JEDDAH, 26 October 2007 — Arabian American Development Co. yesterday said that it has received official notification from Saudi Arabia’s Ministry of Commerce and Industry approving the formation of the Al-Masane Al-Kobra Mining Company.
In a statement carried by Reuters, the president and CEO of Arabian American Hatem El-Khalidi said the approval is to be published in the Official Gazette.
Hatem El-Khalidi, president and CEO of Arabian American, said the Saudi government’s approval in “the formation of the joint stock company reinforces our belief that the project will be good for the growth and diversification of the Saudi economy and good for the shareholders of Arabian American Development Co.”
The next step in the process will be for the joint stock company to hold an organizational meeting to form its board of directors. Upon completion of the publication of the approval and of the organizational meeting, the ministry will issue the license allowing Al-Masane Al-Kobra Mining to do business in the Kingdom. The board of directors of Arabian American has approved Hatem El-Khalidi, Ghazi Sultan, Dr. Ibrahim Al-Moneef and Mohammed Al-Omair to represent its interests on the board of the new mining company.
The joint stock company will be owned 50 percent by Arabian American and 50 percent by Saudi investors. The Saudi investors are contributing $60 million in cash, and Arabian American is contributing its 30-year mining lease in the Al-Masane area of southwest Saudi Arabia.
The lease was granted in 1993 when the company discovered and proved reserves of 7.1 million tons of ore containing zinc, copper, gold, and silver. The lease contains a provision for a 20-year extension beyond the original term. The construction of the mill is subject to the completion of other procedures and formalities required. Arabian American estimates the mill will require approximately 22 months to complete and will cost approximately $120 million, which will be financed partly with cash contributed by the Saudi investors, and the remainder being financed within the Kingdom.
Mineral deposits in Saudi Arabia are widespread and of many types, ranging from gold to lightweight aggregate.
The bulk of metallic mineral resources are contained in Precambrian rocks of the Arabian shield, in the western part of the country. Non-metallic resources are contained in both Precambrian rocks and Phanerozoic rocks that overlie the Arabian shield in the central and northern parts of the Kingdom.
Gold mining in Saudi Arabia dates back 5,000 years. At the present time, most occurrences are represented by sites of ancient mining. The advance of cyanide heap leaching techniques in the 1980s to the stage of profitable extraction of gold from rocks containing as little as 0.75 g/t Au opened up new prospective areas in Saudi Arabia and spurred a strong phase of exploration that continues to the present. Many occurrences have been sampled and a significant number drilled, and some locations at the present time are operating mines.
Gold occurrences are abundant and widespread, commonly taking the form of ancient mines developed on gold-bearing quartz veins and gossans and, more rarely, placers. The distribution and concentrations of the ancient mines provide an invaluable “first-order” geochemical survey and a guide to areas of further potential.