Solitario Resources Corp. (XPL, Financial) filed Quarterly Report for the period ended 2009-06-30.
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 $60 million; its shares were traded at around $2.017 with and P/S ratio of 300.
On April 16, 2009 we sold a covered call option covering 40,000 shares of Kinross (the "August 09 Kinross Call") for net proceeds of $45,000. The option had a strike price of $17.50 per share and an expiration date of August 19, 2009. As of June 30, 2009, we have recorded a current liability of $108,000 for the fair value of the August 09 Kinross Call and recorded a loss on derivative instrument of $63,000 for the three and six months ended June 30, 2009. Subsequent to June 30, 2009, we repurchased the August 09 Kinross Call for cash of $125,000 and concurrently we sold a covered call option covering 40,000 shares of Kinross with a strike price of $17.50 expiring on November 21, 2009 (the "November 09 Kinross Call") for $158,000.
We had a net loss of $1,388,000 or $0.05 per basic and diluted share for the three months ended June 30, 2009 compared to a loss of $1,409,000 or $0.05 per basic and diluted share for the three months ended June 30, 2008. As explained in more detail below, the primary reason for the reduction in the loss for the three months ended June 30, 2009 compared to the loss in the same period of 2008 was a reduction in our exploration expense in 2009 compared to 2008 as well as a decrease in our loss on derivative instruments to a gain of $3,000 during the three months ended June 30, 2009 compared to a loss of $864,000 during the three months ended June 30, 2008. These changes were partially offset by an increase in our general and administrative costs, primarily related to our stock option compensation expense of $868,000 during the three months ended June 30, 2009 compared to a stock option compensation benefit of $85,000 during the three months ended June 30, 2008. In addition, we recorded a gain of $490,000 from the sale of our Kinross stock during the three months ended June 30, 2009 compared to a gain of $796,000 during the three months ended June 30, 2008. These fluctuations caused an increase in our pre-tax loss during 2009 compared to 2008, including our unrealized gain on derivative instruments discussed below, we recorded an income tax benefit of $295,000 during the three months ended June 30, 2009 compared to an income tax benefit of $130,000 during the three months ended June 30, 2008. Each of these items is discussed in more detail below.
We had a loss of $2,059,000 or $0.07 per share for the six months ended June 30, 2009 compared to a loss of $2,923,000 or $0.10 per share for the six months ended June 30, 2008. The primary reason for the reduction in the loss in the six months ended June 30, 2009 from the loss in the same period of 2008 was a reduction in exploration expense and a gain on derivative instruments of $530,000 during the six months ended June 30, 2009 compared to a loss on the derivative instruments of $2,731,000 in the six months ended June 30, 2008. As explained below, this change in the derivative instruments is primarily related to the change in value of our Kinross Collar, which is, in turn, affected by the price of a share of Kinross stock. These reductions in costs were partially offset by an increase in our stock option compensation expense included in general and administrative costs to $747,000 during the six months ended June 30, 2009 compared to $17,000 during the first six months of 2008. Each of these items is discussed in more detail below.
Excluding the $747,000 and $17,000, respectively, of stock-option compensation expense during the first half of 2009 and 2008, discussed below, other general and administrative costs were $1,177,000 during the first six months of 2009 compared to $1,205,000 in the same period of 2008. Salary and benefits expense increased to $643,000 in the first six months of 2009 compared to $601,000 in the first six months of 2008. Legal and accounting costs increased to $216,000 in the first six months of 2009 compared to $152,000 in the first six months of 2008, primarily related to the restatement discussed above. However these increases were offset by (i) a $40,000 decrease in consulting expense to a related party, discussed below; (ii) a decrease in office and insurance expense to $132,000 in the first six months of 2009 compared to $160,000 in the first six months of 2008; and (iii) a decrease in our travel and shareholder services expenses to $186,000 in the first six months of 2009 compared to $257,000 in the same period of 2008. These decreases were partially related to the decreased exploration activity discussed above.
