Revett Minerals Inc. (OTCBB: RVMIF) (TSX: RVM) is not only one of the most undervalued companies we have seen in some time, but it is also one of the most misperceived. Revett owns and operates the currently producing Troy Mine and development stage Rock Creek Project, both located in northwestern Montana. The misconception revolves around a recent decision regarding the Rock Creek project by a U.S. District Court Judge. We say "Who cares?" The reason is simple, the real value of Revett Minerals at this point is in the Troy Mine. Do we need to repeat that? The real value of Revett Minerals at this point is in the Troy Mine!

We correctly called a move in Revett stock last fall when we recommended it to our subscribers at $0.10, before it moved to $0.50 a few months later. In our report, we stated "Remember these words: "This stock will not be a $0.12 stock for long." In our opinion, you must act quickly." Now we are going back to the well with Revett Minerals and saying the real value is in the Troy Mine. Rock Creek is a phenomenal project of world-class proportions. However, your guess is as good as mine as to when the judge and environmental lobby will concede and allow it to be developed. Maybe a good way to look at it would be as an added bonus. For now, however, investors should not hesitate to buy the stock at these levels on the merits of the Troy Mine alone.

Troy Silver and Copper Mine

Revett's main project is the producing Troy Mine in Lincoln County, Montana, which at full capacity, could average 1.7 million ounces of silver and 16 million pounds of copper per year. Revett acquired Troy from ASARCO Inc. in October 1999. ASARCO is said to have invested over $100 million into the Troy Mine and its infrastructure. Revett reopened the mine and began commercial mining activities in January 2005 following an eleven year break in production. The Company recently achieved its fifth consecutive year of increased productivity at the mine. This is very positive for investors in Revett Minerals.

Ore from the mine is extracted using the “room and pillar” method and is processed on site using standard flotation technology. Drill results have indicated there are also several areas of higher grade silver in areas of the Troy Mine where mining has not yet commenced. Take note of this, Revett has the potential to mine a higher grade of silver from existing pillars and from additional deposits in areas of the Troy Mine where mining has not yet commenced. Please take a minute and read the previous sentence over again, so we do not have to repeat it. Revett management is among the best in the industry. They know what they have at Troy and, in our opinion, we will be seeing big news from the Troy Mine.

Like most other miners, the resulting concentrate is sold under contract to a third party metals trader. The Troy concentrate typically contains 34% to 40% copper and 70 to 100 ounces of silver per ton. The Troy concentrate typically contains between 34% and 40% copper, and between 70 to 110 ounces of silver per ton. In 2009, Troy produced around 8.7 million pounds of copper in concentrate and 1,127,639 ounces of silver. At December 31, 2009, the estimated proven and probable ore reserves at Troy were 9.1 million tons grading 1.23 ounces per ton silver and 0.57% copper using a net smelter return cut off of $21.02 per ton.

The mine comprises 24 patented lode-mining claims and approximately 188 unpatented lode-mining claims. The patented claims were legally surveyed in 1983 and all of the mining claims are in good standing. Revett’s Troy Mine has often been compared to the Galena Mine, which is owned by U.S. Silver, due to its similar silver equivalent production (3m oz Ag Eq), revenue stream and cash flows. The market values the Galena at $53 million versus Revett's $36 million. Our previous opinion remains unchanged, this undervalued asset presents a tremendous opportunity for investors to buy Revett Minerals common stock, since there are very few small-cap miners actually in production.

“Drilling Down” at Troy

Just a few weeks ago Revett announced very encouraging results from its core drilling program at Troy. In our opinion, this press release confirms Revett has significant potential at the Troy Mine. Revett publicly stated that results from its underground core drilling confirmed the presence of a thicker, higher grade area within the “I-Beds”. The “I-Beds” are approximately 1,120 feet below the current operations at Troy and have been a source of speculation among investors for a number of years. The recent results offer shareholders increasing confidence in delineating a significant resource in the “I-Beds” as Revett looks to accelerate its exploration efforts at Troy. We believe continued exploration success, such as experienced with the C-Bed discovery and development, will add significantly to Troy’s mine life and facilitate the eventual development of the JF Properties to the south. 

