A man takes a photo of the world's largest gold bullion coin, the Australian Kangaroo One Tonne Gold Coin, which is being displayed to mark the official launch of the Perth Mint Physical Gold Exchange Traded Fund (AAAU), outside the New York Stock Exchange (NYSE) in New York. File photo: VCG

The London Bullion Market Association (LBMA), an independent authority for precious metals based in London, said on Thursday that an incident review process has been invoked concerning on whether the Perth Mint remains on the authority's good delivery list following media reports that diluted gold was delivered to China. 

Currently, the Perth Mint remains on the good delivery list, according to an LBMA statement. The organization said it is difficult to provide a timeline for the review, due to numerous stakeholders involved.

The Shanghai Gold Exchange (SGE) said on Wednesday that media reports claiming that "Perth Mint sold diluted gold bullion to SGE" deviates from the truth, according to a statement from its official WeChat account. 

The Perth Mint responded on Wednesday that there is no question about the gold purity and value of the gold bars it has sold to customers in China. At all times the one-kilogram bars it produced and sold contained at least 99.99 percent gold, a fact that has never been in dispute, read the statement. 

The statement further addressed that its one-kilogram 99.99 percent gold bars contain up to 0.01 percent of non-gold materials, and these purity specifications meet industry standards and align with standards set by the international market authority - the London Bullion Market Association. 

The company said that it was aware that some of its one-kilogram bars did not meet the non-gold specifications of SGE, and it immediately launched a review of refining practices.

As part of the review, the Perth Mint implemented new processes which came into effect in December 2021 and adheres to the SGE's non-gold specification standards.

The Australian Broadcasting Corporation (ABC) reported on Monday that the Perth Mint sold up to 100 tons of "doped" gold to SGE which potentially did not comply with SGE's purity standards for silver content, adding that the company could face a potential recall of A$9 billion worth of "doped" one-kilogram gold bars from customers in China.

SGE alleged two bars contained too much silver and were non-compliant with its specifications in 2021. The Perth Mint checked the two gold bars and found one had been "red flagged" by its refinery, according to the ABC's report.  

The bar's purity test, known as an "assay," had failed to meet SGE's standards for silver but still above the crucial 99.99 percent. The report from ABC said. It said that most of the gold bars were potentially non-compliant with SGE's standards and the Perth Mint didn't share the information with Shanghai.