Executive Summary / Key Takeaways

• Solitario Resources has engineered a capital-efficient exploration model through strategic joint ventures that fund advanced-stage projects while preserving equity, a critical advantage for a pre-revenue company facing a weak zinc price environment.
• The company's financial trajectory is improving, with nine-month net losses narrowing to $3.32 million from $3.77 million year-over-year, driven by disciplined cost control and $4.4 million in fresh capital from private placements that extended cash runway into 2026.
• A strategic pivot beyond zinc is underway, evidenced by the 2023 name change and third-quarter 2025 acquisitions of Cat Creek (critical metals) and Bright Angel (gold/copper), diversifying political and commodity price risk across four jurisdictions.
• The investment thesis hinges entirely on partner execution and asset advancement, as Solitario generates zero revenue and remains dependent on JV partners like Teck Resources (TECK) and Nexa Resources to fund the heavy lifting at its most valuable projects.
• Critical variables for 2026 include drilling results at Golden Crest where Phase 1 intersected 1,445 g/t silver, and whether the Teck JV at Lik can advance toward feasibility amid Alaska's permitting challenges and a stagnant zinc market.

Setting the Scene: A Forty-Year Evolution to Capital Efficiency

Solitario Resources began as a Colorado subsidiary of Crown Resources in 1984, but its modern identity crystallized in July 2023 when management dropped "Zinc" from the corporate name. This was not cosmetic. The change signaled a deliberate pivot from a single-commodity focus to a diversified precious and critical metals strategy, reflecting the harsh reality that zinc prices have declined 0.78% year-to-date in 2025 while facing projected oversupply. The company's business model has remained consistent since its 1994 Toronto IPO: acquire exploration properties, advance them through drilling and studies, then monetize via sale, joint venture, or royalty—never developing mines itself. This asset-light philosophy becomes a survival mechanism when junior miners face a financing drought.

The industry structure works against pure-play explorers. Major producers like Nexa Resources and Hudbay Minerals generate hundreds of millions in quarterly revenue from operating mines, while early-stage companies burn cash with no near-term production path. Solitario sits in the middle ground, holding carried interests and JV stakes that provide exposure to advanced projects without the capital burden. The company operates as a single segment but manages a portfolio that spans Peru's zinc belt, Alaska's Ambler district, South Dakota's Homestake-Wharf trend, and Colorado's critical metals frontier. This geographic spread matters because it diversifies regulatory risk—Peru's political instability is offset by Alaska's mining-friendly jurisdiction and South Dakota's stable permitting environment.

Strategic Differentiation: The Joint Venture as a Financial Instrument

Solitario's true innovation lies in treating joint ventures as balance-sheet tools, not just operational partnerships. At the Florida Canyon zinc project in Peru, Nexa Resources funds 100% of exploration, feasibility, and reclamation costs while Solitario retains a carried interest . This means zero cash outflow and zero reclamation liability for a project where over $100 million has been spent collectively. The "so what" is stark: while competitors like Fireweed Metals spend aggressively on solo drilling programs, Solitario preserves capital while maintaining exposure to a potential development decision. The risk is that Nexa controls the pace, and Solitario's upside is capped by its minority position—but in a capital-starved sector, avoiding dilution is often more valuable than maximizing ownership.

The Lik project in Alaska demonstrates a different JV architecture. The 50-50 partnership with Teck American Incorporated splits costs and control, but Teck's involvement brings technical credibility and funding capacity that Solitario could never command alone. Teck spent over $100 million on the project before the JV, and the partnership structure allows Solitario to participate in what management calls "advanced exploration" with a major miner bearing half the financial load. This matters because Alaska's Ambler district requires deep technical expertise and community relations that only an established operator can navigate. The trade-off: Solitario's 50% stake is more valuable than a carried interest, but it still must fund its share of future development, creating potential cash calls if the project advances.

Golden Crest represents the opposite end of the spectrum—a 100%-owned gold project where Solitario controls its destiny. The May 2025 metallurgical results showing favorable gold recovery, combined with the high-grade silver intercept of 1,445 g/t over 1.2 meters in drill hole GC-012, position this as the company's most direct path to creating standalone value. Management has budgeted $1.91 million of the total $3.91 million 2025 exploration spend for Golden Crest drilling, and the program ended in September to conserve cash. This discipline is significant as it shows management is not drilling for headlines but advancing methodically toward a resource definition that could attract a major partner or buyer.

