Nevada's mining companies are pouring money into exploration at a pace that hasn't been seen for nearly a decade.
And partly but only partly as a result of that exploration, the gold reserves that are available for profitable mining in the state have increased sharply.
The current gold reserves 97.1 million ounces are enough to maintain current levels of production for 14 years, says John Dobra, a University of Nevada, Reno, economist who specializes in mining issues.
The 14 years of reserves is unprecedented in the state's history, Dobra reported to members of the Nevada Mining Association.
Mining is by far the most important industry in the rural counties of northern Nevada, and it supports hundreds of jobs in corporate offices, laboratories, equipment dealers and supply houses in Reno and Sparks as well.
The frenzied pace of exploration continues.
The state division of minerals estimates that mining companies will invest more than $156 million in exploration this year. That compares with $121.3 million in 2005, and it's nearly double the $79.7 million spent on Nevada exploration in 2004.
It's probably a conservative number, says Dobra, because the state relies on voluntary reporting by mining companies. Big companies are the most likely to report their exploration investments, but small companies typically are more involved in the search for new mineral deposits.
The biggest single force driving the big exploration push is continued strength of gold prices.
Prices last week were running about $585 per ounce of gold. That's off from the near-$700 levels recorded this spring, but it's still dramatically higher than the $450 price level a year ago.
Exploration programs also get a boost from the stable U.S. political climate, says Doug Driesner, director of mining services for the state.
At a time when mining executives are kidnapped and killed in other parts of the world, Driesner says, investments in the safety of Nevada look pretty good.
That's particularly true, he says, because the state's geology remains highly attractive to companies prospecting for gold, silver and other minerals.
But Dobra cautions government officials in Nevada that they shouldn't be too self-congratulatory about the state's regulatory climate.
Even though exploration investment has been up sharply the last couple of years, Dobra notes that the 2005 figure still didn't match the $140 million annual investments of 1995 and 1997.
The problem, he says, has been slow approval of mining proposals by federal agencies, particularly the Bureau of Land Management.
"The permitting process for developing a mine in the U.S. is likely to take years rather than the months it takes overseas," Dobra reported to the mining association a few days ago. "Fortunately, the BLM appears to have worked out some of the problems in the process."
Uncertainties about regulation, Dobra said, encourage executives of big mining companies to put their capital to work elsewhere in the world.
Even though spending on exploration programs is up sharply, mining executives aren't entirely sure how much of the growth in reserves is directly the result of their search.
The reserves figure at the end of 2005 97.1 million ounces of gold compared with reported reserves of 80.4 million ounces a year earlier, Dobra said.
But he noted that reserves are defined as minerals that can be profitably extracted at today's prices.
Some of the growth of reported reserves, he said, came as mining companies moved deposits out of the lower category defined as "resources" minerals known to exist in the ground, but can't necessarily be mined profitably into the "reserves" category as prices rise.
"The extent to which reserves increased because of reclassification versus discovery is not known," Dobra said.