Arab Mining Company (Armico), an Arab government-owned firm, has acquired a 10 per cent stake in Al-Masane Al-Kobra Mining (Amak), a Saudi joint stock company owned by Arabian American Development Company, for $37.3 million.

Arabian American, the owner and operator of a petrochemical facility located in southeast Texas, is the original developer of Amak, which is in the final stages of development in Najran Province of southwestern Saudi Arabia.

As per the transaction, Armico paid SR28 per share for the stake totalling 5 million shares of Amak. With 50 million shares now outstanding, this investment now values the company at SR1.4 billion ($373 million), the company said.

Armico was established in 1975 with headquarters at Amman. The key shareholders include the governments of the UAE (20.2 per cent), Saudi Arabia (20.2 per cent), Iraq (20.2 per cent), Kuwait (20.2 per cent), as well as eleven other Arab nations representing 19.2 per cent.
 
This capital provides Amak with the financing necessary to start full production in early 2012.

Through this deal, Armico has acquired a seat in Amak which will be reprresented by Sultan Al-Shawli, Saudi Deputy Minister for Petroleum and Minerals.

Amak's Saudi partners now own 53 per cent (previously 59 per cent) and Arabian American now owns 37 per cent (previously 41 per cent).

Further, this values the Saudi partners’ stake at $198 million compared to their initial investment of $60 million, and ARSD’s stake is now valued at $138 million or $107 million more than the amount currently carried on ARSD’s balance sheet.

As a result of this equity infusion, AMAK’s cash flow projections indicate adequate funds available for the commencement of operations and the start of operating cash flows assuming successful operational testing of the mill beginning in the fall of 2011 and production in early 2012.

Welcoming Al-Shawli to the Amak board, Nick Carter, president and CEO, said 'We recognize the importance his expertise will have in helping Amak reach its full potential.'
 
Carter pointed out that Armico, as it newest equity partner, offers Amak significant prestige in the Arab world and a strong voice in dealing with governmental entities on further exploration and production opportunities.

'The $1.25 billion multi-lateral fund is chartered by the League of Arab States. Their decision to make an equity investment in Amak is significant because it is the first significant non-government mining company operating in Saudi Arabia and is Armico's first investment in the Kingdom.'

Carter revelaed that Amak was 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.