10 Most Interesting Silver Stocks – Part 2

3. Alexco Resource Corp. (TSX:AXR)

Alexco Resource is Canada’s newest silver producer.  The company is focused on the Yukon Territory of Northern Canada. Renowned silver bug Sprott Asset Management is a significant shareholder, reportedly owning a 12.1% stake in the company.

The story of Keno's discovery is authored by Yukon mining prospector and geologist Dr. Aaro Aho.

Alexco entered into production at its Bellekeno mine in January 2011. Management forecasts 2.8 million ounces of silver, 18 million pounds of lead and 8 million pounds of zinc production in 2011. In 2008, Alexco reached a financing arrangement with Silver Wheaton to provide the capital necessary to develop the Bellekeno deposit through to production in order to avoid a dilutive equity financing. That call now looks prescient, as in December, 2010 just before the Bellkeno mine was about to enter production, Alexco completed a financing at a price of $8.20, for gross proceeds of $41 million.

Interestingly, Alexco also has an environmental services business in Canada and the United States. The company provides mine-related environmental consulting services, reclamation and mine closure services, and environmental remediation technologies to clients in both the public sector and the private sector.

Alexco’s President & CEO Clynton Nauman attributes the relatively short time frame associated with putting the Bellekeno mine into production to the strategic structure of the organization. “One of the reasons we were able to permit the Bellekeno Mine in a timely manner was the fact that we utilized our expert in-house environmental services team to permit the project.” he said. “As a result, we confidently constructed the mine and mill and related facilities in tandem with permitting stages, enabling fast-track project execution in a modern environmental regulatory regime.”

On the exploration front, Alexco’s primary objective is the Keno Hill silver district in the Yukon Territory in properties near their production facility. Although the Yukon is famous for its Klondike gold rush, the Keno Hill silver deposit, discovered in 1918, actually produced more pay-dirt than the Klondike. This lesser known but very rich precious metals district made the Yukon one of the world’s leading silver producers for decades – Keno Hill reportedly produced more than 217 million ounces of silver between 1921 and 1988. To purchase a copy of Dr. Aho’s book, “Hills of Silver, The Yukon’s Mighty Keno Hill Mine” – CLICK HERE.

4. Silver Standard Resources Inc. (TSX:SSO)

According to the company, Silver Standard possesses the largest in-ground silver resource of any publicly-traded primary silver miner. With a pipeline of 13 projects, ranging from early-stage exploration to production in various countries including Argentina, Peru, Mexico, Canada, Chile, the United States and Australia, the company’s portfolio is impressive.

Silver Standard’s first mine, the Pirquitas Mine in Argentina, achieved commercial production in December, 2009. In 2010 production from the Argentinean mine was 6.3 million ounces of silver and sold 5.94 million ounces at a weighted average price of $20.92 per ounce for total revenues of $112 million. The Pirquitas operation milled 1.26 million tonnes of ore in 2010 with silver grades of 233 grams per tonne at recoveries of 65.2%. Cash production cost per ounce declined throughout 2010 as production volumes and efficiencies increased to $9.47 per ounce in the fourth quarter net of by-product credits. Average cash production cost per ounce of silver, net of by-product credits, are projected to be $9 per ounce of silver in 2011. Factoring out by-products, the average cash production costs per ounce of silver is estimated to be $15.00

But what seems to have captured the interest of investors is not what Silver Standard is doing today but what they might do in the future. The speculative jewel in the Silver Standard crown appears to be the Pitarrilla project in Durango, Mexico. Pitarrilla, a grassroots discovery made by Silver Standard in 2002, now ranks as one of the largest silver discoveries in the world. Currently, estimated silver reserves are 91.7 million ounces, measured and indicated silver resources total 552 million ounces, plus 82 million ounces of inferred silver resources. And as they say in Mexico, eso es grande! A feasibility study on the project is expected to be completed this year.

In January of this year in a note to clients, BMO Capital Markets analyst Andrew Kaip wrote that the Vancouver-based miner boasts an “unrivalled pipeline of projects.” With three development projects in Latin America including the Pitarrilla project in Mexico, Mr. Kaip believes Silver Standard has the potential “to evolve into the fastest growing intermediate silver producer.”

5. Revett Minerals Inc. (TSX:RVM)

The bull trout, depicted above, and the grizzly bear are the cornerstones of the fight against the Rock Creek mine.

The justice system. An endless fount of interest. On March 29th, 2010, a federal judge rejected the U.S. Forest Service’s approval of a mining operation on the edge of the Cabinet Mountains Wilderness Area in Montana. That project was the Rock Creek mine owned by Revett Minerals.

The court ruled that the Forest Service violated the National Environmental Policy Act and the Forest Service Organic Act in approving the Rock Creek Mine, which would have bored under the Cabinet Mountain Wilderness Area and into the midst of popular recreational areas and key habitat for bull trout, grizzly bears and other environmentally sensitive wildlife species.

In response to the ruling, Jim Costello of the Rock Creek Alliance said, “We’ve said all along that this mine simply cannot be built without contaminating the region’s waters and pushing the Cabinet’s fragile bull trout and grizzly bear population in Rock Creek to extinction. It’s time for the government to stop this merry-go-round and start working to protect our region’s waters, trout and bears.”

The groups that challenged the U.S. Forest Service’s permit for the Rock Creek mine include: Rock Creek Alliance, Cabinet Resource Group, Clark Fork Coalition, Earthworks, Sierra Club, Trout Unlimited, Idaho Council of Trout Unlimited, Pacific Rivers Council, Alliance for the Wild Rockies, Natural Resources Defence Council, Montana Wilderness Association, and Great Old Broads for Wilderness. These groups were represented by lawyers from Earthjustice and the Western Mining Action Project. A long list and considerable opposition. But the U.S. Forest Service continues its claim that the General Mining Law of 1872 leaves them no other choice but to permit the mine.

At the time of the judicial set-back Revett’s management team defended their plans, saying mitigation measures taken by the company would actually improve trout and bear habitat. John Shanahan, Revett Minerals President & CEO reiterated his conviction that the mine could “be an environmentally responsible operation,” adding that “we don’t want to do it any other way.”

MiningFeeds.com connected with Mr. Shanahan for an exclusive interview to determine the status of the Rock Creek mine and to discuss the company’s operations at the company’s Troy mine which is currently in production. CLICK HERE – to learn more.

For 10 Most Interesting Silver Stocks – Part 3CLICK HERE.

Mike Luft

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