For the first time in a number of years, the overall outlook for the mining industry in Mountain America is about as bright as it could possibly be. The only negative — and it's pushed by the "gloom-and-doom" crowd — is for coal, which is a producer of "greenhouse gases" when burned conventionally. Today, even uranium is enjoying a renaissance. And ironically, the very price increases that have been driving up the cost of construction — increased fuel and materials costs — are largely the same increases that are causing mining to grow.

In March, gold was selling for $655 an ounce, silver for $13.25 an ounce, copper for over $3 a pound, uranium for $90 a pound, and steam coal for approximately $35 per ton. Nearly all of these are recent record highs, and in the case of gold, silver, copper, and uranium, they come on the heels of near record low prices that had driven many producers (virtually all, for uranium) from the market in this country. Surviving gold producers who had trimmed and streamlined their operations to produce profitably at a $200 per ounce price are faced, almost literally, with an embarrassment of riches today, though somewhat tempered by rising production costs.

How long it will all last is anybody's guess, though there are plenty of people who make a good living off just such predictions. Let's take a look at what's been happening in mining across Mountain America.

Not surprisingly, nearly all the news relating to gold production is from Nevada, the nation's largest gold producer. Though total 2006 production figures had not been released at press time, Nevada has moved into the No. 2 position worldwide, surpassing Australia. Ironically, gold production is declining worldwide, but even so Nevada production is well in excess of 6.5 million ounces, making the state the world's third-largest gold producer.

Barrick Gold Corp., the world's largest producer of the precious metal, has been busy quashing rumors that it is about to acquire Newmont Mining, the second-largest producer. Barrick poured the first bullion in February at its Ruby Hill operation near Eureka, in central Nevada. Ruby Hill had been an operating mine until 2002, when the small operation was closed due to falling prices. Barrick invested something less than $75 million in upgrading and expanding the mine and mill facilities in preparation for reopening, including almost $30 million in new mining equipment and process upgrades. Ruby Hill is an open-pit mine expected to produce about 120,000 ounces of gold this year at a cost of $240 to $250 per ounce.

Barrick has a substantial number of future projects in the pipeline and increased that number last year with the 2006 acquisition of major producer Placer Dome. At the forefront of new Nevada projects is the Cortez Joint Venture (60-percent Barrick, 40-percent Kennecott) that includes the aptly named Pipeline and Cortez Hills deposits. Located next to the existing Cortez Pipeline mine on the Battle Mountain trend some 60 miles south of Barrick's flagship Goldstrike property, Cortez Hills is expected to become a significant contributor, with average annual production of 425,000 to 440,000 ounces at a cash cost of $290 to $300 per ounce during its first 10 years. Currently in the permitting stage, construction will begin immediately following approval, expected in 2008.

Newmont Mining Corp., the second-largest producer of gold, posted record profits last year but forecasts a decline this year, with production costs that could be 25-percent higher. "We continue to be challenged by declining [ore] grades at our mature properties," explained CEO Wayne Murdy. And costs continue to spiral upward, though a major power plant being built by the company in Nevada will eventually provide a $25-per-ounce production cost savings through lower energy costs.

During 2006, Newmont invested over $1.5 billion as it brought three new mines into commercial production, including the Phoenix and Leeville mines in Nevada. The underground Leeville mine — Newmont's first in Nevada — actually began production in the third quarter of 2005 and will reach design production levels this year. Phoenix, acquired with Battle Mountain Gold in 2001 and approved for development in January 2004, today has 8.5 million ounces of gold reserves and 660 million pounds of copper reserves. An open pit operation, the area is open in most directions, providing opportunity for substantial expansion in the future.

Newmont's $435-million, 203-megawatt, coal-fired Nevada power plant is now under construction, with initial startup expected next year. In addition to producing power at a lower cost than the company now pays for electric energy, it will produce a surplus of power that will be sold to Sierra Pacific Power, the local utility.

Reno-based General Metals Corp. owns the Independence mine, a property not yet in production that is a 240-acre island within Newmont's Phoenix mine. The company is completing exploration work at the site and hopes to begin preparations for mining and heap-leaching of the shallower of two deposits in the near future.

