Solitario Resources Corp. (XPL, Financial) filed Quarterly Report for the period ended 2009-03-31.
Solitario is a gold silver platinum-palladium and base metal exploration company actively exploring in Brazil Mexico and Peru. Solitario has significant business relationships with Anglo Platinum Newmont Mining and Votorantim Metais. Solitario has approximately US$24 million in cash and marketable securities and no debt. Solitario is traded on the American Stock Exchange (AMEX: XPL) and on the Toronto Stock Exchange (TSX: SLR). Solitario Resources Corp. has a market cap of $40.5 million; its shares were traded at around $1.3599 with and P/S ratio of 202.3.
We had a net loss of $671,000 or $0.02 per basic and diluted share for the three months ended March 31, 2009 compared to a loss of $1,513,000 or $0.05 per basic and diluted share for the first three months ended March 31, 2008. As explained in more detail below, the primary reason for the reduction in the loss in the first three months of 2009 compared to the loss in the first three months of 2008 was from an unrealized gain on derivative instruments of $527,000 primarily related to a reduction in the estimated liability from our Kinross Collar during the three months ended March 31, 2009 compared to an unrealized loss of $1,867,000 during the three months ended March 31, 2008. In addition, we recorded a stock-option compensation benefit of $121,000 included in general and administrative costs during the three months ended March 31, 2009 for the decline in our estimated stock option liability compared to stock-option compensation expense of $102,000 during the first three months of 2008. We also reduced our exploration expense in the first three months of 2009 to $681,000 compared to exploration expense of $1,021,000 during the first three months of 2008. During the first three months of 2008, these areas of increased costs were partially mitigated by the gain on sale of $1,787,000 from the sale of 100,000 shares of Kinross. There were no sales during the three months ended March 31, 2009. Additionally as a result of a decrease in our pre-tax loss during 2009 compared to 2008, including our unrealized gain on derivative instruments discussed below, we recorded income tax expense of $84,000 during the first quarter of 2009 compared to an income tax benefit of $213,000 during the first quarter of 2008. Each of these items is discussed in more detail below.
Our net exploration expense decreased to $681,000 during the first quarter of 2009 compared to $1,021,000 in the first quarter of 2008. During 2009 we significantly decreased our exploration efforts on reconnaissance exploration in Brazil and Peru in response to recent downturn in market prices for certain commodities for which we explore including silver and zinc. The price of gold has fluctuated significantly during 2008 and 2009 and has been trading around $800 to $1,000 during most of the last year. These uncertainties have caused many smaller exploration and mining companies to reduce their activities and in some cases have caused exploration companies to go out of business. The downturn in the prospects for small mining companies has also reinforced the need for all companies including ours to be more selective in our exploration efforts. We anticipate our future exploration activities will also be limited. We have increased certain selected portions of our exploration activities related to evaluation for acquisition of other mineral properties. This is partially based upon the difficulties of our peers in raising money and our relatively large amount of liquid assets compared to some other junior exploration companies. We continued our exploration activities associated with the Strategic Alliance upon the signing of the Alliance Agreement in January 2005, discussed below under "Joint Ventures." As a result of our joint ventures with Votorantim on our Bongara and Chambara properties, and the reimbursement of exploration expense by Anglo Platinum on our Pedra Branca project, which are discussed below under the heading "Joint Venture, Royalty and the Strategic Alliance Properties," our internal exploration expense was reduced during the first quarter of 2009 compared to 2008, when we were conducting more project exploration activities on our own. During the first three months of 2008, exploration expenses of $27,000 were offset by joint venture reimbursements by Anglo Platinum on our Pedra Branca project. No similar reimbursements were made during 2009. The largest decreases in our gross exploration costs were for exploration associated with drilling at our Mercurio project which was completed during 2008 and our reconnaissance efforts in Brazil. We also reduced our work on the Strategic Alliance and at our Pedra Branca Project in Brazil during 2009 compared to 2008. We conducted no drilling programs during the first three months of 2009 compared to the drilling program at Mercurio which was completed during the three months ended March 31, 2008. We continued to perform sampling and exploration in our Alliance Project Areas, discussed below, as well as reconnaissance efforts to add new prospects and ongoing geologic work to evaluate and advance our existing exploration properties and targets. We anticipate continuing to acquire mineral properties, either through staking, joint venture or lease, in Latin America during 2009 and our 2009 exploration expenditure budget is approximately $4,404,000. This budget includes approximately $1,500,000 for the Pedra Branca project, which will be funded by capital contributions from Anglo. The primary factors in our decision to not increase exploration expenditures in 2009 relate to a reduction in non-gold commodity prices and a downturn in equity prices for mineral exploration companies. This reduction in exploration activity will allow us to conserve our limited resources in the event of a longer term down turn in the mineral exploration industry.
