration Expense The following items comprised exploration expense: For the year ended December 31, (in thousands) 2024 2023 Geologic and field expenses $ 3,939 $ 2,176 Administrative 209 202 Total exploration expense $ 4,148 $ 2,378 Asset Retirement Obligation and Reclamation Liabilities Solitario recorded an asset retirement obligation of $ 125,000 upon the acquisition of the Lik project for Solitario’s estimated reclamation cost of the existing disturbance at the Lik project. This disturbance consists of an exploration camp including certain drill sites and access roads at the camp. The estimate was based upon estimated cash costs for reclamation as determined by Solitario and its joint venture partner Teck and is supported by a permitting bond required by the State of Alaska, for which Solitario has retained a reclamation bond insurance policy in the event Solitario or its 50% partner, Teck, do not complete required reclamation. Solitario has not applied a discount rate to the recorded asset retirement obligation as the estimated time frame for reclamation is not currently known, as completion reclamation is not expected to occur until the end of the related project life, which would follow future development and operations, the start of which cannot be estimated or assured at this time. Additionally, no depreciation will be recorded on the related asset for the asset retirement obligation until the Lik project goes into operation, which cannot be assured. As of December 31, 2024 and 2023, Solitario has no reclamation liability at its Florida Canyon project as Nexa is responsible for the costs at Florida Canyon, including reclamation, if any. In addition, the activities to date at Solitario’s Cat Creek project of staking claims and mapping, soil and rock sampling, and assaying have not created any material environmental or other disturbances. Solitario is also involved in certain matters concerning its 2024 drilling program remediation at its Golden Crest project. Generally, the bulk of remediation at Golden Crest associated with its 2024 drilling program was carried out concurrently with drilling activities, with only ongoing contouring and reseeding of drill sites remaining as of December 31, 2024. At December 31, 2024, Solitario has recorded a reclamation liability of $ 20,000 , included in asset retirement and reclamation liabilities related to the Golden Crest project. 3. Marketable Equity Securities During 2024 Solitario sold 100,000 shares of Highlander Silver Corp. common stock for proceeds of $ 54,000 and recorded a realized gain on sale of $ 54,000 . Solitario did not sell any of its marketable equity securities during 2023. At December 31, 2024 and 2023 Solitario owns the following marketable equity securities: As of December 31, 2024 As of December 31, 2023 shares Fair value (000’s) shares Fair value (000’s) Kinross Gold Corp 100,000 $ 927 100,000 $ 605 Vendetta Mining Corp. 7,750,000 81 7,750,000 118 Vox Royalty Corp. 134,055 314 134,055 276 Highlander Silver Corp. - - 100,000 33 Total $ 1,322 $ 1,032 66 Table of Contents The following tables summarize Solitario’s marketable equity securities and adjustments to fair value: (in thousands) Year ended December 31, 2024 2023 Marketable equity securities at cost $ 1,440 $ 1,440 Cumulative unrealized loss on marketable equity securities ( 118 ) ( 408 ) Marketable equity securities at fair value $ 1,322 $ 1,032 The following table represents the realized and unrealized gain (loss) on marketable equity securities: (in thousands) Year ended December 31, 2024 2023 Unrealized gain on marketable equity securities $ 290 $ 83 Realized gain on marketable equity securities sold 54 - Net gain on marketable equity securities $ 344 $ 83 4. Operating Lease Solitario leases one facility, its Wheat Ridge, Colorado administrative office (the “WR Lease”), that has a term of more than one year. Solitario has no other significant operating lease costs. The WR Lease was extended in October 2023 to February 2026 and Solitario recorded a net increase in right of use assets of $ 87,000 during 2023 upon the extension of the WR Lease. The WR Lease is classified as an operating lease and has a remaining term of 14 months at December 31, 2024. The right-of-use office lease asset for the WR Lease is classified as other assets and the related liability as a current office lease liability, for the portion of the liability due in one year and a long-term liability for the balance in the consolidated balance sheet. Lease expense is recognized over the lease term, with variable lease payments recognized in the period those payments are incurred. During 2024 and 2023, Solitario recognized $ 42,000 and $ 41,000 , respectively, of lease expense for the WR Lease included in general and administrative expense. Cash lease payments of $ 44,000 and $ 40,000 , respectively, were made on the WR Lease during 2024 and 2023. The discount rate within the WR Lease is not determinable and Solitario applied a discount rate of 7 % based upon Solitario’s estimate of its cost of capital in recording the WR Lease. Solitario has $ 52,000 remaining cash payments as of December 31, 2024, of which $ 2,000 is imputed interest on the WR Lease, and Solitario has recorded the remaining $ 50,000 lease liability as $ 43,000 as a current liability and $ 7,000 as non-current liability in the consolidated balance sheet. 