Letter to Shareholders

We had high expectations for 2010 – and we were not disappointed. Major achievements for the year included:

• Acquiring the right to earn an 80% interest in the advanced Mt. Hamilton Gold Project – Nevada
• Initiating groundbreaking new development activities on our high-grade Bongará Zinc Project – Peru
• Securing an excellent joint venture partner, Buenaventura, for our Pachuca Real Silver-Gold
  Project – Mexico
• Another year of solid exploration progress on our Pedra Branca Platinum-Palladium Project – Brazil
• Developing new drilling projects for 2011

Details of all these exciting new developments are presented here on a project-by-project basis.

With the option to acquire an 80% interest in the Mt. Hamilton project, Solitario will be entering a rather exclusive and prestigious group – U.S. gold producers. We have been asked by a number of shareholders if we are changing our business strategy and now plan on developing all of our projects independently. The simple answer is no. We still believe that we can return more value to shareholders by being successful on the exploration front, and then securing great partners to fund the more advanced exploration, feasibility and development costs of a project. With this business model, we can focus on exploration – something we are very good at.

Then why Mt. Hamilton? Frankly, it was a unique opportunity with exceptional value. The project was on the verge of feasibility, with a simple mining configuration and plan, as well as easy heap-leach processing with good gold and silver recoveries. Mt. Hamilton has a low capital cost to place it into production – $52 million, low operating costs estimated at $450 to produce an ounce of gold, and importantly, outstanding upside to add new resources.

We see 2011 as another banner year for the company with the anticipated completion of the Mt. Hamilton Feasibility Study, the addition of detailed pre-feasibility work on our high-grade Bongará zinc project, initial drilling by Buenaventura on our Pachuca Real silver-gold project and drilling on at least two of our 100%-owned projects.

Best regards,

Christopher E. Herald
President & Chief Executive Officer