Letter to Shareholders:
With Solitario’s continued success in the execution of its unique business model, we believe a new corporate name is in order to more fully reflect who we are and what we do. With shareholder approval, Solitario will have a new name that symbolizes a new chapter in our corporate evolution:

Our shareholders and the investment community have long recognized Solitario’s success in the exploration arena with the premium quality of our asset base. But what is becoming increasingly important is the exceptional structure of our joint- venture arrangements with our senior mining company partners. All our joint ventures are similarly structured to Net Profit Interest Royalties, or NPI Royalties. This has created a unique company that retains significant interests, ranging from 25-35%, in five outstanding exploration/development projects for which we are essentially financed through production to cash flow. We know of no other company with such an array of NPI royalty-structured joint ventures.

Our business model is designed to lower risk and enhance financial returns relative to royalty-only companies or self-financing exploration companies that develop their own projects independently. This strategy has allowed us to: (1) preserve a low number of shares outstanding, (2) assemble a very effective exploration group consisting of 14 full-time geologists working in three countries, and (3) maintain a strong balance sheet with approximately $30 million in cash and securities, and no debt. Solitario Exploration & Royalty Corp. is committed to the following three guiding principles:

• Remain highly focused on exploration, leaving feasibility, development and mining operations to global mining companies

• Preserve our ability to make market-impacting, 100%-owned blockbuster exploration discoveries for our shareholders

• Minimize financial risk and shareholder dilution through our NPI royalty- structured joint ventures

Comparison of Five-Year Cumulative Total Return

2007: A Year of Achievement with an even more Promising Future

During the past several years we continued to enhance the breadth and quality of Solitario’s asset base and financial strength. Today we have five financed joint venture arrangements:

• Bongará - advanced high-grade zinc project in Peru, Solitario’s 30% interest funded through production by Votorantim Metais

• Pedra Branca - advanced PGM project in Brazil, Solitario’s 35% interest substantially funded through production by Anglo Platinum

• Pachuca Real - silver-gold project in Mexico, Solitario’s 30% interest funded through production by Newmont Mining

• Chambara - regional zinc project in Peru, Solitario’s 30% interest funded through production by Votorantim Metais

• Peru Alliance - regional gold project in Peru, Solitario’s 25% interest funded through production by Newmont Mining
  

• In total, our partners estimate they will spend over $10 million on these projects in 2008, with at least $5 million on Bongará alone.

On our 100%-owned projects, we have an aggressive independent exploration program planned for 2008 in all three countries in which we operate: Mexico, Peru and Brazil. Perhaps the most intriguing of these is our new Purica copper-molybdenum project in northern Mexico that is strategically situated between two world-class copper-molybdenum deposits, Cananea and La Rica.

As of March 15, 2008, our Kinross share position was worth approximately $28 million and we had about $2 million in cash.

During 2007 and early 2008 we reported:

• Exceptionally good drill hole assay results on our Bongará zinc project

• A dramatic 400% expansion in our Pedra Branca land holdings to 178,500 hectares

• A good start on our Pachuca Real initial drilling program

• An exciting new regional zinc project in northern Peru – Chambara

• Three new projects in our Peru Alliance - Cajatambo, Excelsior and Twin Lakes

• Impressive drill widths of polymetallic mineralization on our Triunfo project

As impressive as 2007 was for Solitario, we fully believe that our 2008 results will be even more meaningful – and that’s saying something! Before presenting 2007 project results, we will expand more on the royalty aspects of Solitario’s joint ventures and how that sets us apart from our peers.

Sincerely,


Christopher E. Herald
President & Chief Executive Officer