0000917225
2012-01-01
2012-03-31
0000917225
2012-05-07
0000917225
2012-03-31
0000917225
2011-12-31
0000917225
2011-01-01
2011-03-31
0000917225
2010-12-31
0000917225
2011-03-31
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
SOLITARIO EXPLORATION & ROYALTY CORP.
0000917225
10-Q
2012-03-31
false
--12-31
No
No
Yes
Smaller Reporting Company
Q1
2012
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<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">1.       <u>Business
and Significant Accounting Policies</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: normal 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; font-variant: normal"><u>Business</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">           Solitario
Exploration & Royalty Corp. (“Solitario”) is a development stage company which is developing its Mt. Hamilton project
located in Nevada. See “Recent Developments” below. In addition Solitario has a focus on the acquisition of precious
and base metal properties with exploration potential and the development or purchase of royalty interests. In addition to its Mt.
Hamilton project, Solitario acquires and holds a portfolio of exploration properties for future sale, joint venture or to create
a royalty prior to the establishment of proven and probable reserves. Although Solitario intends to develop the Mt. Hamilton project,
Solitario has never developed a mineral property. At March 31, 2012, Solitario's mineral properties are located in the United States,
Mexico, Brazil, Bolivia and Peru.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          The
accompanying interim condensed consolidated financial statements of Solitario for the three months ended March 31, 2012 and 2011
are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America. 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,
2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          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, 2011. 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><u>Recent developments</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><i>Mt. Hamilton feasibility study</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          In
December 2010 Solitario signed the Limited Liability Company Operating Agreement of Mt. Hamilton LLC, (the “MH Agreement”),
and formed Mt. Hamilton LLC (“MH-LLC”), the owner of the Mt. Hamilton project. Solitario announced on February 22,
2012 the completion of a feasibility study on its Mt. Hamilton project (the “Feasibility Study”), prepared by SRK Consulting
(US), Inc. of Lakewood, Colorado (“SRK”). As a result of the completion of the Feasibility Study, pursuant to the MH
Agreement, Solitario earned an 80% interest in MH-LLC, became a development-stage company (but not a company in the “Development
Stage”) and reported mineral reserves at its Mt. Hamilton project. See Note 7, “Mineral Properties” below.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><u>Investment in Kinross</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          Solitario
has a significant investment in Kinross Gold Corporation (“Kinross”) at March 31, 2012, which consists of 820,000 shares
of Kinross common stock. During the three months ended March 31, 2012 Solitario sold 30,000 shares of Kinross for net proceeds
of $353,000 and recorded a gain on sale of $332,000. Solitario sold 105,000 shares of Kinross for net proceeds of $1,648,000 and
recorded a gain on sale of $1,568,000 during the three months ended March 31, 2011. As of March 31, 2012, Solitario has no covered
calls or any other derivative arrangements outstanding against its holdings of Kinross shares. As of March 31, 2012, Solitario
has borrowed $2,792,000 in margin loans against its holdings of Kinross shares. The short-term margin loans are discussed below
under, “Short-term debt.” As of May 4, 2012, Solitario owns 805,000 shares of Kinross common stock which have a value
of approximately $6.75million based upon the market price of $8.39 per Kinross share. Solitario’s investment in Kinross common
stock represents a significant concentration of assets, with the inherent risk that entails. Any significant fluctuation in the
market value of Kinross common shares could have a material impact on our liquidity and capital resources.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><u>Employee stock compensation plans</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          Solitario’s
outstanding options on the date of grant have a five year term, and vest 25% on date of grant and 25% on each of the next three
anniversary dates. Solitario recognizes stock option compensation expense on the date of grant for 25% of the grant date fair value,
and subsequently, based upon a straight line amortization of the unvested grant date fair value of each of its outstanding options.
