LBMA Assaying and Refining Seminar 2009

Good Morning Ladies and Gentleman, and welcome to this, the third of the Assaying Seminars which the LBMA has held since 2005.

I am glad that our attendance has held up reasonably well in spite of all the problems which most industries and markets are facing at present. Perhaps the financial sector here in London has been particularly hard hit by the onset of the credit crunch last year but there is no doubt that recessionary conditions are affecting many parts of the precious metals industry. So I would like to express our thanks to all of you for managing to get to London for this meeting and on behalf of the LBMA and the seminar programme Committee, I would like to thank you for making the journey to London. In particular, I would like to thank those of you who are speaking for the time and trouble you have taken to prepare the material that you are going to present. Another group that I would like to thank is the seminar programme committee, whose names are in the seminar preprints that you have been given on registering this morning.

Although the word recession is constantly in the newspaper headlines, it is interesting to note that one very important part of the bullion business remains robustly healthy. I am referring to investment which primarily means the purchase of Good Delivery bars and their storage on behalf of funds and other private investors in the vaults of LBMA custodians in London. In other words, London has tended to become the market of last resort. This accentuates the importance of the Good Delivery List. Refiners with LBMA accreditation are able to sell their gold and silver bars to investors who wish to purchase and store their bullion in London. This in turn highlights the need for these bars to conform to the Good Delivery specifications, both in relation to fineness and physical appearance, which are the main topics covered by our seminar this year.

For those of you who are not familiar with what we have done before, let me just recap on the reasons that we set up this series of seminars. We go back to 2004 when the LBMA introduced proactive monitoring. This was, arguably, the most important development in the Good Delivery system since the LBMA took over the maintenance of the Good Delivery list from the London Gold and Silver markets in 1987, the year when this association was established. Proactive monitoring was always intended to have two functions. The first of these was to demonstrate to the LBMA and hence to the wider market that each Good Delivery refiner was maintaining the standards which it had demonstrated when it was first listed. The second function was to allow the assaying laboratories attached to refineries to get feedback on their current performance by means of assaying reference samples or comparing the assays of dip samples which they take in their own refineries and are check assayed by the LBMA’s referees.

Both of these functions place an extra burden on assaying laboratories and it was clearly very important that they should give a good account of themselves in the related assays. The LBMA therefore felt that it would be helpful to refiners and assayers to hear further details about the proactive monitoring system and the way it functions but also to hear about the latest techniques of assaying and to compare notes with their peer group.

Indeed I think it was the aspect of networking that convinced us to hold the second and indeed the third seminar in the series. There are probably not that many opportunities for assayers and other technical specialists to meet their opposite numbers in other refining companies. We hope you will all benefit from the opportunity of discussing aspects of assaying, refining and casting with others from our industry.

But let us not forget that there was a fundamental reason for the introduction of proactive monitoring, namely that some concerns had been expressed by users of precious metals that not

all assays were certain to meet the values marked on bars and weight lists. Although the minimum fineness for gold is over 995 and for silver 999, much of the metal produced and traded has, of course, a much higher level of fineness. It is vital that the market’s customers should have confidence that the output from Good Delivery refiners (in whatever form but in particular in the form of Good Delivery bars) should be reliable in terms of both the fineness and the physical quality of the bars.

As proactive monitoring has evolved, it has become increasingly a tool whereby assayers can check their own performance and we are always careful to provide them with as much feedback as we can from the comparative assays of reference materials or of check assays carried out by our referees.

But on the other aspect of quality, namely the physical form of Good Delivery bars, the LBMA has also been aware of the need to maintain or in some cases clarify standards. Particularly nowadays when the London market is the market of last resort, where a company’s bars can always be sold regardless of the state of current industrial demand, this means that bars must be suitable for investment purposes. Investors and their auditors want to ensure that the bars which are being held for them meet the highest standards of physical appearance. We have sometimes found it difficult to put into words a quantitative description of what is necessary for a bar to be acceptable in terms of its appearance and the absence of defects. Some companies go to enormous lengths to ensure that their bars are produced with virtually no faults at all. In other cases, bars may have a small unimportant defects which are not regarded as rendering unacceptable as Good Delivery.

