Pedra Branca Platinum/Palladium Project - Brazil

We believe that our Pedra Branca project represents one of the best undeveloped platinum-palladium (“PGM”) projects in the Western Hemisphere. 2010 marked the eighth year in a row that Anglo Platinum funded exploration on the project – committing $1.5 million in funding.

Contributing to our enthusiasm for the project is the performance of the PGM market during 2010. Platinum started 2010 at about $1,500 per ounce and is currently up about 17% to approximately $1,750 per ounce (March 31, 2011). Palladium’s performance has been even more spectacular, rising from approximately $420 per ounce at the start of 2010 to its current price of about $775 per ounce (March 31, 2011), over an 80% increase.

Overview
The Pedra Branca PGM project consists of 57 exploration concessions totaling approximately 70,000 hectares (173,000 acres) in Ceará State, northeastern Brazil. Not including 2010-2011 drilling, 318 holes totaling 23,811 meters of core drilling have been completed on 25 prospects located throughout the project area. Drilling has intersected significant mineralization on 13 of the prospects.

The geology of the Pedra Branca project is similar to the Bushveld complex of South Africa where the vast majority of the world’s PGM production originates. PGM mineralization occurs in stratigraphic layering of an ultramafic (iron-magnesium-rich) body. In many cases the PGM grade is associated with the mineral chromite. In other areas the PGM is more closely related with minor sulfide concentrations.

Our Pedra Branca Agreeent: Anglo Platinum – World’s Largest Platinum Producer
The property is owned through our jointly held Brazilian subsidiary, Pedra Branca do Mineração (“PBM”). Anglo Platinum, the largest platinum producer in the world, has funded approximately $7.0 million for exploration since signing the initial Letter Agreement in January 2003 and has now earned a 51% interest in PBM. Although Anglo Platinum funds the entire exploration program, Solitario manages the project.

Anglo Platinum has the option to earn an additional 9% interest in PBM (for a total of 60%) by funding a further $10.0 million on exploration and development. However, Anglo Platinum is not required to fund any future exploration expenditures. After Anglo Platinum has spent $17 million, we would fund our 40% share of feasibility expenses. Anglo Platinum has the option to earn an additional 5% interest (for a total of 65%) by arranging for 100% financing to put the project into commercial production after completion of a feasibility study.

2010-2011 Exploration
Our 2010 drilling program got started later than planned due to the scarcity of available drill rigs in Brazil. In fact, drilling did not begin until November 2010, with most of the 25-hole, 2,100 meter core drilling program completed during the first quarter of 2011. This program tested four new targets and also expanded the drilling patterns at the Curiu, Cedro and Trapia prospects. As of the printing of our 2010 Annual Report, most of the drill hole assay results are still pending from the laboratory.

Details of the 2011 exploration program are still being developed. Additional drilling and scoping level studies that include resource estimation, metallurgy and preliminary infrastructure engineering are currently being considered. We are still awaiting Anglo Platinum’s decision on whether or not it will fund an expanded 2011-2012 exploration program.