Thy sin’s not accidental

Minera Andes 3q10 production

This morning Minera Andes (MAI.to) reported 3q10 production numbers for its 49% owned San José mine in Argentina. Read the thing on that link if you like, but here I’d just like to walk through one table to show a simple and fairly accurate way to make a revenues estimate for a precious metals producer, with Minera Andes as our guinea pig

1) note sales numbers for the quarter in gold, silver, whatever
2) go over and get London PM fix prices for your metals
3) work out the average PM fix price for that quarter
4) do the math (ounces X price)
5) once you have your number, compare it later to the revenue result reported by the company in question
6) if the estimate gets close to the reality over time, you can begin to rely on the calculation more closely

So in the case of Minera Andes (MAI.to) at San José, as this chart shows there’s a pretty close correlation between our “calculated” method which you can do when the production/sales numbers come out and the reported revenues number that usually turns up 4 to 6 weeks later. 
As for the latest numbers from our specific case, the calculation to 3q10 this time around is $47.58m, which means MAI’s 49% will be good for around $23.3m to the company. That’s slightly down on 2q10, a quarter that eventually reported revenues of $49.4m (49% of which being $24.21m) a net profit from San José for MAI.to of $6.24m and a company net profit of $4.64m.

UPDATE: Anonymous (yawn) writes in the comments section:

Anonymous said…

The revenue maybe down but they built up inventory to realize higher prizes in the future/now 

Here are the charts. Maybe, but not a datapoint that will change things much. As you see, it’s more run of sales rhythm more than a big inventory build-up that’s in play. There is a common point though; look at several quarters’ worth of information, not just one. The trend is your friend. You want charts? We got charts. DYODD.

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