Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 30, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Solitario Zinc Corp. | |
Entity Central Index Key | 917,225 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Is Entity Emerging Growth Company? | false | |
Entity Filer Category | Smaller Reporting Company | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 58,232,866 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 182 | $ 214 |
Short-term investments | 10,561 | 11,642 |
Investments in marketable equity securities, at fair value | 1,906 | 2,643 |
Prepaid expenses and other | 60 | 114 |
Total current assets | 12,709 | 14,613 |
Mineral properties | 15,657 | 15,657 |
Other assets | 117 | 125 |
Total assets | 28,483 | 30,395 |
Current liabilities: | ||
Accounts payable | 134 | 141 |
Long-term liabilities | ||
Asset retirement obligation – Lik | 125 | 125 |
Shareholders’ equity: | ||
Preferred stock, $0.01 par value, authorized 10,000,000 shares (none issued and outstanding at September 30, 2018 and December 31, 2017) | ||
Common stock, $0.01 par value, authorized 100,000,000 shares (58,261,366 and 58,434,566 shares, respectively, issued and outstanding at September 30, 2018 and December 31, 2017) | 583 | 584 |
Additional paid-in capital | 69,748 | 69,312 |
Accumulated deficit | (42,107) | (39,767) |
Total shareholders’ equity | 28,224 | 30,129 |
Total liabilities and shareholders equity | $ 28,483 | $ 30,395 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Preferred stock | ||
Preferred stock, par value | $ .01 | $ .01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock | ||
Common stock, par value | $ .01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 58,261,366 | 58,434,566 |
Common stock, shares outstanding | 58,261,366 | 58,434,566 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue - mineral property sale | $ 502 | |||
Costs, expenses and other: | ||||
Exploration expense | 344 | 180 | 686 | 519 |
Depreciation and amortization | 7 | 6 | 19 | 8 |
General and administrative | 344 | 40 | 1,509 | 900 |
Total costs, expenses and other | 695 | 226 | 2,214 | 1,427 |
Interest income (net) | 46 | 38 | 109 | 114 |
Unrealized (loss) gain on marketable equity securities | (74) | 157 | (737) | 618 |
(Loss) gain on derivative instruments | (18) | 267 | ||
Total other (loss) income | (28) | 177 | (628) | 999 |
Net Loss | $ (723) | $ (49) | $ 2,340 | $ 428 |
Basic and diluted | $ (0.01) | $ 0 | $ (0.04) | $ (0.01) |
Weighted average shares outstanding: | ||||
Basic and diluted | 58,303 | 55,864 | 58,379 | 44,467 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities: | ||
Net loss | $ (2,340) | $ (428) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 19 | 8 |
Unrealized loss (gain) on marketable equity securities | 737 | (618) |
Employee stock option expense | 510 | 23 |
Unrealized gain on derivative instruments | (267) | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | 67 | (37) |
Accounts payable and other current liabilities | (7) | 11 |
Net cash used in operating activities | (1,014) | (1,308) |
Investing activities: | ||
Sale of short-term investments, net | 1,068 | 3,254 |
Loan to Zazu | (1,500) | |
Purchase of Zazu net of cash acquired | (417) | |
Purchase of other assets | (11) | (2) |
Proceeds from the sale of marketable equity securities | 666 | |
Purchase of marketable equity securities | (578) | |
Sale of derivative instruments | 55 | |
Net cash provided by investing activities | 1,057 | 1,478 |
Financing activities: | ||
Purchase of common stock for cancellation | (75) | (28) |
Net cash used in financing activities | (75) | (28) |
Net (decrease) increase in cash and cash equivalents | (32) | 142 |
Cash and cash equivalents, beginning of period | 214 | 119 |
Cash and cash equivalents, end of period | $ 182 | $ 261 |
Business and Significant Accoun
Business and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Business and Significant Accounting Policies | 1. Business and Significant Accounting Policies Business and company formation Solitario Zinc Corp. (“Solitario” or the “Company”) is an exploration stage company as defined in Industry Guide 7, as issued by the United States Securities and Exchange Commission (“SEC”). Solitario was incorporated in the state of Colorado on November 15, 1984 as a wholly-owned subsidiary of Crown Resources Corporation ("Crown"). In July 1994, Solitario became a publicly traded company on the Toronto Stock Exchange (the "TSX") through its initial public offering. Solitario has been actively involved in mineral exploration since 1993. Solitario’s primary business is to acquire exploration mineral properties or royalties and/or discover economic deposits on its mineral properties and advance these deposits, either on its own or through joint ventures, up to the development stage. At that point, or sometime prior to that point, Solitario would likely attempt to sell its mineral properties, pursue their development either on its own, or through a joint venture with a partner that has expertise in mining operations, or create a royalty with a third party that continues to advance the property. Although Solitario has owned exploration projects in both precious and base metals in the past, Solitario has shifted its primary focus to the acquisition and exploration of zinc-related exploration mineral properties since the Acquisition (defined below). However, Solitario may still evaluate and / or acquire other precious metal projects as part of its overall mineral property activity. In addition to focusing on its mineral exploration properties and the evaluation of mineral properties for acquisition or purchase of royalty interests, Solitario also evaluates potential strategic transactions for the acquisition of new precious and base metal properties and assets with exploration potential or business combinations that Solitario determines to be favorable to Solitario. Solitario has recorded revenue from the sale of mineral properties, including the sale on April 26, 2018 of its interest in the royalty on the Yanacocha property (discussed below) and the sale in 2015 of its former interest in Mount Hamilton LLC (“MH-LLC”) the owner of Solitario’s former Mt. Hamilton project (the “Mt. Hamilton Transaction”), and joint venture property payments and the sale of a royalty on the former Mt. Hamilton project. Revenues from the sale or joint venture of properties or assets, although significant when they occur, have not been a consistent annual source of revenue and would only occur in the future, if at all, on an infrequent basis. Solitario currently considers its carried interest in the Florida Canyon project and its interest in the Lik project to be its core mineral property assets. Nexa Resources, Ltd. (“Nexa”), Solitario’s joint venture partner, is expected to continue the development and furtherance of the Florida Canyon project and Solitario is monitoring progress at Florida Canyon. Solitario is working with its 50% joint venture partner, Teck American Incorporated, a wholly-owned subsidiary of Teck Resources Limited (both companies referred to as “Teck”), in the Lik deposit to further the exploration and evaluate potential development plans for the Lik project. As of September 30, 2018, Solitario has significant balances of cash and short-term investments that Solitario anticipates using, in part, to further the development of the Florida Canyon and Lik projects and to potentially acquire additional mineral property assets. The fluctuations in precious metal and other commodity prices contribute to a challenging environment for mineral exploration and development, which has created opportunities as well as challenges for the potential acquisition of early-stage and advanced mineral exploration projects or other related assets at potentially attractive terms. The accompanying interim condensed consolidated financial statements of Solitario for the three and nine months ended September 30, 2018 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). They do not include all disclosures required by generally accepted accounting principles for annual financial statements, but in the opinion of management, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation of our financial position and results of operations. Interim results are not necessarily indicative of results, which may be achieved in the future or for the full year ending December 31, 2018. These financial statements should be read in conjunction with the financial statements and notes thereto which are included in Solitario’s Annual Report on Form 10-K for the year ended December 31, 2017. