Precious metals prices have surged faster than expected this year and are showing no signs of slowing in 2006, mining executives say. Consequently, some Inland Northwest mining companies are looking to ramp up exploration efforts or production levels, or both.
We have a bullish outlook on demand for silver and gold, says Scott Lamb, vice president of investor relations at Coeur dAlene Mines Corp., of Coeur dAlene. The balance between supply and demand will remain tight, and that will lead to a strong price environment.
As of last week, gold was trading at about $540 a troy ounce, about $90 more than a year ago and about $50 more than industry observers predicted it would reach in 2005. Gold prices could trend upward to $600 next year, some say.
Silver was priced at $9.25 an ounce last week. A year ago, the white metal was trading at $6.70 an ounce, which was nearly $2.50 more than it had commanded in 2002. Industry observers say silver prices could approach $10 an ounce next year.
In 2006, Coeur dAlene Mines plans to continue development of its Kensington mine in Alaska and its San Bartolome property in Bolivia, although production at those properties likely wont start until 2007, Lamb says.
Also, the company will look for additional acquisition opportunities next year. This year, Coeur bought silver interests in Australia that gave it more than 3 million ounces of additional annual production and boosted its reserves by 20 percent.
Phillips S. Baker Jr., president and CEO of Coeur dAlene-based Hecla Mining Co., says that companys production levels dropped this year because of labor issuesthe company encountered strikes at its operations in Mexico and Venezuela. Also, production costs increased because of rising prices for fuel and construction materials.
Fortunately, he says, the better-than-expected prices have helped the company meet its revenue expectations.
Generally speaking, Baker says Hecla will produce roughly the same amount of silver and gold next year as it will this year.
Hecla made big strides in some of its exploration efforts last year, though, and the company expects some of those projects to progress next year, Baker says.
In 2006, youll see these things move forward in a dramatic way, he says.
Spokane-based Gold Reserve Inc. decided this year to move forward with its big Brisas project in Venezuela. Gold Reserve President A. Douglas Belanger says the company hopes to start construction on that $550 million mine in the second or third quarter of next year and to begin producing gold and copper there in 2008, Belanger says.
He says copper prices have been surging, too, this year, with copper hitting an all-time high price of $2.10 per pound earlier this month.
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