5. Other Assets The following items comprised other assets: (in thousands) December 31, 2024 2023 Furniture and fixtures, net of accumulated depreciation $ 66 $ 83 Right of use office lease asset 47 83 Exploration bonds and other assets 4 4 Total other assets $ 117 $ 170 6. Income Taxes : The net deferred income tax assets/liabilities in the December 31, 2024 and 2023 consolidated balance sheets include the following components: (in thousands) 2024 2023 Deferred tax assets: Loss carryovers $ 12,806 $ 12,403 Mineral Property 1,669 1,669 Capitalized Exploration Costs 1,771 841 Stock option compensation expense 292 129 Other 162 175 Unrealized loss on short-term investments 29 100 Lease Liability 12 19 Valuation allowance ( 16,722 ) ( 15,301 ) Total deferred tax assets 19 35 Deferred tax liabilities: Unrealized gains on marketable equity securities - 1 Lease Asset 11 21 Basis difference on fixed assets 8 13 Total deferred tax liabilities 19 35 Net deferred tax liabilities $ - $ - 67 Table of Contents The U.S. Federal Statutory Tax Rate for 2024 is 21%. The reconciliation of the expected income tax expense (benefit) and the actual income tax expense (benefit) is as follows: (in thousands) 2024 2023 Expected income tax benefit $ ( 1,127 ) $ ( 788 ) Equity based compensation - ( 23 ) Foreign tax rate differences ( 7 ) ( 19 ) State income tax ( 181 ) ( 160 ) Change in valuation allowance 1,421 992 Prior year return reconciliation ( 104 ) - Permanent differences and other ( 2 ) ( 2 ) Income tax (benefit) expense $ - $ - Solitario has U.S. Federal net operating loss (NOL) carryovers of $ 27,471,000 as of December 31, 2024. Under the Tax Cuts and Jobs Act (“TCIA”) Federal NOL’s incurred in taxable years beginning in 2018 and later have an indefinite carryforward period, but the use of the NOL carryover is limited to 80% of taxable income in the subsequent year. Federal NOL carryovers incurred prior to 2018 expire after 20 years. Solitario has $ 12,769,000 of Federal NOL carryovers incurred prior to 2018 which begin expiring in 2027. Solitario has State NOL carryovers in Colorado, Montana, and Alaska of $ 27,833,000 which begin expiring in 2026. Solitario has Canadian and Peruvian NOL carryovers of $ 19,155,000 which begin expiring in 2027. Solitario has U.S. Federal and State capital loss carryovers of $ 414,000 which begin expiring in 2026. NOL carryovers and capital loss carryovers are a benefit to Solitario in the form of future tax savings and such carryovers are recorded as deferred tax assets, subject to a valuation allowance. Solitario has provided a valuation allowance of 100 % of its net deferred tax assets due to the uncertainty of generating future profits that would allow for the realization of such deferred tax assets. 7. Derivative Instruments: From time-to-time Solitario has sold covered call options against its holdings of shares of common stock of Kinross included in Marketable Equity Securities. The business purpose of selling covered calls is to provide additional income on a limited portion of shares of Kinross that Solitario may sell in the near term, which is generally defined as less than one year and any changes in the fair value of its covered calls are recognized in the statement of operations in the period of the change. During 2024, Solitario sold covered calls against its holdings of Kinross for net proceeds of $ 38,000 , recorded an unrecognized loss of $ 29,000 during the year ended December 31, 2024 and recorded a liability for its outstanding covered call at December 31, 2024 of $ 67,000 . At December 31, 2024 Solitario has outstanding covered calls against all of its holdings of Kinross common stock with an exercise price of $ 10.00 per share with an exercise date of May 16, 2025. During 2023, Solitario sold covered calls against its holdings of Kinross for cash proceeds of $ 31,000 all of which expired unexercised. 8. Fair Value of Financial Instruments : For certain of Solitario's financial instruments, including cash and cash equivalents, and short-term investments the carrying amounts approximate fair value due to their short maturities. Solitario's marketable equity securities, including its investment in shares of Kinross common stock, Vendetta common stock, and Vox Royalty common stock are carried at their estimated fair value based on publicly available quoted market prices. 