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation. Recent Developments Sale of the Yanacocha Royalty On April 26, 2018 Solitario sold its royalty interest in the non-producing Yanacocha property (the “Yanacocha Royalty”) to a wholly owned subsidiary of Newmont Mining Corporation (“Newmont”) for approximately $502,000 in cash. The Yanacocha Royalty covered 43 concessions totaling 36,052 hectares. Newmont owns the underlying mineral concessions covered by the Yanacocha Royalty. None of the concessions covered by the Yanacocha Royalty have any reported reserves or resources. Solitario had no mineral property capitalized cost in the Yanacocha Royalty and recorded Mineral Property Revenue of $502,000 during the nine months ended September 30, 2018. Purchase of Zazu On July 12, 2017, Solitario completed the acquisition of Zazu Metals Corp. (“Zazu”) whereby Solitario agreed to acquire all the issued and outstanding common shares of Zazu (the "Zazu Shares") by way of a statutory plan of arrangement (the "Arrangement") under the Canada Business Corporations Act Financial reporting The condensed consolidated financial statements include the accounts of Solitario and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements are prepared in accordance with generally accepted accounting principles and are expressed in U.S. dollars. Revenue recognition Solitario adopted ASU 2014-09 (defined below under “Recent accounting pronouncements”) on January 1, 2018. ASU 2014-09 primarily impacts revenue recognition based upon the timing of transfer of control of goods and services sold. Solitario’s recorded the revenue of $502,000 from the sale of the Yanacocha Royalty in accordance with ASU 2014-09. Payments received for the sale of property interests are recorded as a reduction of the related property's capitalized cost. Proceeds from the sale of properties which exceed the capitalized cost of the property without reserves are recognized as revenue. Payments received on the sale of properties with reserves are recognized as revenue to the extent the proceeds exceed the proportionate basis in the assets sold. Solitario records delay rental payments as revenue in the period received. There were no delay rentals in the periods presented. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Some of the more significant estimates included in the preparation of Solitario's financial statements pertain to: (i) Solitario’s carrying value of short-term investments; (ii) the recoverability of mineral properties related to its mineral exploration properties and their future exploration potential; (iii) the fair value of stock option grants to employees, to officers and directors and to others; (iv) the ability of Solitario to realize its deferred tax assets; and (v) Solitario's investment in marketable equity securities. In performing its activities, Solitario has incurred certain costs for mineral properties. The recovery of these costs is ultimately dependent upon the sale of mineral property interests or the development of economically recoverable ore reserves, the ability of Solitario or its joint venture partners to obtain the necessary permits and financing to successfully place the properties into production, and upon future profitable operations, none of which is assured. Cash equivalents Cash equivalents include investments in highly liquid money-market securities with original maturities of three months or less when purchased. As of September 30, 2018, a portion of Solitario’s cash and cash equivalents are held in brokerage accounts and foreign banks, which are not covered under the Federal Deposit Insurance Corporation (“FDIC”) rules for the United States. Short-term investments As of September 30, 2018 and December 31, 2017, Solitario has $9,662,000 and $10,395,000, respectively, of its current assets in United States Treasury Securities (“USTS”) with maturities at September 30, 2018 ranging from 15 days to 22 months. The USTS are recorded at their fair value, based upon quoted market prices. As of September 30, 2018 and December 31, 2017, Solitario has $499,000 and $1,247,000, respectively, in separate bank certificates of deposit (“CDs”) each with a maximum value of $250,000, and each of which are covered by FDIC insurance to the full-face value of the CDs. At September 30, 2018, these CDs have maturities of six months. At September 30, 2018 Solitario has $400,000 in an interest-bearing United States Dollar savings account with a Peruvian bank. Solitario’s short-term investments are recorded at their fair value, based upon quoted market prices. The short-term investments are highly liquid and may be sold in their entirety at any time at their quoted market price and are classified as a current asset. Mineral properties Solitario expenses all exploration costs incurred on its mineral properties prior to the establishment of proven and probable reserves through the completion of a feasibility study. Initial acquisition costs of Solitario’s mineral properties are capitalized. Solitario capitalizes all development expenditures on its projects, subsequent to the completion of a feasibility study. Solitario regularly performs evaluations of its investment in mineral properties to assess the recoverability and/or the residual value of its investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the carrying amount of an asset may not be recoverable, utilizing established guidelines based upon undiscounted future net cash flows from the asset or upon the determination that certain exploration properties do not have sufficient potential for economic mineralization. Derivative instruments Solitario accounts for its derivative instruments in accordance with Accounting Standards Codification (“ASC”) No. 815, "Accounting for Derivative Instruments and Hedging Activities" (“ASC 815”). Solitario has entered into covered calls from time to time on its investment in Kinross Gold Corporation (“Kinross”) marketable equity securities. In addition, during 2017, Solitario owned warrants exercisable to acquire shares of Vendetta Mining Corp. (“Vendetta”) common stock (the “Vendetta Warrants”). Each Vendetta Warrant allowed Solitario to purchase one share of Vendetta common stock at a price of Cdn$0.10 per share for a period of two years. At September 30, 2018, Solitario no longer owned any Vendetta Warrants. Solitario has not designated its covered calls as hedging instruments and any changes in the fair value of the covered calls and the Vendetta Warrants are recognized in the statement of operations in the period of the change as gain or loss on derivative instruments. Fair value FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. For certain of Solitario's financial instruments, including cash and cash equivalents and accounts payable, the carrying amounts approximate fair value due to their short-term maturities. Solitario's short-term investments in USTS and CDs, its marketable equity securities and any covered call options against those marketable equity securities are carried at their estimated fair value based on quoted market prices. Marketable equity securities Solitario's investments in marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon quoted prices of the securities owned. Solitario records investments in marketable equity securities as available-for-sale for investments in publicly traded marketable equity securities for which it does not exercise significant control and where Solitario has no representation on the board of directors of those companies and exercises no