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However, whereas this energy supply squeeze spells trouble for most, Silverado amazingly sees nothing but a big ‘blue sky’ of unprecedented opportunities. That’s because this enterprising company has taken the extraordinary landmark step of remedying the problem at its very source.

That is to say, Silverado’s wholly-owned subsidiary, Silverado Green Fuel Inc., ( silveradogreenfuel.com ) has pioneered the refinement of a cost-efficient, environmentally friendly alternative to oil. We’re talking about the conversion of low-rank coal (of which the U.S. has an abundance) into liquid fuel, or an environmentally friendly fuel source.

Low-rank coal, which includes subbituminous, lignitic, and brown coals, has traditionally been used for mine-mouth power generation due to its high water content and therefore lower energy content. Over one-quarter of the world’s coal reserves are in the United States, half of those reserves are low-rank coal (LRC).

However, Silverado’s proprietary coal-to-liquid conversion technology has found an innovative multi-application use for this underutilized form of coal. Silverado’s cutting edge solution is simply referred to as a Green Fuel. This is a very fitting name as this fuel is non-toxic and non-hazardous.

Silverado Green Fuel is made from hydrothermally treated LRC and is called low-rank coal-water fuel (LRCWF). The hydrothermal treatment process is the key to producing this low-cost, non-hazardous alternative to petroleum fuels for use in utility and industrial boilers. LRCWF is an excellent feedstock for advanced slurry fed gasifiers, like the ones offered by GE. Clean synthesis gas can then be converted into the whole spectrum of ultra-clean petrochemicals and fuels using Fischer-Tropsch technology.

Too good to be true? Well, not according to the U.S. government (as demonstrated by the U.S. Congress’s passage of three separate authorization bills for LRCWF and hydrothermal treatment), and the lignite-rich state of Mississippi. The latter is seizing the initiative to become the first U.S. state government to take a roll in financially assisting and further developing this new ‘green’ energy form. Meanwhile, the U.S. federal government is also beginning to move in the same direction, as we will discuss later on in this article.

The desire at the highest levels of the U.S. government to embrace coal derived fuels is being spurred on by a realization that the U.S. must significantly reduce its dependence on foreign oil. It must therefore move towards energy self sufficiency. The economic benefits to the U.S. cannot be overstated either since it boasts the world’s largest coal reserves and has enough coal to meet its energy needs for at least the next two centuries.

This new paradigm shift is not lost on Silverado’s Company CEO, Garry Anselmo, who recently met with SmallCapMedia. During the interview, he obviously had plenty to smile about, though he is far from smug. He exudes the self-assurance of a man who knows that his Company’s contribution to society will be far reaching and will meet the approval not just of his shareholders but also of his grand-children.

"If a ship transporting Green Fuel breaks apart, you have water and a substrate that is conducive to plant growth. If a pipeline ruptures, you have water and particles that can be scooped up and reconstituted,” he states in a matter-of-fact manner.

“It (Green Fuel) is non-toxic, non-hazardous, nothing dies. No birds are hurt in spills," he adds. “But we’re not just talking about helping the environment here. We’re also talking about the launching of a product that meets a multi-billion dollar demand.”

In addition, licensing this technology to developing nations will help to diminish the amount of greenhouse gases emitted to the atmosphere worldwide. There are significant markets in the U.S. for LRCWF including the remaining oil-fired utilities, industrial oil-fired boilers, and the technology of the future for clean power – Integrated Gasification Combined Cycle (IGCC), using General Electric gasification technology.

Work on a $US 26 Million Green Fuel (clean coal liquid) Production and Boiler Testing Demonstration Facility in Mississippi Gets Underway
Indeed, Anselmo’s dream of turning Silverado into an alternative energy powerhouse is already beginning to take form. The Mississippi Development Authority is contributing funds. Choctaw County is contributing the 14 acre plant site in the Red Hills Ecoplex and a building loan to be repaid by Silverado. North American Coal, which provides lignite to the Red Hills Generating Plant adjacent to the planned demonstration site will contribute the first year’s coal requirements at their cost.