The question of course is: At what size or severity does a defect make a bar unacceptable? Of course it is to some extent a subjective question. For instance one medium sized hole may still be regarded as acceptable in a bar under certain conditions whereas a whole collection of smaller holes may not. In order to try to explain the thinking of the vault managers in London (these are the people who ultimately decide on the acceptability of bars which they receive) the LBMA has produced a Visual Guide to Good Delivery bars. It is a work in progress and in coming years it will be added to, particularly with additional illustrations of defects in silver bars.

During the past two years the LBMA has produced some significant changes to the rules which relate to the casting and marking of Good Delivery bars. For some refiners at least the most important and challenging change was the decision to ban the use of closed or gated moulds and to insist instead that all bars be cast in open moulds. This was because of the danger of an internal voids being created when gated moulds were used. I am very pleased to say that all companies who were required to do so made the transition to open mould casting in the time available.

Producing good looking bars particularly in silver is not easy. The tendency for molten silver to absorb oxygen means that in the final stages of casting the top surface of the cast bar can end up with open blisters because of this. Good melting and casting practice can however produce bars that look virtually perfect.

For all these reasons, the LBMA has decided to widen the agenda for this seminar by including a number of aspects of the physical production and inspection of bars including the very important one of weighing.

I’m very glad to say that the last seminar held here in March 2007 also produced some very important recommendations which the LBMA has been able to adopt and implement. I’m referring to the manufacture and imminent sale of solid sample reference materials. This major project is now reaching its end point as far as gold is concerned and we hope that silver will not be too far behind. You will hear much more about this from members of the project team later today.

I do not wish to pre-empt further what our speakers are going to say today so I will close by wishing you all a pleasant stay in London and hoping that you get some real benefit from your participation here today.

Good morning ladies and gentlemen, it is encouraging to see that this 3rd LBMA Assaying and Refining Seminar has achieved another high attendance level, despite the cold winds currently blowing through the global economy. This seminar is organised for you, the participants, and we hope that you will all contribute your knowledge and energies to make this an informative and instructive event.

As you are all aware, the London Good Delivery Lists for Gold and Silver, covering large investment bars, continues to consolidate its global position as THE standard of acceptability.

Now more than ever investors are seeking security and certainty and, in these challenging times, the London Good Delivery is undoubtedly ahead of the regulatory curve in having a world-wide reach providing the global benchmark for acceptability that is not subject to any national barriers. I believe it is fair to say that the LBMA with the London Good Delivery Lists is regarded as the provider of global regulation on large bar standards for Gold and Silver.

The lists now have 59 Gold Refiners representing 24 Countries and 67 Silver refiners representing 23 Countries.

Currently, the LBMA Physical Committee is reviewing 3 new Applicant Refiners for London Good Delivery: 1 for Gold and 2 for silver. Additionally, there are 9 serious enquiries from Refiners seeking the requirements for London Good Delivery listing: 5 for Gold, 3 for Silver and 1 refiner for both metals.

It is interesting to reflect how the composition of the London Good Delivery Lists have changed in recent years, particularly in the shift eastwards from Europe and North America; for example on the Gold List we have 10 Japanese refiners, 8 Russian refiners and 6 Chinese refiners, while Switzerland, a country recognised for its refining expertise has only 5 refineries on the list, and the United Kingdom has dropped off the list entirely, with no accredited Gold refiners.

We can see a similar pattern for Silver with 13 Japanese refiners, 11 Chinese refiners and 7 Russian refiners. Whilst Switzerland has just 4 refiners, and the United Kingdom scrapes onto the List with 3 refiners, along with Canada, Germany and the USA at the same level.

As we saw in the Autumn of 2008, physical gold and silver demand soared to exceptional levels, that most likely exceeded those last seen in the early 1980’s. However, one feature remained constant in those hectic months; the universal requirement that all sizes of gold and silver bars had been produced by refiners listed as London Good Delivery.