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 June 30, 2009 and December 31, 2008, we owned 1,110,000 shares and 1,150,000 shares of Kinross common stock, respectively. The Kinross shares are recorded at their fair market value of $20,147,000 and $21,183,000 at June 30, 2009 and December 31, 2008, respectively. At June 30, 2009, 500,000 of these 1,110,000 shares are subject to the Kinross Collar. In addition we own other marketable equity securities with a fair value of $164,000 and $33,000 as of June 30, 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 stockholders\' equity. During the three and six months ended June 30, 2009, we recorded an unrealized gain (loss) on marketable equity securities in accumulated other comprehensive income in stockholders\' equity of $380,000 and $(238,000), respectively, less related deferred tax (expense) benefit of $(142,000) and $89,000, respectively . During the three and six months ended June 30, 2009, we reclassified $490,000 of unrealized gain on marketable equity securities, net of related deferred taxes of $183,000 to gain on sale of marketable equity securities as a result of the sale of 40,000 shares of Kinross. During the three and six months ended June 30, 2008, we recorded a loss on marketable equity securities in accumulated other comprehensive income in stockholders\' equity of $1,782,000 and $6,789,000, respectively, less related deferred tax benefit of $665,000 and $2,532,000, respectively. We reclassified $796,000 and $2,583,000, respectively, of unrealized gain on marketable equity securities, net of related deferred taxes of $297,000 and $963,000, respectively, to gain on sale of marketable equity securities as a result of the sale of 42,920 and 142,920 shares of Kinross, respectively. 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 $20.98 per share to a low of $6.85 per share during the 52 weeks ended June 30, 2009.
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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 $60 million; its shares were traded at around $2.017 with and P/S ratio of 300.
Highlight of Business Operations:
On December 10, 2008, we sold two covered call options covering 50,000 shares of Kinross each (the "February 09 Kinross Calls"). The first call option had a strike price of $20.00 per share and expired unexercised on February 21, 2009. We sold the first call option for $65,000 cash and it had a fair market value of $76,000 recorded as derivative instrument liability on December 31, 2008. The second call option had a strike price of $22.50 per share and expired unexercised on February 21, 2009. We sold the second option for $39,000 cash and it had a fair market value of $40,000 recorded as derivative instrument liability on December 31, 2008. During the six months ended June 30, 2009, we recorded a gain on derivative instruments of $116,000 on the February 09 Kinross Calls upon their expiration.On April 16, 2009 we sold a covered call option covering 40,000 shares of Kinross (the "August 09 Kinross Call") for net proceeds of $45,000. The option had a strike price of $17.50 per share and an expiration date of August 19, 2009. As of June 30, 2009, we have recorded a current liability of $108,000 for the fair value of the August 09 Kinross Call and recorded a loss on derivative instrument of $63,000 for the three and six months ended June 30, 2009. Subsequent to June 30, 2009, we repurchased the August 09 Kinross Call for cash of $125,000 and concurrently we sold a covered call option covering 40,000 shares of Kinross with a strike price of $17.50 expiring on November 21, 2009 (the "November 09 Kinross Call") for $158,000.
We had a net loss of $1,388,000 or $0.05 per basic and diluted share for the three months ended June 30, 2009 compared to a loss of $1,409,000 or $0.05 per basic and diluted share for the three months ended June 30, 2008. As explained in more detail below, the primary reason for the reduction in the loss for the three months ended June 30, 2009 compared to the loss in the same period of 2008 was a reduction in our exploration expense in 2009 compared to 2008 as well as a decrease in our loss on derivative instruments to a gain of $3,000 during the three months ended June 30, 2009 compared to a loss of $864,000 during the three months ended June 30, 2008. These changes were partially offset by an increase in our general and administrative costs, primarily related to our stock option compensation expense of $868,000 during the three months ended June 30, 2009 compared to a stock option compensation benefit of $85,000 during the three months ended June 30, 2008. In addition, we recorded a gain of $490,000 from the sale of our Kinross stock during the three months ended June 30, 2009 compared to a gain of $796,000 during the three months ended June 30, 2008. These fluctuations caused an increase in our pre-tax loss during 2009 compared to 2008, including our unrealized gain on derivative instruments discussed below, we recorded an income tax benefit of $295,000 during the three months ended June 30, 2009 compared to an income tax benefit of $130,000 during the three months ended June 30, 2008. Each of these items is discussed in more detail below.
