Quality Assurance

The long-term viability of a Refiner and its ability to meet Good Delivery standards, especially in responding to legitimate complaints about Bar quality, require it to have a minimum annual production volume and financial standing. In addition, Refiners should undergo continuous monitoring of their production to ensure compliance with the technical specifications set out in these Rules.

Refiners must comply with all provisions set out in this section. Failure to do so may result in the suspension or removal of a Refiner from the List.

4.1 Throughput and Tangible Net Worth (TNW)

4.1.1 Minimum Requirement

Rule (R) Refiners must comply with the following minimum Throughput and TNW requirements, or have a letter of guarantee from the parent company, who will fully support and resolve any production issue:

• Tangible net worth (TNW):
  • The net financial value of a Refiner. All Refiners must have a minimum TNW of £15,000,000.
• Throughput:
  • The annual refined production of a Refiner. The current minimum thresholds are 10 tonnes for gold and 50 tonnes for silver per annum.
  • Refiners that are Listed for one metal as a by-product (only applicable to existing GD Refiners), must meet the annual thresholds outlined in the application criteria.

Guidance (G) LBMA recognises that in any one financial year there may be temporary circumstances which result in reduced Throughput or TNW data being submitted by a Refiner with the effect that the Refiner fails to meet the requisite thresholds.

As such, all annual data provided by a Refiner to LBMA will be reviewed on a three-year moving average basis which means that trends will be analysed over time. This will operate with the consequences as follows:

• 1 period (financial year) < threshold = Refiner placed on watch list;
• 2 consecutive periods < threshold = Refiner informed;
• 3 consecutive periods < threshold = Refiner must submit a remedial plan and failing to do so could result in the refiner being moved to the Former List.

4.1.2 Reporting

R Refiners must report their Throughput and audited TNW data to the GDL Team within three months of their financial year-end. Refiners must confirm how much of their Throughput was for large bars produced.

G Refiners are subject to annual review based on reported Throughput and TNW data. Any requests for extension of this deadline will be dealt with on a case-by-case basis at the discretion of LBMA.

If a Refiner suffers a substantial and sustained fall in refined production volumes or its TNW relative to the minimum thresholds, it must without delay inform LBMA of (i) the reasons for the fall and, if appropriate, the likely future figures; (ii) the steps being taken; and (iii) the anticipated timeframe for production volumes to return to prior levels.

Failure to fully and promptly disclose the causes of any prolonged reduction in Throughput or TNW may result in the suspension or removal of a Refiner from the List.

LBMA will only use Throughput and TNW data for the purpose of monitoring the viability of a Refiner’s business. Such data will be treated in the strictest confidence and will not be shared with any third parties.

4.2 Corporate Changes

R A Refiner must inform the GDL Team at least one month in advance, providing all appropriate details, if it wishes to change:

• Location of its Refiner;
• Ownership or control (including group restructuring);
• Changes in processes.

Failure to do so, could jeopardise any production from the period the change took place to the refiner notifying the Executive and the change being approved.

In the case of a change in location, the refiner must satisfy the following process (not limited to) prior to commencing production at the new location:

• Appoint a Good Delivery Supervisor to witness bar casting
• Undergo a round of Proactive Monitoring within 12 months (if the refinery is not due a cyclical round)
• Complete a Responsible Sourcing audit (if there is a change in source for raw materials)

G LBMA reserves the right in such circumstances to ask the Refiner company to submit a new application.

4.3 Proactive Monitoring

R Refiners must comply with the Proactive Monitoring (PAM) Programme, as set out in Annex D. On request, Refiners must provide a dip sample from a normal production melt, which will be check-assayed by one of the Referees.

G A list of the Referees can be found on the LBMA website in the Good Delivery Rules section.

LBMA operates a programme of monitoring the quality of the production and assaying ability of Refiners. A Refiner’s ability to cast GD Bars also needs to be demonstrated during the PAM process, which takes place once every three years. A Refiner will receive a letter from LBMA instructing it to participate in the PAM process on or around the third anniversary of its first inclusion on the List.

Evidence will need to be provided in either photographic or video form, which will be reviewed by the Supervisor and included in the Supervisor’s report. The list of Supervisors can be found on the LBMA website in the Good Delivery Rules section.

Exceptions may apply to Refiners who regularly supply the London bullion market or other such recognised physical markets.

Special arrangements apply to gold Refiners which only produce and market “four-nines” gold (see Annex D).

4.4 Retesting of Bars

R On request from LBMA, Refiners, at their cost, must submit Bars for retesting.

G LBMA may request a Refiner to send Bars to a Vault for inspection and testing if:

• a Refiner is unable to demonstrate the required competence in assaying, as revealed under the PAM process; or
• if the appearance of a Refiner’s Bars gives cause for concern.

Testing method

The methods of inspection and testing specified in the Application process will generally be followed.

A Refiner is required to pay for the cost of insurance and shipping the Bars to the Vault. If a subsequent inspection by a panel of Vaults or other specialists appointed by LBMA is satisfactory, LBMA will charge the Refiner accordingly. However, should the Vault’s inspection indicate the need for further testing of the Bars by the Referees, an additional charge may be levied to cover the cost of shipping the Bars to the Referees and the testing of the Bars by the Referees. Current charges are available here.

Refusal to participate in PAM or refusal to submit Bars for retesting will result in the suspension or removal of a Refiner from the List.

4.5 Annual Maintenance Fees

R Refiners must pay a maintenance fee to LBMA within 30 days of the date of invoice.

G Fees for a single or dual metal listing and dual bar listing can be found on the LBMA website. Refiners will be invoiced for their fee at the start of the calendar year.

In case of late payment, the fee will be subject to a 20% surcharge.

If a Refiner does not pay its fee within 90 days of the date of invoice, the Refiner will be immediately suspended from the List and may be removed.