Troy Exploration Program

Revett began exploring at Troy in 2006 to follow up on a prospective regional program performed by prior owner ASARCO Inc. While the primary near-term focus has been to further delineate the extensive stratabound copper and silver mineralization hosted in the “I-Beds” of the Lower Revett Formation 1,120 feet beneath, and adjacent to, the mine’s current workings, Revett management also plans to follow up on new geologic interpretations which resulted in the discovery of the “C-Bed” ore body. In its 2010 10-K, Revett disclosed the “C-Bed” ore body is 1.8 M tons of 1.61opt silver and 0.56% copper. The Company went on to say it is currently developing this resource. Revett also stated the ultimate goal of this phase of the program is to demonstrate mineralization continuity in the “I-Beds” starting from beneath the active mine south for approximately 8,000 feet to the “I-Bed” hosted “JF” deposit. The “JF” deposit boasts a historical resource of 11 million tons grading 0.4% copper and 1.4 opt silver. Revett plans to access the “I-Beds”, including the “JF”, to augment and extend its current six year mine plan. Revett has publicly stated that, if successful, the life of the Troy mine could more than double assuming current extraction rates. In our opinion, this is an event of magnanimous proportions, considering the Troy Mine is already in production and serves as an important environmental and economic baseline for development plans at Rock Creek.

Longer term, we believe the geologic potential around the active Troy Mine is excellent, especially since Revett has been systematically increasing its property holdings around the mine. If one does some homework, it becomes obvious that Revett has been adding to its holdings around Troy by staking and acquiring claims covering the known mineralized trends to the north and east of the mine. In our opinion, Revett’s intention is to delineate, and bring into production, deposits in the area that can utilize the existing milling capacity at Troy.

Revett Formation

The Revett Formation consists of three main strata units, the Upper, Middle and Lower.  The main Troy mining areas are currently located in the Upper Revett unit.  Other mineralization occurs in the Lower Revett in a series of bedding units labeled “A” through “I” stratigraphically downward.  Drilling from both underground and surface programs have intercepted strata-bound copper/silver mineralization in the “A, B, C and I- Beds” of the Lower Revett Formation, ranging from 180 to 1,120 feet below the Troy workings. It is important to note that Revett’s Rock Creek project is also hosted in the Lower Revett Formation, specifically the “A, C & E-Beds”. Revett has publicly confirmed the presence of ore grade mineralization in the “A, C & I- Beds” at Troy.   

A-, C-, E-, G-, and I-Beds

In addition to the existing reserves and resources at the Troy Mine, Revett has been exploring beneath and adjacent to the current workings. The primary target has been stratabound silver and copper mineralization located in the I-Beds of the Lower Revett Formation, approximately 1,200 ft. stratagraphically below the main ore body at the mine. These same I Beds host a historic resource in the JF deposit just south of Troy.

Because the Rock Creek Project – about 25 miles away – is hosted in upper quartzite units of the Lower Revett Formation (specifically the A-, C-, E-, and G-Beds), Revett believed the potential for ore grade mineralization existed in these beds at Troy as well. Revett’s 2007 exploration campaign proved successful in this regard, not only confirming mineralization in the I-Beds, but also in the discovery of a mineable reserve hosted in the C-Beds directly beneath the current workings: mineralization containing 1.9M oz. of silver and 13.7M lbs. copper grading 1.61 opt Ag & 0.56 percent Cu; this is included in the current reserve.

Revett plans to complete development work to access the C-Beds at Troy in the 3rd quarter of this year and anticipates development and production in the 4th quarter of 2010. Once completed, Troy should show a significant increase in metal production in 2011.

Financials

Revett Minerals reported a profit for the First Quarter 2010. and generated $2.1 million in operating cash-flow from the Troy Mine, which resulted in a $0.01 per share overall profit. During the same period, Revett achieved record mill throughput at Troy averaging 4,265 tons per day compared to 3,811 tons per day in the first quarter of 2009, which is a 12% improvement. Revett produced 287,259 ounces of silver and 2.5 million pounds of copper at the Troy Mine , which generated $12.1 million in revenues.

