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November xx, 2006

August 20, 2009

Via EDGAR

Securities and Exchange Commission

ATTN:  H Roger Schwall and Gary Newberry

Division of Corporation Finance

100 F Street, NE

Washington, DC  20549-4628

Re:                    Comment letter dated July 31, 2009

                          Solitario Exploration & Royalty Corp. ("Solitario or the "Company")

                          Form 10-K for the Year Ended December 31, 2008

                          Filed March 13, 2009

                          Form 10-Q for the Fiscal Quarter Ended March 31, 2009

                          Filed May 8, 2009

                          SEC File No. 1-32978

Dear Mr. Schwall and Mr. Newberry:

          Set forth below are our responses to the comments of the staff of the Securities and Exchange Commission (the "Staff").  The number of the responses and headings set forth below correspond to the numbered comments and headings on the letter from the Staff.

Furthermore, Solitario acknowledges the following:

     Solitario is responsible for the adequacy and accuracy of the disclosure in our filings with the Securities and

     Exchange Commission (the "SEC"); and

     Staff comments or changes to disclosures in response to Staff comments do not foreclose the SEC from

     taking any action with respect to our filings; and

     Solitario may not assert Staff comments as a defense in any proceeding initiated by the SEC or any person

     under the federal securities laws of the United States

SEC COMMENT:

Form 10-K for the Fiscal Year ended December 31, 2008

General

1.          We note that approximately 80% of your total assets as of December 31, 2008 consists of your investment in the equity securities of Kinross.  Please clarify how you evaluated whether you are an investment company as defined in Section 3(a)(1) of the Investment Company Act of 1940.  Provide us with any analysis and calculations necessary to support your position.

RESPONSE:

          We believe that we are not an investment company because we safely meet the requirement under Section 3(a)(1)(C) under the Investment Company Act of 1940 (the "1940 Act") that the issuer not be engaged nor propose to engage in "the business of investing, reinvesting, owning, holding, or trading in securities."  Solitario is primarily engaged in the business of acquisition and exploration of mineral properties located in Peru, Brazil, and Mexico.  Our principal expertise is in identifying mineral properties with promising mineral potential, acquiring these mineral properties and exploring them to enable it to sell, joint venture or create a royalty on these properties prior to the establishment of proven and probable reserves.  We have been actively involved in this business since 1993.  Further description of its business operations has been found in our periodic filings, which disclosure gives no indication that Solitario could be construed as an investment company.  We do not believe it would be possible to identify a single investor, reasonable or not, who purchased shares of Solitario thinking the investor was making an investment in a company primarily engaged in the business of investing, reinvesting, owning, holding, or trading in securities.

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          The fact that the value of Solitario's 1,110,000 shares of Kinross Gold Corporation's common stock currently exceeds 40% of its total assets is the result of a combination of historical factors, including changes in market prices of the stock and the accounting treatment of mining companies generally, not a purposeful action to become engaged in the business of holding securities.  Our Kinross stockholdings stem from our origins as a wholly owned subsidiary of Crown Resources Corporation ("Crown"). As described in our periodic filings, including our Form 10-K for the year ended December 31, 2008, Crown completed a spin-off its holding of Solitario's shares to its shareholders in 2004, and when Crown subsequently merged with Kinross Gold Corporation ("Kinross"), Solitario was issued 1,942,920 shares of Kinross common stock in exchange for the 6,071,626 shares of the common stock of its parent Crown that it owned at that time.

          As a result of the merger and subsequent appreciation in the market value of Kinross stock, Solitario found itself with a relatively large asset in the Kinross stock that it could not readily sell without significant adverse tax consequences.  Even though we have been steadily selling the Kinross stock (832,920 of the 1,942,920 shares originally received, or 43%, to date), Solitario has continued to exceed the 40% threshold for investment securities set forth in Section 3(a)(1)(C) of the 1940 Act.  This disparity in the relative "value", according to generally accepted accounting principles, of our operating assets and the Kinross stock exists only because United States Generally Accepted Accounting Principles ("GAAP") limits the capitalization of costs on exploration properties to only the initial cost expenditures, and excludes, by requiring us to expense, the subsequent exploration expenditures and even subsequent payments made to the seller or lessor of the property.  Under GAAP, irrespective of the amount invested in exploration of mining properties and with no regard for their current value or long term potential for appreciation, exploration mining properties are reported as assets in our balance sheet at the historical cost of only whatever we initially paid for them.  By comparison, we report the current market value of the Kinross stock, irrespective of the actual amount or our historical cost that we initially paid for such stock.

