ITRO Itronics Inc (CE)

Reno-based Itronics, Inc. (PINKSHEETS: ITRO) gave a more bullish outlook towards future revenue Tuesday when the company released its second quarter results, saying its line of liquid fertilizers would see growth while silver recovered through its photochemical recycling plant would climb 50% to 100% in the third quarter.

Spot silver prices have averaged greater than $18 per ounce over the last quarter and with global demand for commodities showing steam, those prices will more than likely continue. Higher silver prices are benefiting Itronics through the recovery of heavy metals in its photochemical recycling process which is about to expand ten-fold through the installation of Itronics' long-awaited phase 1 silver refinery plant expansion.

The company announced in July that the silver refining capacity would increase ten-fold to 2.4 million ounces on an annualized basis, forecasting $42 million in sales as a result, when fully implemented. Yet today's news revealed third quarter silver sales would increase 50% to 100% -- without consideration to the phase 1 refinery expansion.

While silver is sexy, fertilizer isn't. Yet in examining Itronics' development, its GOLD'n GRO line of liquid fertilizers holds more promise than the company reaching its $42 million silver sales goal.

Itronics boasts the only EPA-approved photochemical recycling plant in the United States and over the last four to five years the company has slowly opened up new markets in adding no less than 10 states where EPA approvals to sell its GOLD'n GRO line of fertilizers have been granted. While California remains its core market, bulk fertilizer sales have continually climbed for two reasons. First, nitrate and phosphate fertilizers have doubled in cost and continue to cause pollution through surface water runoff. Second, GOLD'n GRO fertilizers are pollution-free and actually improve soil conditions, reducing overall fertilizer costs over time. So the bottom line has been lower costs and better crop yields that can be found in repeat orders in California where Itronics' GOLD'n GRO line of fertilizers is more established.

The company says that its new phase 1 silver refinery expansion will lower costs 90%, making Itronics the low-cost leader of any silver refiner in the nation. Part of that development includes phasing in a new source of raw material in keeping with Itronics' 'green' business, metal canisters used in the photo processing industry. Those canisters contain large amounts of silver, iron and other materials which Itronics will recover through its silver refinery plant expansion. The materials both replace and add to the mix needed to manufacture Itronics' line of liquid fertilizers which will lower fertilizer production costs and generate new GOLD'n GRO products.

While Itronics prepares for the future, the company just recently completed a 1,000-to-1 reverse of its common stock and is now looking for new financing to meet its growth plan. Only time will tell at what pace Itronics will grow, but in examining its survival capability, I wouldn't bet against it reaching its market peg or attract capital.

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