We had a loss of $2,059,000 or $0.07 per share for the six months ended June 30, 2009 compared to a loss of $2,923,000 or $0.10 per share for the six months ended June 30, 2008. The primary reason for the reduction in the loss in the six months ended June 30, 2009 from the loss in the same period of 2008 was a reduction in exploration expense and a gain on derivative instruments of $530,000 during the six months ended June 30, 2009 compared to a loss on the derivative instruments of $2,731,000 in the six months ended June 30, 2008. As explained below, this change in the derivative instruments is primarily related to the change in value of our Kinross Collar, which is, in turn, affected by the price of a share of Kinross stock. These reductions in costs were partially offset by an increase in our stock option compensation expense included in general and administrative costs to $747,000 during the six months ended June 30, 2009 compared to $17,000 during the first six months of 2008. Each of these items is discussed in more detail below.
Excluding the $747,000 and $17,000, respectively, of stock-option compensation expense during the first half of 2009 and 2008, discussed below, other general and administrative costs were $1,177,000 during the first six months of 2009 compared to $1,205,000 in the same period of 2008. Salary and benefits expense increased to $643,000 in the first six months of 2009 compared to $601,000 in the first six months of 2008. Legal and accounting costs increased to $216,000 in the first six months of 2009 compared to $152,000 in the first six months of 2008, primarily related to the restatement discussed above. However these increases were offset by (i) a $40,000 decrease in consulting expense to a related party, discussed below; (ii) a decrease in office and insurance expense to $132,000 in the first six months of 2009 compared to $160,000 in the first six months of 2008; and (iii) a decrease in our travel and shareholder services expenses to $186,000 in the first six months of 2009 compared to $257,000 in the same period of 2008. These decreases were partially related to the decreased exploration activity discussed above.
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 June 30, 2009 and December 31, 2008, we owned 1,110,000 shares and 1,150,000 shares of Kinross common stock, respectively. The Kinross shares are recorded at their fair market value of $20,147,000 and $21,183,000 at June 30, 2009 and December 31, 2008, respectively. At June 30, 2009, 500,000 of these 1,110,000 shares are subject to the Kinross Collar. In addition we own other marketable equity securities with a fair value of $164,000 and $33,000 as of June 30, 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 stockholders\' equity. During the three and six months ended June 30, 2009, we recorded an unrealized gain (loss) on marketable equity securities in accumulated other comprehensive income in stockholders\' equity of $380,000 and $(238,000), respectively, less related deferred tax (expense) benefit of $(142,000) and $89,000, respectively . During the three and six months ended June 30, 2009, we reclassified $490,000 of unrealized gain on marketable equity securities, net of related deferred taxes of $183,000 to gain on sale of marketable equity securities as a result of the sale of 40,000 shares of Kinross. During the three and six months ended June 30, 2008, we recorded a loss on marketable equity securities in accumulated other comprehensive income in stockholders\' equity of $1,782,000 and $6,789,000, respectively, less related deferred tax benefit of $665,000 and $2,532,000, respectively. We reclassified $796,000 and $2,583,000, respectively, of unrealized gain on marketable equity securities, net of related deferred taxes of $297,000 and $963,000, respectively, to gain on sale of marketable equity securities as a result of the sale of 42,920 and 142,920 shares of Kinross, respectively. 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 $20.98 per share to a low of $6.85 per share during the 52 weeks ended June 30, 2009.
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