DALLAS, Oct. 24 /PRNewswire-FirstCall/ -- Arabian American Development Co. (BULLETIN BOARD: ARSD) today announced that it has received official notification that the Ministry of Commerce and Industry for the Kingdom of Saudi Arabia has approved the formation of the Al-Masane Al-Kobra Mining Company (ALAK). The approval is to be published in the Official Gazette (the Saudi version of the Federal Register) at the Company's expense. 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 ALAK 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 ALAK.
In announcing this development, Hatem El-Khalidi, President and CEO of Arabian American stated, "The Company is grateful to the Ministry for the approval of our venture and appreciates the careful examination they gave our application. Their decision to approve 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 approval is an important step in the development of the mining venture which Arabian American has been working on for many years. The joint stock company will be owned 50% by Arabian American and 50% 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 by Royal Decree 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, which will process the ore, will commence when the formalities of the formation of ALAK are completed, the lease is transferred to the name of ALAK, and the construction contract is finalized with the prime contractor. Negotiations with the prime contractor and the sub contractors have been ongoing and can be finalized when ALAK is licensed to conduct business. 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.
About Arabian American Development Co.
Arabian American owns and operates a petrochemical facility located in southeast Texas just north of Beaumont, Texas, specializing in high purity petrochemical solvents and other solvent type manufacturing. Arabian American also has a mining project, as mentioned above, in Saudi Arabia which is under development and is expected to produce economic quantities of zinc, copper, gold, and silver when it is put into production. There are currently about 20 employees at the mine site.
Safe Harbor
Statements in this release that are not historical facts are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements are based upon management's belief as well as assumptions made by and information currently available to management. Because such statements are based upon expectations as to future economic performance and are not statements of fact, actual results may differ from those projected. These risks, as well as others, are discussed in greater detail in Arabian American's filings with the Securities and Exchange Commission, including Arabian American's annual Report on Form 10-K for the year ended December 31, 2006 and the Company's subsequent Quarterly Reports Form 10-Q.
Company Contact: Nick Carter, President, Secretary and Treasurer
(409) 385-1400
