ECU Silver (ECU.to): Has anyone else noticed something really strange about these results?

When your humble scribe saw ECU Silver (ECU.to) returning a loss in its 3q10 report yesterday it was a little strange because, after all, in this previous post that looked at the production numbers we'd ended up by anticipating a net profit for the quarter of $2m or so (guesstimated, of course). The culprit of the big difference between IKN's guess and the ECU report was quickly noted, however.

IKN had estimated sales revenues at $8.7m for gold and silver. We'd come to that number by simple multiplication of gold and silver sales as reported by ECU.to with the average spot prices for those metals in 3q10, according to the London Fixes. This is a method that usually works when anticipating sales revenues, but this time it came with a big big miss.

ECU silver (ECU.to) reported sales of $5.29m for the quarter.

That's a big difference and when seeing that low number it was "WTF?" time at IKN nerve centre, so this morning I found myself checking the ECU.to 3q10 MD&A to try and work out how this low figure came about. The answer seems to be in the sales of pyrite concentrate and what follows is based on guesstimates (because ECU.to disclosure is so pisspoor you need to assume here and there) but at least makes sense

First, this from the MDA

"During the quarter, the Company recorded sales of a portion of its gold pyrite material in process inventory. This resulted in a gain from the reversal of previous inventory cost write-offs in the amount of $1,049,111."

Now, according to ECU.to filings the total pyrite concentrate sales were 3999oz, and production of pyrite conc was 1740oz. This implies that ECU sold 2259 oz Au in the pyrite conc for $1.05m...less than $500 an ounce!

This also adds up in the estimates for all products. Check this simple table in which we make conservative estimates for the prices fetched for the other metals sales. We use doré gold U$1,150/oz, silver $18.50 (according to the London Fix, the quarter average was U$18.92) and then Zn and Pb at $1.00/lb. This leaves the gold-in-pyrite concentrate as the unknown variable (presented in blue)

product	sales	est prices	revs
pyrite conc inventory	2259oz	$465?	$1,049,111
pyrite conc prod	1740oz	$465?	$809,100
dore Au	1989oz	$1150	$2,287,350
Ag	72264oz	$18.50	$1,336,884
Pb	141,215lb	$1.00	$141,215
Zn	65,616lb	$1.00	$65,616
		total	$5,689,276
	recorded sales		$5,293,139

For me, the $5.7m rough total is close enough to the $5.29m ECU reported as sales...what with TCRC etc etc. So under the rough guess table, the produced pyrite conc, if given the same average price of the inventory conc revenues (as implied by the MDA, but not explicit), also fits that estimate of $465/oz Au

Is ECU Silver (ECU.to) really selling its ounces of gold-in-pyrite at U$465/oz or thereabouts? I'm not sure but on reverse engineering on the numbers it seems at this point the only logical answer. I know IKN isn't the flavour of the Month over at ECU.to and I'm unlikely to be able to get an answer from management, but those of you long ECU.to would be wise to write, phone, tweet or whatever the top people there and get an answer on this, because this quarter's sales number was weird compared to the ounces sold numbers.

Auto sales picking up in Argentina

News from the Argentine Auto Chamber of Commerce, ACARA, will not go down well with anyone who's daft enough to think that the country is about to implode and die on us again (however many rabid righties might like to see people suffer).

Recent figures show that Auto sales are now at new record levels (the traditional December spikes notwithstanding). Get all the details from the ACARA website, right here.

Meanwhile, the cynical amongst us (gosh, I feel lucky not to be one of those) could note that the economic and life-standards rebound happening in Argentina is mightily well timed for next year's Presidential election, with one of the two Ks looking to keep control of the country. Just sayin'.

Chile's car sales

July's figures for new auto sales were just released by the Chilean car honchos ANAC, so it's a good moment to catch up on what's been happening to that sector in the country. In places where consumer stimuli on auto sales hasn't been used to any great extent (Brazil has been running a successful campaign on that score all year, way before 'cash for clunkers' was invented by Obama&Co), new auto sales are a good way to get a thumbrule idea of the way the consumer is acting in any given country. In the case of Chile, there's good news and bad. First the good, and new auto sales have been picking up as the year progresses.

ANAC originally put its estimates for 2009 at 130,000 units, but they've bumped that up to 140,000 on recent numbers (Chile's sales tend to increase month after month during the year, peaking in November)

But the bad news is the longer view. The 140,000 units forecast for 2009 sit like this compared to previous years.

And that's quite a drop, dudettes and dudes. Chile isn't rotating its new cars this year, with plenty of consumers driving their present car another few thousand miles instead of trading in. It's called a recession, something that Chile hasn't denied suffering for the last year. Evidence above.