control over the management of those companies. The cost of marketable equity securities sold is determined by the specific identification method. During the first nine months of 2018 Solitario adopted ASU 2016-01, “Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825)” (“ASU 2016-01”). In accordance with ASU 2016-01, changes in fair value are recorded in the consolidated statement of operations during the period of the change. During the first nine months of 2018 Solitario recorded a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption of ASU 2016-01. See Note 9, “Shareholders’ Equity and Other Comprehensive Income”, below. Foreign exchange The United States dollar is the functional currency for all of Solitario's foreign subsidiaries. Although Solitario's South American exploration activities during 2017, and the first nine months of 2018, have been conducted primarily in Peru, a portion of the payments under the land, leasehold and exploration agreements of Solitario are denominated in United States dollars. Realized foreign currency gains and losses are included in the results of operations in the period in which they occur. Income taxes Solitario accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes” (“ASC 740”). Under ASC 740, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accounting for uncertainty in income taxes ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. ASC 740 provides that a company's tax position will be considered settled if the taxing authority has completed its examination, the company does not plan to appeal, and it is remote that the taxing authority would reexamine the tax position in the future. The provisions of ASC 740 had no effect on Solitario's financial position or results of operations. Earnings per share The calculation of basic and diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the three and nine months ended September 30, 2018 and 2017. Potentially dilutive shares related to outstanding options exercisable to acquire 4,025,228 shares of Solitario common stock for the three and nine months ended September 30, 2018 were excluded from the calculation of diluted earnings (loss) per share because the effects were anti-dilutive. Potentially dilutive shares related to outstanding options exercisable to acquire 1,928,428 shares of Solitario common stock for the three and nine months ended September 30, 2017 were excluded from the calculation of diluted earnings (loss) per share because the effects were anti-dilutive. Employee stock compensation and incentive plans Solitario classifies all of its stock options as equity options in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” Recent accounting pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. For a lessor, the accounting applied is also largely unchanged from previous guidance. The new rules will be effective for Solitario in the first quarter of 2019. Solitario does not anticipate early adoption. Solitario does not expect the adoption of ASU 2016-02 to materially change its current accounting methods and therefore it does not expect the adoption to have a material impact on its consolidated financial position or results of operations. In January 2016 the FASB issued ASU 2016-01, “Financial Instruments – Overall (subtopic 825-10) Recognition and Measurement of Financial Assets and Liabilities,” (“ASU 2016-01”) . In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (ASU 2018-02”), which allows for a reclassification from accumulated other comprehensive income or loss to retained earnings or accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (“TCJA”). ASU 2018-02 also requires certain related disclosures. ASU 2018-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the TCJA is recognized. Early adoption is permitted. Solitario is currently evaluating the impact of ASU 2018-02 but does not believe it will have a material effect on Solitario’s financial position or results of operations. |
Mineral Property
Mineral Property | 9 Months Ended |
Sep. 30, 2018 | |
Extractive Industries [Abstract] | |
Mineral Property | 2. Mineral Property The following table details Solitario’s investment in Mineral Property: (in thousands) September 30, December 31, 2018 2017 Exploration Lik project (Alaska – US) $15,611 $15,611 La Promesa (Peru) 6 6 Montana Royalty property (US) 40 40 Total exploration mineral property $15,657 $15,657 All exploration costs on our exploration properties, none of which have proven and probable reserves, including any additional costs incurred for subsequent lease payments or exploration activities related to our projects are expensed as incurred. Exploration expense The following items comprised exploration expense: (in thousands) Three months ended Nine months ended 2018 2017 2018 2017 Geologic and field expenses $322 $74 $619 $195 Administrative 22 106 67 324 Total exploration costs $344 $180 $686 $519 Asset Retirement Obligation In connection with the Acquisition, Solitario recorded an asset retirement obligation of $125,000 for Solitario’s estimated reclamation cost of the existing disturbance at the Lik project. This disturbance consists of an exploration camp including certain drill sites and access roads at the camp. The estimate was based upon estimated cash costs for reclamation as determined by the permitting bond required by the State of Alaska, for which Solitario has purchased a reclamation bond insurance policy in the event Solitario or its 50% joint venture partner, Teck, does not complete required reclamation. Solitario has not applied a discount rate to the recorded asset retirement obligation as the estimated time frame for reclamation is not currently known, as reclamation is not expected to occur until the end of the Lik project life, which would follow future development and operations, the start of which cannot be estimated or assured at this time. Additionally, no depreciation will be recorded on the related asset for the asset retirement obligation until the Lik project goes into operation, which cannot be assured. |
Marketable Equity Securities
Marketable Equity Securities | 9 Months Ended |
Sep. 30, 2018 | |
Marketable Securities [Abstract] | |
Marketable Equity Securities | 3. Marketable Equity Securities Solitario's investments in marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon quoted prices of the securities owned. The cost of marketable equity securities sold is determined by the specific identification method. Changes in market value are recorded in the consolidated statement of operations. During the three and nine months ended September 30, 2018, Solitario recorded an unrealized loss on marketable equity securities of $74,000 and $737,000, respectively. During the three and nine months ended September 30, 2017, Solitario recorded an unrealized gain on marketable equity securities of $157,000 and $618,000, respectively. On May 2, 2016, Solitario purchased 7,240,000 units of Vendetta for aggregate consideration of $289,000. Each unit included one common share of Vendetta and one Vendetta Warrant. The total purchase price for the units of $289,000 was allocated between the Vendetta common shares and the Vendetta Warrants based upon total fair values on the date of purchase. The Vendetta common shares were allocated a purchase cost of $186,000 and the Vendetta Warrants were allocated a purchase cost of $103,000. During the three and nine months ended September 30, 2017, Solitario sold 2,000,000 and 3,480,000 common shares of Vendetta, respectively, for cash proceeds of $407,000 and $666,000, respectively, that had a recorded cost of $50,000 and $88,000, respectively. In addition, during the three and nine months ended September 30, 2017 Solitario exercised 5,000,000 and 7,240,000 of the Vendetta Warrants, respectively, it held and received 5,000,000 and 7,240,000 Vendetta common shares, respectively, by paying $411,000 and $578,000, respectively, to Vendetta. As a result, as of September 30, 2017, Solitario no longer owned any Vendetta Warrants. The cost of the common shares received from the exercise of the Vendetta