PERFORMANCE LOAN AGREEMENT FOR FUNDING OF DRILLING PROGRAM

THIS PERFORMANCE LOAN AGREEMENT FOR FUNDING OF DRILLING PROGRAM (the
“Agreement”) is made and entered into as of August 1, 2018, by and between
Compañía Minera Milpo S.A.A., a company organized under the laws of the Republic
of Peru and hereinafter “Nexa”), and Minera Solitario Peru S.A.C., a company
organized under the laws of the Republic of Peru (“Solitario”). Each of Nexa and
Solitario is individually referred to herein as a “Party,” and they are
collectively referred to herein as the “Parties.”

RECITALS

A.       Minera Bongará S.A., a company organized under the laws of the Republic
of Peru (“Bongará”) is the holder of certain mining concessions located in Peru,
as described on the attached Annex A (the “Properties”). Those Properties
comprise a portion of the “Florida Canyon Project.”

B.       Solitario, Solitario Zinc Corp. (f/k/a Solitario Exploration & Royalty
Corp. and Solitario Resources Corp.), of which Solitario is a wholly-owned
subsidiary, and Votorantim Metais – Cajamarquilla S.A. (“Votorantim”) are
parties to that Framework Agreement for the Exploration and Potential
Development of Mining Properties dated March 23, 2007 (the “Bongará Framework
Agreement”). Pursuant to the Bongará Framework Agreement, Votorantim has the
right to conduct mineral exploration, evaluation, and possible development and
exploitation of the Properties, make certain associated earn-in expenditures and
earn up to a 70% shareholding interest in Bongará.

C.       Bongará and Votorantim are parties to a Mining Assignment Agreement
dated August 4, 2006, formalized by public deed issued before the public notary
in Lima, Peru, Luis Dannon Brender, dated April 19, 2007 (as amended, the
“Mining Assignment Agreement”). The Mining Assignment Agreement allows
Votorantim to conduct the activities referred to in Recital B above on the
Properties.

D.       Effective November 28th 2014, Votorantim assigned its interests in the
Bongará Framework Agreement and the Mining Assignment Agreement to Compañía
Minera Milpo S.A.A.

E.       Under the terms of the Bongará Framework Agreement, Nexa is currently
obligated to incur 100% of the expenditures at the Florida Canyon Project.

F.       Solitario engaged SRK Consulting (U.S.) Inc. (“SRK”) to design a
drilling program for exploration drilling at the Florida Canyon Project. That
drilling program calls for a 41-hole, 17,000 meter program (the “Drilling
Program”). The first 16 holes which will be drilled as part of the Drilling
Program are identified on Annex B attached hereto. In order to advance the
Drilling Program, Solitario has agreed to provide to Nexa a portion of the funds
required to complete the Drilling Program. Solitario will provide those funds to
Nexa by way of a performance installment loan, as more particularly described in
Section 2 (a) below.

G.       Solitario and Nexa have now agreed to proceed with the Drilling
Program, and desire to enter into this Agreement, which will govern the
implementation, funding and completion of the Drilling Program, loan amounts
made by Solitario to Nexa, and repayment of those loan amounts, irrespective of
any of the terms of either the Bongará Framework Agreement or the Mining
Assignment Agreement to the contrary.

 1 

 

NOW, THEREFORE, for and in consideration of the mutual covenants contained in
this Agreement, the Parties agree as follows:

1.                  Implementation of Drilling Program.

(a)               Nexa agrees to carry out the Drilling Program, and shall use
commercially reasonable efforts to begin the Drilling Program by August 1, 2018,
but in any event no later than October 1, 2018. Once it has started the Drilling
Program, Nexa shall diligently pursue it to completion; provided, however, that
Nexa may in its reasonable discretion temporarily suspend the Drilling Program
if weather conditions (taking into account that some work may be season
dependent) do not allow for responsible or safe conduct of the Drilling Program.
In any event, however, Nexa shall be obligated to complete the Drilling Program
by December 31, 2019.