Literally dozens of exploration companies are acquiring, drilling and mapping gold — and silver — properties all across northern Nevada, and many of these will become operating mines or expansions of existing mines over the next few years, particularly if gold prices remain as high as they are predicted to remain. A few recent examples:

• Columbus Gold Corp. is conducting exploratory drilling at the company's Utah Clipper and Crestview properties, adjacent to Barrick Gold's world-class Pipeline-Gold Acres gold mine complex in the Cortez-Pipeline sector of the Battle Mountain trend. Exploratory drilling was most recently conducted in the vicinity by Newmont in 1987 and Asarco in 1994.
• Golden Odyssey Mining as staked 30 additional claims totaling 600 acres adjoining its Morningstar Project on the Walker Lane Belt in the Battle Mountain area. The project area now totals 129 claims where exploratory drilling will now be conducted.
• AuEx Ventures and joint venture partner NewWest Gold USA have completed the follow-up phase of reverse circulation drilling at the Long Canyon gold exploration property in Elko County. Favorable results will lead to further development of the property.
• Gateway Gold Corp. has confirmed the presence of a large gold-bearing system on its golden Dome property in northeastern Nevada, halfway between the company's Big Springs project and the Jerritt Canyon mines to the south. "The widespread nature of the gold and associated trace element results are encouraging in that they indicate that we have discovered a very large gold bearing system at Golden Dome," said company president Michael D. McInnis.
• Queenstake Resources Ltd. reports that the Mahala deposit at its Smith Mine produced 24,052 tons of ore at an average ore grade of 0.55 ounces per ton in the fourth quarter of 2006 and last year's exploratory drilling program has extended the gold mineralization of the Mahala deposit some 500 feet farther northwest. Further extensions are anticipated from drilling this year. At year-end 2005 the Mahala had estimated probably reserves of 241,920 tons grading 0.31 ounces per ton for 75,700 contained ounces.
• Terraco Gold Corp. reports that preliminary geologic mapping and rock sampling in the Moonlight Basin have returned results as high as 0.116 ounces per ton gold and greater than 72.92 ounces per ton silver. Terraco controls more than 4,400 acres in the basin, including the site of the historic Moonlight Mine.
• Columbus Gold Corp. has acquired three Nevada gold properties within historic mining districts. The acquisitions of Red Hills, White Horse Flats and Scraper Springs increase the company's portfolio to 25 100-percent owned properties, 20 of them in Nevada. Exploration of the new properties will begin this year.
• Silver Quest Resources has completed a diamond drilling program at its Corcoran Canyon Silver Project in central Nevada, north of Tonopah in Nye County. The drilling resulted in discovery of a new silver zone that will be further explored this year.

Copper prices, as plumbing and electrical contractors can readily attest, have escalated dramatically in the past couple of years (though dropping considerably in recent months), leading to renewed activity in the copper mining field, especially in Arizona and Utah.

Last month, shareholders of Phoenix-based Phelps Dodge Corp. approved a $26-million buyout by New Orleans-based Freeport McMoRan Copper & Gold Inc. The largest mining merger ever, it had previously cleared regulatory hurdles in the United States and Europe. Phelps Dodge has operated mines in Arizona for 125 years and moved its headquarters to Phoenix in 1987 from New York City. Headquarters for Phelps Dodge's global mining operations will remain in Phoenix and Freeport's president and CEO, Richard Adkerson, will relocate there to lead the consolidated enterprise.

Most of Phelps Dodge's mines are older, higher-cost properties, while Freeport's Grasberg mine in Papua, Indonesia, is not only the world's largest gold mine and second-largest copper producer, it is one of the lowest cost producers anywhere. With the PD acquisition, Freeport will be focused on generating cash to pay down the huge debt, and with near record copper prices, Freeport may choose to boost production by reopening closed mines and reducing production costs at existing ones. PD has a number of mines in Arizona, such as the open pit at Miami, closed since 2002, that could be restarted to increase production.

At Safford, Ariz., Phelps Dodge constructing a new mine and delivery of structural steel have allowed several aspects of the project to proceed ahead of schedule, with construction now about 22-percent complete. Construction workers are preparing the pit area for mining, though actual ore removal is not expected to begin until June or July, and the first copper will not be produced until 2008. The number of construction workers at the site is expected to peak at 1,000 in June. Some 100 Phelps Dodge employees are also on-site.

