SOLITARIO ZINC CORP.
10-Ks and 10-Qs
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark
One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended
September 30,
2019
OR
☐
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the
transition period from
to
Commission
File Number.
001-39278
SOLITARIO ZINC CORP.
(Exact
name of registrant as specified in its charter)
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Colorado
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84-1285791
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.
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4251 Kipling St. Suite 390, Wheat Ridge, CO
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80033
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(Address of principal executive offices)
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(Zip Code)
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(303) 534-1030
(Registrant's telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Common
Stock, $0.01 par value
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XPL
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NYSE
American
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Indicate by
checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
YES
☒ NO ☐
Indicate by check
mark whether the registrant has posted on its corporate Web site,
if any, every Interactive Data File required to be posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to post such files).
YES
☒ NO ☐
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, smaller reporting
company or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act.
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Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated
filer
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Smaller
reporting company ☒
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Emerging
Growth Company ☐
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
YES
☐ NO ☒
There
were 58,134,066 shares of $0.01 par value common stock outstanding
as of October 30, 2019.
TABLE
OF CONTENTS
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PART 1
- FINANCIAL INFORMATION
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Page
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3
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15
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22
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22
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PART II
- OTHER INFORMATION
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23
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23
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23
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23
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23
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23
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23
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24
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2
PART I - FINANCIAL INFORMATION
I
tem 1.
Financial
Statements
SOLITARIO
ZINC CORP.
C
ONDENSED CONSOLIDATED BALANCE SHEETS
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(in thousands of
U.S. dollars,
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September
30,
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except share and
per share amounts)
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2019
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December
31,
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(unaudited)
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2018
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Assets
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Current
assets:
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Cash and cash
equivalents
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$
335
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$
117
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Short-term
investments
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7,318
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10,223
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Investments in
marketable equity securities, at fair value
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1,014
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1,585
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Prepaid expenses
and other
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324
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211
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Total current
assets
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8,991
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12,136
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Mineral
properties
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15,617
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15,657
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Other
assets
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179
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110
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Total assets
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$
24,787
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$
27,903
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Liabilities and
Shareholders’ Equity
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Current
liabilities:
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Accounts
payable
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$
188
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$
688
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Other current
liabilities
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4
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-
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Operating lease liability
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40
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-
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Total current liabilities
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232
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688
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Long-term
liabilities
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Asset retirement
obligation – Lik
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125
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125
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Operating lease liability
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17
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-
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Total long-term liabilities
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142
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125
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Commitments
and contingencies (Note 8)
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Equity:
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Shareholders’
equity:
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Preferred stock,
$0.01 par value, authorized
10,000,000 shares (none issued and
outstanding at September 30, 2019 and
December 31, 2018)
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-
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-
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Common stock, $0.01
par value, authorized 100,000,000 shares
(58,135,366 and 58,171,466
shares, respectively, issued and outstanding at September 30,
2019 and December 31, 2018)
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581
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582
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Additional paid-in
capital
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70,120
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69,873
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Accumulated
deficit
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(46,288
)
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(43,365
)
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Total
shareholders’ equity
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24,413
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27,090
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Total
liabilities and shareholders’ equity
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$
24,787
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$
27,903
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See
Notes to Unaudited Condensed Consolidated Financial
Statements
3
S
OLITARIO ZINC CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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(in thousands of US
dollars, except per share amounts)
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Three months
endedSeptember 30
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Nine months
endedSeptember 30
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2019
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2018
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2019
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2018
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Revenue, net
– mineral property sale
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$
-
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$
-
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$
408
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$
502
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Costs,
expenses and other:
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Exploration
expense
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815
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344
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1,680
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686
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Depreciation
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6
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7
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19
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19
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General
and administrative
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319
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344
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1,065
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1,509
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Total
costs, expenses and other
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1,140
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695
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2,764
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2,214
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Other
(loss) income
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Interest
income, net
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43
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46
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205
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109
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Unrealized
loss on marketable equity securities
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(347
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(74
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(736
)
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(737
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Loss on
derivative instruments
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(36
)
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-
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(36
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-
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Total
other loss
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(340
)
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(28
)
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(567
)
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(628
)
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Net
loss
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$
(1,480
)
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$
(723
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$
(2,923
)
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$
(2,340
)
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Loss
per common share:
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Basic
and diluted
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$
(0.03
)
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$
(0.01
)
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$
(0.05
)
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$
(0.04
)
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Weighted
average shares outstanding:
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Basic
and diluted
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58,138
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58,303
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58,147
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58,379
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See
Notes to Unaudited Condensed Consolidated Financial
Statements
4
S
OLITARIO ZINC CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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(in thousands of
U.S. dollars)
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Nine months
endedSeptember 30,
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2019
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2018
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Operating
activities:
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Net
loss
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$
(2,923
)
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$
(2,340
)
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Depreciation
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19
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19
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Amortization
of capitalized lease asset
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29
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-
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Unrealized
loss on marketable equity securities
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736
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737
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Employee
stock option expense
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258
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510
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Loss
on derivative instruments
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36
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-
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Changes
in operating assets and liabilities:
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Prepaid
expenses and other assets
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211
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67
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Note
receivable, net of mineral property sold
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(223
)
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-
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Accounts
payable and other current liabilities
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(528
)
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(7
)
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Net
cash used in operating activities
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(2,385
)
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(1,014
)
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Investing
activities:
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Sale of
short-term investments, net
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2,844
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1,068
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Purchase of
Vendetta units
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(233
)
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-
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Sale of
Kinross calls
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10
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-
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Purchase of
other assets
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(6
)
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(11
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Net
cash provided by investing activities
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2,615
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1,057
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Financing
activities:
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Purchase of
common stock for cancellation
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(12
)
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(75
)
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Net
cash used in financing activities
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(12
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(75
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Net increase
(decrease) in cash and cash equivalents
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218
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(32
)
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Cash
and cash equivalents, beginning of period
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117
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214
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Cash
and cash equivalents, end of period
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$
335
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$
182
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See
Notes to Unaudited Condensed Consolidated Financial
Statements
5
N
OTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
1. Business
and Significant Accounting Policies
Business and company formation
Solitario Zinc
Corp. (“Solitario,” or the “Company”) is an
exploration stage company as defined in Industry Guide 7, as issued
by the United States Securities and Exchange Commission
(“SEC”). Solitario was incorporated in the State of
Colorado on November 15, 1984 as a wholly owned subsidiary of Crown
Resources Corporation ("Crown"). In July 1994, Solitario became a
publicly traded company on the Toronto Stock Exchange (the "TSX")
through its initial public offering. Solitario has been actively
involved in mineral exploration since 1993. Solitario’s
primary business is to acquire exploration mineral properties or
royalties and/or discover economic deposits on its mineral
properties and advance these deposits, either on its own or through
joint ventures, up to the development stage of the project. At that
point, or sometime prior to that point, Solitario would likely
attempt to sell its mineral properties, pursue their development
either on its own, or through a joint venture with a partner that
has expertise in mining operations, or create a royalty with a
third party that continues to advance the property. Solitario is
primarily focused on the acquisition and exploration of
zinc-related exploration mineral properties, however Solitario will
evaluate and potentially acquire other base and precious metal
mineral exploration properties. In addition to focusing on its
mineral exploration properties, Solitario also evaluates potential
strategic transactions for the acquisition of new precious and base
metal properties and assets with exploration potential or business
combinations that Solitario determines to be favorable to
Solitario.
Solitario has
recorded revenue in the past from the sale of mineral properties,
including the sale of certain mineral royalty properties in January
2019, discussed below, and the sale in June 2018 of its interest in
the royalty on the Yanacocha property. Revenues and / or proceeds
from the sale or joint venture of properties or assets have not
been a consistent annual source of cash and would only occur in the
future, if at all, on an infrequent basis.
Solitario
currently considers its carried interest in the Florida Canyon
project and its interest in the Lik project to be its core mineral
property assets. Nexa Resources, Ltd. (“Nexa”),
Solitario’s joint venture partner, is continuing the
exploration and furtherance of the Florida Canyon project and
Solitario is monitoring progress at Florida Canyon. Solitario is
working with its 50% joint venture partner, Teck American
Incorporated, a wholly owned subsidiary of Teck Resources Limited
(both companies are referred to as “Teck”), in the Lik
deposit to further the exploration of, and to evaluate potential
development plans for the Lik project.
As
of September 30, 2019, Solitario has significant balances of cash
and short-term investments that Solitario anticipates using, in
part, to further the exploration of the Florida Canyon and Lik
projects and to potentially acquire additional mineral property
assets. The fluctuations in precious metal and other commodity
prices contribute to a challenging environment for mineral
exploration and development, which has created opportunities as
well as challenges for the potential acquisition of early-stage and
advanced mineral exploration projects or other related assets at
potentially attractive terms.