Warrants was recorded during the three and nine months ended September 30, 2017 based upon the total of the (i) exercise price of the Vendetta Warrants exercised, $411,000 and $578,000, respectively, and (ii) the fair value of the Vendetta Warrants on the date of exercise, which equaled their intrinsic value of $641,000 and $950,000, respectively, for a total value of $1,052,000 and $1,528,000, respectively. As a result of these transactions, Solitario owns 11,000,000 common shares of Vendetta and no Vendetta Warrants as of September 30, 2018 and December 31, 2017. The following tables summarize Solitario’s marketable equity securities and adjustments to fair value: (in thousands) September 30, 2018 December 31, 2017 Marketable equity at cost $1,714 $1,714 Cumulative unrealized gain on marketable equity securities 192 929 Marketable equity securities at fair value $1,906 $2,643 The following table represents changes, including sales, in marketable equity securities during the three and nine months ended September 30, 2018 and 2017: (in thousands) Three months ended Nine months ended 2018 2017 2018 2017 Cost of marketable equity securities sold $ - $50 $ - $ 88 Realized gain on marketable equity securities sold - 357 - 578 Proceeds from the sale of marketable equity securities sold - (407) - (666) Purchase of marketable equity securities - 1,052 - 1,528 Gross unrealized (loss) gain recorded in the statement of operations (74) 157 (737) 618 Change in marketable equity securities at fair value $(74) $ 802 $(737) $ 1,480 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | 4. Other Assets The following items comprised other assets: (in thousands) September 30, December 31 2018 2017 Furniture and fixtures, net of accumulated depreciation $ 38 $ 31 Lik project equipment, net of accumulated depreciation 75 90 Exploration bonds and other assets 4 4 Total other assets $117 $125 |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | 5. Derivative Instruments Vendetta Warrants During the three and nine months ended September 30, 2017, Solitario exercised its remaining Vendetta Warrants, discussed above in Note 3, “Marketable Equity Securities.” As a result, as of September 30, 2017, Solitario owned no Vendetta Warrants. During the three and nine months ended September 30, 2017, Solitario recorded a (loss) / gain on derivative instruments of $(31,000) and $215,000, respectively, related to the Vendetta Warrants, prior to the date of their exercise. Solitario owned no Vendetta Warrants as of September 30, 2018. Covered Call Options From time to time Solitario has sold covered call options against its holdings of Kinross. The business purpose of selling covered calls is to provide additional liquidity on a limited portion of shares of Kinross that Solitario may sell in the near term, which is generally defined as less than one year. Solitario has not designated its covered calls as hedging instruments and records gains or loss on the covered call in the period of the change. Solitario recorded the following gain on derivative instruments: (in thousands) Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Gain on Kinross calls $ - $ 13 $ - $ 52 Gain on Vendetta Warrants - (31) - 215 $ - $(18) $ - $267 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 6. Fair Value For certain of Solitario’s financial instruments, including cash and cash equivalents and payables, the carrying amounts approximate fair value due to their short-term maturities. Solitario’s short-term investments in CDs and USTS, Kinross covered calls and marketable equity securities are carried at their estimated fair value primarily based on quoted market prices. Solitario accounts for its financial instruments under ASC 820. ASC 820 establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: · Level 1 · Level 2 · Level 3 The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. During the three and nine months ended September 30, 2018 there were no reclassifications in financial assets or liabilities between Level 1, 2 or 3 categories. The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the hierarchy as of September 30, 2018: (in thousands) Level 1 Level 2 Level 3 Total Assets Marketable equity securities $1,906 $ - $ $1,906 United States Treasury securities 9,662 - - 9,662 Bank Certificates of Deposit 899 - - 899 The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the hierarchy as of December 31, 2017: (in thousands) Level 1 Level 2 Level 3 Total Assets Marketable equity securities $2,643 $ - $ - $2,643 United States Treasury securities 10,395 - - 10,395 Bank Certificates of Deposit 1,247 - - 1,247 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes Solitario accounts for income taxes in accordance with ASC 740. Under ASC 740, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized. At September 30, 2018 and December 31, 2017, a valuation allowance has been recorded, which fully offsets Solitario’s net deferred tax assets, because it is more likely than not that the Company will not realize some portion or all of its deferred tax assets. The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that the deferred tax assets can be realized prior to their expiration. During the three and nine months ended September 30, 2018 and 2017, Solitario recorded no deferred tax expense. |
Employee Stock Compensation Pla
Employee Stock Compensation Plans | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Employee Stock Compensation Plans | 8. Employee Stock Compensation Plans On June 18, 2013, Solitario’s shareholders approved the 2013 Solitario Exploration & Royalty Corp. Omnibus Stock and Incentive Plan (the “2013 Plan”). Under the terms of the 2013 Plan, a total of 1,750,000 shares of Solitario common stock were originally reserved for awards to directors, officers, employees and consultants. On June 29, 2017, Solitario shareholders approved an amendment to the 2013 Plan, which increased the number of shares of common stock available for issuance under the 2013 Plan from 1,750,000 to 5,750,000. Awards granted under the 2013 Plan may take the form of stock options, stock appreciation rights, restricted stock, and restricted stock units. The terms and conditions of the awards are pursuant to the 2013 Plan and are granted by the Board of Directors or a committee appointed by the Board of Directors. As of September 30, 2018, and December 31, 2017, there were options outstanding that are exercisable to acquire an aggregate of 4,025,228 and 1,928,428 shares of Solitario common stock, respectively. These options have exercise prices between $0.62 per share and $1.96 per share. Of these, as of September 30, 2018, 1,425,228 options are Replacement Options granted in connection with the Acquisition. During the nine months ended September 30, 2018, 357,200 Replacement Options with an exercise price of $2.24 per share expired unexercised. During the nine months ended September 30, 2018, Solitario granted options exercisable to acquire 100,000 shares of common stock to a consultant, with an exercise price of $0.62 per share, having a term of eleven months and having a grant date fair value of $12,000 based upon a Black-Scholes model with a 66% volatility and a 1% risk-free interest rate. During the three months ended September 30, 2017, Solitario granted options to acquire 2,500,000 shares of common stock, including 2,300,000 Conditional Options (described below). During the nine months ended September 30, 2017, Solitario granted options to acquire a total of 4,282,428 shares of common stock, including 1,782,428 Replacement Options. There were no exercises of options under the 2013 Plan during the three and nine months ended September 30, 2018 and 2017. During the three and nine months ended September 30, 2018, Solitario recorded non-cash stock option compensation expense of $68,000 and $510,000, respectively. Solitario recorded $23,000 of non-cash stock option compensation expense during the three and nine months ended September 30, 2017. On September 1, 2017, the Board of Directors granted, subject to shareholder approval at the next meeting of shareholders, 2,300,000 stock options under the 2013 Plan to officers and members of the Board of Directors (the “Conditional Options”). The Conditional Options were approved by Solitario’s shareholders at Solitario’s annual meeting on June 19, 2018. The Conditional Options have a five-year life, an exercise price of $0.77 per share, and a grant date fair value of $970,000, based upon a Black-Scholes model with a volatility of 64%, and a risk-free interest rate of 1.70%. The Conditional Options vest on the schedule of 25% on date of approval of the grant (June 19, 2018) and 25% on each of the next three anniversary dates of the date of grant (September 1, 2018, 2019 and 2020). |
