Mineral Sales Revenue — Concentrate Delivery
Recognizing revenue from the sale of copper concentrate, iron ore, or other mineral product to a smelter or trader.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Trade Receivable (Smelter / Trader) | Asset (+) | 12,500,000.00 | - |
| Mineral Sales Revenue | Revenue (+) | - | 12,500,000.00 |
💡 Accountant's Note
Mineral sales revenue is recognized when control of the concentrate or ore passes to the buyer — typically at the point of loading onto the transport vessel or truck (FOB), or at delivery to the smelter or refinery (CIF). The revenue is provisionally measured at the shipment date using prevailing metal prices, with final pricing based on the metal price at the 'quotation period' specified in the off-take agreement.
Practitioner & Systems Framework
💻 ERP Architecture
Mineral sales are processed in the ERP against the off-take agreement with the smelter or trader. The initial invoice is raised at the provisional price (spot price on the shipment date or a period average). The off-take agreement specifies the quotation period (e.g., the month of arrival at the smelter), which determines the final price. If the final price differs from the provisional price, a price adjustment entry is posted. Smelter treatment and refining charges (TC/RC) and penalties for impurities in the concentrate reduce the realized price — these are presented as deductions from revenue (not cost of sales).
⚠️ Audit Flags
Auditors confirm revenue recognition at the correct point of control transfer (shipment date for FOB). Test provisional pricing against the prevailing metal price on the shipment date. For shipments with quotation periods spanning the reporting date, assess the fair value of the price adjustment — this creates a provisional pricing adjustment (PPA) receivable or payable that is marked to market at each period-end. Confirm TC/RC deductions are correctly presented as revenue reductions per the off-take contract. Review any disputed shipment weights or assay grades — these create contingent adjustments.
📄 Required Documentation
Off-take agreement (pricing formula, quotation period, TC/RC structure), bill of lading or delivery receipt (control transfer evidence), provisional invoice at shipment price, concentrate assay report (grade and weight), TC/RC deduction calculation, provisional pricing adjustment calculation at period-end, and final invoice on quotation period close.
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