DEFINITION of 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.
BREAKING DOWN 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.