During the three months ended March 31, 2012 and March 31, 2011, Solitario recorded $174,000 of stock option expense for the amortization
of grant date fair value with a credit to additional paid-in-capital.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">          On
June 27, 2006 Solitario’s shareholders approved the 2006 Stock Option Incentive Plan (the “2006 Plan”). Under
the terms of the 2006 Plan, the Board of Directors may grant up to 2,800,000 options to Directors, officers and employees with
exercise prices equal to the market price of Solitario’s common stock at the date of grant.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          There
were no new options granted during the three months ended March 31, 2012 and 2011. During the three months ended March 31, 2012
no options were exercised. During the three months ended March 31, 2011 options for 18,100 shares were exercised for proceeds of
$36,000, with 10,000 of those options exercised at a price of Cdn$1.55 per share and 8,100 shares exercised at a price of Cdn$2.40
per share.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><u>Earnings per share </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          The
calculation of basic and diluted earnings and loss per share is based on the weighted average number of common shares outstanding
during the three months ended March 31, 2012 and 2011. Potentially dilutive shares related to outstanding common stock options
of 2,433,400 and 2,565,900 during the three months ended March 31, 2012 and 2011, respectively, were excluded from the calculation
of diluted loss per share because the effects were anti-dilutive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><u>Derivative instruments</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><i>Ely Warrants</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          In
connection with the equity investment in Ely during 2010, Solitario acquired warrants to purchase 1,666,666 shares of Ely common
stock at Cdn$0.25 per share for a period of two years. Warrants for 833,333 shares expire on August 26, 2012 and the remaining
warrants for 833,333 shares expire on October 19, 2012. As of March 31, 2012 and December 31, 2011, Solitario has recorded $139,000
and $73,000, respectively for the fair value of the warrants received from Ely as a current asset. Solitario recorded an unrealized
gain on derivative instrument of $66,000 and $56,000, respectively, in the statement of operations for a net gain related to the
Ely warrants for the three months ended March 31, 2012 and 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><i>International Lithium Corp.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          In
May 2011 TNR Gold Corp. (“TNR”) completed a spin-out of a new entity, International Lithium Corp. (“ILC”).
Solitario owned 1,000,000 shares of TNR at the time of the spin-out and received 250,000 shares of ILC and warrants to acquire
250,000 shares of ILC (the “ILC Warrants”) at a price of Cdn$0.375 per share for a period of two years. During the
three months ended March 31, 2012, Solitario recorded no unrealized gain or loss on derivative instruments related to its ILC warrants.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"><i>Covered Call Options </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">          From
time to time Solitario has sold covered call options against its holdings of Kinross. The business purpose of selling covered calls
is to provide additional income on a limited portion of shares of Kinross that Solitario may sell in the near term, which is generally
defined as less than one year. As of March 31, 2012 and December 31, 2011, Solitario has no outstanding covered call options.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">          Solitario
has not designated its covered calls as hedging instruments as described in ASC 815 and any changes in the fair market value of
its covered calls are recognized in the statement of operations in the period of the change.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">          The
following table provides a detail of the location and amount of the fair values of Solitario's derivative instruments presented
in the condensed consolidated balance sheet as of March 31, 2012 and December 31, 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr>
<td style="vertical-align: bottom; padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line; text-decoration: underline">(in thousands)</td>
<td colspan="3" style="vertical-align: top; padding-right: 1.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">                   Derivative Instruments                     </td></tr>
<tr style="vertical-align: top">
<td style="width: 46%; padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line"> </td>
<td style="width: 23%; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline">Balance Sheet <br /> Location</td>
<td style="width: 12%; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">March 31,<br />  2012</td>
<td style="width: 19%; padding-right: 2.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">December 31,<br />  2011</td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 12.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-indent: 0.9pt">Derivatives not designated as hedging<br />   instruments under ASC 815</td>
<td style="padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line"> </td>
<td style="padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line"> </td>
<td style="padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line"> </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line">Ely investment warrants</td>
<td style="padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line">Other current assets</td>
<td style="padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$   139 </td>
<td style="padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$   74   </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line">ILC warrants</td>
<td style="padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line">Other current assets</td>
<td style="padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">    4 </td>
<td style="padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">  4   </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          The
following amounts are included in gain on derivative instruments in the condensed consolidated statement of operations for the
three months ended March 31, 2012 and 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 52%; padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line; text-decoration: underline">(in thousands)</td>
<td style="width: 21%; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">March 31, 2012</td>
