XML 23 R8.htm IDEA: XBRL DOCUMENT

Mineral Properties

12 Months Ended

Dec. 31, 2020

Extractive Industries [Abstract]

Mineral Properties

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

(in thousands)		December 31,
		2020				2019
Exploration
Lik project (Alaska – US)		$	15,611			$	15,611
Gold Coin (Arizona – US)			17				-
La Promesa (Peru)			-				6
Total exploration mineral property		$	15,628			$	15,617

Exploration property

Solitario's exploration mineral properties at December 31, 2020 and 2019 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 or the cost to acquire the property, as appropriate. At December 31, 2020, 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.

Lik Property

Solitario holds a 50% operating interest in the Lik zinc-lead sliver property in northwest Alaska, which we acquired as part of the acquisition of Zazu metals corporation (“Zazu”) in July 2017. Solitario recorded its acquisition cost of $15,611,000 as mineral property at the date of acquisition. Teck is Solitario’s 50% partner on the Lik Project and acted as the project manager during 2020.

Gold Coin

Solitario acquired an option-to-buy a 100% interest in the Gold Coin Property in southeastern Arizona in late-2020. Terms of the Gold Coin option agreement include scheduled payments to the underlying owner of $12,000 upon signing (paid), and at the owner’s option, to pay $15,000 at the first anniversary date, with a total of $242,000 over a five-year period. Upon signing the Gold Coin option agreement Solitario paid a finders’ fee of $5,000 to a contract geologist. Solitario has agreed to escalating work commitments at Solitario’s option totaling $1,025,000 during the first four years, with the first year totaling $75,000. The underlying owner will retain a 2.0% Net Smelter Return royalty. Solitario will have the option, but not obligation, to reduce the Net Smelter Return royalty to 1.0% by paying the owner $500,000 and will have the option to eliminate the remaining royalty of 1.0% by paying the owner $1.0 million.

Florida Canyon

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 previously recorded joint venture property payment revenue received in excess of capitalized costs. Per the joint venture agreement, as of December 31, 2020, no further standby joint-venture payments are due to Solitario on the Florida Canyon project. At December 31, 2020 and 2019, Solitario has no remaining capitalized costs related to its Florida Canyon joint venture. Per the joint venture agreement with Nexa covering the Florida Canyon project, Solitario currently holds a 39% interest in the Florida Canyon zinc project with Nexa. With the exception of the Drilling Program during 2018 and 2019 (discussed below), Nexa is required to fund 100% of exploration expenditures at Florida Canyon, until Nexa commits to put the project into production based upon a positive feasibility study, at which time Nexa’s interest will increase from its current 61% interest to a 70% interest. In August of 2018, Solitario agreed to fund a portion of a 2018 – 2019 drilling program at the Florida Canyon project. Solitario funded $1,580,000 of the 39-hole 17,033-meter drilling program, which was completed in the fourth quarter of 2019 (the “Drilling Program”).

Royalty sale

On January 22, 2019, Solitario completed the Royalty Sale to SilverStream SEZC (“SilverStream”), for Cdn$600,000. On closing of the Royalty Sale, Solitario received Cdn$250,000 in cash and a convertible note from SilverStream in the principal amount of Cdn$350,000 (the “SilverStream Note”). The SilverStream Note was originally due December 31, 2019, accrued 5% per annum simple interest, payable on a quarterly basis, and was convertible into common shares of SilverStream, at the discretion of SilverStream, by providing Solitario a notice of conversion. In December of 2019, Solitario and SilverStream agreed to extend the due date of the SilverStream Note to June 30, 2020, and to increase the interest rate to 8% per annum simple interest. During 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 May 19, 2020, SilverStream completed an initial public offering, including changing its name to Vox Royalty Corp. (“Vox”) and, in accordance with the terms of the SilverStream Note, issued Solitario 137,255 shares of common stock of Vox in full satisfaction of obligations owed under the SilverStream Note. In accordance with the terms of the SilverStream Note, the 137,255 Vox shares were issued at a price of Cdn$2.55 per share, which was at a 15% discount to the initial public offering price of Cdn$3.00 per share. Solitario recorded its initial investment in the Vox common shares at the initial public offering price, or a total of Cdn$412,000 or $294,000. Solitario recorded other income of $44,000 for the gain on the conversion of the SilverStream Note during 2020.

Solitario recorded interest income from the SilverStream Note of $7,000 and $12,000 during 2020 and 2019, respectively.

Discontinued projects

During 2020 Solitario recorded $6,000 of mineral property impairment related to its decision to abandon its La Promesa project in Peru. Solitario did not abandon or impair any of its properties during 2019 and did not record any mineral property impairment during the year ended December 31, 2019.

Exploration Expense

The following items comprised exploration expense:

		For the year ended December 31,
(in thousands)		2020				2019
Geologic and field expenses		$	326			$	1,726
Administrative			87				81
Total exploration expense		$	413			$	1,807

Asset Retirement Obligation

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.