The London Good Delivery refiners were working flat out for several months – as many of you in this hall will testify – to refine/up-grade/re-cast material as quickly as possible.

Now in early 2009 the reverse is happening – disinvestment of small bars by individuals taking profits is causing large quantities of material to flow back into the London Good Delivery refiners, but this time much of the material is being cast into large London Good Delivery bars, in order that it may be shipped to London depositories where it is used to replenish accounts; which themselves have in many cases been depleted by the investment demand for the ETF products. All of the ETF’s clearly state that the underlying allocated holdings of Gold or Silver, must only be of London Good Delivery bars. The growing risk awareness, amply demonstrated by the investment growth of the ETF’s, shows a flight to quality based upon our proven and accepted standards.

For now the circle is squared, but the time will come, perhaps in weeks or maybe months, when the growth of pent up demand in the traditional centres can be satisfied with lower prices, and the circle starts to spin in it’s traditional direction again.

Precious metals are increasingly being sought as collateral, as opposed to other forms of security backing, and almost always the lender will insist that the material is London Good Delivery, because it is a recognised consistent quality standard.

In so many ways, be it regular trade, collateral obligations, or ETF’s, London Good Delivery sets the standard, and that is why the LBMA Physical Committee spend so much time and effort in ensuring that these standards are maintained and improved to reflect a constantly changing, complex and demanding market place.

The Physical Committee of the LBMA is constantly tweaking and up-dating the London Good Delivery Rules to improve our target standards in this ever changing environment, while exercising our on-going duty of care.

As I said at the beginning, this seminar is organised for you, the participants. We hope the programme will provide an excellent opportunity to review changes, exchange ideas and maintain the joint effort to continue setting the global refining standard for Gold and Silver.

Thank you.

The Proactive Monitoring (“PAM”) regime was announced in January, 2004, with the first round of the three year rolling monitoring programme getting underway in June of that year. The main objectives of PAM are to ensure that refiners on the Good Delivery List continue to maintain the highest standards of technical competence and also to encourage technical improvement throughout the bullion refining industry. During the first three year PAM cycle fifty one gold refiners and sixty three silver refiners were issued with Notification of Proactive Monitoring letters.

PAM covers not only a refiner’s ability to assay but also among other things provides the LBMA with an opportunity to check on the refiner’s level of production over the immediately preceding three years and the refiner’s Net Tangible Worth (“NTW”)

Of the one hundred and fourteen refiners issued with Notification of PAM letters in the first three year cycle one gold refiner and four silver refiners decided that the cost and work associated with undergoing PAM was not justified by their then current refining operations and they were duly transferred to the Former List of Acceptable Melters and Assayers. One further silver refiner underwent a group re-organisation resulting in its NTW falling significantly below the LBMA’s normal minimum £10 million requirement and as no group company with sufficient NTW could be found to provide the LBMA with a letter of support in respect of the refining operation that refiner was also transferred to the Former List.

In the first three year PAM cycle seven gold refiners and one silver refiner had to undergo retesting and / or technical training but all subsequently passed the assaying test.

The second three year programme got underway in July 2007 and we are now approximately two thirds of the way through with Notification of PAM letters having been sent out to refiners in six separate batches since then. Technical testing has been completed on the first five batches with twenty one gold and thirty silver refiners all having passed the assaying test at the first attempt. Of these gold refiners eight elected to be treated as 9999’s producers and purchased assay reference samples from the LBMA with the remaining thirteen refiners producing dip samples. One gold refiner, who passed the dip sample assaying test, has subsequently been transferred to the Former List as the LBMA was unable to satisfy itself as to the refiner’s financial position.

It is noticeable that in the second three year cycle the standard of assaying has improved with no retests being required so far in addition to which some results have been particularly impressive.

