Mt. Hamilton Gold Project - Nevada USA

Solitario announced positive Feasibility Study results on the Centennial Gold deposit situated on the Mt. Hamilton property in eastern Nevada, U.S.A. The Feasibility Study demonstrates robust economics with excellent potential for developing additional resources. Development of the project will deliver significant economic benefits to the local economy of White Pine County with an estimated 120 fulltime jobs.

With the completion of this Feasibility Study, Solitario will hold an 80% interest in Mt. Hamilton LLC (the “Company”), a limited liability company which holds 100% of the Mt. Hamilton project assets. Ely Gold will hold a 20% interest in the Company. The Feasibility Study has been prepared on behalf of the Company by SRK Consulting (U.S.) Inc. (SRK).

Life-of-mine cash operating costs on a gold equivalent basis (at a 52:1 silver to gold ratio) are estimated at $535 per gold-equivalent ounce recovered, well below world-average industry cash costs. The economic base case assumes a $1,323 life-of-mine gold price and a $25.34 silver price, generating approximately $226 million in cash flow (operating margin – EBITDA) on a pre-tax basis over the mine’s currently anticipated eight-year mine-life. At gold and silver prices of $1,700 and $33 per ounce, respectively, the project will generate nearly $390 million in life-of-mine cash flow. Initial capital costs are estimated at $71.9 million, including a contingency of $6.3 million. On average, silver production contributes approximately 11% to the overall project revenues.

The Mt. Hamilton gold project will be an open pit mining operation with heap leach processing and projected gold recoveries of 79%. The reserves are contained within a well-defined ore body displaying excellent continuity of mineralization that will be mined within a single open pit. Processing is straight-forward with two-stage crushing to minus ¾-inch, no agglomeration and rapid gold leach rates, followed by conventional ADR (adsorption-desorption-recovery) metal extraction. The project also incorporates several innovative design concepts to minimize surface disturbance and environmental impacts, such as a vertical ore pass and underground conveying system to reduce surface disturbance and improve air quality. The Company is also pleased to report mineral resources adjacent to the reserves reported in the Feasibility Study that have the potential to significantly extend the mine life.

Feasibility Study Highlights:
Base Case: Gold Price-$1,323; Silver Price- $25.34

Production Rate: 8,500 tons ore per day
Mine Life: 8.0 years
Average Gold Recovery: 79% (70% of recoverable gold in the first 30 days )
Average Silver Recovery: 90% of soluble silver (~ 36% of total contained silver)
Life of mine strip ratio: 2.4:1.0 (waste:ore)
Initial Capital Cost: $71.9 M (including $6.3 M contingency)
Sustaining Capital: $35.3 M (including $4.3 M contingency and $10.3 M end-of-mine closure costs)
Working Capital: $7.1 M
Underlying NSR-Royalty: 1%
Cash Costs per Gold-Equivalent Ounce Recovered: $535
Average Annual Gold Production: 48,000 ounces
Average Annual Silver Production: 330,000 ounces
Average Annual Gold-Equivalent Production: 54,000 ounces (at a 52:1 silver to gold ratio)

The economic analysis in the Feasibility Study assumed a declining price curve for gold and silver. Realized gold/silver prices were set at $1,600/$35.45 per ounce for the first year of production, $1,420/$28.25 for the second year, and $1,280/$23.90 per ounce for all subsequent years. These prices are based on the 12-month, 24-month and 36-month trailing average of gold and silver prices, respectively. This declining gold price scenario results in an average life-of-mine price of $1,323 per ounce for gold and $25.34 per ounce for silver.


Mineral reserves were estimated from a pit design based on $1,200/oz. gold and $20/oz. silver prices. The cutoff grade used to estimate reserves was 0.006 oz/t gold equivalent (0.20 grams/tonne) and is the internal cutoff grade. Multiple pit scenarios were evaluated using these criteria under a range of gold prices to determine the most favorable pit design for both optimal resource extraction and cash flow.



The Feasibility Study resource and reserve estimations demonstrate a potential to increase the size of the existing Centennial deposit through step-out exploration drilling around the east and southeast margins of the current pit configuration. This mineralization falls entirely within a pit design based on $1,600/oz. gold and $40/oz. silver and is situated immediately adjacent to the reserve pit. Approximately 2.6 million tons of Indicated Resources grading 0.017 oz/t gold (45.3 koz of gold) and 0.153 oz/t silver (397.6 koz of silver) and 2.8 million tons of Inferred Resource grading 0.018 oz/t gold (50.2 koz of gold) and 0.080 oz/t silver (223.5 oz of silver) above a 0.006 oz/t gold cut-off have been identified outside of the reserve pit, but within the resource envelope (Whittle™ shell). Drilling is planned in these areas with the objective to upgrade the mineralization to Measured and Indicated Resources.

Solitario is also planning a drilling program to upgrade mineralization around the nearby historic Seligman pit area. The Seligman deposit, situated approximately 2,000 feet north of the planned Centennial pit, was partially mined in the mid-1990’s. About 310 drill holes define a well mineralized, near surface gold deposit that was abandoned due to low gold prices. Solitario believes these two resource expansion programs may have the potential to extend mining for three to four years.

The Feasibility Study was prepared by SRK Consulting (U.S.), Inc., an independent and internationally recognized mining engineering firm. The Feasibility Study provides mineral resource and mineral reserve estimates, and a classification of resources and reserves in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves: Definitions and Guidelines, November 27, 2010 (CIM). It also meets the standards of the U.S. Securities and Exchange Commission Industry Guide 7 for estimating and reporting reserves.

Terms of the Mt. Hamilton LLC Joint Venture
Solitario and Ely Gold formed Mt. Hamilton LLC (“MH-LLC”), a limited liability company which now holds 100% of the Mt. Hamilton project assets under an Operating Agreement (“MH-Agreement”). Per the terms of the MH-Agreement, with the completion of this Feasibility Study, Solitario will hold an 80% interest in MH-LLC, and DHI-US. Ely Gold’s wholly owned US subsidiary, will hold a 20% interest in MH-LLC. Further Solitario obligations include arranging project financing, and making future property and advanced royalty payments