          The distortion resulting from this disparity in accounting treatment is apparent when you consider the fact that we paid approximately $1.4 million for the Crown investments that are today, as Kinross stock, valued at more than $21 million, even though we have, as noted above, already sold 43% of the Kinross stock.  According to our most recent Form 10-Q, the cost basis of our mining exploration properties, which excludes exploration expenses or any estimate of their current value, is $2.776 million, and we held almost $1 million in cash and cash equivalents.  If apples were compared to apples, by comparing the initial cost of both assets ($0.798million for the remaining shares of Kinross stock and the $2.776 million paid for the initial acquisition of mining properties) rather than treating them differently, Solitario would only have around 22% of its assets in investment securities.

          The result is the same if one compares actual market values.  Our market capitalization today (the number of shares outstanding times its current market price) is around $60 million.  If we assume that the market acts rationally and considers the approximate $21 million market value of the Kinross stock in valuing Solitario's stock, then that means that around 35% of our value is derived from our ownership of Kinross stock.  The irony, or perhaps the conclusive rebuttal to the contention that Solitario is an investment company at all, is that, if we did register as an investment company, we believe we would be required to value all of our assets at "fair value", including our mining exploration properties, and that comparison of market values would yield the same result-we hold approximately 35% of our assets in investment securities.

          In any event, we have never been considered an indirect vehicle for investing in Kinross shares because our operating results have been unrelated to that value.  And we have confirmed that view to the investment public by our actions.  We have been steadily selling our Kinross stock to the maximum extent that we could do so without incurring adverse tax consequences (i.e., to the extent that we could offset the income from those sales with net loss carryforwards and losses from operations).  As we have disclosed in our periodic filings, we intend to continue selling the Kinross stock.  Moreover, we hope to announce one or more acquisition transactions within the next 12 months that will take us well below the 40% benchmark of Section 3(a)(1)(C).

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          Furthermore, we have been advised that, pursuant to Sections 3(b) and 3(c) of the Act, even if a company is deemed to have investment securities having a value exceeding 40% of the value of its total assets, as long as it fits into one of the enumerated statutory exceptions, it is not an investment company.  For example, under Section 3(b)(1), any issuer that is primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding or trading in securities, is not an investment company.  In 1947, the Commission created a five factor test to determine whether a company is "primarily" engaged in the investment business:

                    1. the company's history;

                    2.  the way the company represents itself to the investing public today;

                    3. the activities of its officers and directors;

                    4. the nature of its assets; and

                    5. the sources of its income.

          Historically, the Commission's interpretation of this five part test heavily emphasized the "nature of assets" element of the test, so that any issuer who exceeded a "50% of assets in investment securities" test was essentially required to register or seek an exemption from the Commission, irrespective of the balancing that could have resulted from consideration of the other four factors.  While the Commission has readily granted exemptive relief to various operating companies, including Microsoft Corporation and many others, there was essentially no consideration of the other Tonopah factors if the issuer had more than 50% of its assets in investment securities.

          In 2007, however, the U.S. Court of Appeals for the Seventh Circuit had a rare opportunity to interpret the Commission's Tonopah test.  In SEC v. National Presto Industries, Inc., the appellant National Presto had initially refused to apply for an exemption.  That refusal forced the agency to seek an injunction requiring it to register as an investment company, the district court granted the injunction and National Presto Industries appealed.  In the National Presto case, the Court of Appeals specifically rejected the Commission's historical emphasis on assets as the "most important" of the five factors since it "would make the exclusion in SS80a-3(b)(1) unavailable as a practical matter."  The court reasoned, "What good would it do to enact a law using 40% as the threshold in subsection (a)(1)(C), and convert the 40% test to 50% as a definition of the firm's 'primary' engagement?"  National Presto confirms that Section 3(b)(1) means what it says: if an issuer is primarily engaged in a business or businesses other than investing, reinvesting, holding or trading in securities, it is not an investment company even if it does have more than 40% (or 50%) of its assets in investment securities.

