Amid some of the worst economic conditions that the mining industry has been faced with in more than a decade, the mood among the large crowd at the 114th Annual Northwest Mining Association's annual meeting was surprisingly upbeat. More than 2,200 attendees showed up at John Asuaga's Golden Nugget Casino in Reno, NV for the conference held Dec. 1-5. And more than 200 companies exhibited in 240 spaces, including SME and the Minerals Information Institute. The number of attendees and exhibitors were the most for the conference in more than 10 years.

The conference was held in Reno/Sparks for just the second time in its illustrious history but began under the cloud of global financial turmoil. Prior to, and during the conference, the industry news headlines were grim, to say the least. An alarming number of mine plans and expansions had been put on hold; hundreds of miners across the United States had been or were in the process of being laid off; commodity prices were falling and some of the biggest mergers in the industry fell through while miners around the world put the brakes on to take a waitand-see approach.

It was a painful time for many, but the downsizing actions taken by many mining companies was exactly what needed to happen, according to Industry Outlook Luncheon featured speaker Frederick Sturm. He is the executive vice president and chief investment strategist and member of Mackenzie's Investment team. He has earned a reputation as one of Canada's leading investors in natural-based companies and he also manages the Ivy Global Natural Resource Fund in the United States.

Sturm said that the mining industry has fallen hard and that he expects it to bounce back quickly, before falling hard again. In these tough times, he said, the companies that have pulled back on production early are doing the right thing in the long run.

"Produce what your clients need, less one ton. This will be key in maintaining profit margins and shortening the recovery cycle," Sturm said while telling attendees that it was time for companies to focus on their profit margin and not recovery.

Sturm had praise for mining companies, such as Freeport-McMoRan Copper & Gold, who were "facing reality, shelving projects."

Freeport-McMoRan, one of the world's largest copper producers, was hit particularly hard by low commodity prices. In early December, the company announced major cutbacks to copper and molybdenum production, hundreds of layoffs and stopped or reduced production at many of its mines, including the Chino Mine in Hurley, N.M. as well as at its mines in Miami, Morenci, Bagdad and Sierrita, Arizona and the Climax and Henderson molybdenum mines in Colorado.

"It is time to right size your operations quickly and move on," said Sturm. "I applaud the leaders who are doing this. They have recognized the challenges and are dealing with them."

In the near and mid future, Sturm said one of the biggest challenges mining companies will face will be getting capital.

Among the things that Sturm said are hurting the industry are a general broad market re-pricing of risk; extra concern about slower economy and deleveraging; emerging markets are not strong enough yet to "go it alone;" forced and voluntary liquidation of broker/bank hedge position.

When the U.S. dollar starts to ease again next year, Sturm predicted the gold price will experience another run.

Until then, he said, "we must forget the recent highs in resource prices, they will not be seen again for some time. Only the low cost suppliers will remain profitable. High cost suppliers will be strangled by lack of access to capital.