Assay results determine how much payable precious metal a shipment actually contains. A quoted gold or silver price applies to a defined quantity of metal, not automatically to the gross weight of ore, concentrate, or recycled material. Sampling, laboratory analysis, and settlement clauses bridge that gap, often weeks after an initial commercial price is discussed.
For commodities trading, an assay report can alter a supplier’s revenue without any change in the exchange quotation. Five distinct uncertainties explain why a laboratory certificate deserves as much scrutiny as the price chart.
Unrepresentative Samples Can Misstate the Shipment’s Metal Content
Precious metals are rarely distributed uniformly through a shipment of concentrate or scrap. A small sample drawn from an unusually rich portion can overstate the grade of the entire lot; contamination or poor mixing can produce the opposite error. The consequences grow when shipments contain coarse particles or material from several sources.
Commercial contracts should specify sampling locations, preparation procedures, retained samples, and independent supervision. An impressive assay number is less informative when the sample’s relationship to the shipment is unclear.
Moisture and Weight Measurements Can Change the Payable Quantity
Metal grades are commonly expressed against dry material, while cargoes arrive with measurable moisture. Using wet tonnage in a calculation intended for dry weight can inflate expected contained metal. The error is separate from whether the laboratory measured the metal concentration correctly.
Imagine a hypothetical silver-bearing concentrate shipment weighing 120 metric tons on arrival. Moisture testing establishes 10% water, leaving 108 dry tons. An assay reports 1,500 grams of silver per dry ton, yielding 162,000 grams, or approximately 5,208 troy ounces. At an illustrative silver price of $32 per ounce, contained metal is worth about $166,670 before recoveries and charges. Multiplying the assay by the full wet weight instead implies 180,000 grams, about 5,787 ounces and $185,190. The mistaken valuation exceeds the dry-weight figure by roughly $18,520. Confirm both the moisture basis and weight certificate before interpreting a reported grade.
Refinery Recovery Terms Can Reduce Payment Despite a High Grade
Contained metal is not always payable metal. Refiners may deduct processing losses, apply minimum deductions, or charge for treatment and refining. Certain impurities also make recovery more expensive. Consequently, two shipments with the same assay grade can produce different net proceeds.
Higher purity can even be less profitable when the richer material carries unusually costly contaminants or unfavorable recovery terms. Examine the payable percentage, refining schedule, penalty thresholds, and pricing period instead of ranking shipments by assay grade alone.
Disputed Assays Can Delay Pricing and Create Cash-Flow Exposure
Buyer and seller laboratories sometimes report different grades. Contracts may require an umpire assay when the discrepancy exceeds an agreed tolerance, with settlement adjusted after an independent result. Meanwhile, provisional invoices may be paid at only part of the estimated value.
In commodities trading, delayed final settlement can complicate hedging and financing during volatile prices. A producer holding a metal-linked CFD against expected shipment revenue may discover that the eventual payable quantity differs from the hedge size. Check dispute procedures, provisional payment percentages, and the date on which the metal price is fixed.
Assay Announcements Can Be Mistaken for Immediate Market Supply
A mining company may announce encouraging assay grades from exploration samples, but those results do not establish commercial production. Mining costs, metallurgical recovery, permitting, and project scale still determine whether the deposit becomes saleable metal. A strong assay can improve a project’s prospects without adding a single ounce to current supply.
Before opening a precious-metals CFD position based on an assay announcement, identify whether the result concerns exploration, a delivered shipment, or refinery settlement. Then verify the sampling basis, payable recovery assumptions, and the broker’s contract size so the anticipated market effect is not confused with a laboratory measurement.