Ore Production — Transfer to Inventory
Recording the production of run-of-mine (ROM) ore and transfer to stockpile inventory.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Ore Stockpile Inventory | Asset (+) | 4,800,000.00 | - |
| Mining Cost (Production) | Expense (-) | - | 4,800,000.00 |
💡 Accountant's Note
As ore is extracted from the mine, the production costs (drilling, blasting, loading, hauling, crushing) are accumulated as the cost of production. These costs are transferred to ore stockpile inventory when the ore reaches the stockpile. The cost per tonne of ore produced is a critical operational metric — it drives all subsequent inventory valuations and cost of sales calculations.
Practitioner & Systems Framework
💻 ERP Architecture
Ore production costs are captured in the mine operating cost centres (drilling, blasting, loading, hauling, processing) in the ERP. At the end of each period, the total production costs are divided by the tonnes of ore produced to calculate the cost per tonne. This unit cost is applied to the ore tonnes transferred to the stockpile. The production module captures tonnes mined, ore grade (metal content per tonne), and recovery rates. The mine's production cost model (LOM — Life of Mine cost model) provides the expected unit cost range for budgeting and benchmarking.
⚠️ Audit Flags
Auditors test the production cost calculation — tonnes produced multiplied by cost per tonne should equal total production costs. Confirm that all production costs (contractor mining costs, explosives, haulage) are captured before the unit cost is calculated. Test ore stockpile quantities through physical survey or GPS-based volume measurement — ore stockpiles are significant assets that cannot be physically counted but can be measured. Review the allocation of mine overhead (management, services, utilities) to production cost vs. period cost. Test the grade of ore in the stockpile against the mine's geological model.
📄 Required Documentation
Mine production report (tonnes mined, ore grade, recovery), production cost centre report, ore stockpile survey (volume measurement), cost per tonne calculation, mine overhead allocation methodology, ore grade reconciliation to geological model, and LOM cost plan vs. actual analysis.
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