Solitario Exploration: developing a multi-commodity mid-tier mining house

Solitario Exploration and Royalty (TSE:SLR, NYSE AMEX:XPL) continues to advance the Mount Hamilton Gold and Silver Project, located at the southern end of the Battle Mountain gold trend in Nevada. The Company is earning an 80% interest from Ely Gold and Minerals (CVE:ELY) who retain the balance of the minority interest.
The Mount Hamilton Project covers 3,900 acres, and is located in an established mining district which is 40 miles from Ely. The Project currently hosts a NI 43-101 compliant mineable in pit resource at the Centennial Gold Deposit of 17.7 million tonnes at 0.025 oz/t Au, for 444,000 ounces of gold, and 0.147 oz/t Ag, for 2,594,000 ounces of silver.
The Centennial Gold Deposit is a small part of a very significant strike line that extends over a length of 15,000 feet and variable width of up to 3,000 feet, and includes inferred non-compliant resources at Centennial Extension with 6.84 million tonnes at 0.018 oz/t Au, for 122,000 ounces, North East Seligman with 2.62 million tonnes at 0.035 oz/t Au, for 93,000 ounces, Chester with 0.87 million tonnes at 0.031 oz/t Au, for 27,000 ounces, and Fiveway with 0.79 million tonnes at 0.060 oz/t Au, for 48,000 ounces;  for a grand total of 11.12 million tonnes at 0.026 oz/t Au,  containing 290,000 ounces of gold.
Management recently indicated at the Denver Gold Forum that they believe that the Mount Hamilton Project may develop into a 1 to 2 million ounce gold resource across the entire strike line.
SRK Consulting is completing an independent Feasibility Study, and has proposed a number of improvements to prior plans that include a production increase from 5,000 to 8,500 tonnes per day, which equates to an annualized production rate of 3 million tonnes.
The Centennial Gold Deposit is contained within an open pit that contains a mineralized gold zone that measures 2,000 by 1,000 feet, where 20 foot benches will be excavated utilizing 100 ton capacity haul trucks that will deliver ore to crushers located next to the open pit. The life of mine waste to ore ratio is estimated at approximately 2.5 tons of waste, to 1.0 ton of ore, with waste ore hauled to a storage area constructed nearby the open pit.
The crushed gold ore will be sent down a 3,400 foot long conveyor to a secondary crusher that will reduce the ore to minus ¾ inch, and then delivered it to a heap for leaching. The leachate will be collected and piped to a standard adsorption and desoprtion gold recovery plant for the production of gold and silver, in the form of doré bars. Recovery rates are expected to be around 75% for gold, and 36% for silver.
Capital costs for the entire operation are still being developed as part of the Feasibility Study, but are anticipated to be $70 million, plus-or minus 15%.
Solitario is completing environmental permitting with state and federal agencies, as drilling continues to test extensions of higher grade mineralization along the eastern edge of the Centennial open pit deposit, and gold mineralization at the Chester Prospect, situated approximately one mile to the south of Centennial. The next resource upgrade is expected in 2 to 3 months and is expected to outline additional gold and silver ounces within the Centennial open pit.
The release of the completed Feasibility Study is expected at the end of the of the fourth quarter of 2011, and should establish a timeline for final development plans that lead to mine construction.
Solitario maintains a number of free carried minority interests in projects that are under active development that include a 30% interest in the Bongará Zinc Project in Peru, which is known as one of the world’s largest undeveloped zinc projects. Votorantim Metais, who are the world’s third largest zinc producer and own a zinc smelter based in Peru, are developing Bongará.
Bongará has potential to exceed 20 million tonnes of zinc at 9%, silver at 0.4 oz/t, and additional lead credits. The project is expected to produce 1.5 million tonnes of ore per year, yielding concentrates that contain 108,000 tonnes of zinc, 16,000 tonnes of lead, and 400,000 ounces of silver.
Undergrounding tunneling, development of road access, drilling, positive metallurgical testing and permitting continue towards the start of mine production planned for the first quarter of 2015.
Recovered ore is estimated to carry metal values of $200 per tonne, with zinc and lead valued at $1.00 per pound, and silver at $25.00 per ounce. Capital costs are estimated at $140 million, yielding revenues of $282.8 million per year.  Solitario will be free carried through to the start of production, and will reimburse the developer from cash flows generated from mining operations.
Solitario also retains a 30% free carried interest in the Pachuca Real high grade gold and silver project in Mexico, with Buenaventura (NYSE:BVN) holding the majority interest, and currently managing a 16,000 metre drilling and exploration program at Pachuca Norte.
The Pachuca Real Project is located to the north of Mexico City, and includes one of the world’s greatest silver districts that had historical production of 1.46 billion ounces of silver, and 7.0 million ounces of gold. Recent exploration efforts by Buenaventura at Pachuca Norte confirm the presence of widespread mineralization of a similar style to the mineralization that was mined in the historic district.  
The Pedra Branca Platinum and Palladium Project, in Brazil, has been joint ventured with Anglo Platinum (LON:AAL), who may earn up to a 65% interest, and will free carry Solitario for the next $10 million in exploration costs, and Solitario’s share of construction funding.
Pedra Branca has absorbed 318 drill holes, and hosts potential for 2 million ounces of platinum and palladium within the proposed Esbarro Open Pit. Anglo is undertaking geologic resource estimates, preliminary metallurgical testing and local mine infrastructure studies, having already spent $7 million. A major geophysical program is also underway to define new drilling targets within the project area.
The Company has an alliance with Newmont Mining (NYSE:NEM), who may earn up to a 75% interest, and is conducting a drilling program at the 100% owned Cerro Azul Gold and Silver Project in Peru. Cerro Azul contains high grade gold and silver veining that has been identified at surface, and covers an area that measures 3,500 metres by 2,000 metres.
Solitario holds $17 million in cash, and is joint venture funded for an additional $12 million over the current year on a number of advanced projects. The Company maintains a long history of minimal share dilution, with 36.6 million shares outstanding, capitalized at $58 million.
Solitario is developing into a mid tier mining house with zinc production forecast from Bongará in 2015, and awaits a development decision on the timeline for mine construction and gold production at Mount Hamilton; and mine development at Pedra Branca. The Company is also developing a pipeline of 100% owned projects for future joint venture funding.  A lot of ban