Smelters purchase and treat precious metals concentrates and also base metal concentrates. Basically, the smelter buys concentrates on the basis of the agreed content of gold and silver and pay for these precious metals contained at prices current in the international market, at date of the transaction or according to the agreement with the concentrator. The treatment charge must include the cost of delivering concentrate to the smelter, sampling, smelting, freight on crude gold to the refinery, refining, selling. Economists are used to assess these charges and the profit on operations is followed. In the case of some metals all is included in a treatment charge; in other cases a part only. Melting is included in the base treatment charge, the balance being taken care of in the price at which metal is paid for after certain deductions from the international market price. Essentially, all methods have as the fundamental basis of charge the costs mentioned.
The main factors in the commercialization of gold concentrates are the treatment charge, penalties and payment. The first one includes the current cost of treating the concentrate and some interest on capital and investment and tries to get an optimum profit. It has been noted that treatment charges may graduate up-ward for low gold grade concentrates. The second one are influenced by the non-valuable minerals present in the concentrate that add tot eh difficulties and costs of smelting. They are usually graduated considering the content of non desired elements. It is important to mention that gold concentrates may content iron sulphides minerals, siliceous minerals and some base metals. Gold concentrates that content lead and copper may be used as collectors of the precious metals. It has been established that if the concentrate is highly siliceous such as 30% or more are penalized by copper smelters, but not for lead smelters. Siliceous concentrates may be smelted on a flat schedule selected to encourage the profit of the process.
Regarding payments, they are established according to the quality of the gold concentrate. For example, a smelter may pay less for silver in a given gold concentrate than in a specialized base metal smelter. Payments by the smelter are rarely, if ever based on the full amount of a given gold concentrate shipped, as detected by assay or on the international market value of the gold price at the time of settlement. The first difference takes care of the losses in treatment. The second deduction is to cover freight on the base bullion and the cost of refining it, the cost of recovery of by-products, selling and it serves also as a hedge on the course of the market between settlement date and purchase. It is important to point out that payment deductions and penalties are in many cases smelter profits.
Gold payments are base on the international prices. The same concept is valid for silver. Smelters make some deductions and may pay 95% of the balance, sometimes making an additional deduction on concentrates of low quality. Zinc smelters does not pay much for precious metals because their losses in recovering gold and silver are higher than others smelters. Gold from placers and bullions from leaching plants may be commercialized and deductions must be included in the contract between the smelter or refinery and gold operations.