|Solitario Resources Signs Agreement With Votorantim Metais On Its High-Grade Bongará Zinc Project, Peru
August 15, 2006
|Denver, Colorado: Solitario Resources Corporation (TSX: SLR; AMEX: XPL) is pleased to announce that it has signed a Letter Agreement with Votorantim Metais Cajamarquilla, a wholly owned subsidiary of Votorantim Metais, on Solitario's 100%-owned Bongará zinc project in northern Peru. The Bongará project hosts the Florida Canyon zinc deposit where high-grade zinc mineralization has been encountered in drill holes over an area two by two kilometers in dimension.
Terms of the Letter Agreement
The Letter Agreement calls for a firm commitment by Votorantim Metais to fund a one-year, $1.0 million exploration program slated to begin in early October 2006. This commitment is subject to a due diligence period ending September 15, 2006. Votorantim Metais can earn up to a 70% interest in the project by funding the $1.0 million exploration program, by completing future annual exploration and development expenditures, and by making cash payments annually after the first year. The option to earn the 70% interest can be exercised by Votorantim Metias any time after the first year commitment by committing to place the project into production based upon a feasibility study. Additionally, Votorantim Metais, in its sole discretion, may elect to terminate the option to earn the 70% interest at any time after the first year commitment. The agreement calls for Votorantim Metais to have minimum annual exploration and development expenditures of $1.5 million in each of years two and three, and $2.5 million in all subsequent years until a minimum of $18.0 million has been expended by Votorantim Metais. Votorantim Metais will act as project operator.
Once Votorantim Metais has fully funded its $18.0 million work commitment, it has further agreed to finance Solitario's 30% participating interest for construction. Solitario will repay the loan facility through its cash flow distributions. Both parties are currently working towards signing definitive agreements effectuating the Letter Agreement by October 31, 2006.
Solitario discovered the Florida Canyon deposit in 1996 and joint ventured the Bongará project with Cominco Ltd. in early 1997. Cominco spent approximately US$16.0 million on the project, including drilling 80 core holes within the Florida Canyon deposit area between 1997 and 2000 (see Table I below for previous drilling highlights).
A 23-hole infill core drilling program slated to begin in early October 2006 is currently being permitted and, subject to satisfaction of due diligence, will be funded by Votorantim Metais. The drilling program will focus on an area approximately 200 by 700 meters in size representing about 5% of the known extent of mineralization. The specific target of this drilling program consists of two stratiform layers of mineralization.
About Votorantim Metais
Votorantim Metais belongs to a private Brazilian industrial conglomerate that is market leader or has outstanding share in every market segment in which it operates, including cement, pulp and paper, metals, chemicals, and orange juice. In 2005, Votorantim Group’s revenues amounted to US$7.8 billion. The metal business division accounted for 30% of revenues and produces zinc, nickel, steel and aluminum. Votorantim Metais is the world's sixth largest primary zinc producer with three operating zinc smelters and two operating zinc mines. It owns the Cajamarquillia zinc smelter and is the major shareholder of Milpo, both located in Peru.
Chris Herald, President and CEO of Solitario, stated, "With Votorantim Metais, we believe we have teamed-up with the best possible partner to evaluate and accelerate exploration and development on our high-grade Florida Canyon zinc deposit. Votorantim Metais brings both financial strength and vertically integrated zinc experience to the project. Votorantim Metais has already initiated studies for an underground exploration program and analysis for road access to the Bongará project with an eye towards initiating these programs in 2007. We are very excited about the opportunity to work with Votorantim Metais on this important development project."
As previously reported, Solitario began trading on the American Stock Exchange (“AMEX”) on Friday, August 11, 2006, under the ticker XPL. The Company’s common stock will also continue to trade on the Toronto Stock Exchange (“TSX”) under the symbol SLR.
Solitario is a gold, silver, platinum-palladium, and base metal exploration company actively exploring in Brazil, Mexico and Peru.
FOR MORE INFORMATION, CONTACT:
|Debbie W. Mino
|Christopher E. Herald
President & CEO
This press release includes certain "Forward-Looking Statements" within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization and reserves, exploration results and future plans and objectives of Solitario, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Development of Solitario’s properties are subject to the success of exploration, completion and implementation of an economically viable mining plan, obtaining the necessary permits and approvals from various regulatory authorities, compliance with operating parameters established by such authorities and political risks such as higher tax and royalty rates, foreign ownership controls and our ability to finance in countries that may become politically unstable. Important factors that could cause actual results to differ materially from Solitario’s expectations are disclosed under the heading "Risk Factors" and elsewhere in Solitario’s documents filed from time to time with Canadian Securities Commissions, the United States Securities and Exchange Commission and other regulatory authorities.