Upon completion of the assaying exercise the LBMA Executive provides the relevant refiners with detailed feedback on the results and also provides the LBMA referees with similar feed back, on a no names basis, so that all parties are able to gain the maximum benefit from PAM. The LBMA Executive and Physical Committee therefore considers that PAM continues to be a worthwhile and successful project, both maintaining and improving standards within the market

Finally in closing I would like to thank all those refiners who have been monitored for their co-operation in supplying all the required information and undertaking the assaying tests. Also a special thanks goes to the five LBMA Referee’s who have done a tremendous amount of work in producing and proving-up the reference samples, cross- checking dip assay results and providing training on fire assay techniques when the need has arisen.

1. Introduction

The work done by the LBMA’s five Good Delivery referees represents a very important part of the Good Delivery system. We felt it would be interesting and helpful for Good Delivery refiners to understand the role or should I say roles played by the referees in a number of areas of the Good Delivery work including applications for Good Delivery accreditation, proactive monitoring and in general, the provision of advice to the LBMA on technical issues relating to assaying, refining, casting and quality of gold and silver bullion.

2. Background

When the LBMA was established in 1987, it took over the maintenance of the Good Delivery List for gold and silver refiners from two organisations - the London Gold Market and the London Silver Market. These organisations continue to exist in a certain way, in that they are responsible for the operation of the daily price fixes for gold (twice a day) and silver (once a day). The gold fixing company has five members and the silver fixing company has three members. Before the formation of the LBMA, the corresponding companies were also responsible for deciding which refiners should be treated as acceptable by the bullion market in London and therefore included on the Good Delivery List. When the LBMA was formed, the application process was much less formal and I would say less objective than it has become over the past twenty years. Indeed if you go back to the very early days of the Good Delivery List it was simply a matter of vault managers having the experience of seeing bars coming into the London market on the basis of the knowledge which traders and consumers had of these bars, this allowed decisions to be made as to which refiners should be listed. Later on, the market enlisted the help of two UK based gold and silver refiners, Englehard Clal and Johnson Matthey which had the expertise necessary to provide this advice. These two companies were thus the LBMA’s referees for the first fifteen years of its existence. During that period, the staff resources of the LBMA were much more limited than they are nowadays (both in terms of the numbers employed and technical expertise) and the LBMA was therefore extremely dependent on the referees for the processing of applications. In a sense they acted as the gate-keeper for the Good Delivery List. The two referees were responsible for:

• Manufacturing and cross-check assaying the reference samples used for testing applicants.
• Selecting samples to be sent to applicants and checking the assay results from applicants against the known values and drawing up a report to be considered by the LBMA’s Physical Committee.
• Testing the bars which were provided by applicants as part of the application process.

One big change compared with the present system is that the two referees were fully aware of who was applying for listing.

There is no doubt that our two UK based referees carried out their duties in an exemplary and objective way though there were very occasional cases where applicants (usually those who had failed the application test) felt that there had been some prejudice against them by the referees. I stress that we do not consider that the referees were in any sense biased against the applicants but it did give us some concerns that there might be such a perception in the market.

3. The New Era Begins

In 2001, partly in response to some suggestions that 999.9 gold might in some cases fail to contain at least a fineness of 999.9, the LBMA decided to completely revamp the system for processing applications and monitoring the status of refiners already on the list. Prior to this there had been some monitoring but it was limited to questions of a non-technical nature such as production quantities, ownership and financial figures.

To cut a long story short, the decision taken at that time was to introduce proactive monitoring and at the same time to expand the panel of referees. This was in part because of the volume of work involved, partly to make the panel more international and also, and probably most importantly, to put the testing procedure for both applications and monitoring on a fully double blind basis. Double blind of course is a term usually associated with the testing of medicines etc. What we mean by double blind is that the refiner which is being tested and the referee involved do not know each others identities at the time of testing. What this meant was that the LBMA had to play a much greater and more central role in this work. This does not mean that the role of the referees was significantly reduced. Far from it. But it did mean that the system of testing would henceforth be free from any suggestion that Referees could be biased one way or another in relation to any refiner that was applying for accreditation or that was being monitored.