68 Table of Contents Solitario applies ASC 820 that establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements within a hierarchy between Level 1: quoted market prices; Level 2 quoted market prices for similar assets and liabilities; and Level 3: unobservable inputs with little or no market data. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. During the years ended December 31, 2024 and 2023, there were no reclassifications in financial assets or liabilities between Level 1, 2 or 3 categories. The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the hierarchy as of December 31, 2024: (in thousands) Level 1 Level 2 Level 3 Total Assets Short-term investments $ 4,523 $ - $ - $ 4,523 Marketable equity securities $ 1,322 $ - $ - $ 1,322 Liabilities Kinross calls $ 67 $ - $ - $ 67 The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the hierarchy as of December 31, 2023: (in thousands) Level 1 Level 2 Level 3 Total Assets Short-term investments $ 8,436 $ - $ - $ 8,436 Marketable equity securities $ 1,032 $ - $ - $ 1,032 Items measured at fair value on a recurring basis: Short-term investments: At December 31, 2024 and 2023 Solitario has $ 4,523,000 and $ 7,738,000 , respectively, in a money market account included in short-term investments. In addition, at December 31, 2023, Solitario’s holdings include short-term investments of USTS recorded at their fair values of $ 698,000 based upon quoted market prices. Marketable equity securities : At December 31, 2024 and 2023, the fair value of Solitario’s holdings in shares of Vendetta, Kinross, and Vox Royalty marketable equity securities are based upon quoted market prices. During the year ended December 31, 2024 and 2023, Solitario did not change any of the valuation techniques used to measure its financial assets and liabilities at fair value. 9. Commitments and Contingencies: At December 31, 2024 and 2023, Solitario has recorded an asset retirement and reclamation liability obligation of $ 145,000 and $ 125,000 , respectively, related to its Lik and Golden Crest projects. See Note 2 “Mineral Properties,” above. Solitario leases office space under a non-cancelable operating lease for the Wheat Ridge, Colorado office which provides for future total minimum rent payments as of December 31, 2024 of $ 52,000 through February 2026. 10. Employee Stock Compensation Plans: On June 18, 2013, Solitario’s shareholders approved the 2013 Solitario Exploration & Royalty Corp. Omnibus Stock and Incentive Plan, as amended (the “2013 Plan”), which expired in April 2023. Under the terms of the 2013 Plan, a total of 5,750,000 shares of Solitario common stock are reserved for awards to directors, officers, employees and consultants. The 2013 plan permitted the Board of Directors of the Company (the “Board of Directors”) or a committee appointed by the Board of Directors to grant awards in the form of stock options, stock appreciation rights, restricted stock, and restricted stock units. As of December 31, 2023, the 2013 Plan has expired and no additional awards may be granted under the 2013 Plan, although awards made prior to the 2013 Plan’s expiration will remain outstanding in accordance with their terms. The outstanding awards under the 2013 Plan are detailed below. 69 Table of Contents On June 20, 2023, Solitario’s shareholders approved the 2023 Solitario Stock and Incentive Plan (the “2023 Plan”). Under the terms of the 2023 Plan, a total of 5,000,000 shares of Solitario common stock are reserved for awards to directors, officers, employees and consultants. Awards may take the form of stock options, stock appreciation rights, restricted stock and restricted stock units. The terms and conditions of the awards are pursuant to the 2023 Plan and are granted by the Board of Directors or a committee appointed by the Board of Directors. The 2023 Plan has a term of 10 years. As of December 31, 2024, awards for a total of 2,175,000 options have been granted under the 2023 Plan. a.) Stock option grants The following table shows the grant date fair value of Solitario’s awards during 2024 and 2023 pursuant to the 2023 Plan. There were no grants under the 2013 Plan in 2024 or 2023. Grant Date 06/07/24 11/16/23 (1) Plan 2023 Plan 2023 Plan Option – grant date price $ 0.85 $ 0.51 Options granted 2,125,000 50,000 Expected life years 5.0 5.0 Expected volatility 72 % 72 % Risk free interest rate 4.3 % 4.4 % Weighted average fair value $ 0.53 $ 0.32 Grant date fair value $ 1,120,000 $ 16,000 (1) Option grants have a five-year term, and vest 25 % on date of grant and 25 % on each of the next three anniversary dates. b.) Stock option activity During 2024 and 2023, options for 250,000 and 1,486,500 , respectively, shares