Shareholders' Equity and Accumu
Shareholders' Equity and Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity and Accumulated Other Comprehensive Income | 9. Shareholders’ Equity and Accumulated Other Comprehensive Income (in thousands, except Accumulated Share amounts) Common Common Additional Other Total Stock Stock Paid-in Accumulated Comprehensive Shareholders’ Shares Amount Capital Deficit Income Equity Balance at December 31, 2017 58,434,566 584 $69,312 $(40,343) $ 576 $30,129 Cumulative-effect adjustment change in accounting principle - - - 576 (576) - Adjusted balance January 1, 2018 58,434,566 584 69,312 (39,767) - 30,129 Stock option expense - - 10 - - 10 Purchase of shares for cancellation (52,614) - (26) - - (26) Net loss - - - (1,004) - (1,004) Balance at March 31, 2018 58,381,952 $584 69,296 (40,771) $ - 29,109 Stock option expense - - 432 - - 432 Purchase of shares for cancellation (92,586) (1) (38) - - (39) Net loss - - - (613) - (613) Balance at June 30, 2018 58,289,366 $583 $69,690 $(41,384) $ - $28,889 Stock option expense - - 68 - - 68 Purchase of shares for cancellation (28,000) - (10) - - (10) Net loss - - - (723) - (723) Balance at September 30, 2018 58,261,366 $583 $69,748 $(42,107) $ - $28,224 Solitario adopted ASU 2016-01 in the first quarter of 2018. Solitario recorded a cumulative-effect adjustment for the change in accounting principle to accumulated deficit of $576,000 on January 1, 2018 related to the adoption of ASU 2016-01. In addition, as a result of the adoption of ASU 2016-01, Solitario (i) eliminated its previously recorded gain on sale of marketable equity securities of $357,000 and $578,000, respectively, in its consolidated statement of operations for the three and nine months ended September 30, 2017, and (ii) eliminated its previously recorded income tax (expense) benefit of $(74,000) and $15,000, respectively, for the three and nine months ended September 30, 2017, which resulted in an adjusted unrealized gain on marketable equity securities of $157,000 and $618,000, respectively, for the three and nine months ended September 30, 2017. These changes decreased the net income to a net (loss) for the three months ended September 30, 2017 from $77,000 to $(49,000) and reduced the net loss for the nine months ended September 30, 2017 from $453,000 to $428,000. These changes as a result of the adoption of ASU 2016-01 were similarly reflected in the adjustments to net income and marketable equity securities in the statement of cash flows for the nine months ended September 30, 2017. Share Repurchase Program On October 28, 2015, Solitario’s Board of Directors approved a share repurchase program that authorized Solitario to purchase up to two million shares of its outstanding common stock. During 2017, Solitario’s Board of Directors extended the expiration date of the share repurchase program through December 31, 2018. During the three months ended September 30, 2018 Solitario purchased 28,000 shares of Solitario common stock for an aggregate purchase price of $10,000. Solitario did not purchase any shares during the three months ended September 30, 2017. During the nine months ended September 30, 2018 and 2017, Solitario purchased 173,200 and 38,700 shares of Solitario common stock, respectively, for an aggregate purchase price of $75,000 and $28,000, respectively. As of September 30, 2018, Solitario has purchased a total of 841,000 shares for an aggregate purchase price of $423,000 under the share repurchase program since its inception. |
Business and Significant Acco_2
Business and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
1. Business and Significant Accounting Policies | 1. Business and Significant Accounting Policies Business and company formation Solitario Zinc Corp. (“Solitario” or the “Company”) is an exploration stage company as defined in Industry Guide 7, as issued by the United States Securities and Exchange Commission (“SEC”). Solitario was incorporated in the state of Colorado on November 15, 1984 as a wholly-owned subsidiary of Crown Resources Corporation ("Crown"). In July 1994, Solitario became a publicly traded company on the Toronto Stock Exchange (the "TSX") through its initial public offering. Solitario has been actively involved in mineral exploration since 1993. Solitario’s primary business is to acquire exploration mineral properties or royalties and/or discover economic deposits on its mineral properties and advance these deposits, either on its own or through joint ventures, up to the development stage. At that point, or sometime prior to that point, Solitario would likely attempt to sell its mineral properties, pursue their development either on its own, or through a joint venture with a partner that has expertise in mining operations, or create a royalty with a third party that continues to advance the property. Although Solitario has owned exploration projects in both precious and base metals in the past, Solitario has shifted its primary focus to the acquisition and exploration of zinc-related exploration mineral properties since the Acquisition (defined below). However, Solitario may still evaluate and / or acquire other precious metal projects as part of its overall mineral property activity. In addition to focusing on its mineral exploration properties and the evaluation of mineral properties for acquisition or purchase of royalty interests, Solitario also evaluates potential strategic transactions for the acquisition of new precious and base metal properties and assets with exploration potential or business combinations that Solitario determines to be favorable to Solitario. Solitario has recorded revenue from the sale of mineral properties, including the sale on April 26, 2018 of its interest in the royalty on the Yanacocha property (discussed below) and the sale in 2015 of its former interest in Mount Hamilton LLC (“MH-LLC”) the owner of Solitario’s former Mt. Hamilton project (the “Mt. Hamilton Transaction”), and joint venture property payments and the sale of a royalty on the former Mt. Hamilton project. Revenues from the sale or joint venture of properties or assets, although significant when they occur, have not been a consistent annual source of revenue and would only occur in the future, if at all, on an infrequent basis. Solitario currently considers its carried interest in the Florida Canyon project and its interest in the Lik project to be its core mineral property assets. Nexa Resources, Ltd. (“Nexa”), Solitario’s joint venture partner, is expected to continue the development and furtherance of the Florida Canyon project and Solitario is monitoring progress at Florida Canyon. Solitario is working with its 50% joint venture partner, Teck American Incorporated, a wholly-owned subsidiary of Teck Resources Limited (both companies referred to as “Teck”), in the Lik deposit to further the exploration and evaluate potential development plans for the Lik project. As of September 30, 2018, Solitario has significant balances of cash and short-term investments that Solitario anticipates using, in part, to further the development of the Florida Canyon and Lik projects and to potentially acquire additional mineral property assets. The fluctuations in precious metal and other commodity prices contribute to a challenging environment for mineral exploration and development, which has created opportunities as well as challenges for the potential acquisition of early-stage and advanced mineral exploration projects or other related assets at potentially attractive terms. The accompanying interim condensed consolidated financial statements of Solitario for the three and nine months ended September 30, 2018 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). They do not include all disclosures required by generally accepted accounting principles for annual financial statements, but in the opinion of management, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation of our financial position and results of operations. Interim results are not necessarily indicative of results, which may be achieved in the future or for the full year ending December 31, 2018. These financial statements should be read in conjunction with the financial statements and notes thereto which are included in Solitario’s Annual Report on Form 10-K for the year ended December 31, 2017. