Annex D: Proactive Monitoring – Procedures and Criteria

The system of monitoring is designed mainly to provide reassurance to purchasers about the quality they can expect from GD Bars.

The main method of monitoring requires the Refiner to submit a dip sample from a commercial melt for check-assaying by two of the Referees. The dip sampling and Bar casting operation must be witnessed by a Supervisor. An alternative way of monitoring the assaying ability of “four-nines” gold Refiners is described in Section 4 of this annex. All Refiners (including Referees) will be monitored once every three years.

Evidence of GD Bar casting must be witnessed by the Supervisor. Exceptions to this requirement will include Refiners regularly supplying GD Bars to the London bullion market or other such recognised physical market, evidence of which must be submitted.

1. Notice to Refiners about monitoring

The LBMA will send a letter to the LBMA contact at the Refiner concerned (via email) informing them that proactive monitoring of its gold and/or silver production is to take place within a period of one month from the date of the notification letter. LBMA is willing to be flexible on the time allowed for arranging the monitoring operation, if for example this is affected by holiday periods or other enforced shutdowns.

2. Dip sampling

2.1 Appointment of Supervisor

A Refiner being monitored by the dip sampling method should, in the first place, appoint a Supervisor to witness and report to LBMA about the sampling operation. The list includes the internationally recognised assaying and inspection companies which are within LBMA membership.

These companies have local representatives or laboratories around the world. The costs and expenses of the Supervisor must be paid by the Refiner. The Supervisor will charge a fixed fee (see LBMA website for all fees) for each dip sampling operation witnessed, unless specifically agreed otherwise, plus travelling and subsistence expenses incurred by the Supervisor’s representative. Thus, the expenses chargeable by the Supervisor will depend on the locations of their representative offices relative to that of the Refiner.

2.2 Witnessing of dip sample

The melt from which the dip sample is taken should have a fineness in the range of 999 or above for silver and between 995.0 and a maximum of 999.0 for gold. The sample should be taken from a normal production melt and the operations leading up to the taking of the sample must be witnessed by the Supervisor. The Refiner should be confident about what the melt contains and that it is homogeneous before taking the dip sample. The dip sample should be taken at the final stage of production, that is, just before casting.

The purpose of taking the dip sample is to provide sufficient homogeneous material to provide the samples to be assayed by the Refiner and the Referees, together with enough spare samples in case of various eventualities (such as a sample being lost in the post).

The actual method of taking and casting the dip sample can be either of the following:

1. The Refiner may use a standard LBMA mould (which will be brought to the Refiner by the Supervisor). This consists of a two-part cast iron mould which produces a casting with dimensions of:
   
   - for silver: 60 mm in width, 6 mm in thickness and 100 mm in height;
   - for gold: 60 mm in width, 6 mm in thickness and 50 mm in height.
   
   The Refiner should have a guillotine or shear available which can be used to crop 5 mm from each edge. In the case of silver, the cropped casting should then be cut into 8 pieces of approximately 25 x 22.5 mm each (giving a sample weight of around 35 grams). In the case of gold, the guillotine should be used to cut off eight samples of approximately 10 grams each.
   
2. The Refiner can use its normal method of dip sampling, provided that this will produce the necessary samples for fire assay (in the case of gold) and, in the case of silver, for spectrographic analysis, including by spark OES which requires a plate type sample of minimum dimensions 25 x 25 mm).
   
   Dip samples requirements:
   
   • A minimum sample weight of 10g for gold and 30g for silver applies.
   • A minimum sample thickness of 5mm for silver applies.
   • Pin samples are not acceptable for silver samples.

The Supervisor will report to LBMA using a standardised format including information on:

• the use to which the refined metal will be put,
• the raw materials used,
• the processes leading up to the sample being taken,
• the method of dip sampling employed and,
• in the case of Bars which are to be numbered, the numbers of the Bars produced.

2.3 Treatment of the dip samples

Two of the eight samples will be sealed and sent by the Supervisor to LBMA, within approximately two weeks. One will be left with the Refiner for assaying and five will be sealed by the Supervisor and left with the Refiner as reserves.

Refiner assay

The sample left with the Refiner by the Supervisor should be assayed by corrected fire assay or appropriate spectrographic technique in the case of gold and by an appropriate spectrographic method of analysis in the case of silver. The number of individual fire assay trials to be carried out is not specified by LBMA but is instead left to the Refiner, according to its normal practice. For gold fire assays, the report should include the individual trial results expressed to five significant figures of fineness and the mean of the trial results, also to five figures.

The assay results should be presented in an Excel or .csv file and submitted by email to the GDL Team within four working days after the dip sampling. The method of assaying must be stated in the report (including the type of spectrographic testing used for silver). In the case of the assaying of silver by spectrographic methods, oxygen and nitrogen should be ignored when deducting the sum of the impurities from 1000 (in other words, these gases should be treated as silver).

When determining the assay of dip samples using spectrographic methods, the applicant is responsible for identifying all impurity elements contained therein which will determine the final assay. LBMA does not prescribe detailed procedures or criteria for assaying by means of spectrographic methods but Annex I lists the elements that Referees will typically determine.

The report on a silver dip sample should include the elemental analysis using the LBMA template which will be provided, as well as the silver assay obtained by difference for all trials.

The LBMA Executive Committee will treat the information provided by the Refiner in strict confidence. In particular, no information which could be used to identify the Refiner will be provided to the Referee(s) that will assay the dip sample. However, at the conclusion of the Proactive Monitoring the assays of the Refiner and Referee will be sent (anonymously via the Executive) to each other.

Referee assay

On receipt of the two samples by LBMA, both samples will be sent, according to a rota, to two Referees who will be asked to assay the sample they receive to five significant figures. It should be noted that the Referees will not be aware of the identity of the Refiner that provided the samples.

For gold, the Referee will carry out at least 6 trials by means of corrected fire assay and will include the results in the report sent to LBMA. In the case of silver, the Referee will normally use one or other spectrographic analysis method and determine the silver assay by difference (with dissolved gases such as oxygen counting as silver). The Referee will provide to LBMA the elemental analysis of the dip sample as well as the silver assay obtained by difference.

If the assays of the Refiner and Referees fail to agree within the tolerances described below, the Refiner will also be asked to unseal one of the spare samples, carry out an assay on it and submit a new assay report to LBMA within five working days.

The Referees are all Refiners of both gold and silver, who have previously demonstrated to LBMA’s satisfaction a very high level of accuracy in the assaying of gold and silver. They also manufactured sets of reference samples which are free from detectable inhomogeneity and whose assay values were established to high levels of accuracy by means of an extensive programme of cross-checking.