<td style="width: 27%; padding-right: 2.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">March 31, 2011</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 12.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-indent: 0.9pt">Derivatives not designated as hedging<br />   instruments under ASC 815</td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: right">Gain(loss)</td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: right">Gain(loss)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line">Ely investment warrants</td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">                 $ 66 </td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">                 $ 56 </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line">Kinross collar</td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>- </u>  </td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>(2</u>)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line">    Total derivatives</td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u> 66</u></font> </td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u> 54</u></font> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 0.55in; padding-left: 0.25in; layout-grid-mode: line"> </td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: 5.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><u>Fair Value</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; background-color: white">          For
certain of Solitario’s financial instruments, including cash and cash equivalents, payables and short-term debt, the carrying
amounts approximate fair value due to their short term maturities. Solitario’s marketable equity securities are carried at
their estimated fair value primarily based on quoted market prices. The long-term debt associated with MH-LLC is carried at its
estimated fair value based upon the discounted present value of the payments using an estimated discount rate and the Ely Warrants
and ILC Warrants are carried at their estimated fair value based on a Black-Scholes option pricing model.</p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; background-color: white"> </p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; background-color: white">          Solitario
accounts for its financial instruments under ASC 820, "Fair Value Measurements." ASC 820 establishes a framework for
measuring fair value and requires enhanced disclosures about fair value measurements. ASC 820<font style="color: black"> clarifies
that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. ASC 820 also requires disclosure about how fair value is determined for
assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant
levels of inputs as follows: </font></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-indent: 20pt; background-color: white"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt/12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; background-color: white"><tr style="vertical-align: top">
<td style="width: 0"></td><td style="width: 0"><font style="font: 10pt Symbol">·</font></td><td style="padding-right: 0.55in"><font style="font-size: 10pt"><b>Level 1</b>: quoted prices in active markets for identical assets
or liabilities;</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt/12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; background-color: white"><tr style="vertical-align: top">
<td style="width: 0"></td><td style="width: 0"><font style="font: 10pt Symbol">·</font></td><td style="padding-right: 0.55in"><font style="font-size: 10pt"><b>Level 2</b>: quoted prices in active markets for similar assets
and liabilities and inputs that are observable for the asset or liability; or</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt/12pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; background-color: white"><tr style="vertical-align: top">
<td style="width: 0"></td><td style="width: 0"><font style="font: 10pt Symbol; color: black">·</font></td><td style="padding-right: 0.55in"><font style="font-size: 10pt; color: black"><b>Level 3</b>: </font>Unobservable inputs in which
there is little or no market data, which require the reporting entity to develop its own assumptions<font style="color: black">.</font></td></tr></table>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; background-color: white"> </p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; background-color: white">          The
determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant
to the fair value measurement. During the three months ended March 31, 2012 there were no reclassifications in financial assets
or liabilities between Level 1, 2 or 3 categories. During the three months ended March 31, 2011, Solitario reclassified its investment
in 1,666,666 shares Ely common shares, which were subject to a hold period as of December 31, 2010, from Level 2 to Level 1 as
the shares were no longer subject to a hold period as of March 31, 2011.</p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; background-color: white"> </p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; background-color: white">          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 March 31, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="width: 46%; padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line; text-align: justify">(in thousands)</td>
<td style="width: 14%; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Level 1</td>
<td style="width: 14%; padding-right: 4.5pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Level 2</td>
<td style="width: 13%; padding-right: 4.5pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Level 3</td>
<td style="width: 13%; padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Total</td></tr>
<tr>
<td style="vertical-align: bottom; padding-right: 1.8pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: justify">Assets</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: 4.5pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: top; padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: justify">Marketable equity securities</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$8,921</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$   -    </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$   -    </td>
<td style="padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$8,921</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: justify">Other current assets – Ely warrants</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-</td>
<td style="padding-right: 4.5pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">139</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-    </td>
<td style="padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">139</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: justify">Other current assets - ILC warrants</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-</td>
<td style="padding-right: 4.5pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">4</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-    </td>
