Item 7. Management’s Discussion and Analysis
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 a smaller reporting 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, 2025, 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 our Cat Creek and Bright Angel projects in Colorado, which are early-stage exploration projects. 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, 2025, we have balances of cash and short-term investments that we anticipate using, in part, to fund planned 2026 exploration, to further the exploration of our Lik, Golden Crest, Cat Creek and Bright Angel 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 geological 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 held marketable equity securities; (iv) sales of covered call options on common stock of Kinross we previously held; (v) sale of mineral property interests and assets; and (vi) joint venture payments, including delay rental payments. During 2025 we issued 1,007,423 shares of common stock pursuant to our ATM program, described below, for net proceeds of $730,000, after commissions and expenses. During 2025 we issued a total of 7,142,855 shares of our common stock in private transactions for net proceeds of $4,411,000. We did not record any mineral property income from the sale of mineral properties during 2025 or 2024. 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.
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(b). Results of Operations
Comparison of the year ended December 31, 2025 to the year ended December 31, 2024
We had a net loss of $3,833,000 or $0.04 per basic and diluted share for the year ended December 31, 2025 compared to a net loss of $5,368,000 or $0.07 per basic and diluted share for the year ended December 31, 2024. As explained in more detail below, the primary reasons for the decrease in net loss during 2025 compared to 2024 were (i) a decrease in our exploration expense to $2,847,000 during 2025 compared to exploration expense of $4,148,000 during 2024; (ii) a decrease in general and administrative expense to $1,566,000 during 2025 compared to general and administrative expense of $1,879,000 during 2024; and (iii) a realized and unrealized gain on marketable equity securities of $680,000 during 2025 compared to a realized and unrealized gain on marketable equity securities of $343,000 during 2024. Partially offsetting these factors that contributed to a decreased net loss during 2025 compared to 2024 were (i) a decrease in interest income to $256,000 during 2025 compared to interest income of $372,000 during 2024; and (ii) an increase in the loss on derivative instruments to $336,000 during 2025 compared to a loss on derivative instruments of $29,000 during 2024. Each of these items is discussed in greater detail below.
Our primary exploration activities during 2025 and 2024 were related to our Golden Crest project in South Dakota. We recorded exploration costs of $2,477,000 at Golden Crest during 2025 compared to $3,884,000 during 2024. The Golden Crest expenditures during 2025 and 2024 were primarily related to the drilling programs where we completed seven drill holes during 2025 compared to 11 drill holes during 2024, with direct drilling costs of approximately $1,176,000 during 2025 compared to $2,042,000 during 2024. 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 2025 when we had no staking, leasing or other initial acquisition costs and, accordingly we did not capitalize any initial acquisition costs during 2025. All future exploration and filing costs related to our Golden Crest claims will be expensed as incurred.
In addition, Solitario’s share of exploration expenses at our Lik project in Alaska was $159,000 during 2025 compared to $142,000 during 2024. There was no drilling at Lik during either 2025 or 2024. Teck performed on-going geologic evaluation of the Lik project during both 2025 and 2024, 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 2026 as well as further environmental monitoring and clean-up at the site.
We spent approximately $54,000 during 2025 at our Cat Creek project during 2025 compared to $35,000 during 2024, primarily related to geophysical and permitting during both years. We spent $37,000 at our newly acquired Bright Angel project in Colorado during 2025 related to on-site geologic activities and permitting, with no similar amount during 2024. Although the exploration program at our Florida Canyon project in Peru is fully funded by our joint venture partner, Nexa, we incurred exploration expenses at Florida Canyon of $47,000 during 2025 compared to $14,000 during 2024.
