Goldcorp Wednesday announced a 5.3% increase in proven and probable gold reserves to 48.8 million ounces while proven and probable silver reserves increased 4.2% to 1.3 billion ounces.

Measured and indicated gold resources were reported at 22.7 million ounces while M&I silver resources were reported to be 598.1 million ounces.

The company also reported total proven and probable reserves of 1.2 billion pounds of copper, lead reserves of 7.2 million pounds and zinc reserves of nearly 16 billion pounds.

Measured and indicated copper resources were reported to be 904 million pounds, while lead M&I resources were reported at 2.74 billion pounds and zinc M&I resources at 10.2 billion pounds.

Goldcorp's recent Canplats and El Morro acquisitions were not included in the original estimates and are expected to further expand reserves and resources.

The company estimated it mined a total of 3.1 million ounces of gold last year and discovered 5.6 million new ounces during that same period.

Eoin Treacy's view Mines are wasting assets by definition. In order to remain relevant, miners therefore have to increase their reserves by any means necessary. Goldcorp has been particularly successful in discovering new supply and has also been active in acquiring promising junior mines. This additional article also by Dorothy Kosich highlights IAMGold's continued success in improving its reserves.

From an investment perspective, the shares most likely to do well are those with the cheapest cost of production, management that are alert to cost pressures, those that remain un-hedged in a rising market and that can increase their reserves.

When metal prices are high, large gold mines have the option of picking between higher and lower cost production. When prices are high it makes sense to focus on newly economic seams, so that lower cost production can be tapped when prices decline. Smaller mines don't often have the luxury of choice in which seams they mine, so they usually offer better leverage to the gold price.

GoldCorp rebounded impressively from its 2008 nadir. It lost momentum from late 2009 and has been ranging with an upward bias since. It found support in the region of $40 two weeks ago and a sustained move below the late January low would be required to question potential for continued higher to lateral ranging.

IAMGold is a mid-tier producer and also rebounded strongly from its 2008 low. It quickly surmounted its pre-crisis peak and encountered resistance near $20 from December 2009. It has found support in the region of the 200-day MA on a number of occasions over the last year and broke upwards last week. An idiom from The Chart Seminar is if the trend is to remain consistent following the completion of a well defined then "if the market has further to go now, it will sustain the upward break" A fall back below $20 would at least delay current potential for further upside and a decline below the 200-day MA would likely suggest that a lengthier corrective phase was unfolding. (In the interests of disclosure, I have a spread-bet long position in IAGGold.)

Hecla Mining is a somewhat smaller producer and also rallied impressively from its 2008 low. It ranged for much of 2010 but successfully broke above the $6 level in September and accelerated to test the pre-crisis peak near $12. It pulled back sharply in January and found at least near-term support in the region of the 200-day MA. A sustained move below $8 would now be required to question potential for some additional higher to lateral ranging.