Our marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon market quotes of the underlying securities. At March 31, 2009 and December 31, 2008, we owned 1,150,000 shares of Kinross common stock. The Kinross shares are recorded at their fair market value of $20,551,000 and $21,183,000 at March 31, 2009 and December 31, 2008, respectively. At March 31, 2009, 900,000 of these 1,150,000 shares are subject to the Kinross Collar. In addition we own other marketable equity securities with a fair value of $47,000 and $33,000 as of March 31, 2009 and December 31, 2008, respectively. Changes in the fair value of marketable equity securities are recorded as gains and losses in other comprehensive income in stockholder's equity. During the first quarter of 2009, we recorded a loss on marketable equity securities in accumulated other comprehensive income in shareholders' equity of $617,000, less related deferred tax benefit of $230,000. During the first quarter of 2008, we recorded a gain on marketable equity securities in accumulated other comprehensive income in shareholders' equity of $5,007,000, less related deferred tax expense of $1,868,000. In addition, we reclassified $1,787,000 of unrealized gain on marketable equity securities, net of related deferred taxes of $667,000 to gain on sale of marketable equity securities as a result of the sale of 100,000 shares of Kinross during the quarter ended March 31, 2008. Any change in the market value of the shares of Kinross common stock could have a material impact on our liquidity and capital resources. The share price of Kinross common stock has varied from a high of $25.36 per share to a low of $6.85 per share during the 52 weeks ended March 31, 2009.
On October 12, 2007 we entered into a Zero-Premium Equity Collar (the "Kinross Collar") pursuant to a Master Agreement for Equity Collars and a Pledge and Security Agreement with UBS whereby we pledged 900,000 shares of Kinross Gold Corporation ("Kinross") common shares to be sold (or delivered back to us with any differences settled in cash). In accordance with the terms of the Kinross Collar, as the result of a dividend that Kinross paid on March 31, 2008, and 2009 and paid on September 30, 2008 of $0.04 per share, the prices under the Kinross Collar have been reduced by $0.12 per share from the price originally set on October 12, 2007. As of March 31, 2009 the Kinross Collar pricing has been adjusted to (i) 400,000 shares due on April 14, 2009 for a lower threshold price of no less than $13.69 per share (the "Floor Price") and an upper threshold price of no more than $21.65 per share; (ii) 400,000 shares due on April 13, 2010 for a lower threshold of the Floor Price and an upper threshold price of no more than $24.34 per share; and (iii) 100,000 shares due on April 12, 2011 for no less than the Floor Price and an upper threshold price of no more than $27.50 per share. Kinross' quoted closing price was $16.37 per share on October 12, 2007, the date of the initiation of the Kinross Collar. On April 14, 2009, the first tranche of the Kinross Collar expired and 400,000 shares under the Kinross Collar were released. No shares were delivered to UBS under the Kinross Collar and no cash was paid or received upon the termination of the first tranche of the Kinross Collar. As of May 4, 2009, 500,000 shares of Kinross common stock are subject to the KinrossRead the The complete Report
Solitario is a gold silver platinum-palladium and base metal exploration company actively exploring in Brazil Mexico and Peru. Solitario has significant business relationships with Anglo Platinum Newmont Mining and Votorantim Metais. Solitario has approximately US$24 million in cash and marketable securities and no debt. Solitario is traded on the American Stock Exchange (AMEX: XPL) and on the Toronto Stock Exchange (TSX: SLR). Solitario Resources Corp. has a market cap of $40.5 million; its shares were traded at around $1.3599 with and P/S ratio of 202.3.