Notwithstanding the above, if there are any permitting or community-related
issues which do not allow Nexa to enter (on reasonable terms) into the necessary
agreements with the titleholders of the surface land located within the
boundaries of the Properties, or if there are delays in obtaining necessary
permits or consents (in both cases, for more than sixty (60) days after the
relevant access request or administrative application has been filed) that
either prevent access or inhibit the initiation, performing or completion of the
Drilling Program (“Delays”), and the circumstances and causes of such Delays are
not caused by Nexa or are beyond Nexa’s control, all of the dates set out in
this Section 1(a), except for the October 1, 2018 deadline for beginning the
Drilling Program, shall be automatically deferred and extended for a period of
time equal to the time of the Delays. Only once the Delays have ceased, such
deferral and extension will cease and the relevant time periods will be resumed
and begin running again.

 

In addition, Nexa may claim force majeure if it is prevented from or delayed in
performing the Drilling Program by any cause beyond its reasonable control,
including, without limitation, acts of God, strikes, lockouts, or other
industrial disputes, laws, rules and regulations or orders of any duly
constituted court or governmental authority, acts of terrorism, acts of the
public enemy, war, insurrection, riots, fire, storm, flood, unusually harsh
weather causing delay, explosion, government restriction, failure to obtain any
approvals required from regulatory authorities, inability or failure to obtain
surface access rights at all or on reasonable commercial terms, or
unavailability of equipment, materials or transportation (provided that they
were properly applied for and pursued in good faith and on a timely basis or the
equipment, materials or transportation were sought in a timely way),
interference by local community or third party interest groups or other causes
beyond its reasonable control, whether of the kind enumerated above or
otherwise. If Nexa claims an event of force majeure has occurred, Nexa shall
promptly notify Solitario, and then the terms applicable for the performance of
the Drilling Program, except for the October 1, 2018 deadline for beginning the
Drilling Program, shall be extended for a period equivalent to the total period
the cause of the prevention or delay persists regardless of the length of such
total period. Nexa may also claim force majeure, if acting reasonably and having
documented and/or supported the events, it believes that social or political
unrest in the area of the Properties or the threat of that unrest will endanger
the safety of its employees or the employees of its contractors if Nexa were to
continue with the Drilling Program. Nexa shall promptly notify Solitario with a
written notice summarizing events that have occurred and prospects for
resolution.

 2 

 

 

Bongará will cooperate with Nexa, at Nexa’s request, in any negotiation with the
titleholders of the surface lands.

If actual drilling under the Drilling Program has not commenced by October 1,
2018, then this Agreement will automatically terminate, and Solitario shall have
no obligation to fund or reimburse Nexa for any expenditures incurred under this
Agreement or pursuant to the Drilling Program.

(b)               Nexa shall be responsible for implementation and execution of
all activities associated with the Drilling Program, including, without
limitation, (i) the hiring and supervision of a drilling contractor, (ii) the
hiring of a helicopter contractor as necessary to get materials and supplies to
the Properties, (iii) arranging for all infrastructure (including, without
limitation, an exploration camp with appropriate core processing and storage
facilities, portable generators, satellite telephones, fuel, potable water,
chemical toilets and site security) at the Properties as necessary to support
the Drilling Program, (iv) the hiring and supervision of contract geologists,
administrative staff and field helpers necessary to carry out the Drilling
Program, (v) arranging for trucks and other heavy equipment necessary to support
the Drilling Program, (vi) arranging for whatever temporary housing is required
at or near the Properties for personnel working on the Drilling Program, and
(vii) arranging for analysis of the drill core and drill results by the
reputable consulting companies described below:

·Drilling: Explomin

·Helicopter: PumaAir

·Geology: Anglo Peruana Terra (APT)

·Field and administrative: Explosupport

·Chemistry analysis: ALS Global

and (viii) preparing reports of results of the Drilling Program as appropriate,
and providing copies of those reports to Solitario within 15 calendar days after
formal request or after they are prepared.

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2.                  Funding and Conduct of Drilling Program.

(a)               Pursuant to the provisions of this Section 2(a), Solitario
shall loan three (3) payments of U.S.$526,596.00 each to Nexa, which the Parties
agree shall be based on the performance by Nexa of the first 5,100 meters of
drilling under the Drilling Program. Once the first 1,700 meters of drilling is
completed, Nexa shall notify Solitario; upon completion of the second 1,700
meters of drilling, Nexa shall provide a second notice; and upon completion of
the third 1,700 meters (for a cumulative total of 5,100 meters of drilling),
Nexa shall issue a final notice of completion. With each such notice, Nexa shall
provide reasonable documentary evidence of the completion of the required 1,700
meters of drilling. Nexa shall issue such notices to Solitario not later than
the 15th day of the calendar month following the month during which the required
1,700 meters of drilling on the Properties has been completed, and Solitario,
unless it disputes in good faith the completion of the requisite amount of
drilling, shall make a loan payment of U.S.$526,596.00 to Nexa within thirty
(30) days after receipt of each such notice. Once Solitario has made three (3)
loan payments to Nexa in the aggregate amount of U.S.$1,579,888.00 under this
Section 2(a), Solitario shall have no further obligation to loan further amounts
to Nexa to fund the Drilling Program. The funds loaned by Solitario to Nexa
under this Section 2(a) shall not bear interest.