The remaining exploration expenditures during 2025 and 2024 were reconnaissance work, including the evaluation of potential mineral properties for acquisition. Our planned 2026 total exploration and development budget, excluding any new projects, in which we may acquire an interest, is approximately $5,677,000, which reflects planned work, including $2,217,000 for drilling at the Golden Crest project, $526,000 for drilling at the Cat Creek project and $520,000 for drilling at the Bright Angel project. All of the planned drilling during 2026 is dependent on receiving required permits and availability of third-party drilling contractors. Our planned exploration activities in 2026 may be modified, as necessary for any drilling programs we may undertake, 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
2025
2024
Golden Crest
$ 2,477
$ 3,884
Lik project
159
142
Florida Canyon
47
14
Cat Creek
54
35
Bright Angel
37
-
Reconnaissance exploration activity
73
73
Total exploration expense
$ 2,847
$ 4,148
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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 $983,000 during 2025 compared to $1,213,000 during 2024. The major components of our general and administrative costs were (i) salary and benefits expense which decreased to $350,000 during 2025 compared to $399,000 during 2024, as a result of fewer personnel; (ii) legal and accounting costs which decreased to $184,000 during 2025 compared to $220,000 during 2024 primarily reduced fees for annual financial audits and quarterly reviews; (iii) travel and investor relation costs which decreased to $321,000 during 2025 compared to $450,000 during 2024 compared as a result of having an investor relations consulting contract during 2024, which expired near the end of 2024; and (iv) other costs related to office, insurance and miscellaneous costs which decreased to $128,000 during 2025 compared to $144,000 during 2024 as a result of reduced activity and general cost increases. We anticipate general and administrative costs for 2026 to be approximately $974,000 which would be comparable to the costs incurred during 2025; however, this amount may vary significantly during 2026 depending on the outcome of our exploration activity at Golden Crest, Cat Creek, Bright Angel 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, 2025, we recorded $583,000 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 $666,000 of non-cash stock option compensation expense during 2024. The amount was lower during 2025 primarily due to the grant of 1,600,000 options during 2025 with a total grant date fair value of $557,000, of which Solitario recognized 25% on the grant date of $139,000 compared to 2,125,000 options granted during 2024, with a grant date fair value of $1,120,000, of which Solitario recognized 25% on the date of grant of $280,000. The remaining compensation expense was related to the straight-line amortization of our outstanding options in 2025 and 2024. 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 a realized and unrealized gain on marketable equity securities of $680,000 during 2025 compared to a realized and unrealized gain on marketable equity securities of $343,000 during 2024. These amounts represent a realized gain on the sale of an aggregate of $1,445,000 during 2025, which was comprised of (i) a realized gain on the sale of our Kinross common stock of $1,319,000; and (ii) a realized gain of $126,000 on the sale of our Vox Royalty common stock. This realized gain during 2025 compared to a realized gain of $54,000 during 2024 from the sale of our Highlander Silver common stock.
In addition, we recorded an unrealized loss on marketable equity securities of $765,000 during 2025 compared to an unrealized gain on marketable equity securities of $289,000 during 2024. The non-cash unrealized loss during 2025 was primarily related to (i) the transfer of $915,000 as an unrealized loss of prior unrealized gain on our holdings of Kinross common stock to realized gain upon the sale of shares of Kinross during 2025; and (ii) the transfer of $126,000 as an unrealized loss of prior unrealized gain on our holdings of Vox Royalty common stock upon the sale of the shares of Vox Royalty common stock during 2025. Added to these transfers of prior unrealized gains (as an unrealized loss) in the value of our marketable equity securities during 2025 was a decrease in the value of our holdings of Vendetta common stock of $24,000 based on quoted market prices. These unrealized losses were partially offset by (i) an unrealized increase in the value of our holdings of Kinross common stock through the date of sale of $71,000; and (ii) an unrealized increase in the value of our Vox Royalty common stock sold of $26,000 through the date of sale for the Vox Royalty shares sold: and (iii) an unrealized increase in the value of remaining holdings of Vox Royalty common stock during 2025 of $203,000.
The non-cash unrealized gain during 2024 was primarily related to (i) an increase in the fair value of our holdings of 100,000 shares of Kinross common stock during 2024 of $322,000 based on quoted market prices; (ii) an increase in the fair value of our holdings of 134,055 shares of Vox Royalty common stock of $38,000 based on quoted market prices; and (iii) an increase of $22,000 in the fair value of our holdings of 100,000 shares of Highlander common stock to the date of the sale of our holdings of the Highlander shares. These unrealized increases in the value of our marketable equity securities during 2024 were partially offset by (i) a decrease in the value of our holdings of Vendetta common stock of $37,000 based on quoted market prices; and (ii) the transfer of $54,000 of previously recorded unrealized gain to realized gain on the sale of our 100,000 Highlander common shares (as an unrealized loss) upon the sale of those shares during 2024.