Highlight of Business Operations:
As a result of a dividend of $0.04 per share that Kinross paid on March 31, 2009 and 2008 and on September 30, 2008, the prices under the Kinross Collar have been reduced by $0.12 per share from the price originally set on October 12, 2007. As of March 31, 2009 the Kinross Collar pricing has been adjusted to (i) 400,000 shares due on April 14, 2009 for a lower threshold price of no less than $13.69 per share (the "Floor Price") and an upper threshold price of no more than $21.65 per share; (ii) 400,000 shares due on April 13, 2010 for a lower threshold of the Floor Price and an upper threshold price of no more than $24.34 per share; and (iii) 100,000 shares due on April 12, 2011 for no less than the Floor Price and an upper threshold price of no more than $27.50 per share. On April 14, 2009, the first tranche of the Kinross Collar expired and 400,000 shares under the Kinross Collar were released. No shares were delivered to UBS under the Kinross Collar and no cash was paid or received upon the termination of the first tranche of the Kinross Collar. As of May 4, 2009, 500,000 shares of Kinross common stock are subject to the Kinross Collar.We had a net loss of $671,000 or $0.02 per basic and diluted share for the three months ended March 31, 2009 compared to a loss of $1,513,000 or $0.05 per basic and diluted share for the first three months ended March 31, 2008. As explained in more detail below, the primary reason for the reduction in the loss in the first three months of 2009 compared to the loss in the first three months of 2008 was from an unrealized gain on derivative instruments of $527,000 primarily related to a reduction in the estimated liability from our Kinross Collar during the three months ended March 31, 2009 compared to an unrealized loss of $1,867,000 during the three months ended March 31, 2008. In addition, we recorded a stock-option compensation benefit of $121,000 included in general and administrative costs during the three months ended March 31, 2009 for the decline in our estimated stock option liability compared to stock-option compensation expense of $102,000 during the first three months of 2008. We also reduced our exploration expense in the first three months of 2009 to $681,000 compared to exploration expense of $1,021,000 during the first three months of 2008. During the first three months of 2008, these areas of increased costs were partially mitigated by the gain on sale of $1,787,000 from the sale of 100,000 shares of Kinross. There were no sales during the three months ended March 31, 2009. Additionally as a result of a decrease in our pre-tax loss during 2009 compared to 2008, including our unrealized gain on derivative instruments discussed below, we recorded income tax expense of $84,000 during the first quarter of 2009 compared to an income tax benefit of $213,000 during the first quarter of 2008. Each of these items is discussed in more detail below.
Our net exploration expense decreased to $681,000 during the first quarter of 2009 compared to $1,021,000 in the first quarter of 2008. During 2009 we significantly decreased our exploration efforts on reconnaissance exploration in Brazil and Peru in response to recent downturn in market prices for certain commodities for which we explore including silver and zinc. The price of gold has fluctuated significantly during 2008 and 2009 and has been trading around $800 to $1,000 during most of the last year. These uncertainties have caused many smaller exploration and mining companies to reduce their activities and in some cases have caused exploration companies to go out of business. The downturn in the prospects for small mining companies has also reinforced the need for all companies including ours to be more selective in our exploration efforts. We anticipate our future exploration activities will also be limited. We have increased certain selected portions of our exploration activities related to evaluation for acquisition of other mineral properties. This is partially based upon the difficulties of our peers in raising money and our relatively large amount of liquid assets compared to some other junior exploration companies. We continued our exploration activities associated with the Strategic Alliance upon the signing of the Alliance Agreement in January 2005, discussed below under "Joint Ventures." As a result of our joint ventures with Votorantim on our Bongara and Chambara properties, and the reimbursement of exploration expense by Anglo Platinum on our Pedra Branca project, which are discussed below under the heading "Joint Venture, Royalty and the Strategic Alliance Properties," our internal exploration expense was reduced during the first quarter of 2009 compared to 2008, when we were conducting more project exploration activities on our own. During the first three months of 2008, exploration expenses of $27,000 were offset by joint venture reimbursements by Anglo Platinum on our Pedra Branca project. No similar reimbursements were made during 2009. The largest decreases in our gross exploration costs were for exploration associated with drilling at our Mercurio project which was completed during 2008 and our reconnaissance efforts in Brazil. We also reduced our work on the Strategic Alliance and at our Pedra Branca Project in Brazil during 2009 compared to 2008. We conducted no drilling programs during the first three months of 2009 compared to the drilling program at Mercurio which was completed during the three months ended March 31, 2008. We continued to perform sampling and exploration in our Alliance Project Areas, discussed below, as well as reconnaissance efforts to add new prospects and ongoing geologic work to evaluate and advance our existing exploration properties and targets. We anticipate continuing to acquire mineral properties, either through staking, joint venture or lease, in Latin America during 2009 and our 2009 exploration expenditure budget is approximately $4,404,000. This budget includes approximately $1,500,000 for the Pedra Branca project, which will be funded by capital contributions from Anglo. The primary factors in our decision to not increase exploration expenditures in 2009 relate to a reduction in non-gold commodity prices and a downturn in equity prices for mineral exploration companies. This reduction in exploration activity will allow us to conserve our limited resources in the event of a longer term down turn in the mineral exploration industry.
