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					                                                                            PROSPECTUS
           Offering of 462,500,000 Shares representing 50% of the total issued share capital of Saudi Arabian Mining Company (Ma'aden) through an Initial Public Offering at an
                                   Offer Price of SR20 per Share (representing a nominal value of SR10 per share and a premium of SR 10 per share)




                                                                  SAUDI ARABIANMININGCOMPANY(MA'ADEN)
      A Saudi Joint Stock Company established pursuant to Royal Decree M/17 dated 14/11/1417H (corresponding to 23/03/1997G) with Commercial Registration Number 1010164391 dated
                                                                          10/11/1421H (corresponding to 04/02/2001G).
                                Subscription Period from Saturday 02/07/1429H (corresponding to 05/07/2008G To Monday 11/07/1429H (corresponding to 14/07/2008G)
Saudi Arabian Mining Company (Ma'aden) (hereinafter referred to as the “Company” or “Ma’aden”) was formed as a joint stock company pursuant to Royal Decree No. M/17 dated
14/11/1417H (corresponding to 23/3/1997G) and Council of Ministers Resolution No. 179 dated 8/11/1417H (corresponding to 17/03/1997G), with Commercial Registration Number
1010164391 dated 10/11/1421H (corresponding to 4/2/2001G) and with a share capital of SR4,000,000,000, comprising 400,000,000 shares with a nominal value of SR10 each (the
"Shares") wholly owned by Government of the Kingdom of Saudi Arabia represented by the Public Investment Fund (“PIF”). Pursuant to Council of Ministers Resolution No. 49 dated
25/02/1429H (corresponding to 04/03/2008G) the capital of the Company was increased to SR 9,250,000,000 comprising 925,000,000 Shares with a nominal value of SR10 each through
the subscription by the Government of the Kingdom of Saudi Arabia represented by the PIF of a total of 62,500,000 shares and the offer of 462,500,000 Shares to the public.
This initial public offering (the "Offering”) of 462,500,000 Shares (collectively "Offer Shares” and each an “Offer Share”), representing in total 50% of the issued capital of the Company. The
price of each Offer Share shall be SR 20 (comprising a nominal value of SR10 and a premium of SR10 per Share). The Council of Ministers Resolution No. 72 dated 3/4/1427H provided that
the price of the Offer Shares should be determined by the mutual agreement of the Minister of Petroleum and Mineral Resources and the Minister of Finance (Chairman of the Board of the
Public Investment Fund), having regard to the financial position of Maaden as at the date of the Offering. On 16/11/1428H, the Minister of Petroleum and Mineral Resources and the Minister
of Finance, chairman of the Board of the Public Investment Fund agreed that the price of the Ma'aden Shares to be offered to the public will be SR 20, comprising a nominal value of SR10
and a premium of SR10.
Subscriptions under the Offering will be restricted to the following tranches:
Tranche (A) the General Organization for Social Insurance (“GOSI”) and the Public Pension Agency (“PPA”). At least 46,250,000 Offer Shares representing 10% of the Offer Shares will be
allocated to GOSI and the PPA, each subscripting to 5%.
Tranche (B) Institutional Investors ("Institutional Tranche"). This Tranche comprises a number of institutional investors (collectively referred to as “Institutional Investors”). The Institutional
Investors shall be selected from among the institutions approached by the Sole Bookrunner after consultation with the Company in accordance with standards previously specified by the
CMA. 124,875,000 Offer Shares representing 27% of the Offer Shares will be allocated to Institutional Investors. This allocation may be decreased down to 23,125,000 Offer Shares
(representing 5% of the Offer Shares), in the event that the number of Offer Shares allocated to Individual Subscribers is increased as described below.
Tranche (C) Individual Subscribers ("Retail Tranche"): includes Saudi individuals and Saudi women divorced or widowed having minor children from a non-Saudi husband who shall have the
right to subscribe in their names for her own benefit (referred to individually as “Individual Subscriber” and collectively as "Individual Subscribers”). 291,375,000 Shares will be allocated to
Individual Subscribers representing 63% of the Offer Shares. This allocation may be increased to 393,125,000 Shares (representing 85% of the Offer Shares).
Pursuant to the Offering, the Company shall issue 462,500,000 new Shares, representing 50% of the issued capital of the Company following completion of the Offering. The Government of
the Kingdom of Saudi Arabia (represented by the Public Investment Fund) shall hold the remaining 50% of the issued capital of the Company. The Company shall receive the subscription
proceeds which shall be used, after the deduction of the subscription costs, to finance the Company’s expansion projects (see “Use of Proceeds” section and “Financing and Costs of
Projects” section). This Offering has been fully underwritten (see “Underwriting” section).
The subscription period will commence on Saturday 02/07/1429H (corresponding to 05/07/2008G) and will remain open for a period of 10 days up to and including Monday 11/07/1429H
(corresponding to 14/07/2008G) (the “Subscription Period”) during which time subscription applications can be made through branches of any of the Receiving Banks identified on page 9.
Each Individual Subscriber must apply for a minimum of 25 Offer Shares and not more than the maximum of 5,000,000. Institutional Investors may subscribe for Offer Shares through the
Sole Bookrunner pursuant to a book building exercise to be conducted prior to the Retail Offering (see "Key Dates for Investors" section). Each Institutional Investor must apply for a
minimum of 500,000 Offer Shares. No maximum limit is applicable to Institutional Investors.
The Offer Shares comprised in the Retail Tranche shall be allocated in two stages. During the first stage at least 25 Shares shall be allocated to each Individual Subscriber. In the event that
there is additional demand from Individual Subscribers, during the second stage each Subscriber for 2,000 shares or less shall receive full allocation of his subscription provided that the total
allocated shares shall not exceed the total of the shares allocated to the Retail Tranche (291,375,000 shares). The remaining Offer Shares (if any) shall be allocated on a pro-rata basis to
the number of Offer Shares applied for by the Subscriber. In the event that there is additional demand from Individual Subscribers, the number of Offer Shares allocated to Individual
Subscribers may be increased by an amount of up to 101,750,000 shares resulting in a total allocation to the Retail Tranche of 393,125,000 shares representing 85% of the total Offer
Shares.
Excess subscription monies (if any) will be refunded to all Applicants (including Individual Subscribers and Institutional Investors) without any charge or withholding by the Receiving Banks.
Notification of the final allotment and refund of subscription monies (if any) will be made no later than on Sunday 17/07/1429H (corresponding to 20/07/2008G) (see “Subscription Terms and
Conditions – Allocation and Refund Policy” section).
The Company has one class of shares. Each Share entitles the holder to one vote and each shareholder has the right to attend and vote at the shareholders' general assembly meeting (the
"General Assembly"). The Offer Shares will be entitled to receive dividends declared by the Company for the financial year ending 31 December 2008 (see "Dividend Policy" section).
Prior to the Offering, there has been no public market for the Shares in Saudi Arabia or elsewhere. An application has been made to the CMA for the admission of the Shares to the Official
List and all relevant approvals pertaining to this Prospectus and all other supporting documents requested by the CMA in addition to all relevant regulatory approvals required to conduct the
Offering have been granted. Trading in the Shares is expected to commence on the Saudi Arabian Stock Exchange (the "Exchange") soon after the final allocation of the Shares (See "Key
Dates for Investors"section). Subsequent to the commencement of trading of the Shares, Saudi nationals, GCC nationals, foreign individuals resident in Saudi Arabia, as well as majority
Saudi or GCC owned companies, banks and Saudi and GCC investment funds will be permitted to trade in the Shares.
The "Important Notice" and "Risk Factors" sections in this Prospectus should be considered carefully prior to making an investment decision in the Offer Shares pursuant to this Prospectus.


                                                                Financial Advisor and Sole Bookrunner


                                                                       Lead Underwriter and Lead Manager



                                                                                           Co-Underwriters




                                                                                           Receiving Banks




jkj




This Prospectus includes information given in compliance with the Listing Rules of the Capital Market Authority of Saudi Arabia (the "CMA"). The Directors, whose names appear on page 4i,
jointly and severally, accept full responsibility for the accuracy of the information contained in this Prospectus and confirm, having made all reasonable enquiries, that to the best of their
knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. The Authority and the Exchange take no responsibility for the contents of
this document, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of
this document.

English Translation of the Official Arabic Prospectus                                                          This Prospectus is dated 20/6/1429H (corresponding to 24/6/2008G)
                             Important Notice
This Prospectus provides full details of information relating to the Company and the
Offer Shares. When applying for Offer Shares, investors will be treated as applying on
the basis of the information contained in the Prospectus, copies of which are available
for collection from the Receiving Banks or by visiting the Company's website,
www.maaden.com.sa, or the Authority's website, www.cma.org.sa.


JPMorgan Chase Bank N.A. - Riyadh Branch ("JPMorgan") has been appointed by the
Company to act as Financial Advisor and Sole Bookrunner in relation to the Offering
described herein.

This Prospectus includes details given in compliance with the Listing Rules of the Authority.
The Directors, whose names appear on page 4, jointly and individually, accept full
responsibility for the accuracy of the information contained in this Prospectus and confirm,
having made all reasonable enquiries, that to the best of their knowledge and belief, there are
no other facts the omission of which would make any statement herein misleading. The CMA
and the Exchange take no responsibility for the contents of this document, give no
assurances as to its accuracy or completeness, and expressly disclaim any liability
whatsoever for any loss arising from, or incurred in reliance upon, any part of this document.

Whilst the Company has made all reasonable enquiries as to the accuracy of the information
contained in this Prospectus as at the date hereof, substantial portions of the market and
industry information herein are derived from external sources. Whilst none of the Company,
its financial advisor or any other advisors have any reason to believe that the market and
industry information is materially inaccurate, such information has not been independently
verified by the Company and no representation is made with respect to the accuracy or
completeness of any of this information. However, the Company does take responsibility for
the accuracy of its own market and industry estimates.

The information contained in this Prospectus as at the date hereof is subject to change,
particularly because the actual financial state of the Company and the value of the Shares
may be adversely affected by future developments in inflation, interest rates, taxation, or other
economic, political and other factors including those described herein under "Risk Factors"
that may negatively affect the Company or any of its investments over which the Company
may have no control. Neither the delivery of this Prospectus nor any oral or written interaction
in relation to the Offer Shares is intended to be, or should be construed as or relied upon in
any way as, a promise or representation as to future earnings, results or events.

This Prospectus is not to be regarded as a recommendation on the part of the Company, the
Directors or any of their respective advisors to participate in the Offering. Moreover,
information provided in this Prospectus is of a general nature and has been prepared without
taking into account any potential investor's investment objectives, financial situation or
particular investment needs. Prior to making an investment decision, each recipient of this
Prospectus is responsible for obtaining independent professional advice in relation to the
Offering and for considering the appropriateness of the information herein, with regard to his
financial objectives, situations and needs.

This Offering is directed at: (1) GOSI and the PPA, (2) Institutional Investors approached by
the Sole Bookrunner, and (3) Saudi individuals and Saudi women divorced or widowed having
minor children from a non-Saudi husband who shall have the right to subscribe in their names
for her own benefit. The distribution of this Prospectus and the sale of the Offer Shares to any
other persons or in any other jurisdiction are expressly prohibited. The Company and the


                                               1
Financial Advisor ask the recipients of this Prospectus to identify these regulatory restrictions
and to abide by them.

Industry, Market and Valuation Data
The institutions that supplied information about the different sectors or provided specific
reports or studies are:

SRK Consulting (UK) Limited (“SRK”) is an international independent institution for consulting
that operates through 31 offices distributed across 6 continents. SRK is an associate
company of the international holding company, formed in 1974, SRK Global Limited which
offers mining project related services ranging from exploration through feasibility, mine
planning, and production to mine closure. The source for all market data contained in “Gold
MER” is SRK, which is the entity that prepared the report. Neither SRK Consulting nor any of
its affiliates, shareholders, directors or their relatives, hold any shareholding or interest of any
kind in the Company. SRK Consulting has given its written consent for the use of the Gold
MER in the manner and format set out in the Prospectus. Such consent has not been
withdrawn.

Behre Dolbear & Company Inc. (“Behre Dolbear”), founded in 1911, specializes in performing
studies and consulting for a wide range of businesses with interests in the minerals industry.
Behre Dolbear prepared the “Phosphate MER” and “Aluminium MER” which has performed
assignments around the world in relation to a broad range of commodities including base and
precious metals, coal and lignite, ferrous metals, uranium, industrial minerals and gemstones.
Neither Behre Dolbear nor any of its affiliates, shareholders, directors or their relatives, hold
any shareholding or interest of any kind in the Company. Behre Dolbear has given its written
consent for the use of the Phosphate MER and Aluminium MER in the manner and format set
out in the Prospectus. Such consent has not been withdrawn.

CRU Strategies Limited (“CRU”), founded in the late 1960s, is an independent business
analysis and consultancy group focused on the mining, metals, power, cables, fertilizer and
chemical sectors. The source for all of the market data contained in “The Phosphate Industry”
and the “The Aluminium Industry” is CRU which employs more than 200 experts in London,
Beijing, Santiago, Sydney and key centers within the United States. Neither CRU nor any of
its affiliates, shareholders, directors or their relatives, hold any shareholding or interest of any
kind in the Company. CRU has given its written consent for the use of its market data and
research in the manner and format set out in the Prospectus. Such consent has not been
withdrawn.

Brook Hunt & Associated Ltd (“Brook Hunt”), since 1975, has operated as a specialized
company analyzing mine, smelter and refinery production costs within the base and precious
metal industries. The source for all of the market data contained in “The Gold Industry” is
Brook Hunt. The information used in the “The Gold Industry” section has been derived from a
Brook Hunt report (gold industry in Saudi Arabia). Neither Brook Hunt nor any of its affiliates,
shareholders, directors or their relatives, hold any shareholding or interest of any kind in the
Company. Brook Hunt has given its written consent for the use of its market data and
research in the manner and format set out in the Prospectus Financial Information. Such
consent has not been withdrawn.

The general overviews of the Gold Industry, the Phosphate Industry and the Aluminium
Industry (set out in the "Industry Overview" section) were prepared in October 2007 and as
such address prevailing market conditions at that time and do not take account of any
changes in market conditions which may have occurred since. The overviews do not contain
any statistical information for 2007 and have not been updated prior to the date of this
Prospectus.




                                                 2
Each of the Gold MER, Phosphate MER and Aluminium MER (set out in the "Mineral Expert
Reports" section) were prepared in or prior to November 2007 and as such address the
matters stated therein at that time or at the times otherwise specified and do not take account
of any changes or developments which may have occurred since. These reports have not
been updated prior to the date of this Prospectus.

Financial Information
The consolidated financial statements of the Company for the years ended 31 December
2007, 2006 and 2005 which have been audited by Deloitte & Touche – Bakr Abulkhair & Co.,
and in each case the notes thereto, which are incorporated elsewhere in this Prospectus,
have been prepared in conformity with the Saudi Organisation for Certified Public
Accountants ("SOCPA") Generally Accepted Accounting Principles. The Company reports its
financial statements in Saudi Arabian Riyals (“SR”).

Forecasts and Forward Looking Statements
Forecasts set forth in this Prospectus have been prepared on the basis of certain stated
assumptions. Future operating conditions may differ from the assumptions used and
consequently no representation or warranty is made with respect to the accuracy or
completeness of any of these forecasts.

Certain statements in this Prospectus constitute "forward-looking-statements". Such
statements can generally be identified by their use of forward-looking words such as "plans",
"intends", "estimates", "believes", "anticipates", "may", "will", "should", "expected", "would be",
"sees" or the negative or other variation of such terms or comparable terminology. These
forward-looking statements reflect the current views of the Company with respect to future
events, and are not a guarantee of future performance. Many factors could cause the actual
results, performance or achievements of the Company to be significantly different from any
future results, performance or achievements that may be expressed or implied by such
forward-looking statements. Some of the risks and factors that could have such an effect are
described in more detail in other sections of this Prospectus (See "Risk Factors" section).
Should any one or more of the risks or uncertainties materialise or any underlying
assumptions relied on prove to be inaccurate or incorrect, actual results may vary materially
from those described in this Prospectus as anticipated, believed, estimated, planned or
expected.

Subject to the requirements of the Listing Rules, the Company must submit a supplementary
prospectus to the Authority if at any time after the Prospectus has been approved by the
Authority and before admission of its shares to the Official List, the Company becomes aware
that: (a) there has been a significant change in essential matters contained in the Prospectus
or any document required by the Listing Rules, or (b) additional significant matters have
become known which would have been required to be included in the Prospectus. Except in
the two aforementioned circumstances, the Company does not intend to update or otherwise
revise any industry or market information or forward-looking statements in this Prospectus,
whether as a result of new information, future events or otherwise. As a result of these and
other risks, uncertainties and assumptions, the forward-looking events and circumstances
discussed in this Prospectus might not occur in the way the Company expects, or at all.
Prospective investors should consider all forward-looking statements in light of these
explanations and should not essentially rely on the forward-looking statements.




                                                3
                                 Corporate Directory

Appointed Board of Directors

   Name                                                                Position                          Nationality              Age
   H.E. Ali Ibrahim AI-Naimi                                           Non-executive Chairman            Saudi                      72
   H.R.H. Prince Faisal Bin Turki Bin Abdulaziz                        Non-executive Director            Saudi                      42
   Dr. Mohammad Suliman AlJasr                                         Non-executive Director            Saudi                      52
   Dr. Abdulrahman A. Al-Jafary                                        Non-executive Director            Saudi                      67
   Dr. Ziad Al-Sudairy                                                 Non-executive Director            Saudi                      53
   Dr. Abdulaziz, S. Al-Jarbou                                         Non-executive Director            Saudi                      60
   Mr. Abdullah A. AI-Zaid                                             Non-executive Director            Saudi                      65
   Dr. Zuhir AbdulHafiz Elnawab                                        Non-executive Director            Saudi                      64
   Dr. Abdallah E. Dabbagh                                             Director and CEO                  Saudi                      62
 Source: Ma’aden
 * Pursuant to the Royal Decree No. 32/A dated 13/02/1418H the currently appointed Board of Directors shall remain until
 the first meeting of the general assembly to take place after the Offering (please review section “Corporate Structure – Board
 of Directors” section).




Shareholders

                                                        Pre-Offering                                     Post-Offering
               Name                    Number of                                          Number of
                                                            %          Value in SR                             %          Value in SR
                                        Shares                                             Shares
   The             Government
   (represented by The Public          400,000,000         100%        4,000,000,000      462,500,000           50%      4,625,000,000
   Investment Fund)
   General Organization for
                                                    -           -                    -     23,125,000          2.5%         231,250,000
   Social Insurance
   Public Pension Agency                            -           -                    -     23,125,000          2.5%         231,250,000
   Public*                                          -           -                    -    416,250,000           45%      4,162,500,000
   Total                               400,000,000         100%        4,000,000,000      925,000,000            100     9,250,000,000


* including the Individual Subscribers and Institutional Investors



Registered Office

The business address of the Company is:




Saudi Arabian Mining Company (Ma’aden)
P.O. Box 68861
Riyadh 11537
Building of the Ministry of Petroleum and Precious Metals
Al-Ma’ather Street


                                                                4
Kingdom of Saudi Arabia
Telephone: +966 1 472 1222
Fax: +966 1 472 1333

Authorised Representative

The Company’s Representative is Mr. Abdullah Al-Fallaj (Vice President – Financial Matters)




Board of Directors’ Secretary
Dr. Bakri Magzoub Mudathir
P.O. Box 68861
Riyadh, 11537
Kingdom of Saudi Arabia
Telephone: +966 1 472 1222
Fax: +966 1 472 1333


Share Registrar



Tadawul
Abraj Attuwenya
700 King Fahad Road
PO Box 60612
Riyadh 11555
Kingdom of Saudi Arabia
Ph: +966-1-2181200
Fax: +966-1-2181220



                                       Advisors
Financial Advisor and Sole Bookrunner
__________________________________________________________________________




JPMorgan Chase Bank N.A. – Riyadh Branch
                             th
Al Faisaliah Office Tower – 8 Floor
P.O. Box 51907
Riyadh, 11553
Kingdom of Saudi Arabia
Telephone: +966 1 273 7300
Fax: +966 1 273 7301

Legal Advisors to the Transaction
__________________________________________________________________________



                                             5
Legal Advisors
Torki A. Al Shubaiki in association with Baker & McKenzie Limited
P.O. Box 4288
Riyadh 11491
Kingdom of Saudi Arabia
Telephone: +96 612 915 561
Fax: +96 612 915 571

Baker & McKenzie LLP
100 New Bridge Street
London EC4V 6JA
United Kingdom
Telephone: +44 207 9191 000
Fax:         +44 207 9191 999


Registered Auditors and Reporting Accountants
__________________________________________________________________________




Deloitte & Touche Bakr Abulkhair & Co.
P.O. Box 213
Riyadh 11411
Kingdom of Saudi Arabia
Tel: +966 1 463 0018
Fax: +966 1 463 0865


Transaction Accounting Advisors
__________________________________________________________________________




KPMG Al Fozan & Al Sadhan
Building No. 7103
Al Ahsa Street, Malaz
P.O. Box 92876, Riyadh 11663
Kingdom of Saudi Arabia
Telephone: +966 1 291 4350
Fax: +966 1 291 4351


Market Studies Advisors And Mineral Experts
__________________________________________________________________________

BEHRE DOLBEAR
Behre Dolbear Company (“Behre Dolbear)
Winchester House
Street 259-269 Old Marylebone Road
London, United Kingdom

                                             6
Telephone: +44 207170 4034
Fax: +44 207170 4035

        SRK Consulting
            Engineers and Scientists

SRK Consulting (UK) Limited (“SRK”)
 th
5 floor, Churchill House
17 Churchill Way
City and County of Cardiff
CF10 2HH, Wales
United Kingdom
Telephone: +44 29 2034 8150
Fax: +44 29 2034 8199



CRU Strategies Limited (“CRU”)
31 Mount Pleasant
London, United Kingdom
Telephone: +4420 72787788
Fax: +4420 7278 0003




Brook Hunt & Associates Ltd
45 High Street, Addlestone
Surrey KT15 1TU
United Kingdom
Telephone: +44 1295 670616
Fax: +44 1932 878 001


NOTE: As of the date of this Prospectus, the foregoing advisors and mineral experts
have given and not withdrawn their written consent to the use of their name and the
publication of their reports or overviews in this Prospectus. Moreover, the foregoing
advisors do not themselves, nor do any of their affiliates, employees or their relatives,
hold any shareholding or interest of any kind in the Company.


Lead Underwriter and Lead Manager
__________________________________________________________________________



Samba For Asset and Investment Management (Samba Capital)
Kingdom Centre
P.O. Box 220007,
Riyadh, 11311
Telephone: +966 1 477 4770
Fax: +966 1 479 9402




                                           7
Legal Advisors to the Underwriters
__________________________________________________________________________




Allen & Overy, LLC
Suite No. 101/202, second floor, Bawaba Village, Building No. 8
Dubai International Financial Centre
P.O. Box 506678, Dubai
United Arab Emirates
Tel: +971 4 426 7100
Fax: +971 4 426 7199

Principal Bankers of the Company
__________________________________________________________________________




Saudi British Bank
P.O. Box 9084,
Riyadh 11413,
Kingdom of Saudi Arabia
Telephone: +966 1 405 0677
Fax: +966 1 405 0660




Samba Financial Group
P.O. Box 833,
Riyadh 11421,
Kingdom of Saudi Arabia
Telephone: +966 1 477 4770
Fax: +966 1 479 9402




The Saudi Investment Bank
P.O. Box 3533,
Riyadh 11481,
Kingdom of Saudi Arabia
Telephone: +966 1 478 6000
Fax: +966 1 477 6781




                                             8
Receiving Banks
__________________________________________________________________________


Riyad Bank
Principal Office, P.O. Box 22622, Riyadh 11416,
Kingdom of Saudi Arabia
Telephone: +966 1 401 3030; Fax: +966 1 404 2618

Arab National Bank
Principal Office, P.O. Box 9802, Riyadh 11423,
Kingdom of Saudi Arabia
Telephone: +966 1 402 9000; Fax: +966 1 402 7747

Banque Saudi Fransi
Principal Office, P.O. Box 56006, Riyadh 11554,
Kingdom of Saudi Arabia
Telephone : +966 1 404 2222 ; Fax: +966 1 404 2311

The Saudi British Bank (SABB)
Principal Office, P.O. Box 9084, Riyadh 11413, Kingdom
of Saudi Arabia
Telephone: +966 1 405 0677; Fax: +966 1 405 0660


The Saudi Investment Bank
Principal Office, P.O. Box 3533, Riyadh 11481, Kingdom
of Saudi Arabia
Telephone: +966 1 478 6000; Fax: 966 1 477 6781



The National Commercial Bank
Principal Office, P.O. Box 3555, Jeddah 21481, Kingdom
of Saudi Arabia
Telephone: +966 2 649 3333; Fax: +966 2 643 7426

Bank Al Bilad
Principal Office, P.O. Box 140, Riyadh 11411, Kingdom
of Saudi Arabia
Telephone: +966 1 479 8888; Fax: +966 1 479 8898

Bank Al Jazira
Principal Office, P.O. Box 6277, Jeddah 21442, Kingdom
of Saudi Arabia
Telephone: +966 2 651 8070; Fax: +966 2 653 2478

Saudi Hollandi Bank
Principal Office, P.O. Box 1467, Riyadh 11431, Kingdom
of Saudi Arabia
Telephone: +966 1 401 0288; Fax: +966 1 403 1104

Al Rajhi Bank
Principal Office, P.O. Box 28, Riyadh 11411, Kingdom of
Saudi Arabia
Telephone: +966 1 462 9922; Fax: +966 1 462 4311


                                             9
Samba Financial Group
Principal Office, P.O. Box 833, Riyadh 11421, Kingdom
of Saudi Arabia
Telephone: +966 1 477 0477; Fax: +966 1 479 9402




                                           10
                Summary of The Offering
Company                               Saudi Arabian Mining Company (Ma'aden)

Capital                               SR9,250,000,000

Total number of issued Shares pre-    462,500,000 shares
Offering

Total number of issued Shares post-   925,000,000 shares
Offering

The Offering                          This initial public offering (the "Offering”) will comprise
                                      an offer of 462,500,000 shares ("Offer Shares”)
                                      representing 50% of the Company's issued capital
                                      following completion of the Offering. The price per share
                                      is SR20 (comprising a nominal value of SR10 and a
                                      premium of SR10).

                                      Subscriptions under the Offering will be restricted to the
                                      following tranches:
                                      Tranche (A) the General Organization for Social
                                      Insurance (“GOSI”) and the Public Pension Agency
                                      (“PPA”). At least 46,250,000 Offer Shares representing
                                      10% the Offer Shares will be allocated to GOSI and the
                                      PPA, each subscribing to 5%. .

                                      Tranche (B) Institutional Investors ("Institutional
                                      Tranche"). This Tranche comprises a number of
                                      institutional investors (collectively referred to as
                                      “Institutional Investors”). The Institutional Investors shall
                                      be selected from among the institutions approached by
                                      the Sole Bookrunner after consultation with the
                                      Company in accordance with standards previously
                                      specified by the CMA. 124,875,000 Offer Shares
                                      representing 27% of the Offer Shares will be allocated to
                                      Institutional Investors. This allocation may be decreased
                                      down to 23,125,000 Offer Shares (representing 5% of
                                      the Offer Shares), which would result in an increase in
                                      the number of Offer Shares allocated to Individual
                                      Subscribers.

                                      Tranche (C) Individual Subscribers ("Retail Tranche"):
                                      includes Saudi individuals and Saudi women divorced or
                                      widowed having minor children from a non-Saudi
                                      husband who shall have the right to subscribe in their
                                      names for her own benefit (referred to individually as an
                                      “Individual Subscriber” and collectively as "Individual
                                      Subscribers”). 291,375,000 Shares will be allocated to
                                      Individual Subscribers representing 63% of the Offer
                                      Shares. This allocation may be increased to
                                      393,125,000 Shares (representing 85% of the Offer
                                      Shares).

Offer price                           SR20 per Share


                                          11
Par value per Share                         SR10

Number of Offer Shares                      462,500,000 Shares

Percentage of issued Shares                 The Offer Shares will represent 50% of the issued
                                            capital of the Company following finalization of the
                                            Offering

Total value of Offer Shares                 SR9,250,000,000

Total number of Shares for which each       Each of GOSI and the PPA have committed to
of GOSI and PPA are committed to            participate in the Offering for an amount equal to the
subscribe                                   percent of Offer Shares allocated to them being
                                            46,250,000 shares, representing 10% of the Offer
                                            Shares.

Total number of Underwritten Offer          416,250,000 Shares, representing 90% of the Offer
Shares                                      Shares

Minimum subscription for Institutional      500,000 Offer Shares
Investors

Minimum subscription amount for             SR 10,000,000
Institutional Investors

Maximum number of Offer Shares to           No maximum
be applied for by Institutional Investors

Minimum subscription for Individual         25 Offer Shares
Subscribers

Minimum subscription amount for             SR500
Individual Subscribers

Maximum number of Offer Shares to           5,000,000 Shares
be applied for by Individual Subscribers

Maximum subscription amount for             SR100,000,000
Individual Subscribers
                                            The Offer Shares comprised in the Retail Tranche shall
Allocation of Offer Shares in the Retail
                                            be allocated in two stages. During the first stage at least
Tranche
                                            25 Shares shall be allocated to each Individual
                                            Subscriber. In the event that there is additional demand
                                            from Individual Subscribers, during the second stage
                                            each Subscriber for 2000 shares or less shall receive
                                            full allocation of his subscription provided that the total
                                            allocated shares shall not exceed the total number of
                                            Shares allocated to the Retail Tranche ( 291,375,000
                                            shares). The remaining Offer Shares (if any) shall be
                                            allocated on a basis pro-rata to the number of Offer
                                            Shares applied for by the Subscriber.

                                            In the event that there is additional demand from
                                            Individual Subscribers the number of Offer Shares
                                            allocated to Individual Subscribers may be increased by
                                            an amount of up to 101,750,000 Shares resulting in a
                                            total allocation to the Retail Tranche of 393,125,000

                                               12
                                       Shares representing 85% of the total Offer Shares.
Use of the net Subscription Proceeds   Net subscription proceeds (after deduction of the
                                       estimated expenses of the Offering) of SR
                                       9,175,000,000 will be paid to the Company and used for
                                       its expansion projects. The Government represented by
                                       the Public Investment Fund shall not receive any portion
                                       from the subscription proceeds (see “Use of Proceeds”
                                       section).

Dividends                              The Offer Shares will be entitled to receive dividends for
                                       the year 2008 if declared by the Company following the
                                       Subscription Period and for subsequent fiscal years.
                                       (see “Dividend Record and Policy” section).

Voting Rights                          The Company has only one class of Shares and no
                                       Shareholder has any preferential voting rights. Each
                                       Share entitles the holder to one vote and each
                                       Shareholder has the right to attend and vote at the
                                       General Assembly Meeting (see “Voting Rights”
                                       section).

Share Restrictions                     The Government, represented by the Public Investment
                                       Fund, will not be permitted to dispose of any of its
                                       Shares during the period of six months from the date on
                                       which trading of the Offer Shares commences on the
                                       Exchange (the "Restriction Period"). After the Restriction
                                       Period has elapsed, the Government, represented by
                                       the Public Investment Fund, may dispose of its Shares
                                       with the prior approval of the CMA.

Listing and Trading of the Shares      Prior to this Offering, there has been no public market
                                       for the Shares in Saudi Arabia or elsewhere. An
                                       application has been made by the Company to the CMA
                                       for the admission of the Shares to the Official List and all
                                       relevant approvals pertaining to this Prospectus and all
                                       other supporting documents requested by the CMA in
                                       addition to all relevant regulatory approvals required to
                                       conduct the Offering have been granted. Trading is
                                       expected to commence on the Exchange soon after the
                                       final allocation of the Shares. (See “Key Dates for
                                       Investors” section.)

Risk Factors                           There are certain risks relating to an investment in this
                                       Offering. These risks are described in the “Risk Factors”
                                       section of this Prospectus, and should be considered
                                       carefully prior to making a decision to invest in the Offer
                                       Shares.

Costs                                  The Company will be responsible for all expenses and
                                       costs associated with the Offer, which are estimated at
                                       SR75,000,000. This figure includes the fees of the
                                       Financial Advisor, Legal Adviser to the Company and
                                       Reporting Accountants, in addition to Receiving Banks,
                                       Manager and Underwriter expenses, marketing
                                       expenses, printing and distribution expenses and other
                                       related expenses.



                                           13
                      Key Dates for Investors
Offering Timetable                                         Date
Subscription Period .................................................The Subscription will commence on
                                                                     Saturday 02/07/1429H (corresponding to
                                                                     05/07/2008G), and it will remain open for a
                                                                     period of 10 days up to and including the
                                                                     last day of closing the subscription on
                                                                     Monday 11/07/1429H (corresponding to
                                                                     14/07/2008G).
Start of Subscription Period………………………….Saturday 02/07/1429H (corresponding                                    to
                                       05/07/2008G)
Last date for submission of application form
and subscription monies ..........................................Monday 11/07/14/29H (corresponding to
                                                                  14/07/2008G)
Allocation and Refund Date………………………… Allocation of the Offer Shares is expected
                                     no later than Sunday 17/07/1429H
                                     (corresponding to 20/07/2008G).
Excess Subscription monies................................ ...Excess subscription monies will be
                                                              refunded to Applicants without any
                                                              charges or withholdings by the Receiving
                                                              Banks on Sunday 17/07/1429H
                                                              (corresponding to 20/07/2008G). (See
                                                              “Subscription Terms and Conditions –
                                                              Allocation and Refunds" section).

Start date of trading of Offer Shares........................Upon completion of all relevant procedures,




Note: The above timetable and dates therein are indicative. Actual dates will be
communicated through national press announcements in Saudi Arabia and on the
CMA’s and Tadawul’s websites.




                                                      14
                            How to Subscribe

Institutional Tranche
Subscription in the Institutional Tranche concerning the Offered Shares is limited to the
institutions approached by the Sole Bookrunner after consultation with the Company in
accordance with standards previously specified by the Authority. Subscription forms will be
available from the Sole Bookrunner.

Retail Tranche
The Retail Tranche is directed at and may be accepted by individuals having Saudi Arabian
nationality only. A Saudi woman who is divorced or widowed and who has minor children from
a non-Saudi husband may subscribe for Offer Shares in the name(s) of her children (they will
be referred to as "Individual Subscriber" and, collectively, as "Individual Subscribers").