The
accompanying interim condensed consolidated financial statements of
Solitario for the three and nine months ended September 30, 2019
are unaudited and are prepared in accordance with accounting
principles generally accepted in the United States of America
(“generally accepted accounting principles”). They do
not include all disclosures required by generally accepted
accounting principles for annual financial statements, but in the
opinion of management, include all adjustments, consisting only of
normal recurring items, necessary for a fair presentation. Interim
results are not necessarily indicative of results, which may be
achieved in the future or for the full year ending December 31,
2019.
These
financial statements should be read in conjunction with the
financial statements and notes thereto which are included in
Solitario’s Annual Report on Form 10-K for the year ended
December 31, 2018. The accounting policies set forth in those
annual financial statements are the same as the accounting policies
utilized in the preparation of these financial statements, except
as modified for appropriate interim financial statement
presentation.
6
Recent Developments
Royalty sale
On January 22, 2019, Solitario
completed the sale of its interest in certain royalties to
SilverStream SEZC, a private Cayman Island royalty and streaming
company (“SilverStream”) for Cdn$600,000 (the
“Royalty Sale”). The Royalty Sale covered (i) a royalty
on the formerly Solitario-owned 125,000-acre polymetallic Pedra
Branca palladium, platinum, gold, nickel, cobalt and chrome project
in Brazil, (ii) a royalty covering 3,880 acres of non-producing
exploration properties in Mexico, and (iii) a purchase option on 11
separate non-producing properties covering over 16,500 acres in
Montana. 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 is due December 31, 2019,
accrues 5% per annum simple interest, payable on a quarterly basis,
and is convertible into common shares of SilverStream, at the
discretion of SilverStream, by providing Solitario a notice of
conversion. Solitario recorded interest income of $3,000 and
$9,000, respectively, from the SilverStream Note during the three
and nine months ended September 30, 2019. SilverStream may only
provide a notice of conversion if SilverStream has completed an
initial public offering during the term of the SilverStream Note
for minimum proceeds of Cdn$5,000,000, otherwise the SilverStream
Note will be payable in cash at the maturity date. Pursuant to the
terms of the SilverStream Note, if SilverStream were to complete an
initial public offering and the SilverStream Note was converted,
Solitario would receive common shares converted at 85% of the
weighted average quoted price of a share of SilverStream common
stock for the most recent 10-day period prior to the notice of
conversion. During the nine months ended September 30, 2019,
Solitario recorded mineral property revenue of $408,000 for 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. As of September
30, 2019, the approximate fair value of the SilverStream Note,
including accrued interest, was $268,000, based upon the current US
dollar / Canadian dollar exchange rate, and Solitario recorded a
credit to exchange gain and loss of $1,000, included in general and
administrative expense during the nine months ended September 30,
2019.
Financial reporting
The
consolidated financial statements include the accounts of Solitario
and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The consolidated financial statements are prepared in accordance
with generally accepted accounting principles and are expressed in
U.S. dollars.
Revenue recognition
Solitario has
recorded revenue from the sale of exploration mineral properties
and joint venture property payments. Solitario’s policy is to
recognize revenue from the sale of its exploration mineral
properties (those without reserves) on a property-by-property
basis, computed as the cash received and / or expected collectable
receivables less any capitalized cost. Payments received for the
sale of exploration property interests that are less than the
properties cost are recorded as a reduction of the related
property's capitalized cost. In addition, Solitario’s policy
is to recognize revenue on any receipts of joint venture property
payments in excess of its capitalized costs on a property that
Solitario may lease to another mining company.
Solitario has
recognized revenue during the nine months ended September 30, 2019
of $408,000 related to the Royalty Sale, discussed above, in
accordance with Accounting Standards Codification
(“ASC”) 606. In addition, Solitario recorded revenue
during the second quarter of 2018 of $502,000 from the sale of its
former Yanacocha exploration mineral property. Solitario expects
any property or asset sales in the future to be on an infrequent
basis. Prior to the sale of its Yanacocha exploration mineral
property, the last proceeds from joint venture property payments
was in 2015 and Solitario does not expect to record joint venture
property payments on any of its currently held properties for the
foreseeable future.
Use of estimates
The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Some of
the more significant estimates included in the preparation of
Solitario's financial statements pertain to: (i) Solitario’s
carrying value of short-term investments; (ii) the recoverability
of mineral properties related to its mineral exploration properties
and their future exploration potential; (iii) the fair value of
stock option grants to employees, to officers and directors and to
others; (iv) the ability of Solitario to realize its deferred tax
assets; (v) the collectability of the SilverStream Note; and (vi)
Solitario's investment in marketable equity
securities.
7
In
performing its activities, Solitario has incurred certain costs for
mineral properties. The recovery of these costs is ultimately
dependent upon the sale of mineral property interests or the
development of economically recoverable ore reserves and the
ability of Solitario or its joint venture partners to obtain the
necessary permits and financing to successfully place the
properties into production, and upon future profitable operations,
none of which is assured.
Cash equivalents
Cash
equivalents include investments in highly liquid money-market
securities with original maturities of three months or less when
purchased. As of September 30, 2019, $328,000 of Solitario’s
cash and cash equivalents are held in brokerage accounts and
foreign banks, which are not covered under the Federal Deposit
Insurance Corporation (“FDIC”) rules for the United
States.
Short-term investments
As of
September 30, 2019, Solitario has $7,318,000 of its current assets
in United States Treasury Securities (“USTS”) with
remaining maturities of 30 days to 15 months. The USTS are recorded
at their fair value, based upon quoted market prices, and are not
covered under the FDIC insurance rules for United States deposits,
with increases or decreases in fair market value recorded as
interest income in the statement of operation in the period.
Solitario’s USTS are highly liquid and may be sold in their
entirety at any time at their quoted market price and are
classified as a current asset.
Mineral properties
Solitario expenses
all exploration costs incurred on its mineral properties prior to
the establishment of proven and probable reserves through the
completion of a feasibility study. Initial acquisition costs of its
mineral properties are capitalized. Solitario regularly performs
evaluations of its investment in mineral properties to assess the
recoverability and/or the residual value of its investments in
these assets. All long-lived assets are reviewed for impairment
whenever events or circumstances change which indicate the carrying
amount of an asset may not be recoverable, utilizing established
guidelines based upon undiscounted future net cash flows from the
asset or upon the determination that certain exploration properties
do not have sufficient potential for economic
mineralization.
Leases
Solitario accounts
for its leases in accordance with
ASC
842,
Leases
(“ASC 842”) by recognizing
right-of-use assets and lease liabilities on the condensed
consolidated balance sheet and disclosing key information about
lease arrangements. Solitario has elected the practical expedient
option to use January 1, 2019, the effective date of adoption of
ASC 842, as the initial date of transition and not to restate
comparative prior periods and to carry forward historical lease
classification. In addition, Solitario has elected the option not
to apply the recognition of assets and liabilities provisions of
ASC 842 to operating leases of less than one year. See Note 4
“Operating Leases” for more information and disclosures
regarding Solitario’s leases.
Fair value
ASC
820,
Fair Value measurement
(“ASC 820”)
established a framework for
measuring fair value of financial instruments and required
disclosures about fair value measurements. For certain of
Solitario's financial instruments, including cash and cash
equivalents and accounts payable, the carrying amounts approximate
fair value due to their short-term maturities. Solitario's
short-term investments in USTS, its marketable equity securities,
Vendetta Mining Corp. (“Vendetta”) Warrants (defined
below in Note 3, “Marketable Equity Securities”) and
any covered call options against those marketable equity securities
are carried at their estimated fair value based on quoted market
prices, and in the case of its Vendetta Warrants, based upon a
Black Scholes model. See Note 6, “Fair Value,”
below.
Marketable equity securities
Solitario's
investments in marketable equity securities are carried at fair
value, which is based upon quoted prices of the securities owned.
Solitario records investments in marketable equity securities for
investments in publicly traded marketable equity securities for
which it does not exercise significant control and where Solitario
has no representation on the board of directors of those companies
and exercises no control over the management of those companies.
The cost of marketable equity securities sold is determined by the
specific identification method. Changes in fair value are recorded
as unrealized gain or loss in the statement of
operations.
8
Derivative instruments
Solitario accounts
for its derivative instruments in accordance with ASC 815,
"Accounting for Derivative Instruments and Hedging Activities"
(“ASC 815”).
Solitario acquired its investment
in Vendetta units, including the Vendetta Warrants during 2019.
Solitario recorded the value of the Vendetta Warrants at their fair
value as other assets on the consolidated balance sheet. Solitario
has sold covered calls from time to time on its investment in
Kinross Gold Corporation (“Kinross”) marketable equity
securities. Solitario has not designated its sold covered calls as
hedging instruments and any changes in the fair value of the sold
covered calls and its Vendetta Warrants are recognized in the
statement of operations in the period of the change as gain or loss
on derivative instruments.
