Business Overview
Solitario Resources Corp. (XPL) is an exploration stage company focused on the acquisition and development of precious and base metal properties. With a diverse portfolio of mineral projects across North and South America, the company is actively working to unlock the value of its assets and position itself for potential growth.Solitario Resources is primarily focused on the exploration and evaluation of precious metals, zinc, and other base metal properties. The company's current core mineral property assets include the Florida Canyon project in Peru, the Lik project in Alaska, and the Golden Crest project in South Dakota. Additionally, the company recently added the Cat Creek project in Colorado to its portfolio.
The company's business model revolves around acquiring exploration properties, conducting initial evaluations, and then either advancing the projects through joint venture partnerships or seeking to sell or create royalty interests prior to the establishment of proven and probable reserves. Solitario has never developed a mineral property on its own, but it continues to evaluate opportunities to further the exploration and potential development of its current projects.
Financials
For the full year 2023, Solitario reported an annual net loss of $3,754,000, with no revenue generated. The company's annual operating cash flow was -$3,263,000, and its annual free cash flow was -$3,274,000. These financial results reflect the company's ongoing exploration activities and the associated costs.In the second quarter of 2024, Solitario reported a net loss of $762,000, compared to a net loss of $1,040,000 in the same period of 2023. The decrease in net loss was primarily due to an unrealized gain on marketable equity securities of $248,000, compared to an unrealized loss of $227,000 in the prior-year quarter. Additionally, the company recorded a gain of $54,000 on the sale of marketable equity securities during the quarter.
For the six months ended June 30, 2024, Solitario reported a net loss of $1,492,000, compared to a net loss of $1,420,000 in the same period of 2023. The company's exploration expense increased to $841,000 in the first half of 2024, compared to $830,000 in the prior-year period, reflecting the company's ongoing investment in its mineral projects.
Liquidity
As of June 30, 2024, Solitario had $8,224,000 in cash and short-term investments, providing the company with the necessary liquidity to fund its exploration activities and potential acquisitions. The company's working capital stood at $9,307,000 as of the same date.Solitario has been actively managing its cash resources, including the sale of short-term investments and marketable equity securities, to support its operations. During the six months ended June 30, 2024, the company generated $388,000 from the sale of short-term investments and $54,000 from the sale of marketable equity securities.
Additionally, Solitario has an at-the-market (ATM) offering agreement in place, which allows the company to issue and sell shares of its common stock through a sales manager. During the second quarter of 2024, the company raised $1,218,000 in net proceeds from the ATM program, further strengthening its financial position.
Mineral Projects
Florida Canyon Project (Peru)
Solitario's carried interest in the Florida Canyon zinc project in Peru is one of its core mineral property assets. The project is being advanced through a joint venture with Nexa Resources, Ltd., Solitario's partner. Nexa is responsible for the ongoing exploration and development of the Florida Canyon project, while Solitario is monitoring the progress.Lik Project (Alaska)
The Lik project in Alaska is another key asset in Solitario's portfolio. The company holds a 50% interest in the project, with Teck American Incorporated, a subsidiary of Teck Resources Limited, as its joint venture partner. Solitario and Teck are working together to further explore and evaluate the potential development plans for the Lik project.Golden Crest Project (South Dakota)
The Golden Crest project in South Dakota is a wholly-owned exploration project for Solitario. During the second quarter of 2024, the company added a new area to the existing Golden Crest project, covering approximately 98 additional claims. Solitario is conducting exploration activities on the Golden Crest project on its own.Cat Creek Project (Colorado)
In 2024, Solitario acquired a new early-stage exploration project, the Cat Creek project in Colorado. The company capitalized the initial lease acquisition cost of $12,000 for this new project and is in the early stages of exploration.Exploration Activities and Outlook
Solitario's exploration expenses for the three and six months ended June 30, 2024 were $487,000 and $841,000, respectively, compared to $555,000 and $830,000 in the same periods of 2023. The company's exploration activities have been focused on its core projects, including the Golden Crest, Lik, and Cat Creek projects.At the Golden Crest project, Solitario received drilling permits during the second quarter of 2024 and plans to begin drilling activities in the third quarter of the year. The company has budgeted approximately $3,900,000 for its full-year exploration expenditures in 2024, which includes around $1,700,000 for the planned drilling at Golden Crest.
Solitario's exploration efforts at the Lik project are being carried out by its joint venture partner, Teck, while the company's work on the Cat Creek project is in the early stages. The company continues to monitor the progress at the Florida Canyon project, which is being advanced by its joint venture partner, Nexa.
Risks and Challenges
Solitario's business is subject to various risks and uncertainties, including those related to the volatile nature of commodity prices, the challenges of mineral exploration and development, and the potential impact of macroeconomic and geopolitical factors. The company's ability to successfully identify, acquire, and advance mineral properties is crucial to its long-term success.Additionally, Solitario's reliance on joint venture partnerships to fund and advance certain projects introduces additional risks, as the company's success is partially dependent on the performance and decisions of its partners.