Subscription Application Forms will be made available during the Subscription Period at the
branches of the Receiving Banks and on the websites of the Receiving Banks. Subscription
can be also effected through the internet, phone banking, or automated teller machines
through the Receiving Banks that offer one or all of those facilities to those Applicants who
have previously subscribed to recent offerings, subject to the following conditions:

(1) The Applicant has an account at such Receiving Bank providing such services, and

(2) There are no changes to the Applicant's information or details since the Applicant's
    subscription in a recent offering.

The Subscription Application Forms must be completed in accordance with the instructions
described in the "Subscription Terms and Conditions" section of this Prospectus. Each
Applicant must agree to all relevant sections of the Subscription Application Form. The
Company reserves the right to reject any Subscription Application Form, in whole or in part, in
the event any of the subscription terms and conditions are not met. Amendments to and
withdrawal of that Subscription Application Form shall not be permitted once the Subscription
Application Form has been submitted. Furthermore, the Subscription Application Form shall,
upon submission, represent a binding agreement between the Applicant and the Company
(See "Subscription Terms and Conditions" section).




                                              15
             Summary of Key Information
This summary of key information aims to give an overview of the information contained in this
Prospectus. As it is a summary, it does not contain all of the information that may be
important to interested investors. Recipients of this Prospectus should read the whole
Prospectus (including “Risk Factors”) before making a decision as to whether or not to invest
in the Company. Capitalized and abbreviated terms have the meanings ascribed to such
terms in the “Definitions and Abbreviations” section, the “Glossary of Terms”, and elsewhere
in this Prospectus.

Overview
Ma'aden was formed as a Saudi joint stock company, pursuant to Royal Decree No. M/17
dated 14/11/1417H (corresponding to 23/3/1997G) and Council of Ministers Resolution No.
179 dated 8/11/1417H (corresponding to 17/03/1997G), with Commercial Registration
Number 1010164391 dated 10/11/1421H (corresponding to 4/2/2001G) for the purpose of
facilitating the exploration and development of Saudi Arabia’s mineral resources. Ma'aden's
objective is to explore and develop Saudi Arabia's mineral resources and become a world
class international mineral resource company.

Ma’aden’s Vision
Ma’aden’s vision is to build a world class international mining company.

Ma’aden’s Mission
Ma’aden’s mission is to become a publicly owned world class international mining company
that generates profits while at the same time protecting matters relating to human resources,
health, safety, as well as environmental and social matters.

The Company’s Current Activities - Gold
To date, Ma'aden's focus has been its gold business. Ma'aden's gold assets include five
operating mines, the last of which commenced production in January 2008. Ma'aden is also
currently carrying out a significant exploration and appraisal programme. The Company's total
gold reserves as at 1 July 2007 were 21.66Mt grading at 1.9g/t of gold according to SRK in its
MER (see "Gold Mineral Expert's Report") and gold production from its four mines operating
throughout 2006 was approximately 167,000 ounces and decreased to approximately
142,763 ounces for the period ended 31 December 2007. Ma'aden also produced small
saleable quantities of copper and zinc concentrate as by-products of its gold mining
operations. In November 2007 the Company settled all its forward gold sale contracts which
comprised forward contracts for an amount of 256,514 ounces due for settlement in 2012 ((for
further information see "Current Company Business (gold operations) - Settlement of Hedge
Contracts")).

The Company was granted an exploration licence for the Ad Duwayhi prospect in 1998 and
extensive exploration activities were carried out under the licence which resulted in the
delineation of a significant gold resource at Ad Duwayhi by the end of 2003.

During the previous years, Ma’aden was able, through exploration programmes, to delineate
six advanced exploration projects, including: Ad Duwayhi, Zalim, As Suk, Ar Rjum,
Mansourah and Masarrah. Preliminary resource estimates completed to date indicate
approximately 7.93 million ounces of gold resource in the region. Ma'aden intends to devote
significant capital expenditure and other resources in the next few years to undertake the


                                              16
necessary technical and feasibility studies and other actions required to assess the economic
and technical feasibility of exploiting the CAGR resources and to achieve its strategic
objective of significantly increasing its gold production.

The Company also expects to be able to achieve further significant growth in its gold
business. In addition, successful development of the Phosphate and Aluminium Projects will
transform the Company from a gold producer into a world class, international mineral
resource company.

The Company’s Future Projects
Ma'aden has taken significant steps towards achieving its vision and mission by launching the
development of a phosphate mine and fertiliser production facility for the production of
Diammonium Phosphate ("DAP") and excess saleable quantities of ammonia and phosphoric
acid (the "Phosphate Project") and a bauxite mine, alumina refinery and aluminium smelter for
the production of aluminium ingot (the "Aluminium Project").

All of the Company’s activities occur within the Kingdom of Saudi Arabia. Except for the new
projects highlighted in this Prospectus, the Company does not intend to materially change the
nature of its operations.

The Phosphate Project
The Phosphate Project aims to exploit an extensive phosphate deposit at AI Jalamid in
northern Saudi Arabia and utilise local natural gas and sulphur to manufacture DAP, which is
the most widely used phosphate based fertiliser in the world. DAP produced by the
Phosphate Project will be sold primarily into international markets after the demand in the
local market has been satisfied. It is anticipated that the Phosphate Project will also produce
excess ammonia and phosphoric acid not required in the production process which will also
be sold domestically or exported.

The Phosphate Project involves the development, design, construction and subsequent
operation of two integrated sites:

     •   The mining facilities at Al Jalamid in northern Saudi Arabia which will comprise a
         phosphate mine and a beneficiation plant; and

     •   The fertiliser complex facilities at Ras Az Zawr on the eastern coast of the Arabian
         Gulf approximately 90km north of Jubail with a fertiliser production facility comprising
         DAP, ammonia, sulphuric acid and phosphoric acid processing plants;

with each site supported by appropriate industrial and social infrastructure.

The mining and beneficiation facilities at Al Jalamid will produce an estimated 5.02 Mtpy of
phosphate concentrate, supported by phosphate reserves sufficient to sustain the project
beyond 20 years (for more information please refer to the MER). It is estimated that the
project will produce approximately 2.92 Mtpy of granular DAP with first production targeted to
commence in the second half of 2010.

On 15 September 2007, Ma'aden entered into a joint venture agreement with SABIC pursuant
to which SABIC acquired a 30 % interest in PhosCo, the joint venture company established to
operate the Phosphate Project. Pursuant to the terms of the Phosphate JVA, Ma'aden and
SABIC will enter into various agreements with PhosCo for the marketing by SABIC of the
majority of the DAP and excess ammonia produced by PhosCo to certain key markets
including India, Pakistan, Taiwan and South Korea, after the demand in the local market has
been satisfied. It is anticipated that SABIC will take all excess phosphoric acid produced by
the Phosphate Project for use in its Saudi Arabian operations in the earlier years.

                                               17
The total cost of the Phosphate Project is estimated at SR20.85 billion (US$5.56 billion )
taking account of projected annual inflation and estimated financing costs and based on
projected capital costs of SR17.03 billion (US$4.54 billion ). Over 70% of total capital costs
have been or will be contracted at a fixed rate under signed Lump Sum Turn-Key (“LSTK”)
contracts for the engineering, procurement and construction ("EPC") of a beneficiation plant,
DAP, ammonia, sulphuric acid and phosphoric acid processing plants and certain supporting
infrastructure.

Thirty percent of total project costs of the Phosphate Project will be funded by equity
contributions from Ma'aden and SABIC in proportion to their interests in the project. The
remaining 70% project costs will be funded by limited recourse debt financing. A mandate
letter appointing arrangers and underwriters for the required debt financing for the Phosphate
Project was executed in December 2007 and formal finance documentation was executed in
June 2008.

The Aluminium Project
The Aluminium Project envisages the exploitation of Ma'aden's bauxite resources at Az
Zabirah in the north central region of Saudi Arabia to produce aluminium for domestic
consumption as well as export. The Aluminium Project involves the development, design,
construction and subsequent operation of two integrated sites:

     •   Mining facilities at Az Zabirah, consisting of a bauxite mine and ore handling
         facilities; and

     •   Aluminium complex facilities at Ras Az Zawr, consisting of an alumina refinery, an
         aluminium smelter and a dedicated power plant;

with each site supported by appropriate industrial and social infrastructure.

Capacities reviewed in historical independent technical studies and by Behre Dolbear in its
Aluminium MER previously indicated that upon completion of the Aluminium Project
approximately 3.5 Mtpy of bauxite would be mined from the Az Zabirah Deposit to produce
approximately 1.4 Mtpy of alumina from the refinery and approximately 0.65 Mtpy of
aluminium from the smelter. Further feasibility studies focusing on the aluminium smelter and
alumina refinery ("FEL 2 Studies") completed earlier this year confirmed the economic
feasibility of increasing these capacities to approximately 4.0 Mtpy of bauxite, 1.8 Mtpy of
alumina and 0.74 Mtpy of aluminium and the Company intends to proceed with the
development of the Aluminium Project on this basis. Excess alumina produced by the refinery
that is not used to expand the smelter's aluminium production is anticipated to be sold to
international markets, after the demand in the local market has been satisfied, through
Ma'aden's proposed marketing arrangements with Rio Tinto Alcan.

In April 2007, Ma'aden entered into a HoA with Rio Tinto Alcan to conclude a joint venture
agreement pursuant to which Rio Tinto Alcan will acquire a 49 % interest in AlumCo the joint
venture company which will operate the Aluminium Project. Commercial production of
aluminium is planned to commence by the end of 2012. The Heads of Agreement envisages
that each of Ma'aden and Rio Tinto Alcan will enter into offtake agreements with AlumCo to
purchase the aluminium produced in proportion to their respective interests in, the project.
The Company anticipates entering into a formal joint venture agreement with Rio Tinto Alcan
in the third quarter of 2008.

Following completion of the FEL 2 Studies and the revision of the estimated production
capacities for the refinery and smelter to approximately 1.8 Mtpy of alumina and 0.74 Mtpy of
aluminium respectively and to the power plant to approximately 2100MW, cost estimates
have been adjusted upwards. It is now estimated that the total cost of the Aluminium Project
is SR39.56 billion (US$10.55 billion) taking into account working capital and contingency


                                               18
costs but not projected annual inflation or estimated financing costs during the construction
phase. This estimate is based on projected capital costs of approximately SR35.04 billion
(US$9.34billion). The increase in cost estimate is attributable to several factors including the
increased capacities of each of the mine, refinery, smelter and power plant, the more
advanced stage of development of the project, increased construction costs due to
inflationary pressures in the region, increased import costs resulting from exchange rate
changes and human capital costs because of skilled labour shortages. The Smelter Opex
estimate, based on an annual production rate of 740,000 tonnes of metal, is estimated at
$1,281 per tonne (vs. $1,056 per tonne based on the previous plan of 650,000 tonnes in Q3
2007 prices).

 It is currently expected that 30% to 40 % of the total costs will be funded through equity
contributions from Ma'aden and Rio Tinto Alcan with the balance to be funded through limited
recourse debt. It is possible that Ma'aden and Rio Tinto Alcan may provide this contribution
by way of a subordinated shareholder loan. Ma’aden may also resort to other sources of
financing.

Common Infrastructure
The successful development and operation of the Phosphate and Aluminium Projects will be
supported by a railway and port facility, as follows:

    •   The 1,486km railway will connect the phosphate and bauxite mine sites, located at Al
        Jalamid and Az Zabirah respectively, to Ras Az Zawr and Jubail. Ma'aden
        understands that the Railway will be constructed by the Public Investment Fund
        ("PIF").

    •   A deep water port facility capable of landing ships with up to 70,000 DWT of carrying
        capacity will be developed at Ras Az Zawr by the Saudi Port Authority. The port will
        primarily be used for the import of raw materials and the export shipment of DAP,
        excess ammonia and aluminium produced from the facilities at Ras Az Zawr.

It is envisaged that the port and railway will be completed by the end of 2009 and the end of
2010 respectively to service the Phosphate and Aluminium Projects once completed.

The Phosphate and Aluminium Projects will be supported by certain key common
infrastructure to be developed by InfraCo, a company currently under formation which will be
a wholly owned subsidiary of Ma'aden, including serviced land, roads, drainage, lighting and a
power grid connection as well as accommodation. The total cost of the key common
infrastructure is estimated at SR862.5 million (US$230 million).

Other Projects
Ma'aden plans to produce caustic soda in joint venture with Sahara Petrochemical Company
with a production capacity of 0.25 Mtpy of caustic soda and 0.30 Mtpy of ethylene di-chloride.
It is anticipated that the caustic soda production will be supplied to the Aluminium refinery
owned by Ma’aden pursuant to a marketing agreement between Ma’aden and Sahara
Petrochemical Company.

Ma’aden has signed a Memorandum of Understanding with Sahara Petrochemical Company
dated 10 September 2006 in relation to the construction of the plant and it is anticipated that a
joint venture agreement will soon be signed pursuant to which a company will be formed and
owned 50% by Ma’aden and 50% by Sahara Petrochemical Company. It is proposed that the
joint venture will last for 25 years. It is anticipated that commercial production of caustic soda
together with ethylene di-chloride will commence in 2011.




                                               19
Ma'aden also anticipates commencing commercial production of kaolin and low grade bauxite
by the end of the year and high value magnesium oxide products in 2009. The total cost of
these three projects is estimated at SR1.75 billion (US$0.47 billion) taking account of
projected annual inflation and estimated financing costs where relevant.

Location of Ma’aden’s Mines
The list below summarises Ma'aden's proposed phosphate and bauxite mines, downstream
facilities at Ras Az Zawr and licences for its gold mines and exploration properties:

1) The Phosphate Project

    a) Al Jalamid Location

    b) Ras Az Zawr Location

2) The Aluminium Project

    a) Az Zabirah Location

    b) Ras Az Zawr Location

3) The Gold Operation

    a) Mining Licences

        •   Mahd Ad Dahab

        •   Sukhaybarat

        •   Bulghah

        •   Al Hagar

        •   Al Amar

    b) Central Arabian Gold Region (CAGR) Exploration Licences

        •   Ad Duwayhi (Ad Duwayhi licence)

        •   Manasourah (Al Uruq licence)

        •   Massarah (Ash Shakhtaliyah licence)

        •   Ar Rjum (Ash Shakhtaliyah licence)

        •   As Suk (Ash Shakhtaliyah licence)

        •   Zalim

        •   Al Hajar (located in the south west of the Kingdom)

    c) Northern Shield Region (Sukhaybarat - Bulghah Area) Exploration Licences

        •   Humaymah (Miskah Licence)



                                            20
         •   Shabah

         •   Al Jardawiyah

         •   An Najadi / Hablah South / Hablah North, Nugrah Licence and Mawan

         •   Tawan

         •   As Siham

Strengths
Ma’aden's key strengths may be described as follows:

Strong growth opportunities

Ma’aden has begun the implementation of major scale projects for the production of
phosphate fertilisers and for aluminium in Saudi Arabia. Upon completion of the Phosphate
and Aluminium Projects Ma’aden will become a major supplier of phosphate fertilizers and
primary aluminium ingot in global markets. Ma’aden also has valuable opportunities to expand
its gold producing projects, as described in the Gold MER.

Favourable markets for core products

It is anticipated that demand for Ma'aden's core products (gold, DAP/MAP and aluminium) will
continue to grow driven by increases in population growth and rising standards of living as
well as rapid industrialisation in the growing economies of India and China. Ma’aden believes
that such increases in demand will allow new producers, including Ma’aden, to enter the
market on a competitive basis.

Diversified business

Ma’aden will be operating a diversified minerals business encompassing gold, phosphate
fertilizers, primary aluminium, and industrial minerals. The markets for these products have
individual price cycles and this will help mitigate the effects of commodity price fluctuations
impacting prices of Ma'aden's core products and movements in the prices of key raw
materials on which it depends.

Long life phosphate and bauxite resources

Ma'aden's future growth is further underpinned by its known reserves and resources of
phosphate and bauxite in Saudi Arabia. In its Phosphate MER, Behre Dolbear measured the
phosphate resources at Al Jalamid are estimated to be 534 Mt in accordance with the Gruk
System (see “Expert Report” Section). It is proposed to mine 223 Mt for the Phosphate
Project over its initial planned life of operations, leaving the balance available to extend the
project life or to enable increases in production capacity during the current project life.
Ma'aden's bauxite ore resources in the south zone of the Az Zabirah deposit are estimated to
be 240 Mt at 50% available alumina and 8% sulphur dioxide and are expected to be sufficient
to supply AlumCo's proposed alumina refinery for a period in excess of 30 years based on
initial design capacity.

Low cost minerals producer

Ma'aden's gold business is, and its phosphate and aluminium businesses will be, fully
vertically integrated from mineral ore to production of primary metal (in the case of aluminium
and gold) and from mined ore to final consumer products (in the case of phosphate fertilisers).


                                              21
The vertical integration of Ma'aden's businesses offers substantial economies of scale
enabling it to minimise the involvement of third parties and thereby more effectively control
costs.

Modern cost effective technology

Both the Phosphate Project and the Aluminium Project will benefit from modern processing
and mining facilities and techniques employing tried and tested methodologies under the
guidance of Ma'aden's joint venture partners, SABIC and Rio Tinto Alcan. Ma’aden's technical
plans seek to take advantage of vertical integration and scale economies to reduce cost and
create synergies such as the use of steam generated in the production of sulphuric acid to fire
the phosphate power plant to be located.

Significant Government support

Ma’aden’ projects enjoy special Government support and backing that includes the provision
of key support infrastructure such as the Railway and Port, the industrial and residential land
at the Ras Az Zawr site, the allocation of fuel for the power station and natural gas for the
ammonia plant and a significant subsidy for the connection of the power supply at Ras as
Zawr to the public electricity network.

Ma’aden’s Strong partners

The participation of SABIC in the Phosphate Project and Rio Tinto Alcan or any other
strategic partner in the Aluminium Project significantly diminishes Ma'aden's project execution
and operating risk.

Synergies between divisions

The shared location of processing facilities for the Phosphate and Aluminium Projects at Ras
Az Zawr and the use of the Railway, Port and other shared infrastructure at this site create
significant synergies between Ma'aden's business divisions.

Experienced management team

Ma’aden's management is experienced in developing, executing and operating natural
resource projects within Saudi Arabia. Ma’aden has recruited experienced senior executives
and technical experts to drive the projects forward and to train its future project workforces
and has engaged international consultants to assist it in planning for its future strategic
growth.

Strategy
Ma’aden's objective is to become a world class diversified mining and minerals group, and to
enhance overall value for its shareholders.

Ma’aden's main strategic driver is to successfully exploit the large phosphate and bauxite
deposits over which it has mining rights through the production of DAP and primary aluminium
ingot. It also plans to achieve significant growth in its gold mining business by exploiting
known gold resources and developing new prospects primarily within the Central Arabian
Gold Region over which it has secured mining or exploration rights.

Ma’aden intends to pursue this strategy by:

    •    Maintaining the momentum it has already achieved with respect to the
         implementation of the Phosphate and Aluminium Projects and ensuring the
         completion of the construction of Ma'aden's mining and production facilities and the


                                              22
    associated infrastructure for the Phosphate and Aluminium Projects within existing
    budgeted costings and in accordance with project deadlines.

•   Using its strong balance sheet following the initial public offering to raise project
    finance for the Phosphate and Aluminium Projects.

•   Co-operating closely with its major shareholder, the Government, represented by the
    Public Investment Fund, to ensure the timely completion of the Railway and the Port
    as the key supporting infrastructure for the successful realisation of the Phosphate
    and Aluminium Projects.

•   Successfully developing its proposed Chlor Alkali Project to produce caustic soda as
    an essential feedstock to be used by the Aluminium Project's alumina refinery to
    refine bauxite to produce alumina (see "The Company's Business - Other Projects").

•   Developing its gold resources in the Central Arabian Gold Region and in the Arabian
    Shield Region.

•   Developing its industrial minerals resources including magnesium oxide products.

•   Taking advantage of its ability to increase production capacity in its future phosphate
    and aluminium operations at a relatively small incremental cost.

•   Increasing appropriate know-how and technical expertise with respect to its project
    management, operations, processing facilities and marketing.

•   Maximising the benefits achieved through the economies of scale available to the
    Company as a result of the availability of key raw material inputs such as energy,
    sulphur, natural gas, and caustic soda.

•   Continuing to build up Ma'aden's human resources at all levels so as to meet the
    needs of running a rapidly expanding diversified mining business.

•   Opportunistically considering strategic acquisitions and concluding joint ventures that
    will enhance Ma'aden's growth prospects and shareholder value.

•   Implementing strong corporate governance as a company listed on Tadawul in order
    to safeguard the interests of all its shareholders.

•   Maintaining its emphasis on corporate social responsibility by implementing detailed
    policies dealing with health and safety and environmental issues.




                                         23
           Summary Financial Information
The selected financial information presented below should be read together with the audited
results as at and for the years ended 31 December 2007, 2006 and 2005, including in each
case, the notes thereto, each of which are included elsewhere in this Prospectus.

Table 1: Summary of Financial Information

                                                         Year Ended December 31
 SR '000                                             2007          2006         2005
 Consolidated income statement
 Sales                                                244,130     349,745       277,964
 Cost of sales                                      (167,407)    (187,733)     (150,764)
 Gross Margin                                          76,723     162,012       127,200
 General and administrative expenses                 (96,304)     (58,359)      (47,167)
 Severance fee                                         (4,281)    (23,101)      (17,005)
 Exploration expenses                                (25,500)     (31,187)      (28,039)
 Technical services expenses                           (4,879)     (5,020)       (3,843)
 Other income/ (expense)- net                          27,695             43      3,258
 Profit/ (Loss) before investment income             (26,546)      44,388        34,404
 Investment income                                    225,636     273,591       181,263
 Net income prior to unusual provisions               199,090     317,979       215,667
 Unusual provisions                                 (446,293)              -           -
 Net income                                         (247,203)     317,979       215,667
 Consolidated cash flow statement
 Profit before investment income                     (26,546)      44,388        34,404
 Adjustments for non-cash items                        52,258      62,016        51,597
 Unusual provisions                                 (446,293)              -           -
 Net change in working capital                      (224,334)      55,934        68,302
 End of service indemnities paid                       (2,121)     (3,305)       (2,089)
 Cash flow from operating activities                (647,035)     159,018       152,149
 Long-term investments                                       -     65,000       460,000
 Interest income received                             292,573     251,640       141,615
 Long-term receivable                                   2,452     (16,337)      (35,874)
 Additions to pre-operating expenses and
                                                    (173,726)    (298,882)     (195,105)
 deferred charges
 Additions to property, plant and equipments        (142,317)     (95,887)      (94,806)
 Proceeds from investment in company under
                                                   (1,383,663)             -           -
 formation
 Cash flow from/used in investing activities       (1,404,681)    (94,465)      275,830
 Net increase/ (decrease) in cash, cash
                                                   (2,051,716)     64,567       428,044
 equivalents and short term investments

 Cash, cash equivalents and short term
                                                    4,746,653    4,682,086     4,254,042
 investments at the beginning of the year/period
 Cash, cash equivalents and short term
                                                    2,694,937    4,746,653     4,682,086
 investments at end of the year/period


 Consolidated balance sheet
 Current assets                                     3,155,902    4,990,300     4,915,697
 Non-current assets                                 2,692,491    1,047,349      743,748


                                                       24
Total assets                   5,848,393   6,037,649   5,659,445
Current liabilities             252,537     192,615     148,596
Non-current liabilities         111,712     113,686      97,480
Shareholders' equity           5,484,144   5,731,348   5,413,369
Total liabilities and equity   5,848,393   6,037,649   5,659,445




                                 25
                                                      Contents
Summary of The Offering ..................................................................................................... 11
Key Dates for Investors ........................................................................................................ 14
How to Subscribe .................................................................................................................. 15
Summary of Key Information ............................................................................................... 16
Summary Financial Information........................................................................................... 24
Industry Overview ................................................................................................................. 44
The Company's Business ..................................................................................................... 57
Aluminium Project ................................................................................................................. 90
Mining and Environmental Regulatory Framework ......................................................... 105
Corporate Structure ............................................................................................................ 112
Related Party Transactions ................................................................................................ 131
Accountants' Report ........................................................................................................... 132
Management's Discussion & Analysis of Financial Condition & Results of Operations134
Dividend Policy ....................................................................................................................... 152
Use of Proceeds................................................................................................................... 153
Underwriting......................................................................................................................... 157
Description of Shares ......................................................................................................... 159
Summary of Bylaws ............................................................................................................ 162
Subscription Terms and Conditions.................................................................................. 168
Legal Information................................................................................................................. 174
Summary of Material Agreements ..................................................................................... 183
Documents Available for Inspection ................................................................................. 197
Mineral Experts Reports ..................................................................................................... 198
Gold Mineral Expert's Report ............................................................................................. 199
Phosphate Mineral Expert's Report ................................................................................... 223
Aluminium Mineral Expert's Report................................................................................... 249
Glossary of Technical Terms ............................................................................................. 284



Annexes
Annex A          Audited consolidated financial statements for the years ended 31 December
                 2006, 2005 and 2004




                                                                  26
Definitions and Abbreviations
Term                             Definition

Rio Tinto Alcan                  Rio Tinto Alcan, Inc., a subsidiary of the Rio Tinto
                                 group formally Alcan, Inc,

AlumCo                           The joint venture company to be established for the
                                 purpose of operating the Aluminium Project

Aluminium MER                    The report entitled “Mineral Independent Experts
                                 Report for the Aluminium Project” prepared by
                                 Behre Dolbear and included in this Prospectus

Aluminium Project                The Aluminium Project to be undertaken by
                                 AlumCo as further described in this Prospectus

Applicant                        An Individual Subscriber or an Institutional Investor

Auditors                         Deloitte & Touche Bakr Abulkhair & Co

Authority                        The Capital Market Authority

Az Zabirah Deposit               The Bauxite deposit located at Az Zabirah as
                                 further described in this Prospectus

Bylaws                           The bylaws of the Company

Board of Directors (The Board)   The Board of Directors of the Company

CAGR Prospects                   The Ad Duwayhi, Zalim, As Suk, Ar Rjum,
                                 Mansourah and Masarrah exploration prospects
                                 located in the Central Arabian Gold Region (CAGR)

Common Infrastructure            Infrastructure common to the Phosphate and
                                 Aluminium Projects as further described in this
                                 Prospectus

Company or Ma’aden               Saudi Arabian Mining Company (Ma'aden)

Companies Regulations            The Regulations for Companies, issued under
                                 Royal Decree No. M/6, dated 22/3/1385H
                                 (corresponding to 21/7/1965G), as amended

Director                         A director of Ma'aden

Exchange                         The Saudi Arabian Stock Exchange (Tadawul)

Financial Advisor and Sole       JP Morgan Saudi Arabia Limited
Bookrunner

Financial Statements             The consolidated audited financial statements of
                                 the Company for years ended 31 December 2007,
                                 2006 and 2005, and in each case the notes thereto



                                    27
Term                      Definition

Gold MER                  The report entitled “An Independent Mineral
                          Experts’ Report on the Gold Mining and Exploration
                          Assets of Saudi Arabian Mining Company
                          (Ma’aden)" prepared by SRK Consulting and
                          included in this Prospectus

Government                Government of the Kingdom of Saudi Arabia
                          Includes Saudi individuals and Saudi women
Individual Subscribers
                          divorced or widowed having minor children from a
                          non-Saudi husband who shall have the right to
                          subscribe in their names for her own benefit.
                          291,375,000 Shares will be allocated to Individual
                          Subscribers representing 63% of the Offer Shares,
                          subject to an increase up to 393,125,000 Shares
                          representing 85% of the Offer Shares.
InfraCo                   Ma’aden Infrastructure Company, a company
                          currently under formation which is to be a wholly
                          owned subsidiary of the Company
                          Includes institutions approached by the Sole
Institutional Investors
                          Bookrunner after consultation with the Company in
                          accordance with standards previously specified by
                          the CMA. 124,875,000 Offer Shares representing
                          27% of the Offer Shares will be allocated to
                          Institutional Investors, subject to a decrease of
                          down to 23,125,000 Offer Shares representing 5%
                          of the Offer Shares following an increase in the
                          number of Offer Shares to the Individual
                          Subscribers.
                          The tranche of Offer Shares described as Tranche
Institutional Tranche
                          (B) in "The Summary of Offering Section".
Listing Rules             The Listing Rules issued by the Authority pursuant
                          to Article 6 of the Capital Market Regulations
                          promulgated under Royal Decree No. M/30 dated
                          2/6/1424H (corresponding to 31/7/2003G)

Management                The current management of Ma'aden

Offer Price               SR 20 per share

Offering                  The initial public offering of 462,500,000 Shares
                          representing 50% of the share capital of the
                          Company

Offer Shares              462,500,000 Shares the subject of the Offering

Official Gazette          Um Al Qura, the official Gazette of the Government
                          of Saudi Arabia

Official List             The list of securities maintained by the Authority in
                          accordance with the Listing Rules

Petromin                  The state petroleum company established in 1962
                          and owned by the Government of Saudi Arabia


                             28
Term                            Definition

PhosCo                          The joint venture company established for the
                                purpose of operating the Phosphate Project.

Phosphate Project               The Phosphate Project to be undertaken by
                                PhosCo as further described in this Prospectus

Phosphate MER                   The report entitled “Mineral Independent Experts
                                Report for the Al Jalamid Project” prepared by
                                Behre Dolbear and included in this Prospectus

Port                            The port relating to Ras Az Zawr location as
                                described in this Prospectus

Prospectus                      This document prepared by the Company in
                                relation to the Offering

Railway                         The north-south Railway proposed to be
                                established in the Kingdom of Saudi Arabia as
                                described in this Prospectus

Receiving Banks                 Saudi British Bank (SABB), The National
                                Commercial Bank, Bank Al Bilad, Bank Al Jazira,
                                Riyad Bank, Banque Saudi Fransi, The Saudi
                                Investment Bank, Arab National Bank, Saudi
                                Hollandi Bank, Al Rajhi Bank and Samba Financial
                                Group

Retail Tranche                  The tranche of Offer Shares described as Tranche
                                (C) in "The Summary of Offering Section".

SAR                             Saudi Railway Company

SR                              Saudi Arabian Riyal

Saudi Arabia                    Kingdom of Saudi Arabia

SABIC                           Saudi Basic Industries Corp.

SABIC Group                     SABIC together with its affiliates and subsidiaries

SCPM                            Saudi Company for Precious Metals (which has
                                since been renamed Ma’aden Gold Company)

Shares                          Shares of the Company with a nominal value of SR
                                10 each

Subscription Application Form   Application form to subscribe for the Offer Shares

Subscription Period              The    period  from   Saturday    02/07/1429H
                                (corresponding to 05/07/2008G), up to and
                                including Monday 11/07/1429H (corresponding to
                                14/07/2008G).

Underwriters                    Samba Capital, Saudi Hollandi Capital, ANB Invest,
                                Aljazira Capital, Riyad Capital, Calyon Saudi

                                   29
Term                     Definition
                         Fransi, AlBilad Investment Co., Al Rajhi Financial
                         Services Co., Alistithmar Capital, NCB Capital and
                         HSBC Saudi Arabia Limited.

Underwriting Agreement   The Underwriting Agreement between the
                         Company and the Underwriters, pursuant to which:

                         1. The Company undertakes to each Underwriter
                         that it will issue and allot the Offer Shares to
                         successful Applicants and/or issue and allot to the
                         Underwriters any Offer Shares that are not
                         purchased pursuant to the Offering (save for the
                         portion of the Offer Shares being allocated to GOSI
                         and PPA); and

                         2. Each Underwriter undertakes to the Company
                         that it will purchase the Offer Shares that are not
                         subscribed for by successful Applicants (save for
                         the portion of the Offer Shares being allocated to
                         GOSI and PPA).

Voting Rights            The Company has only one class of shares. No
                         shareholders has any preferential voting rights;
                         each share grants its holder one vote and each
                         holder has the right to attend the ordinary general
                         assembly and to vote therein (for more information
                         please see “Voting Rights” section)




                            30
                                    Risk Factors
An investment in the Shares involves risk. Investors should carefully consider the following
information about these risks, together with the information contained in this Prospectus,
before deciding to purchase Shares. If any of the following risks actually occur, Ma'aden's
business, results of operations and financial condition could be adversely affected. In that
case, the trading price of the Shares could decline and purchasers of the Offer Shares could
lose all or part of their investment. An investment in the Shares is only suitable for investors
who are capable of evaluating the risks and merits of such investment and who have
sufficient resources to bear any loss which might result from such investment. A potential
investor who is in any doubt about the action he or it should take should consult a
professional advisor who specialises in advising on the acquisition of shares and other
securities.

The risks and uncertainties that Management believes are material are described below.
However, these risks and uncertainties may not be the only ones faced by Ma'aden and are
not intended to be presented in any assumed order of priority. Additional risks and
uncertainties, including those currently unknown, or deemed immaterial, could have the
effects set forth above.