Foreign exchange
The
United States dollar is the functional currency for all of
Solitario's foreign subsidiaries. Although Solitario's South
American exploration activities during 2018 and the first nine
months of 2019 have been conducted primarily in Peru, a portion of
the payments under the land, leasehold and exploration agreements
of Solitario are denominated in United States dollars. Realized
foreign currency gains and losses are included in the results of
operations in the period in which they occur.
Income taxes
Solitario accounts
for income taxes in accordance with ASC 740, “Accounting for
Income Taxes” (“ASC 740”). Under ASC 740, income
taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus
deferred taxes related to certain income and expenses recognized in
different periods for financial and income tax reporting purposes.
Deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or
settled. Deferred taxes are also recognized for operating losses
and tax credits that are available to offset future taxable income
and income taxes, respectively. A valuation allowance is provided
if it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
Accounting for uncertainty in income taxes
ASC
740 clarifies the accounting for uncertainty in income taxes
recognized in a company's financial statements. ASC 740 prescribes
a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. ASC 740 also provides
guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. ASC 740
provides that a company's tax position will be considered settled
if the taxing authority has completed its examination, the company
does not plan to appeal, and it is remote that the taxing authority
would reexamine the tax position in the future.
Earnings per share
The
calculation of basic and diluted earnings (loss) per share is based
on the weighted average number of shares of common stock
outstanding during the three and nine months ended September 30,
2019 and 2018. Potentially dilutive shares related to outstanding
common stock options of 4,373,000 at September 30, 2019 and
4,025,228 at September 30, 2018 for Solitario common shares were
excluded from the calculation of diluted earnings (loss) per share
because the effects were anti-dilutive.
Employee stock compensation and incentive plans
Solitario
classifies all of its stock options as equity options in accordance
with the provisions of ASC 718, “Compensation – Stock
Compensation.”
Recent accounting pronouncements
On
January 1, 2019, Solitario adopted Accounting Standards Update No.
2016-02
Leases
(“ASU
2016-02”) which requires the application of ASC 842
and the recognition of right-of-use
assets and related liabilities associated with all leases that are
not short-term in nature. As a result of the adoption of ASU
2016-02 on January 1, 2019, Solitario recorded both an operating
lease asset for its Wheat Ridge, Colorado office of $82,000 and an
operating lease liability of $82,000 related to the same lease. The
adoption of ASU 2016-02 did not require the recording of any other
assets or liabilities on our condensed consolidated balance sheets
and had an immaterial effect on Solitario’s condensed
consolidated statement of operations for the three and nine months
ended September 30, 2019, and its condensed consolidated statement
of cash flows for the nine months ended September 30, 2019.
Solitario has elected the practical expedient option to use January
1, 2019, the effective date of adoption, as the initial date of
transition and not to restate comparative prior periods and to
carry forward historical lease classification. See Note 4,
“Operating Leases” for more information and disclosures
regarding Solitario’s leases.
9
2. Mineral
Property
The
following table details Solitario’s investment in Mineral
Property:
|
(in
thousands)
|
September
30,
|
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
|
All
exploration costs on our exploration properties, none of which have
proven and probable reserves, including any additional costs
incurred for subsequent lease payments or exploration activities
related to our projects are expensed as incurred.
Royalty Sale
On
January 22, 2019, Solitario completed the Royalty Sale, discussed
above under “Recent Developments” to SilverStream for
Cdn$600,000. On closing of the Royalty Sale, Solitario received
Cdn$250,000 in cash and the SilverStream Note with a principal
amount of Cdn$350,000, with a maturity date of December 31, 2019.
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.
Exploration expense
The
following items comprised exploration expense:
|
(in
thousands)
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
Geologic and field
expenses
|
$
794
|
$
322
|
$
1,621
|
$
619
|
|
Administrative
|
21
|
22
|
59
|
67
|
|
Total exploration
costs
|
$
815
|
$
344
|
$
1,680
|
$
686
|
Asset Retirement Obligation
In
connection with the acquisition of its interest in the Lik project
in 2017, Solitario has recorded an asset retirement obligation of
$125,000 as of September 30, 2019 and December 31, 2018 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 is based upon Solitario’s estimated
cash costs for reclamation. Solitario has purchased a reclamation
bond insurance policy for the bonding required by the State of
Alaska, in the event Solitario or its 50% partner, Teck, do not
complete any 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.
3.
Marketable
Equity Securities
Solitario's
investments in marketable equity securities 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 condensed consolidated statement of operations.
During the three and nine months ended September 30, 2019,
Solitario recorded an unrealized loss on marketable equity
securities of $347,000 and $736,000, respectively. 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.
10
The
following tables summarize Solitario’s marketable equity
securities and adjustments to fair value:
|
(in
thousands)
|
September
30,
2019
|
December
31,
2018
|
|
Marketable
equity securities at cost
|
$
1,879
|
$
1,714
|
|
Cumulative
unrealized loss on marketable equity securities
|
(865
)
|
(129
)
|
|
Marketable
equity securities at fair value
|
$
1,014
|
$
1,585
|
The
following table represents changes, including purchases and sales,
in marketable equity securities during the three and nine months
ended September 30, 2019 and 2018:
|
(in
thousands)
|
Three months
endedSeptember 30,
|
Nine months
endedSeptember 30,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
Purchase of
Vendetta shares
|
$
165
|
$
-
|
$
165
|
$
-
|
|
Gross (loss)
recorded in the statement of operations
|
(347
)
|
(74
)
|
(736
)
|
(737
)
|
|
Change in
marketable equity securities at fair value
|
$
(182
)
|
$
(74
)
|
$
(571
)
|
$
(737
)
|
Vendetta Warrants
On July
31, 2019, Solitario purchased 3,450,000 Vendetta units for total of
$233,000. Each Vendetta unit consisted of one share of Vendetta
common stock and one Vendetta warrant (the “Vendetta
Warrants”). Each Vendetta Warrant entitles the holder to
purchase one additional share of Vendetta common stock for a
purchase price of Cdn$0.13 per share for a period of three years.
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 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 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 the three and nine months ended September 30,
2019, Solitario charged loss on derivative instruments $42,000 for
the change in the value of the Vendetta Warrants.
Solitario did not
sell any marketable equity securities during the three and nine
months ended September 30, 2019 or 2018 and the change in the fair
value of marketable equity securities was related to the purchase
of the shares of common stock from the Vendetta units and the
unrealized loss on marketable equity securities related to their
fair values based upon quoted market prices for the marketable
equity securities held by Solitario during the
periods.
4. Operating
Leases
Solitario adopted
ASU 2016-02 effective January 1, 2019 and accounts for its leases
in accordance with ASC 842. Solitario leases one facility, its
Wheat Ridge, Colorado administrative office (the “WR
Lease”), that has a term of more than one year. Solitario has
no other material operating lease costs. The WR Lease is classified
as an operating lease and has a term of 17 months at September 30,
2019, with no renewal option. At September 30, 2019, the
right-of-use office lease asset for the WR Lease is classified as
other assets and the related liability separated between current
and non-current office lease liabilities in the condensed
consolidated balance sheet. Lease expense is recognized on a
straight-line basis over the lease term, with variable lease
payments recognized in the period those payments are incurred.
During the three and nine months ended September 30, 2019,
Solitario recognized $10,000 and $30,000, respectively, of non-cash
lease expense for the WR Lease included in general and
administrative expense. Cash lease payments of $10,000 and $27,000,
respectively, were made on the WR Lease during the three and nine
months ended September 30, 2019 and this amount, less $1,000 and
$3,000, respectively, of imputed interest during the three and nine
months ended September 30, 2019, reduced the related liability on
the WR Lease. The discount rate within the WR Lease is not
determinable and Solitario has applied a discount rate of 5% based
upon Solitario’s estimate of its cost of
capital.
