A recent surge in the price of gold has renewed Inland Northwest mining companies interest in digging the yellow metal out of the ground.


Gold, which had fallen as low as $252.85 per troy ounce on the London gold exchange as recently as Aug. 26, rallied stronglyclimbing as high as $326.65 an ounce on Oct. 5after European central banks announced they no longer would make new loans of the metal. The metals price had settled back to $304 an ounce by the end of last week.


The European banks action caught by surprise traders who had sold gold forward in the futures market. They scrambled to buy the metal, and the resulting price jump was good news to mining companies, many of which had put mining projects on the back burner while gold prices lagged, says Bill Booth, a vice president with Hecla Mining Co., of Coeur dAlene.


The price rise was enough to start looking at some of those projects that have been on the shelf, says Booth. Weve got one in northern Mexico.


If gold prices continue to improve, it might make sense for Hecla to put that project, the Buena Noche deposit, into production, he says.


The mood was much more upbeat this year at the annual Denver Gold Group Mining Investment Forum, Vicki Veltkamp, Heclas director of investor and public relations, said from the meeting last week.


One of the main signs of renewed interest was that they had a tremendous number of registrations in the last two weeks before the show, she said. Theres probably 400 people here, roughly twice as many as last year.


In recent years, Hecla and Coeur dAlene Mines Corp., of Coeur dAlene, had turned their attention from mining gold to producing silver at ever lower costs. While silver prices were low, at least they had stabilized.


The recent brighter outlook for gold was particularly welcome in the offices of Gold Reserve Corp., of Spokane. Unlike Hecla, Coeur dAlene Mines, and other companies with active mines, Gold Reserve has no production of other metals to fall back on when the price of gold is down. Rather, it has been working for nine years to bring a Venezuelan gold deposit into productionand that deposit is a big one.


Gold Reserve announced Oct. 12 that additional drilling had increased its estimated proven and probable reserves at the Venezuelan property, known as the Brisas deposit, to 6 million troy ounces of gold.


Ive worked all my life for different mining companies that never even came close to having reserves like that, and to have them all in one deposit is quite spectacular, says Doug Belanger, Gold Reserves executive vice president.


Gold Reserve plans by the end of the year to have completed a final report on the deposits reserves and to have initiated contacts with major European banks that customarily have financed major gold mines, Belanger says. After the first of the year, it will pay visits to those banks, he says, adding, weve had a number of visits from various banks already.


Gold Reserve, which employs eight people in its offices in Spokane and between 50 and 80 people altogether, depending on the level of activity at its Venezuelan property, still needs its stock price to improve before it proceeds with construction of a mine, Belanger says. It plans to cover part of the cost of its mine with bank financing, but wants to sell stock to cover the rest.


It doesnt, however, want to sell stock when its share price is down, as it has been for some time. The companys stock sold for about $1.25 a share toward the end of last week. Says Belanger, The last time the price of gold was $320, our stock price was at $10.


The Spokane company already has spent $60 million on its Venezuelan project, and it has a substantial cash horde of $20 million at its disposal, he says. Its deposit is well advanced in permitting, and the things Gold Reserve needs to do to build a mine can be done fairly quickly when we decide to move ahead, Belanger says.


Gold Reserve is hoping for sustainable further improvement in the price of gold, rather than for an additional run-up that would be short-lived, Belanger says.


The recent price jump wasnt sufficient to make Hecla regain interest in mining in the Republic, Wash., area, where it is involved in a joint venture with Newmont Mining Co., of Denver, to explore and develop a deposit on Hecla property. Booth says gold prices would have to be significantly more than $300 an ounce to make mining of that deposit economically feasible.


On average, gold prices were $37 an ounce lower in 1998 than they were in 1997, and mining executives have said for some time that low prices were forcing companies to cut their exploration budgets. Those reductions, theyve said, could result in decreases in gold production over the long term.


Recently, the Gold Institute, a Washington, D.C.-based international association of gold suppliers, said that U.S. gold miners had forecast a 6 percent decrease in production by 2002 unless prices improved. Canadian miners had foreseen a 10 percent decline in production, and Australian miners had predicted a 12 percent drop, the Gold Institute said. Gold was hovering at about $285 an ounce (U.S.) when those projections were made.


A Coeur dAlene Mines Corp. spokesman couldnt be reached for comment for this story.