Gold Refinery Due Diligence: A Practical Guide
Gold refinery due diligence runs in both directions: sellers must verify a refinery's accreditation, assay integrity, financial standing and settlement terms before consigning metal to it — and refineries must verify a seller's identity, licences and metal origin before accepting a single gram. The refinery relationship is where a physical gold transaction succeeds or fails: the metal, the money and the documentation all converge there.
Diligencing a Refinery: The Seller's Checklist
- Accreditation. Is the refinery LBMA Good Delivery accredited, or accredited by its hub (for example DMCC in Dubai)? Accreditation independently certifies assay competence, bar quality and responsible sourcing controls, with ongoing audits. Accreditation status is publicly checkable — check it, don't take it on assertion.
- Legal identity and licensing. Verify the refinery's corporate registration, operating licences and physical facility. A refinery you cannot place on a map with a licence number is not a refinery.
- Assay procedures and rights. Will the refinery allow witnessed weighing, melting and sampling? Are split samples provided? Is there an umpire mechanism for disputed assays? Reputable refineries say yes to all three — see how assays work.
- Settlement terms. Payable percentages, refining and treatment charges, by-metal credits, pricing mechanics and payment timing — in writing, before shipment. See the settlement process for what good terms look like.
- Financial standing. The refinery owes you money between assay and payment. Bank references, trading history and the experience of existing suppliers matter.
- Track record. Speak to current suppliers; verify how disputes were handled. A refinery's reputation among its suppliers is the most informative single datapoint available.
What the Refinery Diligences About You
Expect a serious onboarding process; its absence is a warning sign about the refinery itself. The refinery will require: full KYC on your company and beneficial owners; your export licences and authorisations; evidence of metal origin and chain of custody; sanctions screening of everyone in your chain; and plausibility analysis — do your offered volumes match your claimed source? This is the refinery discharging its own OECD-aligned obligations, on which its accreditation depends.
Red Flags on the Refinery Side
- Claims of accreditation that don't verify against the accreditor's public list.
- No witnessing rights, no split samples, no umpire clause — assay opacity is settlement risk.
- Settlement terms that shift after the metal has arrived — the worst negotiating position a seller can be in.
- Unusually high payable percentages or low charges used as bait — if terms look too good against market norms, scrutinise harder.
- Pressure to ship before terms are documented.
Example
A seller with 20 kg monthly doré supply evaluates two Dubai options. Refinery A: hub-accredited, witnessed assay offered, written schedule of charges, payment within 48 hours of final assay, supplier references check out. Refinery B: claims accreditation that doesn't appear on the accreditor's list, offers a payable percentage half a point higher, but will not allow witnessed sampling and wants the first lot shipped “to build trust”. The half-point premium is worth nothing against unwitnessed assay risk on every future lot — the seller chooses Refinery A and locks terms in a written refining agreement before the first shipment.
Documenting the Relationship
The output of successful mutual due diligence is a written refining or sale agreement covering: assay procedure and rights, payable percentages and charges, pricing mechanics against the LBMA benchmark, settlement timing, by-metal treatment, dispute and umpire mechanics, and the documentation each party provides. Every later disagreement is cheaper to resolve on paper agreed before the first gram moved.
Key Takeaways
- Verify refinery accreditation against the accreditor's public list — never on assertion.
- Insist on witnessed assay, split samples and an umpire clause; assay opacity is settlement risk.
- Lock payable percentages, charges, pricing and payment timing in writing before any metal ships.
- Expect searching due diligence in return — a refinery that asks nothing about your metal's origin is itself a red flag.
- Supplier references and dispute history are the most informative datapoints about a refinery's real behaviour.
Frequently Asked Questions
How do I check if a refinery is LBMA accredited?
The LBMA publishes its Good Delivery lists publicly. Hub accreditations such as DMCC's are likewise publicly listed. If the name isn't on the accreditor's list, the claim is false — there is no private accreditation.
What is a reasonable payable percentage for gold doré?
Commonly in the range of 98–99.5% of assayed fine gold content, varying with lot size, purity profile and relationship. Terms far outside market norms in either direction deserve scrutiny.
Should I visit the refinery before shipping?
For a meaningful supply relationship, yes — or send a trusted representative. Verifying the physical facility, meeting the team and witnessing the first assay materially reduces relationship risk.
Who pays for the umpire assay in a dispute?
Conventionally the party whose assay result is further from the umpire's — an allocation that discourages frivolous disputes from either side. The mechanism should be defined in the refining agreement.
Can a small seller get good refinery terms?
Smaller lots carry proportionally higher charges, but accredited refineries publish or quote transparent schedules at all volumes. Working through an established facilitator can also aggregate volumes toward better terms.