of common stock were exercised for proceeds of $ 54,000 and $ 459,000 respectively. The following table summarizes the activity for stock options outstanding under the 2023 Plan and the 2013 Plan for the years ended December 31, 2024 and 2023: 2024 2023 Weighted Weighted Average Aggregate Average Aggregate Exercise Intrinsic Exercise Intrinsic Options Price Value (1)(2) Options Price Value (1)(2) Outstanding, beginning of year 3,828,500 $ 0.47 5,390,000 $ 0.42 Granted 2,125,000 $ 0.85 50,000 $ 0.51 Exercised ( 250,000 ) $ 0.22 $ 144,000 ( 1,486,500 ) $ 0.31 $ 338,000 Expired - $ - Forfeited ( 355,000 ) 0.60 ( 125,000 ) $ 0.31 Outstanding, end of year 5,348,500 $ 0.62 $ 405,000 3,828,500 $ 0.47 $ 1,034,000 Exercisable, end of year 3,228,500 $ 0.52 $ 403,000 2,576,000 $ 0.41 $ 899,000 (1) Intrinsic value based upon December 31, 2024 and 2023 price of a share of Solitario common stock as quoted on the NYSE American exchange of $ 0.59 and $ 0.56 , respectively, per share. (2) For options exercised during 2024 and 2023 the intrinsic value based upon the price of a share of Solitario common stock as quoted on the NYSE American on the date of exercise of each option. During the years ended December 31, 2024 and 2023, Solitario recorded $ 666,000 and $ 247,000 , respectively, of stock-based compensation expense under its 2023 Plan and 2013 Plan for the amortization of the grant date fair value of each of its outstanding options with a credit to additional paid-in-capital. At December 31, 2024, the total unrecognized stock option compensation cost related to non-vested options is $ 841,000 and is expected to be recognized over a weighted average period of 25 months. At December 31, 2024, the average remaining contractual life of Solitario’s outstanding options is 2.9 years. At December 31, 2024, the average remaining contractual life of Solitario’s vested options is 2.2 years. 70 Table of Contents 11. Shareholders’ Equity Private Placements On July 31, 2023, Solitario entered into a Stock Purchase Agreement (the “SPA”) with Newmont Overseas Exploration Ltd. (“Newmont”), for the purchase and sale of 4,166,667 shares of Solitario common stock (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, Solitario and Newmont entered into an Investor Rights Agreement, which granted Newmont certain additional rights, including a preemptive right, certain anti-dilution protections and certain other rights and notice provisions related to Solitario’s Gold Crest mineral property assets. On October 13, 2023, Solitario completed a private placement of 8,631,818 shares of its 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 affiliates of Solitario participated in the private placement. Investors in the private placement were provided certain registration rights with respect to the Shares they purchased. Solitario 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, Solitario 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 the closing market price of $ 0.51 per share as quoted on the NYSE-American. The issuance of the shares was made through a subscription agreement between Solitario and the advisory firm. The shares were issued pursuant to an exemption from registration under United States and Canadian securities laws. The Consulting Contract is for a period of one-year and Solitario recorded a pre-paid expense of $ 255,000 for the issuance of the shares. No cash was paid for the issuance of the shares. The pre-paid expense was being amortized over the one-year term of the Consulting Contract and Solitario recorded $ 223,000 and $ 32,000 , respectively, during 2024 and 2023 in general and administrative expense related to the Consulting Contract. At the Market Offering Agreement On December 19, 2023, Solitario entered into an amendment to its at-the-market offering agreement that was originally entered into in 2021 (the “ATM Agreement”) with H. C. Wainwright & Co., LLC (“Wainwright”), under which Solitario may, from time to time, issue and sell shares of Solitario’s common stock through Wainwright as sales manager in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $ 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 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. During 2023, Solitario recorded $ 46,000 as a charge to additional paid-in-capital for one-time expenses related to the amendment of the ATM Agreement. During 2024, Solitario 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. Solitario did not sell any shares under the ATM program during 2023. 12. Subsequent Events Solitario has evaluated events subsequent to December 31, 2024, to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued. No events have occurred requiring recognition or disclosure through the date of this report. 71 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None