Arabian American Development Co. on Thursday provided an update on activities at the Al Masane Al Kobra (AMAK) mine in Saudi Arabia, of which it is a 41 percent equity owner, as well as progress on the completion of its isomerization unit that is being built at its South Hampton Resources facility. AMAK has received an initial tranche of $35 million from a total bridge loan in the amount of $85 million. AMAK has completed financing arrangements to fund the $85 million with a Saudi French bank while pre-closing conditions for the SIDF (Saudi Industrial Development Fund) permanent loan are being met. The second amount, $46 million, can be drawn after AMAK receives clearance for the first payment from the SIDF. The SIDF loan is signed and documentation is being completed which satisfies the bridge lender that negotiations for the permanent financing are close to completion. AMAK signed a five-year contract for the underground development and production work at the mine, valued at $125 million over the five-year period. CMG, the contractor on the construction of the surface facilities, won the bid and will begin mobilization at the end of September of 2010. Mobilization will be completed and construction of the ventilation air raises will begin by the end of 2010. Construction will take approximately 90 days. Ore will then be produced starting at low levels as development of the shafts and stopes is undertaken. The contract calls for full capacity production at the 700,000 ton annual rate by the fourth quarter of 2011. (Underground mining projects typically have more waste material to move in the early stages of development which declines as the shafts reach the main production levels.) The mill is approximately 90 percent complete and test runs of ore will take place in the second quarter of 2011 as underground construction activities move forward. Separately, AMAK has issued purchase orders for US manufactured Caterpillar scoops and articulated trucks for the underground work, in addition to Caterpillar generator equipment for powering the activities. Due to the remote location of the mine, Caterpillar's reliability and service was judged to be superior to that available from other vendors competing for this business. These capital equipment purchase orders are not included in the $125 million contract. Construction of the company's South Hampton Resources facility isomerization unit, which will be used to convert normal pentane into isopentane, is near completion and will give the Company more flexibility in managing its product line. South Hampton has initiated start up procedures with normal operations expected to be achieved within a week.