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See Note 3, Marketable Equity Securities above for additional discussion of our marketable equity securities. We may sell some of our marketable equity securities from time to time during 2026 for working capital needs; however, we do not expect to sell all of our holdings of marketable equity securities during 2026. Any proceeds we may receive from sales of marketable equity securities during 2026 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, 2025. See “Liquidity and Capital Resources” below.
We recorded a loss on derivative instruments of $336,000 during 2025 compared to a loss on derivative instruments of $29,000 during 2024. As explained elsewhere in this Annual Report, we settled the covered calls against our shares of Kinross common stock during 2025 for cash payment of $403,000 upon the sale of our Kinross stock. During 2024, we sold the Kinross calls covering our holdings of 100,000 shares of Kinross common stock for net proceeds of $38,000 that were settled as discussed above, for which we had recorded a current liability of $67,000 at December 31, 2024. We do not anticipate selling any calls against our existing marketable equity securities during 2026.
We recorded $20,000 of depreciation and amortization during 2025 compared to $27,000 of depreciation and amortization during 2024. The decrease in depreciation and amortization is primarily related to older assets becoming fully depreciated during 2025 compared to 2024. We amortize our equipment over a five-year period. We anticipate our 2026 depreciation and amortization expense will be similar to our 2025 depreciation expense.
We recorded interest and dividend income of $256,000 during 2025 compared to interest and dividend income of $372,000 during 2024. The decrease during 2025 was primarily related to a decrease in the average outstanding balances of our investments in our money market account during the year as a result of the use of cash for operations, which was partially offset by sales of our common stock during 2025. In addition, average interest rates on short-term investments were higher during 2024 compared to average interest rates during 2025. We anticipate our interest and dividend income will be lower in 2026 as a result of the use of short-term investment balances for exploration and administrative costs during 2026.
We recorded no deferred tax expense or benefit in either 2025 or 2024 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 2025 and 2024. 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 2025 and 2024 we recorded no mineral property impairments.
(c). Liquidity and Capital Resources
Cash
As of December 31, 2025, we had $82,000 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, 2025 we had $7,573,000 in our money market account held in a brokerage account. 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 2026.
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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. As of December 31, 2025, we own 7,750,000 shares of Vendetta common stock recorded at their fair market value of $57,000, and we own 50,000 shares of Vox Royalty common stock recorded at their fair market value of $237,000. 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 $7,795,000 at December 31, 2025 compared to working capital of $5,624,000 as of December 31, 2024. Our working capital at December 31, 2025 consists primarily of our cash and cash equivalents, our investment in short-term investments and our marketable equity securities, less our current liabilities of $215,000. As of December 31, 2025, our cash balances along with our short-term investments and marketable equity securities are adequate to fund our expected expenditures over the next year.
The nature of the mineral exploration business requires significant sources of capital to fund exploration, development and operation of mining projects. We anticipate using our working capital and any additional funds we might acquire to carry out our 2026 planned expenditures. We believe our existing resources are adequate to fund these expenditures. These expenditures include planned exploration for Golden Crest of approximately $3,211,000, including potential drilling, pending the receipt of required permits, as well as planned limited exploration at our Lik project for 2026 of which Solitario will be responsible for 50% of expenditures. We do not expect any significant Solitario exploration expenditures at our Florida Canyon project where Nexa is responsible for all 2026 planned expenditures. Pending receipt of permits, we also plan on increased exploration at both the Cat Creek project and the Bright Angel 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, 2025, options to acquire an aggregate of 5,565,000 shares of our common stock were outstanding. Of that amount there are 3,365,000 options that are vested and exercisable at December 31, 2025. As of December 31, 2025, our outstanding options include 2,233,300 options that are in the money with a weighted average exercise price of $0.62 per share, which is below the market price of a share of Solitario common stock at December 31, 2025 of $0.70 per share as quoted on the NYSE American. During 2025, options for 1,028,500 shares were exercised for cash proceeds of $206,000. 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 2025 and 2024. We do not anticipate that the exercise of our outstanding stock options currently in the money at December 31, 2025 will be a significant source of cash flow during 2026.
