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

9 Months Ended

Sep. 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 September 30, 2014, and December 31, 2013, the Company had a non-controlling equity interest (35%) of approximately $53.4 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 September 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 September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
	(Thousands of Dollars)
Sales	$	16,957		$	17,815	$	47,655		$	64,310
Gross Profit		1,785			6,994		6,469			25,028
General, administrative and other expenses		3,714			4,256		11,285			14,071
Net Income (loss)	$	(1,929	)	$	2,738	$	(4,816	)	$	10,957

Financial Position

	September 30,		December 31,
	2014		2013
	(Thousands of Dollars)
Current assets	$	23,839	$	32,923
Noncurrent assets		264,318		264,997
Total assets	$	288,157	$	297,920
Current liabilities	$	18,353	$	22,497
Long term liabilities		75,023		75,826
Shareholders' equity		194,781		199,597
	$	288,157	$	297,920

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

	Three months ended September 30,					Nine months ended September 30,
	2014			2013		2014			2013
	(Thousands of Dollars)
Company’s share of income (loss) reported by AMAK	$	(680	)	$	965	$	(1,698	)	$	3,991
Amortization of difference between Company’s investment in AMAK and Company’s share of net assets of AMAK		337			337		1,011			1,010
Gain from additional equity issuance by AMAK		-			-		-			3,997
Equity in income (loss) of AMAK	$	(343	)	$	1,302	$	(687	)	$	8,998

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 September 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.