In 2002, we invited the eight Good Delivery refiners of gold and silver who were also LBMA members or associates to apply to be included on the new Referees Panel. The first thing that the new applicant referees had to do before being appointed was to demonstrate objectively their ability to assay gold and silver to a very high standard of accuracy and to produce reference samples of a very high quality.

The most important aspect of the sets of samples was that each sample should have the same assay value or putting it another way that the ingot or plate used to fabricate the samples should be homogeneous within the accuracy of the assaying methods available. Randomly selected samples from each set were cross-checked by two or three other of the aspirant referees and only those which met the highest standards of conformity and consistency were considered as acceptable for Good Delivery purposes. The others were rejected. This proved to be a time consuming and very expensive operation for the referees. In fact at the start of the project there were problems because we could not identify whether differences in assays reported from different referees were due to differences in assaying or because the samples were not homogenous. However, once an effective method of producing homogeneous ingots was achieved and agreed by all participants, the project made good progress. After many thousands of fire assay trials on the gold samples and various analyses of the silver samples, we concluded this intial phase of the work at the end of 2003.

Each aspirant referee had to produce sets of 16 different gold samples and 8 different silver samples covering the full range of Good Delivery fineness. Each gold set consisted of approximately 100 identical 10 gram samples in the form of 3mm diameter wires and for silver each set consisted of approximately 20 identical 30 gram samples in the form of a plate of 2-4 mm thickness.

Eventually, five referees succeeded in establishing their credentials, the other three having dropped out for various reasons. The five new referees were appointed at the end of 2003, three in Switzerland, one in South Africa and one in Japan. I’m sure their names are familiar to all of you.

In total, the five new referees produced approximately 8,000 gold samples and 1,000 silver samples. The larger number of gold samples reflects the fact that more gold samples are used to test applicants and also that gold samples are used in the proactive monitoring of gold refiners but not silver refiners.

4. The New Role of the Referees

Applications for Good DeliveryAccreditation

Apart from having produced and assayed the reference samples which the LBMA sends to applicants for Good Delivery accreditation, the referees have no role in the assay test, which is the first phase of the technical testing of applicants. This work is done totally by the LBMA Executive.

So the next aspect of the referees work that I would like to talk about concerns the testing of bars submitted by applicants. Nowadays we specify that 11 bars should be submitted but only one of these should be fully marked with the company’s logo and all the other required marks. The other 10 are simply identified as for instance LBMA 1 – 10. The bars are first checked by a team representing the various LBMA vaulting companies. They have to check the weight of the bars as recorded by the accepting vault, the clarity of the marks and the general appearance of the bars in terms of physical quality. To some extent this overlaps with the work of the referees who also have to give their opinions on these issues.

The 10 anonymously marked bars are divided between two referees who are then required to carry out a number of tests on them and submit a report to the LBMA. These tests include the following.

The first phase of testing involves visual inspection, weighing and assaying of cut samples taken from each of the bars. The referees then perform full melt assays on four of the five bars, holding one bar each in reserve. For each of the four bars, the referee should take a dip sample before re- casting the bars and then performing top and bottom cut assay tests. The before and after-melt weighing on each bar is also recorded so that the referee can report on any weight loss during melting.

In addition to these tests, the referees carry out a full spectrographic analysis on a cut sample of the remaining unmelted bar, in order to determine the levels of impurities and thence to give an opinion on whether any of these are present in amounts that would be considered deleterious (eg, for reasons of health and safety or for technical reasons relating to the subsequent use of such bars in industry. In performing the spectrographic analysis, the referees will determine the contents of the elements as described in tables 1 and 2 on the next page..

The “core” elements which the majority of LBMA Referees will normally look for when analysing gold and silver samples are shown in Table 1. Table 2 shows elements which may in addition be determined by LBMA Referees.

The LBMA does not set maximum acceptable levels for impurities but seeks to ensure that they are within appropriate limits and the referees’ reports will include their evaluation of the impurities found in this regard.

