Representation

The pre-qualification audit (as mentioned in “Practices – Ethical and Regulatory Compliance”) documents that the precious metals refiner has the tools, techniques and trained personnel to successfully perform the scope of work. Once the PM shipment has arrived at the PM refiner facility and the weighing and sampling process is about to begin, the client or their third-party representative should attend as witness. The second pair of eyes and ears on-site helps to eliminate the human error factor, provides valuable corroboration of the calibration of machinery, and maintains custody control of the samples drawn for final PM analysis. In short, the data gathered is confirmed and it can be verified that all processing and sampling proceeded precisely as intended.

When a client sells Precious Metals bearing materials to a precious metals collector or refinery the transaction is not as simple as seeing what the out-turn is from the refinery and then paying the customer. The transaction is in fact settled by obtaining the accurate weight of the shipment, processing the shipment to uniformity, obtaining a representative sample of the shipment and then analyzing that sample to obtain the PM content. The customer is paid on the basis of this weight, sample and analysis.

The importance of accurate weighing/sampling/analysis therefore cannot be overstated: the high value of the materials means that any error in the process presents unwanted risk. Custody control, verification of all data and calculations, and analytical quality assurance are therefore critical, as once the material has been comingled with other shipments and/or sent to the actual refining steps there is no point of return.

There are several inspection companies (often called “reps” or “umpires”) that are recognized and highly respected worldwide. All reputable PM refineries welcome inspectors as a means to ensure transparency and provide corroboration that all operating procedures were carried out exactly as the buyer and seller intended.

The job of the ‘rep’ company is to have highly trained and skilled personnel present at the PM refinery who are conversant with all aspects of materials, machinery and processing methods. These field representatives observe and supervise the shipment from arrival and weighing to samples sealing and dispatch to the lab(s). When the refiner and the third-party laboratory have completed their analysis, the assays can be compared for quality control purposes (see “The Settlement Process”).

Typical activities of the third-party representative include:

• Scale verification before use
• Gross, tare and net weighing of client materials
• Checking seals
• Witness of processing stages, such as burning, milling, screening, blending, melting, etc.
• Witness of final sampling and sealing of samples

The Take-Away

Make sure your precious metals end up with a responsible recycler, root out and eliminate the unethical and the wasteful, and forge global partnerships; allow for fair margins, invest in research and development; discard perceived limitations and challenge what is ‘normal’.

At Sabin, we believe that long-term wisdom and meaningful innovation is best for business, and as a result, it is what is best for the society of Mankind. If you’d like to learn more about this topic, or any of the other Sabin Metal Precious Metal bulletins, please visit us at www.sabinmetal.com.