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation. Recent Developments Sale of the Yanacocha Royalty On April 26, 2018 Solitario sold its royalty interest in the non-producing Yanacocha property (the “Yanacocha Royalty”) to a wholly owned subsidiary of Newmont Mining Corporation (“Newmont”) for approximately $502,000 in cash. The Yanacocha Royalty covered 43 concessions totaling 36,052 hectares. Newmont owns the underlying mineral concessions covered by the Yanacocha Royalty. None of the concessions covered by the Yanacocha Royalty have any reported reserves or resources. Solitario had no mineral property capitalized cost in the Yanacocha Royalty and recorded Mineral Property Revenue of $502,000 during the nine months ended September 30, 2018. Purchase of Zazu On July 12, 2017, Solitario completed the acquisition of Zazu Metals Corp. (“Zazu”) whereby Solitario agreed to acquire all the issued and outstanding common shares of Zazu (the "Zazu Shares") by way of a statutory plan of arrangement (the "Arrangement") under the Canada Business Corporations Act Financial reporting The condensed consolidated financial statements include the accounts of Solitario and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements are prepared in accordance with generally accepted accounting principles and are expressed in U.S. dollars. Revenue recognition Solitario adopted ASU 2014-09 (defined below under “Recent accounting pronouncements”) on January 1, 2018. ASU 2014-09 primarily impacts revenue recognition based upon the timing of transfer of control of goods and services sold. Solitario’s recorded the revenue of $502,000 from the sale of the Yanacocha Royalty in accordance with ASU 2014-09. Payments received for the sale of property interests are recorded as a reduction of the related property's capitalized cost. Proceeds from the sale of properties which exceed the capitalized cost of the property without reserves are recognized as revenue. Payments received on the sale of properties with reserves are recognized as revenue to the extent the proceeds exceed the proportionate basis in the assets sold. Solitario records delay rental payments as revenue in the period received. There were no delay rentals in the periods presented. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Some of the more significant estimates included in the preparation of Solitario's financial statements pertain to: (i) Solitario’s carrying value of short-term investments; (ii) the recoverability of mineral properties related to its mineral exploration properties and their future exploration potential; (iii) the fair value of stock option grants to employees, to officers and directors and to others; (iv) the ability of Solitario to realize its deferred tax assets; and (v) Solitario's investment in marketable equity securities. In performing its activities, Solitario has incurred certain costs for mineral properties. The recovery of these costs is ultimately dependent upon the sale of mineral property interests or the development of economically recoverable ore reserves, the ability of Solitario or its joint venture partners to obtain the necessary permits and financing to successfully place the properties into production, and upon future profitable operations, none of which is assured. Cash equivalents Cash equivalents include investments in highly liquid money-market securities with original maturities of three months or less when purchased. As of September 30, 2018, a portion of Solitario’s cash and cash equivalents are held in brokerage accounts and foreign banks, which are not covered under the Federal Deposit Insurance Corporation (“FDIC”) rules for the United States. Short-term investments As of September 30, 2018 and December 31, 2017, Solitario has $9,662,000 and $10,395,000, respectively, of its current assets in United States Treasury Securities (“USTS”) with maturities at September 30, 2018 ranging from 15 days to 22 months. The USTS are recorded at their fair value, based upon quoted market prices. As of September 30, 2018 and December 31, 2017, Solitario has $499,000 and $1,247,000, respectively, in separate bank certificates of deposit (“CDs”) each with a maximum value of $250,000, and each of which are covered by FDIC insurance to the full-face value of the CDs. At September 30, 2018, these CDs have maturities of six months. At September 30, 2018 Solitario has $400,000 in an interest-bearing United States Dollar savings account with a Peruvian bank. Solitario’s short-term investments are recorded at their fair value, based upon quoted market prices. The short-term investments are highly liquid and may be sold in their entirety at any time at their quoted market price and are classified as a current asset. Mineral properties Solitario expenses all exploration costs incurred on its mineral properties prior to the establishment of proven and probable reserves through the completion of a feasibility study. Initial acquisition costs of Solitario’s mineral properties are capitalized. Solitario capitalizes all development expenditures on its projects, subsequent to the completion of a feasibility study. Solitario regularly performs evaluations of its investment in mineral properties to assess the recoverability and/or the residual value of its investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the carrying amount of an asset may not be recoverable, utilizing established guidelines based upon undiscounted future net cash flows from the asset or upon the determination that certain exploration properties do not have sufficient potential for economic mineralization. Derivative instruments Solitario accounts for its derivative instruments in accordance with Accounting Standards Codification (“ASC”) No. 815, "Accounting for Derivative Instruments and Hedging Activities" (“ASC 815”). Solitario has entered into covered calls from time to time on its investment in Kinross Gold Corporation (“Kinross”) marketable equity securities. In addition, during 2017, Solitario owned warrants exercisable to acquire shares of Vendetta Mining Corp. (“Vendetta”) common stock (the “Vendetta Warrants”). Each Vendetta Warrant allowed Solitario to purchase one share of Vendetta common stock at a price of Cdn$0.10 per share for a period of two years. At September 30, 2018, Solitario no longer owned any Vendetta Warrants. Solitario has not designated its covered calls as hedging instruments and any changes in the fair value of the covered calls and the Vendetta Warrants are recognized in the statement of operations in the period of the change as gain or loss on derivative instruments. Fair value FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. For certain of Solitario's financial instruments, including cash and cash equivalents and accounts payable, the carrying amounts approximate fair value due to their short-term maturities. Solitario's short-term investments in USTS and CDs, its marketable equity securities and any covered call options against those marketable equity securities are carried at their estimated fair value based on quoted market prices. Marketable equity securities Solitario's investments