The recent resignation of President Gonzalo Sanchez de Lozada of Bolivia may have a profound impact on mine developer Apex Silver (AMEX:SIL), whose first development property, the San Cristobal Project, is located in southern Bolivia.

San Cristobal has the second-largest silver reserve in the world and the seventh-largest zinc reserve. Proven and probable reserves are 454 million ounces of silver, 7.8 billion pounds of zinc, and 2.9 billion pounds of lead -- and exploration continues to find new reserves.

The mine, when operational, is expected to have what's called life-of-mine operating costs of $1.96 an ounce for silver and $0.26 cents a pound for zinc. With silver selling on the spot market for $4.97 an ounce, and zinc, $0.43 cents a pound, the mine would be profitable even at today's low metal prices.

Long story short, Apex planned to maximize its investment by developing San Cristobal when silver prices are higher than today's. But new Bolivian President, Carlos Mesa, wants Bolivia to be managed to the benefit of its indigenous Indian population -- a world-class mine sitting idle could well become a political target.

Bringing things to a head for Apex, President Mesa does not plan to serve through 2007 -- when former President Sanchez de Lozada's orginal term ends -- but has promised early elections. The political climate in Bolivia could be unsettled for years.

Volatility is almost certain in Apex's future. While silver stocks like Pan American Silver (NASDAQ:PAAS) and Coeur d'Alene Mines (NYSE:CDE) took off in February, Apex traded sideways and, recently, down.

Is Apex worth the political risk? It could be. Owners of fellow mining company Freeport-McMoRan Copper & Gold (NYSE:FCX) have seen their stock rise from a 52-week low of $9.95 to a recent all-time high of $38.19.

Bolivia needs jobs. Apex will protect its world-class asset. When it all shakes out, the stock, trading near its 52-week low, has the potential for spectacular long-term gains.

W.D. Crotty can be reached at HawaiiFool@hawaii.com .