Rio Tinto, another worldwide leader in copper production, increased its stake in the Resolution Copper Project near Superior in Arizona to 55 percent last year. The company said shaft sinking will begin soon. The deposit at Resolution lies 2 kilometers below the surface and is not expected to go into production before 2015, an indication of the long lead time necessary for such a challenging project. Part of the challenge is in obtaining all the land needed for the project, and Congress last year failed to approve a land exchange between Rio Tinto and the U.S. Forest Service on Oak Flat, a part of scenic Queen Creek Canyon. Opposition by the San Carlos and White Mountain Apache tribes and by rock climbers helped doom the measure last year, and with Democrats in control of both houses of Congress this year, approval is uncertain at best.

Resolution Copper Co. President John Rickus said the land exchange must be approved this year or the project will be set back many years, since the work force assembled from around the world to do the preliminary work will be dispersed if the firm can't proceed with more extensive development work soon.

Aurelio Resource Corp. has located a significant near-surface copper oxide deposit in a drilling program in the South Courtland area of its Hill Copper Project in the Turquoise Mining District of Cochise County, Ariz. The finds are in the vicinity of the historic Highland and Humbolt mines, where significant copper sulfide resources are reported to remain.

Redhawk Resources Inc., through subsidiary Redhawk Copper Inc., has acquired the Phelps Dodge mining claims in the Bunker Hill Mining District of Pinal County, Ariz. The 27 claims — 26 of them already patented — encompass 520 acres and adjoin claims already owned by Redhawk. The company now controls more than 5,100 acres in the district, known as the Copper Creek property, and it will be further explored in preparation for development.

Big Bar Gold Corp. has acquired two key properties related to its porphyry copper target being developed at the company's Troy Ranch property near Ray in central Arizona. The acquisition now allows unimpeded exploration of the entire target area as the next step toward development.

With molybdenum currently selling for more than $30 a pound, interest in the comparatively rare mineral is strong. Phelps Dodge's underground Henderson Mine near Empire, Colo. — currently the only operating primary moly mine in the country — is being considered as the site of a national Science Foundation underground science and engineering laboratory, and NSF representatives visited the mine in March. There is only one other site competing, and site selection is expected next year. The laboratory would operate while Henderson continues to be actively worked and long after the mineral deposits have played out and mining has ceased.

Meanwhile, Phelps Dodge continues a feasibility study of the proposed 2009 reopening of its Climax Mine near Leadville, Colo. The study will be completed in August. James Arnold, general manager of Climax Molybdenum, a PD subsidiary, said, "Climax is the best unmanned molybdenum orebody on earth right now." The ore is high grade and production costs to mine it would be low. There are about 500 million tons of ore that could be readily recovered at Climax, and reopening the historic mine and constructing an entirely new mill would cost an estimated $250 million.

Phelps Dodge continues to pursue authority to mine its molybdenum property on 12,392-foot Mount Emmons, adjacent to the ski resort community of Crested Butte in Gunnison County, Colo. The proposed Red Lady Mine has received most necessary approvals, but last month opponents of the project appealed their case to the U.S. Supreme Court. Western Mining Action, representing the opponents, contends that the 1872 Mining law that allowed Phelps Dodge to acquire the land for the mine at relatively low prices should be overturned because it favors private developers over the public's right to public lands. The Supreme Court has not yet announced whether it will hear the case.

In Nevada, Idaho General Mines announced last month that, based on ongoing drilling and evaluation work, the company anticipates its wholly owned Hall-Tonopah molybdenum deposit in Nye County will become its second major molybdenum development project. "While our main focus and effort is the permitting and development of the Mount Hope Mine near Eureka, Nev., we are excited to be able to continue to progress a second major molybdenum project," said Bruce Hansen, Idaho General CEO. "Hall-Tonopah is also one of the world's larger high-grade molybdenum deposits." Mining at Mount Hope is projected to begin in 2010.

Anaconda Co. and Cyprus Amax explored the Hall-Tonopah property between 1981 and 1991 and were preparing to mine the deposit when molybdenum prices fell. A single open pit was planned, concentrating on the Hall or lower moly mineralization zone. Now, said Robert Russell, Idaho General's board chairman, "Based on our current modeling and preliminary data, we believe that a mining rate of at least 20,000 tons per day can be sustained at grades of 0.09-percent to 0.11-percent molybdenum, or approximately 2 pounds molybdenum per ton mined."

