What is Assay

An assay is a process of analyzing a substance to determine its composition or quality. The term is often used in the mining industry to refer to tests of ore or minerals. The term assay is also used in the environmental, chemical and pharmaceutical industries.

Assaying is also important in futures markets. Metals that are used to meet delivery requirements of futures contracts must be assayed to ensure that they meet the stringent quality and purity requirements mandated by the futures exchange. Physical delivery of metals helps in convergence of prices between futures and spot markets.

Understanding Assay

Assay results provide an early indication of the potential value of a mineral or ore body, and therefore they are closely monitored by investors in mining companies. An exceptional assay result can trigger a rally in the stock of a company that holds the mineral rights of the property. Conversely, poor assay results may lead to a significant decline in a stock that has run up on speculation about promising results.

Key Takeaways

  • An assay is a process of analyzing a substance to determine its composition or quality.
  • Three techniques - fire assay, wet chemistry, and instrumental analysis - are mainly used to analyze and determine purity of metals.
  • Assays are used in futures markets to meet delivery requirements for metal futures, as specified by exchanges.

There are three main techniques used to assay minerals: fire assay, wet chemistry, and instrumental analysis. The fire assay method is the most popular method and consists of grinding samples into a fine powder mix. Subsequently, they are heated in a ceramic or metal container, which decomposes the sample into constituents. A shallow cup is used to separate out the mixture further and the metals are analyzed using instrumental analysis technique. Distillation, titration, and gravimetric analysis, similar to precipitation, are used in the wet chemistry analysis method.

Futures exchanges typically specify the metal's quality for delivery. For example, the CME group, which has gold futures listed on its platform, requires a minimum fineness of the metal of 995, or 995 parts per thousand, for delivery in the COMEX gold futures. For platinum, the minimum fineness is 99.95%.

Example of Assay

Assay results can move prices for mining and exploration companies. This is because it represents potential for future product demand and earnings growth. For example, in 2020, Thor mining, an Australian mining company, saw its stock price rise after it reported that gold sediments had been found at its Pilbara Goldfield tenements in Western Australia. Its stock price also rose following the confirmation of discovery of high-grade tungsten at another project.

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  1. CME Group. "What is the Precious Metals Delivery Process?" Accessed Dec. 27, 2020.

  2. Reuters. "Thor Mining Plc." Accessed Dec. 27, 2020.