ARSD signs $79m deal for Saudi mine
Dallas, July 20, 2011
Arabian American Development (ARSD) has signed a three-year, $79 million contract with China National Geological & Mining Corporation (CGM) for the operation of the surface works of the Al-Masane Al-Kobra (Amak) mine.
This contract is in addition to a five-year contract with CGM, that totaled $125.0 million which covered the engineering, design, mobilization, rehabilitation of existing mine workings and production work and included a provisional sum of $8.1 million for equipment that CGM has the option to provide.
Arabian American is the original developer and now a 37 per cent equity owner of the Amak mine project.
The company also announced that the Amak mining operation has entered into an agreement with Walid S Bugshan & Partners (Metafco), for the design, supply and construction of a seaport storage facility in Jizan, Saudi Arabia.
"This contract is another major milestone for the Amak mining project which is nearing completion in the Najran Province area of southwest Saudi Arabia,” said Nick Carter, president and CEO of Arabian American.
“The $79 million cost of operations over the three year contract is in line with the previous cash flow expectations based on 2000 tons per day and includes approximately $29.4 million for reagents to be used in the mill process.”
“In conjunction with our new equity partner ARMICO, the mining project has the capital to bring the mine into operation as well as working capital to support the new contract with CGM and we anticipate the start of operating cash flows assuming successful operational testing of the mill beginning in early 2012,” he added.
Carter continued: "The agreement to construct a seaport facility will ensure that when the mine becomes operational and delivers economic quantities of concentrates, we will have adequate storage capabilities.”
“As previously reported, Amak is now in discussions with several major commodity trading companies who have expressed interest in purchasing the off-take of concentrates that will be produced when the mine starts production at the beginning of 2012,” he concluded. – TradeArabia News Service