Equity offering private placements
During 2024, we did not offer or sell our shares of common stock in private placement transactions.
On August 14, 2025, we issued 84,128 shares in a private placement to certain leaseholders at our Golden Crest Project in South Dakota in satisfaction of a portion of the required 2025 annual lease payments with a value of $53,000. The remaining portion of the lease payments due to the leaseholders were made in cash during 2025.
On June 18, 2025, we closed on a private placement of 1,587,300 shares of our common stock (the “Newmont Shares”), pursuant to a Stock Purchase Agreement (the “SPA”) with Newmont Overseas Exploration Ltd. (“Newmont”), for a price of $0.63 per share for net proceeds of $980,000 after certain legal and regulatory offering costs of $20,000. In connection with the sale of the Newmont Shares, Solitario and Newmont amended and restated the Investor Rights Agreement between the parties that was entered into in 2023. The amended and restated Investor Rights Agreement served to amend certain terms of the Investor Rights Agreement, including to provide Newmont with a right of first refusal with respect to certain transactions, such as a sale or joint venture, involving the Golden Crest Properties (whereas the agreement previously granted Newmont a right of first offer with respect to those prospective transactions).
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On June 18, 2025, we closed on a private placement of 5,555,555 shares of our common stock (the “Shares”) at a price of $0.63 per share for net proceeds of $3,431,000 after certain legal and regulatory offering costs of $69,000. The sale of the Shares was made through a subscription agreement between us and a single third-party investor. None of our officers, directors or other affiliates participated in the private placement. The investor in the private placement was 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.
At the Market Offering Agreement
During 2025, Solitario sold an aggregate of 1,007,423 shares of common stock under the ATM Agreement at an average price of $0.76 per share for net proceeds of $730,000, after commissions and sale expenses. 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.
Off-balance sheet arrangements
As of December 31, 2025 and 2024, we have no off-balance sheet arrangements.
(d). Cash Flows
Net cash used in operations during the year ended December 31, 2025 decreased to $3,507,000 compared to $5,099,000 for the year ended December 31, 2024 primarily as a result of (i) the decrease in exploration expense at our Golden Crest project to $2,477,000 during 2025 compared to $3,884,000 of exploration expense incurred at our Golden Crest project during 2024, primarily related to a reduction in drilling expenditures as we drilled fewer holes during 2025 at Golden Crest compared to 2024; (ii) a decrease in general and administrative expense to $1,566,000 during 2025 compared to general and administrative expense of $1,879,000 during 2024; and (iii) a reduction in the use of cash resulting from a decrease in accounts payable and other current liabilities of $94,000 during 2025 compared to a use of cash from a decrease in accounts payable and other current liabilities of $379,000 during 2024. Partially offsetting these reductions in operational use of cash during 2025 compared to 2024 were (i) a decrease in the cash provided from a reduction in prepaid expenses and other current assets to $5,000 during 2025 compared to cash provided from a reduction in prepaid expenses and other current assets of $207,000 during 2024; and (ii) an increase in our exploration expenditures at our Lik, Florida Canyon, Cat Creek and Bright Angel projects to $297,000 during 2025 compared to combined exploration expenditures at these projects of $191,000 during 2024; and (iii) a decrease in interest and dividend income to $256,000 during 2025 compared to interest and dividend income of $372,000 during 2024;. These items are discussed in further detail above under “Results of Operations.”
