The surging precious metals prices of 2005 didnt stop when the calendar turned to 2006, much to the delight of the mining industry. With that trend expected to continue, mining companies are reaping profits again and investing aggressively in exploration and development.


The mood at the recent Northwest Mining Association annual convention in Reno, Nev., was very upbeat, says Vicki Veltkamp, the organizations president-elect and vice president for investor relations at Coeur dAlene-based Hecla Mining Co.


People are believing that we had a very long downturn and that we have only begun the upturn and that it will go on for some time, says Veltkamp.


Gold was trading last week at about $630 a troy ounce, compared with what was seen as a strong, $525-an-ounce price a year ago. Silver prices are hovering at just under $14 a troy ounce, compared with about $8.60 an ounce a year ago.


Prices are expected to continue to strengthen. Veltkamp says one industry expert predicted at the convention that gold prices would hit $800 to $1,000 an ounce within the next two to five years. That, she says, has spurred greater interest in exploration.


Hecla expects to spend about $25 million next year on exploration, some of that at its Lucky Friday mine in North Idaho, where Veltkamp says silver reserves now total almost as much as has been mined there cumulatively in the past 60 years. Miners at the Lucky Friday will share in the companys good fortune by receiving bonuses this year averaging about $30,000 each, she says,


Hecla also is exploring heavily in central Mexico, where it expanded its holdings this year. At its three operating mines, the company expects to produce about 150,000 ounces of gold and 6 million ounces of silver next year, or roughly the same as this year, she says.


Officials at North Idahos other big mining company, Coeur dAlene Mines Corp., also are optimistic about 2007.


Silver and gold markets have been very strong during 2006, and for the first nine months of the year, Coeur reported all-time record levels of net income and cash flow, says Scott Lamb, the Coeur dAlene-based companys vice president for investor relations. As we look ahead to 2007 and beyond, we continue to have a bullish view of the silver and gold markets.


Coeur hopes by the end of next year to complete two big projects in which its investing heavily: the long-awaited Kensington gold mine in Alaska, and the San Bartolome silver project in Bolivia. The Kensington is expected to produce 100,000 ounces of gold annually, while the San Bartolome is expected to produce about 8 million ounces of silver a year.


Meanwhile, a joint venture that includes Spokane-based Minera Andes Inc. said last month that it was wrapping up financing to complete construction of a gold and silver mine in Argentinas Santa Cruz province. Called the San Jose, the mine should be completed next year and is expected to produce 61,000 ounces of gold and 3.2 million ounces of silver annually. Minera Andes owns 49 percent of the venture.