<td style="padding-right: 0.05in; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">4</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-align: justify; background-color: white">          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, 2011:</p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-align: justify; background-color: white"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="width: 48%; layout-grid-mode: line; text-align: justify">(in thousands)</td>
<td style="width: 13%; padding-right: 6pt; layout-grid-mode: line; text-align: right"><u>Level 1</u>  </td>
<td style="width: 14%; padding-right: 8.25pt; layout-grid-mode: line; text-align: right"><u>Level 2</u>  </td>
<td style="width: 13%; padding-right: 3pt; layout-grid-mode: line; text-decoration: underline; text-align: right">Level 3</td>
<td style="width: 12%; padding-right: 5.25pt; layout-grid-mode: line; text-align: right"><u>Total</u>  </td></tr>
<tr style="vertical-align: bottom">
<td style="layout-grid-mode: line; font-weight: bold">Assets</td>
<td style="padding-right: 6pt; font-size: 12pt; layout-grid-mode: line; text-align: right"> </td>
<td style="padding-right: 8.25pt; font-size: 12pt; layout-grid-mode: line; text-align: right"> </td>
<td style="padding-right: 3pt; font-size: 12pt; layout-grid-mode: line; text-align: right"> </td>
<td style="padding-right: 5.25pt; font-size: 12pt; layout-grid-mode: line; text-align: right"> </td></tr>
<tr style="vertical-align: bottom">
<td style="layout-grid-mode: line">  Marketable equity securities</td>
<td style="padding-right: 6pt; layout-grid-mode: line; text-align: right">$10,361 </td>
<td style="padding-right: 8.25pt; layout-grid-mode: line; text-align: right">$     -   </td>
<td style="padding-right: 3pt; layout-grid-mode: line; text-align: right">$    -   </td>
<td style="padding-right: 5.25pt; layout-grid-mode: line; text-align: right">$10,361</td></tr>
<tr style="vertical-align: bottom">
<td style="layout-grid-mode: line">  Other current assets - Ely warrants</td>
<td style="padding-right: 3pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="padding-right: 8.25pt; layout-grid-mode: line; text-align: right">74 </td>
<td style="padding-right: 3pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="padding-right: 3pt; layout-grid-mode: line; text-align: right">74  </td></tr>
<tr style="vertical-align: bottom">
<td style="layout-grid-mode: line">  Other current assets - ILC warrants</td>
<td style="padding-right: 6pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="padding-right: 8.25pt; layout-grid-mode: line; text-align: right">4 </td>
<td style="padding-right: 3pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="padding-right: 5.25pt; layout-grid-mode: line; text-align: right">4 </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><u>Marketable equity securities</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          Solitario's
investments in marketable equity securities are classified as available-for-sale and are carried at fair value, which is based
upon quoted prices of the securities owned. The cost of marketable equity securities sold is determined by the specific identification
method. Changes in market value are recorded in accumulated other comprehensive income within shareholders' equity, unless a decline
in market value is considered other than temporary, in which case the decline is recognized as a loss in the consolidated statement
of operations. Solitario had marketable equity securities with fair values of $8,921,000 and $10,361,000 respectively, and cost
of $966,000 and $$988,000 respectively, at March 31, 2012 and December 31, 2011. Solitario has accumulated other comprehensive
income for unrealized holding gains of $7,955,000 and $9,373,000, respectively, net of deferred taxes of $2,967,000 and $3,496,000,
respectively, at March 31, 2012 and December 31, 2011 related to our marketable equity securities. Solitario sold 30,000 shares
of Kinross for proceeds of $353,000 and recorded a gain on sale of $332,000 during the three months ended March 31, 2012. Solitario
sold 105,000 shares of Kinross stock during the three months ended March 31, 2011 for proceeds of $1,648,000 and recorded a gain
on sale of $1,568,000. Solitario has classified $5,915,000 and $4,361,000, respectively, of marketable equity securities as current,
as of March 31, 2012 and December 31, 2011, which represents Solitario's estimate of the portion of marketable equity securities
that will be liquidated within one year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">         </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">The following table represents changes in marketable
equity securities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">(in thousands)</td>
<td colspan="2" style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Three months ended<br /> March 31,</td></tr>
<tr>
<td style="width: 70%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line"> </td>
<td style="width: 16%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: right">2012</td>
<td style="width: 14%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: right">2011</td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Gross cash proceeds</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$    353 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$    1,648 </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Cost</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>21</u> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>80</u> </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Gross gain on sale included in earnings during the period</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">332 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">1,568 </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Deferred taxes on gross gain on sale included in earnings</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>(124</u>)</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>(585</u>)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Reclassification adjustment to unrealized gain in other</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">comprehensive income for net gains included
in earnings</p></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(208)</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(983)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Unrealized holding loss arising during the period included in<br />    other comprehensive income, net of tax of $405 and $1,226.</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(681)</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(2,060)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Revenue Recognition</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          Solitario
records delay rental payments as revenue in the period received. Solitario did not receive any delay rental payments during the
three months ended March 31, 2012 and 2011, respectively. Any payments received for the sale of property interests are recorded
as a reduction of the related property’s capitalized cost. Proceeds which exceed the capitalized cost of the property are