Net cash used by investing activities was $1,776,000 during 2025 compared to net cash provided by investing activities of $3,938,000 during 2024. The primary reasons for the increase in cash used by investing activities are (i) an increase in the cash used for the net purchase of short-term investments of $3,050,000, primarily from the equity issuances of $5,141,000 during 2025, discussed below, compared to the cash provided by the sale of short-term investments of $3,913,000 during 2024; and (ii) cash used for the settlement of the Kinross call of $403,000, discussed above. Partially offsetting these uses of cash for investing activities were (i) cash from the sale of marketable equity securities of $1,708,000 during 2025 compared with $54,000 of sales of marketable equity securities during 2024; (ii) additions to mineral properties for initial acquisition costs of $31,000 during 2025 compared to 55,000 during 2024; and (iii) sale of derivative instruments of $38,000 during 2024 with no similar sales during 2025. 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 2026.
Our net cash provided by financing activities during 2025 was from (i) the sale of 7,142,855 shares of our common stock in private placement transactions for net cash of $4,411,000 discussed above under “Equity offering private placements;” (ii) the sale of 1,007,423 shares of our common stock under the ATM Program at an average price of $0.76 per share for net proceeds after expenses of $730,000,and (ii) the exercise of options for 1,028,500 shares of our common stock for net proceeds of $206,000. 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. We may utilize the ATM Program during 2026 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. We do not expect that the exercise of options or the issuance of shares in private placements will be a significant source of cash during 2026.
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(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 preparation of mineral properties with reserves for 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 2025 mineral and surface property filing rental and option payments, included in exploration expense, were $475,000. Our 2026 total exploration property claim fees, rentals and option payments for properties we own, have under joint venture, or operate are estimated to be approximately $1,387,000. 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 $854,000 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.
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, 2025 and 2024, 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, 2025
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)
$ 7
$ 7
$ -
$ -
$ -
Mineral property option and lease payments (2)
$ 533
$ 533
$ -
$ -
$ -
(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, 2025. 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.
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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 1,592 unpatented lode claims, with an associated area of approximately 30,388 acres. Solitario acquired its initial interest in the Golden Crest project during 2021.
During 2022 through 2025 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 2025 and 2024 Solitario completed drilling of seven and eleven core holes, respectively, totaling 2,562 and 4,346 meters, respectively. The results included several holes with multi-gram gold mineralization. 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 2026 Solitario, pending permitting, is planning to conduct an initial two-phase drilling program of 4,000 to 6,000 meters consisting of up to 20 additional exploration core holes in the first phase. Depending on drilling results, and receiving permits, Solitario may initiate a second phase drilling program during 2026. In addition, we will be continuing a surface exploration program during 2026 consisting of prospecting for new areas of mineralization through the collection of select rock grab samples, systematic soil sampling and, potentially, geophysics.
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 2025 Nexa spent approximately $1.4 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 completed a re-evaluation of Florida Canyon’s resource model during 2025 that suggests that as much as a 30% increase in resources could be achieved within the current footprint of mineralization if more detailed drilling were conducted. This re-evaluation also identified 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 2025, Teck completed 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 discussions to finalize a 2026 work program, with Teck acting as project manager. Currently, no drilling is anticipated for 2026 at the Lik project.
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Other Properties
Chambara
The current claim holdings of Minera Chambara are 12 concessions totaling 9,880 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, pending permitting, is planning a limited two to four-hole drilling program at the Cat Creek project for 2026 based upon its surface geologic work from 2024 and 2025.
Bright Angel
Solitario entered into a lease on its Bright Angel project in August 2025, which is located in north-central Colorado from a private third party. Solitario has only conducted very limited work on the property to date and is currently working or obtaining permits to drill the project in 2026.
2026 Planned Expenditures
Our 2026 total exploration budget is approximately $5,673,000 for our planned exploration expenditure. 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 $3,211,000 planned exploration expense at our Golden Crest project, including approximately $2,217,000 for drilling, pending permitting. The total exploration budget also includes exploration expenditure, pending permitting, at the Bright Angel project and at the Cat Creek project. We will continue the evaluation of potential new acquisitions of properties primarily in the United States as well as other regions of North and South America. We expect to carry out our exploration activities during 2026 utilizing Teck at Lik, Nexa at Florida Canyon, and our own employees and contract geologists at the Golden Crest, Cat Creek and Bright Angel projects.
(g). Discontinued Projects
No discontinued projects were recognized during 2025 or 2024.
( 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, 2025.
(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.
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