(b)               Nexa shall be obligated to complete the Drilling Program, and
Nexa shall fund the remainder of the Drilling Program through completion (41
holes and 17,000 meters of drilling).

(c)               The funds loaned to Nexa by Solitario pursuant to Section 2(a)
shall be repaid pursuant to the provisions of this Section 2(c). If Solitario
makes an election to obtain a non-recourse loan from Nexa under Section 15.1 of
the Bongará Framework Agreement (the “Construction Loan”), then all amounts of
money loaned to Nexa by Solitario under Section 2(a) of this Agreement shall be
repaid to Solitario by being credited against and treated as an advance against
repayment of the Construction Loan by Solitario. Such amounts shall not accrue
interest, and shall reduce the amount of principal outstanding under the
Construction Loan. If Solitario does not make the election to obtain the
Construction Loan from Nexa under the Bongará Framework Agreement, then all
amounts loaned to Nexa by Solitario under Section 2(a) of this Agreement shall
be repaid to Solitario by being credited against the next capital contributions
Solitario is obligated to make to Bongará under the Bongará Framework Agreement.

(d)               Nexa’s books of account reflecting implementation of and
expenditures under the Drilling Program, shall be available to Solitario in
accordance with Section 6.7.2 of the Bongará Framework Agreement, the provisions
of which are incorporated herein by this reference.

(e)               Any changes to the Drilling Program shall require the
unanimous written agreement of the Parties. Prior to initiation of field
activities Nexa and Solitario shall consult and mutually agree upon the order in
which drilling shall occur under the Drilling Program, taking into account
Bongará’s best interests as well as logistical considerations.

(f)                Solitario shall be entitled to all tax benefits available, if
any, under applicable laws with respect to all amounts which it loans to Nexa
hereunder.

3.                  Indemnity. Nexa agrees that the indemnification provisions
of Section 21.1 of the Bongará Framework Agreement (the provisions of which are
incorporated herein by this reference) shall apply with respect to activities
conducted by or on behalf of Nexa pursuant to this Agreement. The provisions of
this Section 3 shall survive the termination of this Agreement.

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4.                  Inspection. The Parties agree that the provisions of
Sections 6.7.2 and 23 of the Bongará Framework (the provisions of which are
incorporated herein by this reference) shall apply with respect to the rights of
Solitario and its authorized agents to inspect Nexa’s activities under this
Agreement, and review information pertaining to those activities.

5.                  Environmental Obligations. The Parties agree that the
provisions of Section 6.7.5 of the Bongará Framework Agreement (the provisions
of which are incorporated herein by this reference) shall apply with respect to
activities conducted by or on behalf of Nexa under this Agreement.

6.                  Default. If any party fails in the performance of any
obligation under this Agreement (for purposes of this Section 6 called the
“defaulting party”), the other Party shall serve upon the defaulting party
written notice of default, describing the default with specificity. If the
defaulting party, within thirty (30) days after receipt of such notice, does not
cure any material default, the defaulting party shall be deemed to be in
default.

7.                  Consequences of Default. In the event either Party is deemed
to be in material default under Section 6 above, the non-defaulting Party shall
have the right to terminate this Agreement pursuant to Section 8 hereof. An
election by a Party to terminate the Agreement under Section 8 shall not be
deemed to be a waiver by that Party of any other legal or equitable remedies it
may have with respect to such default.

8.                  Termination for Default. Should either Party be in default
of any of its material obligations under this Agreement, determined as provided
in Section 6 above, then the other Party may, subject to the notice requirements
and the defaulting Party’s right to cure as set forth in Section 6, at its
election, terminate this Agreement by giving written notice of such intention to
the defaulting Party, and, upon the defaulting Party’s receipt of such notice,
this Agreement shall be conclusively deemed terminated.