recognized as revenue.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-align: left"><font style="font-weight: normal"><u>Variable
interest entity </u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-align: left"><font style="font-weight: normal"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-align: left"><font style="font-weight: normal">          Pursuant
to the terms of the MH Agreement, Solitario has determined that, prior to earning an 80% interest in MH-LLC as a result of the
completion of the Feasibility Study, MH-LLC was a variable interest entity as of December 31, 2011, of which Solitario was the
primary beneficiary in accordance with ASC 810. Accordingly, Solitario consolidated MH-LLC in its consolidated financial statements
at December 31, 2011 in accordance with ASC 810. Solitario has determined no separate presentation of assets or liabilities was
necessary per ASC 810 at December 31, 2011, as MH-LLC does not have any assets that can only be used to settle specific obligations
or liabilities for which creditors do not have recourse to Solitario. As discussed in Note 1, as a result of the completion of
the Feasibility Study, Solitario earned an 80% interest in MH-LLC on February 22, 2012. MH-LLC will no longer be accounted for
as a variable interest entity, but will be subject to the consolidation method of accounting.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0.5in; text-indent: -0.5in">2.       <u>Exploration
Expense</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0.5in; text-indent: -0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          The
following items comprised exploration expense:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line">(in thousands)</td>
<td colspan="2" style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Three months ended<br />  March 31,</td></tr>
<tr style="vertical-align: top">
<td style="width: 72%; padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line"> </td>
<td style="width: 15%; padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: right">   2012  </td>
<td style="width: 13%; padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: right">   2011  </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line">Geologic and field expenses</td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$237 </td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$ 275 </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line">Administrative</td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">118 </td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">53 </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line">Mt. Hamilton exploration and development</td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>169</u> </td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>513</u> </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line">Total exploration costs</td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>524</u></font> </td>
<td style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>841</u></font> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">3.       <u>Short
term debt</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">                    As
of March 31, 2012, Solitario borrowed $2,000,000 from UBS Bank, USA ("UBS Bank") pursuant to a secured credit line agreement
between Solitario and UBS Bank secured by 540,000 of Solitario’s Kinross shares held in Solitario’s UBS brokerage account.
As of March 31, 2012, Solitario recorded accrued unpaid interest of $4,000 on the secured line of credit, included in accounts
payable. The UBS Bank credit line carries an interest rate which floats, based upon a base rate of 2.25% plus the one-month London
Interbank Offered Rate ("LIBOR"), which is 0.25% as of March 31, 2012. The average base rate was approximately 2.54%
for the three months ended March 31, 2012. UBS Bank may change the base rate at any time. The UBS Bank credit line provides that
Solitario may borrow up to $2 million and that Solitario maintain a minimum equity value percentage in its UBS brokerage account
above 40%, based upon the value of its Kinross shares and any other assets held in Solitario's UBS brokerage account, less the
value of its UBS Bank credit line and any other balances owed to UBS Bank. UBS Bank may modify the minimum equity value percentage
of the loan at any time. In addition, if the equity value in Solitario's UBS brokerage account falls below the minimum equity value,
UBS Bank may sell enough Kinross shares held in Solitario's UBS brokerage account or liquidate any other assets to restore the
minimum equity value. At March 31, 2012, the equity value in Solitario's UBS brokerage account was 62%. Solitario recorded interest
expense related to the UBS credit line of $13,000 and $11,000 for the three months ended March 31, 2012 and 2011, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">          As
of March 31, 2012, Solitario borrowed $792,000, net, from RBC Capital Markets, LLC ("RBC"), in short-term margin loans,
using Solitario's investment in Kinross held at RBC as collateral for the short-term margin loans. During the three months ended
March 31, 2012, the loans carried interest at a margin loan rate of 4.25% per annum, which floats based upon the London Interbank
Offered Rate. The margin loan rate can be modified by RBC at any time. The margin loans are callable by RBC at any time. Per the
terms of the margin loans, Solitario is required to maintain a minimum equity value in the account of 35%, based upon the value
of its Kinross shares and any other assets held at RBC, less any short term margin loan balance and any other balances owed to
RBC. The equity value percentage may be modified by RBC at any time. If the equity value in Solitario's account at RBC falls below
the minimum, RBC may call the loan, or may sell enough Kinross shares held in Solitario's brokerage account or liquidate any other
assets to restore the minimum equity value. At March 31, 2012 the equity balance in Solitario's account at RBC was 68%. Interest
expense related to the short term margin loans for the three months ended March 31, 2012 was $4,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">4.       <u>Long-term
debt</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">          The
following is the schedule of debt payments due Augusta Resources Corporation ("Augusta") as of March 31, 2012 and December
31, 2011:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr>
<td style="width: 49%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline">Payment date</td>
<td style="width: 26%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">March 31,</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>2011</u></p></td>