Mill equipment, contributed by one of Silverado Gold Mines Inc. operations in Alaska, will cut cost, and Silverado is currently talking with other federal agencies interested in the demonstration. (All in all, the $US 26 million requirement should be available as needed, the Company says. Private parties have approached Silverado with capital, but for now the Company preference is to keep working with various government departments, according to Company insiders.)

A ground-breaking ceremony for this 14-acre landmark project took place on April 9th of this year. Mississippi Governor Haley Barbour and other leading state officials were on-hand to proclaim this as a marquis event that will help to establish Mississippi as a national leader in alterative energy and clean coal technologies.

All told, the Mississippi Development Authority, the state’s U.S. senators, and the U.S. federal Departments of Energy and Defense have all been instrumental in guiding Silverado in its bid to make this project a reality.

"We're also actively pursuing federal appropriations and federal grants from the Departments of Energy and Defense," Anselmo says. "We want government on side, lock, stock and barrel."

Already, Silverado is aggressively moving forward to honor its infrastructure development obligations to the project. To this end, the parent Company is refurbishing some of the more costly equipment from its idled gold recovery plant near Fairbanks. This equipment, which includes ball mills, conveyor systems, tanks, overhead crane and a 75,000 gallon thickener, will be shipped to Mississippi.

Indeed, now that the design and permitting of a demonstration plant are in the works, the next step will be the construction of the demonstration facility. The next challenge will be the building of a commercial facility, capable of producing about 8 million barrels of Green Fuel per year, equivalent to over 3 million barrels of oil.

Even though it takes less than 2.5 barrels of Green Fuel (derived from Mississippi Lignite), to create the same energy as one barrel of oil, the current estimate of the cost of creating that barrel of oil equivalent (BOE) is around $15. If the price of oil remains anywhere near its current price level there will be a huge demand and generous profits for all, according to the Company. The price estimate for LRCWF produced from sub-bituminous coals is even lower.

Silverado can begin the permitting process for a commercial facility about 12 months before the demonstration plant begins operation – the completion of which would make it the first such commercial plant in the world. Only capital availability and time dictate the production levels America may achieve.

A Background on Silverado’s Green Fuel Initiative
Silverado certainly seems to be a company that has a knack for thinking ahead of the curve. That is why in 2001 Silverado began to work in earnest with Dr. Warrack Willson, the developer of the hydrothermal treatment process, on the perfecting of this pre-existing ‘green’ fuel technology.

Ironically, that was when oil prices were near their cyclical lows, trading in the low teens. But as Silverado’s alternative fuel initiative gradually began to gather momentum, so too did oil prices, increasingly making LRCWF an economic imperative, rather than just an environmental one. And now that it has been proven on a pilot-scale, this innovative new fuel source seems destined for a big future.

Why Green Fuel?
Green Fuel is the only technology that turns high-moisture (low rank) coal into a low-cost strategic liquid fuel. In fact, it can then be converted by any one of a number of commercial processes to yield a myriad of clean fuels and petrochemicals.

Furthermore, there are hundreds of commercial, industrial and utility oil-designed boilers in use in the U.S. today which with minor adaptations to their feeder components and the addition of particulate capture devices stand to benefit from Silverado’s Green Fuel.

In addition, the synthesis gas component of Green Fuel (involving the gasification of coal) can be used for power generation or reassembled into new petrochemicals such as aviation fuel, gasoline, and diesel fuel.

The end products are free of nitrogen, sulfur, particulate matter, and heavy metals and will benefit many diverse applications, including aviation and auto gasoline, diesel, synthetic natural gas, fertilizers, ammonia, urea, plastics and many others.

