Mt. Hamilton Gold Project - Nevada USA

Significant strides were made in 2012 on our Mt. Hamilton gold-silver project located in Nevada. In February we released the results of a comprehensive Feasibility Study conducted by independent and highly regarded SRK Consulting. With the completion of the Feasibility Study, Solitario earned an 80% interest in the project. The Study demonstrated that Mt. Hamilton represents a platform capable of delivering solid value to Solitario for years into the future.

Feasibility Study Projects Solid Economics

Key economic results of the Feasibility Study include:
- Average Life-of-Mine operating cash cost of $575 per gold equivalent ounce produced.
- Average annual Life-of-Mine gold equivalent production of 54,000 ounces.
- Initial capital of approximately $72 million; sustaining capital $35 million.
- NPV = $198.5 million (5% discount rate; pre-tax at $1,500 gold and $29.00 silver).
- Excellent potential to add new resources adjacent to the currently established reserves.

Importantly, the Feasibility Study only considered mining and processing ores delivered from the Centennial deposit. However, in September 2012, SRK completed an NI 43-101 compliant mineral resource estimate for the Seligman mineralization that lies only 1,500 feet north of the Centennial deposit. As a result, a 39% increase in Indicated Resources contributed to the overall global resources for the Mt. Hamilton project. Table 1 shows the Centennial reserves and resources as well as the Seligman resources:



2012 Drilling Program & 2013 Metallurgical Testing

In total, 42 reverse circulation drill holes and 11 core holes were completed in the second half of 2012, totaling 20,584 feet of drilling. The 53-hole drilling campaign was designed to upgrade the newly defined Seligman inferred resources to measured and indicated categories. Additionally, sample material was obtained to carry out metallurgical and geochemical testing and to measure geotechnical characteristics for mine planning at Seligman. Several holes were also drilled at the Centennial gold deposit to convert inferred resources to measured and indicated categories as well as to test potential extensions of mineralization to the south. Table 1 provides highlights of our drilling program.

We are now incorporating the information gathered in the 2012 drilling program to update resource estimates for both the Centennial and Seligman deposit. Metallurgical testing at an independent laboratory is underway with results expected in the third quarter of 2013. We believe there is a strong potential to increase the production rate by 15-20% and extend the mine life from approximately eight years to ten years, without the addition of significant new capital costs



Permitting Underway

In November of 2012, we filed a Plan of Operations with the United States Forest Service to mine and process both the Centennial and Seligman deposits. In March 2013, the Plan of Operations was deemed complete and the process to obtain both federal and state permits is ongoing. It is always difficult to estimate the time frame required to obtain all permits needed to initiate project construction, but we are hopeful that such approvals will be forthcoming by mid-2014.

We believe our mine plan is well conceived from an environmental standpoint to minimize environmental impacts on federal lands. Significant past disturbance exists on much of the project area where mining occurred in the mid-1990’s. Our processing facilities are located on private property that we own and all of our planned mining is situated above the groundwater table. Because we are using a vertical ore pass and an underground conveyor system to deliver ore from the pit to the processing facilities, we reduce the amount of dust and carbon emissions associated with hauling the ore from the pit to the heap leach pad. These innovative design elements are not only good for the environment, but also are cost effective and should help expedite our permitting timeline.

Wheeler Ridge Exploration Program

The Wheeler Ridge area located immediately south of the Centennial ore deposit represents a significant new gold exploration target that is essentially untested by drilling. In 2011 we found a soil geochemistry map apparently lost in project files dating back to the mid-1990’s. Approximately 2,000 soil samples were collected over much of the existing land package that Solitario controls. The geochemical survey indicated a large zone of soils containing strongly anomalous gold and trace element geochemistry. The rock formations and associated rock alteration underlying the soil anomaly are similar to the underlying rock formations and alteration observed at the Centennial and Seligman deposits. Based on the coincident favorable soil geochemistry and geology observed at Wheeler Ridge, Solitario initiated an Environmental Assessment study to allow for drill testing the Wheeler Ridge zone. The permitting process to allow for drill testing the Wheeler Ridge zone is nearing completion. We hope to have approval to drill at Wheeler Ridge by Q3-2013. Upon approval, Solitario is planning an initial 15-hole program to drill test this large anomaly.

Terms of the Mt. Hamilton LLC Joint Venture

Solitario and Ely Gold formed Mt. Hamilton LLC (“MH-LLC”), a limited liability company which now holds 100% of the Mt. Hamilton project assets under an Operating Agreement (“MH-Agreement”). Per the terms of the MH-Agreement, with the completion of this Feasibility Study, Solitario will hold an 80% interest in MH-LLC, and DHI-US. Ely Gold’s wholly owned US subsidiary, will hold a 20% interest in MH-LLC. Further Solitario obligations include arranging project financing, and making future property and advanced royalty payments.