spiriting away the gold, page-5

Firstly - the mining, production and refining of gold (at the mint) is a completely separate process to hedging, foward selling etc. These are treasury operations carried out by a miner's finance department. You dont actually have to mine any gold to carry out these functions, but it would very risky to do so.

There seems to be an idea that a foreign gold mining company could mine gold very cheaply and sell it to their parent company at less than the gold price so the local company didnt make a profit. This is just nonsense. The auditing and reconciliation of gold production is excrutiating. And the WA government has the power to seize your books at any time and carry out its own audit. When gold is refined at the mint you either receive the physical gold into a gold account at the mint or you immediately sell it on the spot market. Usually you sell it because you need the money. As far as the State Royalty is concerned, this is 2% of the Spot value of the recovered gold at the time it goes into your account. Obviously the records are kept by the mint so theres no way to hide production. Royalties are payable quarterly and the royalty calculation must be independently audited.

If transfer pricing is suspected, the government has the power to review your royalties for three years in areers and to reset the price at which the royalty was calculated. They can levy fines and even confiscate your leases. I must say I have never heard of this happening.