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Marketable Equity Securities

12 Months Ended

Dec. 31, 2017

3. Marketable Equity Securities

On May 2, 2016 Solitario purchased 7,240,000 units of Vendetta for aggregate consideration of $289,000. Each unit included one common share of Vendetta and one purchase warrant which allow the holder to purchase one share of Vendetta common stock at a price of Cdn$0.10 per share for a period of two years (the “Vendetta Warrants”). The purchase price of the units of $289,000 was allocated between the Vendetta common shares and the Vendetta Warrants based upon total fair values on the date of purchase. The Vendetta common stock was allocated a purchase cost of $186,000 and the Vendetta Warrants were allocated a purchase cost of $103,000. As discussed below, during 2017 Solitario exercised all of its Vendetta Warrants, and sold 3,480,000 shares of Vendetta common stock. As of December 31, 2017, Solitario owns 11,000,000 shares of Vendetta common stock which are carried at their fair value based upon the quoted market price of Vendetta, a publicly traded company on the TSX venture exchange, and included in marketable equity securities. .

The following tables summarize Solitario’s marketable equity securities and accumulated other comprehensive income related to its marketable equity securities:

(in thousands)	December 31,
	2017	2016
Marketable equity securities at fair value	$2,643	$1,339
Cost	1,714	274
Accumulated other comprehensive income for unrealized holding gains	929	1,065
Deferred taxes on accumulated other comprehensive income for unrealized holding gains	353	353
Accumulated other comprehensive income	$ 576	$ 712

The following table represents changes in marketable equity securities:

(in thousands)	Year ended December 31,
	2017	2016
Gross cash proceeds from sales	$ 666	$ 56
Cost	88	16
Gross gain (loss) on sale included in earnings during the period	578	40
Deferred taxes on gross gain on sale included in earnings	(214)	(15)
Reclassification adjustment to unrealized gain in other comprehensive income for net (gain) loss included in earnings	(364)	(25)
Gross unrealized holding gain (loss) arising during the period included in other comprehensive income (loss)	442	994
Deferred taxes on unrealized holding losses included in other comprehensive (income) loss	(214)	(368)
Net unrealized holding gain	228	626
Other comprehensive income from marketable equity securities	$(136)	$601

During 2017, Solitario sold 3,480,000 Vendetta common shares, for cash proceeds of $666,000. In addition, during 2017, Solitario exercised its Vendetta Warrants, also discussed below in Note 4, “Other assets” and received 7,240,000 common shares of Vendetta. Solitario transferred the fair value of the Vendetta Warrants on the date of exercise of $949,000, along with the cash paid to exercise the Vendetta Warrants of $578,000 to marketable equity securities as the cost of the 7,240,000 common shares of Vendetta acquired.