You'd think it was the 1950s again, the way uranium exploration has boomed in Wyoming, western Colorado, eastern Utah, northeastern Arizona, and New Mexico. When the price of uranium yellowcake fell below $10 a pound 20 years ago, mining virtually stopped in this country. But now, with the price up to $85 a pound, exploration and development are rampant.

In-situ recovery is responsible for nearly all U.S. uranium mining today, so the impact of mining is greatly reduced over the huge open pit operations of the 1960s to 1980s. And existing uranium mills, closed for years, are suddenly being sought by investors.

Rio Tinto Energy America Inc. has decided not to sell its uranium mill northwest of Rawlins, Wyo. SXR Uranium One Inc. of Toronto had reached a tentative agreement to buy the mill for $110 million, along with related uranium properties in the Green Mountain area of Wyoming. But with the rising price of uranium, Rio Tinto decided to hold on to the mill. "The uranium market has experienced tremendous change in the past year," said a Rio Tinto spokesperson. "Rio Tinto wishes to re-evaluate its options with regard to the Green Mountain and Sweetwater properties as a result of these changes." The Sweetwater mill operated from 1981 to 1983, producing about 1.3 million pounds of uranium from 2.3 million tons of ore.

Rebuffed in its attempt to buy the Sweetwater mill in Wyoming, SXR Uranium One, which is merging with UrAsia Energy to create the world's second-largest uranium producer, has agreed to pay as much as $142 million for U.S. Energy Corp.'s Shootaring Canyon mill and exploration rights on 38,763 acres in Utah. The Shootaring Canyon mill, 48 miles south of Hanksville, Utah, was commissioned and operated for a period of just four months in 1982 before being mothballed. Under the agreement, SXR will issue about 6.6 million new shares, worth $101 million, to Riverton, Wyo.-based U.S. Energy. It will then pay $20 million in cash when the mill again starts production: $7.5 million on delivery of ore to the mill and royalties of $12.5 million from the plant's first production. SXR will also have an option to invest in uranium deposits found or developed by U.S. Energy over the next two years.

Trigon Uranium Corp. has signed an agreement with Shumway Brothers Mining and other parties to acquire six uranium mines previously operated in Utah's White Canyon district in San Juan County. The mines — White Canyon No. 1, Blue Lizard, Yankee Girl, Saddle, Giveaway, and Blind Luck — all operated through the end of the prior uranium cycle in the mid-1980s. Through acquisition of these mines, which are adjacent to such big producers as the Happy Jack and Radium King, Trigon intends to accelerate its entry into the uranium mining business.

Denison Mines Inc., merged with International Uranium Corp. in December, has recommenced active mining operations at a number of its uranium/vanadium mines in the Colorado Plateau district of Colorado and Utah. Mining has begun at the Sunday mine and production there will add about 100 tons or ore to Denison's U.S. production from the Pandora, Topaz and St. Jude mines that will total about 550 tons per day by mid-2007. Production from these mines is being hauled to Denison's White Mesa mill in Utah, where it is currently being stockpiled in preparation for restarting the mothballed mill, which is currently undergoing a $15-million modernization. The company plans to reopen the Rim and Van 4 mines in the Colorado Plateau district this year. At the Tony M mine in the Henry Mountains Complex in Utah, permitting was expected to be complete by the end of March, with anticipated in the third quarter.

Denison has also announced an agreement to acquire five uranium mines in the Arizona Strip district of northeastern Arizona from Pathfinder Mines Corp. These mines are also within hauling distance from the White mesa mill and will offer Denison an opportunity to significantly increase production in the near term.

VANE Minerals (US) LLC has signed a five-year renewable lease agreement on 18 uranium lode claims (approximately 350 acres) in the Lisbon Valley district of southeastern Utah. The claims, which make up the North Alice Extension Project, are located on and adjacent to the North Alice Mine formerly owned and operated by Homestake Mining Co., which produced some 2.5 million pounds of uranium oxide there before closing in the early 1980s. Confirmation drilling at the site is expected to begin in the second quarter, depending on receipt of approval from the Bureau of Land Management.