9.                  Assignability. Neither Party shall have the right to assign,
sublease or otherwise transfer any interest in this Agreement without the prior
written consent of the non-assigning Party. Subject to the foregoing, this
Agreement shall be binding upon, and shall inure to the benefit of, the Parties
hereto, their successors and assigns.

10.              Notice. Any notice, election, report or other correspondence
required or permitted hereunder shall be in writing and (i) delivered
personally; or (ii) sent by reputable overnight courier; or (iii) sent by email,
with a confirmatory copy delivered personally or sent by reputable overnight
courier. All such notices shall be addressed to the Party to whom directed as
follows:

If to Nexa: Jonas Mota e Silva

Email: jonas.silva@nexaresources.com
Telephone: 5117105500

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If to Solitario: Chris Herald and Walt Hunt
Solitario Zinc Corp.
4251 Kipling Street, Suite 390, Wheat Ridge, CO 80033
Email: cherald@aol.com/whunt@solitariocorp.com
Telephone: 1 (303) 534-1030

11.              Counterpart Execution. This Agreement may be executed by each
of the Parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of, which taken together shall
constitute one and the same Agreement.

12.              Interpretation. Use of the word “including” in this Agreement
means “including without limitation” or “including but not limited to.” Each of
the Annexes and Schedules attached to this Agreement is incorporated into the
Agreement by this reference.

13.              Relationship between Agreements. Except as specifically set
forth in Section 2(c), this Agreement shall not in any way modify or amend or be
deemed to modify or amend the Bongará Framework Agreement or the Mining
Assignment Agreement. In addition, the execution and delivery of this Agreement
shall not constitute a waiver by either of the Parties of any of its rights
under either the Bongará Framework Agreement or the Mining Assignment Agreement,
and shall not modify any of the Parties’ obligations thereunder, including
funding obligations (except to the extent that the provisions of Section 2 of
this Agreement are inconsistent with the Parties’ funding obligations under the
Bongará Framework Agreement, the provisions of Section 2 of this Agreement shall
be controlling).

14.              Amendments. Any amendment, supplement, variation, alteration or
modification to this Agreement must be made in writing and duly executed by an
authorized representative of each of the Parties hereto.

15.              Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any other jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Each Party hereby waives
the benefit of any law which renders any provision hereof prohibited or
unenforceable in any respect.

16.              No Waiver. The failure in any one or more instances of a Party
to insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or to
waive any breach of any of the terms, covenants or conditions of this Agreement,
shall not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred. No waiver
shall be effective unless it is in writing and signed by an authorized
representative of the waiving Party.

17.              Fees, Costs and Expenses. Each Party shall be responsible for
its own fees, costs and expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby.

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18.              Governing Law and Dispute Resolution. The provisions of Section
30 of the Bongará Framework Agreement, which are incorporated herein by this
reference, shall apply with respect to any disputes that arise under this
Agreement.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.

COMPAÑÍA MINERA MILPO S.A.A.

By: /s/ Jones Belther
Name: Jones Belther
Title:

COMPAÑÍA MINERA MILPO S.A.A

By: /s/ Diego Miranda
Name: Diego Miranda
Title:

MINERA SOLITARIO S.A.

By: /s/ Todd Christensen
Name: Todd Christensen
Title:

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ANNEX A - Properties

 