Proactive Monitoring

Next, we come to proactive monitoring. There are two ways in which companies can be monitored. If a 999.9 gold refiner elects to be monitored by being sent a set of six reference samples to assay (across the whole range from 995 to 999.9) the reference samples are selected by the LBMA Executive and sent to the company being monitored. Comparing the assay report from the refiner with the known values of the reference samples is done by the Executive and in cases of a marginal pass, they might be referred to the LBMA’s Physical Committee. So in this case, the role of the referee is as with the new applications for listing simply to have originally produced the reference samples. There is no other role for the referees in relation to 999.9 gold refiners. As long as the refiner's assays on the six gold samples match the reference values within the criteria laid down in the Good Delivery Rules, the refiner is informed that it has passed the monitoring test and the LBMA then sends these reference values to the refiner.

The second case is where the company is monitored via dip sampling. In this case the dip sample is witnessed by one of the LBMA supervisors and is then sent to the Executive. Having received all or most of the dip samples from a particular quarterly batch the Executive will pass the dip samples to one of the referees (again without identifying where it has come from) who will be asked to provide an assay and, in the case of silver and gold alloys of around 999 and above, a full spectrographic analysis.

If the assay values on the dip sample determined by the referee and the refiner agree within the criteria set down in the Good Delivery Rules then the refiners is informed that it has passed the monitoring test. The refiner being monitored is sent the assay value determined on the dip samples by the referee. However, the identity of the two parties is not revealed to each other.
In cases where the refiners assay is out of line with that of the referee, a second dip sample will be sent to a second referee and there are procedures laid down for examining all the subsequent results. The refiner is also required to carry out a second assay on one of the spare portions of dip sample which it has retained.

5. General Advice From Referees

From time to time, the LBMA has consulted referees on technical issues. One example is the fineness at which fire assay testing versus spectrographic analysis provides the best assay for gold bullion. A number of the referees have also participated in the planning of this seminar and some are also involved in the reference materials project that you will hear about shortly.

6. Conclusion

The five LBMA referees have made a major contribution to putting the LBMA Good Delivery system on a very robust and objective basis. The LBMA is very grateful to them for the very considerable expenditures which they have made in supporting the work of the association. At the moment, there is no intention to expand the panel of referees from the existing five members.

If due to the pressure of work, it were decided to increase the panel at some stage in the future, we would have to develop a very rigorous process for evaluating the technical ability of any candidates who put their names forward. Such new referees would also be required to produce a full set of gold and silver reference samples and to have these cross-check assayed by other referees. For the moment we still have plenty of reference samples for the purposes of processing applicants and carrying out proactive monitoring but some years from now there will be a requirement for additional samples to be manufactured and at that point, it is possible that the LBMA would contemplate an expansion of the panel of referees.

In my opening remarks I mentioned that the physical quality of Good Delivery bars is important. This is not simply because vault managers like to have nice looking bars in their vaults. There are genuine technical reasons for the LBMA insisting that Good Delivery bars should be free from certain types of defects. The defects which are regarded as the most severe are those which can cause foreign matter to be entrapped within a bar (whether this is dust or possibly water). Any such foreign matter can lead to an increase in the weight of the bar and in addition, if water can be trapped in the voids this can be potentially very dangerous when bars are melted. While the presence of such voids imply obvious risks to health and safety, there are other types of defect which can also result in health and safety problems in the vault namely irregularities which prevent bars from being safely stacked. These can include protrusions, uneven surfaces or wedge shaped bars.

The third category of defect includes those which cause the marks to be unclear or that result in the bar not being clearly identified as unique. The most obvious one would be a missing bar number. But in general bar marks must be large enough, clear enough and deep enough to ensure that they will not be eroded due to abrasion as they are moved around the vault or from vault to vault. Bars can spend many years in the vaulting system in London before (in some cases) being used industrially e.g. for the manufacture of jewellery.

