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Marketable Equity Securities

9 Months Ended

Sep. 30, 2018

3. Marketable Equity Securities

Solitario's investments in marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon quoted prices of the securities owned. The cost of marketable equity securities sold is determined by the specific identification method. Changes in market value are recorded in the consolidated statement of operations. During the three and nine months ended September 30, 2018, Solitario recorded an unrealized loss on marketable equity securities of $74,000 and $737,000, respectively. During the three and nine months ended September 30, 2017, Solitario recorded an unrealized gain on marketable equity securities of $157,000 and $618,000, respectively.

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 Vendetta Warrant. The total purchase price for 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 shares were allocated a purchase cost of $186,000 and the Vendetta Warrants were allocated a purchase cost of $103,000. During the three and nine months ended September 30, 2017, Solitario sold 2,000,000 and 3,480,000 common shares of Vendetta, respectively, for cash proceeds of $407,000 and $666,000, respectively, that had a recorded cost of $50,000 and $88,000, respectively. In addition, during the three and nine months ended September 30, 2017 Solitario exercised 5,000,000 and 7,240,000 of the Vendetta Warrants, respectively, it held and received 5,000,000 and 7,240,000 Vendetta common shares, respectively, by paying $411,000 and $578,000, respectively, to Vendetta. As a result, as of September 30, 2017, Solitario no longer owned any Vendetta Warrants. The cost of the common shares received from the exercise of the Vendetta Warrants was recorded during the three and nine months ended September 30, 2017 based upon the total of the (i) exercise price of the Vendetta Warrants exercised, $411,000 and $578,000, respectively, and (ii) the fair value of the Vendetta Warrants on the date of exercise, which equaled their intrinsic value of $641,000 and $950,000, respectively, for a total value of $1,052,000 and $1,528,000, respectively. As a result of these transactions, Solitario owns 11,000,000 common shares of Vendetta and no Vendetta Warrants as of September 30, 2018 and December 31, 2017.

The following tables summarize Solitario’s marketable equity securities and adjustments to fair value:

(in thousands)	September 30, 2018	December 31, 2017
Marketable equity at cost	$1,714	$1,714
Cumulative unrealized gain on marketable equity securities	192	929
Marketable equity securities at fair value	$1,906	$2,643

The following table represents changes, including sales, in marketable equity securities during the three and nine months ended September 30, 2018 and 2017:

(in thousands)	Three months ended September 30,		Nine months ended September 30,
	2018	2017	2018	2017
Cost of marketable equity securities sold	$ -	$50	$ -	$ 88
Realized gain on marketable equity securities sold	-	357	-	578
Proceeds from the sale of marketable equity securities sold	-	(407)	-	(666)
Purchase of marketable equity securities	-	1,052	-	1,528
Gross unrealized (loss) gain recorded in the statement of operations	(74)	157	(737)	618
Change in marketable equity securities at fair value	$(74)	$ 802	$(737)	$ 1,480