Letter to Shareholders:
Even in these challenging financial times, we remain optimistic and confident about Solitario Exploration & Royalty Corp.'s future. Financially, we are rock solid with approximately $20 million in cash and Kinross securities as of the end of the first quarter of 2009. Of the five major joint ventures and Strategic Alliances we started with in 2008, four remain in tact for 2009, which speaks to the underlying quality of our core properties. Our pipeline of high potential, 100%-owned exploration projects remains full and exciting.

2008 was certainly a year of extremes. What started out as a promising year for the commodity markets ended up being a severe downturn by year's end. Virtually no junior exploration company's market valuation was spared, including Solitario's. However, Solitario was, and remains, far better positioned than most junior exploration companies in not only surviving the current financial crisis, but perhaps benefiting from it with our strong financial position.

Within the geographic areas that we operate, we are seeing a dramatic reduction in competitor activity that is resulting in higher quality advanced properties becoming available to us for acquisition from financially struggling junior exploration companies. Additionally, exploration costs are coming down as the pace of industry work slows.

Our Business Model Is Working
In last year's annual report, we stated, “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.” We substantially lowered our financial risks due to our partners spending approximately $10 million advancing four of our joint-ventured projects in 2008. This allowed Solitario to maintain its strong financial position, while benefiting from our principal projects moving forward. Additionally, we recognized in early 2008 that it would be prudent to trim our independent exploration budget and consequently we significantly reduced our expenditures in Brazil.

At the end of the first quarter of 2009, Solitario had cash and shares of Kinross Gold valued at approximately $20 million and no debt. We remain uniquely positioned for success in the exploration arena, coupled with exceptional joint venture arrangements with senior mining company partners.

Our joint ventures are structured very similarly to Net Profit Interest Royalties, or NPI Royalties, in 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 strategy to create NPI-royalty structured joint ventures has allowed us to maintain:

• a low number of shares outstanding
• an effective exploration team consisting of 12 full-time geologists working in three countries
• a strong balance sheet with approximately $20 million in cash and securities, and no debt
• the ability to move quickly, without financing, when new opportunities arise

With this introduction, we invite you to update yourself on Solitario's solid portfolio of projects. Everything considered, we believe 2009 could well be a year of promising new opportunities.

Sincerely,


Christopher E. Herald
President & Chief Executive Officer