The mining industry has been characterized in recent years by extreme volatility in the prices of precious metals and also other metals, including steel, iron ore, copper and aluminum. 

Subdued pricing environments have been reflected in the stock prices of companies in the sector as well, say industry experts. That’s good news, some analysts assert, because it may be the time for creative investors to buy quality exploration assets.   

Doug Belanger, president of Spokane-based Gold Reserve Inc., the Spokane-based mine exploration company, says in 2014 the malaise that has plagued the base and precious metals continued. On the supply side, he says, 2014 was a tough year for mining companies, with declining valuations and a continued decline in access to new equity. 

“Since junior mining companies are the lifeblood of the industry for future growth, this makes replacing reserves for the dominant producers even more of a challenge,” Belanger says, adding that tight markets for resource debt and higher costs for infrastructure capital make the environment even tougher. Meantime, globally, other countries continue to demand a larger share of revenue. 

Silver has been selling recently for about $16 per troy ounce, compared with about $20 per troy ounce a year ago. Gold has been selling at roughly $1,204 a troy ounce recently, down from $1,230 a year ago.

Historically, the relative price of precious metals is still high, Belanger says, but investors remain cautious. 

“Between these two factors of supply and demand with any sharp upturn in the world economy, there will be a big move to the mining sector by investors on the sidelines,” he says. “But with the large lead time between exploration spending and commencing production, shortages should emerge that will cause a massive rise in metal prices with a leveraged increase in the price of company shares.”

Belanger says that the industry has always been cyclical, and he contends that now is a good time for patient investors to be buying quality exploration assets that are being well managed.

“You buy when there is blood in the streets, and sell when they are popping the champagne corks. This old adage has never been truer than now in the mining industry,” he asserts. 

Hecla Mining Co., of Coeur d’Alene, reported third-quarter net income of $3.6 million, or 1 cent a diluted share, up from a net loss of $8.6 million, or 3 cents a diluted share, in the year-earlier period. 

The company said it produced 2.9 million ounces of silver and about 42,500 ounces of gold during the third quarter, which equated to increases of 25 percent and 15 percent, respectively, compared with the year-earlier quarter. 

In all, Hecla posted $135.5 million in sales in the latest quarter, up 27 percent from $106.6 million in the year-earlier quarter. 

Phillips S. Baker, Hecla’s president and CEO, said in an earnings release that all three Hecla mines performed well in the third quarter.

Baker also said the company has had success in exploration during the past six months that has extended some veins and increased the opportunity for future growth.

Spokane-based Mines Management Inc. reported a net loss of $4.9 million for the nine months ended September 30, compared to a net loss of $5.8 million for the same period in 2013. The smaller loss resulted mostly from reduced operating expenses. 

—Judith Spitzer