Assay

An assay is a laboratory test performed on a sample of ore or rock to determine its mineral content. Think of it like a nutritional label for a piece of earth. Instead of telling you the percentage of fat or sugar, an assay report tells a mining company and its investors the quantity of valuable metals—like gold, silver, or copper—present in the rock. For example, a gold assay might reveal a sample contains 5 grams of gold for every tonne of rock (5 g/t). This process is the bedrock of the mining industry. Without assays, a mountain full of shiny rocks is just a mountain; with them, it could be a potential goldmine. For a value investing enthusiast looking at resource stocks, understanding assay results is non-negotiable. It's the first, most fundamental piece of evidence that separates a worthless patch of dirt from a world-class deposit that could generate profits for decades.

An assay result is the raw data that determines a mining project's potential value. It's the difference between a geologist’s hunch and a quantifiable asset. These results directly feed into a project's economics because they establish the ore grade—the concentration of the target metal. A higher grade generally means more metal can be produced from less rock, leading to lower costs and higher profit margins. It's simple math: mining and processing one tonne of rock to get 10 grams of gold is far more profitable than doing the same work to get only 1 gram. Companies use thousands of assay results from drilling programs to build a 3D model of the mineral deposit. This model is then used to estimate the total amount of metal in the ground, a figure often published in technical reports like a preliminary economic assessment (PEA) or a full feasibility study. These reports determine if a mine is economically viable, what the cut-off grade (the minimum grade that can be mined profitably) should be, and ultimately, whether banks and investors should fund the project. In short, positive assay results are the sparks that can ignite a junior exploration company's stock price, while poor results can extinguish it overnight.

A company's press release might shout about a “spectacular” drill result, but a savvy investor knows to dig deeper. Not all high numbers are created equal.

Grade is the most-hyped number, and for good reason. It’s typically expressed in:

• Grams per tonne (g/t) for precious metals like gold and silver.
• Percentage (%) for base metals like copper, zinc, or nickel.

But what's a “good” grade? It's all relative. A 2 g/t gold grade might be fantastic for a large, open-pit mine near the surface but uneconomical for a deep underground mine. A 1% copper grade might be highly profitable, while a 1% gold grade (which is over 10,000 g/t) would be one of the richest discoveries in history! Context is everything. Always compare a company's reported grades to those of existing, profitable mines with similar characteristics.

A headline might scream “100 g/t Gold!” but the full result might be “100 g/t over 0.5 meters.” This is like finding a single, paper-thin layer of jam in a giant loaf of bread—it's sweet, but there isn't much of it. What investors want to see is a good grade over a significant width, for example, “5 g/t over 20 meters.” A useful, if informal, metric is to multiply the grade x width. In our examples:

• 100 g/t x 0.5 m = 50 gram-meters
• 5 g/t x 20 m = 100 gram-meters

The second result is arguably more attractive because it suggests a much larger, bulk-mineable zone that is likely to be more economically viable.

Be wary of a few common pitfalls when you see assay results announced.

• Selective Reporting: Does the company only highlight its single best drill hole? This is called “cherry-picking.” Always look for a table with all the results from the recent drill program. A single spectacular hit surrounded by duds is far less promising than a series of consistently good results.
• The “Nugget Effect”: Sometimes, a drill can hit a random, isolated high-grade nugget of gold, producing a spectacular but unrepresentative assay. This can create a false impression of the deposit's overall quality. Consistency across multiple drill holes is a much better indicator of a real deposit.
• Ignoring Metallurgy: An assay tells you what's in the rock, but it doesn't tell you how easy it is to get it out. The science of extracting the metal is called metallurgy. A high-grade ore is no good if the metallurgical recovery rate is poor or the processing is prohibitively expensive (e.g., “refractory” ores). Look for commentary on metallurgical test work in company reports.

An assay is the most fundamental data point in valuing a mineral resource. For the value investor, it's a quantitative measure of the “quality” of a company's primary asset. However, a headline number is never the full story. You must look beyond the splashy grade and consider the width of the mineralized zone, the consistency of results across the deposit, and the potential for economic extraction. By treating assay results as clues rather than conclusions, you can better assess the true potential of a mining project and avoid getting swept up in the hype. It’s about understanding the asset you are buying—a core principle that separates disciplined investing from pure speculation.