last weekend i listed several reasons to invest in sso, but i didn't mention the most important one: management. companies that go from exploration all the way through production are rare. less than one project in a hundred ever becomes a mine. and when a discovery large enough to become a mine is found, at least nine times out of ten the explorers aren't the ones who build it. the exploration company almost always takes the quick and easy way out, selling the project to a large mining company.

typically an exploration company is founded by geologists, whose strength is in discovering mineral deposits. they aren't mining engineers, and they may not have any interest in, or know very much about building a mine. their goal is to make a discovery, drill it off to define the resource, sell it to the highest bidder, and then start all over again, looking for the next deposit.

the problem with that approach is that it leaves a lot of money on the table. the greatest rewards go to the company that develops the project, and takes it into production. like most junior mining companies, sso is run by a geologist. robert quartermain has been the president since 1985, and even though sso now has a $2 billion market cap, he still looks at core samples. for almost all of those years, it was not economic to mine silver. to better appreciate the job he has done, try keeping a company afloat for 20 years without any source of revenue.

but sso has done more than just stay afloat. its resource base has grown to 1.4 billion oz. silver, and that's important because in this business, size matters. there are shortages of just about everything in the mining industry - drill rigs, heavy equipment, skilled personnel. sso had to attract people with the needed skill sets to build a mine, and managers with experience in constructing mines are in high demand. that's where it helps to have a huge pipeline of projects. it's easier to attract the best people when you have projects like pirquitas, san luis, pitarrilla and diablillos.

there are still a lot of things that can go wrong. recently novagold blew up when its construction cost estimate increased from $2 billion to $5 billion. in comparison, pirquitas going from $140 million to $220 million doesn't seem like a big deal. then there is gammon gold, which rushed its ocampa project into production, only to see its costs go through the roof. even with today's high gold price, it struggles to make a profit, and there is some question as to whether it should have gone into production in the first place.

building a mining operation carries those risks, and the chances are that sso will have one more hiccup somewhere along the way. i don't know what it will be - a problem with the government of argentina, or a critical piece of equipment breaking down. but in every business (not just mining) there are problems, and it is up to management to deal with them. the mining business is not rocket science. they aren't trying to design a better ipod or do anything revolutionary. the metallurgy and engineering are well understood, and they have managers who have built mines before. whatever problems arise, i am confident that management will solve them.