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A: Good question!

In general, gold and silver are sold on global 24/6 spot markets so we never know who ultimately buys or is the end user of our silver. In particular, we produce two types of silver products, dore bars at Guanacevi and bulk silver and gold sulfide concentrates (cons) from Bolanitos and El Cubo. We will be producing a gold/silver concentrate from our new El Compas mine starting in April this year.

The Guanacevi dore bars are picked up by an armoured car service once a week and delivered to the refinery in Torreon, Mexico where we pay to refine the dore into 99.99% pure gold bullion and 99.9% pure silver bullion. Then, we use a metal trader to offer each lot for sale. Because we own the bullion, we can choose when to sell and select the price when we think spot is at or close to a high, which provides flexibility to sell more when metal prices are rising and sell less when metal prices are falling.

The concentrates are trucked several times a week from each mine to the port of Manzanillo, where many metal traders have warehouse and dock facilities for shipping the cons to smelters worldwide. Our concentrates are shipped to various locations including Korea and Canada, as they are high grade and “clean” which makes them valuable for blending. We secure annual con purchase contracts with metal traders who are the best bidders for our cons (lowest process costs and highest net payable metals). We get paid the majority of the estimated value of each lot upon delivery to the port in Manzanillo, with a final payment two months later based on net actual smelter metal production and costs. We have negotiated the opportunity to select the metal price that we are prepared to accept within some parameters and depending on which metal trader we are selling through. This has given us more flexibility and an opportunity to increase the benefit we get from every ounce that we produce.