Finally there are defects which simply spoil the appearance of the bar or which may imply that there is a lack of quality control which may point to other more important problems. Good appearance has become more important in recent years with the very large number of bars that are being purchased by investors in for instance, exchange traded funds. The auditors of such investors usually expect bars to have a very good physical appearance.

Because it is difficult to express in words the point at which a given defect passes from being minor to major and therefore causing the bar to be judged unacceptable, the LBMA decided to put together a photographic collection of defects showing which ones are acceptable or unacceptable.

The version of the guide which we have distributed for this seminar is still a preliminary one. It was prepared based on comments from the vault managers in London , We prepared this edition for distribution at our conference in Japan last year and eventually it will be updated and expanded to include other types of defect as well as a greater coverage of silver bar defects.

We would welcome any comments from Good Delivery refiners on the content or format of the guide.

For the moment I would like to just illustrate and describe some of the main defect types and indicate which defects would be considered to be acceptable or unacceptable.

SLIDE 1

Good afternoon, my name is Michele Genel the topic that I present you today is

“USE OF ULTRASONIC ANALYSIS FOR THE QUALITY CONTROL OF GOLD STANDARD LARGE BARS”

SLIDE 2

Before giving you technical explanation, I would start my presentation with an anecdote. PAMP’s first approach on this topic date back some years ago when one of our customer had the suspect where some bars, of one of our shipment, was fake. We become crazy for some days checking fineness, and all details concerning this production. But only when we receive back the bars we understood where the problem was.

The aim of this work is to present our recent experience on using of ultrasonic analysis for the quality control of gold standard large bars.

The art of casting metal into specific shapes goes back thousands of years, but it is only in recent times that modern ultrasonic equipment have been available to help and insure product integrity. In ancient times, a foundryman used to tap his casting with a hammer to judge the quality by the resound. Today, microprocessor-based instruments, that also use sound waves, can provide much more information about the hidden internal structure of both ferrous and nonferrous castings.

SLIDE 3

The starting point and reference is the International Norms. The American Society for Testing Material specifications, are the widely accepted criteria for standard practice for testing material. These procedures recommend technical details and guidelines for reliable and reproducible ultrasonic detection of flaws and thickness measure, they are also applicable to any material, in which ultrasonic waves will propagate at a constant speed throughout the media, and from which back reflections can be obtained and solved.

SLIDE 4

The LBMA good delivery rules say “The LBMA considers that the appearance of bars is important, firstly because of the technical reasons and secondly because the maintenance of high standards of surface finish indicates a good level of quality control in general. A poor bar appearance might, on the other hand, suggest that standards of refining or assaying are less than desired.”.

The ultrasonic analysis, included in PAMP quality control procedures, assure an objective and systematic check of refining-melting-casting system.

SLIDE 5

Acoustic Spectrum breaks down sound into three ranges of frequencies.

The sound generated above the human hearing range (typically 20 kHz) is called ultrasound. However, the frequency range normally employed is in between from 100 kHz to 50 MHz. Although ultrasound behaves in a similar manner to audible sound, it has a much shorter wavelength. Ultrasonic vibrations travel in the form of a wave, similar to the light. However, unlike light waves, which can travel in a vacuum, ultrasound requires an elastic media such as liquid or solid. The speed of ultrasound is constant, for gold is about 3300 m/s. The most common method of ultrasonic examination utilize longitudinal waves where the particle motion is in the same direction as the propagation of the wave.

Ultrasonic nondestructive testing introduces high frequency sound waves into a test object, in order to obtain information about the object without altering or damaging it in any way. Two basic quantities are measured in ultrasonic testing: the amount of time for the sound to travel through the sample, and the amplitude of the received signal.

SLIDE 6

Typical probe for ultrasonic flaw detection utilize an active element made of a piezoelectric ceramic, composite, or polymer. When a high voltage electrical pulse excites this element, it vibrates across a specific spectrum of frequencies and generates a burst of sound waves. At the contrary when it receive the incoming sound wave, it generates an electrical pulse. Because sound energy at ultrasonic frequencies, does not travel efficiently through gasses, a thin layer of coupling liquid water or gel is normally used between the transducer and the test piece. All of you have seen the same during pregnant woman ecography test. The crossing of soundwave into gold bars and signal reflection, take place for three times consecutive. The transducer measure the thickness of the bars at every crossing, and the energy associated at every reflection is dissipate.