Bluerock Resources Ltd. has signed an option agreement with Mayan Resources Ltd. to lease the Tramp Mine Project, also known as the Peggie Mine, near Uravan in Montrose County, Colo. The Tramp Mine Project consists of eight claims encompassing the underground Tramp Mine, plus 51 additional claims staked immediately adjacent to the mine. The Tramp Mine is currently permitted for mining operations, and Mayan holds a prospecting permit for 50 exploration drill holes. The mine operated from the 1950s until it was closed in the early 1980s as the price of uranium plummeted. Bluerock plans to resume mining as soon as possible.

Uranerz Energy Corp. has initiated a uranium exploration drilling program on the Hank Project in Wyoming's Powder River Basin, where three hydrogeologic wells were drilled last summer. The drilling equipment will then move to the Nichols Ranch area to assist in finalizing wellfield design need for a Wyoming Department of Environmental Quality permit to mine application. Next, the drill rig will move to the Collins Draw Project to provide more information on mineralization in that area. Finally, the rig will be moved to the Doughstick area to assess the development potential.

With considerable expertise in in-situ recovery mining, Uranerz is currently developing two Powder River Basin projects in Wyoming. These properties are advanced, and the company has initiated environmental licensing and mine planning for both.

Uranium Resources Inc. has increased its estimate of mineralized uranium material in three sections at the Roca Honda Project in New Mexico from 5 million to 15 million pounds. Roca Honda is adjacent to the idle Mount Taylor Mine owned by General Atomics subsidiary Rio Grande Resources. URI also owns the nearby West Largo and Nose Rock uranium deposits, and the company is undertaking a study to evaluate all three properties as conventional underground mining targets, ranking them based on estimates of projected cost. Roca Honda already has a 14-foot shaft that was sunk to a depth of 1,474 feet in 1979-80 by previous owner Kerr-McGee, but it was never opened into the ore and is now plugged at the surface. Nose Rock has an 18-foot production shaft and a 14-foot ventilation shaft completed to a depth of 3,300 feet. URI is assuming that ore mined from these deposits will be milled at a large regional mill, not yet in existence, that will serve several area producers.

MAX Resource Corp. has been granted a USDA Forest Service drill permit for its wholly owned C de Baca uranium property in Socorro County, N.M. The project comprises 108 uranium claims previously explored by Occidental Minerals in the 1980s. The property is 14 miles north of Magdalena and 100 miles south of Albuquerque. It has the potential of in-situ recovery or solution mining.

Coal continues to be deprecated at a major source of greenhouse gases, and a new study from the Massachusetts Institute of Technology says the coal industry faces a bleak future unless ways are developed on a commercial scale to capture and store carbon dioxide. But Marion Loomis, executive director of the Wyoming Mining Association, counters that it would be a big mistake to shun additional coal-fired electrical generation until such CO2 sequestering technology is developed.

In the meantime, Wyoming remains the country's largest producer of coal. Even though U.S. coal consumption declined by 1.2 percent in 2006, Wyoming coal production spiked by more than 10 percent to 446.1 million tons (431.3 million from the 14 Powder River Basin mines) as utilities rushed to replenish stockpiles of Powder River Basin coal. The 2006 total is an increase of 42.7 million tons over the 2005 record.

The big question is whether utilities will demand the same volume of coal again this year or whether softened demand will result in the first annual decline in production in more than 10 years. The two railroads serving the Powder River Basin — Union Pacific and BNSF — proved last year they can ship nearly 450 million tons in a single year, and the railroads are hard at work expanding their capacity to be able to handle statewide production of up to 600 million tons by 2012.

A significant reversal occurred last year when Wyoming coal mines added more than 650 new jobs, bringing total employment in the state's mining industry to more than 5,300. This represents a reversal of the trend of the past several years, in which mines added larger new equipment that required fewer employees to operate. Today, after more than 30 years of large-scale surface mining in the Powder River Basin, mines are still adding larger equipment, but they are also adding more truck-and-shovel fleets and thus more employees because they have to dig deeper and deeper each year to reach the coal. Even though PRB coal seams are as much as 60 feet thick, the strip ratios in some mines are as great as 5-to-1, meaning five units of overburden must be removed for each unit of coal produced.

Currently, having just leased more than 2 billion tons of coal on federal lands in the basin, the Bureau of Land Management is evaluating another round of nominations for an additional 4 billion tons in the Powder River Basin, which would open 35,000 more acres to surface mining.

