Peru Alliance - Newmont Mining

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.

Work conducted in 2008 resulted in the identification, acquisition and delineation of two very high-quality silver-base metals (zinc+lead) projects - the Chonta and La Promesa projects.  Both properties are situated within the central Peru mineral belt that is proximal to the giant Cerro de Pasco silver-base metal district.  

At Chonta, widespread small-scale mining occurred over an area of nearly one-square kilometer.  Our extensive surface work demonstrated widespread silver-base metals mineralization in mantos replacement deposits and veins.   Current plans call for an initial eight-hole, 1,600 meter drilling campaign beginning in May 2009.   This property has never been drill tested.

The 583-hectare Chonta property was optioned in March 2008 with a private party in Peru.   We can earn 100% interest in the property by making escalating payments over a five-year period totaling $2.25 million.   Solitario can unilaterally terminate the agreement at any time.   Additionally, we acquired four concessions and now hold 4,583 hectares in Solitario’s name that enlarges the outer perimeter of the Solitario-held land position. The Chonta property is subject to the provisions of the Newmont Alliance as discussed above.

The 2,000-hectare La Promesa Property, property is a new Solitario discovery.   At surface, we have traced two veins for at least 400 meters along strike, and we have strong indications that at least five other veins may be present.   Solitario currently owns 100% of the La Promesa property, subject to the provisions of the Newmont Alliance.

What sets La Promesa apart from other properties are the exceptionally high grades in silver, zinc, lead and indium* observed at surface.    Although our sampling on the project to date is limited, it is very encouraging.    There appears to be a systematic trend towards greater vein thickness with depth, as the widest observed vein in outcrop occurs at the lowest elevation sampled to date.   The chart below shows some of the exceptional grades encountered at La Promesa.

Our plans call for additional surface work to further define drill targets during the second quarter of 2009.  Pending acquisition of exploration permits within a reasonable amount of time, we anticipate an initial 10-hole, 1,500 meter drilling program beginning in the third quarter of 2009.