Overall, Revett reported a net income after taxes of $0.9 million (which included a $0.8 million non cash charge for the issuance of stock options); or, $0.01 per share profit on revenue of $12 million. This compares to a net loss of $0.9 million or $0.01 per share on revenue of $8.3 million for the same period last year.

Revett has hedged approximately 20% of its forecasted 2011 copper and silver production at the Troy mine at $3.60 per pound of copper and $18.40 per ounce of silver.

This tranche of hedging covers approximately 50% of estimated 2011 direct operating costs at the Troy mine, protecting shareholders against the possibility of lower metal prices. The unhedged balance of copper and silver production will enable Revett to capitalize on the potential for increased copper and silver prices in 2011.

Rock Creek Silver and Copper Mine

Rock Creek is a development stage copper and silver deposit in Sanders County, Montana with 99 patented lode-mining claims, approximately 463 unpatented lode-mining claims, and five tunnel site claims. Revett intends to develop Rock Creek as a 10,000 ton per day, underground mine and conventional mineral flotation processing operation, with estimated annual production of 6 million ounces of silver and 52 million pounds of copper over the life of the mine. Rock Creek is often compared to Mines Management’s Montanore Project.

Rock Creek is an enormous project incorporating 79 modifications, mitigations, and monitoring requirements to protect wildlife and the environment. This includes a $3.6 million purchase of 400 acres in the Noggle Creek area for bear mitigation. Over its 25 year life, Rock Creek will contribute $925 million to the state and local economy, which includes employing 300 people at an average of $45,000 per year plus benefits.

Revett plans use the most environmentally benign form of mining known today to protect the environment, create jobs, and produce silver and copper ore at Rock Creek. Working at an average depth of 1,000 below ground, the Project will be virtually undetectable to people and wildlife on the surface. By using safe, organic, biodegradable additives to separate the copper and silver minerals from the quartzite rock, only a small amount of water will be used in the mining process. Revett plans to recycle the water used at Rock Creek and utilize a dual treatment system to ensure that all water released will exceed drinking water standards.

Also, Rock Creek is located very close to highways, railways, and low cost power, which is the necessary infrastructure for mine development and operation.

It is important to note that a large chunk of the legal costs are being paid by the U.S. Forest Service.

The Rock Creek Decision

At the end of March, a US District Court Judge issued an order, followed by a full opinion in May, regarding the Rock Creek project. The court ruled “the Forest Service’s decision to approve the Rock Creek Mine Project is vacated, and the 2003 Record of Decision and 2001 Final Environmental Impact Statement are set aside and remanded to the Forest Service for further action consistent with the Court’s opinion”. In English, this means the Judge tabled the previous approval of the Rock Creek project from the U.S. Forest Service. He subsequently sent the Environmental Impact Statement (EIS) and the 2003 Record of decision (ROD) back to the U.S. Forest Service for further action, stating a supplement to the EIS would be required to move forward with the project. The obscure opinion issued by the Judge left investors scratching their heads, wondering what Rock Creek's status would be.

So, the project is now on hold pending completion of a supplemental EIS and the other requirements called for in the opinion. One key issue is that while the Judge said the Forest Service violated the National Environment Policy and the Forest Service Organic Act in approving the Rock Creek mine, he threw out two significant claims by the plaintiffs; challenges to the Endangered Species Act and the Clean water act. So, although the project is certainly delayed, the recent ruling does provide some clarity and forward momentum. In our opinion, Rock Creek will eventually get approval and will be developed one day. When it will be developed appears to be a longer proposition as the issues navigate through legal challenges. In fact, we believe Rock Creek will not have as much near-term impact on Revett's stock price as the Troy Mine will. It is our opinion that any selling related to the Judge's decision has subsided and investors are again focused on the long term prospects of the company.

In our opinion, this creates an extraordinary buying opportunity on Revett Minerals. Rock Creek is a project of mammoth proportions. The capital intensive project could have an impact on Revett's stock price. We prefer instead to focus on the fact that Revett is profitable from operations at the Troy Mine and will probably be able to finance any additional exploration at Troy out of existing cash flow. In our opinion, it is rare for a mining company to not have a need to issue a boat load of shares to finance operations. As the company focuses on expanding its Troy operations, it should give management an opportunity to put more cash in the coffers, which should result in less dilution to shareholders when Rock Creek is ready to be developed. In our opinion, this is a perfect example of investors losing sight of the bottom line business and focusing on a short-term transaction. Smart investors will take advantage of the recent pullback in the stock price to add to their position, or initiate a new position.