NUM PROYECTO CODIGOU CONCESION TITULAR FECHA HA_DISP PARTID_REG 1 CAÑON FLORIDA
010233396 BONGARA CINCUENTICINCO MINERA BONGARA S.A. 07/08/1996 1,000.0000
P-20004465 2 CAÑON FLORIDA 010233296 BONGARA CINCUENTICUATRO MINERA BONGARA S.A.
07/08/1996 600.0000 P-20004464 3 CAÑON FLORIDA 010783595 BONGARA VEINTISIETE
MINERA BONGARA S.A. 26/06/1995 300.0000 P-20005021 4 CAÑON FLORIDA 010000306 DEL
PIERO CINCO MINERA BONGARA S.A. 03/01/2006 1,000.0000 P-11053964 5 CAÑON FLORIDA
010000206 DEL PIERO CUATRO MINERA BONGARA S.A. 03/01/2006 500.0000 P-11055358 6
CAÑON FLORIDA 010338405 DEL PIERO DOS MINERA BONGARA S.A. 02/11/2005 600.0000
P-11053955 7 CAÑON FLORIDA 010204507 DEL PIERO SEIS MINERA BONGARA S.A.
26/03/2007 1,000.0000 P-11078790 8 CAÑON FLORIDA 010338605 DEL PIERO TRES MINERA
BONGARA S.A. 02/11/2005 700.0000 P-11053962 9 CAÑON FLORIDA 010338505 DEL PIERO
UNO MINERA BONGARA S.A. 02/11/2005 1,000.0000 P-11053944 10 CAÑON FLORIDA
010190507 VM 42 MINERA BONGARA S.A. 21/03/2007 1,000.0000 P-11106001 11 CAÑON
FLORIDA 010193707 VM 74 MINERA BONGARA S.A. 21/03/2007 1,000.0000 P-11106007 12
CAÑON FLORIDA 010045708 VM 94 MINERA BONGARA S.A. 28/01/2008 900.0000 P-11138318
13 CAÑON FLORIDA 010045808 VM 95 MINERA BONGARA S.A. 28/01/2008 500.0000
P-11136133 14 CAÑON FLORIDA 010193807 VM 75 MINERA BONGARA S.A. 21/03/2007
1,000.0000 P-11105995 15 CAÑON FLORIDA 010046008 VM 97 MINERA BONGARA S.A.
28/01/2008 1,000.0000 P-11136132 16 CAÑON FLORIDA 010046108 VM 98 MINERA BONGARA
S.A. 28/01/2008 500.0000 P-11136186

 

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ANNEX B – Drilling Program (First 16 Holes)

 

PROGRAMA DE PERFORACION DIAMANTINA  PROYECTO FLORIDA CANYON Plataforma Drillhole
Easting Northing Elevation Azimuth Dip Depth (m) Objetivo Comment 108 Plat_108-4
824620 9353967 2726.13 297.69 -73.94 450 Incremento Nuevos Recursos Continuidad
del manto en la parte central 108 Plat_108-6 824620 9353967 2726.13 102.32
-78.35 470 Incremento Nuevos Recursos Continuidad del manto en la parte central
109 Plat_109-1 824582 9353834 2688.09 162.53 -74.44 400 Incremento Nuevos
Recursos Extender el manto en la zona central 109 Plat_109-2 824582 9353834
2688.09 109.28 -79.10 390 Incremento Nuevos Recursos Extender el manto en la
zona central 111 Plat_111-1 824529 9353705 2756.01 127.50 -72.01 495 Incremento
Nuevos Recursos Infill Zona de alta ley de sulfuros en mantos 111 Plat_111-3
824529 9353705 2756.01 103.39 -77.58 455 Incremento Nuevos Recursos Extender el
manto en la zona central 113 Plat_113-12 825305 9353754 2732.34 202.83 -70.57
490 Incremento Nuevos Recursos Continuidad del manto en la parte central 113
Plat_113-6 825305 9353754 2732.34 347.43 -78.90 560 Incremento Nuevos Recursos
Continuidad del manto al lado NE 122 Plat_122-1 824577 9353236 2517.28 80.77
-63.40 170 Incremento Nuevos Recursos Continuidad del manto en la parte central
122 Plat_122-2 824577 9353236 2517.28 135.04 -65.20 170 Incremento Nuevos
Recursos Continuidad del manto en la parte central 122 Plat_122-3 824577 9353236
2517.28 302.68 -80.59 150 Incremento Nuevos Recursos Continuidad del manto en la
parte central 124 Plat_124-1 824488 9353222 2469.98 47.04 -66.46 150 Incremento
Nuevos Recursos Continuidad del manto en la parte central 124 Plat_124-2 824488
9353222 2469.98 106.40 -50.41 150 Incremento Nuevos Recursos Continuidad del
manto en la parte central

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125 Plat_125-2 824418 9353137 2471.95 248.41 -63.25 170 Incremento Nuevos
Recursos Continuidad del manto en la parte central 125 Plat_125-3 824418 9353137
2471.95 300.38 -52.98 180 Incremento Nuevos Recursos Continuidad del manto en la
parte central 128 Plat_128-1 824437 9352985 2458.76 319.56 -52.62 170 Incremento
Nuevos Recursos Continuidad del manto en la parte central Total 5,020