11
The
maturities of Solitario’s lease liability for its WR Lease
are as follows at September 30, 2019:
|
(in
thousands)
|
|
|
Lease payments per
year
|
|
|
2019
|
$
10
|
|
2020
|
42
|
|
2021
|
7
|
|
Total lease
payments
|
59
|
|
Less
amount of payments representing interest
|
(2
)
|
|
Present value of
lease payments
|
$
57
|
The
following is supplemental cash flow information related to our
operating lease for the nine months ended September 30,
2019:
|
(
in
thousands)
|
Nine months
ended
September
30,
2019
|
|
|
|
|
Cash paid for
amounts included in the measurement of lease
liabilities
|
|
|
Operating
cash outflows from WR Lease payments
|
$
27
|
|
Non-cash amounts
related to the WR lease
|
|
|
Leased
assets recorded in exchange for new operating lease
liabilities
|
$
82
|
5 Other
Assets
The
following items comprised other assets:
|
(in
thousands)
|
September
30,
|
December
31
|
|
|
2019
|
2018
|
|
Furniture and
fixtures, net of accumulated depreciation
|
$
39
|
$
36
|
|
Lik project
equipment, net of accumulated depreciation
|
55
|
70
|
|
Exploration bonds
and other assets
|
4
|
4
|
|
Vendetta
Warrants
|
27
|
-
|
|
Office lease
asset
|
54
|
-
|
|
Total other
assets
|
$
179
|
$
110
|
6. Fair
Value
Solitario accounts
for its financial instruments under ASC 820. For certain of
Solitario’s financial instruments, including cash and cash
equivalents and payables, the carrying amounts approximate fair
value due to their short-term maturities. Solitario’s
short-term investments in USTS, marketable equity securities and
Kinross calls are carried at their estimated fair value primarily
based on quoted market prices. The Vendetta Warrants are carried at
their fair value based upon a Black-Scholes model.
During the three and nine months ended September
30, 2019 there were no reclassifications in financial assets or
liabilities between Level 1, 2 or 3 categories.
The
following is a listing of Solitario’s financial assets and
liabilities required to be measured at fair value on a recurring
basis and where they are classified within the hierarchy as of
September 30, 2019:
|
(in
thousands)
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
Assets
|
|
|
|
|
|
Short-term
investments
|
$
7,318
|
$
-
|
$
-
|
$
7,318
|
|
Marketable
equity securities
|
$
1,014
|
$
-
|
-
|
$
1,014
|
|
Vendetta
Warrants
|
$
-
|
$
27
|
$
-
|
$
27
|
|
Liabilities
|
|
|
|
|
|
Kinross
calls
|
$
-
|
$
4
|
$
-
|
$
4
|
12
The
following is a listing of Solitario’s financial assets and
liabilities required to be measured at fair value on a recurring
basis and where they are classified within the hierarchy as of
December 31, 2018:
|
(in
thousands)
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
Assets
|
|
|
|
|
|
Short-term
investments
|
$
10,223
|
$
-
|
$
-
|
$
10,223
|
|
Marketable
equity securities
|
$
1,585
|
$
-
|
$
-
|
$
1,585
|
7. Income
Taxes
Solitario accounts
for income taxes in accordance with ASC 740. Under ASC 740, income
taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus
deferred taxes related to certain income and expenses recognized in
different periods for financial and income tax reporting purposes.
Deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or
settled. Deferred taxes are also recognized for operating losses
and tax credits that are available to offset future taxable income
and income taxes, respectively. A valuation allowance is provided
if it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
At
September 30, 2019 and December 31, 2018, a valuation allowance has
been recorded, which fully offsets Solitario’s net deferred
tax assets, because it is more likely than not that the Company
will not realize some portion or all of its deferred tax
assets. The Company continually assesses both positive and
negative evidence to determine whether it is more likely than not
that the deferred tax assets can be realized prior to their
expiration.
During
the three and nine months ended September 30, 2019 and 2018,
Solitario recorded no current or deferred tax expense.
8.
Commitments
and contingencies
Solitario has
recorded an asset retirement obligation of $125,000 related to its
Lik project in Alaska. See Note 2, “Mineral Property,”
above.
9.
Employee
Stock Compensation Plans
On June
18, 2013, Solitario’s shareholders approved the 2013
Solitario Exploration & Royalty Corp. Omnibus Stock and
Incentive Plan (the “2013 Plan”). Under the terms of
the 2013 Plan, a total of 1,750,000 shares of Solitario common
stock were reserved for awards to directors, officers, employees
and consultants. On June 29, 2017, Solitario’s shareholders
approved an amendment to the 2013 Plan, which increased the number
of shares of common stock available for issuance under the 2013
Plan from 1,750,000 to 5,750,000. Awards granted under the 2013
Plan may take the form of stock options, stock appreciation rights,
restricted stock, and restricted stock units. The terms and
conditions of the awards are pursuant to the 2013 Plan and are
granted by the Board of Directors or a committee appointed by the
Board of Directors.
As of
September 30, 2019, and December 31, 2018 there were options
outstanding that are exercisable to acquire 4,373,000 and 5,223,160
shares, respectively, of Solitario common stock, with exercise
prices between $0.28 and $0.77 per share. During the three months
ended September 30, 2019, Solitario did not grant any additional
options. During the nine months ended September 30, 2019, Solitario
granted options exercisable to acquire 150,000 shares of common
stock, with an exercise price of $0.28 per share, a five-year term,
and a grant date fair value of $23,000 based upon a Black-Scholes
model, with a 64% volatility and a 2.4% risk-free interest rate. In
addition, during the nine months ended September 30, 2019, options
exercisable to acquire 1,000,160 shares of common stock, with
exercise prices between $1.68 and $0.70 per share, expired
unexercised. During the three and nine months ended September 30,
2018, Solitario granted options exercisable to acquire 100,000
shares of common stock, respectively, with an exercise price of
$0.68 per share, a seven-month term and a grant date fair value of
$12,000 based upon a Black-Scholes model with a 66% volatility and
a 1% risk-free interest rate. There were no exercises of options
under the 2013 Plan during the three and nine months ended
September 30, 2019 and 2018. During the three and nine months ended
September 30, 2019, Solitario recorded stock option compensation
expense of $85,000 and $258,000, respectively. During the three and
nine months ended September 30, 2018, Solitario recorded non-cash
stock option compensation expense of $68,000 and $510,000,
respectively.
13
At
September 30, 2019, the total unrecognized stock option
compensation cost related to non-vested options is $402,000 and is
expected to be recognized over a weighted average period of 17
months.
10. Shareholders’
Equity
Shareholders’ Equity for the nine months ended September 30,
2018:
|
(in thousands,
except
|
|
|
|
|
Accumulated
|
|
|
Share
amounts)
|
Common
|
Common
|
Additional
|
|
Other
|
Total
|
|
|
Stock
|
Stock
|
Paid-in
|
Accumulated
|
Comprehensive
|
Shareholders’
|
|
|
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Equity
|
|
Balance
at December 31, 2017
|
58,434,566
|
584
|
$
69,312
|
$
(40,343
)
|
$
576
|
$
30,129
|
|
Cumulative-effect
adjustment change in accounting principle
|
-
|
-
|
-
|
576
|
(576
)
|
-
|
|
Adjusted
balance January 1, 2018
|
58,434,566
|
584
|
69,312
|
(39,767
)
|
-
|
30,129
|
|
Stock option
expense
|
-
|
-
|
510
|
-
|
-
|
510
|
|
Purchase of shares
for cancellation
|
(173,200
)
|
(1
)
|
(74
)
|
-
|
-
|
(75
)
|
|
Net
loss
|
-
|
-
|
-
|
(2,340
)
|
-
|
(2,340
)
|
|
Balance
at September 30, 2018
|
58,261,366
|
$
583
|
$
69,748
|
$
(42,107
)
|
$
-
|
$
28,224
|
Solitario adopted Accounting Standards Update No.
2016-01
Recognition and Measurement of
Financial Assets and Financial Liabilities
(“ASU 2016-01”) in the first quarter
of 2018. ASU No. 2016-01 revised the classification and measurement
of investment in certain equity investments and the presentation of
certain fair value changes for certain financial liabilities
measured at fair value. ASU No. 2016-01 requires the change in fair
value of many equity investments to be recognized in net
income.
Solitario recorded a cumulative-effect adjustment
for the change in accounting principle to retained earnings of
$576,000 related to the adoption of ASU 2016-01.
Shareholders’ Equity for the nine months ended September 30,
2019:
|
(in thousands,
except
|
|
|
|
|
|
|
Share
amounts)
|
Common
|
Common
|
Additional
|
|
Total
|
|
|
Stock
|
Stock
|
Paid-in
|
Accumulated
|
Shareholders’
|
|
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
|
Balance
at December 31, 2018
|
58,171,466
|
582
|
$
69,873
|
$
(43,365
)
|
$
27,090
|
|
Stock option
expense
|
-
|
-
|
258
|
-
|
258
|
|
Purchase of shares
for cancellation
|
(36,100
)
|
(1
)
|
(11
)
|
-
|
(12
)
|
|
Net
loss
|
-
|
-
|
-
|
(2,923
)
|
(2,923
)
|
|
Balance
at September 30, 2019
|
58,135,366
|
$
581
|
$
70,120
|
$
(46,288
)
|
$
24,413
|
Share Repurchase Program
On
October 28, 2015, Solitario’s Board of Directors approved a
share repurchase program that authorized Solitario to purchase up
to two million shares of its outstanding common stock. During 2018,
Solitario’s Board of Directors extended the expiration date
of the share repurchase program through December 31, 2019. During
the three months ended September 30, 2019 and 2018, Solitario
purchased 2,900 and 28,000 shares of Solitario common stock,
respectively, for an aggregate purchase price of $1,000 and
$10,000, respectively. During the nine months ended September 30,
2019 and 2018, Solitario purchased 36,100 and 173,200 shares of
Solitario common stock, respectively, for an aggregate purchase
price of $12,000 and $75,000, respectively. As of September 30,
2019, Solitario has purchased a total of 967,000 shares for an
aggregate purchase price of $461,000 under the share repurchase
program since its inception.