Summary

Lower Revett Formation “A-Bed” Drill Results

Depth below Mine Workings: 180’.

 Revett will continue to focus on development and exploration at Troy, making it an even more productive mine. The recent judicial opinion on Rock Creek is, in our opinion, another stepping stone. The decision provides Revett with the necessary information to proceed toward developing Rock Creek and the Company has publicly stated management plans to work with the U.S. Forest Service and other agencies to move the project forward.

Rock Creek is not dead, but the market has sold the stock off like it is. In our opinion, we believe the project is closer to full approval than the market thinks. So do not lose sight of the fact that a world-class silver mine is on the horizon for Revett. We can not tell you when Rock Creek will be approved, but we can tell you that you want to be a shareholder when it is. Armed with the knowledge that Silver Wheaton (SLW-TSX & Amex) recently increased it stake in Revett to 16.6%, management owns 9%, and two other institutional investors own 6.4%, you should be able to start to see the big picture.

We think the real reason investors should be buying Revett Minerals is Troy Mine. Not only is Troy a cash cow, but it is an undervalued asset. The previous owner of Troy, Asarco, sunk over $100 million into the mine, and, considering Revett's current market capitalization of $39 million, the stock is trading at a deep discount to the value of what Revett has at Troy. 3rd and 4th quarter development work at the Troy Mine should result in a significant increase in metal production in 2011.

In other words, take Rock Creek out of Revett and the stock is a screaming buy on the merits of Troy. We believe investors should buy the stock before the enthusiasm about Rock Creek heats up again. Since the numbers do not lie, in our opinion, there is very little downside on Revett Minerals.

We brought Revett Minerals to our subscribers attention at $0.12 per share last fall. Our report said “Remember these words: "This stock will not be a $0.12 stock for long." In our opinion, you must act quickly. The potential is there for Revett's market capitalization to increase, just on the excellent leverage to discovery, production and rising commodities markets alone.”

With the recent developments at Troy, Revett will not be a $0.30 cent stock for long. In our opinion, you will not be able to buy stock in Revett under $1.00 once production from the 3rd and 4th quarter development work kicks in.
Any favorable news on Rock Creek will be an added bonus, but we expect great news from the Troy Mine to drive the stock price moving forward.

We believe Revett has built a new base at these levels and now is the time to buy the stock, before the rest of the market bids the price up. Ultimately, It is when you buy the stock that counts and, in our opinion, investors should not hesitate at these levels.

Hole ID	From (feet)	To (feet)	Drill Interval (feet)	Silver Grade	Copper Grade	Date/Company
SL-150	362’	392’	30’	0.38 opt	0.21%	2006/Revett
SL-152	373’	416’	43’	0.66 opt	0.14%	2006/Revett
SL-153	366.5’	411’	44.5’	1.11 opt	0.25%	2007/Revett
SL-154	358’	406’	44’	0.46 opt	0.24%	2007/Revett
SL-155	414’	428’	14’	0.39 opt	0.29%	2007/Revett
SL-156	384’	412’	28’	0.93 opt	0.28%	2007/Revett
SL-158	394’	422’	28’	0.47 opt	0.20%	2007/Revett
SL-159	413’	435’	22’	0.36 opt	0.21%	2007/Revett
SL-160	449’	459’	10’	0.87 opt	0.43%	2007/Revett
SL-168	356’	386’	28’	0.85 opt	0.29%	2010/Revett
SL-169	361.5’	381.5’	20’	0.64 opt	0.22%	2010/Revett

Lower Revett Formation “B-Bed” Drill Results

Depth below Mine Workings: 325’.

Hole ID	From (feet)	To (feet)	Drill Interval (feet)	Silver Grade	Copper Grade	Date/Company
SL-154	550.5’	578’	27.5’	1.35 opt	0.65%	2007/Revett
SL-155	501’	517’	16’	0.51 opt	0.20%	2007/Revett

Lower Revett Formation “C-Bed” Drill Results

Depth below Mine Workings: 370’.

