Riding high metal prices, mining companies expect another year of improved cash flows in 2012 that also will support the pursuit of new development.

Industry leaders say that higher prices for silver, gold, and copper are expected to continue into next year. However, the industry still faces tough regulatory and legal obstacles, as well as the ongoing need for skilled workers, they say.

The region's two largest mining companies, Coeur d'Alene-based Hecla Mining Co. and Coeur d'Alene Mines Corp., both reported positive third-quarter earnings and growth plans. Hecla President and CEO Phil Baker went as far as saying in an earnings press release that, "Hecla's financial position and asset base is the strongest it's been in its history."

Hecla's strong outlook follows a decision to complete a shaft expansion project at the Lucky Friday silver mine in North Idaho's Silver Valley and to initiate work to reopen three mines. Also recently, Hecla reached a court settlement regarding the Coeur d'Alene Basin Superfund site, agreeing to pay a total of $263.4 million, plus interest, over the next three years to the U.S. government, the state of Idaho, and the Coeur d'Alene Tribe.

Meanwhile, Coeur d'Alene Mines will realize the first full year of production and cash flow from three of its wholly-owned mines: a silver mine in Bolivia, a silver-gold mine in Mexico, and the Kensington gold mine in Alaska. Additionally, the company has a Nevada silver-gold mine, a silver-gold mine in Argentina, and interest in an Australian silver and base metal mine.

Going into 2012, Coeur expects to wrap up a six-month slowdown at its Alaska mine to complete construction projects to make operations more efficient. Luke Russell, a Coeur vice president of environment, health, and safety, says that Kensington work also includes some underground exploration. A full ramp-up of production is expected by mid-year.

Overall, he says Coeur is on track to end this year with record production of just over 19 million ounces of silver and 220,000 ounces of gold.

"We've had good luck in Bolivia and Mexico, and we're focused on making Kensington more sustainable," Russell says. "Those three are the workhorses; they're going to be the foundation going forward."

Although metal prices were at record highs, Coeur also saw some higher production costs such as rising fuel prices, he says. He adds, however, that, "We're very optimistic about the future of the silver and gold market." Demand for silver, for example, is expected to continue because of the push for alternative energy and solar power, which uses silver as a conductor of electricity, he says.

Excitement about recent and future mining activity was evident at a recent Northwest Mining Association annual conference in Reno, says Laura Skaer, the association's executive director.

"From what I see, it was a pretty good year," Skaer adds, referring to production and profits. "People were really busy this past year, and that's a good sign."

"There was lots of exploration taking place in the Silver Valley," she says. "I don't think people see metal prices falling. There will be some ups and downs."

John Shanahan, Revett Minerals Inc. president and CEO, says he also anticipates mostly strong metal prices next year. Spokane Valley-based Revett operates a copper and silver mine in Montana.

"What 2011 showed us was even though there's turmoil in the financial world, we still had strong metal prices because there's consumption of metal," Shanahan says. "People are still improving their standard of living. People are still choosing higher-end electronics."