1     Risks relating to the development of Ma'aden's projects

1.1    Construction and Project Development Risks

Ma’aden is subject to risks generally associated with specific companies engaged in
construction and development projects and to certain other risks specifically related to its
Phosphate and Aluminium Projects and its stated objective of expanding its gold mining
operations and exploration activities. These include the following:

       a. Ma'aden may incur construction and other costs for the Phosphate or Aluminium
          Projects or other future development projects such as the development of the
          CAGR Prospects which significantly exceed its current cost estimates due to
          increased material, labour or other costs or other additional unanticipated costs
          being incurred, which could make completion or operation of Ma'aden's projects
          uneconomical. In particular, the cost estimates for the Aluminium Project are based
          on the recently increased production capacities for the refinery and smelter of
          approximately 1.8 Mtpy of alumina and 0.74 Mtpy of aluminium respectively. If
          production capacities were increased further then cost estimates will increase
          further. Any such further increase in capacity would only occur if Ma'aden
          determines that it will be economically beneficial to do so. Irrespective of any
          further possible capacity increases, it is expected that the Aluminium Project costs
          will undergo revisions in any event as: (1) project optimisation and capital reduction
          initiatives are undertaken by Ma'aden and Rio Tinto Alcan; (2) the financing plan
          and its associated costs and stand-by equity support requirements are defined; (3)
          advance engineering and construction contracts are awarded; and (4) other
          elements are identified for adjustment (upward or downward) by Ma’aden or its joint
          venture party Rio Tinto Alcan.

       b. Notwithstanding the Government's support of the Phosphate and Aluminium
          Projects to date, principally through its undertaking to finance and provide
          supporting infrastructure, it is possible, due to changes in permitting regulations and
          policies or other reasons not currently known to Ma'aden, that Ma'aden may be
          unable to obtain or renew, or face delays in obtaining or renewing, required mining,
          exploration, industrial, land use, building, occupancy, and other Governmental
          permits, authorisations or permits. This could result in increased costs or delays
          and could require Ma'aden to abandon its activities entirely with respect to one or



                                               31
     both of these Projects or other projects, including Ma'aden's proposed development
     of the CAGR Prospects.

c. Ma'aden may experience delays in completing, or be unable to complete, the
   construction of mining or processing facilities or certain key infrastructure for either
   or both of the Phosphate or Aluminium Projects or other projects including
   Ma'aden's proposed development of the CAGR Prospects as a result of technology
   failures, contractor or sub-contractor default or poor performance, accidents, force
   majeure type events and other factors beyond the control of Ma'aden. In the case
   of the Phosphate and Aluminium Projects, such a delay or failure to complete one
   of the elements of these Projects could threaten the successful development or
   operation of such Project (see risk factor, "Project Interdependencies") and result in
   a failure to achieve the milestones set for each Project by management (see, "The
   Company's Business" - "Phosphate: Project Status and Key Milestones" and
   "Aluminium: Project Status and Key Milestones"). Such a failure or delay may also
   result in increased debt service expense and increased construction, repair or
   renovation costs which could in turn result in the termination of its joint venture
   arrangements with SABIC (in the case of the Phosphate Project) or Rio Tinto Alcan
   (in the case of the Aluminium Project) or of its future financing and supply
   agreements, resulting in claims by third parties for damages for breach of sales and
   supply contracts or the termination of such contracts. This risk is considered greater
   in the case of the Aluminium Project given its earlier stage of development.

d. There are currently shortages of mining equipment (such as trucks used to transport
   ore), experienced engineering, procurement and construction contracting firms,
   skilled operating personnel, plant and equipment and building materials such as
   steel affecting the Saudi market and the Middle East generally, due to the level of
   current and planned projects in Saudi Arabia and the region generally. Such
   shortages have affected the performance, timing and pricing of project contracts
   and could adversely impact either or both Projects and/or the development of the
   CAGR Prospects.

e. Ma'aden's future profitability will depend, in part, on the actual economic returns
   derived from the Phosphate and Aluminium Projects, which may differ significantly
   from Ma'aden's current estimates. Ma’aden's decision to develop the Phosphate
   and Aluminium Projects was substantially based on the results of feasibility studies
   carried out in relation to the Projects which included estimates of anticipated returns
   for the projects. These estimates are based on assumptions about future sales
   prices, anticipated tonnage, grades and metallurgical characteristics of ore to be
   mined and processed, anticipated recovery rates of phosphate or bauxite from the
   relevant ores, anticipated capital expenditure and cash operating costs, and the
   anticipated return on investment. In the event that actual cash operating costs and
   economic returns differ significantly from those anticipated by the studies and
   estimates Ma'aden's future development activities may be less profitable than
   currently anticipated or may not be profitable at all.

f.   The processing facilities for the Phosphate and Aluminium Projects at Ras Az Zawr
     will rely on specialised technology for their operation. Whilst this technology is
     being supplied by experienced providers and has been the subject of various
     technical and feasibility studies by independent consultants, there is a risk that the
     technology may not initially produce at its design capacity or achieve the desired
     product quality. For example, alumina refinery design is specific to the grade and
     quality of the bauxite at Az Zabirah and is therefore unique. In the event that the
     technology used in the processing facilities does not produce the desired quantities
     or quality of products Ma'aden may incur significant costs in rectifying any defects
     in the operation of the technology.




                                         32
g. Although a mandate letter appointing arrangers and underwriters for Phosphate
   Project debt financing has been executed in December 2007 and formal
   documentation for the Phosphate financing is expected to be executed in the third
   quarter of 2008, Ma'aden has not as yet concluded any third party financing
   arrangements to provide the funding required to develop the Phosphate or
   Aluminium Projects or associated infrastructure. Working capital reserves combined
   with equity funding resulting from this Offering and contributions from joint venture
   partners will not be sufficient to cover all funding requirements for these projects.
   Accordingly, Ma'aden will be reliant on obtaining funding from either affiliated or
   unaffiliated sources. There is no assurance that sufficient financing will be available
   for the successful development of these projects or, if available, will be available on
   reasonable terms. Adverse changes in the credit markets may affect the cost or
   availability of debt finance which may have the effect of increasing the costs
   associated with either Project.

h. The Company has not yet entered into a Railway Transportation Agreement with
   Saudi Railway Company (“SAR”) and/or the railway operator with respect to the
   operation of the proposed Railway that will link the phosphate mines at Al Jalamid
   and the bauxite mine at Az Zabirah to Ras Az Zawr and Jubail. As a result, at this
   point the railway tariffs for the Company's use of the Railway have not been
   finalised (although discussions have been held concerning such tariffs). Whilst the
   Company contemplates that tariffs will be set within a particular range that will
   make both Projects economically feasible there can be no guarantee that such
   terms will be reflected in the final Railway Transportation Agreement or any other
   arrangement between the Company and SAR and/or the railway operator. It is
   anticipated that the tariffs charged for Ma'aden's use of the Railway will form a
   material element of the Company's operating costs. Accordingly, unless the tariffs
   are fixed at an appropriate level and period there may be a material adverse effect
   on Ma’aden’s business, prospects, operating results, financial condition, and its
   Share price.

i.   Ma'aden has been granted an industrial licence for the production of alumina and
     aluminium at Ras Az Zawr which will permit Ma’aden to sell 0.20 Mtpy of alumina
     per year with the surplus to be used in the production of 0.74 Mtpy of aluminium per
     year. Currently estimated production capacities of up to 1.8 Mtpy for alumina and
     up to 0.74 Mtpy of aluminium are likely to result in approximately 0.23 Mtpy of
     alumina being available for sale. The terms of the licence require Ma’aden to inform
     the Ministry of Petroleum and Precious Metals (the “Ministry”) of any changes to the
     production capacities of the Aluminium Project as the project design is further
     developed. There can be no guarantee that the Ministry would be prepared to
     amend the scope of such licence to reflect the increased capacities or that were it
     to do so that it would not impose conditions unfavourable to Ma’aden. Nor can there
     be any assurance that further revisions to the scope of the Aluminium Project
     requiring further amendments to the scope of the industrial licence will not be made
     or that if they are, the Ministry would be prepared to amend the scope of licence
     appropriately or that were it to do so that it would not impose conditions
     unfavourable to Ma’aden. Further, whilst Ma’aden has been granted a 30
     year mining licence with respect to the mining of the Az Zabirah Deposit, Ma’aden,
     requires a significant number of other licences to develop and operate the
     Aluminium Project (see, “Legal Information - Mining and Exploration Licences and
     Other Permits and Authorisations” section) including a certificate of environmental
     approval which, under the terms of the industrial licence, must be obtained before
     production is permitted to commence. This has been issued based on the previous
     capacities and will need to be re-issued to reflect the revised capacities of the
     refinery and the smelter. Other outstanding licences which are required to be
     obtained relate to the construction of facilities and infrastructure at Ras Az Zawr
     and include a licence to construct and operate the power, desalination and steam
     plant. Whilst the Company is confident that it can obtain such further licences


                                        33
              and on terms that will enable it to develop and operate the Aluminium Project as
              currently envisaged, there can be no guarantee that such licences will be granted
              and if granted that they will contain appropriate terms.

The occurrence of any of the circumstances described above could have a material adverse
effect on Ma'aden's business, prospects, results of operations and financial condition and/or
its Share price.

1.2        Project Interdependencies

The Phosphate and Aluminium Projects are complex, large scale projects which comprise a
number of different elements relating to the mining of minerals, mine site processing,
transportation and the downstream processing of mineral ores and raw materials. The
operation of many of these project elements is interdependent with other elements meaning
that the successful completion of the various integrated elements of a particular project in
accordance with the project schedule becomes critical to the success of that project as a
whole.

In the case of the Phosphate Project all five processing plants, two power stations, the
Railway and the Ras Az Zawr infrastructure, including the Port and support facilities, are
required to be completed for the project to achieve operational readiness. For example,
should the sulphuric acid, phosphoric or ammonia plants not be operational on time for any
reason, including delays or performance failure associated with LSTK EPC contracts for the
plant, the phosphoric acid or ammonia needed to produce DAP will not be available and
production of DAP could be delayed.

Similarly, a significant delay in completion of the construction of the Railway or the Port at
Ras Az Zawr or the existence of operational problems with respect to either the Railway or
the Port would be likely to significantly prejudice the successful outcome of both projects and
in any event severely disrupt Ma'aden's ability to transport mineral extracts and raw materials
and to export its key products.

Ma’aden has contingency plans to deal with circumstances where one of the project elements
is not completed in a timely manner, including transportation of phosphate or bauxite by road
if the Railway is not completed on time and the importation of intermediate feedstock.
Nonetheless, the occurrence of such delay or operational problems may have an impact on
the timing of completion of another element of the project and thus ultimately Ma'aden's ability
to begin production of DAP and/or aluminium, which may have a material adverse effect on
Ma'aden's business, prospects, results of operations and financial condition and/or its Share
price.

1.3        Dependence on Key Third Parties including the Government of Saudi Arabia,
           Joint Venture Partners, Contractors and Financiers

During the execution and operational phases of the Phosphate and Aluminium Projects
Ma'aden will be dependent on the support and contributions of a number of key third parties
as described below:

      a.     Joint Venture Partners

      Ma’aden will be dependent on SABIC and Rio Tinto Alcan (or any other strategic partner)
      for the provision of technical support services, know-how, management and technical
      expertise, and marketing services. If, for whatever reason, such technical and other
      services were not available to Ma'aden it could suffer increased costs and liabilities and
      disruption to the execution or operation of its projects.

      On 15 November 2007 Rio Tinto completed the acquisition of 100% of the issued capital
      of Rio Tinto Alcan pursuant to a takeover offer. Accordingly, Rio Tinto has assumed

                                                34
control of Rio Tinto Alcan and has the ability to control or influence Rio Tinto Alcan's
activities including the development of proposed projects such as the Aluminium Project.
Whilst Ma'aden has no reason to believe that the development of the Aluminium Project
will not proceed as contemplated in the Aluminium HoA, it is possible that the Aluminium
Project may not proceed in this manner or at all resulting in a material adverse effect on
Ma'aden.

On 8 November BHP Billiton confirmed that it had approached Rio Tinto with a proposed
offer to acquire the Rio Tinto group (including Rio Tinto Alcan but excluding debt) for
approximately SR523 billion (US$141 billion). Rio Tinto rejected the proposal on the basis
that its board believed the offer to undervalue Rio Tinto and its prospects. On 6 February
2008 BHP Billiton made a revised offered to acquire the group offering 3.4 BHP Billiton
shares for every Rio Tinto share valuing the Rio Tinto group at approximately SR552.75
(US$147.4) as of 4 February 2008. Rio Tinto’s board has rejected the revised offer on the
basis that it believes that the offer significantly undervalues Rio Tinto. Should however
this or a further offer be successful BHP Billiton will assume control of Rio Tinto Alcan (as
a subsidiary of Rio Tinto) and the development of the Aluminium Project will be subject to
the same risks described in the foregoing paragraph.

b.   Government of Saudi Arabia

The Company will continue to depend on the Government with respect to its development
of the Port and the Railway as key supporting infrastructure for the operation of the
Phosphate and Aluminium Projects. In addition, sourcing low cost and secure energy
supplies through Saudi ARAMCO will be critical to the success of these projects. Whilst
the Company has no reason to believe that the Government will withdraw its support, any
failure to develop or any delay in developing this key supporting infrastructure could have
a material adverse effect on the Phosphate and Aluminium Projects.

c.   Contractors

Ma’aden will also be heavily dependent on third-party contractors and consultants in
order to carry out its development of the Phosphate and Aluminium Projects as well as
current gold mining operations, the proposed development of the CAGR Prospects, and
to carry out future operations generally. Such services may include the provision of
project management, engineering, construction, process design and planning. Some of
the services required for Ma'aden’s operations and project developments may only be
available on commercially reasonable terms from one or a limited number of appropriately
skilled providers. These operations and project developments may be interrupted or
otherwise adversely affected by a failure to supply, or delays in the supply of these
services by third party providers, by any material change to the terms on which these
services are made available by third party providers, and/or by the failure of third party
providers to provide services that meet Ma'aden’s quality requirements. If Ma'aden is
forced to change a provider of such services, this may result in Ma'aden experiencing
additional costs, interruptions to current operations or to the development of projects,
including in particular the Phosphate and Aluminium Projects, or some other adverse
effect on its business. There is also no guarantee that Ma'aden will be able to find
adequate replacement services on a timely basis or at all.

d.   Financiers

The development of Ma'aden's projects including, in particular its Phosphate and
Aluminium Projects and the expansion of Ma'aden's gold mining and exploration business
will require significant capital expenditures and, in addition to debt finance, Ma'aden will
be relying on third-party sources of capital for this purpose. This will include SABIC in the
case of the Phosphate Project and Rio Tinto Alcan, in the case of the Aluminium Project,
each of whom will have funding commitments pursuant to their respective joint venture
arrangements, subject to formal documentation being signed. Should Rio Tinto Alcan not

                                           35
      enter into formal joint venture documentation or SABIC or Rio Tinto Alcan fail to meet
      their respective funding commitments, then Ma'aden will have to seek alternative sources
      of capital which may or may not be available on terms satisfactory to Ma’aden or at all. In
      addition, Ma'aden may require third party capital for the development of other future
      projects. Ma’aden’s access to third-party sources of capital to fund any project depends
      on a number of factors, including the market's perception of Ma'aden’s growth potential
      and Ma'aden’s current and potential future earnings. If Ma'aden is not able to obtain third-
      party sources of capital on favourable terms, Ma'aden’s planned development and hence
      its business, financial condition and results of operations could be adversely affected,
      which could result in a decline in the market value of its securities. Moreover, additional
      equity offerings may result in dilution of Ma'aden's shareholders' interests, and additional
      debt financing may substantially increase Ma'aden’s leverage.

      Whilst Ma'aden is currently negotiating with the key third parties described above, there
      can be no assurance that such negotiations will be concluded on terms satisfactory to
      Ma'aden and in a timescale that will enable Ma'aden to meet its project implementation
      deadlines. Delay in the provision of or failure by any of the above key third parties to
      provide services, funding or other support on which Ma'aden is dependent may disrupt or
      prevent the successful development of Ma'aden's Projects and therefore have a material
      adverse effect on Ma'aden's business, prospects, results of operations and financial
      condition and/or its Share price.

1.4     The Company's rights to use the land at Ras Az Zawr have not been formalised

The land at Ras Az Zawr on which the Phosphate and Aluminium production facilities will be
constructed is owned by the Government. The land was subject to a "right of use" granted in
favour of Saudi ARAMCO which was subsequently released so as to make the land available
for Ma'aden's Phosphate and Aluminium Projects. It is intended that ownership of the land will
remain with the Government, represented by the Property Department of the State. Steps are
currently under way to register the land in the name of the Property Department of the State
for use by Ma’aden At that stage, the allocation of the land to Ma'aden will be formalised and
the terms and conditions of occupation of the land by Ma’aden will be agreed with the relevant
Government Agencies (including the period of the allocation, and whether a rent or some
other fee will be payable by the Company in connection with its occupation of such land or
Ma’aden’s right to sublease or licence portions of the land to PhosCo and AlumCo). If the land
allocation is not formalised or is not formalised on terms satisfactory to Ma’aden, then there is
likely to be a material adverse effect on Ma'aden's business, prospects, results of operations
and financial condition and/or its Share price.

2     Risks relating to the operation of Ma'aden's projects

2.1     Ma’aden's future operations will be energy-intensive and, as a result, its
        profitability may decline if energy costs were to rise, or if energy supplies were
        interrupted

In the event of the successful completion of Ma'aden’s Aluminium and Phosphate Projects,
Ma'aden will consume substantial amounts of electrical energy in its operations and
interruptions in energy supply could materially adversely affect Ma'aden. In addition,
aluminium smelters generally require an uninterrupted supply of intense electrical energy, and
any interruption for more than a very short duration, whatever the cause, may result in the
solidification of aluminium in the pots, with widespread damage to the pot-line and resulting
capital costs and interruptions to business resulting from the need to replace significant items
of equipment. The availability of electricity is influenced by a number of factors many of which
are beyond Ma'aden's control, including, but not limited to, supply interruptions, price
fluctuations and natural disasters.

Operating expenses at Ma'aden's proposed phosphate and bauxite mining locations are
sensitive to changes in electricity and fuel prices which may fluctuate significantly, including

                                                36
diesel fuel, which Ma'aden will be using for its equipment and as a source of its electricity. If
energy costs were to rise, or if energy supplies or supply arrangements were to be
interrupted, the profitability of future DAP, aluminium or gold production activities may decline
causing a material adverse effect on Ma'aden's business, prospects, results of operations and
financial condition and/or its Share price.

2.2   Ma’aden's profitability could be adversely affected by increases in production
      costs including the cost of raw materials and by disruptions to the supply of raw
      materials

Ma’aden's costs of production may increase significantly. Aside from energy costs, Ma'aden's
most significant cash costs, include (i) the cost of raw materials used in the production
process; (ii) labour costs; (iii) repair and maintenance costs; (iv) freight costs and (v) royalty
payments to the Government relating to gold, phosphate and aluminium production.

The raw materials that Ma'aden intends to use in manufacturing DAP and aluminium include
sulphur, natural gas, lime, calcined petroleum coke and resin. The prices of many of these
raw materials depend on supply and demand relationships at a global level, and are subject
to continuous volatility. Supply of these raw materials may also be subject to interruptions or
delays should failures occur in suppliers’ plants or in transport infrastructure.

Prices for the raw materials required by Ma'aden may increase from time to time and, if they
do, it may not be able to pass on the entire cost of the increases to Ma'aden's customers or
offset fully the effects of higher raw material costs through productivity improvements. In
addition, there may be a potential time lag between changes in prices under supply contracts
and the point when Ma'aden can implement a corresponding change under its sales contracts
with customers. As a result, Ma'aden may be exposed to fluctuations in raw material prices
since, during the time lag period, it may have to temporarily bear the additional cost of the
change under its purchase contracts, which could have a negative impact on Ma'aden's
profitability.

In the event that there are interruptions in or delays to the supply of raw materials Ma'aden
may need to find alternate supplies. In these circumstances there can be no assurance that
Ma'aden will be able to find a suitable alternate supplier capable of or willing to supply the raw
materials in the quantities required or at a price which is acceptable to Ma'aden. Any delay in
finding a suitable alternative supplier may result in an interruption of Ma'aden's operations.

Increases in production costs including, in particular, the cost of raw material and delays in
the supply of raw materials could have a material adverse effect on Ma'aden's business,
prospects, results of operations and financial condition and/or on its Share price.

2.3   Ma’aden’s business is subject to a number of operational hazards and events of
      force majeure, including the significant risk of disruption or damage to persons
      and property and operational risks including failure of key plant or equipment

Upon completion of the Phosphate and Aluminium Projects, Ma'aden will be operating large
scale complex mining operations and processing and refining facilities that are subject to
significant operational risks generally associated with mineral companies including industrial
accidents, unusual or unexpected geological conditions and environmental hazards. Hazards
associated with open-pit mining include accidents involving the operation of open-pit mining
that is subject to collapses due to the blasting relating to mining activities and natural flooding.
Hazards associated with processing at Ma'aden's mines include the risk of accidents
associated with operating crushing and concentrating plant and equipment. Ma’aden and its
operations may also suffer as a result of other general force majeure type events.

Such hazards or events could cause significant damage to Ma'aden's facilities or harm to its
workforce, major disruption to production processes and Ma'aden's ability to deliver its
products and/or result in significant losses or liabilities being incurred by Ma'aden, any of

                                                37
which may have a material adverse effect on Ma'aden's business, prospects, results of
operations and financial condition and/or its Share price.

The unplanned failure of a key item of plant or equipment, such as power or gas distribution
equipment, a mill in the alumina refinery or the sea water cooling system which supplies water
to the ammonia and sulphuric acid plants' heat exchangers, or unplanned maintenance and
repair work could interrupt Ma'aden's mining or production process. Maintaining production
capacity is and will be significant to Ma'aden's business and any interruptions could have a
material adverse effect on Ma'aden's business, prospects, results of operations and financial
condition and/or its Share price.

2.4   To the extent that Ma'aden increases its indebtedness in the future it will be
      subject to risks associated with a higher level of indebtedness and to greater
      constraints on its operational flexibility

Although Ma'aden currently benefits from a net cash position, significant increases in
indebtedness incurred to fund the development of the Phosphate and Aluminium Projects will
expose Ma’aden to certain risks. These risks include the possible inability to repay
indebtedness, which may result in foreclosure of assets or may require Ma'aden to dispose of
assets on disadvantageous terms. Ma’aden would be subject to increased interest expense
and such indebtedness may increase Ma'aden's exposure to additional costs associated with
interest rate fluctuations.

The credit facilities Ma'aden proposes to put in place with respect to the new projects are
likely to contain customary restrictions and limitations on Ma'aden’s ability to incur further debt
and impose strict financial covenants requiring certain financial ratios to be met. These
covenants are likely to place restrictions on the way in which Ma'aden may finance its
operations.

If Ma'aden were to breach certain debt covenants in the future, its lenders could require
Ma'aden to repay the debt immediately, and, if the debt is secured, may take possession of
the property or asset securing the loan. In addition, if any lender declared its loan due and
payable as a result of a default, Ma'aden's other lenders would be likely to have the ability to
require that those debts owed to them be paid immediately. In these circumstances there
could be no assurance that Ma'aden would be able to access sufficient alternative funding to
meet such repayments.

Any of these risks could have a material adverse effect on Ma'aden's business, prospects,
results of operations and financial condition and/or its Share price.

2.5   Failure to obtain approval for or to successfully construct a pipeline for the
      supply of water to Ma'aden's CAGR Prospects which is suitable for use in the
      production of gold, could have a material adverse effect on Ma'aden's gold
      business

Development of the CAGR Prospects is critical to the growth and ongoing viability of
Ma'aden's gold business, with a number of new mines in this area proposed to be brought
into production. However, a means of providing water to the region is required in order to
achieve this and management is currently preparing an integrated development plan for the
provision of water (and other infrastructure) to facilitate the economic development of the gold
resources within the CAGR Prospects. Should the construction of operation of the pipeline
prove uneconomic, or should the required approvals and permits for the construction and use
of the pipeline not be obtained or be the subject of significant delay, then Ma'aden will not be
able to proceed with the development of the CAGR Prospects. This could significantly hinder
the growth of the gold business or even render it unviable and could therefore have a material
adverse effect on Ma'aden's business, prospects, results of operations and financial condition
and/or on its Share price.


                                                38
2.6    Ma’aden's profitability could be adversely affected by changes in law or
       regulations in Saudi Arabia

Ma’aden's business and operations are subject to detailed mining, environmental and health
and safety laws and regulations. New or amended laws or regulations may result in significant
additional compliance requirements on Ma’aden which Ma’aden may not be able to comply
with either at all or without incurring significant additional costs. Furthermore, any such new or
amended laws and regulations could lead to delay in the development of the Phosphate and
or Aluminium Projects and or the exploitation of the Company's gold reserves and resources
and therefore have a material adverse effect on Ma'aden's business, prospects, results of
operations and financial condition and/or its Share price.

3     Risks specifically relating to exploration, mining and production activities and the
      mining industry generally

3.1    Title to Ma'aden’s exploration and mining properties

All of the exploration or mining licences which Ma'aden has, or may acquire an interest in, are
or will be subject to applications for renewal or issue (as the case may be). Failure to have a
licence renewed or issued may have a material negative impact on Ma'aden through loss of
the opportunity to discover or develop any mineral resources within the licence area. While
Management has no reason to believe that any third parties have claims over the licensed
properties, title to such properties may still be subject to potential litigation by third parties
claiming an interest in them.

The failure to comply with all applicable laws and regulation, including failures to pay royalties
or severance payments, meet minimum expenditure requirements, or carry out and report
assessment work, may invalidate the licences. Ma’aden might not be able to retain its licence
interests when they come up for renewal.

3.2    The volume and grade of Ma'aden’s Ore Reserves and its rate of production may
       not conform to current expectations

No assurance can be given that the estimated quantities or grades of phosphate, bauxite or
gold described in this Prospectus will be available for extraction, that any particular level of
recovery of phosphate, bauxite or gold will in fact be realised or that budgeted or expected
levels of production of phosphate, aluminium or gold will be achieved. Resource exploration is
speculative in nature and there is uncertainty in any mineral resource or reserve estimate.
Therefore, the actual deposits and the grade of mineralization actually encountered may differ
materially from the estimates disclosed in this document. Moreover, the level of exploration
expenditure actually required to delineate a resource or prove up a reserve may be
significantly more than initially estimated. There can be no guarantee that an identified
reserve or resource will continue to qualify as a commercially mineable deposit that can be
legally and economically exploited over the medium to long term. In the case of bauxite
reserves it is possible that the grade of bauxite feed may vary substantially from the grade
estimated through sampling tests. The alumina refinery has been designed to be optimised
for a specific grade of bauxite feed based on the estimated grade of the bauxite reserve.
Whilst some allowance has been made for variations in grade, substantial variations could
impact the production rate, cost and quality of alumina produced by the refinery. Mining of
phosphate, bauxite or gold resources can also be affected by other factors such as permitting
regulations and requirements, weather, community or environmental factors which may
restrict access to reserves, unforeseen technical difficulties, unusual or unexpected geological
formations and work interruptions. The estimated resources and reserves described in this
Prospectus should not be interpreted as an assurance of the commercial viability, potential or
profitability of any future operations.

Additionally, the production of minerals fluctuates materially from year to year. The annual
production of gold mineral reached a peak of 239,731 ounces during 2005 and has been

                                               39
decreasing since reaching 142,763 ounces for the period ended 31 December 2007,
representing a drop of 47% during the intervening period. This decrease was a result of a
drop in the reserves at certain mines as well as a drop in the grade of the raw material as well
as the level of extractions.

3.3   The profitability of Ma'aden's operations, and the cash flows generated by these
      operations, will be significantly affected by changes in the market prices for
      gold, phosphate and aluminium

The market price for gold products, DAP and aluminium can fluctuate significantly. These
fluctuations are caused by numerous factors beyond Ma'aden's control, including, in the case
of gold: speculative positions taken by investors or traders in gold; changes in the demand for
gold use in jewellery, for industrial uses and for investment; changes in the supply of gold for
production, disinvestment, scrap and hedging; financial market expectations regarding the
rate of inflation; the strength of the US dollar (the currency in which gold trades are affected
internationally) relative to other currencies; changes in interest rates; actual or expected gold
sales by central banks; gold sales by gold producers in forward transactions; global or
regional political or economic events; and costs of gold production in major gold-producing
nations, such as South Africa, the United States, Australia and Uzbekistan. Factors affecting
the market prices for phosphate and aluminium include, in the case of DAP, the cost of the
primary raw materials used to make DAP (such as phosphate rock, sulphur and ammonia in
the case of DAP and natural gas in the case of ammonia), plant outages, uneven buying
patterns, seasonality of planting seasons, vessel delivery patterns, variable weather
conditions and, in the longer-term, the expansion or contraction of production capacity of
phosphate products worldwide and, in the case of aluminium, the level of demand in end
user-markets, such as the automotive, building and construction sectors, which tend to be
cyclical and on the supply side the availability of carbon used for the lining of the reduction
cells (also known as pots) in aluminium smelters. Indeed, both Aluminium and DAP prices
have shown a long run falling trend in real terms (refer to "Industry Overview" - "Phosphate
Industry Overview" and "Aluminium Industry Overview").

If revenue from gold sales falls below the costs of production for an extended period in the
short term prior to the successful completion of the Phosphate and Aluminium Projects,
Ma'aden may experience losses and be forced to curtail or suspend some or all of its current
projects and/or operations.

3.4   Ma’aden could incur significant liabilities under environmental laws

There are certain risks inherent in the activities of mining Groups that could subject Ma'aden
to extensive liability under environmental laws. Ma’aden's production facilities at Ras Az Zawr
will generate hazardous and toxic substances, chemicals, pollutants and other waste which, if
not properly managed, are capable of causing damage to human and animal life or to the
environment. These include waste products such as "red mud" (a waste material which
results from the Bayer process used to produce alumina) in the case of the Aluminium Project
and phosphor-gypsum, sulphur dioxide and hydrofluoric gas in the case of the Phosphate
Project. A similar risk exists at Ma'aden's production facilities at its various gold mine sites.
The discharge, storage and disposal of such waste are subject to environmental regulations,
some of which require the clean up of prior contamination and reclamation of mined out
areas. Pollution risks and related clean-up costs are often difficult to assess unless long term
environmental audits have been performed and the extent of liability under environmental
laws is clearly determinable. Ma’aden accrues the estimated future environmental costs over
the operating life of a mine; however, estimates of ultimate rehabilitation and restoration costs
are subject to revision as a result of future changes in regulations, technology and cost
estimates. In the future it is also possible that Ma'aden may be exposed to environmental
liabilities resulting from the activities of third parties operating downstream facilities at Ras Az
Zawr.




                                                40
Other activities undertaken by Ma'aden as part of the mining process could lead to
environmental problems such as the escape of dust and other pollutants and therefore to
environmental claims against the Company. This could result in additional costs being
incurred by the Company and potential disruption to Ma'aden's mining operations.

Whilst Ma'aden has developed and is developing environmental controls and management
systems for its current and future operations in accordance with best practice domestic and
international standards, environmental laws and regulations are continually changing and are
likely to become more restrictive over time, particularly in the extractive and heavy industries
such as aluminium, gold and fertiliser production. If Ma'aden's environmental compliance
obligations were to change as a result of changes in the laws and regulations or in certain
assumptions it makes to estimate liabilities, or if unanticipated conditions were to arise in its
operations, Ma'aden's expenses and provisions would increase to reflect these changes. If
material, these expenses and provisions could adversely affect its business, operating results
and financial position. Moreover, any changes may have an impact on Ma'aden's ability to
access finance for the development of its projects as the provision of funding by financial
institutions is likely to be subject to compliance with the Equator Principles, a financial
industry benchmark for determining, assessing and managing social and environmental risk in
project financing.

3.5    Risk related to Renewal of Mining Licences

The Minister of Petroleum and Precious Minerals has the discretion to renew the mining
licences for a period or periods not to exceed 30 years, provided that all the conditions and
requisite procedures have been complied with and observed without violating the rules which
are in place at the time of such renewal. The ability of Ma’aden to renew its licences depends
on the rules and procedures provided in the Mining Law and its implementing regulations as
well as the rules provided in the licence which is the subject of renewal.

4     General Risks Relating to Ma'aden's Business

4.1    Ma’aden may not be able to effectively manage its future growth

Assuming the successful completion of the proposed Aluminium and Phosphate Projects and
development of the CAGR Prospects, Ma'aden will experience significant growth in the next
few years. As a result, the operating complexity of Ma'aden's businesses and the
responsibilities of its Management will increase significantly. Following the Offering,
Management will assume additional responsibilities associated with the operation of a publicly
listed company.

There can be no assurance that Ma'aden will be able to attract further managers of the quality
and experience it desires or successfully manage its future growth. Any inability of Ma’aden to
successfully manage its growth could have a material adverse effect on Ma'aden's business,
prospects, results of operations and financial condition and/or its Share price.

4.2    Ma’aden is dependent on its key personnel and maintaining a highly qualified
       and skilled workforce.

Ma’aden's future success will depend on its continued ability to attract, retain and motivate
highly qualified and suitably skilled personnel at each of Ma'aden's mining facilities,
processing facilities and administrative offices. The competition in Saudi Arabia for personnel
with relevant expertise is intense due to the current high demand for qualified individuals.
Furthermore, the remote locations and severe climatic conditions associated with Ma'aden's
mining facilities make it difficult for Ma'aden to attract suitably qualified personnel.

Ma'aden lacks experience in developing projects of the proposed scale of the Phosphate and
Aluminium Projects and in operating, commissioning and maintaining the processes and


                                               41
technology associated with such projects and marketing the resultant products. Accordingly,
to some extent, it will be reliant on acquiring technical know-how and expertise from its joint
venture parties and other third party providers.

While Ma'aden attempts to structure compensation packages in a manner consistent with the
evolving standards of the Saudi Arabian market, there can be no assurance that Ma'aden will
be able to retain its personnel without affecting Ma'aden's profitability. In particular, Ma'aden
may be unable to retain qualified personnel or may be unable to control the costs associated
with retaining and motivating highly qualified employees. Failure to successfully manage
Ma'aden's personnel needs could materially adversely affect Ma'aden's operations and
growth strategy.

4.3    Currency fluctuations may have a material adverse effect on Ma'aden's business,
       financial condition and results of operations

Currently most of Ma'aden's revenues are received in US dollars and it is anticipated that this
will continue to be the case following the development of its Phosphate and Aluminium
Projects. Fluctuations between the US dollar and other currencies in which it will incur and
pay certain project costs could increase project costs and adversely affect Ma'aden's
operating margins.

4.4    Ma'aden’s insurance coverage may be inadequate and the occurrence of
       significant uninsured events could materially and adversely affect the business,
       financial condition and results of operations of Ma'aden

Ma’aden may become subject to liabilities, including liabilities for pollution or other hazards,
against which Ma'aden is not insured adequately or at all or cannot insure. Ma’aden's
existing insurance policies contain, and future policies are likely to contain, exclusions and
limitations on coverage. In addition, Ma'aden's existing insurance policies may not continue
to be available and future insurance policies may not be available at economically acceptable
premiums. As a result, in the future, Ma'aden's insurance coverage may not cover the extent
of claims against Ma'aden for environmental or industrial accidents or pollution.

There is a risk that losses and liabilities arising from such events could significantly increase
Ma'aden's costs and have a material adverse effect on Ma'aden's business, prospects results
of operations and financial condition and/or its Share Price.

5     Risks Related to the Offering

5.1    Shareholders may not receive cash dividends on the Shares

Future dividends will depend on, amongst other things, the future profit, financial position,
capital requirements, distributable reserves and available credit of the Company and general
economic conditions and other factors that the Directors of the Company deem significant
from time to time.

Also, Ma'aden's ability to declare and pay cash dividends on the Shares may be restricted by,
among other things, covenants in credit facilities, the recovery of accumulated losses,
compliance with shareholder agreements in each case in relation to Ma'aden's subsidiaries
and by provisions of Saudi Arabian law. Accordingly, there can be no assurance as to the
distribution of dividends to Shareholders.

