I have a very short piece up at Seeking Alpha about how to understand the mine development process. A mining guy gave me this:
“In the actual experience of bringing a mine into commercial production, a mine that comes into production normally does not generate revenues immediately after commencing mining of ore.
Typically, a mine would start mining the ore long before the leaching/flotation process begins as they want to stockpile enough material to keep the process going continuously before the process begins. Then after leaching/flotation process, the pregnant solution or concentrate goes through an extraction and drying cycle of the material to be smelted down to doré bars. The doré bars then get further refined into pure silver (the saleable product, if not selling concentrate). The whole process, from the start of mining to declaring “commercial production”, can take up to a year to accomplish. This is why recovery is important because you just don’t know how much salable product you will get until you reach the endpoint of the process.
The process of mining the ore is just one step and it does not equate to instant cash flow. It is only a step in the process, and cash is required to fund to process to cash flow. If any shareholder can find me a company that mines and instantly generates revenue right after mining the material, I’d like to invest in that company in a big way.”
I think that is exactly right.