INVESTMENT COMMENTARY — Solitario’s potential in South America is attracting interest

A strategic position in South America, a property package with geologic merit and the prospect of near-term exploration success have combined to make Solitario Resources (TSE) attractive to investors, according to Don Poirier of McDermid St. Lawrence.

The mining analyst points out that Solitario’s Bongara zinc property in Peru emerged as the company’s main project last year.

The property, which covers more than 40,000 hectares, hosts an oxide zinc deposit containing an estimated 1.3 million tonnes grading 20% zinc and 2.1% lead.

Last fall, Solitario made a second discovery at Bongara, about 6 km northwest of the oxide deposit. The new zone contains zinc and lead sulphide mineralization and is characterized by strong alteration commonly associated with Mississippi Valley-type lead-zinc deposits.

The new zone measures at least 2,000 metres in length, with several mineralized horizons.

The company has a drill rig on site and has started a definition drilling program on the oxide deposit. The rig will then be moved to the sulphide discovery for an initial program of test holes.

Solitario’s other significant asset is its 63,000-hectare Yanacocha project in Peru.

The property sits between Barrick Gold’s 3-million-oz. Corona property and Newmont’s Yanacocha mine. Barrick holds an option on Solitario’s Yanacocha property and can earn a 60% interest by spending US$7.2 million.

Poirier says Solitario has just scratched the surface with its preliminary work on the property, and he is optimistic a sustained and comprehensive effort by Barrick will result in a discovery.

In addition to its Peruvian assets, Solitario has a large portfolio of copper-gold properties in Argentina. Several of the properties were optioned to Phelps Dodge last year in a deal giving the major the right to earn a 60% interest by spending US$3.1 million and paying US$2.8 million.

Solitario has 11.7 million shares outstanding (14.8 million fully diluted), about $800,000 in working capital and roughly US$1.5 million in debt obligations.