<td style="width: 25%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">December 31,</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><u>2011</u></p></td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">June 1, 2012</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$750,000 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">750,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">June 1, 2013</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">750,000 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">750,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">June 1, 2014</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">750,000 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">750,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">June 1, 2015</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">1,000,000 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">1,000,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Unamortized discount</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>(395,000</u>)</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>(448,000</u>)</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Total</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">2,855,000 </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">2,802,000 </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Current portion</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>741,000</u> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>727,000</u> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Long-term debt</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u>2,114,000</u></font> </td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u>2,075,000</u></font> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 44.1pt 0 0">          During
the three months ended March 31, 2012 and 2011, Solitario recorded $53,000 and $64,000, respectively, of interest expense for accretion
of the debt discount related to MH-LLC long-term debt due to Augusta. During the three months ended March 31, 2011 Solitario made
a payment of $500,000 of principal on the long-term debt to DHI-US, which in turn was paid to Augusta.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0; text-align: left"><b> </b></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">5.     <u>Income Taxes</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          Solitario
accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes.” 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          Primarily
as a result of the built-in-gain in the value of Solitario's holdings of Kinross common stock recognized as other comprehensive
income, Solitario estimated that its deferred tax liabilities exceeded its realizable deferred tax assets by $2,159,000 and $2,797,000
at March 31, 2012 and December 31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          During
the first quarter of 2012, Solitario recorded a $109,000 deferred tax benefit in the statement of operations and recorded a deferred
tax benefit of $529,000 to other comprehensive income related to net unrealized losses of $1,418,000 on marketable equity securities.
During the first quarter of 2011, Solitario recorded $245,000 deferred tax expense in the statement of operations and recorded
a deferred tax benefit of $1,811,000 to other comprehensive income related to net unrealized losses of $4,854,000 on marketable
equity securities.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">6.          <u>Shareholders’
Equity, comprehensive loss and non-controlling interest</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">         As
a result of the completion of the Feasibility Study discussed above under “Recent developments,” Solitario recorded
the earn-in of its 80% interest in MH-LLC by reducing noncontrolling interest by $531,000 for Solitario’s accumulated earn-in
payments made to DHI-US recorded in its contra noncontrolling interest account as of February 22, 2012. In addition Solitario recorded
a reduction in additional paid-in-capital of $2,983,000 for DHI-US’ proportionate share of its 20% interest in the equity
of MH-LLC as of February 22, 2012. The following provides a reconciliation of the beginning and ending balances of Solitario Shareholders'
equity, comprehensive loss and non-controlling interest for the three months ended March 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><b>For the three months ended March 31, 2012</b></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="width: 29%; vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">(in thousands, except</td>
<td style="width: 8%; vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center"> </td>
<td style="width: 6%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center"> </td>
<td style="width: 7%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center"> </td>
<td style="width: 9%; vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center"> </td>
<td style="width: 9%; vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Accumulated</td>
<td style="width: 8%; vertical-align: bottom; padding-right: 2.2pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Total</td>
<td style="width: 8%; vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center"> </td>
<td style="width: 7%; vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Contra</td>
<td style="width: 9%; vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center"> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Share amounts)</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Common</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Common</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center; text-indent: -5.4pt">Additional</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center"> </td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Other</td>
<td style="vertical-align: bottom; padding-right: 2.2pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Solitario</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Non-</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Non-</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Total</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line"> </td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; text-align: center; tab-stops: 95.6pt right 376.0pt; text-autospace: ideograph-numeric">Stock</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; text-align: center; tab-stops: 95.6pt right 376.0pt; text-autospace: ideograph-numeric">Stock</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center; text-indent: -5.4pt">Paid-in</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; text-align: center; tab-stops: 95.6pt right 376.0pt; text-autospace: ideograph-numeric">Accumulated</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Comprehensive</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Shareholder</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Controlling</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Controlling</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Shareholders’</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line"> </td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Shares</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Amount</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center; text-indent: -5.4pt">Capital</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Deficit</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Income</td>
