Mt. Hamilton Gold Project - Nevada USA

In October 2013 Solitario announced the results of a gold price sensitivity study on Mt. Hamilton resources. Resource estimates were tabulated using three gold/silver price assumptions for the confining optimized pit shape: $1,100/$19, $1,300/$22 and $1,500/$25 per ounce. The study showed that the contained ounces in the Mt. Hamilton gold/silver resource is relatively insensitive to gold price assumptions between $1,100 to $1,500 and silver prices between $19 and $25 per ounce as presented in the tables below. The cutoff grade of 0.006 ounces per ton gold was held constant for the reporting of the three price scenarios.

The Measured and Indicated resource estimate for the February 2012 Feasibility Study assumed a gold price of $1,600 and resulted in 526,854 ounces of contained gold (excluding silver). With the addition of the Seligman resource and additional drilling conducted since the Feasibility Study was completed, the new Measured and Indicated resource estimate using an $1,100 per ounce gold price resulted in a 21% increase in contained gold to 638,490. In addition, Inferred in-pit resources increased 105% from 60,859 contained ounces of gold in the Feasibility Study to 124,806 contained gold ounces generated under the new lower case $1,100 gold price assumption. Solitario believes that with the design of our new mine plan combining the Centennial and Seligman deposits into a single pit (
click here), and increasing our production rate from 8,500 to 10,000 tons per day, project economics will remain robust at lower metal prices.

These new resource estimates were prepared on behalf of Solitario by SRK Consulting (U.S.) Inc. ("SRK") and serve to update the previous resource estimate for the Mt. Hamilton Project stated in the most recent October 25, 2012 Technical Report. The updated Mount Hamilton resource estimates were constrained by potentially mineable optimized pits using gold price assumptions of $1,100, $1,300 and $1,500 per ounce of gold and $19, $22 and $25.00 per ounce of silver. These new Mt. Hamilton resource estimates were based on 857 drill holes with an average hole depth of 396 feet for a total of 317,739 feet of drilling. The drill data were verified and validated by SRK in compliance with NI-43-101 requirements. This consolidated Mt. Hamilton resource estimate includes 60 new infill drill holes that converted earlier Inferred resources to the Indicated category, and added new ounces to the resource estimate.



Mt. Hamilton Resource and Metallurgy Update

In September 2013, a new NI-43-101 compliant Mt. Hamilton resource estimate was completed incorporating both the Centennial and Seligman gold and silver deposits. The resources for these two deposits were previously reported separately; however, drilling completed in 2012 suggests that these two mineralized zones are a single deposit and could be potentially mined by a single pit. The recently completed metallurgical testing on the Seligman area oxide mineralization has shown similar column leach gold recoveries and moderately enhanced silver recoveries compared to the Centennial area mineralization. This 2013 resource estimate was prepared on behalf of Solitario by SRK Consulting (U.S.) Inc. ("SRK") and serves to update the previous resource estimate for the Mt. Hamilton Project stated in the most recent October 25, 2012 Technical Report.

The updated Mount Hamilton resource estimate was constrained by a potentially mineable optimized pit using a gold price of $1,500 per ounce of gold and $25.00 per ounce of silver. The in-pit Measured and Indicated Resource, at a cutoff grade of 0.006 ounces per ton gold, contains approximately 791,000 ounces of gold equivalent ("AuEq") using a 60:1 silver-to-gold ratio. An additional Inferred Resource totaling approximately 207,000 AuEq ounces is also estimated within the optimized pit. Previously reported Mineral Reserves for the Centennial deposit are fully contained within, and are not additional to the Mineral Resources stated in the table below.



Gold and silver mineralization is hosted in moderate to strongly oxidized calc-silicate skarn and hornfels and altered granodiorite. The new Mt. Hamilton resource estimate was based - on 857 drill holes with an average hole depth of 396 ft for a total of 317,739 ft of drilling. The drill data were verified and validated by SRK in compliance with NI-43-101 requirements. This consolidated Mt. Hamilton resource estimate includes 60 new infill drill holes that converted earlier Inferred Seligman resources to the Indicated category, while also expanding the Seligman resource.

This resource estimate utilizes lower gold and silver price assumptions ($1,500 versus $1,600 for gold and $25.00 versus $40.00 for silver) than the previous Centennial resource estimate, and similar gold and silver price assumptions to those used for the 2012 Seligman estimate. It should be emphasized that more conservative specific gravity assumptions were incorporated into this latest resource model in comparison to previous models based on recently completed, more detailed density testing.

Solitario is currently working on a new mine plan that considers mining the Seligman deposit first as it would require less pre-stripping of waste than previously envisioned in mining only the Centennial deposit. This could advance initial ore delivery by as much as six months, reduce working capital costs, modestly increase initial capital costs and reduce life-of-mine operating costs compared to the 2012 Centennial Feasibility Study mining plan that did not include Seligman mineralization. 2013 field work includes drilling two geotechnical core holes to better design the conveyor adit and vertical ore pass that connects the Mt. Hamilton open pit operations to the heap leach facilities. Figures showing the new resource model for the combined Seligman - Centennial resource can be accessed by clicking here.

Seligman Metallurgical Testing Results

Metallurgical testing of Seligman area oxide mineralization was recently completed with overall favorable results that were similar to metallurgical test work on the Centennial ores. In summary, the Seligman skarn and igneous oxide ores are amenable to cyanidation. Column leach test results averaged 80 percent for gold and 43.6 percent for silver, and are similar to the 2012 Centennial Feasibility Study recoveries of 79 percent for gold and 38 for percent silver. Additionally, projected recoveries were achieved in 120 days compared to 160 days in the Feasibility Study. The 3/4-inch crush size for leaching recommended in the 2012 Mt. Hamilton Technical Report was also confirmed to be appropriate for the Seligman ore.


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.
- 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.

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.


Solitario Exploration & Royalty Corp.
4251 Kipling Street, Suite 390; Wheat Ridge, CO 80033 | Tel: 303-534-1030; Fax: 303-534-1809