Last year, notable production increases were posted by Peabody Energy's Rawhide Mine and Arch Coal's Coal Creek Mine. Production resumed at Coal Creek after the complex had been idle since 2001, and the mine is expected to continue to ramp up production this year.

Production totals from 2006 at Powder River Basin mines, with 2005 totals in parentheses:

• Arch Coal's Black Thunder: 92.2 million tons (87.5 million in 2005)
• Peabody Energy's North Antelope Rochelle: 89.7 million (82.7)
• Kennecott Energy's Jacobs Ranch: 39.9 million (37.2)
• Kennecott Energy's Cordero Rojo: 39.7 million (37.8)
• Kennecott Energy's Antelope: 33.9 million (29.9)
• Peabody Energy's Caballo: 32.5 million (30.6)
• Foundation Coal's Eagle Butte: 25.3 million (24.1)
• Foundation Coal's Belle Ayr: 24.6 million (19.3)
• Kiewit Mining's Buckskin: 22.5 million (19.5)
• Peabody Energy's Rawhide: 16.2 million (12.4)
• Western Fuels' Dry Fork: 5.9 million (4.1 million)
• Wyodak's Wyodak: 4.7 million (4.7)
• Arch Coal's Coal Creek: 4.2 million (0.0)

Wyoming production totals for 2006 from outside the Powder River Basin:

• Jim Bridger Mine: 6.6 million (5.5)
• Kemmerer Mine: 4.5 million (4.6)
• Black Butte Mine: 3.7 million (3.5)
• Hanna Mines: 0.0 million (0.0)

Peabody Energy's plans to build the first new coal mine in Campbell County, Wyo., in more than a decade continue to advance, but the have been pushed back from the original late 2008 opening date to 2009 or possibly later. But a spokesman for the St. Louis-based company said it is "a matter of when, not if" the 30-million-ton to 40-million-ton School Creek Mine will open some 15 miles southeast of Wright. Peabody acquired the property in a swap with Arch Coal in early 2006, but the soft market demand for coal has pushed back the opening date. The mine will employ and estimated 300 people when it does finally open.

Peabody's North Antelope Rochelle Mine south of Gillette, Wyo., reached a milestone last year when it shipped its 1-billionth ton of coal — to Associated Electric Cooperative's New Madrid Generating Station in Missouri on June 1. North Antelope Rochelle was the Powder River Basin's second-largest producer last year.

Elsewhere, Peabody's Lee Ranch Mine in western New Mexico was named the safest U.S. surface coal mine in 2005 by the Mine Safety and Health Administration, receiving the prestigious Sentinels of Safety Award in Washington, D.C., ceremonies in September 2006. Mine employees achieved both zero reportable and zero lost time incidents during the year. As of August 2006, Lee Ranch employees had worked two years and more than 1 million hours without a reportable accident.

The first new coal mine in Colorado in years is being planned by CAM Colorado LLC. The company plans to mine and ship 8 million tons of coal per year from the Red Cliff Mine, about 11 miles north of the far western Colorado towns of Mack and Loma. Permitting is being sought for a 15-mile rail spur to serve the mine, which would be a surface operation. An affiliate of CAM Colorado currently produces about 280,000 tons of coal per year from the nearby McClane Canyon Mine.

Commissioners in Fremont County, Colo., recently postponed consideration of a permit application for the proposed Northfield Coal Mine, an underground operation planned for a location between Canon City and Florence, south of Colorado Highway 115 near the historic coal producing towns of Williamsburg, Coal Creek and Rockvale. The mine would employ up to 60 workers to recover coal in seams up to 6 feet thick lying between 300 feet and 800 feet below the surface. Two underground production units would recover a total of 1,000 tons of coal per day.

In southern Utah, local residents are up in arms over the proposal by Alton Coal Development for a coal mine on 2,600 acres between the Kane County farming community of Alton and Bryce Canyon National Park. The opposition stems from the fact that the coal would be trucked via US-89, the Heritage Highway, between Alton and State Route 20 to reach Interstate 15 and a railroad loading facility near Cedar City. A consultant has been retained to prepare an environmental impact statement in conjunction with the Bureau of Land Management, and the process is still in early stages.