An Empirical Estimate of Current cash flowOn June 4/07, AUN announced that La Negra has shipped 120 tonnes of copper concentrate with a grade of 24.4 per cent copper and 43 ounces/ton of silver, which represents a total of 64,500 pounds of copper and 5,160 ounces of silver, under its agreement with Trafigura S.A. de C.V.
Based on current metal prices the approximate gross value of the copper and silver contained in the concentrate is $285,245. The quality of concentrate exceeds the minimum specifications listed in the off-take agreement with Trafiguza.
At that time, AUN also stated that the focus was directed toward the production of a minimum 48-per-cent zinc concentrate, which was close to being achieved.
On June 20th/07, AUN announced that it had begun regular shipments of zinc,lead and copper concentrates and that it expected that those would soon reach 440 tons of concentrate a week.
Such proximate data are amenable to estimation of the value of the contained base metals, as well as the silver constituent.
That is, we have 440 tons of concentrate containing at least 48 % zinc and at least 24.4 % copper. As lead has about the same proximate content as copper in La Negra Ore, we can round up the 3 constituents to 100 % by allocating 50 % of the concentrate to zinc, and 25 % each to copper and lead. The Silver content in 440 tons of concentrate, based on the June 4th data would be about 19,000 oz or about 0.55 ton.
So, the weekly 440 ton of concentrate would contain 484,000 lbs of zinc, and 242,000 lbs each of lead and copper, as well as about 19,000 oz of silver.
At current prices, the weekly gross value of 440 tons of zinc/copper/lead + silver concentrate from La negra would be about $2.1 million dollars.
Assuming a 45 week production year, the gross metal production from La Negra at 440 tons of metal per week, will be about $95 million dollars.
This is considerably above the gross sales estimated by Squirmi from the historical production data, and suggests that those estimates may be conservative.
Indeed, based on these recent guided concentrate data bu AUN, annual cash flows net to AUN would be close to $60 million or better than $0.60 per share.
This is an exceptional cash flow, even if in error by 50 %, and explains why RI was so enthusiastic about the future of AUN , once commercial production began.
It would appear as though Q3 will be a block-buster quarter for such an emergent junior silver producer..