Hole ID	From (feet)	To (feet)	Drill Interval (feet)	Silver Grade	Copper Grade	Date/Company
SL-154	584’	620’	36’	1.68 opt	0.57%	2007/Revett
SL-155	568’	598’	30’	1.50 opt	0.59%	2007/Revett
SL-158	554’	576’	22’	2.09 opt	0.63%	2007/Revett
SL-159	581’	613’	32’	1.37 opt	0.47%	2007/Revett
including			16’	1.79 opt	0.62%
SL-160	557’	567’	10’	0.37 opt	0.18%	2007/Revett

Lower Revett Formation “I-Bed” Drill Results

Depth below Mine Workings: 1,120’.

Hole ID	From (feet)	To (feet)	Drill Interval (feet)	Silver Grade	Copper Grade	Date/Company
SL-125	1,312’	1,330’	18’	0.62 opt	0.18%	1987/ASARCO
SL-126	1,888’	1,900’	12’	0.66 opt	0.28%	1987/ASARCO
SL-131	907’	918’	11’	1.02 opt	0.41%	1989/ASARCO
SL-150	1,279’	1,315’	36’	1.09 opt	0.21%	2006/Revett
SL-151	1,346’	1,366’	20’	0.57 opt	0.22%	2006/Revett
SL-152	1,302.5’	1,317.5’	28.5’	0.79 opt	0.18%	2006/Revett
SL-153	1,314’	1,337’	23’	1.48 opt	0.24%	2007/Revett
SL-154	1,338’	1,364’	26’	0.71 opt	0.22%	2007/Revett
SL-155	1,345’	1,380’	35’	0.79 opt	0.24%	2007/Revett
SL-156	1,325’	1,345’	20’	0.85 opt	0.28%	2007/Revett
SL-158	1,334’	1,368’	34’	0.53 opt	0.23%	2007/Revett
SL-159	1,417’	1,439’	22’	0.61 opt	0.23%	2007/Revett
SL-160	1,499’	1,523’	24’	0.09 opt	0.15%	2007/Revett
SL-161	1,029’	1,059’	30’	0.73 opt	0.32%	2007/Revett
SL-162	1,120’	1,152’	32’	0.70 opt	0.23%	2007/Revett
SL-163	1,378’	1,392’	14’	0.16 opt	0.01%	2007/Revett
SL-165	1,181’	1,185’	4’	1.47 opt	0.87%	2008/Revett
SL-168	1,286’	1,334’	48’	0.86 opt	0.29%	2010/Revett
SL-169	1,306’	1,346’	40’	1.64 opt	0.37%	2010/Revett
including			24’	1.99 opt	0.43%	2010/Revett
SL-170	1,342’	1,384	42’	0.92 opt	0.37%	2010/Revett
including			20’	1.04 opt	0.43%	2010/Revett

Note: Holes SL-125 through SL-159 were previously released.

Recent Drill Results

We are including recent drill results, since so many institutional investors follow the stock. If you do not understand the drill result tables, we will try to give you a brief tutorial. As we mentioned previously, there are numerous bedding units labeled by Revett “A” through “I”. Holes are drilled by Revett’s Exploration Team and given a corresponding ID. Samples are taken from each drill hole at a particular level below the current mine’s workings. The samples are tested and graded as to how much silver and copper is contained in each.

Assay Quality Assurance and Quality Control

Core samples are collected under the direct supervision of Revett personnel and stored at a secure storage facility at the Troy Mine. Detailed geologic logging identified the mineralized intervals sampled. All the samples were taken from 2 inch cores that were sawed in half. In general two foot intervals were sampled, which is pretty much the industry standard.

All samples were analyzed for copper, silver and lead using atomic absorption spectrometry. Any samples with silver values greater than 0.40 ounces per ton were fire assayed. A total of 1802 samples were taken from intercepts in drill holes SL-150 through SL-170. Revett submitted reference samples to American Analytical Services and Chris Christopherson Inc. for Quality Assurance and Quality Control.