5.2    Effective control by the Founding Shareholder

The Government, represented by the Public Investment Fund, as founding shareholder will
remain in a position to vote in relation to all matters requiring shareholder approval, including
the election of the Board and significant corporate transactions.


                                               42
Following completion of the Offering, the Government, represented by the Public Investment
Fund, will own 50 % of the Shares in issue. Therefore, the Government, represented by the
Public Investment Fund, will be able to influence all matters requiring Shareholder approval
since it will be able to pass ordinary resolutions without the need for other Shareholders to
vote in favour and, similarly, prevent other Shareholders from passing ordinary and special
resolutions by voting against them. It may exercise these rights in a manner that could have a
material adverse effect on Ma'aden's business, prospects, results of operations and financial
condition and/or its Share price.

5.3   Absence of prior trading market and potential volatility of the price of Offer
      Shares

There has been no prior market for the Offer Shares and there can be no assurance that,
following admission to the Official List, an active trading market for the Offer Shares will
develop. If an active trading market is developed, there is no assurance that this will continue
after admission to the Official List or for how long.

Various factors, including variations in actual or anticipated operating results, changes in, or
failure to meet, earnings estimates or forecasts, market conditions in the industry, regulatory
actions, general economic conditions or other factors beyond Ma'aden's control could cause
significant fluctuations in the price and liquidity of the Offer Shares.

5.4   Future Share sales

Sales of substantial amounts of the Shares in the public market following the completion of
the Offering, or the perception that these sales will occur, could adversely affect the market
price of the Shares.

Upon the successful completion of the Offering, the Government, represented by the Public
Investment Fund, may not dispose of any Shares during the period of six months from the
date on which trading on the Offer Shares commences on the Exchange pursuant to the
Listing Rules. Moreover, Ma'aden does not currently intend to issue additional Shares
immediately following the Offering. Nevertheless, the issuance by Ma'aden or sale by the
Government, represented by the Public Investment Fund, following the share-restriction
period of a substantial number of Shares could have an adverse effect on the market for the
Shares and result in a lower market price of the Shares.




                                              43
                            Industry Overview

The overviews of the gold, phosphate and aluminium industries provided below have been
prepared by CRU (for the phosphate and aluminium industries) and by Brook Hunt (for the
gold industry) and have been reviewed by the Company. The overviews contain market and
other industry data from external sources, including third party or industry or general
publications. The Company has not independently verified such data, and there can be no
assurance as to the accuracy and completeness of, and the Company takes no responsibility
for, such data. In addition, when considering the industry and market data included in this
Prospectus, Subscribers should note that this information may be subject to uncertainty due
to differing definitions of the relevant markets and market segments described.

The general overviews of the Gold Industry, the Phosphate Industry and the Aluminium
Industry set out below were prepared in October 2007 and as such address prevailing market
conditions at that time and do not take account of any changes in market conditions which
may have occurred since. The overviews do not contain any statistical information for 2007
and have not been updated prior to the date of this Prospectus.

Gold Industry Overview
Background

As a result of its relative rarity, unique lustre, malleability, resistance to corrosion and other
unique physical properties, gold has been used in coinage, in jewellery, as a store of value
and in various practical applications for thousands of years.

Global demand for gold in 2006 is estimated at 3,530 tonnes. Jewellery is the largest
component of demand, accounting for around 64 % of the total. Dentistry, electronic and
other industrial applications, collectively referred to as non-jewellery fabrication demand,
accounted for a further 18 %. Bar hoarding, that is purchases of physical gold for the
purposes of investment by private individuals, accounted for seven % of demand. In 2006 the
remaining 11 % of demand for physical gold came from gold miners closing out hedge
positions; this component of demand is a short-term phenomenon occurring as a result of
rising gold prices.

Gold is supplied to the market from mine production, recycling or mobilisation of above-
ground stocks. Global above-ground gold stocks are estimated at around 158,000 tonnes, of
which around 28,500 tonnes is held by central banks (the “official sector”). Gold in the form of
jewellery accounts for just over 50 % of above-ground stocks.

Gold Supply

In 2006 global gold supply fell by 4.9 % relative to the prior year, to 3,914 tonnes. Mine
production accounts for 63 %, or 2,471 tonnes of this total, with the balance made up by net
official sector supply (central bank sales) of 328 tonnes and scrap supplies of 1,115 tonnes.

Around 85 % of mine production is from primary gold mines, that is, mines which derive most
of their revenue from gold, rather than other co-product metals. The remaining 15 % is mainly
from mines for which copper or silver are the main products.

Primary gold mines typically produce gold in the form of a doré, which is an alloy of gold and
silver plus impurities. A variety of mining methods are used, both underground and open cut.
Ore mined underground typically grades between 4 and 15g/t; ore mined from open cuts
varies in grade from around 1g/t upwards. A wide range of ore processing techniques are


                                               44
employed, depending on the scale of operation, grade and nature of the ore. Where gold
occurs in ore as large discrete grains, simple gravity concentration methods may be used;
otherwise gold is often extracted by cyanide leaching and adsorption onto activated carbon,
followed by elution, electrowinning and smelting to produce doré.

Gold mines vary greatly in scale. In many developing countries gold is mined on a small
scale by informal sector artisan miners, using rudimentary methods and equipment. At the
other extreme, the largest formal sector mining operations extract and process tens of millions
of tonnes of ore per year using the largest available mining equipment and advanced
processing technologies.

Doré is shipped to third party refineries, where it is refined to London Bullion Market
Association “Good Delivery” standard, i.e. cast into bars of prescribed weight and dimensions,
containing no less than 99.5 % gold.

South Africa is the largest producer of gold, accounting for 12 % of global mine supply,
followed closely by the United States, China and Australia, each with a 10 % share of the
total. The five largest gold mining companies collectively account for 34 % of global mine
production.

Brook Hunt expects global gold mine production to increase to 2,566 tonnes in 2007 and
2,794 tonnes in 2010, with significant production increases from the former Soviet states,
China, Africa and Asia.

Of the other sources of supply, the official sector is comprised of central banks and the IMF.
The former have been significant contributors to gold supply since the early 1990s, selling
gold at an average rate of 438 tonnes per annum from 1992 to 2006.

The significant official sector sales that have occurred over the last twelve years have been
part of a process of reserve rebalancing which many of the larger central banks have
embarked upon in the belief that their reserves were overweight in gold. This process
culminated in the signing of the Washington Agreement (WA1) in September 1999. Under
WA1 fifteen European central banks agreed to limit their sales and lending activities to 2,000
tonnes over the five years to 2004. The agreement was renewed in September 2004 (WA2),
allowing the signatories to sell up to 2,500 tonnes over the following five years.

In 2006 central bank sales amounted to 328 tonnes, as many of the banks who are parties to
WA2 elected not to take up their sales quotas for the period, while other banks outside the
agreement entered the market as purchasers.

Brook Hunt’s forecasts of official sector supply assume that the signatory banks take
advantage of their full WA2 sales entitlements, and that over the longer term, net official
sector sales continue at a rate of 400-500 tonnes per annum.

Scrap is a fairly constant, but low, proportion of total supply, on average over the last ten
years accounting for around 830 tonnes of supply annually. In the West, gold jewellery
recycling rates are very low, although in Asia jewellery held primarily as an investment may
be sold during times of hardship or to realise profit when the gold price is high. Consequently,
Brook Hunt's estimate of scrap supply is partly price sensitive, rising and falling in line with
gold prices.

Gold Demand

In 2006 global gold demand is estimated to have fallen by 2.9 % relative to 2005, to 3,530
tonnes, due to a sharp fall in the demand for jewellery. Also in 2006 Gold use in jewellery
fabrication fell by 16 % to 2,280 tonnes, as a result of consumers’ sensitivity to higher gold
prices.


                                              45
Year-to-year variations in the consumption of gold in jewellery fabrication are driven by
numerous factors, but most importantly by the prevailing economic climate and the price of
gold. Over the longer term such factors as changing consumer tastes also play a large part.

India is by far the largest single jewellery fabricating country, accounting for around 21 % of
global demand. Besides adornment, in India gold jewellery is also an important means of
storing personal wealth, and has special cultural significance in many other regards. Indian
gold demand has declined from 720 tonnes in 1998 to 464 tonnes in 2006, in part due to price
sensitivity, but also as a result of consumers’ growing financial sophistication. Demand
recovered somewhat in 2005, reaching 539 tonnes, before resuming its decline in 2006.

As a luxury consumer item, gold jewellery demand in Western countries is dictated by
economic conditions, changing broadly in line with GDP growth. Brook Hunt’s forecasts for
global jewellery fabrication demand anticipate average annual growth of 1.9 % over the next
ten years.

 “Other” fabrication demand includes use of gold in electronics, which accounts for around
304 tonnes per annum, followed by dentistry, which requires around 61 tonnes per annum.
Coins and medals, plus other miscellaneous industrial and decorative uses account for the
balance.

With regard to gold demand for investment, bar hoarding is essentially an Asian
phenomenon, whereby investors buy gold bars as an investment and store of value.
Hoarding demand tends to be negatively correlated with the gold price, although significant
swings in annual demand are common and difficult to confidently quantify or attribute to a
particular cause. The other main source of investment demand which has arisen in recent
years is Exchange Traded Funds (ETFs), which provide investors with a means of investing
directly in gold without the costs of purchasing physical metal.

Early closure of hedge book commitments by gold miners has been a source of net gold
demand since 2000, as this requires that gold is purchased in the marketplace for delivery
against the forward sales contracts. Gold demand for net de-hedging in 2006 is estimated at
375 tonnes, having averaged 245 tonnes per annum since 2000. As of Q1 2007 gold miners’
outstanding hedge books amounted to 1,241 tonnes of gold. Net de-hedging is forecast to
continue for the next few years, although at a slower rate, as the outstanding hedges dwindle.

Costs

Brook Hunt estimates that global average cash cost for gold mine production was US$297/oz
in 2006. Of this cash cost, costs incurred at mine sites, i.e. mining and processing ore, site
general and administrative costs averaged US$287/oz. Smelting and refining costs accounted
for costs of US$18/oz, offset by by-product credits, mainly for silver and copper, of US$8/oz.

Pricing

Most refined gold is traded globally in Over the Counter (OTC) transactions directly between
buyer and seller, rather than through exchanges. As well as “spot” transactions, the OTC
market encompasses forwards, options and complex derivative contracts. The main centres
for OTC trading are London, New York and Zurich. In addition to the OTC market, gold is
traded on futures exchanges such as NYMEX and TOCOM.

The most widely-quoted reference price for gold is set each afternoon at the London Gold
Bullion Market Association price fixing, usually referred to as the London p.m. fix.

Market Outlook

The gold price fell to a low of US$253/oz in 1999, its lowest level in nominal terms since 1979,
and its lowest in real terms since the 1960s, due to perceived over-supply of gold from mines

                                              46
and central bank sales, plus a strong US dollar. Besides fundamental supply and demand
parameters, the gold price is strongly influenced by a range of other factors, such as the value
of the US dollar relative to other currencies, and perceived geopolitical and economic risks.

Since 1999 prices have increased substantially, with the London p.m. fix averaging
US$604/oz in 2006. Prices have increased in response to falling mine production; the
Washington Agreements, which have constrained official sector sales; a weaker US dollar
and an increase in perceived geopolitical and economic risks due to terrorism, rising oil prices
and concern over instability in financial markets.

Brook Hunt expects gold prices to remain firm in 2007 and 2008, with annual averages of
US$675/oz and US$690/oz respectively, indicating that investment demand, including ETFs,
remains strong.

Brook Hunt expects these supportive economic and political factors to continue for some time
allowing gold prices to remain at levels in excess of US$500/oz into 2010.

Phosphate Industry Overview
Introduction

There is no substitute for phosphorus: it is essential for all plant and animal life. Phosphorus
(P) is required for cell division, photosynthesis, flowering, fruiting and rapid root development,
and along with nitrogen (N) and potash (K), it is considered one of the three primary plant
nutrients. Plants absorb phosphorous from the soil and convert it to forms that can be
absorbed by people and animals. On agricultural soils, harvesting and grazing removes plants
containing phosphorus, so replacement of the phosphorus in the soil is necessary to improve
future crop production. The growth in global population along with improved nutrition will
guarantee that demand for food will grow in the future, requiring additional quantities of
phosphate fertilizers.

Phosphorus is a relatively scarce mineral. Commercially viable phosphorus is found in ore
bodies (typically with associated carbonates and silicates), referred to collectively as
phosphate rock. Most phosphate fertilizers are manufactured from phosphate rock. While
phosphate rock reserves are widespread throughout the world, high-grade deposits with low
impurities are becoming more difficult to find and more costly to develop.

Diammonium phosphate (DAP) and monammonium phosphate (MAP) (a close alternative)
are the primary phosphate fertilizers used in the world today. DAP is the world’s most popular
and widely traded source of phosphate fertilizer with world consumption estimated by British
Sulphur Consultants (BSC) at 27.92 million tonnes, accounting for 31 % of global phosphate
fertilizer consumption whereas world consumption for MAP in 2006 was estimated at 15.98
               1
million tonnes in 2006, accounting for 20 % of global phosphate fertilizer consumption. DAP
                           2
has 64 total nutrient units (18 units of nitrogen and 46 units of phosphate). MAP has a similar
composition but requires less nitrogen and more phosphorous to produce.

The DAP production process has three main steps; mining of phosphate rock, conversion into
intermediary phosphoric acid, typically by reacting it with sulphuric acid, and lastly
transformation of the phosphoric acid (by the addition of ammonia) to DAP. The total value of
DAP produced in 2006 (based on average plant net-back price, deducting freight costs) was
an estimated US$8 billion.




1
  For the purpose of this analysis, all volumes, costs and prices are on a product tonne basis, rather than P2O5
content.
2
    A fertilizer's grade refers to the total nutrients (N, P & K) contained in the fertilizer, by weight.

                                                                47
DAP and MAP only became commercially viable and available in the early 1970s. These two
fertilizers played a vital role in boosting agricultural production across the globe. While DAP
faces some competition from other types of phosphate fertilizers (in recent years MAP has
taken some market share from DAP due to the formers superiority in certain soils and for
certain crops), there is no substitute for these phosphate fertilizers as a means of meeting the
phosphate nutrient requirements of current global crop production. It is also important to
remember that most DAP producers can adjust their product mix of DAP and MAP (using the
same granulation equipment and simply adjusting the levels of phosphoric acid and ammonia
inputs) based on market conditions for each product, and that Ma’aden capacity will have this
flexibility as well.

There is no substitute for phosphorous rock ore as the phosphorus raw material source for
phosphate fertilizers. Phosphorous rock ore is found across the globe, mainly in old marine
sediments. Commercially viable deposits are widespread, as the relatively high cost of
transporting the ore, in relation to the market price, provides opportunities for smaller
producers to exist to supply local markets. The majority of high quality reserves are located in
Morocco (and to a lesser extent across the rest of North Africa) and China. The US remains a
major producer, but the main production centre in Florida is faced with declining reserves and
reserve quality, as well as increased opposition to mining. The industry there is likely to be
much less significant relative to the rest of the world within the next 20 years.

Mining is a relatively simple operation, though upgrading the raw ore – referred to as
beneficiation – to a grade sufficient to allow conversion to phosphoric acid can be problematic
with some deposits. Depending on the characteristics of the deposit and distance to the
downstream phosphoric acid/DAP complex, the cost of the beneficiated phosphate rock
accounts for a little less than one-third of the cash cost of producing DAP.

Supply and Demand

DAP consumption grew from 5.67 million tonnes in 1975 to 27.92 million tonnes in 2006 at an
annual average growth rate of 5.3 %, though significant year-on-year variation has remained
persistent over time. Rapid growth to 1990 was followed by a brief period of low or negative
growth during the political and economic restructuring in the countries of Eastern Europe and
the former Soviet Union, which were significant suppliers of phosphates up to that point (the
economic turmoil led to lower export availability and higher phosphate rock raw material costs
to DAP producers dependant on Russian supplies). Growth accelerated again from the early
1990s, propelled principally by the rapid growth of consumption in China and India. Worldwide
historical trends in DAP consumption are shown in the table below.

Table 2: DAP Consumption – Historical Trends A (‘000 tones)
                                                 Share of World Consumption (%)
                                         2006           1975          1985          1995     2006
West Europe                              1,626         0.0%           2.1%         6.6%      5.8%
Central Europe                            240         10.8%           5.8%         0.7%      0.9%
Former Soviet Union                        72          0.0%           0.0%         0.0%      0.3%
Africa                                    840          2.0%           3.0%         2.6%      3.0%
North America                            3,408        51.1%          28.9%        18.0%     12.2%
Central America                           587          6.9%           3.5%         1.5%      2.1%
South America                            1,423        12.7%           4.4%         3.7%      5.1%
Middle East                              1,383         9.0%          12.4%         8.5%      5.0%
South Asia                               9,222         6.1%          24.5%        20.7%     33.0%
SE Asia                                  1,356         1.0%           0.4%         3.2%      4.9%
East Asia                                6,920         0.0%          11.8%        30.2%     24.8%
Oceania                                 843             0.3%          3.2%          4.1%     3.0%
World Total                          27,919           100.0%        100.0%        100.0%   100.0%
Data: IFA, British Sulphur Consultants




                                                 48
China’s use of DAP began in the late 1970s. DAP consumption grew by an average 11.8 %
per annum between 1980 and 2006, and currently accounts for 22.9 % of global consumption.
Furthermore, China’s combined DAP and MAP demand accounts for 28 % of global
consumption. China was once the world’s largest importer, accounting for over one-third of
trade in the mid to late 1990s. By 2005 China's DAP/MAP exports equalled its DAP/MAP
imports, following rapid development of their domestic phosphates capacity.

India’s DAP consumption grew by an average 10.6 % per annum between 1975 and 2006
(9.4 % per annum from 1996-2006), and currently accounts for 27.9 % of global consumption.

Going forward, CRU expects DAP and MAP consumption growth to exceed overall phosphate
fertiliser demand growth, with DAP/MAP consumption rising at about 2.7 % per annum to
2025, while phosphate fertilisers in total are expected to rise by 1.8 % per annum. This is a
continuation of the current trend whereby high analysis products replace lower analysis
products due to superior performance characteristics and lower transport costs per tonne of
nutrients. The bulk of new demand is expected to continue to come from Asia (DAP and to a
lesser extent MAP) and South America (primarily MAP).
Broadly speaking on a global basis, the growth in DAP production has matched the growth in
demand. Year to year imbalances between consumption and production are reflected in
changes in industry inventories. Changes in the geographical location of production are
reflected in the following table.

Table 3: DAP Production - Share of World Production (%) (‘000 t)
                  2006                     1975            1985     1995          2006
West Europe         313                    4.2%            1.3%     1.3%          1.1%
Central Europe      319                    7.0%            5.2%     1.5%          1.1%
FSU                 2,239                  0.0%            0.0%     4.3%          8.1%
Africa              2,258                  0.6%            4.2%     9.9%          8.1%
North America       8,839                  76.7%           67.3%    60.0%         31.8%
Central America     0                      2.0%            0.6%     2.4%          0.0%
South America       35                     3.0%            1.3%     0.3%          0.1%
Middle East         1,408                  4.7%            6.1%     5.7%          5.1%
South Asia          5,365                  0.8%            6.2%     11.0%         19.3%
SE Asia             104                    0.8%            1.1%     0.6%          0.4%
East Asia           6,314                  0.3%            6.0%     3.0%          22.7%
Oceania             592                    0.0%            0.7%     0.0%          2.1%


World Total         27,787                 100.0%          100.0%   100.0%        100.0%
Source: IFA, British Sulphur Consultants


The US was the first nation to construct and operate large-scale DAP production plants,
largely to satisfy their own consumption, and subsequently for export. As the technology
became more widely known and accepted, other nations, particularly those that were already
producing phosphate rock and other downstream products for export became DAP producers
as well. Also, in a few instances, productive capacity was built largely on the basis of serving
a large domestic market (by importing the raw materials). This process began slowly in the
1970s, but rapidly accelerated through the end of the 1990s. Currently, the trend continues to
push new production towards areas not only with lower-cost phosphate rock resources, but
ready access to cheaper sulphur/sulphuric acid and ammonia.

The biggest changes since 1975 have been the decline in the relative importance of the US
as a global supplier, in the face of rapid production growth in China and India, though the
latter is largely dependant on imported raw materials. China is now the second largest
producing country in the world, following the US, but is expected to become the global leader
within 3-4 years. In general, China does not have particularly low cash costs, but it has been
able to grow production to feed its rapidly growing domestic market due to low capital and


                                                    49
labour costs (capital costs are kept low primarily by incorporating lower-cost domestic
engineering, fabrication and construction services).

Costs

In 2006, British Sulphur Consultants estimates the average cash operating cost (which does
                                                                         3
not include delivery to market) for all DAP producers as US$221 per tonne . The table below
shows the major components of costs, which are spread fairly broadly across the three main
raw material components and the costs of conversion (these are the costs associated with
converting the various raw materials into intermediates and subsequently into the final
product).

Table 4: Cash Operating Costs by Major Cost Component (2006) (nominal US$/tonne)
                                                                       US$/tonne                          % of total
    Phosphate Rock                                                                         68.4                 31%
    Sulphuric Acid                                                                         39.6                 18%
    Ammonia                                                                                65.9                 30%
    Conversion                                                                             47.1                 21%
    Total                                                                                 221.0                100%
Note: Conversion costs include all other cash costs                                Data: British Sulphur Consultants

The average cost conceals a large variation in costs between the high and low end of the cost
curve, from a minimum of US$156 per tonne to a maximum of US$277 per tonne. In addition,
transportation costs to end-user markets can be very significant (for example, the plant with
US$156 per tonne cash costs also faces around US$40 per tonne in transport costs just to
reach an export port). Because of the sometimes very significant logistical costs, planned new
DAP plants will consider the costs of delivering the product along with the cash cost curve,
and result in situations where plants with a large local market may be built despite being
relatively high on the industry cash cost curve.

Because of the cyclical nature of the purchased raw materials (i.e.; ammonia, sulphur and
phosphate rock), there can be a great degree in variability in costs at a particular plant from
one year to the next.

Most new and planned DAP plants are being built with captive phosphate rock and
phosphoric acid capacities resulting in relatively low cash operating costs typically around
US$200-210 per tonne.

Prices

DAP, as well as other phosphate fertilizers, its raw materials or intermediates – phosphate
rock, sulphur/sulphuric acid, phosphoric acid, ammonia – are not exchange-traded
                                                                 4
commodities (with some very minor exceptions). DAP prices are typically determined via
public tenders, some negotiated contracts for specified quantities over a period of time – i.e.
six months or a year (with a formula to adjust for changes in the market price over time) – and
as spot sales. As such, DAP market prices are quite transparent, with several fertilizer trade
publications quoting them on a weekly basis.




3
    DAP prices are expressed in US$ per metric tonne of DAP product (46% P2O5).
4
  DAP prices represent sales between suppliers and buyers. These buyers typically resell these products to other
resellers or end users (the farmer). Ma'aden and SABIC will likely sell its products through importers in the host
country (both private and public) or through international fertilizer brokers. It is unlikely that Ma'aden will sell any of
its products directly to the farmer.



                                                           50
Typical supply/demand issues move the market price. In recent years the escalation in the
cost of phosphate rock/phosphoric acid raw materials (whether as a direct production cost for
an integrated producer or, most significantly, as purchased by non-integrated producers) have
played an increased role in moving prices to their current highs, by shifting the equilibrium
price higher. This has led to a greater disparity between the margins received by integrated
producers and those that rely on purchased raw materials/intermediates, with the former
enjoying record margins. High ammonia prices have played a similar, though smaller, role in
moving prices higher.

The history of prices shows a long run falling trend in real prices, using the US GDP deflator
to bring prices to 2006 equivalents, though the rate of decline has slowed over the past
decade. For a commodity like phosphate, the decline in real prices is typical, as
manufacturers have built larger, more technically efficient plants to reduce costs and stay
competitive. In addition, a degree of oversupply characterised the market in many of the past
15 years, primarily the result of limited producer discipline – for example, state-controlled
companies would often bring new capacity on stream with little regard to the industry
supply/demand balance, instead they have been more concerned about growing their
domestic industrial base and to provide employment. The average rate of decline in real
prices from 1985-2006 has been 0.9 % a year.

Apart from the long run trend, another important aspect of prices is cyclical behaviour, as
illustrated by the table below. These cycles result because the growth in demand and the
additions to capacity are not in synch, which is brought about by a myriad of factors –
including farm product pricing (influenced by weather, government intervention) and
developments in the upstream phosphate rock and phosphoric acid markets.

The Tampa price has historically served as the benchmark for international DAP sales since
the US is the world’s largest exporter currently representing 46 % of international DAP trade.
Freight costs are important to determine delivered cost to the customer’s port-of-entry and the
competition will adjust free on board (“fob”) values from the suppliers port-of-export to be
competitive.

Table 5: DAP Benchmark Price, fob Tampa ($ per tonne)
            Year             Price               Year       Price            Year             Price
            1985               276              1993          165            2001                 166
            1986               314              1994          220            2002                 172
            1987               241              1995          264            2003                 195
            1988               298              1996          268            2004                 234
            1989               253              1997          244            2005                 255
            1990               241              1998          243            2006                 260
            1991               236              1999          216            2007                 401
            1992               193              2000          177
Source: CRU Strategies

Outlook

The maintenance of the healthy growth rates of DAP consumption depends heavily on the
continued growth of the world economy and particularly the economies of the developing
world, as increased incomes there have a more significant impact on food demand. Growth of
over four % a year in the global economy looks probable over the next 10 years, barring a
major economic recession. Recessions can slow the growth in DAP demand by reducing
incomes and thus reduce food demand.




                                                  51
The increase in supply to meet this demand is likely to come mostly from China, the Middle
East and North Africa. China has a large and growing DAP market, with low capital and
labour costs. We expect that, going forward, China will meet the vast majority of this demand
with domestic production, though still likely importing volumes into the north due to logistical
constraints within China. CRU do not believe that China will become a major exporter, as
China's government has made it clear that phosphate is considered a strategic natural
resource and has enacted a less favourable tax treatment and tariffs on phosphate rock and
DAP exports. The Middle East and North Africa hold advantages – to varying degrees –
pertaining to lower raw material costs by integration into those raw materials or simply
capturing savings due to proximity to existing suppliers.

Conversely, some older, non-integrated capacity in the US, Europe and possibly India can be
expected to close down, especially those plants that purchase high cost phosphate rock. This
is expected to occur following a period where they are expected to operate in a ‘negative cash
flow’ scenario, preventing them from servicing existing debt (which in some cases is
considerable). This will be brought about by a combination of new capacity additions
exceeding demand growth and continued high phosphate rock pricing. CRU Strategies
believes that its forecasts of announced and probable projects suggest a period of falling
phosphate fertilizer prices to around 2011 to 2012, which is likely to trigger a capacity
rationalisation that will bring about the next cyclical upturn.

In addition, sustaining current levels of DAP prices depends on continued producer discipline,
specifically those that sell phosphate rock and/or phosphoric acid. By exercising caution in
expanding capacity, they may be able to prevent, or at least prolong, the current relative
market tightness. With concentration in the phosphate rock and phosphoric acid export
markets at 95 % (from nine companies and China) and 90 % (from seven companies and
China) respectively, continuation of producer discipline also appears probable. Producers
appear to have gravitated towards concentrating on margin over the past few years, rather
than tending to target volume, as they did in the past.

DAP prices are likely to continue to be cyclical, driven by the cyclical nature of the raw
material inputs costs (phosphate rock, ammonia and sulphur), economic growth fluctuations
and the uneven additions of new capacity. However, the trend in prices will be dictated by
costs of production in the long run, and it is our belief that there has been a structural shift
upwards in these costs, due to higher capital costs and producer discipline among the sellers
of phosphate rock and phosphoric acid.

Aluminium Industry Overview
Introduction

The aluminium industry is the world’s second largest metals industry, after steel. The world
consumption of primary aluminium in 2006 was estimated by CRU at 34.34 million tonnes.
Primary aluminium is aluminium made from alumina (which is made from bauxite). In
addition, there is consumption of secondary aluminium (made from scrap), estimated at 14
million tonnes in 2006. The total value of primary aluminium produced in 2006 was US$88
billion. Primary and secondary aluminium is further transformed into various semi-fabricated
products – rolled sheet, coil and plate, extruded bars and sections, wire-rod, castings and
forgings, before final use in manufacturing.

Aluminium has a relatively short history as an industrial metal. Its widespread use only
became viable in the last decades of the nineteenth century, with the discovery of the Hall-
Heroult process for the electrolytic smelting of aluminium, and the Bayer process for the
production of alumina. Prior to these discoveries, aluminium was a semi-precious metal. The
twin processes are still in use today as the main (indeed almost exclusive) processes for
producing aluminium.



                                              52
The applications of aluminium took off very rapidly in the Second World War, due to military
uses. Non-military applications then grew rapidly between 1945 and 1970, by which time the
uses of aluminium were very broadly based. The main uses include transport (in road
vehicles, aircraft, railcars and marine uses), in packaging (drinks cans, aluminium foil),
construction (windows, doors, cladding, facades), electrical (cable and wire), consumer
durables, and in fabrication. The key properties of aluminium that lead to this wide array of
applications are its light weight, high strength to weight ratio, good electrical conductivity and
machinability. Aluminium faces competition from a variety of materials, depending on the
application. Its main substitutes are steel (in transport, construction, packaging and
engineering), plastics (in packaging and construction) and copper (in electrical applications
and heat exchangers).

Aluminium is a very abundant element in nature, but its main commercial ore is bauxite.
Bauxite is largely found in tropical areas of the world, with the main global reserves located in
Australia, Brazil, Guinea, India and Jamaica. Mining is a relatively simple operation, and the
cost of mining bauxite forms only a small proportion of the total cost of producing primary
aluminium. Aluminium is produced from bauxite in two stages. First, bauxite is processed in
an alumina refinery to produce alumina (Al2O3) an oxide of aluminium. Secondly, alumina is
processed into aluminium in an electrolytic smelter. The main costs of converting bauxite into
alumina are energy (in the form of process steam for digestion and fuel for calcination), labour
and caustic soda. The main costs of converting alumina into aluminium are power, labour and
carbon products (coke and pitch). Relative costs of production and freight tend to favour the
processing of alumina close to the source of bauxite, and the processing of aluminium close
to a source of low cost power.

Supply and Demand

The consumption of primary aluminium grew from 4.1 million tonnes in 1960 to 34.34 million
tonnes in 2006, an annual average growth rate of 4.66 %. As the table below shows, the
demand growth rate has varied over time. Rapid growth to 1974 was followed by a period of
slower growth in the following two decades. Growth accelerated again from the early 1990s,
propelled principally by the rapid growth of consumption in China, as well as the resumption
of economic growth in the countries of Eastern Europe and countries of the former Soviet
Union.

Table 6: Primary Aluminium Consumption (1960-2006) (million tonnes)
                 1960 1965 1970 1975 1980 1985 1990 1995                              2000     2005     2006 75-'06 '05-06
EU/EEA          1.413   1.764   2.922    3.255    4.286     4.408    4.946    5.545    6.291    7.079    7.322 165.800     14.40
Other Europe    0.057   0.097   0.167    0.340    0.404     0.487    0.383    0.293    0.464    0.886    0.956   14.060    1.840
CIS             0.620   0.952   1.304    1.549    1.814     2.648    2.736    0.730    0.628    0.840    0.927   48.410    1.770

North America   1.619   2.962   3.636    3.482    4.691     4.537    4.626    5.721    7.148    7.002    7.059 173.087    14.060

Latin America   0.063   0.124   0.198    0.403    0.579     0.687    0.671    0.859    0.985    1.343    1.409   25.180    2.750
Middle
                0.015   0.041   0.095    0.170    0.259     0.329    0.516    0.701    0.898    1.126    1.231   18.720    2.360
East/Africa
India           0.024   0.078   0.159    0.142    0.229     0.308    0.440    0.493    0.590    0.977    1.089   14.280    2.070
China           0.088   0.095   0.181    0.451    0.574     0.750    0.893    1.753    3.238    7.162    8.778   65.750   15.940

Japan           0.148   0.293   0.894    1.148    1.607     1.662    2.368    2.426    2.364    2.408    2.479   64.800    4.890
South & East
                0.023   0.037   0.096    0.145    0.310     0.459    0.919    1.738    2.001    2.666    2.736   36.810    5.400
Asia
Oceania         0.039   0.074   0.135    0.150    0.240     0.317    0.311    0.383    0.388    0.358    0.358 165.800     0.720
Total           4.110   6.510   9.790   11.240   14.990    16.590   18.810   20.640   24.000   31.850   34.340 637.960    66.190
Source: CRU

The table also shows the relative importance of different geographical regions in primary
aluminium consumption. Until the late 1980s consumption was dominated by North America,
Western Europe, Japan and the Soviet Union. Since 1990 the main features have been the

                                                          53
rapid growth in China and the rest of South East Asia, and the rapid decline and then
recovery of former Eastern Bloc economies. China’s primary aluminium consumption grew by
an average 13.9 % a year between 1989 and 2006, by which year it accounted for 25.6 % of
global consumption–surpassing the shares of North America and Western Europe. Between
2000 and 2006, China contributed 59 % of the total global growth in primary aluminium
consumption.

The largest end use is transport which accounted for 30 % of aluminium consumption
(primary and secondary) in 2006, and grew by 6.2 % per year from 1994 to 2006. The second
biggest market, construction, is more mature. It accounted for 19 % of consumption in 2006,
having grown at an average 3 % a year over the previous 12 years. Packaging (10 % of
consumption) is the slowest growing market (1.5 %). The other main markets – electrical (11
%), machinery and equipment (9 %) and others (21 %), have all grown at over 4% a year
between 1994 and 2006.

The supply of primary aluminium has generally matched the growth in demand. Year to year
imbalances between consumption and production are reflected in changes in industry
inventories. Changes in the geographical location of production are reflected in the following
table.