14
I
tem 2.
Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
The
following discussion should be read in conjunction with the
information contained in the consolidated financial statements of
Solitario for the years ended December 31, 2018 and 2017, and
Management’s Discussion and Analysis of Financial Condition
and Results of Operations contained in Solitario’s Annual
Report on Form 10-K for the year ended December 31, 2018.
Solitario's financial condition and results of operations are not
necessarily indicative of what may be expected in future periods.
Unless otherwise indicated, all references to dollars are to U.S.
dollars.
(a)
Business Overview and Summary
We are
an exploration stage company under Industry Guide 7, as issued by
the SEC, with a focus on the acquisition of precious and base metal
properties with exploration potential and the development or
purchase of royalty interests. Currently our primary focus is the
acquisition and exploration of zinc-related exploration mineral
properties. However, we will continue to evaluate other mineral
properties for acquisition, and we hold a portfolio of mineral
exploration properties and assets for future sale, joint venture or
to create a royalty prior to the establishment of proven and
probable reserves. Although our mineral properties may be developed
in the future by us, through a joint venture or by a third party,
we have never developed a mineral property. In addition to focusing
on our current mineral exploration properties, we also from time to
time evaluate potential strategic transactions for the acquisition
of new precious and base metal properties and assets with
exploration potential.
Our
current geographic focus for the evaluation of potential mineral
property assets is in North and South America; however, we have
conducted property evaluations for potential acquisition in other
parts of the world. At September 30, 2019, we consider our carried
interest in the Florida Canyon project in Peru and our interest in
the Lik project in Alaska to be our core mineral property assets.
In addition, at September 30, 2019, we have one exploration
property in Peru. We are conducting independent exploration
activities in Peru and through joint ventures operated by our
partners in Peru and the United States. We conduct potential
acquisition evaluations in other countries located in South and
North America.
We have
recorded revenue in the past from the sale of mineral properties,
including the Royalty Sale in January 2019 and the sale in June
2018 of our interest in the royalty on the Yanacocha property. In
addition, we have received proceeds from the sale in 2015 of our
former interest in MH-LLC the owner of our former Mt. Hamilton
project, and joint venture property payments and the sale of a
royalty on our former Mt. Hamilton project. Revenues and / or
proceeds from the sale or joint venture of properties or assets,
although generally significant when they have occurred in the past,
have not been a consistent source of revenue and would only occur
in the future, if at all, on an infrequent basis. We have reduced
our exposure to the costs of our exploration activities in the past
through the use of joint ventures. Although we anticipate that the
use of joint venture funding for some of our exploration activities
will continue for the foreseeable future, we can provide no
assurance that these or other sources of capital will be available
in sufficient amounts to meet our needs, if at all.
As
of September 30, 2019, we have significant balances of cash and
short-term investments that we anticipate using, in part, to (i)
further the development of the Lik project, (ii) fund exploration
at the Florida Canyon project, and conduct reconnaissance
exploration and (iii) potentially acquire additional mineral
property assets. The fluctuations in precious metal and other
commodity prices contribute to a challenging environment for
mineral exploration and development, which has created
opportunities as well as challenges for the potential acquisition
of advanced mineral exploration projects or other related assets at
potentially attractive terms.
(b)
Results of Operations
Comparison of the quarter ended September 30, 2019 to the quarter
ended September 30, 2018
We had
a net loss of $1,480,000 or $0.03 per basic and diluted share for
the three months ended September 30, 2019 compared to a net loss of
$723,000 or $0.01 per basic and diluted share for the three months
ended September 30, 2018. As explained in more detail below, the
primary reasons for the increase in the net loss in the three
months ended September 30, 2019 compared to the net loss in the
three months ended September 30, 2018 were (i) an increase in
exploration expense to $815,000 during the three months ended
September 30, 2019, primarily related to the drilling completed by
Nexa at the Florida Canyon project, compared to $344,000 in
exploration expense during the three months ended September 30,
2018, when we were primarily doing reconnaissance exploration; (ii)
an unrealized loss on marketable equity securities of $347,000
during the three months ended September 30, 2019 compared to an
unrealized loss on marketable equity securities of $74,000 during
the three months ended September 30, 2018; and (iii) the recording
of a loss on derivative instruments of $36,000 during the three
months ended September 30, 2019 with no similar item during the
three months ended September 30, 2018. Partially offsetting the
above items, which increased the net loss, was a decrease in
general and administrative expense to $319,000 during the three
months ended September 30, 2019 compared to general and
administrative expense of $344,000 during the three months ended
September 30, 2018. Each of the major components of these items is
discussed in more detail below.
15
Our net
exploration expense increased to $815,000 during the three months
ended September 30, 2019 compared to exploration expense of
$344,000 during the three months ended September 30, 2018. During
the three months ended September 30, 2019, Nexa exceeded the third
and final required total drilling target of 5,100 meters of the
2018/2019 exploration and drilling program at the Florida Canyon
project. Solitario was responsible for a total of $1,580,000 of the
total drilling costs incurred by Nexa for the 2018/2019 exploration
and drilling program, of which Solitario had previously paid
$1,053,000 prior to the three months ended September 30, 2019. Upon
Nexa’s completion of the third drilling target during the
three months ended September 30, 2019, Solitario paid $527,000,
charged to exploration expense for its final payment on its
$1,580,000 commitment obligation with regard to the 2018/2019
exploration and drilling program. Nexa will be responsible for any
additional costs related to the 2018/2019 exploration and drilling
program, which is expected to be completed during the fourth
quarter of 2019. During the three months ended September 30, 2018,
there was no similar item charged to exploration expense compared
to the $527,000 of Florida Canyon exploration expense charged
during the three months ended September 30, 2019. In addition, we
incurred $147,000 of exploration expense at our Lik project in
Alaska during the three months ended September 30, 2019 compared to
Lik project expenditures of $208,000 during the three months ended
September 30, 2018. The Lik project is located in Alaska and the
majority of the exploration expense on this project occurs during
the second and third quarters of the year due to weather
conditions. In addition, we incurred $31,000 of exploration expense
related to permitting and site work at our La Promesa project in
Peru during the three months ended September 30, 2019, compared to
$5,000 of exploration expense at La Promesa during the three months
ended September 30, 2018 as we were working on drilling permits and
approvals during 2019, with no similar activity during the three
months ended September 30, 2018. During the three and nine months
ended September 30, 2019, we had three contract geologists in Peru,
and our Denver personnel spent a majority of their time on
reconnaissance exploration activities described above and related
administrative matters. As a result of the completion of our
exploration and drilling commitment at Florida Canyon during the
third quarter of 2019, and the anticipated seasonal wind-down of
activities at the Lik project during the fourth quarter of 2019, we
expect our remaining exploration expenditures will be at a reduced
level for the remainder of 2019; however our full-year exploration
expenditures for 2019 are expected to exceed the expenditures for
full-year 2018.
Exploration expense
(in thousands) by project for the three and nine months ended
September 30, 2019 and 2018 consisted of the
following:
|
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
||
|
Project
Name
|
2019
|
2018
|
2019
|
2018
|
|
Florida
Canyon
|
$
535
|
$
2
|
$
1,070
|
$
23
|
|
Lik
|
147
|
208
|
190
|
233
|
|
La
Promesa
|
31
|
5
|
90
|
57
|
|
Reconnaissance
|
102
|
129
|
330
|
373
|
|
Total
exploration expense
|
$
815
|
$
344
|
$
1,680
|
$
686
|
General
and administrative costs, excluding stock option compensation
costs, discussed below, were $234,000 during the three months ended
September 30, 2019 compared to $276,000 during the three months
ended September 30, 2018. The major components of these costs were
related to (i) salaries and benefit expense of $108,000 during the
three months ended September 30, 2019 compared to salary and
benefit costs of $155,000 during the three months ended September
30, 2018, as we have reduced staff and taken salary reductions
during 2019; (ii) legal and accounting expenditures of $40,000 in
the three months ended September 30, 2019 compared to $17,000
during the three months ended September 30, 2018; (iii) directors
and officer insurance costs of $14,000 during the three months
ended September 30, 2019 compared to $15,000 during the three
months ended September 30, 2018; (iv) office and other expenses of
$33,000 during the three months ended September 30, 2019, compared
to $34,000 during the three months ended September 30, 2018; and
(v) travel and shareholder relation costs of $38,000 during the
three months ended September 30, 2019 compared to $54,000 during
the three months ended September 30, 2018. We anticipate the
general and administrative costs will be incurred at comparable
quarterly amounts for the remainder of 2019.
