My understanding after having ridden this same roller coaster with another junior miner getting into production is this....

Company builds the mill, starts processing ore, starts producing some sort of concentrates, tinkers with process, tinkers with chemicals, runs more ore, produces some concentrates, but still does some tinkering to the process until it is fully optimized, etc. over and over and over....

So the question becomes, what does the company do with the low grade concentrates or dore that has been produced during the ramp up and fine tuning of the mill?

Well it sells them to the smelter, thank you - captain obvious!!!

Here's the thing in the financial world of mining companies though....

Money booked from the sale of concentrates or dore PRIOR to declaration of "COMMERCIAL PRODUCTION" is not counted on the books as "REVENUE," it is merely used to offset cash costs in a convenient legal manner.

Unless I missed it, SMFI has not come out with a press release declaring "COMMERCIAL PRODUCTION," which would mean that the mill is operating at the targeted TPD and recovery rates. Until then, yes it is producing some concentrates and dore, and yes they are selling them, but NO, it does not count as revenue.

For those of you who want to check this out with another company, look at the press releases and pictures posted on the website of GORO "Gold Resource Corporation." They build a mill for an open pit operation in Mexico, posted pictures of the mill in operation and the first bags of concentrates being loaded on the flatbed for shipment to the smelter, talked openly about optimizing the recoveries, etc. Then, magically, on July 1st the first day of 3rd fiscal quarter they announce in a press release "they have achieved commercial production" and only since then have they started booking revenue. All they sold to the smelter prior ot July 1 did not count as revenue.

So before you tar and feather whoever it is who runs SFMI because the report seemingly contradicts itself, have a drink, stay the course, and smile.