Table 7: Primary Aluminium Production ('000 tonnes)
                                                                                         2006 % of
                           1960           1974              1989     2000      2006
                                                                                              total
North America                             5,472             5,585    6,041     5,333        15.7%
Western Europe              990           3431              3,707    4,066     4,543        13.4%
Eastern Europe               35            336               461      367       472           1.4%
CIS                         700           2,100             3,433    3,615     4,294        12.7%
China                        70            280               758     2,423     9,324        27.5%
Middle East               2,518            167               462     1,247     1,919          5.7%
Other Asia                  160           1,306              678      861      1,398          4.1%
Africa                       44            279               604     1,178     1,864          5.5%
Australasia                  12            330              1,501    2,094     2,274          6.7%
Latin America                17            254              1,698    2,167     2,494          7.4%
World                     4,546          13,954            18,886   24,059    33,915         100%
Source: CRU

Until the 1973 oil crisis, aluminium production took place mostly in the main aluminium
consuming countries of Western Europe, USA, Japan and the countries that now comprise
the CIS. Between 1974 and 1989 the importance of these areas declined as new smelters
were built in countries with low cost power – in Latin America, Australia, the Middle East and
Canada. Between 1989 and the present day these trends continued, but the Middle East and
Southern Africa supplanted Australia and Latin America as the largest producers. The biggest
change since 1989 has been the rapid growth of China as a producer. China is now the
largest single producing country of primary aluminium in the world by some margin. In
general, China does not have low power costs, but it has been able to grow production to
feed its rapidly growing domestic market due to low capital and labour costs.

Costs

CRU Strategies estimates that in 2006 the average corporate cost for all companies was
US$1,636 per tonne. The table below shows the major components of costs. The average
cost conceals a large variation in costs between different companies, from a minimum of
                                                                th      th
US$911 per tonne to a maximum of US$2,425 per tonne. The 10 to 90 percentile range
was US$1,342 per tonne to US$2,086 per tonne.




                                                      54
Table 8: Aluminium Corporate Costs by Major Component (2006)
 Component                                                        US$/Tonne               % of total
Alumina                                                                 702                    43%
Carbon                                                                  155                       9%
Labour                                                                  159                    10%
Power                                                                   428                    26%
Other costs                                                             192                    12%
Total (world average)                                                  1,636                  100%
Source:CRU

Prices

Since 1978, primary aluminium contracts have been traded on the London Metal Exchange
(LME) and by the mid-1980s the LME aluminium price became the main reference price for
aluminium, with most primary aluminium being traded at a price related to the LME price.
Before the LME contract, aluminium prices were published by producers as list prices, and
periodically adjusted in line with market forces. They were not transparent (producers
adjusted prices by means of payment terms and discounts), were adjusted infrequently and
failed to represent the market accurately.

Primary aluminium is currently used as the reference price for aluminium. Prices for alumina
and semi fabricated products are closely linked to the primary aluminium price. The history of
prices shows a long run falling trend in real prices, using the US GDP deflator to bring prices
to 2006 equivalents as is shown in the table below. The rate of decline over 46 years has
been 0.8 % a year.

Table 9: Primary Aluminium Prices, in real 2006$ (1960-2006)
 LME 3m price (real 2006$)
              1960            2,626               1976         2,510           1992           1,703
              1961            2,582               1977         2,687           1993           1,512
              1962            2,447               1978         2,648           1994           1,916
              1963            2,365               1979         3,657           1995           2,290
              1964            2,506               1980         3,771           1996           1,883
              1965            2,563               1981         2,566           1997           1,952
              1966            2,481               1982         1,894           1998           1,646
              1967            2,382               1983         2,608           1999           1,633
              1968            2,169               1984         2,187           2000           1,804
              1969            2,624               1985         1,747           2001           1,630
              1970            2,280               1986         1,855           2002           1,507
              1971            1,751               1987         2,359           2003           1,547
              1972            1,657               1988         3,527           2004           1,816
              1973            2,395               1989         2,806           2005           1,955
              1974            2,819               1990         2,305           2006           2,594
              1975            2,110               1991         1,816


Apart from the long run trend, the other important aspect of prices is cyclical behaviour. The
table illustrates that the average annual real aluminium price is subject to pronounced price
cycles. Over the period 1981-2004 the nominal 3-month LME prices averaged US$1,468 per
tonne. But annual average nominal prices varied from a low of US$1,032 per tonne in 1982 to
a high of US$2,319 per tonne in 1988. In the 1990s the cycle was less marked, but prices hit
a low of US$1,161 per tonne in 1993 and a high of US$1,832 per tonne in 1995. Between
1996 and 2004, annual average prices were contained in a relatively narrow band by
historical standards of US$1,364-1,721 per tonne. 2005, 2006 and 2007 to date have seen
the biggest breakout from this band since the late 1980s, with the annual average price in

                                                    55
2007 expected to be US$2,705 per tonne. In terms of real 2006 prices, this is still below the
peaks in 1980 and 1988, when prices exceeded US$3,500 per tonne.

Outlook

The maintenance of the healthy growth rates of aluminium consumption depends heavily on
the continued growth of aluminium in transport applications, the continued rapid growth of the
Chinese economy, and the growth of consumption in other emerging economies, notably
India. Whilst CRU Strategies expects growth rates to slow from last year’s 7.8 % and 10.1 %
in 2007 (propelled by Chinese demand), it expects to see average annual growth of 5.8 % to
2015, barring a major economic recession. CRU Strategies believes that the increase in
supply to meet this demand is likely to come mostly from China, the Middle East, Russia,
Africa and Iceland. On the other hand some older smelters in the US, Europe and China can
be expected to close down. Expansion of alumina capacity can be expected to occur mostly
in China, Australia, Brazil, Guinea and India.

Aluminium prices are likely to continue to be cyclical, mainly driven by economic growth
fluctuations, though the timing of troughs and peaks is unpredictable.




                                             56
                       The Company's Business

Overview
Ma'aden was formed as a Saudi joint stock company, pursuant to Royal Decree No. M/17
dated 14/11/1417H (corresponding to 23/3/1997G) for the purpose of facilitating the
exploration and development of Saudi Arabia’s mineral resources. In that year Petromin
transferred all of its interest in the Saudi Mining Company for Precious Metals (“SCPM”),
amounting to 50% of the share capital of SCPM to Ma'aden. Ma’aden acquired the remaining
50% balance of the shares in SCPM in November 1999 from, Boliden Mineral S.P., a
Swedish mining company for an amount of SR26,000,000.

Subsequent to the transfer of these assets, Ma'aden's active gold business has expanded to
include the operation of five gold mines in the Kingdom: Mahd Ad Dahab (located in central
western Saudi Arabia), Al Hajar (located in south western Saudi Arabia), Sukhaybarat
(located in central Saudi Arabia), Bulghah (located in central Saudi Arabia) and Al Amar
(located in central Saudi Arabia) which commenced production in early 2008. As of 31
December 2007, the main customers of Ma’aden were JPMorgan, Barclays Bank and
Umicore, amounting to 93.6% of Ma’aden’s cumulative gold sales.

Ma'aden's objective is to explore and develop Saudi Arabia's mineral resources and become
a world class international mineral resource company. Ma'aden has taken significant steps
towards achieving this objective by launching the development of a phosphate mine and
fertiliser production facility for the production of Diammonium Phosphate ("DAP") and excess
quantities of ammonia and phosphoric acid (the "Phosphate Project") and a bauxite mine,
alumina refinery and aluminium smelter for the production of aluminium ingot (the "Aluminium
Project").To date, Ma'aden's focus has been its gold and base metals business.

Since its formation, Ma'aden (through the Ministry of Petroleum) has collaborated with the
Government, represented by the Public Investment Fund, and local legislators to develop a
regulatory framework for the governance of the mining industry in Saudi Arabia. In addition,
Ma'aden secured the commitment of the Public Investment Fund to design and construct the
Railway, Port and other infrastructure to underpin its planned Phosphate and Aluminium
Projects.

Ma’aden’s Mission
Ma’aden’s mission is to become a publicly owned world class international mining company
that generates profits while at the same time protecting matters relating to human resources,
health, safety, as well as environmental and social matters.

Shareholding Structure Pre and Post Offering
                                               Pre-Offering                                   Post-Offering
            Name
                               Number of                                        Number of
                                                   %          Value in SR                         %           Value in SR
                                Shares                                           Shares

 Government of the Kingdom
 of Saudi Arabia represented   400,000,000        100%        4,000,000,000     462,500,000        50%        4,625,000,000
 by Public Investment Fund

 General Organization for
                                           -           -                    -    23,125,000        2.5%        231,250,000
 Social Insurance




                                                       57
           Public Pension Agency                       -          -                -    23,125,000        2.5%      231,250,000

           Public                                      -          -                -   416,250,000         45%     4,162,500,000

           Total                           400,000,000      100%       4,000,000,000   925,000,000        100%     9,250,000,000


       *including Institutional Investors and Individual Subscribers


       Ma'aden Organisational Structure and Overview
       Ma'aden's business units will be organised under separate subsidiaries to facilitate joint
       ventures with strategic partners such as Rio Tinto Alcan and SABIC. It is envisaged that
       Ma'aden will retain a majority interest in these companies, each of which will have its own
       Board and management.

       The proposed group structure for Ma’aden is shown below.

       Proposed Ma’aden Group Structure


                                                            Ma'aden




                                            SABIC                      Alcan                Sahara
                                             30%                        49%                  50%

100%                               70%                      51%                  50%             50%              100%

                                 Ma'aden              Ma'aden Aluminium                                     Ma'aden
 Ma'aden Gold                  Phosphate                   Company                Chlor Alkali           Infrastructure
  Company1                      Company               ("AlumCo") (Under           JVCo (Under               Company
                               ("PhosCo")                 Formation)              Formation)2              ("InfraCo")
                                                                                                       (Under Formation)3




   Gold Mining                 Phosphate                    Aluminium
   Exploration                                                                    EDC Project          Infrastructure
                                Project                       Project
    Projects




       Please note that the formation process of InfraCo, Chlor Alkali and AlumCo has not yet been
       finalized as of the date of this Prospectus.
       1
           Saudi Mining Company for Precious Metals was renamed Ma’aden Gold Company.

       2
        The company will be 50% owned by Ma’aden and 50% by Sahara Petrochemical Company for the purpose of
       establishing Chlor Alkali.

       3
         The company will be wholly-owned by Ma’aden and will be established for the purpose of building and maintaining
       the required infrastructure for the Ras Az Zawr.




                                                                  58
Ma’aden’s Major Accomplishments
Dates       Event

1997        The Al Amar licence was issued covering an area of 5km² with a duration of
            30 Hijri years. The Al-Amar mine is located 210 km west of Riyadh in central
            Saudi Arabia, 900m above sea levels. This licence covers essential and
            precious minerals with an annual surface rent of SR50,000.

1997        Ma'aden commenced exploration for phosphate in the Umm Wu'al area.

1998        The Al Hajar licence was issued covering an area of 6Km² with a duration of
            30 Hijri years. This licence covers precious and base metals with an annual
            surface rent of SR60,000. Mining operations ceased in 2006 following
            depletion of the open cut Ore Reserves and operations are now limited to the
            reclaiming of gold stacked at the heap leach facility.

1998        Ma'aden was granted an exploration licence for the Ad Duwayhi prospect. In
            2004, the Ad Duwayhi licence was renewed for a period of four additional Hijri
            years. A further renewal of this licence is currently pending.

1999        Ma’aden won the right to explore and investigate the feasibility of the bauxite
            deposits at Az Zabirah in a competitive tender.

1999        Ma'aden was granted an exploration licence for Al Jalamid (the Turayf
            licence). In 2004, the Al Jalamid licence was extended for a period of 4
            additional Hijri years and is now subject to a renewal application for a reduced
            licence area.

1999/2003   Ma’aden carried out a staged resource definition diamond core drilling
            programme with total drilling advance of 60.031m in 574 holes.

2001        The Bulghah licence was issued covering an area of 39Km² with a duration of
            30 years. The licence covers the mining lower grade ore (less than 1.0g/t of
            gold) for processing at the Bulghah heap leach processing facility (which has
            a design capacity of 4.0Mtpy) and higher grade ore (greater than 1.0g/t of
            gold) for processing at the Sukhaybarat processing facility. The licence is for
            gold with an annual surface rent of SR390,000.

2001        The Al Hajar mining and processing operation was commissioned.

2001        Ma'aden commenced exploration for phosphate in the Al Jalamid area.

2002        The Mansourah deposit was discovered by Ma’aden. The Mansourah deposit
            is located some 460km northeast of Jeddah. A total diamond core drilling
            advance of 65,107 m in 317 holes and 26 reverse circulation holes have been
            completed to date.

2002        Bulghah mining and processing operation was commissioned.

2003        Development of the Railway was authorised. Construction of the Railway was
            approved by the Supreme Economic Council and the Council of Ministers and
            its development will be monitored by SAR, a company wholly owned by PIF.

2003        Ma'aden was granted the Al Uruq licence.



                                          59
2004   Snowden determined a JORC Code compliant Mineral Resource of 2.1Moz of
       gold contained within 17.1Mt grading at 3.9g/t of gold for Ad Duwayhi.

2004   The Masarrah deposit was discovered. The Masarrah deposit is located
       approximately 6.5km north-west of Mansourah. A total of 34,115m of diamond
       core drilling was completed.

2005   Bechtel's Feasibility Study Report for the Aluminium Project was completed.

2006   Ma’aden was granted a mining licence for the Al Jalamid site by the Ministry of
                                                                                2
       Petroleum & Minerals. The licence covers an area of 49.55km and
       encompasses the Al Jalamid Deposit and the four other prospective deposit
       areas identified in the immediate area around the Al Jalamid Deposit. The
       term of licence is 30 Hijri years from the date of issue and the annual surface
       rent for the licence is SR 500,000.

2006   Ma’aden signed a Memorandum of Understanding with Sahara Petrochemical
       Company in relation to the construction of a caustic soda plant and it is
       anticipated that a joint venture agreement will soon be signed pursuant to
       which a company will be formed and owned 50% by Ma’aden and 50% by
       Sahara Petrochemical Company.

2006   Ma'aden entered into a project management consultant agreement with
       Worley Arabia Limited for the provision of certain project management
       services relating to all contracted works and services to be carried out in
       connection with the development of the Phosphate Project and the Common
       Infrastructure
                                                                                   2
2006   Ma'aden was granted a mining licence which covers an area of 37.82km and
       encompasses the Al Khabra deposit site and three other prospective deposit
       targets identified in the Umm Wu’al area. The Al Khabra mining licence was
       granted for a period of 30 Hijri years. The annual surface rent for the licence is
       SR380,000.

2007   Ma'aden was granted three mining leases by the Ministry of Petroleum and
       Mineral Resources for the south zone of the Az Zabirah deposit. Ma'aden has
       also applied for two contiguous exploration licences which will cover the
                                                                        2
       central zone of the Az Zabirah Deposit with a total area of 164km .

2007   Ma'aden entered into a joint venture agreement with SABIC pursuant to which
       PhosCo, the joint venture company to be established to operate the
       Phosphate Project, will be owned 30% by SABIC and 70% by Ma’aden.

2007   A contract of the operation and maintenance of the phosphate mine at the Al
       Jalamid site mine was awarded to Saudi Comedat Company Ltd.

2007   Ma'aden entered into LSTK EPC contracts for the construction of each of the
       sulphuric acid, phosphoric acid, ammonia, DAP and beneficiation plants to be
       constructed at the Ras Az Zawr site.

2007   Ma'aden entered into heads of agreement with Rio Tinto Alcan to conclude a
       joint venture agreement pursuant to which Rio Tinto Alcan will acquire a 49%
       interest in AlumCo, the joint venture company which will operate the
       Aluminium Project.

2007   Construction of sulphuric acid, phosphoric acid, ammonia and DAP plants

                                      60
       commenced at Ras Az Zawr

2007   The construction of the Al Amar mine was finalized.

2008   Ma’aden and SABIC obtained, for the benefit of PhosCo, a commitment letter
       pursuant to which AlRajhi Bank, Riyad Bank, Samba Financial Group, Saudi
       Fransi Bank, Standard Chartered Bank, Caylon Bank and Mizoho Corporate
       Bank agreed to secure and arrange for loans for the financing of the
       Phosphate Project.

2008   A mandate letter appointing arrangers and underwriters for the required debt
       financing for the Phosphate Project was executed.

2008   The FEL 2 Studies were completed and the estimated production capacities
       for the refinery and smelter were revised to approximately 1.8 Mtpy of alumina
       and 0.74 Mtpy of aluminium respectively.

2008   The Al Amar mine was commissioned.

2008   First production delivery from the kaolin and low grade bauxite project.




                                      61
Strengths
Ma’aden's key strengths may be described as follows:

Strong growth opportunities

Ma’aden benefits from an existing gold business that generates strong cash flows from five
operating gold mines and has a number of advanced exploration projects ready for
development. Ma’aden has begun the implementation of major scale projects for the
production of phosphate fertilisers and for aluminium in Saudi Arabia. Upon completion of the
Phosphate and Aluminium projects Ma’aden will become a major supplier of phosphate
fertilizers and primary aluminium ingot in global markets with its business and financial growth
prospects transformed. Ma’aden has also valuable opportunities to expand its gold producing
projects, as described in the Gold MER.

Favourable markets for core products

It is anticipated that demand for Ma'aden's core products will continue to grow driven by
increases in population growth and rising standards of living as well as rapid industrialisation
in the growing economies of India and China. Ma’aden believes that such increases in
demand will allow new producers, including Ma’aden, to enter the market on a competitive
basis.

In 2006 global gold supply declined to a greater extent than the reduction in global demand
for gold. This has resulted in an attractive pricing environment for gold which experts expect
to continue in the medium term.

At present, there is no alternative to DAP or monammonium phosphate (“MAP”) as a fertiliser
which can deliver significant increases in food production and the product is not recyclable.

For the period from 2000 to 2006 the average growth rate for the consumption of primary
aluminium was 5.4 % per annum, which has been fuelled by the rapid economic growth in
China and the world.

Diversified business

Ma’aden will be operating a diversified minerals business encompassing gold, phosphate
fertilizers, primary aluminium, and industrial minerals. The markets for these products have
individual price cycles and this will help mitigate the effects of commodity price fluctuations
impacting prices of Ma'aden's core products and movements in the prices of key raw
materials on which it depends.

Long life phosphate and bauxite resources

Ma'aden's future growth is further underpinned by its known reserves and resources of
phosphate and bauxite in Saudi Arabia. Ma’aden's measured phosphate resources at Al
Jalamid are estimated to be 534 Mt. It is proposed to mine 223 Mt for the Phosphate Project
over its initial planned life of operations, leaving the balance available to extend the project life
or to enable increases in production capacity during the current project life.

Ma'aden's bauxite ore resources in the south zone of the Az Zabirah deposit are estimated to
be 240 Mt at 50 % available alumina and eight % sulphur dioxide (“SiO2“)and are expected to
be sufficient to supply AlumCo's proposed alumina refinery for a period in excess of 30 years
based on initial design capacity. Additional bauxite resources have been delineated in the
central and north zones and exploration is continuing for higher grade bauxite deposits which



                                                 62
may be mined more economically with a view to improving overall returns from the Aluminium
Project.

Low cost minerals producer

Ma'aden's gold business is, and its phosphate and aluminium businesses will be, fully
vertically integrated from mineral ore to production of primary metal (in the case of aluminium
and gold) and from mined ore to final consumer products (in the case of phosphate fertilisers).

The vertical integration of Ma'aden's businesses offers substantial economies of scale
(particularly in terms of transport and storage of raw materials) enabling it to minimise the
involvement of third parties and thereby more effectively control costs. In addition, Ma'aden
will benefit from raw material supplies sourced within Saudi Arabia including, in particular,
sulphur, natural gas and an economical source of heavy crude oil. As a result Ma'aden
expects to hold a significant cost advantage over its nearest competitors in producing and
delivering DAP to its target markets. In addition, lower freight rates to Ma’aden’s key markets
in Asia due to its closer proximity to those markets are expected to enable Ma’aden to
compete on more favourable terms than alternate suppliers in North Africa and the United
States.

Modern cost effective technology

Both the Phosphate Project and the Aluminium Project will benefit from modern processing
and mining facilities and techniques employing tried and tested methodologies under the
guidance of Ma'aden's joint venture partners, SABIC and Rio Tinto Alcan. Ma’aden's technical
plans seek to take advantage of vertical integration and scale economies to reduce cost and
create synergies such as the use of steam generated in the production of sulphuric acid to fire
the phosphate power plant to be located.

Significant Government support

Ma’aden is the vehicle through which the Government intends to realise its strategic goal of
creating a world class diversified mineral business operating from Saudi Arabia. The
Phosphate and Aluminium Projects, in particular, have received strong Government backing
the provision of key support infrastructure such as the Railway and Port. The Government has
also allocated the industrial and residential land at the Ras Az Zawr site for the establishment
of the processing facilities and supporting social and industrial infrastructure required for the
Company’s projects. In addition, the Government has provided an allocation of fuel for the
power station and natural gas for the ammonia plant (in each case through Saudi ARAMCO).
The Government will also grant the Company a significant subsidy for the connection of the
power supply at Ras as Zawr to the public electricity network on condition that the SEC
remain responsible for the maintenance and operation of the transmission network grid.

Ma'aden's strong partners

The participation of SABIC, currently one of the world’s largest petrochemical companies in
the world, in the Phosphate Project and Rio Tinto Alcan, currently the world’s second largest
aluminium company, or any other strategic partner in the Aluminium Project significantly
diminishes Ma'aden's project execution and operating risk.            Through joint venture
arrangements SABIC and Rio Tinto Alcan will each provide the benefit of their world class
technical, and operational experience to provide input and know-how in the engineering
design of the projects and during the project execution and operational phases of the projects.
Ma’aden's joint venture partners will also provide expertise with respect to the sale and
marketing of Ma'aden's products to be reflected in agreements and flexible marketing
arrangements that enable Ma'aden to develop its own marketing resources over time.




                                               63
Synergies between divisions

The shared location of processing facilities for the Phosphate and Aluminium Projects at Ras
Az Zawr and the use of the Railway, Port and other shared infrastructure at this site create
significant synergies between Ma'aden's business divisions. By way of example, the ability to
combine acidic waste streams from the fertilizer plants with the alkaline waste streams from
the alumina refinery provides an opportunity to neutralise waste streams at a cost lower than
that likely to be incurred by Ma’aden’s competitors.

Experienced management team

Ma’aden's management is experienced in developing, executing and operating natural
resource projects within Saudi Arabia having profitably operated four gold mines, brought two
mines into economic production and commenced a number of advanced exploration projects
where it has carried out JORC compliant resource estimates and pre-feasibility studies.

Ma’aden has recruited experienced senior executives and technical experts to drive the
projects forward and to train its future project workforces and has engaged international
consultants to assist it in planning for its future strategic growth. Management's experience is
supplemented by key expertise and specialised personnel provided by joint venture partners.

Strategy
Ma’aden's objective is to become a world class diversified mining and minerals group, and to
enhance overall value for its shareholders.

Ma’aden's main strategic driver is to successfully exploit the large phosphate and bauxite
deposits over which it has mining rights through the production of DAP and primary aluminium
ingot. It also plans to achieve significant growth in its gold mining business by exploiting
known gold resources and developing new prospects primarily within the Central Arabian
Gold Region over which it has secured mining or exploration rights.

Ma’aden intends to pursue this strategy by:

    •    Maintaining the momentum it has already achieved with respect to the
         implementation of the Phosphate and Aluminium Projects and ensuring the
         completion of the construction of Ma'aden's mining and production facilities and the
         associated infrastructure for the Phosphate and Aluminium Projects within existing
         budgeted costings and in accordance with project deadlines.

    •    Using its strong balance sheet following the initial public offering to raise project
         finance for the Phosphate and Aluminium Projects.

    •    Co-operating closely with its major shareholder, the Government, represented by the
         Public Investment Fund, to ensure the timely completion of the Railway and the Port
         as the key supporting infrastructure for the successful realisation of the Phosphate
         and Aluminium Projects.

    •    Successfully developing its proposed Chlor Alkali Project to produce caustic soda as
         an essential feedstock to be used by the Aluminium Project's alumina refinery to
         refine bauxite to produce alumina (see "The Company's Business - Other Projects").

    •    Developing its gold resources in the Central Arabian Gold Region and in the Arabian
         Shield Region.

    •    Taking advantage of its ability to increase production capacity in its future phosphate
         and aluminium operations at a relatively small incremental cost.

                                              64
  •   Increasing appropriate know-how and technical expertise with respect to its project
      management, operations, processing facilities and marketing.

  •   Maximising the benefits achieved through the economies of scale available to the
      Company as a result of the availability of key raw material inputs such as energy,
      sulphur, natural gas, and caustic soda.

  •   Continuing to build up Ma'aden's human resources at all levels so as to meet the
      needs of running a rapidly expanding diversified mining business.

  •   Opportunistically considering strategic acquisitions and concluding joint ventures that
      will enhance Ma'aden's growth prospects and shareholder value.

  •   Implementing strong corporate governance as a company listed on Tadawul in order
      to safeguard the interests of all its shareholders.

  •   Maintaining its emphasis on corporate social responsibility by implementing detailed
      policies dealing with health and safety and environmental issues.

Research and Development
      The Company does not carry out any research and development activities.




                                           65
                          Current Company Business
                                            (Gold Operations)

Background of Gold Operations

The history of gold mining in the Arabian Peninsula dates back to ancient times. Numerous
ancient workings dating back over 4,000 years have been documented by government
agencies. These sites formed the focus for subsequent exploration work in modern times
which has been carried out largely by government agencies since 1954. This work resulted in
extensive documentation of old workings, regional-scale geologic mapping at a scale of
1:250,000 and localised trenching and drilling programmes.

Exploration carried out by Ma’aden through its gold division since 1997 has focused largely
on the follow-up of old workings, but has also succeeded in discovering new gold occurrences
and deposits. Ma’aden and its wholly owned subsidiary, SCPM currently hold between them
                                                2
mining leases covering approximately 110km and will hold, following renewal of current
                                                                         2
applications, exploration licences covering approximately 48,492.42km of the prospective
geological area known as the Arabian Shield.

Estimates of the Company's gold and other mineral reserves and resources appearing in this
section are based on the figures set out in the Gold MER which are stated as at 1 July 2007.
The Directors are not aware of any facts or circumstances that have occurred since that date
which would lead to any significant reduction in the reserves or resources as stated in the
Gold MER.

Gold Mines Licences

Ma'aden's gold assets include five operating mines, the last of which commenced production
in January 2008. Ma'aden currently holds the following licences in relation to each of the
operating mines in Al Amar, Mahd Ad Dahab, Sukhaybarat, Bulghah and Al Hajar.

The table below provides the historical sequence for securing such licences and their
duration, size of the mines and their yearly rental values.

Table 10: Gold Mines Licences
       Date          Licence/location           Duration*             Size                 Yearly Rent
 1988                     Mahd Ad Dahab¹           30 years             10.3 Km²                   SR110,000
 1988                     Sukhaybarat²             30 years               50 Km²                   SR500,000
 1997                     Al Amar²                 30 years                  5 Km²                   SR50,000
 1998                     Al Hajar²                30 years                  6 Km²                   SR60,000
 2001                     Bulghah²                 30 years               39 Km²                   SR390,000
Source: Ma’aden

* refers to Hijri years

¹ Ma’aden has the right to extend or renew the licence for Mahd Ad Dahab upon the expiry of its original term for
periods which do not cumulatively exceed 20 years subject to not violating the operative rules and regulations at the
time of renewal, provided that Ma’aden would have met all its obligations listed in the licence, the Mining Law and its
implementing regulations.

 ² The Minister of Petroleum and Mineral Resources has the right to renew the licences for these mines upon the
finalization of all necessary procedures in this regard for periods which do not cumulatively exceed 30 years subject
to not violating the operative rules and regulations at the time of renewal, provided that Ma’aden would have met all
its obligations listed in the licence, the Mining Law and its implementing regulations.




                                                         66
Ma’aden is currently also developing a prospect (Ad Duwayhi) for mining. In addition, the
Company has five advanced exploration projects and 33 other projects. The “Exploration
Project” section contains more information with respect to these projects. In addition to mining
and processing of gold, Ma’aden also produces zinc and copper concentrates.

Operating Mines

Ma'aden's current operating mines are:

Mahd Ad‘Dahab

Mahd Ad’Dahab is situated in the western region of the country known as the Hejaz in the Al
Medinah Province of Saudi Arabia. Ma’aden began commercial production at the mine in
1988. Originally, the mine had a planned life of seven years, which has since been extended
to 2011 by underground diamond drilling. Mining is carried out by underground methods with
a total tunnel development in excess of 60km and a metallurgical plant.

In its MER, SRK states that as at 1 July 2007, Mahd Ad’Dahab had Ore Reserves of
347,000oz of gold (360,000oz of gold equivalent) contained within 1.2Mt grading at 8.7g/t of
gold (9.0g/t of gold equivalent). This ore reserve includes a total of 232kt of surface sources
grading at 0.8g/t of gold (0.9g/t gold equivalent) containing 6koz of gold (7,000oz of gold
equivalent). Total Mineral Resources comprise 643koz of gold (665koz of gold equivalent)
contained within 1.2Mt grading at 16.1g/t of gold (16.6g/t of gold equivalent).

In 2007 Mahd Ad‘Dahab mined and processed approximately 183,425 tonnes of ore at a
grade of around 11.1 g/t of gold from underground operations, resulting in gold production of
approximately 58,256 ounces for 2007 compared to 58,400 ounces and 56,108 ounces in
2005 and 2006 respectively. In addition, the mine also processes reclaimed tailings and
produces copper and zinc concentrates for third party toll smelting.

There is the potential to upgrade current Inferred Mineral Resources at the mine to the
Indicated Mineral Resources category and potentially extend the life of the mine by one year
to 2013. Any further potential for the mine beyond this is largely dependent on further
exploration in the immediate underground mining areas.

The net cash cost per ounce of gold produced at Mahd Ad’Dahab for the year ended 31
December 2007 was US$153 (SR 573.75) compared to a net cash cost of US$87 (SR326.25)
per ounce for the previous year. The significant increase in net cash cost per ounce in 2007
was due to a decrease in by-product credits and increased production cash costs.

Sukhaybarat

The Sukhaybarat site is situated in Al Qaseem Province about 250km east of Mahd
Ad‘Dahab. Sukhaybarat now comprises a carbon-in-leach (CIL) processing plant only. It
processes ore transported form Bulghah mine, which is located 65km to the south west of
Sukhaybarat. Its open cut mining operation and heap leach operations ended in 2003. The
Sukhaybarat plant has a rated capacity of 600ktpa and is planned to continue operations until
2014. The current LoMp is solely dependent on processing ore from the Bulghah mine and,
specifically, the planned future processing of lower grade ore from that mine.

In its Gold MER, SRK states that as at 1 July 2007, Sukhaybarat has Ore Reserves of 2koz of
gold contained within 0.2Mt grading at 0.4g/t of gold. Total Mineral Resources comprise 2koz
of gold contained within 0.2Mt grading at 0.4g/t of gold. Its Ore Reserves are limited to the
surface stock pile of ore transported from Bulghah.

Process output at the Sukhaybarat plant has increased since 2005 to reach a current
annualised output of 624ktpa. However, the head grade has reduced significantly since 2005
from 2.9g/t of gold to 1.4g/t of gold. This, in conjunction with other factors, has resulted in an

                                               67
approximate 50% reduction in annualised gold production since 2005. Gold production at
Sukhaybarat in 2007 was approximately 25,079 ounces.

Given the increasing contribution of fresh and lower grade ore planned for delivery to the
heap leach facility from Bulghah, Ma’aden’s intention is that the Sukhaybarat mine will focus
on maximising metallurgical recoveries. Ore Reserves are expected to be fully depleted by
2014.

The net cash cost per ounce of gold for the years ended 31 December 2005, 2006 and 2007
was approximately SR637.5 (US$170), SR986.25 (US$263), and SR1,275 (US$340) per
ounce respectively. The increase in cash costs during the period is primarily due to declining
ore grades.

Bulghah

Bulghah is situated in Al Madinah Province about 65km south of the Sukhaybarat processing
plant. It comprises an open-pit mine which mines lower grade ore (less than 1.0g/t of gold) for
processing at the Bulghah heap leach processing facility (which has a design capacity of
4.0Mtpy) and higher grade ore (greater than 1.0g/t of gold) for processing at the Sukhaybarat
processing facility.

Bulghah was commissioned in October 2002. It is currently in a transitional phase as its high
grade (oxidised) ore is depleted and future production will be increasingly dominated by lower
grade transitional and sulphide ores which have lower metallurgical recoveries than those
achieved historically from ores previously mined at this site.

In its MER, SRK states that as at 1 July 2007, Bulghah has Ore Reserves of 428,000oz of
gold contained within 16.8Mt grading at 0.8g/t of gold.

Process throughput at the Bulghah processing facility has been reduced from in excess of 4.0
Mtpy to an annualised production of 2.9Mtpy based on processing figures for the year 2007.
Furthermore, the grades of stacked gold (ore ready for heap leaching) have also reduced
(currently 0.7g/t of gold), which when combined with the reduction in the quantity processed,
has resulted in an approximate 31% reduction in annualised gold production since 2006. Gold
production at Bulghah in 2007 was approximately 43,299 ounces.

Given the increasing contribution of fresh and lower grade ore planned for delivery to the
heap leech facility, Ma’aden intends to focus on maximising metallurgical recoveries at the
mine. It expects Ore Reserves to be fully depleted by 2010.

The net cash cost per ounce of gold at the mine for the last three years ended 31 December
2005, 2006 and 2007 was SR461.25 (US$123), SR832.5 (US$222) and SR1,151.25
(US$307) per ounce respectively.

Al Hajar

Al Hajar is located in southern Saudi Arabia 710km southeast of Riyadh. It comprises an open
cut mine and the Al Hajar heap leach facility which is currently re-processing previously
stacked and leached material. Mining operations ceased in 2006 following depletion of the
open cut Ore Reserves and operations are now limited to the reclaiming of gold stacked at
the heap leach facility. The heap leach facility was commissioned in 2001 and has a rated
capacity of 750ktpa. A secondary crusher was installed in October 2005 to improve crushing
methods and increase gold recoveries. Subsequent metallurgical testing of the stacked and
leached ore at the mine indicated that the material leached has residual gold grades of 1.3g/t
of gold. The current LoMp assumes that material stacked prior to October 2005 can be
economically reclaimed, re-crushed (to less than 20mm) and re-stacked on a new Heap
Leach Pad with metallurgical recovery of 51.9% for gold.


                                              68
In 2005, Ma’aden commenced mining at Jadmah, a satellite deposit situated some 4km west
of Al Hajar which is now depleted. In 2006, Ma’aden completed a technical study investigating
the potential for re-crushing existing stacked and leached material. In the third quarter of
2006, the re-crushing programme commenced, and in September resulted in the
reprocessing of 0.3Mt of material grading at 1.5g/t of gold up to 1 July 2007.

