Peru Alliance - Newmont Mining
During 2007 and early 2008, work on our Peru Alliance area (Alliance Partner - Newmont Mining) resulted in the acquisition of three new projects: Cajatambo, Excelsior and Twin Lakes. All three properties are 100% owned and are situated within the central Peru mineral belt that is proximal to the giant Cerro de Pasco silver-base metal district. During the first half of 2008 we plan additional surface work to potentially define drill targets on all three properties.

The Cajatambo property consists of nine concessions totaling 9,000 hectares. The geology of the property is dominated by of Tertiary volcanics that have been significantly altered by silicification, quartz-alunite and argillic alteration. The alteration system can be traced over an area eight kilometers long by two kilometers wide. It is considered to be a high-sulfidation epithermal gold system that is geologically similar in character to many of the large gold deposits situated throughout the Andean Mountains of Peru. Our work to date consists mainly of stream sediment sampling, rock chip channel sampling and reconnaissance geologic mapping. The best channel sample is 51 meters of 0.93 grams per tonne gold.

The Excelsior property consists of two concessions totaling 2,000 hectares. The geology of the property is comprised of a sequence of metamorphosed Ordovician sedimentary formations. Mineralization consists of gold-bearing massive and stockwork quartz-iron replacements associated with an intrusive dike in phyllites. The quartz replacements can be traced intermittently over a length of eight kilometers and a width of up to one kilometer. Mineralization is also associated with regional faulting along the hinge of an anticline. Although gold concentrations are not exceptionally high at surface, the remarkable size and consistency of anomalous gold is what makes this prospect intriguing.

The Twin Lakes property consists of one concession totaling 1,000 hectares. The geology of the property is composed of Tertiary volcanics cut by a system of parallel quartz veins. Veins are up to two meters wide and can be traced along strike up to 1.2 kilometers. The veins are polymetallic in character, within a low-sulfidation environment. Assay results are moderately high at surface and we believe the potential for a system of high-grade veins exists at depth.

We are particularly encouraged with the exploration results that we continue to generate in central Peru and anticipate additional acquistions in 2008.

In January 2005, we signed a Strategic Alliance Agreement (the “Peru Alliance”) and a Stock Purchase Agreement with various subsidiaries of Newmont Mining ("Newmont") to explore for gold in South America. Newmont purchased 2.7 million shares of Solitario (at the time, a 9.9% equity interest) for approximately $3.8 million. As part of the agreement, Solitario is committed to spend $3.8 million over the four-year period on gold exploration in regions (“Alliance Projects Areas”) that are mutually agreed upon by Newmont Exploration and Solitario. If Solitario acquires properties within Alliance Projects Areas and meets certain minimum exploration expenditures, Newmont Exploration will have the right to joint venture acquired properties and earn up to a 75% interest by taking the project through feasibility and financing Solitario’s retained 25% interest into production. Newmont Exploration may elect to earn a lesser interest or no interest at all, in which case it would retain a 2% net smelter return royalty and Solitario would own a 100% interest in the property.