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Derivative Instruments
 3 Months Ended
Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments

6.        Derivative Instruments

 

RMB Warrants

 

The RMB Warrants entitle the holder to purchase a total of 1,624,748 shares of Solitario common stock pursuant to the terms and conditions of the RMB Warrants. As amended, the RMB Warrants expire on August 21, 2016, and have an exercise price of $1.5387 per share, subject to customary anti-dilution adjustments. Solitario recorded a warrant discount at the time it entered into the Facility Agreement, which it amortized on a straight-line basis. See Note 5, short-term debt, above.

 

Solitario has recorded a liability as of March 31, 2016 and December 31, 2015 of $1,000 and $4,000, respectively, for the fair value of the RMB Warrants based upon a Black-Scholes model. Solitario adjusts the fair value of the warrants at each balance sheet date, with changes in value recorded in other income (loss) in the statement of operations. Solitario recorded a gain on the RMB Warrants of $3,000 and $49,000, respectively, during the three months ended March 31, 2016 and 2015.

 

Covered Call Options

 

From time to time Solitario has sold covered call options against its holdings of Kinross Gold Corporation (“Kinross”). The business purpose of selling covered calls is to provide additional liquidity 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. Solitario has not designated its covered calls as hedging instruments and records gains or loss on the covered call in the period of the change.

 

Solitario recorded the following gain (loss) on derivative instruments related to Kinross calls:

(in thousands)

Three months ended

March 31,

  2016 2015
Shares of Kinross 100  180 
     
  Proceeds from sale of call $ 40  $ 84 
  Loss (gain) on derivative instrument  1  (82) 
    Ending other liability balance $ 41  $ 2