in marketable equity securities are classified as available-for-sale and are carried at fair value, which is based upon quoted prices of the securities owned. Solitario records investments in marketable equity securities as available-for-sale for investments in publicly traded marketable equity securities for which it does not exercise significant control and where Solitario has no representation on the board of directors of those companies and exercises no control over the management of those companies. The cost of marketable equity securities sold is determined by the specific identification method. During the first nine months of 2018 Solitario adopted ASU 2016-01, “Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825)” (“ASU 2016-01”). In accordance with ASU 2016-01, changes in fair value are recorded in the consolidated statement of operations during the period of the change. During the first nine months of 2018 Solitario recorded a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption of ASU 2016-01. See Note 9, “Shareholders’ Equity and Other Comprehensive Income”, below. Foreign exchange The United States dollar is the functional currency for all of Solitario's foreign subsidiaries. Although Solitario's South American exploration activities during 2017, and the first nine months of 2018, have been conducted primarily in Peru, a portion of the payments under the land, leasehold and exploration agreements of Solitario are denominated in United States dollars. Realized foreign currency gains and losses are included in the results of operations in the period in which they occur. Income taxes Solitario accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes” (“ASC 740”). Under ASC 740, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses and tax credits that are available to offset future taxable income and income taxes, respectively. A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accounting for uncertainty in income taxes ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. ASC 740 provides that a company's tax position will be considered settled if the taxing authority has completed its examination, the company does not plan to appeal, and it is remote that the taxing authority would reexamine the tax position in the future. The provisions of ASC 740 had no effect on Solitario's financial position or results of operations. Earnings per share The calculation of basic and diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the three and nine months ended September 30, 2018 and 2017. Potentially dilutive shares related to outstanding options exercisable to acquire 4,025,228 shares of Solitario common stock for the three and nine months ended September 30, 2018 were excluded from the calculation of diluted earnings (loss) per share because the effects were anti-dilutive. Potentially dilutive shares related to outstanding options exercisable to acquire 1,928,428 shares of Solitario common stock for the three and nine months ended September 30, 2017 were excluded from the calculation of diluted earnings (loss) per share because the effects were anti-dilutive. Employee stock compensation and incentive plans Solitario classifies all of its stock options as equity options in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” Recent accounting pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. For a lessor, the accounting applied is also largely unchanged from previous guidance. The new rules will be effective for Solitario in the first quarter of 2019. Solitario does not anticipate early adoption. Solitario does not expect the adoption of ASU 2016-02 to materially change its current accounting methods and therefore it does not expect the adoption to have a material impact on its consolidated financial position or results of operations. In January 2016 the FASB issued ASU 2016-01, “Financial Instruments – Overall (subtopic 825-10) Recognition and Measurement of Financial Assets and Liabilities,” (“ASU 2016-01”) . In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (ASU 2018-02”), which allows for a reclassification from accumulated other comprehensive income or loss to retained earnings or accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (“TCJA”). ASU 2018-02 also requires certain related disclosures. ASU 2018-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the TCJA is recognized. Early adoption is permitted. Solitario is currently evaluating the impact of ASU 2018-02 but does not believe it will have a material effect on Solitario’s financial position or results of operations. |
Mineral Property (Tables)
Mineral Property (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Extractive Industries [Abstract] | |
Capitalized Investment in Mineral Property | (in thousands) September 30, December 31, 2018 2017 Exploration Lik project (Alaska – US) $15,611 $15,611 La Promesa (Peru) 6 6 Montana Royalty property (US) 40 40 Total exploration mineral property $15,657 $15,657 |
Exploration Expense | (in thousands) Three months ended Nine months ended 2018 2017 2018 2017 Geologic and field expenses $322 $74 $619 $195 Administrative 22 106 67 324 Total exploration costs $344 $180 $686 $519 |
Marketable Equity Securities (T
Marketable Equity Securities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Marketable Equity Securities | (in thousands) September 30, 2018 December 31, 2017 Marketable equity at cost $1,714 $1,714 Cumulative unrealized gain on marketable equity securities 192 929 Marketable equity securities at fair value $1,906 $2,643 |
Changes in Marketable Equity Securities | (in thousands) Three months ended Nine months ended 2018 2017 2018 2017 Cost of marketable equity securities sold $ - $50 $ - $ 88 Realized gain on marketable equity securities sold - 357 - 578 Proceeds from the sale of marketable equity securities sold - (407) - (666) Purchase of marketable equity securities - 1,052 - 1,528 Gross unrealized (loss) gain recorded in the statement of operations (74) 157 (737) 618 Change in marketable equity securities at fair value $(74) $ 802 $(737) $ 1,480 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | (in thousands) September 30, December 31 2018 2017 Furniture and fixtures, net of accumulated depreciation $ 38 $ 31 Lik project equipment, net of accumulated depreciation 75 90 Exploration bonds and other assets 4 4 Total other assets $117 $125 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Gain Loss on Derivative Instruments | (in thousands) Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Gain on Kinross calls $ - $ 13 $ - $ 52 Gain on Vendetta Warrants - (31) - 215 $ - $(18) $ - $267 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value | (in thousands) Level 1 Level 2 Level 3 Total Assets Marketable equity securities $1,906 $ - $ $1,906 United States Treasury securities 9,662 - - 9,662 Bank Certificates of Deposit 899 - - 899 The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the hierarchy as of December 31, 2017: (in thousands) Level 1 Level 2 Level 3 Total Assets Marketable equity securities $2,643 $ - $ - $2,643 United States Treasury securities 10,395 - - 10,395 Bank Certificates of Deposit 1,247 - - 1,247 |
Shareholders' Equity and Accu_2
Shareholders' Equity and Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity and Accumulated Other Comprehensive Income | (in thousands, except Accumulated Share amounts) Common Common Additional Other Total Stock Stock Paid-in Accumulated Comprehensive Shareholders’ Shares Amount Capital Deficit Income Equity Balance at December 31, 2017 58,434,566 584 $69,312 $(40,343) $ 576 $30,129 Cumulative-effect adjustment change in accounting principle - - - 576 (576) - Adjusted balance January 1, 2018 58,434,566 584 69,312 (39,767) - 30,129 Stock option expense - - 10 - - 10 Purchase of shares for cancellation (52,614) - (26) - - (26) Net loss - - - (1,004) - (1,004) Balance at March 31, 2018 58,381,952 $584 69,296 (40,771) $ - 29,109 Stock option expense - - 432 - - 432 Purchase of shares for cancellation (92,586) (1) (38) - - (39) Net loss - - - (613) - (613) Balance at June 30, 2018 58,289,366 $583 $69,690 $(41,384) $ - $28,889 Stock option expense - - 68 - - 68 Purchase of shares for cancellation (28,000) - (10) - - (10) Net loss - - - (723) - (723) Balance at September 30, 2018 58,261,366 $583 $69,748 $(42,107) $ - $28,224 |
