Solitario Resources Corporation CEO Speaks About His Company

| About: Solitario Exploration (XPL)

On June 25, The Wall Street Transcript interviewed Christopher E. Herald, President and CEO of Solitario Resources Corporation (NYSEMKT:XPL). Key excerpts follow:

TWST: What is Solitario?

Mr. Herald: Solitario is an exploration company in the minerals industry. Our focus is primarily on gold right now; however, we have some significant assets in other commodities, notably zinc, platinum, and palladium. Our goal is to discover large deposits and then to take these deposits to an advanced stage and do one of two things: joint-venture that asset with a major mining company or, secondly, perhaps sell the asset. In the past, we have focused mainly on joint-venturing.

We have major joint ventures with three of the largest mining companies in the world that include Newmont Mining, Anglo Platinum and a Brazilian private company, Votorantim Metais. Our most advanced asset, the Bongara project in Peru, is a very high-grade undeveloped zinc project that we think could be one of the larger undeveloped zinc deposits in the world. Followed by that is our platinum-palladium project called Pedra Branca, which is in northeastern Brazil, and is joint-ventured with Anglo Platinum, the world's largest platinum producer. We are well positioned to see this project advance. Finally, another major joint venture asset that we have is our early stage Pachuca Real silver/gold project in central Mexico that is joint-ventured with Newmont Mining. So we have a diverse portfolio in terms of commodities, as well as diversity in countries in which we operate.

We operate strictly in Latin America and are very well financed with $21 million in cash and securities in the bank. This year will be the most aggressive drilling season we have had in our 13-year corporate history. We anticipate about 25,000 meters of drilling, and, of that drilling, about 80% of the costs are paid for by our partners. We're very much looking forward to the results of these projects during the next six months, and we think they could add a lot of value to the company.

TWST: Would you walk us through each of those projects? What's the agenda for the next 12 months with each and what would make the next 12-24 months an overall success?

Mr. Herald: I will start with our Bongara zinc project. We discovered that in 1996, and joint-ventured it with Teck Cominco, which is the largest zinc producer in the world. Cominco spent about $16 million over a four-year period from 1996 to the end of 2000. Based on their drilling, we see the potential of about 20 million tons of material at a very high grade of 12% zinc, 2% lead, and about 0.5 ounces silver. Currently Solitario owns 100% of Bongara. Our new partner, Votorantim Metais, is earning a 70% interest in Bongara. To earn that interest, they have to spend a minimum of $18 million in exploration and development; they have to take the project through feasibility; and then they have to finance Solitario's 30% retained interest.

Essentially this is a 30% net profits royalty, which is a very valuable asset to us. Votorantim, a private company, is the seventh largest zinc producer in the world, which had revenues of about $10 billion last year. They are a very diversified company with operations in zinc -three zinc smelters and two zinc mines. They are also the second largest orange juice pulp producer in the world and have huge timber, lumber and fertilizer assets. We think we have a good partner in Votorantim.

Bongara will undergo a very significant drilling program beginning in less than a month. There will be two rigs on the property and around 14,000 meters of drilling will be completed. We believe that this drilling will advance the project to a feasibility stage. I think it will demonstrate the continuity of the mineralization and the very high potential to provide significant returns not only to Votorantim, but also to Solitario.

This project is located in northern Peru, and we think that it will be one of our flagship properties for years to come. The second asset that's probably most developed is our platinum-palladium project, Pedra Branca (northeastern Brazil), which is joint-ventured with Anglo Platinum, the world's largest platinum producer. We have drilled 208 holes there to date. Drilling resumed on that project about two weeks ago where we are currently drilling six new targets. We have four deposits that are quite well defined, and we think we have in the neighborhood of three-quarters of a million ounces of inferred resources on the project. With this upcoming drill project, we hope to add one or two new deposits to the list of growing resources there.

Solitario operates the Pedra Branca Project and Anglo Platinum funds it. For Anglo Platinum to earn an interest in the project, they first have to spend $7 million on exploration and that will earn them 51%. They've spent about $1.5 million to date. They also have to complete a feasibility study or spend an additional $10 million, whichever comes first, to get to a 60% interest. They can then earn 5% more (to 65%) by financing Solitario's remaining 35% participating interest. So, again, this has the attributes of a net profits royalty and is a very valuable joint venture. We are fully financed just like we were on the Bongara zinc deposit. We have the right partner in Anglo Platinum, being the largest platinum producer in the world. We think this project, if we can grow it to about 50% more than what it is right now, will be large enough for the project to move forward into development and production over the next several years or so.

Finally, the third flagship joint venture property is our Pachuca Real project in central Mexico, which is joint ventured with Newmont Mining. This project has quite an interesting history. Our property position is very large; about 125,000 net acres of mineral rights. It's situated right in the middle of one of the largest silver districts ever found in the world, the Pachuca district, which produced 1.4 billion ounces of silver over its history, as well 7 million ounces of gold.

Newmont began drilling on this project in early May. We expect initial results over the next several weeks on their drilling. They have identified at least seven targets that are currently undergoing drill testing. We think that this project, if we can demonstrate a whole new district north of the historic district, will be a real catalyst to our share price and also to the asset base of the company. Pachuca Real is being operated by Newmont Mining. We are very excited about the potential of this early stage project. This is the first drilling the north district has ever had on it so it should be quite exciting for us.

Besides these three significant joint ventures, we carry on independent exploration with our own geologists in Mexico, Peru and Brazil. In each of these areas, we are advancing early stage projects hopefully to a more advanced stage. We have several interesting properties in Brazil. In Mexico, we're really more in the initial stages of identifying good projects. We think we have a couple, but a lot more work needs to be done. It is the same in Peru, in that we've been in Peru for over a dozen years now. We understand the country very well. We think we are exploring in great geologic terrain, and we hope with time that we will be able to advance some of these early stage projects into more meaningful programs.

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