How does it Work?
To produce Silverado’s Green Fuel, low-rank coal is pulverized and then hydrothermally (hot water and high pressure) treated. The process dehydrates the coal particles and also draws out waxy substances which upon cooling, seal the micro-pores of the coal particle leaving it relatively water free. The water that is removed from the coal during the hydrothermal process is then added back to the beneficiated coal particles, producing Green Fuel.

Military Initiatives to Find the Best Coal-Based Alternative Fuels
Silverado has submitted technical data on its Green-Fuel hydrothermal treatment process to the U.S. Department of Energy and the U.S. Department of Defense (DOD), regarding the inclusion of Silverado’s Green Fuel in the latter’s Clean Fuel Initiative.

DOD scientists are apparently impressed with Green Fuel and are examining its potential for use as a raw feedstock for the production of synthetic fuels. One of DOD’s paramount concerns is obtaining secure and reliable sources of energy ones that are not dependent on foreign oil or foreign refined fuels.

This is becoming an increasingly important imperative as over 100 million barrels of transportation fuel are used annually for U.S. defense needs, alone. Products derived from Green Fuel could augment the many different transportation fuels now used by DOD to operate its aircraft, ships, and vehicles and it could be done considerably more cost efficiently with Green Fuel as a feedstock or base.

Furthermore, the Energy Policy Act of 2005 requires that the Secretary of Defense is required to develop a strategy to use fuel produced from coal, oil shale and tar sands.

U.S. Congress Wakes up to Coal-to-Liquids Technology
Coal is the only fossil fuel energy source that is abundant enough to be considered a strategic fuel in the U.S. but to qualify as such it must be available in a user-friendly liquid form. Enter Silverado’s Green Fuel.

U.S. Senator Jim Bunning has therefore just introduced legislation, co-sponsored by Senator Barack Obama, that will encourage the building of at least 10 coal-to-liquid-fuel plants.

This bill enables the Department of Energy to provide loan guarantees for the construction of these plants and direct loans for the planning and permitting processes involved. Loan guarantees will encourage private investment and planning loans will help prepare companies for the construction of plants. Such developments stand to benefit Silverado immeasurably.

Furthermore, the world’s consumption of energy is forecast to increase by 57% between 2004 and 2030, according to the U.S. Energy Information Administration’s latest annual International Energy Outlook report, which was released in May. It further suggests that if oil prices continue to remain high, then coal is expected to become the fastest-growing energy source.

Silverado has made a formal presentation to the United States House Committee on Resources at a 2006 hearing to investigate the harnessing of America’s vast coal supplies as an alternative fuel source.

Investment Summary
Shareholders of Silverado Gold Mines Ltd are in an enviable position. They have considerable exposure to a rising tide market for gold prices, as well as for antimony. Not only does this come in the form of the ‘blue sky’ potential for finding a prolifically rich ‘mother lode’ style gold deposit at the Nolan Property, but it also can be measured in more tangible terms by way of the Company’s small-scale but very lucrative placer gold mining operation.

Then there’s an additional dimension to the Company by way of Silverado’s radically non-linear diversification into the 21st century alternative energy business. This involves its wholly owned subsidiary, Silverado Green Fuel Inc.

The Company’s ‘green’ alternative fuel source heralds a major breakthrough in inexpensively solving North America’s addiction to dwindling foreign oil reserves. And it could help mitigate carbon emissions throughout the industrialized world, too. With a much sought-after business model for the wide-scale commercialization of this clean fuel initiative, Silverado certainly has a tiger by the tail.

SmallCapMedia therefore believes that a convergence of powerful value drivers is now setting the stage for a very bright and dynamic future for Silverado. One that promises to reward patient investors with considerable ‘home run’ potential.

Hence, SmallCapMedia believes that the share price of this enterprising, up-and-coming Company will continue to establish a sustained upwards trend during the balance of 2007. And the advent of plenty of ‘blue sky’ potential at its gold projects and its green energy venture should provide a powerful springboard for Silverado’s share price in 2008 – a time when SmallCapMedia expects to see the Company’s stock trading at many multiples of its current price.