Financial Performance: Controlled Burn in a Cash-Intensive Business

The nine-month financial results tell a story of deliberate cash conservation. Net losses improved to $3.32 million ($0.04 per share) from $3.77 million ($0.05 per share) in 2024, an improvement partially attributable to a $350,000 reduction in exploration spending and a $250,000 cut in general and administrative costs. Exploration expense fell to $2.56 million from $2.91 million, primarily because Golden Crest drilled fewer holes at lower cost per hole. This is not a company cutting corners—it is optimizing its burn rate to match available capital.

The cash position of $7.95 million as of September 30, 2025, with $7.57 million in a money market account, provides roughly eight months of runway at the current operational burn rate of approximately $1 million per month. However, this calculation understates the true runway because JV partners fund the most expensive work. The June 2025 private placements strengthened the balance sheet meaningfully: 1.59 million shares to Newmont Overseas Exploration (NEM) at $0.63 per share brought $1,001,700, while 5.56 million shares to a third-party investor generated $3,502,800. Newmont's involvement is particularly significant because the amended Investor Rights Agreement grants them a right of first refusal on Golden Crest transactions, effectively validating the project's potential.

Marketable securities sales provided an additional liquidity cushion. The company liquidated its entire Kinross Gold (KGC) position for $998,000 net proceeds and sold Vox Royalty (VOX) shares for $230,000. These were not panic sales but strategic decisions to redeploy capital into core assets. The result: working capital increased to $7.88 million from $5.62 million at year-end 2024, giving management flexibility to acquire additional properties or weather a prolonged downturn.

Competitive Positioning: The Efficient Junior in an Inefficient Market

Solitario's competitive set spans from pure explorers to integrated producers, but its positioning is unique. Trilogy Metals , focused on Alaska's Ambler district like Solitario's Lik project, trades at a $824 million market cap despite similar net losses and no revenue. Trilogy's 49% non-operating stake in the Arctic project requires it to fund its share of development, while Solitario's 50% operating interest at Lik provides more control but similar cost exposure. The key difference: Solitario's portfolio diversification across Peru and South Dakota reduces single-project risk, while Trilogy's Alaska concentration amplifies both upside and downside.

Fireweed Metals represents the aggressive solo explorer model, spending $44 million annually on its Yukon zinc project. Fireweed's high-grade discoveries are impressive, but its funding dependency creates constant dilution pressure. Solitario's JV structure avoids this trap, though it sacrifices some upside. The trade-off matters for investors: Fireweed offers higher octane resource growth but at the cost of severe share dilution, while Solitario provides more predictable, lower-cost advancement.

Among producers, Nexa Resources' (NEXA) $764 million quarterly revenue and $100 million net income dwarf Solitario's entire market capitalization. Nexa's 5-7% global zinc market share and integrated operations provide cash flow that funds exploration, but its mature mines face declining grades and higher costs. Solitario's Florida Canyon project, with grades around 9.8% zinc, offers higher-quality feedstock that could command a premium in a development scenario. The carried interest structure means Solitario benefits from Nexa's execution without bearing operational risk—a significant advantage when Peruvian political instability threatens mine operations.

Hudbay Minerals' (HBM) Q3 2025 results illustrate the producer challenge: $346.8 million revenue but only $0.03 EPS, missing estimates due to operational disruptions. Solitario's lack of production means it avoids these execution risks, but it also misses the revenue stability that allows producers to fund exploration internally. The company's valuation at $61.95 million market cap reflects this pre-revenue status, trading on asset potential rather than cash flow.

Outlook and Execution Risk: Waiting for the Cycle to Turn

Management's 2025 guidance reveals a company in harvest mode. The $3.91 million exploration budget is comparable to 2024 spending, but the allocation is more focused. With $1.91 million directed to Golden Crest and no significant Q4 expenditures planned, Solitario is conserving capital while awaiting results. The statement that "our drilling program ended shortly after the end of September 2025" is a clear signal that management will not spend for spending's sake.

The 2026 outlook hinges on three variables: partner advancement at Lik and Florida Canyon, commodity price recovery, and internal drilling success. Teck's ongoing work at Lik could move the project toward pre-feasibility, which would trigger a revaluation of Solitario's 50% stake. Nexa's exploration at Florida Canyon, if successful, could lead to a development decision where Solitario's carried interest converts to a royalty or participating interest. Both scenarios are outside management's direct control, making partner execution the critical risk.

Golden Crest offers the most direct path to value creation under Solitario's control. The high-grade silver intercept and favorable metallurgy support a major 2026 drilling campaign designed to expand the resource. If successful, this could attract a major gold producer to acquire or joint venture the project, providing non-dilutive capital for further exploration. The risk is that gold prices have not performed as expected, and without a discovery that moves the market, Golden Crest remains a stranded asset.