In its Gold MER, SRK states that as at 1 July 2007, Al Hajar has Ore Reserves of 87,000oz of
gold contained within 2.1Mt and grading 1.3g/t. Total Mineral Resources comprise 87,000oz
of gold contained within 2.1Mt and grading 1.3g/t of gold. Process throughput at the heap
leach facility increased from 666ktpa to 756ktpa between 2004 and 2006. Performance for the
year period ended 2007 is expected to be 31% below budget. The head grade has also
reduced significantly since 2004, from 3.5g/t of gold to the current 1.3g/t of gold. Accordingly,
this has resulted to a 39% reduction in gold production from 2006 and a 40% decrease in
cash operating costs during 2007 against 2006 figures.

Ma'aden is largely focused on attaining the forecast production rates and unit operating
expenditures as provided in the latest LoMp. However, there are six regional exploration
prospects situated within the Al Hajar Exploration Licence area, namely, Hajeej, Sheers,
Jadmah, Gossan-14, Waqba and Sha’abat Al Hamra.

Al Amar

Al Amar is located in the Ar Riyadh Province approximately 195km southwest of Riyadh. It
comprises an underground mine which is planned to process a gold rich polymetalic ore at a
rate of 200ktpa to produce gold in doré and copper and zinc concentrates which are sold to
third parties for toll smelting. Construction was completed during the half year period ended
30 June 2007 and the facility is currently undergoing commissioning and production build up
with full production planned for 2009.

In its MER, SRK states that as at 1 July 2007, Al Amar has Ore Reserves of 429,000oz of
gold (441,000oz gold equivalent) contained within 1.4Mt grading at 9.9g/t of gold (10.2g/t of
gold equivalent). Total Mineral Resources comprise 722koz of gold (742koz gold equivalent)
contained within 2.0Mt grading at 11.2g/t of gold (11.5g/t gold equivalent).

The LoMp assumes underground mining at a rate of 200ktpa and underground mining of the
Ore Reserve is planned to continue at the projected rate of 200ktpa until depletion in 2014.
The Al Amar processing facility will process ore mined from the underground operation and
has a rated design capacity of 200ktpa. The mine is expected to produce approximately
385,000 ounces of gold, 635,000 ounces of silver, 45,500kt of zinc and 7800kt of copper over
the planned life of the mine. Processing will involve crushing, grinding, copper flotation, and
recovery of gold from the copper flotation tailings by CIL technology and zinc flotation. Its
products will be copper concentrate, doré and zinc concentrate, which will all be sent abroad
for refining.

Al Almar commenced production in January this year. The capital expenditure spend by
Ma’aden in building the Al-Amar mine was approximately US$63.24 million (SR237.13
million). No substantial production is forecasted for the current year, but under the LoMp mill
tonnage for 2008 is assumed at 203ktpa at a gold grade of 9 g/t of gold.

Ma’aden’s objective is to achieve the projected production build up schedule for Al Amar.
There is also the prospect of upgrading the currently delineated Inferred Mineral Resource at
the south vain zone. The bulk in-situ institute mineral resource is estimated at 4.5 million
tonnes at 3.5 grams per tonne Au (at a cut-off 2 grams per tonne). This includes 1.7 million
tonnes of oxide materials. These resource figures will be tested along the strike and depth for
extensions of the currently delineated ore bodies through underground and surface drilling.




                                               69
Exploration Projects

The Company was granted an exploration licence for the Ad Duwayhi prospect in 1998 and
extensive exploration activities were carried out under the licence which resulted in the
delineation of a significant gold resource at Ad Duwayhi by the end of 2003.

During the previous years, Ma’aden was able, through subsequent exploration programmes
to delineate six advanced exploration projects, including: Ad Duwayhi, Zalim, As Suk, Ar
Rjum, Mansourah and Masarrah. Preliminary resource estimates completed to date indicate
approximately 7.93 million ounces of gold resource in the region. Ma'aden intends to devote
significant capital expenditure and other resources in the next few years to undertake the
necessary technical and feasibility studies and other actions required to assess the economic
and technical feasibility of exploiting the CAGR resources and to achieve its strategic
objective of significantly increasing its gold production.

Ma'aden's exploration projects are located within the prospective Arabian Shield area and are
grouped into two regions, namely the CAGR and the Northern Shield Region sometimes
referred as the Sukhaybarat-Bulghah area.

CAGR Prospects

Since the grant of the exploration licence for the Ad Duwayhi prospect in 1998, Ma'aden has
conducted an extensive exploration programme throughout targeted areas which has resulted
in the delineation of six advanced exploration projects: Ad Duwayhi, Zalim, As Suk, Ar Rjum,
Mansourah and Masarrah. Last year Ma’aden set budgeted capital expenditure at US$33.5
million (SR125.62 million) for the period extending from the second half of 2007 to 2010 to
undertake more exploration activities in the licensed regions and further studies including the
necessary feasibility studies (second half of 2008) for the Ad Duwayhi prospect and the pre-
feasibility studies (the fourth quarter of 2008) for the Mansourah, Ar Rjum, Masarrah, As Suk
and Zalim properties. Budgeted capital expenditure has since been revised to approximately
US$41.62 million (SR156.06 million).

Development of the CAGR prospects, including the more advanced Ad Duwayhi prospect
where a pre-feasibility study has been completed, is dependent on the supply of sufficient
quantities water for processing. Due to shortages of water in the region it will be necessary to
construct a long distance (approximately 500km) pipeline to provide water to the prospects.
Management is currently preparing an integrated development plan to provide water and
other infrastructure to allow the CAGR gold resources to be economically developed as on
the basis of the Company’s current projections it is likely that none of the prospects, including
Ad Duwayhi, can operate on a stand alone basis due to of the costs of supplying water for
processing. Two alternative water pipeline conceptual project cost assessments have been
completed: the first for a scheme involving piping salt water from the Red Sea and the second
involving piping treated sewage water from Taif. A consultant has been engaged to prepare a
detailed scope of work for the design and detailed engineering for the purposes of awarding a
contract for the design and construction of the water pipeline, should the Company determine
that the economic exploitation of the CAGR prospects is possible. Management is also in
discussions with the relevant Government authorities to determine the land access and permit
requirements necessary to award the contract for the construction of the pipeline.

The CAGR prospects have a total preliminary resource estimate of approximately 7.93 million
ounces of gold in place. The deposits are open at depth and are considered by management
to have good potential to develop resources amenable to underground mining methods, once
open cut operations have ceased. The table below gives the detailed Mineral Resource
statements for the development of the Ad Duwayhi deposit and the advanced exploration
properties of Mansourah, Ar Rjum, Masarrah, As Suk and Zalim. In combination, these
assets have a total Mineral Resource of 7.9Moz of gold contained within 103.2Mt grading at
2.4g/t of gold. Ad Duwahyi, the most advanced of these properties has a total Mineral


                                               70
Resource of 2.1Moz of gold contained within 17.1Mt grading at 3.9g/t of gold representing
some 25% of the total gold content of the Mineral Resources reported in the table below.

Table 11: Mineral Resource Statement
                                Tonnage               Grade                      Content
                                 (kt)           (g/t Au)    (g/t Au Eq)      (koz Au)   (koz Au Eq)
Measured
Ad Duwayhi                              7,222         2.8            2.8         648            648
Subtotal                                7,222         2.8            2.8         648            648
Indicated
Ad Duwayhi                              6,359         5.7            5.7       1,169           1,169
Mansourah                          18,135             2.4            2.4       1,388           1,388
Masarrah                           13,501             2.3            2.3         981             981
Subtotal                           37,995             2.9            2.9       3,538           3,538
Measured + Indicated
Ad Duwayhi                         13,581             0.0            0.0       1,817           1,817
Mansourah                          18,135             2.4            2.4       1,388           1,388
Masarrah                           13,501             2.3            2.3         981            981
Total Measured + Indicated         45,216             2.9            2.9       4,186           4,186
Inferred
Ad Duwayhi                              3,493         2.7            2.7         299            299
Mansourah                               3,558         2.0            2.0         228            228
Ar Rjum                            35,886             1.9            1.9       2,225           2,225
Masarrah                                2,603         2.1            2.1         176            176
As Suk                                  1,728         4.1            4.1         228            228
Zalim                              10,753             1.7            1.7         590            590
Subtotal                           58,021             2.0            2.0       3,747           3,747
Mineral Resources
Ad Duwayhi                         17,074             3.9            3.9       2,116           2,116
Mansourah                          21,693             2.3            2.3       1,616           1,616
Ar Rjum                            35,886             1.9            1.9       2,225           2,225
Masarrah                           16,104             2.2            2.2       1,157           1,157
As Suk                                  1,728         4.1            4.1         228            228
Zalim                              10,753             1.7            1.7         590             590
Total Mineral Resources           103,237             2.4            2.4       7,933           7,933
Source: SRK

Should the results of pre-feasibility, feasibility and other studies show satisfactory results, it is
proposed that new mines will be brought into production at Ad Duwayhi, Mansourah,
Massarah and Ar Rjum. Resource modelling and metallurgical test work is being carried out
while an economic development plan for each of these projects is being formulated.

In addition to the advanced exploration projects in the CAGR, Ma'aden will continue to
explore the Jabal Ghadara, Bir Tawilah, Masarrah North, Mansourah South, Umm Selam, and
Amana prospects where exploration and drilling to date have intersected several mineralised
intercepts.

Ad Duwayhi (Ad Duwayhi licence)

Between 1999 and 2003, Ma’aden carried out a staged resource definition diamond core
drilling programme with total drilling advance of 60,031m in 574 holes. As the result of the
Ma’aden drilling programs a significant high grade vein mineralisation was outlined. In
February 2004, Snowden determined a JORC Code compliant Mineral Resource of 2.1Moz of
gold contained within 17.1Mt grading at 3.9g/t of gold. In February 2007 SRK completed a
pre-feasibility study which assumes the construction of an open cut mining operation
processing through a CIL plant with a rated processing capacity of 1Mtpy at a capital cost of


                                                 71
US$92 million (SR345 million). The pre-feasibility study was multi-disciplinary in scope and
demonstrated the technical feasibility of the project as well as its economic viability given
certain assumptions. Development of the project is, however, dependent upon the
establishment of regional infrastructure including a water pipeline, the total capital expenditure
requirement for which is estimated at approximately US$90 million (SR337.5 million).
Accordingly, off takers (Ad Duwayhi) would then be charged for water supply alone. The
pricing for this supply assumes recovery of the capital costs over a 20 year period, in addition
to the annual unit operating costs which also assume that other off takers (including some of
the advanced exploration properties) have been developed. The capital cost of regional
infrastructure for the project is intended to be financed by either internal or external sources of
funds or a mixture of both. The project assumes a LoMp inventory of 10.2Mt mined at a grade
of 3.5g/t gold, metallurgical recoveries of 93%, a processing rate of 1Mtpy and LoMp
weighted cash cost of production of US$224/oz.

Diamond core drilling to obtain bulk samples has been completed and metallurgical test work
is being carried out. It is expected that testing will be completed by the end of July 2008 and
that the feasibility study will commence before the end of 2008.

Mansourah Prospect (Al Uruq Exploration licence)

The Mansourah deposit is located some 460km northeast of Jeddah and 50km south east of
the town of Zalim and 35km south of the Jeddah-Riyadh expressway. The Mansourah deposit
was discovered by Ma'aden in September 2002. A total diamond core drilling advance of
65,107 m in 317 holes and 26 reverse circulation (“RC”) holes have been completed to date.
In its MER, SRK states that as at 1 July 2007, the Mansourah prospect had Mineral
Resources of 1,616koz of gold contained within 21.69Mt grading at 2.3 g/t of gold.
Metallurgical test work and environmental baseline studies will be undertaken in preparation
for a pre-feasibility study for the project. Follow up diamond core drilling programmes will be
carried out to test the economic potential of certain Mansourah satellite prospects.

Masarrah Gold Prospect (Ash Shakhtaliyah licence)

The Masarrah deposit is located approximately 6.5km north-west of Mansourah and was
discovered by Ma'aden in 2004. A total of 34,115m of diamond core drilling has been
completed. In its MER, SRK states that as at 1 July 2007, the Masarrah prospect had Mineral
Resources of 1,157koz of gold contained within 16.10Mt grading at 2.2 g/t of gold. Further
drilling is being conducted to further define the resource to the north.

The Mansourah and Masarrah projects are located within 6.5km of each other and Ma’aden
envisages that ore from each site will be trucked to a centrally located plant and the deposits
will be developed as one project. Both deposits are open at depth and management
considers that in each case there is potential to locate more resource amenable to
underground mining methods.

Ar Rjum Project (Ash Shakhtaliyah licence)

The Ar Rjum project situated inside the Mahazat Assaid Conservation area is located
approximately 300km from Jeddah and 25km south of the town of Al Muwayh on the Jeddah–
Riyadh expressway. Ma’aden was issued the licence in April 2002.

The project location comprises several prospects, including Wasema, Um-Naam, Gazal, Al
Maha, and Ar Rjum Zinc. Between 2004 and end of June 2007 a total of 395 resource
definition diamond core holes with total length of 56,800m were drilled on the two main Ar
Rjum prospects of Wasema and Um-Naam. In its MER, SRK states that as at 1 July 2007, the
Ar Rjum prospects had Mineral Resources of 2,225koz of gold contained within 35.89Mt
grading at 1.9 g/t of gold.




                                                72
Resource definition and infill drilling is in progress to bring the Ar Rjum prospects of Wasema
South extension and Um-Naam to the pre-feasibility stage. During 2008, management
anticipates that a JORC-compliant audited resource estimate of the two prospects will be
completed.

As Suk (Ash Shakhtaliyah licence)

The As Suk gold prospect is located within the area covered by the Ash
Shakhtaliyah licence. A feasibility study was completed in respect of the As Suk prospect in
1997 by international consultants and the Company is currently reviewing and updating the
data contained in this study. Metallurgical tests carried out using the gravity process have
shown improved recovery rates over those achieved using the heap leach process which was
recommended by the feasibility study. Feasibility studies for the process plant and for the
geology and mining aspects of the project are expected to commence shortly. It is envisaged
that the As Suk prospect will be developed together with the other CAGR properties, although
no exploration work is currently being carried out in relation to this prospect. In its Gold MER,
SRK states that as at 1 July 2007, the As Suk had Mineral Resources of 228,000oz of gold
contained within 1.73Mt grading at 4.1 g/t of gold.

Zalim
                                                                                      2
The Zalim gold prospect is a relatively small prospect with an area of 288.5 km which is
subject to a separate licence positioned within the area covered by the Ash Shakhtaliyah
licence. It is located approximately 460km east of Jeddah, about half way along the Jeddah-
Riyadh expressway. Recently, an application to renew the licence for another five years has
been submitted to the DMMR. It is envisaged that ore from the Zalim prospect will be trucked
to the As Suk site for processing once the project is developed. In its MER, SRK states that
as at 1 July 2007, that the Zalim prospect had Mineral Resources of 590,000oz of gold
contained within 10.75Mt grading at 1.7 g/t of gold.

Northern Arabian Shield Prospects
                                               2
Ma'aden holds a licence area of 23,149.59km which, in the view of the Company, represents
the most prospective ground around the Company’s existing mines and known prospects in
the Northern Arabian Shield area.

Ma'aden's most advanced exploration projects in the region are the Bulghah North and
Humaymah prospects. Other exploration licences include the Shabah Licence, the Al
Jardawiyah Licence, the An Najadi/Hablah South/Hablah North and Nuqrah Licence, the
Tawan Licence, and the As Siham Licence.

Bulghah North (Mawan licence)

A study of previous exploration, regional geological and structural interpretation work was
undertaken to rank and prioritise the most promising areas of Ma'aden's exploration licences
around Sukhaybarat and Bulghah mines. These areas were covered by large grid soil / rock
geochemical reconnaissance surveys that indicated a significant gold anomaly 3km north of
the Bulghah mine. Following a series of drilling programmes, the discovery of a significant
gold mineralisation at Bulghah North was confirmed. Drilling results have confirmed that the
Bulghah North mineralised zone is similar to the Bulghah mine style of mineralisation.

As at 1 July 2007, 483 RC holes with a total length of 38,240m and 35 diamond core holes
with total length of 5100 m had been completed. Following an additional infill and definition
drilling programme, Ma’aden envisages completing in-house resource estimate in the Inferred
and Indicated Mineral Resource categories by the end of the second quarter of 2008.

Subject to the successful completion of its ongoing evaluation programme Ma'aden proposes
to bring the Bulghah North deposit into production as an expansion to the current operation at

                                               73
Bulghah. The Bulghah North prospect is located within the Bulghah mining lease and no
further government permit or licence will be required to develop the deposit.

Humaymah (Miskah licence)

The Humaymah gold prospect is located 35km southeast of the Bulghah mine and is the
second grassroots gold prospect discovered in the Northern Arabian Shield area by Ma'aden.
Access to the property is via a 30km paved two lane road that connects the towns of Bulghah
and Al Hassu in the south. The property is situated 5km east of the paved road.

To date 76 RC holes with a total length of 3,119m and 27 diamond core holes with a total
length of 4,115m have been completed. Resource definition drilling is currently being
undertaken on this prospect.

Overview of Gold Operations

The annual production of Ma’aden’s gold division peaked at 265,819 gold ounces for the
period ended 31 December 2004 and has since declined to 142,763 gold ounces for the
period ended 31 December 2007 due to depleting reserves in some of the mines and lower
grades and recovery rates. This represents a 46% decrease over the intervening period.
However, high gold, copper, silver and lead prices have enabled the gold business to
maintain profitable operations and a positive cash flow in 2007.

The Company's total gold reserves as at 1 July 2007 were 21.66Mt grading at 1.9g/t of gold
according to SRK in its MER (see "Gold Mineral Expert's Report"). Ma'aden also produced
saleable quantities of silver, copper and zinc as concentrate by-products of its gold mining
operations. On the basis of Ma'aden's existing gold resources and exploration activities, the
Company expects to be able to achieve further significant growth in its gold business. In
addition, successful development of the Phosphate and Aluminium Projects will transform the
Company from a gold producer into a world class, international mineral resource company.

Ma'aden's operating statistics for the years ended 31 December 2005, 2006 and 2007 are
summarised in the table below:

Table 12: Operating Statistics
                                                       Units             2005             2006                 2007
 Processing
 Tonnage                                                 (kt)           5,813            5,449             4,218
 Grade                                               (g/t Au)              1.6              1.2                 1.3
 Production
 Gold                                               (koz Au)              240              167                 143
 Silver                                             (koz Au)              434              293                 290
 Zinc                                                  (t Zn)               0              983                 716
 Copper                                                (t Cu)             668              730                 737
 Lead                                                  (t Pb)               0                0                 123
 Gold Equivalent                                 (koz Au Eq)              256              192                 143
 Expenditures
 Cash Cost(1) - on mine                              (US$/t)             9.33            10.57                  10
 Cash Cost(2) - Co-product                          (US$/oz)              220              317                 297
 Cash Cost(3) - By-product                          (US$/oz)              207              283                 240
 Capital Expenditure                                 (US$m)             26.59            20.28             91.44
Source: SRK
(1) On mine cash costs excluding concentrate and bullion related treatment, refining and realisation charges
(2)      Co-product cash cost based on cash cost excluding by-product credits divided by gold equivalent
         production (payable)
(3) By-product cash cost based on cash costs net of by-product credits divided by gold production (payable)




                                                       74
Ma’aden’s consolidated revenue (derived exclusively from its gold business and excluding
investment income) was SR349.7 million for the year ended 31 December 2006, an increase
of 26 %, compared to the year ended 31 December 2005.

In its Gold MER, which is set out in full in this Prospectus, see “Gold Mineral Expert’s Report”,
SRK states that the Ore Reserves for the Company’s five operating mines and Ad Duwayhi
(classified by Ma’aden as a development project) as at 1 July 2007 were 21.66Mt grading at
1.9g/t of gold, with contained gold of 1.29Moz (1.32Moz of gold equivalent). Total Mineral
Resources in respect of the operating mines, Ad Duwayhi and the Company’s five advanced
exploration projects in Measured, Indicated and Inferred categories were 132.76Mt grading at
2.3 g/t of gold, with contained gold of 10.04Moz.

Set out below is a table showing Ma’aden’s total Mineral Resources and Ore Reserves on an
asset by asset basis as at 1 July 2007. It includes the five operating mines, Ad Duwayhi and
the five advanced exploration projects referred to in “Exploration Projects” below.

In the following table and throughout this and other sections of the Prospectus, Mineral
Resources and Reserves relating to Ma'aden's gold business have been stated in accordance
with standards as defined by the terms and conditions given in the JORC Code. The JORC
Code is an internationally recognised Mineral Resource and Reserve Mining Code.

Table 13: Total Mineral Resources and Ore Reserves (as at 1 July 2007)
                                    Tonnage                 Grade                              Content
                                       (kt)         (g/t Au)         (g/t Au Eq)    (koz Au)        (koz Au Eq)
Ore Reserves
Proved
Mahd Ad'Dahab                                 447         10.6               11.0          153              158
Subtotal                                      447         10.6               11.0          153              158
Probable
Mahd Ad'Dahab                                 792              7.6            7.9          194              202
Al Amar                                   1,350                9.9           10.2          429              441
Bulghah                                  16,768                0.8            0.8          428              428
Sukhaybarat                                   164              0.4            0.4               2             2
Al Hajar                                  2,143                1.3            1.4              87            99
Subtotal                                 21,218                1.7            1.7        1,140             1,172
Ore Reserves
Mahd Ad'Dahab                             1,239                8.7            9.0          347              360
Al Amar                                   1,350                9.9           10.2          429              441
Bulghah                                  16,768                0.8            0.8          428              428
Sukhaybarat                                   164              0.4            0.4               2             2
Al Hajar                                  2,143                1.3            1.4           87                99
Total Ore Reserves                       21,665                1.9            1.9        1,293             1,329
Mineral Resources
Measured
Mahd Ad'Dahab                                 344         21.3               21.9          235              243
Ad Duwayhi                                7,222                2.8            2.8          648              648
Subtotal                                  7,566                3.6            3.7          884              891
Indicated
Mahd Ad'Dahab                                 727         13.4               13.9          313              325
Al Amar                                   1,864           11.3               11.6          679              698
Bulghah                                  21,537                0.8            0.8          561              550
Sukhaybarat                                   164              0.4            0.4               2             2
                                    Tonnage                    Grade                           Content
                                       (kt)         (g/t Au)         (g/t Au Eq)    (koz Au)        (koz Au Eq)
Mineral Resources
Al Hajar                                  2,143                1.3            1.4              87            99



                                                    75
                                Tonnage                    Grade                           Content
                                   (kt)         (g/t Au)         (g/t Au Eq)    (koz Au)        (koz Au Eq)
Ore Reserves
Proved
Ad Duwayhi                            6,359                5.7            5.7        1,169             1,169
Advanced Exploration Projects        31,635                2.3            2.3        2,369             2,369
Subtotal                             64,430                2.5            2.5        5,181             5,211
Measured + Indicated
Mahd Ad'Dahab                         1,071                8.7            9.0          549              568
Al Amar                               1,864                9.9           10.2          679              698
Bulghah                              21,537                0.8            0.8          561              550
Sukhaybarat                               164              0.4            0.4               2             2
Al Hajar                              2,143                1.3            1.4              87            99
Ad Duwayhi                           13,581                0.0            0.0        1,817             1,817
Advanced Exploration Projects        31,635                2.3            2.3        2,369             2,369
Total Measured + Indicated           71,996                2.6            2.6        6,064             6,102
Inferred
Mahd Ad'Dahab                             174         16.8               17.5              94            98
Al Amar                                   141              9.5            9.7              43            44
Bulghah                               2,431                0.7            0.7              56            56
Ad Duwayhi                            3,493                2.7            2.7          299              299
Advanced Exploration Projects        54,528                2.0            2.0        3,448             3,448
Subtotal                             60,766                2.0            2.0        3,939             3,944
Mineral Resources
Mahd Ad'Dahab                         1,245           16.1               16.6          643              665
Al Amar                               2,005           11.2               11.5          722              742
Bulghah                              23,968                0.8            0.8          617              606
Sukhaybarat                               164              0.4            0.4               2             2
Al Hajar                              2,143                1.3            1.4              87            99
Ad Duwayhi                           17,074                3.9            3.9        2,116             2,116
Advanced Exploration Projects        86,164                2.1            2.1        5,817             5,817
Total Mineral Resources             132,762                2.3            2.4       10,004           10,046
Source: SRK

Ma’aden anticipates that the Ore Reserves at its operating mines including the Al Amar mine
will be depleted by 2014. Accordingly, in its LoMp’s Ma’aden has made provisions totalling
US$14.62 million (SR54.82 million) in the aggregate in respect of environmental liabilities and
other closure costs.

However, Ma'aden’s strategic objective with respect to its gold business is to increase its Ore
Reserves in existing mines, extending the life of certain mines where possible, and following
completion of appropriate technical feasibility and economic viability studies, to develop other
prospective deposits into producing mines if technically and financially feasible. To this end
Ma'aden is currently conducting an extensive exploration programme focusing on targets in
the proximity of existing mines as well prospective areas within the CAGR where it has
identified Measured, Indicated and Inferred total gold resources of 7.93 million ounces.

The exploration projects are at an early stage with the exception of Ad Duwayhi, where a pre-
feasibility study has been prepared. However, Ma’aden intends to undertake further
exploration activities over the next three years in order to undertake the necessary studies
and other actions required to assess the economic and technical feasibility of exploiting the
CAGR resources and to achieve its strategic objective of significantly increasing its gold
production.




                                                76
Settlement of Hedge Contracts

With the privatization of Ma’aden and the increase in the price of gold during the past two
years to unprecedented levels, the Board of Directors decided, pursuant to its decision No. 2
dated 22/10/1428H (corresponding to 03/11/2007G) to liquidate all of the gold forward
contracts to enable Ma’aden to proceed without any obligations arising under such contracts,
in addition to allowing the Company to benefit from the increase in gold prices.

In 2001 the prices of gold were relatively low with the average purchase price of gold set at
SR1017.56 (US$ 271.35) per ounce. As part of its risk management strategy, the Board of
Directors made the following decisions pursuant to the authorities vested in it by the
Company’s bylaws to authorize management to enter into hedging contracts for the purpose
of the deferred selling of quantities of gold in order to secure a minimum return on its
investment.

      •   Decision No. 1. dated 21/09/1421H (corresponding to 17/12/2000G) in relation to
          the approval of the Bulghah mine project; and
                                  th
      •   Decision No. 2 in its 8 meeting dated 24/10/1423H (corresponding to 28/12/2002G)
          in relation to the approval of the Al Amar mine project.

Given the foregoing, Ma'aden entered into hedging contracts with each of SAMBA Financial
Group (previously known as ‘The Saudi American Bank-Riyadh’) and JP Morgan Bank
(previously known as ‘Chase Manhattan Bank’) for the forward sale of 244,956 ounces of gold
from the Al Amar mine with an average price per ounce of SR1,400 (US$ 373.6). During the
same year (2001), Ma'aden entered into a call option contract with Barclays Bank plc which
was converted into a forward sales contract in December of 2006 for the purpose of selling
11,558 ounces of gold from the Sukhaybarat and Bulghah mines with an average price per
ounce of SR1,047 (US$279.2). Forward contracts are contracts pursuant to which the
Company agrees to sell a certain amount of gold at a fixed price at a settlement date in the
future. No payments are made upon the signature on such contracts. At the settlement date,
the Company delivers the gold at the agreed-upon price.
On 21 November 2007 the Company settled all its forward gold sale contracts which
comprised forward contracts for an amount of 256,514 ounces due for settlement in 2012. At
the settlement of the contracts, the price of gold was approximately SR3,000 (US$800) per
ounce. This resulted in the sale price of the gold being considerably less than market price at
the time of sale.

Table 14: Gold Prices
Saudi Riyals                                                 Year ended December 31
                                                   2007          2006            2005
 Average Market Price                             2,606          2,272          1,616
 Average Sale Price by Ma’aden                    1,668          1,721          1,365
Source: unverified Management Estimates
Ma’aden was required to pay a cash sum of SR446 million (US$ 119 million) from its cash
reserves to settle these contracts. The following table details such settlements on a per mine
basis.

Table 15: Settlement of Forward Contracts Per Mine
                                                 Amount    Cost of Contract Settlement
                                                (ounces)                 (US$ million)
 Al Amar Mine                                   244,956                           113
 Sukhaybarat and Bulghah Mines                   11,558                             6
 Total                                          256,514                           119
Source: Management Estimates




                                                   77
The resulting loss was expensed in the income statement for the year ending 31 December
2007 at the time of the settlement of the contracts. As these forward sales contracts have now
been settled no further provision or reserve will be required to be made in respect of them.




                                             78
                 Ma’aden Expansion Projects
Phosphate Project

Phosphate Project General Overview

The Phosphate Project aims to exploit an extensive phosphate deposit at AI Jalamid in
northern Saudi Arabia and utilise local natural gas and sulphur to manufacture DAP, which is
the most widely used phosphate based fertiliser in the world. DAP produced by the
Phosphate Project will be sold primarily into international markets, after the demand in the
local market has been satisfied. It is anticipated that the Phosphate Project will also produce
excess ammonia and phosphoric acid not required in the production process which will also
be sold domestically or exported.

The Phosphate Project involves the development, design, construction and subsequent
operation of two integrated sites:

     •   The upstream Al Jalamid site in northern Saudi Arabia which will comprise a
         phosphate mine and a beneficiation plant; and

     •   The downstream Ras Az Zawr site on the coast of the Arabian Gulf approximately
         90km north of Jubail with a fertiliser production facility comprising DAP, ammonia,
         sulphuric acid and phosphoric acid processing plants;

with each site supported by appropriate industrial and social infrastructure.

It is expected that the mining and beneficiation facilities at Al Jalamid will produce an
estimated 5.02 Mtpy of phosphate concentrate, supported by phosphate reserves sufficient to
sustain the Phosphate Project beyond the estimated 20 year life of the project. It is estimated
that the Phosphate Project will produce approximately 2.92 Mtpy of granular DAP. It is also
anticipated that the Phosphate Project will generate approximately 0.44 Mtpy of excess
ammonia for sale and 0.16 Mtpy of excess phosphoric acid for sales to the domestic market
in Saudi Arabia.

The phosphate concentrate will be transported by train from Al Jalamid to the fertiliser
production facility at Ras Az Zawr for processing. The Railway is to be constructed by PIF
(see, “Common Infrastructure – Railway”).

In addition, the Phosphate Project (like the Aluminium Project) will be supported by a port
facility and certain key common infrastructure further described in the "Common
Infrastructure" section below.

The phosphate concentrate will be processed at the Ras Az Zawr site to produce DAP in a
fertiliser production facility consisting of a phosphoric acid plant, a sulphuric acid plant, an
ammonia plant, a DAP granulation plant, a cogeneration and desalination plant, and other site
infrastructure. Sulphur and natural gas, the additional key raw material inputs, will be sourced
from Saudi ARAMCO.

Power supply at Al Jalamid will be provided by a newly constructed captive plant consisting of
three diesel-fired turbines and power at Ras Az Zawr will be generated by a captive co-
generation plant using steam produced by the sulphuric acid and ammonia plants. Much of
the infrastructure at Ras Az Zawr will be common to the Phosphate and Aluminium Projects,
including worker accommodations and will be provided by InfraCo, which is under formation
and will be a subsidiary of Ma'aden.



                                               79
On 15 September 2007, Ma'aden entered into a joint venture agreement with SABIC pursuant
to which SABIC subscribed for a 30 % interest in PhosCo, the joint venture company to be
established to operate the Phosphate Project. Pursuant to the terms of the Phosphate JVA,
Ma'aden and SABIC will enter into various agreements with PhosCo for the marketing by
SABIC of the majority of the DAP and excess ammonia produced by PhosCo to certain key
markets in Asia and the Indian sub-continent, after the demand in the local market has been
satisfied. It is anticipated that SABIC will take all excess phosphoric acid produced by the
Phosphate Project for use in its Saudi Arabian operations in the earlier years.

The total cost of the Phosphate Project is estimated at US$5.56 billion (SR20.85 billion)
taking account of projected annual inflation and estimated financing costs and based on
projected capital costs of US$4.54 billion (SR17.03 billion). Over 70% of total capital costs
has been contracted at a fixed rate under signed Lump Sum Turn-Key (“LSTK”) contracts for
the engineering, procurement and construction ("EPC") of a beneficiation plant, DAP,
ammonia, sulphuric acid and phosphoric acid processing plants and certain supporting
infrastructure.

Thirty percent of total project costs of the Phosphate Project will be funded by equity
contributions from Ma'aden and SABIC in proportion to their interests in the project. The
remaining project costs (70%) will be funded by limited recourse debt financing. A mandate
letter appointing arrangers and underwriters for the required debt financing for the Phosphate
Project was executed in December 2007 and formal finance documentation was executed in
June 2008.

Project Status and Key Milestones

The preliminary design of the phosphate mine and beneficiation plant at the upstream Al
Jalamid site has been completed. A contract for the operation and maintenance of the mine
was awarded to Saudi Comedat Company Ltd, a company owned by a syndicate of
experienced mining contractors comprising CMCI, Jordan Comedat and Kier Group, on 1
October 2007. An LSTK EPC contract for the construction of the beneficiation plant was
entered into on 17 December 2007.

Ma'aden has entered into LSTK EPC contracts for the construction of each of the sulphuric
acid, phosphoric acid, ammonia and DAP plants to be constructed at the Ras Az Zawr site
and construction of these facilities has already commenced. The value of these contracts
together with those for the beneficiation plant and certain other infrastructure represents over
70% of the total capital costs of the Phosphate Project. In addition, recruitment efforts have
commenced and local technical institutions have been requested to commence preparation of
appropriate training programs. Further key milestones in the development of the Phosphate
Project are: (1) the commencement of commercial operations of the beneficiation plant
(expected in the first half of 2010); (2) the commencement of commercial operations of the
DAP plant (expected by end of 2010); (3) the operation of the phosphate facilities at full
capacity, being 2.92 Mtpy of DAP (expected by end of 2012).

The milestones for commercial operations of the sulphuric acid, phosphoric acid, ammonia
and DAP plants are based on certain completion dates set out in the recently signed LSTK
EPC contracts for the relevant plants (see "Summary of Material Agreements"). Each of the
LSTK EPC contractors for the production plants was selected by Ma'aden based on their
respective experience and track record in executing similar projects. Whilst Ma'aden currently
anticipates completing the milestones as described above, the dates mentioned are indicative
only and may change due to factors beyond Ma'aden's control.