16
We
recorded $85,000 of non-cash stock option expense for the
amortization of unvested grant date fair value with a credit to
additional paid-in-capital during the three months ended September
30, 2019 compared to $68,000 of stock option compensation expense
during the three months ended September 30, 2018. The increase was
primarily related to additional stock options being outstanding,
from grants made at the end of 2018 and during the first quarter of
2019, which increased the amortization costs during the three and
nine months of 2019 compared to 2018. We anticipate our stock
option expense related to vesting of grant date fair value for the
remainder of 2019 will be comparable to the rate of expense
incurred through September 30, 2019.
We recorded an unrealized loss on marketable
equity securities of $347,000 during the three months ended
September 30, 2019 compared to an unrealized loss on marketable
equity securities of $74,000 during the three months ended
September 30, 2018.
The loss
during each of the three months ended September 30, 2019 and 2018
was primarily related to a decrease in the value of our holdings of
shares of Vendetta common stock. During the three months ended 2019
we acquired an additional 3,450,000 shares of Vendetta common
stock, through the purchase of 3,450,000 Vendetta units, for an
allocated cost of $165,000 (See Note 3, “Marketable Equity
Securities,” to the unaudited condensed financial
statements). At September 30, 2019, we own a total of 14,450,000
shares of Vendetta common stock. The fair value of the Vendetta
shares, based on quoted market prices, decreased to $546,000 and
$1,617,000, respectively, at September 30, 2019 and 2018 compared
to fair values of $800,000 and $1,589,000, respectively at June 30,
2019 and 2018. Partially offsetting this loss on marketable equity
securities, during the three months ended September 30, 2019, the
value of our holdings of 100,000 shares of Kinross Gold Corp
(“Kinross”) common stock increased in value based upon
quoted market prices by $72,000. However, during the three months
ended September 30, 2018, we recorded a loss on marketable equity
securities related to our holdings of Kinross common stock of
$102,000.
We
recorded a loss on derivative instruments of $36,000 during the
three months ended September 30, 2019 primarily related to a loss
on our Vendetta Warrants of $42,000 based upon a Black-Scholes
model. This loss in value of the Vendetta Warrants was primarily
related to a reduction in the price per share of Vendetta common
stock, which was Cdn$0.09 per share when Solitario acquired the
Vendetta Warrants and was Cdn$0.05 on September 30, 2019. Partially
offsetting this decrease was a gain of $6,000 on certain Kinross
covered call options we sold during the third quarter of 2019.
There were no outstanding derivative instruments during the three
and nine months ended September 30, 2018.
We
recorded interest income of $43,000 during the three months ended
September 30, 2019 compared to interest income of $46,000 during
the three months ended September 30, 2018 primarily due to a
decrease in the balance of short-term investments in USTS earning
interest during the three months ended September 20, 2019 compared
to balance of short-term investments during the three months ended
September 30, 2018. We anticipate our interest income for the
remainder of 2019 will decrease compared to the amount of interest
income recorded in prior quarters of 2019 as our balance of
short-term investments is lower. See a discussion of liquidity and
capital resources below.
We
regularly perform evaluations of our mineral property assets to
assess the recoverability of our investments in these assets. All
long-lived assets are reviewed for impairment whenever events or
circumstances change which indicate the carrying amount of an asset
may not be recoverable utilizing guidelines based upon future net
cash flows from the asset as well as our estimates of the
geological potential of an early stage mineral property and its
related value for future sale, joint venture or development by us
or others. During the three and nine months ended September 30,
2019 and 2018, we recorded no property impairments.
At
September 30, 2019 and 2018, our net operating loss carryforwards
exceeded our taxable gains resulting in a net tax asset position
for which we provide a valuation allowance for all net deferred tax
assets. We recorded no income tax expense or benefit during the
three and nine months ended September 30, 2019 or 2018. As a result
of our exploration activities, we anticipate we will not have
currently payable income taxes during 2019. In addition to the
valuation allowance discussed above, we provide a valuation
allowance for our foreign net operating losses, which are primarily
related to our exploration activities in Peru. We anticipate we
will continue to provide a valuation allowance for these net
operating losses until we are in a net tax liability position with
regards to those countries where we operate or until it is more
likely than not that we will be able to realize those net operating
losses in the future.
17
Comparison of the nine months ended September 30, 2019 to the nine
months ended September 30, 2018
We had
a net loss of $2,923,000 or $0.05 per basic and diluted share for
the nine months ended September 30, 2019 compared to a net loss of
$2,340,000 or $0.04 per basic and diluted share for the nine months
ended September 30, 2018. As explained in more detail below, the
primary reasons for the increase in our net loss were (i) an
increase in our exploration expense to $1,680,000 during the nine
months ended September 30, 2019 compared to exploration expense of
$686,000 during the nine months ended September 30, 2018; and (ii)
an increase in loss on derivative instruments of $36,000 during the
nine months ended September 30, 2019 with no comparable expense
during the nine months ended September 30, 2018. Partially
offsetting these increases in expenses were (i) a decrease in
general and administrative costs to $1,065,000 during the nine
months ended September 30, 2019 compared to general and
administrative costs of $1,509,000 during the nine months ended
September 30, 2018; (ii) a reduction in our revenue, net mineral
property sale to $408,000 during the nine months ended September
30, 2019 compared to revenue of $502,000 during the nine months
ended September 30, 2018; and (iii) an increase in interest income
to $205,000 for the nine months ended September 30, 2019 compared
to interest income of $109,000 during the nine months ended
September 30, 2018. The significant changes for these items and the
other major components of our net loss are discussed in more detail
below.
During
the nine months ended September 30, 2019, we completed the Royalty
Sale and recorded net revenues of $408,000. During the nine months
ended September 30, 2018 we sold our interest in our Yanacocha
royalty property to Newmont Mining Corporation for $502,000 in
cash, discussed in “Recent Developments” in our Annual
Report on Form 10-K for the year ended December 31, 2018. We do not
anticipate additional significant property asset sales during the
remainder of 2019.
Our net
exploration expense increased to $1,680,000 during the nine months
ended September 30, 2019 compared to $686,000 during the nine
months ended September 30, 2018. The primary reason for the
increase was the recording of $1,053,000 of exploration expense for
the completion of drilling by Nexa in excess of a 5,100-meter total
threshold of the 2018/2019 exploration and drilling program at the
Florida Canyon project during the first nine months of 2019,
discussed above. Solitario and Nexa had not started the 2018/2019
drilling program during the nine months ended September 30, 2018
and as a result there was no comparable expense to the 2019 Florida
Canyon expense during 2018. In addition, during the nine months
ended September 30, 2019 Solitario’s share of the exploration
work at our Lik property in Alaska, which is operated by our joint
venture partner Teck, was $190,000 compared to $233,000 during
2018. We also spent $90,000 at our La Promesa project in Peru
during the nine months ended September 30, 2019 compared to $57,000
during the nine months ended September 30, 2018. With the final
payment of Solitario’s commitment for the 2018/2019 drilling
program at Florida Canyon, and the wrap-up of the 2019 exploration
program at Lik in Alaska during the third quarter of 2019, we do
not expect to incur exploration expense during the remainder of
2019 at the rate of expenditures incurred through the first nine
months of 2019.
General
and administrative costs, excluding stock option compensation costs
discussed below, were $807,000 during the nine months ended
September 30, 2019 compared to $999,000 during the nine months
ended September 30, 2018. The major components of the costs were
(i) salaries and benefit expense during the nine months ended
September 30, 2019 of $323,000 compared to salaries and benefit
expense of $474,000 during the nine months ended September 30, 2018
as a result of personnel and salary reductions; (ii) legal and
accounting expenditures of $146,000 during the nine months ended
September 30, 2019, compared to $143,000 during the nine months
ended September 30, 2018; (iii) D&O insurance costs of $43,000
during the nine months ended September 30, 2019 compared to $45,000
during the nine months ended September 30, 2018; (iv) office and
other costs of $85,000 during the nine months ended September 30,
2019 compared to $93,000 during the nine months ended September 30,
2018; and (v) travel and shareholder relation costs of $209,000
during the nine months ended September 30, 2019 compared to
$243,000 during the nine months ended September 30,
2018.
During
the nine months ended September 30, 2019 and 2018, Solitario
recorded $258,000 and $510,000, respectively, of stock option
expense for the amortization of unvested grant date fair value with
a credit to additional paid-in capital. The large decrease in
expense during the nine months ended September 30, 2019 was related
to $422,000 of stock option expense recorded during the nine months
ended September 30, 2018 for the conditional options approved in
June 2018 and discussed in Note 10, “Employee Stock
Compensation Plans” to our audited financial statements for
the year ended December 31, 2018 in our Annual Report on Form 10-K.
