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A Double-Homer for the Silver Valley

By David Bond      Printer Friendly Version
Jan 20 2009 3:40PM

Wallace, Idaho – So much weird good stuff happened here in the old northern Idaho silver camp this past week that the only thing we could do to sort this out was to put down the laptop and turn on the TV and watch football yesterday. It was a classic battle for the NFC championship between East and West. East was Philadelphia, old and establishment; West was from some newbie state called Arizona where the only thing you can do is grow rocks and mine them.

The West won. This bodes well for us. The miners beat the banksters. The East Coast money-takers broke their picks dickin' with the West Coast money-creators. The banks are down; the guys who mine money are back.

Or so we were musing, during a rockin' fourth quarter that saw the Cardinals rally against the Eagles and finish them off for the season. Symbolic thinking, yes, but a sign of good things to come. We have the silver and the gold out here. The Banksters have zilch, except what paper their politicians can shake us down for. It's a mess out there, and we're sending high-pressure cold systems your way. So much for global warming.

The last time the West had the upper financial hand was during the War Between the States, and we won't make that mistake again, our silver mines bankrolling the likes of the imperialist Abe Lincoln and his carpetbagger successors. No, this time we make our own deals, with China, Europe and Dubai. To heck with Baltimore and Philly. Your day is over, Banksters.

Within the past week our friends at SNS Silver effectively tied up governance of the Silver Belt between the Crescent and the Consolidated Silver, and brought John Ryan, who set up the deal for U.S. Silver to buy the Galena-Coeur-Caladay mining complex from Coeur d'Alene Mines back in 2006, into the CEO's chair at Sterling, filling the vacuum left by Ray DeMotte's departure last May.

A Wallace native, Ryan will restore a needed sense of vision to that company (we could dis him for his Boston College law degree, but at least he learned to be a mining engineer here at the University of Idaho), and he will be joined by some pretty competent help: David Greenway, who put together the SNS acquisition of the Crescent; Andy Grundman, Sunshine Precious Metals Inc.'s personable lawyer; and Ron Ho, the CFO at SNS Silver, as Sterling's corporate secretary and treasurer.

Marketing the Silver Belt's west end, with its half-dozen miles of tetrahedrite on the south side of the Osburn Fault, will be a no-brainer. Sterling's infrastructure is in superb shape and comprises the Jewell and Silver Summit shafts, and the newly driven Sterling Tunnel at the Sunshine Mine, along with one restored mill at the Sunshine and one operational mill at the Silver Summit. SNS drilled out a respectable block of silver and base-metal ore at the Crescent above the Hooper whose metallurgy is compatible with the Sunshine concentrator.

Not yet into the mix would be U.S. Silver's huge land package, comprising four deep shafts, two mills, two tailings ponds and some of the best known reserves of primary silver in the western hemisphere. For the time being U.S. Silver wants to forge its own way, but the marketing and operational synergies of nearly a dozen miles of the Silver Belt are obvious to everybody but them.

Meantime, Justin Rice's long-held claims up Two Mile Canyon north of the Osburn Fault are coming in. Big time. There's more ore up on Royal Apex Ventures Inc.'s land than 50/50 joint-venturer Azteca Gold dares to announce in one blast. Suffice it to say that some one-half of Azteca's shares are held by insiders; CEO Matt Russell gobbled up some million units  the company's private placement earlier this month, increasing his fully-diluted position in the company to more than 31 percent. Russell comes from a long tradition of miners betting their hunches and coming out winners. He and his father, Bob, co-founded General Moly, which resulted in scads of happy shareholders and mining guys, and neither Russell is a stranger to the rocks of the Coeur d'Alene Mining District.

Our friend David Morgan, who visited the Royal Apex property Azteca is drilling (it's due north of Osburn, Idaho, midpoint between the Sunshine and the Caladay but on the north and vastly unexplored side of the Osburn Fault) last week, penciled out just the base-metal values and they came at a bit under $600 per ton at current prices and that doesn't count the silver. The hoop-la doesn't stop there; the zinc grades are so rich you can take the rock out with tweezers and drop it right into the refinery – no need to separate the stuff from its host minerals. Old-timers tell us there were rich bands of zinc like this located in the Pine Creek District west of Bunker Hill before and during World War II. So this isn't company hype.

The Royal Apex Ventures/AZG story is worth telling. Justin Rice and Matt and Bob Russell speak the same language. As CEO of Coeur d'Alene Mines, Justin Rice put together the Coeur Shaft sinking deal back in the 1970s. Flush with cash, he then finagled the nascent Rochester Mine away from Asarco and vended it into then-publicly-traded Royal Apex, which Coeur immediately acquired. Rochester turned out to be a world class gold and silver deposit and has served up, since its 1986 opening, some 110 million ounces of silver and 1 million ounces of gold. There is a reason folks here in the Silver Valley call Justin Rice a “mine finder.”

“It was always our intent to come back to the Silver Valley and sink shaft on the Royal Apex property as soon as Rochester was operational, based on our exploration results,” Rice recalls. “But events changed and I was no longer in charge of the company.” Rice left Coeur d'Alene Mines and the surviving company went off to Mexico and Bolivia in search of silver, eschewing its holdings in the Silver Valley. Coeur, once a darling of the NYSE, is now essentially a penny stock. It did not take Rice long to re-locate CDE's old Royal Apex claims and return to the plans he'd laid out in the late 1980s. Last year, Azteca and the Russells raised money for a couple of drill rigs and went to work on Rice's land. You will be hearing about assay results for months.

Since 1884 the Coeur d'Alene District has been the premier host of primary silver mining in the United States, surpassing the Comstock Lode's legendary production and Potosi's recorded production. Preliminary results from drilling by Azteca suggest silver might not even be our primary metal, at least not at depth. What happens here in the Silver Valley in the next few months will be of a scale not seen since the discovery of the Bunker Hill, the Hercules, the Hecla or the Sunshine. Perhaps bigger on orders of magnitude. This is not something to be missed. It's exciting here again. All of which proposes even larger synergies, as the new North meets the old South, and bright guys are in charge again.

David Bond



Editor of The Silver Valley Mining Journal