Solitario Eploration & Royalty Corp. has a market cap of $111.6 million; its shares were traded at around $3.75 with and P/S ratio of 557.9.
This is the annual revenues and earnings per share of XPL over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of XPL.
Highlight of Business Operations:On August 26, 2010, we signed a Letter of Intent ("LOI") with Ely Gold and Minerals, Inc., ("Ely") to make certain equity investments into Ely and to joint venture Ely's Mt. Hamilton gold project, which was wholly-owned by DHI-Minerals (US) Ltd. ("DHI-US") an indirect wholly-owned subsidiary of Ely. On August 26, 2010 and October 19, 2010, we made private placement investments of Cdn$250,000 each in Ely securities. We received a total of 3,333,333 shares of Ely common stock and warrants to purchase a total of 1,666,667 shares of Ely common stock (the "Ely Warrants") for an exercise price of Cdn$0.25 per share, which expire two years from the date of purchase. The private placements were pursuant to the LOI to joint venture Ely's Mt. Hamilton gold project. On November 12, 2010 we made an initial contribution of $300,000 for a 10% membership interest in, upon the formation, of Mt. Hamilton LLC ("MH-LLC") which was formed in December 2010. The terms of the joint venture are set forth in the Limited Liability Company Operating Agreement of MH-LLC between Solitario and DHI-US (the "MH Agreement"). MH-LLC owns 100% of the Mt. Hamilton Gold project. Pursuant to the MH Agreement, we may earn up to an 80% interest in MH-LLC, and indirectly, the Mt. Hamilton project, by completing various staged commitments. See a more complete discussion of Ely and MH-LLC below in Note 12 to the consolidated financial statements, "Ely Gold investment and the Mt. Hamilton Joint Venture" in Item 8 "Financial Statements and Supplementary Data."
We have a significant investment in Kinross at December 31, 2010, which consists of 980,000 shares of Kinross common stock. In August 2006, Solitario received 1,942,920 shares in exchange for 6,071,626 shares of Crown common stock it owned on the date of the Crown - Kinross Merger. Subsequent to the Crown - Kinross Merger, we have sold 982,920shares of Kinross common stock to fund our operations. As of March 8, 2011, Solitario owns 960,000 of Kinross common stock. In October 2007, Solitario entered into a Zero-Premium Equity Collar (the "Kinross Collar") with UBS Securities, LLC ("UBS"), which currently limits our ability to sell 100,000 of these shares until April 12, 2011, when the Kinross Collar expires. Under the Kinross Collar, upon termination on April 12, 2011, if the price of a share of Kinross common stock falls below $13.69 per share UBS will buy the shares for that amount. Furthermore, the Kinross Collar provides for an upper limit that we would receive of $27.50 per share on that date for the sale of those shares. As of March 8, 2011, the 860,000 shares of Kinross common stock that are not subject to the Kinross Collar have a value of approximately $13.36 million based upon the market price of $15.54 per Kinross share. Any significant fluctuation in the market value of Kinross common stock could have a material impact on Solitario's liquidity and capital resources.
During the year ended December 31, 2010, we borrowed $2,800,000 in short-term margin loans using our investment in Kinross as collateral for the short-term margin loan. At December 31, 2010, we have recorded $2,823,000 of short-term debt including $23,000 of accrued interest. See Note 3, to the consolidated financial statements "Short Term Debt" in Item 8 "Financial Statements and Supplementary Data."
Included in the consolidated balance sheet at December 31, 2010 and 2009 are total assets of $515,000 and $3,310,000, respectively, related to Solitario's foreign operations, located in Brazil, Peru, Mexico and Bolivia. Included in mineral properties in the consolidated balance sheet at December 31, 2009 are net capitalized costs related to the Pedra Branca Property, located in Brazil, of $2,607,000, which was deconsolidated during 2010.
We have reported losses in 15 of our 17 years of operations. We reported losses of $4,066,000 and $1,786,000 for the years ended December 31, 2010 and 2009, respectively. We can provide no assurance that we will be able to operate profitably in the future. We have had net income in only two years in our history, during 2003, as a result of a $5,438,000 gain on derivative instrument related to our investment in certain Crown warrants and during 2000, when we sold our Yanacocha property. We cannot predict when, if ever, we will be profitable again. If we do not operate profitably, the trading price of our common stock will likely decline.
In connection with the formation of MH-LLC, the Mt. Hamilton properties contributed by DHI-US to MH-LLC were subject to a security interest granted to Augusta Resource Corporation ("Augusta") related to Ely's acquisition of the Mt. Hamilton properties. Pursuant to the MH Agreement, as part of our earn-in, we agreed to make payments of $3,750,000, with $1,250,000 of that in cash to DHI-US and $2,500,000 of that in the form of private placement investments in Ely common stock, all to provide Ely with the funds necessary for Ely to make the loan payments due to Augusta. Failure to make any of the payments or investments necessary to provide Ely with funds to make the required payments due to Augusta may result in the loss of all of our interest in the Mt. Hamilton project.
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