INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY (AMAK)

6 Months Ended

Jun. 30, 2014

INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY ("AMAK") [Abstract]

INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY ("AMAK")

13. INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY (“AMAK”)

As of June 30, 2014, and December 31, 2013, the Company had a non-controlling equity interest (35%) of approximately $53.8 million and $54.1 million, respectively. This investment is accounted for under the equity method. There were no events or changes in circumstances that may have an adverse effect on the fair value of our investment in AMAK at June 30, 2014.

AMAK’s financial statements were prepared in the functional currency of AMAK which is the Saudi Riyal (SR).  In June 1986 the SR was officially pegged to the U. S. Dollar (USD) at a fixed exchange rate of 1 USD to 3.75 SR.

The summarized results of operation and financial position for AMAK are as follows:

Results of Operations

	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
	(Thousands of Dollars)
Sales	$	30,431		$	15,333	$	30,698		$	46,495
Gross Profit		4,045			8,128		4,684			18,034
General, administrative and other expenses		4,982			7,029		7,570			9,815
Net Income (loss)	$	(937	)	$	1,099	$	(2,886	)	$	8,219

Financial Position

	June 30,		December 31,
	2014		2013
	(Thousands of Dollars)
Current assets	$	26,558	$	32,923
Noncurrent assets		263,961		264,997
Total assets	$	290,519	$	297,920
Current liabilities	$	16,109	$	22,497
Long term liabilities		77,700		75,826
Shareholders' equity		196,710		199,597
	$	290,519	$	297,920

The equity in the income or loss of AMAK reflected on the consolidated statement of income for the three and six months ended June 30, 2014, and 2013, is comprised of the following:

	Three months ended June 30,					Six months ended June 30,
	2014			2013		2014			2013
	(Thousands of Dollars)
Company’s share of income (loss) reported by AMAK	$	(331	)	$	399	$	(1,018	)	$	3,026
Amortization of difference between Company’s investment in AMAK and Company’s share of net assets of AMAK		337			337		674			674
Gain from additional equity issuance by AMAK		-			3,996		-			3,996
Equity in income (loss) of AMAK	$	6		$	4,732	$	(344	)	$	7,696

At December 31, 2013, we had an outstanding advance to AMAK of approximately $0.5 million for interim funding on a short term basis.  The entire balance owed was paid in the second quarter of 2014; therefore, at June 30, 2014, there was no amount outstanding.

See our Annual Report on Form 10-K for the year ended December 31, 2013, for additional information.