We anticipate our stock option compensation expense for the
remainder of 2019 will be at a similar rate to the expense incurred
through September 2019, pending the grant of any
options.
18
We
recorded an unrealized loss on marketable equity securities of
$736,000 during the nine months ended
September 30, 2019 compared to an unrealized loss
on marketable equity securities of $737,000 during the nine months
ended September 30, 2018. The non-cash unrealized loss during the
nine months ended September 30, 2019 and 2018 was primarily related
to a decrease in the value of our holdings of shares of Vendetta
common stock, even though our holdings of Vendetta common stock
increased from 11,000,000 shares of Vendetta common stock to
14,450,000 shares of Vendetta common stock. During the three months
ended September 30, 2019 we acquired an additional 3,450,000 shares
of Vendetta common stock, through the purchase of 3,450,000
Vendetta units, for an allocated cost of $165,000 (See Note 3,
“Marketable Equity Securities,” to the unaudited
condensed financial statements). The fair value of our Vendetta
shares decreased from a fair value of $1,249,000 and 2,191,000,
respectively, at December 31, 2018 and 2017 to a fair value of
$546,000 and $1,617,000, respectively, at September 30, 2019 and
2018 based on quoted market prices. This reduction in value of our
Vendetta shares during 2019 was partially offset by an increase in
the value of our holdings of Kinross common stock, which increased
in fair value, based upon quoted market prices, by $132,000 during
the nine months ended September 30, 2019.
We may look to
reduce our holdings of marketable equity securities as a source of
cash flow over the next year, which may reduce the volatility of
the changes in unrealized gains and losses in marketable equity
securities during the remainder of 2019.
During
the nine months ended September 30, 2019 our interest income on
short-term investments increased to $205,000 compared to interest
income of $109,000 for the nine months ended September 30, 2018
primarily as a result of the effects of lower interest rates on the
quoted market price of our USTS holdings as well as a slightly
increased average interest rate received on USTS invested during
2019 compared to 2018. We anticipate as we utilize our short-term
investments to provide funds for exploration and general and
administrative expenses, our interest income will be reduced during
the remainder of 2019.
(c)
Liquidity and Capital Resources
Cash and Short-term Investments
As of
September 30, 2019, we have $7,653,000 in cash and short-term
investments. As of September 30, 2019, we have invested $7,318,000
of our current assets in USTS with remaining maturities of 30 days
to 15 months. The USTS are recorded at their fair value, based upon
quoted market prices. We anticipate we will roll over that portion
of our USTS not used for exploration expenditures, operating costs
or mineral property acquisitions as they become due during the
remainder of 2019.
We
intend to utilize a portion of our cash and short-term investments
in our exploration activities and the potential acquisition of
mineral assets over the next several years. We also expect to use a
portion of our cash to repurchase shares of our common stock
pursuant to the terms of a stock buy-back program announced on
October 28, 2015, and discussed above in Note 10,
“Shareholders’ Equity,” to the unaudited
consolidated financial statements. The stock buy-back program may
be terminated at any time and does not require Solitario to
purchase a minimum number of shares.
Investment in Marketable Equity Securities
Our
marketable equity securities are carried at fair value, which is
based upon market quotes of the underlying securities. At September
30, 2019 we own 14,450,000 shares of Vendetta common stock and
100,000 shares of Kinross common stock. The Vendetta shares are
recorded at their fair market value of $546,000 and the Kinross
shares are recorded at their fair value of $460,000 at September
30, 2019. In addition, we own other marketable equity securities
with a fair market value of $8,000 at September 30, 2019.
During the three months ended 2019 we
acquired an additional 3,450,000 shares of Vendetta common stock,
through the purchase of 3,450,000 Vendetta units, for an allocated
cost of $165,000 (See Note 3, “Marketable Equity
Securities,” to the unaudited condensed financial statements)
to bring our ownership of Vendetta shares of common stock to
14,450,000 shares.
We did not sell any of our marketable
equity securities during the three and nine months ended September
30, 2019 or 2018.
19
Working Capital
We had
working capital of $8,759,000 at September 30, 2019 compared to
working capital of $11,448,000 as of December 31, 2018. Our working
capital at September 30, 2019 consists primarily of our cash and
cash equivalents, our investment in USTS and our investment in
marketable equity securities of $1,014,000, other current assets of
$324,000, which include the SilverStream Note of $268,000 at
September 30, 2019, less our current liabilities of $232,000, which
consist of accounts payable and the current portion of our
operating lease liability. As of September 30, 2019, our cash
balances along with our short-term investments and marketable
equity securities are adequate to fund our expected expenditures
over the next year.
The
nature of the mineral exploration business requires significant
sources of capital to fund exploration, development and operation
of mining projects. We will need additional capital if we decide to
develop or operate any of our current exploration projects or any
projects or assets we may acquire. We anticipate we would finance
any such development through the use of our cash reserves,
short-term investments, joint ventures, issuance of debt or equity,
or the sale of other exploration projects or assets.
Stock-Based Compensation Plans
As of
September 30, 2019, and December 31, 2018 there were options
outstanding that are exercisable to acquire 4,373,000 and 5,223,160
shares of Solitario common stock, respectively, with exercise
prices between $0.77 per share and $0.28 per share. We do not
anticipate the exercise of options to be a significant source of
cash flow during the remainder of 2019.
Share Repurchase Program
On
October 28, 2015, our Board of Directors approved a share
repurchase program that authorized us to purchase up to two million
shares of our outstanding common stock. During 2018, our Board of
Directors extended the term of the share repurchase program until
December 31, 2019. All shares purchased to date have been cancelled
and reduced the number of shares of outstanding common stock. The
amount and timing of any shares purchased has been and will be
determined by our management and the purchases will be effected in
the open market or in privately negotiated transactions based upon
market conditions and other factors, including price, regulatory
requirements and capital availability and in compliance with
applicable state and federal securities laws. Purchases may also be
made in accordance with Rule 10b-18 of the Securities Exchange Act
of 1934, as amended (the “1934 Act”). The repurchase
program does not require the purchase of any minimum number of
shares of common stock by the Company, and may be suspended,
modified or discontinued at any time without prior notice. No
purchases will be made outside of the United States, including on
the TSX. Payments for shares of common stock repurchased under the
program have been funded using the Company’s working capital.
As of September 30, 2019, Solitario has purchased a total of
967,000 shares for an aggregate purchase price of $461,000 under
the share repurchase program since its inception and these shares
are no longer included in our issued and outstanding shares. We
anticipate we will continue to purchase a limited number of shares
under the share repurchase plan during the remainder of 2019 as
determined by management.
(d)
Cash Flows
Net
cash used in operations during the nine months ended September 30,
2019 increased to $2,385,000 compared to $1,014,000 during the nine
months ended September 30, 2018 primarily as a result of (i) the
cash outflows of $1,580,000 for the Nexa drilling exploration
expense, of which $527,000 was incurred during 2018, and paid
during 2019, with the remaining amount of 1,053,000 incurred and
paid during 2019, with no comparable exploration cash use during
the nine months ended September 30, 2018; and (ii) the receipt of
$185,000 in cash on the mineral property revenue related to the
Royalty Sale, compared to the receipt of $502,000 in cash from the
Yanacocha royalty property sale, discussed above, during 2018. The
remainder of the Royalty Sale revenue of $263,000 was recorded upon
receipt of the SilverStream Note. Partially offsetting these
increases in usages of operating cash were (i) a decrease in
non-stock option general and administrative expense to $807,000
during the nine months ended September 30, 2019 compared to
$999,000 during the nine months ended September 30, 2018, discussed
above; and (ii) an increase in cash interest income during the nine
months ended September 30, 2019 compared to the nine months ended
September 30, 2018. Based upon projected expenditures in our 2019
budget, we anticipate continued use of funds from operations
through the remainder of 2019, however at a reduced rate from that
incurred during the nine months ended September 30, 2019. See
“Results of Operations” discussed above for further
explanation of some of these variances.
20
During
the nine months ended September 30, 2019, $2,615,000 in cash was
provided from investing activities compared to the provision of
$1,057,000 of cash from investing activities during the nine months
ended September 30, 2018. The primary sources of cash related to
the net proceeds from short-term investment sales and purchases of
$2,844,000 and $1,068,000, respectively, during the nine months
ended September 30, 2019 and 2018. During the nine months ended
September 30, 2019 we purchased $6,000 of office equipment and we
purchased the Vendetta units, which included the Vendetta Warrants
for $233,000, as discussed above. We do not anticipate significant
sales of marketable equity securities during the remainder of 2019.