The output graphic of a standard bars must be the same as shown, and the height of each peak is the thickness of the bars at every crossing.

SLIDE 7

The figure shows the instrumentation used at Pamp Krautkramer USM 35X Universal Ultrasonic Flaw Detector. There are also different type of transducers displayed, where the use of this is in function of application, the probe used by us is highlighted in the blue box.

In the following slides, I’ll go over some typical examples of ultrasound checking. This represent our experience on this uncommon field.

SLIDE 8

Left side of the slide shows the appearance of good large standard bar and its ultrasonic profile. The right side of the slide shows a layering structure. Signal will propagate inside the bar but it will be dissipated in the surface corresponding to the layer interface. The output graph shows the lack of signal (because it is completely dissipate), or it will be measure with thickness lower than theoretical. The layering is a typical example of a cool casting. During the casting gold firms up quickly because the temperature is too low and it generates a stratified structure (in red).

SLIDE 9

Gas bubbles included in the gold bar, can cause a foaming structure as shown in the picture on the right side. On the other side the good standard bar appears in the normal condition.

One indicator (marker) of this phenomenon is the absence of cooling retraction in the center of the surface of the bar, highlighted in red.

The signal will be propagated inside the bar but it will be dissipated. The result is the complete lack of the signal.

There are two probable processes, which might generate gas bubble inside the bars.

The first is hot casting: the over melting temperature keep air inside the mass during casting, the gases therefore can’t be released and generate foaming structure.

The second is a chemical refining process. The gold concentrated solution is reduced with chemical processes; the traces of the reducer can be retained within the metal and might determinate gas bubbles formation during casting process. The above explanation proves that both bars are within the LBMA specifications: on the other hand it explain also why our customer expressed suspects on the quality of some of our bars.

SLIDE 10

One more time on left side an example of good standard bar, the right side shows a bar section with an inclusion of a tungsten tool, unfortunately dropped during casting. The signal will be reflected by unknown component and it will be dissipated. The output of the instrument show the lack of the signal.

Sometimes in case the component is relatively small, the sound wave is not completely dissipated. Thereby between the three repeated peaks we can remark an intermediate reflection peaks in the area corresponding to the inclusions.

It’s also important to remark that the signal received by possible presence of surface slags or cavities slags is similar to the ultrasonic profile of inclusion. As a result this kind of bar doesn’t comply the LBMA standard and therefore it will have to be rejected.

SLIDE 11

The presence of another metal inside the bars is a typical example of falsification. The ultrasonic analysis is similar to the previous example of inclusions inside the bar.

The signal will be reflected by un unknown component, the output of the instrument will show the complete lack of the signal. Another typical example of falsification is bars made with different material than gold.

The setting speed of ultrasound for gold as explained above is about 3300 m/s. Any other material has another propagation speed, thereby the output will be, one more time, the lack of signal on the screen of the instrument. The right side of the picture shows brass gilded bar.

SLIDE 12

1. As I said during the introduction we started this control procedure as a fitting with the quality control system asked from our customer.

2. PAMP ISO 9001 Quality System foresees the continuous improvement of product quality. In this setting ultrasonic analysis represent a quick and impartial control.

3. Ultrasonic analysis stand all the other routine quality check like fineness, appearance, weight and mark.

4. We stress the attention this is not a definitive check. If any bars have not expected ultrasonic profile, but they complies the routine check, they are simply remelted and/or assigned to other use. Usually remelting operation correct the ultrasonic profile and the bars became acceptable.

SLIDE 14

As a conclusion, in this show we have reviewed the various issues associated with the use of ultrasonic analysis for quality control of gold standard large bars. Thank you for your attention.

SLIDE 15

Thank you for your attention.

SLIDE 16

Bibliography