Business and Significant Acco_3
Business and Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Apr. 26, 2018 | Dec. 31, 2017 | Jul. 12, 2017 | |
Accounting Policies [Abstract] | ||||||||
Mineral property revenue recorded | $ 502 | |||||||
Solitario common shares issued at a rate of 0.3572 for 1 share Zazu for all issued and outstanding Zazu shares | 19,788,177 | |||||||
Solitario options granted to Zazu option holders | 1,782,428 | |||||||
Total purchase price of Zazu | $ 16,110 | $ 16,110 | ||||||
Sale of Yanacocha Royalty | $ 502 | |||||||
Current assets in United States Treasury securities | $ 9,662 | 9,662 | $ 10,395 | |||||
Bank certificates of deposit each with $250,000 maximum | 499 | 499 | $ 1,247 | |||||
Interest bearing United States Dollar savings account in Peruvian bank | $ 400 | $ 400 | ||||||
Potentially dilutive shares related to outstanding common stock options | 4,025,228 | 1,928,428 | 4,025,228 | 1,928,428 | ||||
Cumulative-effect adjustment for change in accounting principle | $ 576 | $ 576 |
Mineral Property - Capitalized
Mineral Property - Capitalized Investment in Mineral Property (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Lik Project (Alaska-US) | ||
Exploration | $ 15,611 | $ 15,611 |
La Promesa (Peru) | ||
Exploration | 6 | 6 |
Montana Royalty Property (US) | ||
Exploration | $ 40 | $ 40 |
Mineral Property - Exploration
Mineral Property - Exploration Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Extractive Industries [Abstract] | ||||
Geologic and field expenses | $ 322 | $ 74 | $ 619 | $ 195 |
Administrative | 22 | 106 | 67 | 324 |
Total exploration costs | $ 344 | $ 180 | $ 686 | $ 519 |
Mineral Property (Details Narra
Mineral Property (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Extractive Industries [Abstract] | ||
Asset Retirement Obligation - Lik | $ 125 | $ 125 |
Marketable Equity Securities -
Marketable Equity Securities - Marketable Equity Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Marketable Securities [Abstract] | ||
Marketable equity at cost | $ 1,714 | $ 1,714 |
Cumulative unrealized gain on marketable equity securities | 192 | 929 |
Marketable equity securities at fair value | $ 1,906 | $ 2,643 |
Marketable Equity Securities _2
Marketable Equity Securities - Changes in Marketable Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Notes to Financial Statements | ||||
Cost of marketable equity securities sold | $ 50 | $ 88 | ||
Realized gain on marketable equity securities sold | 357 | 578 | ||
Proceeds from the sale of marketable equity securities sold | (407) | (666) | ||
Purchase of marketable equity securities | 1,052 | 1,528 | ||
Gross unrealized (loss) gain recorded in the statement of operations | (74) | 157 | (737) | 618 |
Change in marketable equity securities at fair value | $ (74) | $ 802 | $ (737) | $ 1,480 |
Marketable Equity Securities (D
Marketable Equity Securities (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | May 02, 2016 | |
Notes to Financial Statements | |||||
Units Vendetta purchased | 7,240,000 | ||||
Aggregate consideration for units of Vendetta (common stock $186,000; Warrants $103,000) | $ 289 | ||||
Common shares Vendetta sold | 2,000,000 | 3,480,000 | |||
Proceeds from sale of Vendetta | $ 407 | $ 666 | |||
Cost of sale of Vendetta | $ 50 | $ 88 | |||
Vendetta warrants exercised and shares received | 5,000,000 | 7,240,000 | |||
US dollar cost of warrants exercised | $ 411 | $ 578 | |||
Intrinsic value Vendetta shares | 641 | 950 | |||
Total value Vendetta shares | $ 1,052 | $ 1,528 | |||
Vendetta shares owned | 11,000,000 | 11,000,000 |
Other Assets - Other Assets (De
Other Assets - Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Furniture and fixtures, net of accumulated depreciation | $ 38 | $ 31 |
Lik project equipment, net of accumulated depreciation | 75 | 90 |
Exploration bonds and other assets | 4 | 4 |
Total other assets | $ 117 | $ 125 |
Derivative Instruments - Gain L
Derivative Instruments - Gain Loss on Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Gain on Kinross calls | $ 13 | $ 52 | ||
Gain on Vendetta Warrants | (31) | 215 | ||
Gain on Derivative Instruments | $ (18) | $ 267 |
Derivative Instruments (Details
Derivative Instruments (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gain (loss) on derivative instruments | $ (31) | $ 215 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Level 1 | ||
Marketable equity securities | $ 1,906 | $ 2,643 |
United States Treasury securities | 9,662 | 10,395 |
Bank Certificates of Deposit | 899 | 1,247 |
Level 2 | ||
Marketable equity securities | ||
United States Treasury securities | ||
Bank Certificates of Deposit | ||
Level 3 | ||
Marketable equity securities | ||
United States Treasury securities | ||
Bank Certificates of Deposit |
Employee Stock Compensation P_2
Employee Stock Compensation Plans (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 19, 2018 | Dec. 31, 2017 | Jun. 29, 2017 | Jun. 18, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Shares reserved for awards under 2013 Plan | 5,750,000 | 1,750,000 | ||||||
Exercisable options outstanding with exercise prices between $0.62 per share and $1.96 per share | 4,025,228 | 4,025,228 | 1,928,428 | |||||
Replacement Options with an exercise price of $2.24 per share expired | 357,200 | |||||||
Options granted to consultent with an exercise price of $0.62 per share | 100,000 | |||||||
Grant date fair value of options issued to consultant | $ 12 | |||||||
Options granted (includes 2,300,000 Conditional Options and 1,782,428 Replacement Options) | 2,500,000 | 4,282,428 | ||||||
Non-cash stock option compensation expense | $ 68 | $ 23 | 510 | $ 23 | ||||
Conditional options approved by the Board of Directors with an exercise price of $0.77 per share | 2,300,000 | |||||||
Grant date fair value of conditional options | $ 970 |
Shareholders' Equity and Accu_3
Shareholders' Equity and Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Common Stock | ||||||
Beginning balance, value | $ 583 | $ 584 | $ 584 | $ 584 | ||
Beginning balance, shares | 58,289,366 | 58,381,952 | 58,434,566 | 58,434,566 | ||
Repurchase of shares for cancellation, shares | (28,000) | (92,586) | (52,614) | |||
Ending balance, value | $ 583 | $ 583 | $ 584 | $ 583 | ||
Ending balance, shares | 58,261,366 | 58,289,366 | 58,381,952 | 58,261,366 | ||
Additional Paid-in Capital | ||||||
Beginning balance, value | $ 69,690 | $ 69,296 | $ 69,312 | $ 69,312 | ||
Ending balance, value | 69,748 | 69,690 | 69,296 | 69,748 | ||
Retained Earnings / Accumulated Deficit | ||||||
Beginning balance, value | (41,384) | (40,771) | (39,767) | (39,767) | ||
Net loss | (723) | (613) | (1,004) | |||
Ending balance, value | (42,107) | (41,384) | (40,771) | (42,107) | ||
Accumulated Other Comprehensive Income | ||||||
Beginning balance, value | ||||||
Ending balance, value | ||||||
Beginning balance, value | 28,889 | 29,109 | 30,129 | 30,129 | ||
Stock option expense | 68 | 432 | 10 | |||
Repurchase of shares for cancellation, value | (10) | (39) | (26) | |||
Net loss | (723) | (613) | (1,004) | $ (49) | 2,340 | $ 428 |
Ending balance, value | $ 28,224 | $ 28,889 | $ 29,109 | $ 28,224 |
Shareholders' Equity and Accu_4
Shareholders' Equity and Accumulated Other Comprehensive Income (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Equity [Abstract] | |||||
Cumulative-effect adjustment for change in accounting principle | $ 576 | $ 576 | |||
Previously recorded income tax (expense) benefit | $ (74) | $ 15 | |||
Adjusted unrealized gain on marketable equity securities | 157 | 618 | |||
Decrease in net income to ($49,000) 3 months; to $428,000 9 months | $ 77 | $ 453 | |||
Shares repurchased | 28,000 | 173,200 | 38,700 | ||
Aggregate repurchase price | $ 10 | $ 75 | $ 28 | ||
Total shares repurchased | 841,000 | ||||
Aggregate total purchase price | $ 423 |