Background, Geology and Resources

The Al Jalamid Deposit is located within the Sirhan Turayf region, a northern province of
Saudi Arabia that extends into Jordan, southern Iraq, and Syria. It encompasses an area of
       2
32.7km in the northern province of Saudi Arabia, approximately 27km to the north-west of

                                              80
the village of Al Jalamid, and 120km south-east of the town of Turayf, and is part of a total
                                 2
area of approximately 4016km where Ma’aden controls the mineral estate. This area is
currently subject to an application for licence renewal (see the “Mining and Exploration
Licences and Other Permits and Authorisations” section). The Al Jalamid Deposit is relatively
flat and shallow, making it accessible for mining operations.

Ma'aden commenced exploration for phosphate in the Umm Wu'al area in 1997 and in the Al
Jalamid area in 2001. Ma’aden’s exploration programs and geological database in these
areas have outlined nine prospective deposit areas (five at Al Jalamid and four in the Umm
Wu’al area).

On the basis of these results, Ma’aden adopted a long-term strategy for the development and
exploitation of the phosphate resources in the northern region of Saudi Arabia. In 2002
Ma’aden commissioned the Saudi Arabian Phosphate Consortium (SAPC) to complete a
Bankable Feasibility Study ("BFS") for the Al Jalamid resource. Geotechnical analysis
performed by SAPC confirmed that drill hole spacing used in the exploration programs
provided sufficient certainty to upgrade the classification of a significant portion of the
resource at Al Jalamid to the "measured" resource category in accordance with the JORC
Code.

In its Phosphate MER (see, “Mineral Experts Report”), Behre Dolbear confirmed an estimate
of the total Measured Resources within the Al Jalamid deposit (pursuant to Ma’aden’s mining
licence) at 534 Mt according to the JORC Code classification with a 97.5 % probability that
the tonnage exceeds 505 Mt. However, not all of the Measured Resources will be
economically mineable and so defined as Proven Reserves. Behre Dolbear classifies 223Mt
as Proven Reserves within the JORC classification and confirms that this level of Proven
Reserves is more than sufficient to support the 20 year mining plan developed for Al Jalamid.
Furthermore, developments since these estimates were made including an increase in
assumed product prices and improved beneficiation recoveries might enable new mine
planning studies to lead to a modest increase in the Behre Dolbear's estimates.

Ownership Structure and Management

Ownership

The Phosphate Project will be developed in a joint venture with SABIC, through a limited
liability company ("PhosCo"), incorporated in Saudi Arabia, which will own and operate the
project and be 70 % owned by Ma'aden and 30 % owned by SABIC. PhosCo is managed by
a board of managers comprised of six managers, four of which are appointed by Ma’aden
two of which are appointed by SABIC. The first board of managers of PhosCo has been
elected for a term of three years and is comprised of the following members:

    •   Dr. Abdullah Essa AlDabagh (Chairman) (representing Ma’aden)

    •   Mr. Khalid Saleh AlMudaifer (representing Ma’aden)

    •   Dr. Mansour Othman Nazer (representing Ma’aden)

    •   Mr. Khalid Salem AlRuais (representing Ma’aden)

    •   Mr. Abdullah Ali Al Bakr (Chief Financial Officer) (representing SABIC)

    •   Mr. Hussain Ali Abu Halikeh (representing SABIC)

The current president of PhosCo is Mr. Abdullaziz AlHarbi and the vice-president is Mr.
Dahash Al Rasheedi.



                                              81
PhosCo.’s board is currently working on recruiting prospective PhosCo employees from the
best qualified personnel available whilst ensuring that it recruits and trains a sufficient number
of Saudi employees. Recruitment efforts have commenced and local technical institutions
have been requested to commence preparation of appropriate training programmes.

A joint venture agreement ("Phosphate JVA") was concluded on 15 September 2007 by
Ma'aden and SABIC.

The term of the Phosphate JVA is 25 years which will renew automatically for a subsequent
five year period, subject to either party giving two year's notice of their intention not to renew.
A summary of the material terms and conditions of the Phosphate JVA is set out in “Summary
of Material Agreements”.

Each joint venture partner will contribute equity in proportion to its project interest. Ma'aden's
contribution to the joint venture on a best endeavours basis will include assigning the land
and mining leases for the Ras Az Zawr and Al Jalamid sites to PhosCo, procuring a
contractual commitment from Saudi ARAMCO for the supply of sulphur and gas and
procuring the provision of certain project infrastructure and services. SABIC have undertaken
to provide PhosCo with research, technical and marketing services on commercial terms and
with technical, operational, project management and construction support and certain other
services on favourable terms equivalent to those offered to SABIC affiliates, subject in all
cases to the negotiation of appropriate services agreements with PhosCo.

Overview of SABIC

SABIC is a joint stock company formed in 1976 and owned 70 % by the Government of Saudi
Arabia and 30 % by public shareholders. SABIC is a holding company for a group of
companies that together constitute the Middle East’s largest non-oil industrial company and
the sixth largest international petrochemical company in the world based on revenues
(source: Fortune 500).

The principal business of SABIC is the manufacture and sale of basic chemicals,
intermediates (including industrial gases), polymers (including polyolefins, PVC and
polyester), fertilisers and metals. It has 22 manufacturing affiliates (16 in Saudi Arabia, three
in the Kingdom of Bahrain, one in the Netherlands, one in Germany, and one in the United
Kingdom).

SABIC's fertiliser business unit consists of two divisions: urea and ammonia/phosphates. Its
product range includes urea, ammonia, DAP, compound and liquid fertilisers. The combined
fertiliser production capacity of SABIC and its affiliates is approximately 8 Mtpy at present
including a production capacity of 0.3 Mtpy of DAP. With the start-up of the SAFCO IV plant in
2006, a SABIC owned fertiliser production facility in Jubail, SABIC now ranks as the world’s
largest producer of urea fertiliser, and the single largest producer of granular urea. It is also
the largest granular urea exporter in the world. Currently, Saudi Arabia’s entire urea and
ammonia demand is met by SABIC, while it meets 90 % of the Kingdom’s total requirements
for phosphate fertiliser.

For the year ended 31 December 2007, the SABIC Group had gross revenues of SR126.7
billion and gross profits of SR27 billion. Its total assets as at 31 December 2007 were SR256
billion.

Technical Support

PhosCo will receive technical and operational support from SABIC (through its subsidiary
SAFCO) and the various technology providers and LSTK contractors for the various plants at
the fertiliser production facility at Ras Az Zawr.



                                                82
It is proposed that PhosCo will enter into a technical support agreement with SABIC pursuant
to which SABIC (through its subsidiary SAFCO) will provide support to PhosCo as well as
other agreements for the training of PhosCo.’s technical personnel. These are currently being
negotiated. SABIC has experience with similar plants, operating and maintaining SAFCO IV,
a similar fertiliser production facility through SAFCO. The proposed agreement with SABIC is
also expected to cover project management, training support, maintenance support and
operational support.

Additional technical, operational and maintenance support and training for each of the
sulphuric acid, ammonia and DAP plants will be provided by:

-   Outotec (LSTK contractor for the sulphuric acid plant);

-   Samsung and Uhde (LSTK contractor and technology provider for the ammonia plant);
    and

-   Dragados and Incro (LSTK contractor and technology provider for the DAP plant).

PhosCo will be provided with training and technical support in respect of its phosphoric acid
plant by Yara France (Yara) as technology provider, under the terms of its technology
transfer, agreement and by Litwin as LSTK contractor, under the terms of its contract.

Al Jalamid Operations and Facilities

The development at Al-Jalamid comprises a phosphate mine, beneficiation plant and
supporting infrastructure.

Mining

Ma’aden has developed a 20-year mine plan for an open cut mine for proven reserves of
223.3 million tonnes measured in accordance with JORC standards. All mined ore will be
crushed and conveyed to the beneficiation plant feed stockpile.

In its Phosphate MER (see “Mineral Experts Reports”), Behre Dolbear have confirmed that
there is potential to further expand the Phosphate Project by developing a substantial portion
of an additional 194 million tonnes of measured resources on an economic basis. Additional
test work has commenced to fully evaluate this potential.

Mine production is expected to average approximately 11 Mtpy of ore. Behre Dolbear has
confirmed in its Phosphate MER that estimated phosphate reserves will be sufficient to
sustain production at this level beyond the mine's estimated 20-year life. The mining and
beneficiation facilities at Al Jalamid will be scheduled to produce an estimated 5.02 Mtpy of
phosphate concentrate on a dry basis.

The mining activities at the Al Jalamid site will be conducted by Saudi Comedat Company Ltd,
a company owned by a syndicate of experienced mining contractors comprising CMCI,
Jordan Comedat and Kier Group pursuant to a mining services contract signed on 1 October
2007. The initial contract period will be for eight years after which the contract is intended to
be re-tendered. The mine contractor will provide all equipment, personnel and consumables
for the operation of the mine during the contract period. PhosCo will, however, retain control
of the mining resource, long term mine planning and ore quality.

Beneficiation

Beneficiation involves processes which increase the percentage of phosphate content in the
ore whilst lowering the content of other deleterious minerals.



                                               83
The Al Jalamid beneficiation plant will utilise grinding, washing, de-sliming, flotation and
drying processes to remove calcium and magnesium carbonates from the ore and produce a
phosphate concentrate suitable for use in the manufacture of wet process phosphoric acid.
The plant design capacity is 11.6 Mtpy of ore (dry basis) to ensure production of 5.02 Mtpy
(on a dry basis) of flotation concentrate.

The basic design of the beneficiation plant was completed by WorleyParsons in November
2006, and was based on process flowsheets developed by SNC Lavalin/Jacobs and then
optimized by Litwin. This basic design constituted the basis of the invitation to bid to provide a
lump sum (or fixed amount) bid for the LSTK EPC contract for the beneficiation plant, which
was signed at the end of 2007. Mobilisation at the site and site preparation for construction of
the plant has commenced.

Infrastructure and Water Supply

A substantial amount of industrial infrastructure will need to be developed at the Al Jalamid
site to support mining and beneficiation operations. This includes a power plant, potable water
production, treatment and distribution, roads and telecommunications.

Raw water supplies are a critical input requirement for a beneficiation plant and will be drawn
from the reserves of the Tawil aquifer which is part of the eastern Arabian aquifer system. The
quantity of ground water that is estimated to be withdrawn from the reserve over the lifetime
                              3
of the project (212 million m ) represents a negligible portion of the estimated reserve in the
                                3
Tawil Aquifer (40,000 million m ).

Ras Az Zawr Site Facilities

The phosphate concentrate will be transported by rail from the Al Jalamid beneficiation plant
to Ras Az Zawr for processing. The phosphate concentrate will be processed in a fertiliser
production facility consisting of a phosphoric acid plant, a sulphuric acid plant, an ammonia
plant, a DAP granulation plant, a co-generation plant and desalination plant, and other
infrastructure.

Ma’aden's phosphate processing facilities will be constructed so as to minimise the risk of
interruptions to production and processing. Ma'aden will operate three separate trains for the
production of phosphoric acid and sulphuric acid. Each train will be capable of operating
independently and as a result, if one of the trains becomes inoperable for whatever reason,
supplies of these key raw materials needed for the production of DAP will continue to be
available. There will be four separate trains for the DAP granulation plant, two of which will
be capable of producing both DAP and MAP with the other two dedicated for DAP production.
In addition, even though there will be only one ammonia plant, ammonia can be purchased
locally from SABIC or imported, if required.

Plans have been put in place to minimise disruptions in mine production by including suitable
ore and plant feed stockpiles at the mine, railheads, and Ras Az Zawr site. Adequate storage
has also been included for key raw materials and intermediate products at the Ras Az Zawr
site. Additional storage can be added later, if required.

The proximity of Ras Az Zawr to the Eastern Province’s oil and gas production and shipment
facilities (Ras Tanura is the world’s largest oil export port) means that there is an extensive
network of supply pipelines and storage facilities to draw upon should the need arise.

Sulphuric Acid Plant

Sulphuric acid will be manufactured in the sulphuric acid plant using sulphur procured from
Saudi ARAMCO. The sulphuric acid plant will supply sulphuric acid to the phosphoric acid
plant for the production of phosphoric acid. The sulphuric acid plant will also produce high-


                                               84
pressure, super-heated steam which will be fed into the cogeneration plant to produce power
for the fertiliser production facility.

The plant consists of three acid production trains and will produce a total of approximately
4.66 Mtpy and consume approximately 1.52 Mtpy of molten sulphur in the process. Four days
of molten sulphur storage will be provided to ensure that the plants can continue to operate in
case of an interruption in supply. Sulphuric acid storage will be designed to allow the
sulphuric acid plant to continue in full operation while one phosphoric acid plant is undergoing
an annual overhaul.

Molten sulphur, the key raw material input for the production of sulphuric acid, will be supplied
by Saudi ARAMCO pursuant to the terms of a sulphur supply contract. Saudi ARAMCO has
already provided sulphur supply letters to Ma'aden that outline the pricing mechanism for the
supply of the required quantity of sulphur for sulphuric acid production. it is anticipated that a
formal supply contract will be signed approximately 6 months prior to completion of the plant,
as is customary in Saudi Arabia.

The sulphuric acid facility is based on process technology from Outotek and in June 2007
Ma'aden signed LSTK contracts with Outotek GmbH and GAMA Industry Austria Ltd for the
design, procurement and construction (“EPC”) of the sulphuric acid plant. Construction of the
sulphuric acid plant commenced in December 2007.

The EPC cost of the sulphuric acid plant under the LSTK contracts is approximately US$495
million (SR1.87 billion).

Phosphoric Acid Plant

Phosphoric acid is one of the main inputs for the production of DAP. Three separate
phosphoric acid production trains are proposed to be constructed to meet annual DAP
production requirements. Sulphuric acid will be mixed with the phosphate concentrate in the
phosphoric acid plants to produce phosphoric acid, which will then be used for supply to the
DAP plants.

In aggregate the three phosphoric acid trains will have a combined annual production
capacity of approximately 1.52 Mt and consume approximately 5.02 Mt of phosphate
concentrate each year. There will also be on-site storage facilities for approximately 200,000
tonnes of concentrate which will support fourteen days production of phosphoric acid.

The phosphoric acid will be supplied to the DAP trains, with surplus phosphoric acid to be
transported via road tankers for local sale to SABIC.

The phosphoric acid facility is based on process technology from Yara, in respect of which
Ma'aden has obtained a licence. In June 2007 Ma'aden signed LSTK contracts with Litwin
Middle East and certain other parties for the design and construction of the phosphoric acid
plants. Construction of the phosphoric acid plant commenced in December last year.

The EPC cost of the phosphoric acid plant under the LSTK contract is approximately US$523
million (SR2 billion).

Ammonia Plant

The ammonia plant will be designed for production of approximately 1.09 Mtpy of ammonia,
approximately 0.66 Mtpy of which will be used by the DAP plant, with the surplus to be
exported, after the demand in the local market has been satisfied. Surplus ammonia will be
available for future expansions of DAP production. The estimated output is expected to be
sufficient to supply the ammonia required for DAP production of 2.92 Mtpy.



                                               85
Surplus ammonia will be stored onsite in two 30,000 tonne capacity refrigerated ammonia
storage tanks. The storage capacity of the tanks is expected to be sufficient to ensure an
adequate ammonia supply to the DAP plants, in the event that the ammonia plant is
undergoing a planned shutdown for maintenance. To the extent that ammonia production
exceeds required input for DAP production and storage requirements, it is expected that
ammonia will be exported to international markets, after the demand in the local market has
been satisfied. It is anticipated that approximately 0.44 Mt of surplus ammonia will be
available for sale each year through Ma'aden's marketing arrangements with SABIC.

Natural gas, the key raw material input for the production of ammonia, will be supplied by
Saudi ARAMCO and used as feedstock for the production of ammonia at Ras Az Zawr. Saudi
ARAMCO will be responsible for supplying natural gas to the Ras Az Zawr site. It has
dedicated gas for supply to PhosCo at Ras Az Zawr via a gas allocation letter in quantities
sufficient to meet the ammonia plant's daily requirements. It is anticipated that a formal supply
contract will be signed approximately six months prior to completion of the plant as is
customary in Saudi Arabia.

In July 2007 Ma'aden signed LSTK contracts with Samsung Engineering Co., Ltd and
Samsung Saudi Arabia Ltd. for the EPC of the ammonia plant pursuant to which Uhde will be
subcontracted to provide technology and design and other services. Construction work on the
ammonia plant commenced in December last year.

The EPC cost of the ammonia plant under the LSTK contracts is approximately SR3.57 billion
(US$951 million).

Diammonium Phosphate (DAP) Plant

The DAP plant has been designed to produce approximately 2.92 Mtpy of DAP in two
independently operating plants (each comprising two trains). The overall plant comprises four
DAP production trains, two of which will also have the capability to produce MAP, should
production of MAP be considered more economically viable.

100,000 tonnes of DAP storage at the fertiliser production facilities will be allocated to each of
the two plants, providing a total storage capacity of 200,000 tonnes. The total storage
capacity corresponds to 22 days of production, and is intended to allow the plant to operate
through shipping interruptions and short term fluctuation in product demand.

The DAP plant will be based on process technology from Incro SA in respect of which
Ma'aden obtained a licence. In June 2007 Ma'aden signed LSTK contracts with Dragodos
Gulf Construction, Intecsa Ingenieria Industrial S.A. and Initec Energia S.A. Union Temporal
de Empresas for the EPC of the DAP plant. Construction of the DAP plant complex
commenced in December last year.

The EPC cost of the DAP plant under the LSTK contracts is approximately SR1.83 billion
(US$486 million).

PhosCo Infrastructure

PhosCo's operations at Ras Az Zawr will require the support of substantial infrastructure. In
addition to the port facility which will be used to export DAP and ammonia, PhosCo's
operations will rely on certain infrastructure dedicated for the sole use of PhosCo at Ras Az
Zawr ("PhosCo Infrastructure") and is located inside PhosCo's fence line and certain
infrastructure which is to be shared with the Aluminium Project ("Common Infrastructure") and
is located outside PhosCo's fence line (a discussion of the Common Infrastructure and the
Port is set out in “The Company’s Business - Common Infrastructure”).




                                               86
The PhosCo Infrastructure includes the following:

     •   A power generation and water desalination plant capable of generating
         approximately 135MW of electricity and 40,000 m3 of desalinated water per day. The
         plant will make use of the excess steam generated by the sulphuric acid and
         ammonia plants and any surplus power produced will be sold to the SEC's national
         electricity distribution grid. In addition, the connection to the grid will provide an
         alternative source of power should this be required. Bids have been received for the
         LSTK EPC contract for the plant from contractors and this contract was awarded and
         signed in December 2007. Construction of the plant commenced recently.

     •   A seawater cooling system to provide cooling water to the ammonia and sulphuric
         acid plants, and supply water to the desalination plant. PhosCo is responsible for the
         infrastructure required to bring the water to the process plant.

     •   Gas distribution facilities to various plants and facilities for the gas supplied to the
         Ras Az Zawr site.

Other infrastructure includes facilities for process and potable water, storm water, effluent and
waste water treatment, plant air, feedstock distribution, phosphate concentrate handling,
integrated control systems, communications and security, acid loading, liquid sulphur
receiving, roadways, lighting, security and administrative offices.

The total cost of the PhosCo Infrastructure is estimated at approximately US$755 million
(SR2.83 billion).

Project Development, Management and Commissioning

Worley Arabia Limited ("WorleyParsons") has been appointed as the Project Management
Consultant (“PMC”) for the Phosphate Project and to assist PhosCo, Ma'aden and SABIC to
manage the overall implementation and execution of the Phosphate Project. WorleyParsons
has assigned a team to each LSTK contractor working with them to ensure that contract
conditions are met and will carry out certain design, procurement, and construction
management services as necessary to assist in meeting scheduled production.

During construction and initial operations of certain construction projects, PhosCo’s teams will
be supported by external providers including the EPC and LSTK contractors and technology
providers.

Commissioning of the facilities is planned to occur in a sequential manner as follows:

     •   The mine and beneficiation plants at Al Jalamid will be commissioned to provide a
         build-up of rock concentrate at Ras Az Zawr for processing.

     •   Ras Az Zawr Phosphate Project site infrastructure such as major roadways, control
         rooms, maintenance buildings, office buildings, laboratories will be progressively
         constructed, fitted out and completed.

     •   Power supply to the site and associated infrastructure together with cooling seawater
         supply and outfall, utilities boiler, desalination plant and associated storage and
         distribution systems will be constructed.

     •   The ammonia plant has the longest lead time for construction and must be
         operational before DAP can be produced.

     •   A sulphuric acid plant is scheduled to be the first plant to commence operation at
         Ras Az Zawr. As soon as quantities of sulphuric acid have been produced and


                                               87
        subject to the various plants being completed on time and in sequence, the first
        phosphoric acid plant will then commence operation. Similarly, as soon as quantities
        of phosphoric acid have been produced, a DAP granulation plant will commence
        operation using ammonia produced by the ammonia plant.

    •   For each of the plants, commissioning will include producing initial quantities of the
        product; reaching a stable level of production and handing the plant to the operations
        team.

Environmental Impact

An Environmental Impact Assessment (EIA) study for each of the Al Jalamid and Ras Az
Zawr sites was prepared in conjunction with the BFS. The study was prepared in accordance
with Presidency of Meteorology & Environment of Saudi Arabia ("PME") standards, Islamic
principles for the conservation of the natural environmental, Ma’aden's corporate policy, and
applicable international standards.

The EIA study concluded that construction and operation of the mine and beneficiation plant
at Al Jalamid, and the fertiliser production facilities at Ras Az Zawr are not anticipated to
generate any major negative environmental impact at the sites, although several mitigation
measures to minimise any potential negative impact proposed by the EIA are planned to be
implemented.

The findings of the study have been confirmed by subsequent studies carried out in relation to
the sites for the Phosphate Project including a Supplemental Environmental Impact Report
(SEIA) prepared by GHD, a leading international engineering and environmental consultant,
to assess the potential for additional environmental impacts generated by changes to the
design of these facilities and amendments made to the Equator Principles since the
completion of the EIA and various other studies.

A Community Impact Study (CIS) also undertaken to comply with the requirements of the
Equator Principles established by the World Bank classified the Phosphate Project as a
Category B Project, meaning that potential limited adverse social or environmental impacts
are few in number, generally site-specific, largely reversible and readily addressed through
mitigation measures.

Ma'aden proposes to manage the potential environmental impact of the Phosphate Project by
implementing a specific environment management plan for the Al Jalamid site. The
environmental impact of all activities at Ras Az Zawr (including those relating to the
Aluminium Project, Port and other infrastructure) is to be managed through the
implementation of an "environmental monitoring programme" which will enable Ma'aden to
assess its compliance with applicable environmental standards and regulations, establish the
effectiveness of pollution prevention and control strategies and support management
decisions, by identifying priorities for action.

Marketing and Agency Arrangements

Pursuant to the terms of the Phosphate JVA, Ma'aden and SABIC have entered into various
agreements with PhosCo and each other concerning the marketing of DAP and excess
ammonia produced by PhosCo, providing for the following:

    •   SABIC and Ma'aden will each be responsible for marketing a pro-rata amount of the
        total DAP and excess ammonia production equivalent to their interests in PhosCo of
        30 % and 70 % respectively (as amended from time to time) for the Phosphate JVA's
        initial term of 25 years and any subsequent renewal periods. In consideration of the
        marketing of their respective shares of the DAP and ammonia production, each of
        SABIC and Ma’aden will be paid a marketing fee by PhosCo.


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     •   The assignment by Ma'aden of its marketing obligation in respect to 47 % of the total
         DAP production to SABIC such that 77 % of the total DAP production will be
         marketed by SABIC for a period of 15 years commencing on the first date of
         production by the Phosphate Project. As a result Ma'aden will be responsible for
         marketing 23 % of the total DAP production.

     •   The assignment by Ma'aden of its marketing obligation in respect of all of the excess
         ammonia production to SABIC such that all excess ammonia production will be
         marketed by SABIC for a period of 15 years commencing on the first date of
         production by the Phosphate Project.

     •   That Ma'aden will have the right to call back all or part of its pro rata share of the
         total DAP and excess ammonia from SABIC at any time after the expiry of a period
         of 5 years from the effective date of the marketing agreements between Ma’aden
         and PhosCo and SABIC and PhosCo.

Pursuant to the proposed marketing arrangements with SABIC it is anticipated that during the
first five years of production SABIC will market DAP to international markets, after the
demand in the local market has been satisfied, with a particular focus on the Indian sub-
continent and excess ammonia produced to international markets east of Suez with a
particular focus on Asia and the Indian sub-continent, after the demand in the local market
has been satisfied. PhosCo has agreed to sell to SABIC all of the surplus volume of
phosphoric acid produced by PhosCo at Ras Az Zawr. A final sale and supply agreement
between PhosCo and SABIC in relation to the surplus phosphoric acid is currently under
negotiation.

Phosphate Project Costs and Funding

The total cost of the Phosphate Project is estimated at US$5.56 billion (SR20.85 billion)
taking account of projected annual inflation and estimated financing costs and based on
projected capital costs of US$4.54 billion (SR17.03 billion). Over 70% of total capital costs
have been contracted at a fixed rate under signed LSTK contracts for the engineering,
procurement and construction ("EPC") of a beneficiation plant, DAP, ammonia, sulphuric acid
and phosphoric acid processing plants and certain supporting infrastructure. For further
details regarding costs see table 13.1 in the Phosphate MER prepared by Behre Dolbear.

The principal items of Phosphate Project costs include the cost of construction of the mine at
Al Jalamid and associated facilities and infrastructure ($0.58 billion (SR2.18 billion)) and the
cost of construction of the processing facilities at Ras Az Zawr and associated infrastructure
($3.33 billion (SR12.49 billion)). Other miscellaneous costs will include finance costs, inflation,
interest payments and other debt related fees. Provisions for contingency costs account for
the balance of the project costs.

It is expect that 30 % of total project costs of the Phosphate Project will be funded by way of
equity contributions from Ma'aden and SABIC in proportion to their interests in the project.
The remaining project costs will be funded by limited recourse debt financing.

The debt financing is currently being sourced from a mix of Islamic, other local, regional and
international commercial banks and financial institutions and export credit agencies. Debt
funding is also expected to be made available by the PIF and the Saudi Industrial
Development Fund. Debt financing will be made available on a limited recourse basis with
security limited to PhosCo's assets. Ma'aden and SABIC will provide completion support in
proportion to their respective shareholdings in PhosCo. Ma'aden and SABIC will also be
expected to enter into equity retention and subordination arrangements with the financiers.

A mandate letter appointing arrangers and underwriters for the required debt financing for the
Phosphate Project was executed in December of 2007 and formal finance documentation was
executed in June of 2008.

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Al u min iu m P ro j e ct

Aluminium Project Overview

Ma'aden's objective is to exploit Saudi Arabia's bauxite resources to produce aluminium for
domestic and export markets.

The Aluminium Project involves the development, design, construction and subsequent
operation of two integrated sites:

     •   The mining facilities at Az Zabirah, consisting of a bauxite mine and ore handling
         facilities; and

     •   The aluminium complex at Ras Az Zawr, consisting of an alumina refinery, an
         aluminium smelter and a dedicated power plant at Ras Az Zawr;

with each site supported by appropriate industrial and social infrastructure.

Capacities reviewed in historical independent technical studies and by Behre Dolbear in its
Aluminium MER previously indicated that upon completion of the Aluminium Project
approximately 3.5 Mtpy of bauxite would be extracted from the Az Zabirah Deposit to produce
approximately 1.4 Mtpy of alumina from the refinery and approximately 0.65 Mtpy of
aluminium from the smelter. Further feasibility studies focusing on the aluminium smelter and
alumina refinery ("FEL 2 Studies") completed earlier this year confirmed the economic
feasibility of increasing these capacities to approximately 4.0 Mtpy of bauxite, 1.8 Mtpy of
alumina and 0.74 Mtpy of aluminium and the Company intends to proceed with the
development of the Aluminium Project on this basis. Excess alumina produced by the refinery
that is not used to expand the smelter's aluminium production is anticipated to be sold to
international markets, after the demand in the local market has been satisfied, through
Ma'aden's proposed marketing arrangements with Rio Tinto Alcan.

In April 2007, Ma'aden entered into a HoA with Rio Tinto Alcan to conclude a joint venture
agreement pursuant to which Rio Tinto Alcan will acquire a 49 % interest in AlumCo the joint
venture company which will operate the Aluminium Project. Commercial production of
aluminium is planned to commence by the end of 2012. The Heads of Agreement envisages
that each of Ma'aden and Rio Tinto Alcan will enter into offtake agreements with AlumCo to
purchase the aluminium produced in proportion to their respective interests in, the project.
The Company anticipates entering into a formal joint venture agreement with Rio Tinto Alcan
in the third quarter of 2008.

Following completion of the FEL 2 Studies and the revision of the estimated production
capacities for the refinery and smelter to approximately 1.8 Mtpy of alumina and 0.74 Mtpy of
aluminium respectively and for the power plant to approximately 2100MW, cost estimates
have been adjusted upwards. It is now estimated that the total cost of the Aluminium Project
is SR39.56 billion (US$10.55 billion) taking into account working capital and contingency
costs but not projected annual inflation or estimated financing costs during the construction
phase. This estimate is based on projected capital costs of approximately SR35.04 billion
(US$9.34billion). The increase in cost estimate is attributable to several factors including the
increased capacities of each of the mine, refinery, smelter and power plant, the more
advanced stage of development of the project, increased construction costs due to
inflationary pressures in the region, increased import costs resulting from exchange rate
changes and human capital costs because of skilled labour shortages. The FEL 2 Studies
also confirmed an increased production cost per tonne of $1,281 based on an annual
production rate of 0.74 Mtpy of aluminium. This was previously estimated as $1,056 per tonne
by Behre Dolbear in the Aluminium MER based on the previous capacity of 0.65Mtpy of
aluminium.


                                               90
The successful development and operation of the Phosphate and Aluminium Projects will be
supported by a railway and port facility and certain key common infrastructure further
described in the "Common Infrastructure" section below. The bauxite ore will be mined using
trucks and shovels and will be transported from the Az Zabirah mine site to the processing
facilities at Ras Az Zawr by train, on the Railway.

The alumina refinery will process the bauxite using the Bayer process. The alumina produced
will be used primarily as feedstock for the project's aluminium smelter, with surplus production
to be sold into international markets, after the demand in the local market has been satisfied.

Power, steam and desalinated water will be supplied to the smelter and refinery by a project-
dedicated oil-fired power plant rated at approximately 2,100 MW net capacity to be developed
as part of the Aluminium Project. It is expected that the heavy crude oil to fuel the power plant
will be supplied by Saudi ARAMCO at a fixed cost.

Certain of the other associated utilities including cooling water facilities and worker
accommodations to be located at Ras Az Zawr will be developed by InfraCo, which is
currently under formation and will be a subsidiary of Ma'aden. It has been agreed that any
excess power not required for the refining and smelting operations will be sold to SEC.

Project Status and Key Milestones

The Aluminium Project is at an earlier stage of development than the Phosphate Project.
The FEL 2 Studies for the aluminium smelter and the alumina refinery which confirmed the
current capacities of the refinery and smelter were completed in the first quarter of this year.
Further, detailed engineering studies ("FEL 3 Studies") for the smelter and refinery will need
to be completed before execution of EPCM contracts for the construction of these facilities
and as a pre-condition to financing. The Company is currently in discussions with EPCM
contractors for the mine and refinery and the smelter who will be appointed during the FEL 3
Studies phase to assist with the completion of the studies. It is expected that the FEL 3
Studies will be completed by the third quarter of 2009. On 30 April 2007, Ma'aden entered
into a Heads of Agreement ("HoA") with Rio Tinto Alcan for the development of the Aluminium
Project after the evaluation and selection of a group of international companies, with which
Ma’aden has strong ties, that specializes in this field. It is anticipated that a formal joint
venture agreement to replace Ma'aden's current Heads of Agreement with Rio Tinto Alcan will
be signed in the third quarter of 2008. Further key milestones in the development of the
Aluminium Project are: (1) the availability of first reliable power (expected by the end of the
first half of 2012); (2) first alumina production (expected by end of the second half of 2012);
(3) first aluminium production (expected by end of the second half of 2012); (4) operation of
the aluminium facilities at full capacity (1.8 Mtpy of alumina and 0.74 Mtpy of aluminium)
expected by end of the first half of 2013).

It is expected that the alumina refinery will become operational after the aluminium smelter
and under the terms of the HoA, Rio Tinto Alcan will be required to use its reasonable best
efforts to supply alumina to the smelter during that period.

Whilst Ma'aden currently anticipates completing the milestones as set out above, the dates
specified are indicative only and may change due to factors beyond Ma'aden's control.

Background, Geology and Resources

A significant bauxite deposit was discovered at Az Zabirah in 1979 by Riofinex Limited, a
subsidiary of Rio Tinto. Exploration work carried out by Riofinex between 1979 and 1984
further defined the deposit which is located discontinuously along a strike length of
approximately 105km, with an average width of approximately 2.5km ("Az Zabirah Deposit").
The Az Zabirah Deposit comprises three main zones: the north, central and south zone, with
each being approximately 30km in length.


                                               91
Subsequently, between 1987 and 1993, Bureau de Recherché Géologiques et Minières
(“BRGM”), in conjunction with the Directorate General for Mineral Resources ("DGMR"),
conducted a pre-feasibility study of the deposit. Ma’aden won the right to explore and
investigate the feasibility of the bauxite deposits at Az Zabirah in a competitive tender in 1999.

In December 2001, Ma’aden commissioned Hatch Associates Pty. Ltd. ("Hatch") to review
geological data collected from exploration programs conducted by Riofinex and BRGM. Hatch
prepared resource estimates for the south zone and the central zone of the deposit based on
the Riofinex and BRGM programs and a drilling programme undertaken by Ma'aden.

The total resource (including measured, indicated and inferred resources) for the south and
central zones of the deposit at Az Zabirah was estimated by Hatch in 2004 at 377 Mt with an
estimated total available alumina content of 50.4 % and an estimated silica content of 8.3 %.
Hatch was also engaged to prepare a mine plan (“Mine Plan") in November 2003 based on a
specified limited period of production, exclusively within the south zone and estimated the Az
Zabirah ore proved and probable reserves in the south zone to be 39.40 Mt in accordance
with the then applicable standards. Further work is currently being undertaken to upgrade this
estimate to comply with JORC Code standards. This is expected to be completed early next
year.

