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Mineral Properties

12 Months Ended

Dec. 31, 2019

The following table details Solitario’s capitalized investment in exploration mineral property:

(in thousands)	December 31,
	2019		2018
Exploration
Lik project (Alaska – US)	$	15,611	$	15,611
La Promesa (Peru)		6		6
Montana Royalty property (US)		-		40
Total exploration mineral property	$	15,617	$	15,657

Exploration property

Solitario's exploration mineral properties at December 31, 2019 and 2018 consist of use rights related to its exploration properties, and the value of such assets is primarily driven by the nature and amount of economic mineral ore believed to be contained, or potentially contained, in such properties. The amounts capitalized as mineral properties include concession and lease or option acquisition costs. Capitalized costs related to a mineral property represent its fair value at the time it was acquired. At December 31, 2019, none of Solitario’s exploration properties have production (are operating) or contain proven or probable reserves. Solitario's exploration mineral properties represent interests in properties that Solitario believes have exploration and development potential. Solitario's mineral use rights generally are enforceable regardless of whether proven and probable reserves have been established.

In addition to its capitalized exploration properties, 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 recorded joint venture property payment revenue received in excess of capitalized costs. Per the joint venture agreement, as of December 31, 2019, no further standby joint-venture payments are due to Solitario on the Florida Canyon project. At December 31, 2019 and 2018, Solitario has no remaining capitalized costs related to its Florida Canyon joint venture.

On January 22, 2019, Solitario completed the Royalty Sale, discussed above under “Recent Developments” to SilverStream for Cdn$600,000. At closing of the Royalty Sale, Solitario received Cdn$250,000 in cash and the SilverStream Note with a principal amount of Cdn$350,000, and a maturity date of December 31, 2019, which was subsequently extended to June 30, 2020. During the nine months ended September 30, 2019, Solitario recorded mineral property revenue of $408,000 from the Royalty Sale, consisting of the fair value of the cash received on the date of the sale of $185,000 and the fair value of the SilverStream Note on the date of the sale of $263,000, less the carrying value of the royalties sold of $40,000.

On April 26, 2018, Solitario sold the Yanacocha Royalty to Newmont for $502,000 in cash. Newmont owns the underlying mineral concessions covered by the Yanacocha Royalty. None of the concessions covered by the Yanacocha Royalty have any reported reserves or resources. Solitario had no mineral property capitalized cost in the Yanacocha Royalty and recorded Mineral Property Revenue of $502,000 during 2018.

Discontinued projects

Solitario did not abandon or impair any of its properties during 2019 or 2018 and did not record any mineral property write-downs during the years ended December 31, 2019 or 2018.

Exploration Expense

The following items comprised exploration expense:

	For the year ended December 31,
(in thousands)	2019		2018
Geologic and field expenses	$	1,726	$	1,165
Administrative		81		89
Total exploration expense	$	1,807	$	1,254

Asset Retirement Obligation

In connection with the acquisition of Zazu, Solitario recorded an asset retirement obligation of $125,000 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 the 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 reclamation is not expected to occur until the end of the Lik 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.