<td style="vertical-align: bottom; padding-right: 2.2pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Equity</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Interest</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Interest</td>
<td style="vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: center">Equity</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold">Balance at December 31, 2011</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$34,204,958</td>
<td style="vertical-align: bottom; padding-right: -1.3pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$342</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$49,015 </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$(39,381)</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$5,877 </td>
<td style="vertical-align: bottom; padding-right: 2.15pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$15,853</td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$(1, 640)</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$(340)</td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right">$13,873 </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.3pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: 2.15pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-underline-style: double; text-align: right"> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Issuance of shares and $150 cash to</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">noncontrolling shareholder for future</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">earn-in</p></td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">25,000</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">41 </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: 2.15pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">41 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(191)</td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(150)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Noncontrolling interest contribution</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">99 </td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">99 </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Loan to noncontrolling interest</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(49)</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(49)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Record reversal of contra noncontrolling</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">interest on earn-in</p></td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(531)</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">531 </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Record interest on advance to</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">noncontrolling interest</p></td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(8)</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(8)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Disproportionate share entry on earn-in</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(2,983)</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(2,983)</td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">2,983 </td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Stock option expense</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">174 </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">174 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">174 </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Comprehensive income:</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">    Net loss</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(670)</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(670)</td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(192)</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(862)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">    Net unrealized loss on marketable<br />      equity securities (net of tax of <br />       $529)</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(<u>889</u>)</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(<u>889</u>)</td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>- </u>  </td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>(889</u>)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line">Comprehensive loss</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(1,559)</td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">(192)</td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: right">(1,751)</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold">Balance at March 31, 2012</td>
<td style="vertical-align: bottom; padding-right: -1.45pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-decoration: underline; text-underline-style: double; text-align: right">34,229,958</td>
<td style="vertical-align: bottom; padding-right: -1.3pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-decoration: underline; text-underline-style: double; text-align: right">$342</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-underline-style: double; text-align: right"><font style="text-underline-style: double"><b><u>$46,247</u></b></font><b> </b></td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-decoration: underline; text-underline-style: double; text-align: right">$(40,051)</td>
<td style="vertical-align: bottom; padding-right: 5.4pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-underline-style: double; text-align: right"><font style="text-underline-style: double"><b><u>$4,988</u></b></font><b> </b></td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-decoration: underline; text-underline-style: double; text-align: right">$11,526 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-underline-style: double; text-align: right"><font style="text-underline-style: double"><b><u>$662</u></b></font><b> </b></td>
<td style="vertical-align: bottom; padding-right: -1.6pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-decoration: underline; text-underline-style: double; text-align: right">$    -  </td>
<td style="vertical-align: bottom; padding-right: -2.3pt; padding-left: 5.4pt; layout-grid-mode: line; font-weight: bold; text-decoration: underline; text-underline-style: double; text-align: right">$12,188 </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">7.          Mineral
Properties</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><i>Mt. Hamilton</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          On
February 22, 2012, Solitario announced the completion of the Feasibility Study on its Mt. Hamilton project prepared by SRK. As
a result of the completion of the Feasibility Study, Solitario earned an 80% interest in MH-LLC, owner of the Mt. Hamilton project,