          Acknowledging that "primarily" was an undefined and necessarily imprecise term, the National Presto court went on to consider the Commission's five part Tonopah test as a means for evaluating the meaning of the term.  Most significantly, the Court of Appeals rejected the Commission's longstanding emphasis on the "nature of assets" factor, noting that even the Commission's original decision in Tonopah had concluded that the most important factor is number 2: the way the company represents itself to the investing public today, i.e., "Will its portfolio and activities lead investors to treat it as an investment vehicle or as an operating enterprise?"

          Perhaps the most important lesson of National Presto, however, is its confirmation of a "statutory" exclusion from the definition of "investment company" found in Section 3(b)(1).  As we understand it, this concept is roughly comparable to the statutory exemption from registration under the 1933 Act for transactions "not involving a public offering"  In other words, issuers that hold themselves out to the world as operating companies and not as vehicles for investments in other companies are not required to, as the Court of Appeals phrased it in National Presto, "kowtow to an agency" by bearing the cost of applying for an unnecessary exemption that everyone knows should be readily granted.  Bona fide operating companies can now rely on the plain meaning of the statute, as it has been interpreted by the Seventh Circuit, rather than being forced to plead with the Commission to exercise its discretion to grant an exemption.

          In light of National Presto, we believe Solitario satisfies the Tonopah test, with its reinstated emphasis on how the issuer holds itself out to, and is perceived by, the investing public.

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          For example, Tonopah factor number 1, Solitario's history, clearly supports its exclusion from the definition.  Since our inception as an operating subsidiary of Crown Resources Corporation, we have been engaged in the business of acquiring and exploring mineral properties.  We have never engaged directly or through a wholly-owned subsidiary or subsidiaries in the business of investing, reinvesting, owning, holding or trading in securities.  As explained above, due to the Crown-Kinross merger, Solitario received a large amount of Kinross stock, but our periodic filings clearly indicate that we never sought to make our ownership in Kinross stock a component of our business.  In fact, as disclosed in those filings, we have always maintained operational control over all of our wholly owned projects and varying degrees of operational control over our joint ventures.  As an exploration company, we have been investing heavily in developing projects or joint ventures that we hope will generate substantial returns in the long run.  Those exploration expenses are trending upward - in 2002 our exploration expenses were $957,000, while our 2009 exploration expenditure budget is approximately $4,404,000.

          Our satisfaction of the most important factor, number 2 (the way the company represents itself to, and is perceived by, the investing public), is readily established by reviewing Solitario's website, annual report, and periodic filings as well as third party analyses of Solitario and the value of our stock.  Throughout our history, we have represented Solitario to the investing public as nothing but a company engaged in mining exploration.  The price of our stock has historically been aligned with our operating results and, more importantly, investors' opinions of the long term value of our prospects, not with the value of the Kinross stock or that company's results and prospects.

          Solitario also clearly meets the requirement of factor number 3 (the activities of its officers and directors) since virtually all of the activities of our officers and directors are focused on furthering the goal of Solitario as a mining enterprise.  Our three executive officers are highly experienced mining industry executives, not investment managers, as disclosed by their employment histories in our most recent proxy statement on Schedule 14A.  We estimate that at least 98% of the time of these mining experts is spent running our mining exploration activities and related operations.  Similarly, every one of our five directors is an experienced mining industry expert - our board is comprised of a (1) mining industry consultant, (2) a chairman of a gold exploration company, (3) a retired mining engineer, (4) a retired mining operations manager and (5) our CEO and President, who has spent his entire career as a geologist. As Solitario's CFO, I do spend some time managing the liquidation process for the Kinro