The Colorado acquisitions—Cat Creek (molybdenum/rhenium) and Bright Angel (gold/copper)—represent early-stage lottery tickets. With only $9,000 and $6,000 spent respectively in Q3, these projects are not material to near-term valuation but provide optionality on critical metals demand driven by electrification trends. The "so what" is that Solitario is building a portfolio that can pivot with commodity cycles, reducing dependence on zinc recovery.

Risks and Asymmetries: When the Model Breaks

The joint venture strategy, while capital-efficient, creates a fundamental agency problem. Solitario's most valuable assets are controlled by partners whose incentives may not align with minority shareholders. If Teck slows exploration at Lik to focus on other projects, or if Nexa deprioritizes Florida Canyon, Solitario has limited recourse beyond legal agreements. The risk is not that these projects fail geologically, but that they die from neglect—a common fate for JV assets in downturns.

The lack of production revenue is a double-edged sword. While it avoids operational risk, it means Solitario cannot self-fund exploration. The company must constantly tap equity markets, creating dilution pressure that erodes per-share value. The June 2025 placements at $0.63 per share, below the current $0.68 price, demonstrate this challenge. If zinc prices remain weak and partners pull back, Solitario faces a choice between dilutive financings or asset sales at distressed prices.

Peruvian political risk materialized in 2025 with community protests affecting several mining projects. While Florida Canyon is in a relatively stable region, any escalation could delay Nexa's work, pushing back potential development and extending Solitario's cash burn timeline. The company's geographic diversification mitigates this, but Peru represents a significant portion of its NAV.

On the upside, the JV structure creates asymmetric leverage. A single discovery at Lik or Florida Canyon could re-rate Solitario's valuation multi-fold, as the market would price in not just the discovery but the company's remaining exposure to additional targets. The high-grade nature of these projects—Lik at 9.6% zinc equivalent, Florida Canyon at similar grades—means they could be economic even at current zinc prices, making them attractive to acquirers seeking high-quality feedstock.

Valuation Context: Pricing Optionality at a Discount

At $0.68 per share, Solitario trades at a $61.95 million market capitalization with zero revenue and a book value of $0.27 per share. Traditional metrics like P/E or EV/EBITDA are meaningless for a pre-revenue explorer. The relevant valuation framework is enterprise value per unit of resource potential and cash runway relative to burn rate.

The company's $7.95 million cash position represents 13% of market cap, providing a floor value that limits downside. With quarterly operational cash burn of approximately $1.66 million, the runway is roughly 4.8 quarters before requiring additional capital—though JV funding extends this materially. Compare this to Trilogy Metals (TMQ), which trades at 6.6 times book value despite similar losses, or Fireweed Metals (FWZ), which has burned through significantly more capital for comparable resource potential. Solitario's price-to-book ratio of 2.5 times appears conservative relative to pure-play peers.

The valuation must also consider the carried interest value at Florida Canyon. With over $100 million spent historically and Nexa funding all future costs, Solitario's optionality has tangible value. If Nexa advances to feasibility, Solitario's stake could be worth $20-40 million in a development scenario—representing 30-65% upside from current valuation. The risk is that this value is realized only after years of partner-funded work, requiring investors to have patience and confidence in Nexa's execution.

Conclusion: A Call Option on Partner Execution

Solitario Resources has constructed a portfolio that defies the typical junior miner cash-burn model. Through strategic joint ventures, the company retains significant exposure to advanced zinc, gold, and critical metals projects while outsourcing the capital-intensive work to major partners. The improving financial trajectory—narrowing losses, controlled spending, and a strengthened balance sheet—demonstrates management's discipline in a sector known for profligacy.

The investment thesis rests on two variables: partner execution at Lik and Florida Canyon, and commodity price recovery. If Teck advances Lik toward development or Nexa moves Florida Canyon to production, Solitario's carried interests and JV stakes could be revalued dramatically. The 2026 drilling at Golden Crest provides internal optionality that could create standalone value independent of partners.

The primary risk is that this model becomes a waiting game that never pays off. Partners may move slowly, zinc prices could remain depressed, and Solitario may be forced into dilutive financings to maintain its asset base. At $0.68 per share, the market is pricing in a low probability of near-term success. For investors willing to underwrite partner execution and wait for the commodity cycle to turn, Solitario offers asymmetric upside through a capital structure that preserves equity while maintaining exposure to high-quality assets. The story is not about what Solitario controls today, but what its partners may deliver tomorrow.