and intends to develop the Mt. Hamilton project, subject to a number of factors including obtaining necessary permits and availability
of required capital, none of which is currently in place.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          The
MH Agreement provides that if Solitario completes a bankable feasibility study and earns an 80% interest in MH-LLC, as of that
date, Solitario will be obligated to make any unpaid payments of cash and stock to DHI-US, any unpaid payments to the underlying
royalty holder and, pursuant to the MH Agreement, Solitario will be obligated to make any uncompleted investment Tranches due to
Ely by the due dates described above, or will be subject to dilution of its interest in MH-LLC. If Solitario fails to make the
required Augusta loan payment of $750,000 due DHI-US in June 2012, or the remaining earn-in payments of $150,000 in cash and 25,000
shares of Solitario stock due DHI-US in August 2012, it will lose its entire interest in MH-LLC. If Solitario fails to make any
of the remaining required payments due after 2012, Solitario will be diluted from its current 80% ownership interest, to a 49%
interest in MH-LLC and DHI-US will increase its ownership interest to 51%. Furthermore, the MH Agreement provides that all costs
for development at Mt. Hamilton after completion of the Feasibility Study will be shared by Solitario and DHI-US pro-rata. However
DHI-US has notified Solitario that it has exercised its option of having Solitario contribute DHI-US’ share of costs through
commercial completion as a loan, with such loan, plus interest at 8%, being repaid to Solitario from 80% of DHI-US’s share
of distributions from MH-LLC. During the three months ended March 31, 2012 Solitario loaned DHI-US $49,000 for its share of costs
subsequent to the completion of the Feasibility Study. See also Note 12, “Ely Gold investment and the Mt. Hamilton joint
venture” to the consolidated financial statements included in Solitario’s Annual Report on Form 10-K for the year ended
December 31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">          In
addition, Solitario began capitalizing its development costs incurred at its Mt. Hamilton project subsequent to the completion
of the Feasibility Study. During the three months ended March 31, 2012 Solitario capitalized $220,000 of development costs at the
Mt. Hamilton project.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0.5in; text-indent: -0.5in">8.       Segment
Reporting</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0.5in; text-indent: -0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0">        With
the completion of the Feasibility Study on February 22, 2012, Solitario now operates in two segments, (i) mineral exploration and
(ii) mining development and operations. Solitario is capitalizing Mt. Hamilton development and operations costs subsequent to February
22, 2012, as detailed above in Note 7, “Mineral properties.” The following summarizes Solitario segment activity for
the three months ended March 31, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.55in 0 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line">(in thousands)</td>
<td colspan="6" style="padding-right: 8.1pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Three months ended March 31, 2012</td></tr>
<tr>
<td style="width: 37%; vertical-align: top; padding-right: 0.55in; padding-left: 5.4pt; layout-grid-mode: line"> </td>
<td style="width: 10%; vertical-align: bottom; padding-right: -5.4pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Exploration expense</td>
<td style="width: 10%; vertical-align: top; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Interest expense</td>
<td style="width: 11%; vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Other</td>
<td style="width: 10%; vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Pre-tax loss</td>
<td style="width: 10%; vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Total assets</td>
<td style="width: 12%; vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-decoration: underline; text-align: center">Capital expenditures</td></tr>
<tr>
<td style="vertical-align: top; padding-right: 5.4pt; padding-left: 5.4pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Mt. Hamilton development and</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Operations</p></td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$ 169 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$ 53 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$ 12 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$ 234 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$  9,277 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">$ 355 </td></tr>
<tr>
<td style="vertical-align: top; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line">Exploration <font style="font-size: 8pt">(1)</font></td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">355 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-  </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">312 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">667 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">1,895 </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right">-   </td></tr>
<tr>
<td style="vertical-align: top; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line">Corporate and other <font style="font-size: 8pt">(2)</font></td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>-  </u> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>15</u> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>  55</u> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>  70</u> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>  9,295</u> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-align: right"><u>    9</u> </td></tr>
<tr>
<td style="vertical-align: top; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line">Consolidated</td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>524</u></font> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>68</u></font> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>379</u></font> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$ <font style="text-underline-style: double"><u>971</u></font> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u>20,467</u></font> </td>
<td style="vertical-align: bottom; padding-right: -0.9pt; padding-left: 5.4pt; layout-grid-mode: line; text-underline-style: double; text-align: right">$<font style="text-underline-style: double"><u> 364</u></font> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0.55in 0 35.25pt">(1)     Exploration expense
includes loss on unconsolidated subsidiary of $109 and Exploration total assets include investment in unconsolidated subsidiary
of $1,544.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0.55in 0 35.25pt">(2)     Corporate and other
includes gain on sale of marketable equity securities of $332 and Corporate and other total assets include investment in marketable
equity securities of $8,921</p>
<p style="margin: 0pt"></p>