Seigniorage is the difference between how much it costs to make physical money and how much value that money is given by the issuer. For example, if it costs just 5p to make a £10 note the seigniorage would be £9.95. Seigniorage typically operates at a profit for the state, however, it is possible for seigniorage to happen at a loss to the state: negative seigniorage. This usually happens when the production costs and/or the value of the metal in a coin exceeds the value assigned to it by the mint. For instance, if it costs 28p to create a 20p piece then the coin has negative seigniorage because it is technically worth less than the metal in consists of.
Some collectable/investment coins are issued as ‘bullion coins’ meaning their value is essentially the value of the metal in them, therefore they have no seigniorage. For instance, at the time of writing the gold sovereign, with 7.98g of gold in would be worth approximately £237.