Our marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon market quotes of the underlying securities. At March 31, 2009 and December 31, 2008, we owned 1,150,000 shares of Kinross common stock. The Kinross shares are recorded at their fair market value of $20,551,000 and $21,183,000 at March 31, 2009 and December 31, 2008, respectively. At March 31, 2009, 900,000 of these 1,150,000 shares are subject to the Kinross Collar. In addition we own other marketable equity securities with a fair value of $47,000 and $33,000 as of March 31, 2009 and December 31, 2008, respectively. Changes in the fair value of marketable equity securities are recorded as gains and losses in other comprehensive income in stockholder's equity. During the first quarter of 2009, we recorded a loss on marketable equity securities in accumulated other comprehensive income in shareholders' equity of $617,000, less related deferred tax benefit of $230,000. During the first quarter of 2008, we recorded a gain on marketable equity securities in accumulated other comprehensive income in shareholders' equity of $5,007,000, less related deferred tax expense of $1,868,000. In addition, we reclassified $1,787,000 of unrealized gain on marketable equity securities, net of related deferred taxes of $667,000 to gain on sale of marketable equity securities as a result of the sale of 100,000 shares of Kinross during the quarter ended March 31, 2008. Any change in the market value of the shares of Kinross common stock could have a material impact on our liquidity and capital resources. The share price of Kinross common stock has varied from a high of $25.36 per share to a low of $6.85 per share during the 52 weeks ended March 31, 2009.
On October 12, 2007 we entered into a Zero-Premium Equity Collar (the "Kinross Collar") pursuant to a Master Agreement for Equity Collars and a Pledge and Security Agreement with UBS whereby we pledged 900,000 shares of Kinross Gold Corporation ("Kinross") common shares to be sold (or delivered back to us with any differences settled in cash). In accordance with the terms of the Kinross Collar, as the result of a dividend that Kinross paid on March 31, 2008, and 2009 and paid on September 30, 2008 of $0.04 per share, the prices under the Kinross Collar have been reduced by $0.12 per share from the price originally set on October 12, 2007. As of March 31, 2009 the Kinross Collar pricing has been adjusted to (i) 400,000 shares due on April 14, 2009 for a lower threshold price of no less than $13.69 per share (the "Floor Price") and an upper threshold price of no more than $21.65 per share; (ii) 400,000 shares due on April 13, 2010 for a lower threshold of the Floor Price and an upper threshold price of no more than $24.34 per share; and (iii) 100,000 shares due on April 12, 2011 for no less than the Floor Price and an upper threshold price of no more than $27.50 per share. Kinross' quoted closing price was $16.37 per share on October 12, 2007, the date of the initiation of the Kinross Collar. On April 14, 2009, the first tranche of the Kinross Collar expired and 400,000 shares under the Kinross Collar were released. No shares were delivered to UBS under the Kinross Collar and no cash was paid or received upon the termination of the first tranche of the Kinross Collar. As of May 4, 2009, 500,000 shares of Kinross common stock are subject to the KinrossRead the The complete Report
