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Marketable Equity Securities

12 Months Ended

Dec. 31, 2019

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 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 “2016 Vendetta Warrants”). The purchase price of the units of $289,000 was allocated between the Vendetta common shares and the 2016 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 2016 Vendetta Warrants were allocated a purchase cost of $103,000. During 2017 Solitario exercised all of its 2016 Vendetta Warrants and sold 3,480,000 shares of Vendetta common stock.

On July 31, 2019, Solitario purchased 3,450,000 Vendetta units for aggregate consideration of $233,000. Each unit consisted of one share of Vendetta common stock and one warrant which allows the holder to purchase one additional share of Vendetta common stock at a purchase price of Cdn$0.13 per share for a period of three years (the “2019 Vendetta Warrants”). The purchase of the units on July 31, 2019 increased Solitario’s holdings of Vendetta common shares to 14,450,000 shares. On the purchase date Solitario recorded marketable equity securities of $165,000 for the Vendetta shares acquired and $68,000 for the 2019 Vendetta Warrants based upon an allocation of the purchase price of the Vendetta units, based upon (i) the fair value of the Vendetta common shares received, based upon the quoted market price for Vendetta common shares and (ii) the fair value of 2019 Vendetta Warrants based upon a Black Scholes model, using the stock price of Cdn$0.09, volatility of 79%, a term of three years and a discount rate of 1.5%. During 2019, Solitario charged loss on derivative instruments $47,000 for the change in the value of the 2019 Vendetta Warrants.

As of December 31, 2019, Solitario owned 14,500,000 shares of Vendetta common stock which are carried at their fair value based upon the quoted market price of Vendetta, whose common shares are listed on the TSX venture exchange, and included in marketable equity securities.

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

(in thousands)	Year ended December 31,
	2019			2018
Marketable equity securities at cost	$	1,879		$	1,714
Cumulative unrealized (loss) gain on marketable equity securities		(840	)		(129	)
Marketable equity securities at fair value	$	1,039		$	1,585

During 2019 Solitario added 3,450,000 shares of Vendetta through the purchase of the Vendetta units, discussed above, and recorded an increase in marketable equity securities of $165,000. Solitario did not acquire any marketable equity securities during 2018. Solitairo did not sell any marketable equity securities during 2019 or 2018. Solitario recorded a loss on marketable equity securities of $711,000 and $1,058,000, respectively, during 2019 and 2018 for the change in the fair value of its marketable equity securities.