However, we will continue to liquidate a portion of our investments
in USTS as needed to fund our operations and potential mineral
property acquisitions during the remainder of 2019. Any potential
mineral property acquisition or strategic corporate investment
during the remainder of 2019, discussed above under “Business
Overview and Summary,” could involve a significant change in
our cash provided or used for investing activities, depending on
the structure of any potential transaction.
We used
$12,000 and $75,000, respectively, in financing activities for the
purchase of our common stock during the nine months ended September
30, 2019 and 2018, as discussed above under “Share Repurchase
Program” in “Liquidity and Capital Resources.” We
anticipate the use of funds for additional purchases of our common
stock during the remainder of 2019; however, this will be limited
to the maximum number of shares, permissible under the share
repurchase program.
(e)
Off-balance sheet arrangements
As of
September 30, 2019, and December 31, 2018 we have no off-balance
sheet obligations.
(f)
Development Activities, Exploration Activities, Environmental
Compliance and Contractual Obligations
We are
not involved in any development activities, nor do we have any
contractual obligations related to any potential development
activities as of September 30, 2019. As of September 30, 2019,
there have been no changes to our exploration activities,
environmental compliance or other contractual obligations from
those disclosed in our Management’s Discussion and Analysis
of Financial Condition and Results of Operations included in our
Annual Report on Form 10-K for the year ended December 31,
2018.
(g)
Discontinued Projects
We sold
our Brazil, Mexico and Montana royalty properties during the nine
months ended September 30, 2019 in the Royalty Sale. We did not
record any mineral property write-downs during the three and nine
months ended September 30, 2019 and 2018.
(h)
Critical Accounting Estimates
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations and Note 1, “Business and Summary of Significant
Accounting Policies,” to the Consolidated Financial
Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2018 describe the significant accounting
estimates and policies used in preparation of our consolidated
financial statements. Actual results in these areas could differ
from management’s estimates.
(i)
Related Party Transactions
As of
September 30, 2019, and for the three and nine months ended
September 30, 2019, we have no related party transactions or
balances.
(j)
Recent Accounting Pronouncements
See
Note 1, “Business and Summary of Significant Accounting
Policies,” to the unaudited consolidated financial statements
under “
Recent Accounting
Pronouncements”
above for a discussion of recent
accounting pronouncements.
21
(k)
Forward Looking Statements
This
Quarterly Report on Form 10-Q contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of
1933, as amended and Section 21E of the 1934 Act with respect
to our financial condition, results of operations, business
prospects, plans, objectives, goals, strategies, future events,
capital expenditures, and exploration and development efforts.
Words such as “anticipates,” “expects,”
“intends,” “forecasts,”
“plans,” “believes,” “seeks,”
“estimates,” “may,” “will,” and
similar expressions identify forward-looking statements. These
forward-looking statements are based on our current expectations
and assumptions about future events and are based on currently
available information as to the outcome and timing of future
events. When considering forward-looking statements, you should
keep in mind the risk factors and other cautionary statements
described under the heading "Risk Factors" included in Item 1A of
Part I of our Annual Report on Form 10-K for the year
ended December 31, 2018. These forward-looking statements
appear in a number of places in this report and include statements
with respect to, among other things:
●
Our estimates of
the value and recovery of our short-term investments;
●
Our estimates of
future exploration, development, general and administrative and
other costs;
●
Our ability to
realize a return on our investment in the Lik project and the
Florida Canyon project;
●
Our ability to
successfully identify and execute on transactions to acquire new
mineral exploration properties and other related
assets;
●
Our estimates of
fair value of our investment in shares of Vendetta and
Kinross;
●
Our estimates of
the fair value of the Vendetta Warrants and the Kinross
calls;
●
Our estimate of the
collectability of the SilverStream Note:
●
Our expectations
regarding development and exploration of our properties, including
those properties subject to joint venture agreements;
●
The impact of
political and regulatory developments;
●
Our future
financial condition or results of operations and our future
revenues and expenses; and
●
Our business
strategy and other plans and objectives for future
operations.
Although we have
attempted to identify important factors that could cause actual
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that these statements will prove to be accurate as
actual results and future events could differ materially from those
anticipated in the statements. Except as required by law, we assume
no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events
or otherwise.
I
tem 3.
Quantitative and Qualitative
Disclosures about Market Risk
Smaller
Reporting Companies are not required to provide the information
required by this item.
I
tem 4.
Controls and
Procedures
Disclosure Controls and Procedures
As
required by Rule 13a-15 under the 1934 Act, as of September 30,
2019, we carried out an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures.
This evaluation was carried out under the supervision and with the
participation of our Chief Executive Officer (our principal
executive officer) and our Chief Financial Officer (our principal
financial officer). Based upon and as of the date of that
evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were
effective as of September 30, 2019.
Disclosure controls
and procedures are controls and other procedures that are designed
to ensure that information required to be disclosed in our reports
filed or submitted under the 1934 Act is recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports
filed under the 1934 Act is accumulated and communicated to our
management, including our principal executive officer and our
principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the
1934 Act) during the quarter ended September 30, 2019 that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
22
PART II
- OTHER INFORMATION
I
tem 1.
Legal Proceedings
None.
I
tem 1A.
Risk Factors
There
are no material changes to the Risk Factors associated with our
business disclosed in Part I, Item 1A of our Annual Report on Form
10-K for the year ended December 31, 2018.
I
tem 2.
Unregistered Sales of
Equity Securities and Use of Proceeds
The
following table provides information about our purchase of our
common shares under the share repurchase program during the three
months ended September 30, 2019.
|
Issuer Purchases
of Equity Securities
|
||||
|
Period
|
Total Number of
Shares Purchased
|
Average Price
Paid Per Share
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum number
of Shares that May Yet Be Purchased Under the Plans or
Programs
(1)
|
|
July 1, 2019- July
31, 2019
|
-
|
n/a
|
-
|
1,035,900
|
|
August 1, 2019
– August 31, 2019
|
-
|
n/a
|
-
|
1,035,900
|
|
September 1, 2019
– September 30, 2019
|
2,900
|
$
0.31
|
2,900
|
1,033,000
|
(1)
As of September 30,
2019, we have purchased a total of 967,000 shares of common stock
for an aggregate purchase price of $461,000 under the share
repurchase program and these shares are no longer included in our
issued and outstanding shares.
I
tem 3.
Defaults upon Senior
Securities
None
I
tem 4.
Mine Safety
Disclosures
None
I
tem 5.
Other Information
None
I
tem 6.
Exhibits
The
Exhibits to this report are listed in the Exhibit
Index.
23
S
IGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
|
SOLITARIO ZINC
CORP.
|
|
|
|
|
|
|
|
|
Date:
November 1,
2019
|
By:
|
/s/
James R.
Maronick
|
|
|
|
|
James R. Maronick |
|
|
|
|
Chief Financial
Officer
|
|
24
EXHIBIT
INDEX
|
|
Amended
and Restated Articles of Incorporation of Solitario Exploration
& Royalty Corp., as Amended (incorporated by reference to
Exhibit 3.1 to Solitario’s Quarterly Report on Form 10-Q
filed on August 10, 2010)
|
|
|
|
|
|
|
|
Articles
of Amendment to Restated Articles of Incorporation of Solitario
Zinc Corp. (incorporated by reference to Exhibit 3.1 to
Solitario’s Current Report on Form 8-K filed on July 14,
2017)
|
|
|
|
|
|
|
|
Amended
and Restated By-laws of Solitario Zinc Corp. (Solitario Exploration
& Royalty Corp.) (incorporated by reference to Exhibit 99.1 to
Solitario’s Annual Report on Form 10-K filed on March 22,
2013)
|
|
|
|
|
|
|
|
Form of
Common Stock Certificate of Solitario Zinc Corp. (incorporated by
reference to Exhibit 4.1 to Solitario’s Quarterly Report on
Form 10-Q filed on November 8, 2017)
|
|
|
|
|
|
|
31.1
*
|
|
Certification
of Chief Executive Officer pursuant to SEC Rule 13a-14(a)/15d-14(a)
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
|
|
|
|
31.2
*
|
|
Certification
of Chief Financial Officer pursuant to SEC Rule 13a-14(a)/15d-14(a)
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
|
|
|
|
32.1
*
|
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
18 U.S.C Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
101*
|
|
The
following financial statements, formatted in XBRL: (i) Condensed
Consolidated Balance Sheets as of September 30, 2019 and
December 31, 2018, (ii) Condensed Consolidated Statements of
Operations for the three and nine months ended September 30, 2019
and 2018, (iii) Condensed Consolidated Statements of Cash Flows for
the nine months ended September 30, 2019 and 2018; and (iv) Notes
to the Condensed Unaudited Consolidated Financial Statements,
tagged as blocks of text.
|
*
Filed
herewith
25
TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial StatementsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits