Peru Alliance - Newmont Mining

Cerro Azul, Peru - Silver-Gold

The Cerro Azul project represents another Solitario grass roots discovery. It is situated in central Peru and consists of three concessions totaling 2,400 hectares (5,928 acres). Significant progress was made on the project in 2010 with the collection and analysis of 2,300 rock chip and soil samples.

The geology of the property consists of Tertiary volcanics cut by a system of parallel quartz veins exposed along a ridge crest of over one kilometer. Individual veins attain widths of up to three meters and can be traced along strike for up to one kilometer where their extremities are hidden by younger gravel deposits. Some of the veins are silver rich and polymetallic in character and others are more gold rich.

Based upon the extensive sampling and careful geologic mapping conducted in 2010, a number of high-grade vein targets were identified, as well as a sheeted, gold-dominant vein system. The map below shows a number of these important trends that represent prospective targets.

Mineralogical studies of the wall rock alteration and of the veins themselves suggest that the current land surface may be above the most favorable level of mineralization in the structures. A planned 2011 core drilling program is being designed to intersect the veins at depth in order to test for greater widths and coalescing zones. Vein grades on the surface are very encouraging and drill testing is programmed to substantiate continuity of these high-grade structures in the subsurface. The significant width of the gold-rich Shear Zone area represents an important bulk mineable target if drilling shows only a modest increase in grade over surface values.

La Promesa, Peru - Polymetallic

The 2,000-hectare La Promesa property in Peru is a new Solitario discovery. At surface, we have traced two veins for at least 400 meters along strike, and we have strong indications that at least five other veins may be present. Solitario currently owns 100% of the La Promesa property, subject to the provisions of the Peru Alliance Agreement with Newmont Mining as discussed on page 10.

What sets La Promesa apart from other properties are the exceptionally high surface grades in silver, zinc, lead and indium. Although our sampling on the project to date is limited, it is very encouraging. For instance, on the western vein, two channel samples were collected 300 meters apart with true widths of 2.8 and 1.2 meters that graded 760 gpt silver, 15.6% zinc, 7.2% lead and 153 ppm indium, and 1,981 gpt silver, 33.1% zinc, 5.6% lead and 430 ppm indium, respectively. On the eastern vein, located about 600 meters east of the western vein, a 0.9 meter (true width) channel sample graded 678 gpt silver, 15.0% zinc, 4.5% lead and 12 ppm indium. There appears to be a systematic trend towards greater vein thickness with depth, as the widest observed vein in outcrop occurs at the lowest elevation sampled to date.

Previous work conducted revealed a very anomalous stream sediment sample (6.7 ppm silver and 0.63% zinc) draining an area that visually displays a large zone of altered rocks – similar in appearance to the mineralized zone that has yielded such spectacular surface geochemistry. However, because of weather, we were unable to access this very interesting zone of alteration and the apparent source of the exceptionally strong geochemical anomaly. Our plans call for completing all permitting activities necessary to conduct additional surface work and to further define drill targets. Assuming permits are received in a timely fashion, drilling is anticipated to occur during the third quarter of 2010. We anticipate an initial eight-hole, 1,200 meter drilling program, subject to permitting.