In April 2003, Ma’aden also commissioned Saudi Arabian Bechtel Company (“Bechtel”) to
prepare a Feasibility Study Report (“FSR”) for the Aluminium Project which was completed in
2005 (with additional work performed by Snowden and Runge). This was subsequently
revised in 2005, and confirmed Hatch's reserve and resource estimates, estimating a mine life
of 12 years. The FSR recommended that further work be done to upgrade a portion of the
inferred resource in the south zone to an indicated resource, and the mine plan was revised
to increase reserves and hence the mine life.

In February 2007, Ma'aden was granted three mining leases by the Ministry of Petroleum and
Mineral Resources for the south zone of the bauxite deposit. Ma'aden has also applied for
two contiguous exploration licences which will cover the central zone of the Az Zabirah
                                  2
Deposit with a total area of 164km .

In July 2007, Hatch Engineering commenced a further review of the resource and reserve
estimates as part of the FEL 2 engineering design package for the mine and refinery.

In its Aluminium MER (see, “Mineral Experts Reports”), Behre Dolbear assesses the total
potential resource for the South Zone of the Az Zabirah deposit to be 240 Mt at 50% available
alumina and 8% SiO2. Even if only half of this assessed resource is converted to reserves, in
Behre Dolbear's view, a reasonable assumption, it would allow for a mine life of well over 30
years at the initially proposed alumina production rate of 1.4 Mtpy from a bauxite supply rate
of 3.5 Mtpy. They further state that additional resources may be available from the Central
Zone of the deposit which has drilled out resource potential (partly measured but mostly
inferred classification) of over 100 Mt at 50 % total available alumina and 8 % SiO2.

However, Behre Dolbear did not support the reserve estimates contained in the Hatch report
which is part of the FSR nor the update prepared by SMGC in 2005 as being in compliance
with the JORC Code. It has reservations as to the geological modelling and resource
estimates procedures from data validation to conversion of resources to reserves followed by
Hatch and in the update studies carried out by Ma'aden and SMGC in 2005. In its Report it
recommends that the differences in the levels of resources supported by those studies and
those supported by the Project Feasibility Study carried out by Hatch in 2003 be resolved. To
this effect Behre Dolbear recommended that new resource modelling should be
undertaken on the basis of new procedures endorsed by it in the Aluminium MER.

The work commenced by Hatch in July 2007 was to be used as the basis for the preparation
of a further technical report to prepare a revised resource model for the South zone of the Az
Zabirah bauxite deposit which would, amongst other things, address the issues raised by

                                               92
Behre Dolbear. In late 2007 the Company engaged international technical consultants to
prepare a technical report in compliance with the requirements of Canadian National
Instrument 43-101 (the Canadian equivalent standard of the JORC Code). The technical
consultants considered the planning, estimation and design work reviewed to be
comprehensive and of prefeasibility study standard. The technical consultants determined
that the work was of sufficient quality to support a Mineral Resource estimate in accordance
with the CIM Definition Standards (CIM 2005) and best practice guidelines (CIM 2003) and to
convert the Mineral Resource estimate to Mineral Reserves.

In its report issued in May 2008 the technical consultants estimated the total Mineral
Resource at the South Zone of the Az Zabirah deposit to be 258.8 Mt at 49.4% available
alumina and 8.9% SiO and the total Mineral Reserves at 203Mt at 47.5% available alumina
and 9.5% silica. These classifications were prepared in accordance with the Canadian
standards described above.

The mine plan has since been updated to take into account the revised Mineral Resource and
Mineral Reserve estimates as well as the revised estimated capacities of the refinery and
smelter reviewed in FEL 2 Studies. The revised mine plan envisages production at an annual
mining rate of 4.0 Mtpy of bauxite to meet the annual alumina supply target of 1.8 Mtpy and
aluminium production of 0.74 Mtpy for a period in excess of 30 years.

Ownership Structure and Management

Ownership

The Aluminium Project will be owned and operated in joint venture with Rio Tinto Alcan
through a limited liability company ("AlumCo") to be incorporated in Saudi Arabia. A Heads of
Agreement ("HoA") was concluded on 30 April 2007 between Ma'aden and Rio Tinto Alcan.
AlumCo will be owned 51 % by Ma'aden and 49 % by Rio Tinto Alcan. The conclusion of the
formal joint venture agreement is anticipated in the third quarter of 2008 after the completion
of the negotiations.

Under the HoA each joint venture partner will contribute equity in proportion to its project
interest. The HoA also outlines each partner's responsibilities towards the Aluminium Project
with Ma'aden being responsible on a reasonable endeavours basis for, amongst other things,
procuring the provision of certain infrastructure and services, licences for the production of
power, steam and desalinated water, property and mining leases for the Az Zabirah and Ras
Az Zawr sites, caustic soda and fuel supply contracts. Rio Tinto Alcan is obliged to provide
AlumCo with certain management support services including the provision of skilled
personnel from other Rio Tinto Alcan plants, training, human resources management,
developing and updating of certain operational policies and procurement services.

The term of the Aluminium joint venture agreement, as contemplated under the HoA, is
intended to be 30 years and subject to renewal for an additional term of 20 years unless the
parties agree otherwise. A summary of the material terms and conditions of the HoA is set
out in “Summary of Material Agreements”.

Overview of Rio Tinto Alcan

On 15 November 2007 Rio Tinto completed the acquisition of 100% of Alcan's issued share
capital pursuant to a takeover offer for an all cash consideration of approximately SR142.88
billion (US$38.1 billion).

Rio Tinto Alcan is a multinational company regarded as a global leader in aluminium
production and packaging with operations in primary aluminium and fabricated aluminium as
well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina
processing. In 2006 Rio Tinto Alcan generated revenues of SR88.5 billion (US$23.6 billion)
and achieved net income of approximately SR 6.75 billion (US$1.8 billion). Rio Tinto Alcan

                                              93
has over 60,000 employees, including its joint ventures, and has operating facilities in 61
countries and regions. Immediately prior to the Rio Tinto take-over, Rio Tinto Alcan was a
public company whose shares traded on the Toronto, New York, London, Paris and Swiss
stock exchanges with a market capitalisation of approximately SR143 billion (US$38 billion).
For further information refer to Rio Tinto Alcan's website: www.alcan.com.

On 8 November BHP Billiton confirmed that it had approached Rio Tinto with a proposed offer
to acquire the Rio Tinto group (including Rio Tinto Alcan but excluding debt) for approximately
SR523 billion (US$141 billion). Rio Tinto rejected the proposal on the basis that its board
believed the offer to undervalue Rio Tinto and its prospects. On 6 February 2008 BHP Billiton
made a revised offer to acquire the group offering 3.4 BHP Billiton shares for every Rio Tinto
share valuing Rio Tinto Group at approximately SR552.75 billion (US$147.4 billion) as of 4
February 2008. Rio Tinto’s board has rejected the revised offer again on the basis that it
believes that the offer significantly undervalues Rio Tinto.

Management

Upon incorporation of AlumCo, following the execution of the joint venture agreement, it is
proposed that the Board of Managers of AlumCo will comprise three managers appointed by
Ma'aden (including the chairman) and three managers appointed by Rio Tinto Alcan
(including the vice chairman). The senior management team to be appointed by the Board will
include a chief executive officer recruited by Ma'aden, a chief operating officer recruited by
Rio Tinto Alcan and a chief financial and chief human resources officer jointly recruited by
Ma'aden and Rio Tinto Alcan.

Project Management

Management of the Aluminium Project will require the successful co-ordination of the
construction and commissioning of the alumina refinery, aluminium smelter and power plant
at Ras Az Zawr. It is anticipated that construction of the refinery and smelter will proceed
under EPCM contracts which are currently being negotiated and that construction of the
power plant will proceed under an EPC contract. It is the current intention to appoint one of
the contractors awarded the construction of the refinery or smelter to be responsible for co-
ordinating the development of these three projects.

Az Zabirah Operations and Facilities

The site for the Az Zabirah bauxite mine is located in the Qassim province in the north-
eastern region of Saudi Arabia, approximately 150km north of Buraydah and 440km north-
west of Riyadh.

The mine plan has since been updated to take into account the revised Mineral Resource and
Mineral Reserve estimates as well as the revised estimated capacities of the refinery and
smelter reviewed in FEL 2 Studies. The revised mine plan envisages production at an annual
mining rate of 4.0 Mtpy of bauxite to meet the annual alumina supply target of 1.8 Mtpy and
aluminium production of 0.74 Mtpy for a period in excess of 30 years. Bauxite initially be
mined from the south zone resource area with conventional open cut mining techniques and
delivered to the mine processing facilities at Az Zabirah, with excavated waste material being
placed in previously mined areas.

It is proposed that mining operations will be undertaken by a third party contractor on the
basis that a contracted mining operation has been assessed to be more cost-effective than a
mining operation to be undertaken by AlumCo itself which is a common practice in the mining
industry. This will be reviewed further during the FEL 3 Studies phase with assistance from
Rio Tinto Alcan with the benefit of their experience in mining operations.

The mine processing facilities will comprise a two-stage crushing plant which will accept run-
of-mine (ROM) ore and will crush the ore into a size suitable for delivery to and processing

                                              94
through the grinding mills in the alumina refinery. The mine facilities will include also a loading
station to deliver crushed ore to the top of train wagons. The mine processing facilities have
been designed to process 4.0 Mtpy of dry bauxite and will be located at the mine site.

The mine infrastructure will include site access roads, drainage, bore field and water supply
pipeline, integrated communications systems, sewerage systems, electrical systems,
reticulation of utilities and worker accommodation.

Ras Az Zawr Facilities

Bauxite ore transported by rail to Ras Az Zawr will be refined to produce aluminium oxide
commonly known as alumina which will in turn be processed in the aluminium smelter (also
located at Ras Az Zawr) to produce aluminium.

Alumina Refinery

The project’s alumina refinery will use the Bayer process. The Bayer process is considered
the most cost-effective commercial method for producing alumina and involves four steps -
digestion, clarification, precipitation and calcination. The resulting product is alumina, which
may then be processed into aluminium metal through the smelting process.

It is intended that the refinery will operate continuously, with a first phase capacity of 1.8 Mtpy
smelter grade alumina based on current estimated capacities. It is envisaged that a second
1.8 Mtpy stream for the production of alumina may be added following successful operation of
the first phase in conjunction with a commensurate expansion of the smelter.

Aluminium Smelter

The smelter will use the Pechiney smelting process technology to extract aluminium metal
from alumina through electrolytic reduction. This process is to be licensed to AlumCo by AP
Aluminium Pechiney and is currently regarded as the most modern, commercially available
and proven smelting technology.

The smelting process converts alumina into its two elemental components, aluminium and
oxygen. The separation of aluminium from oxygen is accomplished by high-temperature
electrolysis in individual electrolytic cells or "pots".

The smelter will comprise two modern pre-bake high amperage technology potlines, each
with reduction cells with an overall facility capacity of 0.74 Mtpy of aluminium metal. The
smelter will also include a carbon plant for anode production, a cast house for ingot
production, material handling, and support facilities.

AlumCo Infrastructure Power, Steam & Desalinated Water Facility

As with PhosCo's processing facilities at Ras Az Zawr, AlumCo's operations at Ras Az Zawr
will rely on certain infrastructure dedicated for the sole use of AlumCo ("AlumCo
Infrastructure") as well as Common Infrastructure. A discussion of the Common Infrastructure
and the port facility are set out in the “Common Infrastructure” section.

Power, steam and desalinated water will be supplied to the smelter and refinery by a project-
dedicated oil-fired power plant rated at approximately 2,100 MW net capacity to be developed
as a key item of AlumCo Infrastructure. The power plant will be located on the coastline at
Ras Az Zawr adjacent to the refinery and smelter and will be designed to meet all electricity,
water and steam requirements of the two facilities.

It is proposed that pursuant to a power interconnection agreement with Saudi Electricity
Company ("SEC") the plant will have access to approximately 600 MW of back-up power
supply and also have the ability to sell surplus capacity back into the grid. See "Power

                                                95
Interconnection Agreement with Saudi Electricity Company in the "Summary of Material
Agreements" section.

Construction of the power, water and steam station will be undertaken by an EPC contractor.
The bid process for the award of the power EPC has commenced and award of the contract is
currently expected to occur by the end of the year.

Project Development and Commissioning

It is intended that the project facilities will be executed as individual, interrelated design and
construction packages with internationally recognised EPCM and EPC contractors with
extensive project execution experience in Saudi Arabia. It is envisaged that the EPCM/EPC
contractor teams will work closely with AlumCo’s project personnel to ensure the successful
completion of the facilities.

Ma’aden and Rio Tinto Alcan have established teams to oversee all necessary studies for the
completion of the alumina refinery and aluminium smelter. In anticipation of the completion of
these studies and the execution of the Aluminium JVA Ma'aden and Rio Tinto Alcan are also
establishing a dedicated team of specialists to oversee the overall execution of the Aluminium
Project.

Environmental Impact

In conjunction with the FSR Ma’aden engaged Bechtel to conduct an Environmental Impact
Assessment (EIA) for each of the Az Zabirah mine site and refinery and smelter at Ras Az
Zawr. A further study was conducted in relation to the Port and power, steam and desalination
water facility.

The EIA study concluded that construction and operation of the mine at Az Zabirah, and the
alumina refinery and aluminium smelter at Ras Az Zawr are not anticipated to generate any
major negative environmental impact at the sites, although several mitigation measures to
minimise any potential negative impact proposed by the EIA are planned to be implemented.

A certificate of environmental approval with respect to the proposed operations of the
Aluminium Project at Ras Az Zawr has been issued based on the previous capacities of 1.4
Mtpy of alumina 0.65 Mtpy of aluminium from the smelter. The Company proposes to prepare
a revised EIA study which reflects the revised capacities of approximately 1.8 Mtpy of alumina
and 0.74 Mtpy of aluminium and apply for an updated certificate on this basis.

It is proposed that a specific environment management plan be formulated for the Az Zabirah
site. However, the environmental impact of all activities at Ras Az Zawr (including those
relating to the Phosphate Project, Port and other infrastructure) are to be managed through
the implementation of an "environmental monitoring programme" which will enable Ma'aden to
assess its compliance with applicable environmental standards and regulations, establish the
effectiveness of pollution prevention and control strategies and support management
decisions, by identifying priorities for action.

Offtake and Agency Arrangements

Under the terms of the HoA Ma'aden and Rio Tinto Alcan have each agreed to enter into an
offtake agreement with AlumCo to purchase their pro rata share (according to their respective
project interests of 51 % and 49 %) of aluminium produced by the Aluminium Project at a
price based on LME prevailing prices. These are currently being prepared and negotiated.
Primary aluminium is one of the most commonly traded commodities on the LME with a daily
average traded volume of 191,163 tonnes for the year to date (30 April 2008. The Aluminium
spot and future markets will provide a liquid market into which Ma'aden can sell its aluminium
production.


                                               96
Nonetheless, the HoA contemplates that Rio Tinto Alcan and Ma'aden will enter into a sales
agency agreement pursuant to which Rio Tinto Alcan will act as Ma'aden's sales agent for the
sale of a portion of Ma'aden's share of smelter aluminium outside Saudi Arabia in
consideration for the payment of an agency fee. It is anticipated that the term of the
agreement will be 15 years from the first date of full commercial production from first line of
the smelter. It is also proposed that Rio Tinto Alcan shall have the right to terminate the sales
agency agreement at any time after the fifth year of the term by providing to Ma'aden 12
months' prior written notice. The portion of Ma'aden's share of aluminium production to be
subject to the agreement and the agency fee payable to Rio Tinto Alcan is yet to be agreed in
principle.

It is proposed that each year after the fifth year of the term of the sales agency agreement,
Ma'aden will be entitled to reduce the amount of aluminium which Rio Tinto Alcan may sell on
its behalf in increments of up to 25 % of Ma'aden's pro rata share of aluminium provided it has
first given Rio Tinto Alcan 12 months notice. The gross proceeds of sale (before deduction of
the commission payable to Rio Tinto Alcan) remitted to Ma'aden upon sale of smelter
aluminium by Rio Tinto Alcan on behalf of Ma'aden will be determined with reference to the
average price achieved by Rio Tinto Alcan on sales of smelter aluminium in arm's length
transactions with third parties.

Rio Tinto Alcan and Ma'aden also propose entering into an exclusive sales agency
agreement for Saudi Arabia for the sale by Ma'aden on behalf of Rio Tinto Alcan of that
portion of Rio Tinto Alcan's share of the smelter aluminium that Rio Tinto Alcan determines
may be sold to purchasers within Saudi Arabia. Ma'aden will have the right to terminate the
sales agency agreement at any time after the fifth year of the term on 12 months prior written
notice to Rio Tinto Alcan. The agreement is anticipated to otherwise be substantially on the
same terms as the sales agency agreement for markets outside of Saudi Arabia.

Project Costs and Funding

Following completion of the FEL 2 Studies and the revision of the estimated production
capacities for the refinery and smelter to approximately 1.8 Mtpy of alumina and 0.74 Mtpy of
aluminium respectively, and for the power plant to approximately 2100MW, cost estimates
have been adjusted upwards. It is now estimated that the total cost of the Aluminium Project
is SR39.56 billion (US$10.55 billion) taking into account working capital and contingency
costs but not projected annual inflation or estimated financing costs during the construction
phase. This estimate is based on projected capital costs of approximately SR35.04 billion
(US$9.34billion). The increase in cost estimate is attributable to several factors including the
increased capacities of each of the mine, refinery, smelter and power plant, the more
advanced stage of development of the project, increased construction costs due to
inflationary pressures in the region, increased import costs resulting from exchange rate
changes and human capital costs because of skilled labour shortages.

Key Aluminium Project costs include the cost of the mine at Az Zabirah ((SR0.83 billion)
(US$0.22 billion)) and construction of the facilities at Ras Az Zawr being the refinery ((SR8.19
billion) (US$2.18 billion)), the smelter ((SR13,66 billion) (US$3.64 billion)) and the power plant
((SR12.37 billion) (US$3,30 billion).

It is currently expected that 30% to 40 % of the total costs will be funded through equity
contributions from Ma'aden and Rio Tinto Alcan with the balance to be funded through limited
recourse debt. It is possible that Ma'aden and Rio Tinto Alcan may provide this contribution
by way of a subordinated shareholder loan. Ma’aden may also resort to other sources of
financing.

Common Infrastructure

Both the Phosphate and Aluminium Projects rely on the successful development and
operation of several substantial infrastructure projects. These are:

                                               97
       •   The port for exporting DAP and ammonia in the case of the Phosphate Project and
           for the import of raw materials, and export of alumina and aluminium in the case of
           the Aluminium Project;

       •   The Railway project to transport the phosphate and bauxite ore from Al Jalamid and
           Az Zabirah (respectively) to Ras Az Zawr; and

       •   Certain common infrastructure facilities including land, accommodation and
           telecommunications at Ras Az Zawr to service both the Phosphate and Aluminium
           Projects.

Port

A new Port will be constructed, operated and maintained by the Saudi Port Authority. It will
service industrial and mining operations located at Ras Az Zawr including the import and
export requirements associated with the Aluminium and Phosphate Projects.

The new Port will be located at Ras Az Zawr, approximately 90km northeast of Al Jubail.

It is proposed that the port facility will comprise a 24km long, 175m wide navigation channel
and a 2.4km by 1.4km port basin. The port has been designed to receive visiting vessels of
up to 70,000 DWT to ensure that there is sufficient capacity to accommodate the largest
vessels involved in the DAP and ammonia trades, and to meet the export needs of the
Aluminium Project.

Phase 1 development of the Port will involve the construction of three main berths, one for dry
bulk cargo (such as DAP), one for general cargo and one for liquid bulk cargo.

Provision has been made in the port basin design for additional berths if required for future
expansion and for the extension of the proposed Railway line to the future berth front.

In February 2008 it was reported that the Saudi Port Authority entered into an agreement with
China Harbour Engineering Company (a joint venture between China's Harbour Contracting
and Engineering Company local company Rafid Group) for the construction of the Port. The
total cost for construction and development of the Port is estimated under the contract at
approximately SR2.2 billion (US$590 million). The Company will not be responsible for any of
the costs associated with the development of the Port.

Railway

Development of the Railway has been authorised under the Royal Decree No. 56, dated
4/3/1424 H (corresponding to 6/5/2003G). Construction of the Railway has been approved by
the Supreme Economic Council and the Council of Ministers and its development is being
monitored by SAR, a company wholly owned by PIF.

The PIF is undertaking the development of a new north-south railway line from Riyadh to
Haditha with spurs to Al Jalamid and Basayta and a linkage from the Az Zabirah to Ras Az
Zawr and Jubail. Ma'aden understands that the Railway will be constructed by SAR and fully
funded by the PIF and is expected to cost approximately SR16.9 billion (US$4.5 billion). The
Company will not be responsible for any of the costs associated with the development of the
Railway.

The total length of the Railway will be approximately 2,400km and will transport minerals as
well as passengers and general freight. The mineral line will be approximately 1,486km long
linking the phosphate mine at Al Jalamid and bauxite mine at Az Zabirah to the processing
facilities at Ras Az Zawr. Ma'aden understands that the Railway will be critical to the



                                              98
production of DAP, alumina and aluminium at Ras Az Zawr and therefore the successful
operation of the Aluminium and Phosphate Projects.

Accordingly, it is important that the construction schedule for the Railway is synchronised with
the Phosphate Project schedule which will be completed prior to the Aluminium. Ma’aden’s
Phosphate and Aluminium Project teams are working closely with the PIF to ensure timely
completion of all the milestones related to the construction of the Railway. Ma’aden has
representatives on the board of directors of SAR, the entity responsible for the construction
and operation of the Railway project.

Detailed design of the mineral line of the Railway was completed in March 2006 and in May
2006 the Council of Ministers approved the establishment of a new company, Saudi Railway
Company which is owned by the PIF, in order to monitor the establishment, operate and
manage the Railway project.

Design and development of the Railway project is being co-ordinated by two separate
consortiums. The consortium responsible for the design comprises CANARAIL of Canada,
SYSTRA of France and Khatib & Al-Alami of Saudi Arabia and the development consortium
comprises the same entities together with Louis Berger Group.

The Railway works are to be divided into a number of contracts: civil and track works;
procurement of rolling stock (wagons & locomotives); procurement of railway transport
operator; facilities including workshops; and signalling and telecommunications. Contracts
valued at over SR9.0 billion have already been awarded.

In July 2006, the PIF awarded Al Khodary and Al Omaeir Contractors with the contract
(valued at approximately SR1.8 billion) to undertake An Nafud’s earthwork between Hail and
Jawf (280km). Mobilisation and ordering of equipment is complete, and earthwork is in
progress.

In April 2007, the PIF signed contracts (valued at approximately SR7.2 billion) with three
Railway and civil works contractor consortiums lead by the Saudi Bin laden Group, Al Swaikat
Group, the China Railway no.18, and Al Rashed Company in association with Barclay
Mowlem to undertake the civil and track works, which cover the construction of roadbed,
concrete bridges, concrete culverts, concrete sleepers, rails, crushed rock ballast, and
mainline track structure.

Ma’aden is currently negotiating a Railway Cooperation Agreement (“RCA”) with PIF which
will be entered into between PIF, SAR, Ma’aden and PhosCo. It is contemplated that the RCA
will address matters including target dates for construction of the Railway and the
beneficiation plant, information sharing, and certain operational requirements for the Railway.
It is anticipated that the RCA will be entered into during 2008.

Ma'aden also intends to enter into a Railway Transportation Agreement (“RTA”) with SAR
and/or the Railway operator prior to completion of the Railway which will address minimum
requirements and performance levels as to capacity, frequency, scheduling and turn around
times in relation to PhosCo and AlumCo. The RTA will also provide for the tariffs that are
payable in connection with the use of the Railway by PhosCo and AlumCo. It is anticipated
that the RTA will be executed following execution of the RCA and once PIF has appointed an
operator for the Railway.

The tariffs payable by PhosCo and AlumCo for use of the Railway have not yet formally been
agreed. Ma'aden anticipates that tariffs will be set within a particular range that will make both
the Phosphate and Aluminium Projects economically feasible.

Completion of the line from Al Jalamid to Ras Az Zawr is scheduled for the end of 2010, prior
to the commissioning of the Phosphate Project processing facilities at Ras Az Zawr. In the


                                               99
event that construction of the Railway is delayed, Ma’aden may be required for a limited
period of time to truck phosphate concentrate from Al Jalamid to Ras Az Zawr.

Common Infrastructure at Ras Az Zawr

Each of the Phosphate and Aluminium Projects have been configured such that Common
Infrastructure (infrastructure that cannot be identified as solely for the use of PhosCo or
AlumCo) at Ras Az Zawr will be provided by InfraCo, which is currently under formation and
will be a subsidiary of Ma'aden. InfraCo’s scope includes the following items:

     •   primary services, roads, sanitation facilities, electric power, and national electric
         power connections

     •   Power distribution and transmission

     •   Worker accommodation at Ras Az Zawr – housing for bachelor workers

     •   Residential land at Al-Jubail – housing for family workers

These services, including their initial capital costs, are neither PhosCo’s nor AlumCo's
responsibility and are therefore not included in the Phosphate or Aluminium Project's costs.
Capital costs for the Common Infrastructure will be funded by Ma’aden. However, each of
PhosCo and AlumCo will be required to pay a charge for their use to InfraCo, with the
intention that InfraCo will recover its capital investment in the Common Infrastructure. This
charge will also apply to any other entities which may occupy sites and operate downstream
industries within the Ras Az Zawr site.

Ma'aden is currently in discussions with the Royal Commission to determine the most efficient
means of managing the current and future development of the new mining industrial zone at
Ras Az Zawr.

The Common Infrastructure schedule has been developed to ensure that components that
are critical for the operations of PhosCo and AlumCo are completed on time.

The total cost of the Common Infrastructure is estimated at approximately SR862.5 million
(US$230 million).

Other Projects
Ma’aden is constantly exploring for and evaluating new industrial Mineral Resources in Saudi
Arabia for supply to local and international markets. The Company is actively evaluating the
potential to enrich its mineral portfolio from identified deposits of industrial minerals including
refractory clay and low-grade bauxite, sillimanite type minerals, graphite, bentonite and
attapulgite, diatomite, silica, garnets, wollastonite, and brine type minerals.

Summaries of Ma'aden's other projects are set out below.

Chlor Alkali Project

Caustic soda is an essential feedstock needed for the refining of bauxite to alumina. It is
produced from the electrolysis of brine, along with chlorine which is later used in the
manufacture of ethylene di-chloride (“EDC”).

The Company proposes to construct a facility in a 50/50 joint venture with Sahara
Petrochemical Company with the capacity to produce up to 0.25 Mtpy of caustic soda and
0.30 Mtpy of EDC. The plant will be located at Jubail Industrial City to allow ethylene to be
delivered by pipeline from the Tasnee Ethane Cracker. The ethylene required for production

                                               100
is to be provided by Saudi ARAMCO. Brine is readily available and will be sourced locally
from one or more of the many suppliers in the region. Power will be supplied by the electrical
grid of SEC.

It is proposed that caustic soda produced will be supplied to Ma’aden’s alumina refinery under
a marketing agreement between Ma’aden and Sahara. A separate marketing agreement will
be entered into with a third party for any surplus caustic soda produced. EDC is a widely
traded commodity and will be sold into international markets with a portion being taken by
another joint venture company in which Sahara Petrochemical Company has an interest.
Jacob's Engineering was awarded the Project Manager Contract and is currently completing
the design of the chlor alkali plant and the EDC plant. A technology agreement for the plants
has been concluded with Uhde. Award of the EPC contract is expected to occur by the end of
the year. Production is expected to commence in 2011.

Ma'aden and Sahara have signed a Memorandum of Understanding dated 10 September
2006 in respect of the construction of the plant, with a joint venture agreement expected to be
signed shortly, pursuant to which a joint venture company, to be owned 50 % by Ma’aden and
50 % by Sahara, will be incorporated for the purpose of owning and operating the project. The
proposed term of the joint venture is 25 years. The total cost of the project is estimated at
SR1,500 million (US$400 million) (within a margin of +/- 30%) and it is anticipated that it will
be financed with 30% equity and 70% debt.

Industrial Minerals Projects

Magnesite

Zarghat is a high-grade magnesite resource which will provide top quality feedstock for a
range of high-value magnesia products. The development of the Zarghat magnesite deposit in
the north-central part of Saudi Arabia is planned as part of Ma’aden’s strategy to develop and
diversify the minerals base of Saudi Arabia. The project is expected to become operational
mid 2009.
                                       2
Ma’aden’s mining licence covers 3km that includes all the magnesite in this area. The proven
reserve at Zarghat is approximately 2.7 million tonnes and comprises four separate bowl-
shaped ore bodies that outcrop within 300 m of each other. It is proposed that the mine will
be developed as an open cast mine and run of mine material will be crushed and screened on
site and delivered to Ma’aden’s processing plant at Al Madinah Al Munawarah.

Processing will occur at a state-of-the-art calcining and sintering plant that will be built at Al
Madinah Al Munawarah industrial city, with calcined and sintered magnesia products shipped
regionally within Saudi Arabia and to selected international destinations.

The chemical and physical characteristics of Zarghat magnesite make it suitable for a range
of high grade magnesia applications in a variety of market sectors, including refractories,
environmental, agricultural, construction and other value added applications.

Ma’aden also holds exploration licences in the Jabal Al Rokham and Jabal Abt areas which
are also prospective for magnesite. Initial exploration work concluded that the magnesite
grade in these areas is lower than at Zarghat but that these areas have the potential for larger
tonnages.

The expected capital cost of the project is estimated at SR236.25 million (US$63 million).

Kaolin and Low grade Bauxite

Ma'aden is planning to develop kaolin and low grade bauxite resources to supply the cement
industry in Saudi Arabia with high alumina feedstock. The kaolin and bauxite resources
considered for exploitation are located in the central zone of the Az Zabirah lease area some

                                               101
30km to the north of the south zone which contains the Az Zabirah Deposit. Suitability for
other applications, such as refractory clays, is currently under investigation.

Production from the project is estimated at 50,000 tonnes of kaolin per annum and 250,000
tonnes of cement grade bauxite feedstock.

The project is situated near Al Baithah town and development of the mine and construction of
the plant has been completed. First production delivery occurred in the first quarter of this
year 2008.

The expected capital cost of the project is estimated at SR13.5 million (US$3.6 million).




                                              102
Dates and Expected Future Events

Dates                   Events
 nd
2 Quarter of 2008       Execution of financing documents for the Phosphate Project.
 rd
3     Quarter of 2008   Ma'aden anticipates entering into a joint venture agreement for the
                        Aluminium Project with Rio Tinto Alcan.

2008                    Ma’aden anticipates entering into a Railway Cooperation Agreement
                        with PIF.

2008                    Commencement of a feasibility study at Ad Duwayhi is scheduled

2008                    The completion of a JORC-compliant audited resource estimate of
                        the Ar Rjum prospects of Wasema and Um-Naam is expected

2008                    Tender for the low grade bauxite and Kaolin project near Al Buathia is
                        expected. (Construction of the mine and the infrastructure has already
                        commenced.)

2009                    The development of the Gold deposits at Ad Duwayhi is planned

2009                    The operation of the magnesite project which is the subject of
                        Ma’aden’s mining licence, covering 3 Km² at Zarghat is expected to
                        commence

2009                    Full production at the Al Amar mine

Mid 2009                Industrial Minerals Project is expected to become operational

End of 2009             Completion of the port to service the Phosphate and Aluminium
                        Projects is anticipated.

2009-2017               The contract with Saudi Comedat for the mining and production of
                        necessary ore for the Phosphate Project is expected to commence in
                        the Al Jalamid region. Saudi Comedat is required to mine 92.4 million
                        tonnes of material during the contract term, of which 40.1 million
                        tonnes is to be phosphate ore.
 st
1 Half of 2010          Commencement of commercial operations of the initial sorting
                        laboratory for the Phosphate Project is expected.

2ndHalf of 2010         Commencement of commercial operations of the beneficiation plant for
                        the Phosphate Project is expected.

End of 2010             Commencement of commercial operations of the DAP plant is
                        expected

End of 2010             The completion of the railway to service the Phosphate and Aluminium
                        Projects is expected

2011                    Gold deposits at Mansourah-Masarrah anticipated to be developed.

2011                    It is anticipated that commercial production of caustic soda together
                        with ethylene di-chloride will commence.


                                              103
Dates            Events
 st
1 Half of 2012   The availability of the electric energy for the Aluminium Project
 nd
2 Half of 2012   First production of alumina is expected.
 nd
2 Half of 2012   First production of aluminium is expected.

End of 2012      The facilities for the production of phosphate are expected to be fully
                 operational with an estimated production of approximately 2.92 Mtpy of
                 DAP.
 st
1 half of 2013   The facilities for the production of aluminium are expected to be fully
                 operational with an estimated production of 1.8 Mtpy of alumina and
                 approximately 0.74 Mtpy of aluminium.

2013             Gold deposits at Ar Rjum are anticipated to be developed




                                        104
      Mining and Environmental Regulatory
                  Framework

Mining Investment Laws and Regulations

The Mining Investment Law

Mining operations in Saudi Arabia are governed by the Mining Investment Law (the "Mining
Law") enacted by Royal Decree M/47 dated 20/8/1425H (corresponding to 5/10/2004G) and
its Executive Regulations (the "Regulations") which were enacted by Royal Decree G/173
dated 30/11/1425H (corresponding to 11/1/2005G).

Regulatory bodies

The Mining Law provides that the Ministry of Petroleum and Mineral Resources ("MPMR")
shall be responsible for supervising the implementation of the Mining Law. The specific
responsibilities of the MPMR include, amongst other things: formulating the necessary
regulations for the implementation of the Mining Law and proposing any amendments;
designating the land and sea areas over which rights may be granted under the Mining Law
and determining the conditions upon which those rights may be granted pursuant to the
Mining Law; coordinating the activities of government agencies responsible for the provision
of infrastructure facilities required for mining areas (including roads, railways, ports, power
plants, and power supply lines); supervising the financial and technical activities of the
licensees under the Mining Law in accordance with the Regulations; establishing the
procedures for public bidding for exploration and mining licences; and setting controls for the
protection and restoration of land upon which mining operations are conducted. The Mining
Law also provides that the Saudi state has a priority right to purchase from any licensee any
minerals that it requires on prevailing conditions and at prevailing prices, unless the licensee
has a prior commitment to sell its production to a third party.

Licences

Under the Mining Law all natural mineral deposits are the exclusive property of the Kingdom
of Saudi Arabia. Title to minerals in the Kingdom transfers to a licensee under the Mining Law
upon extraction of the minerals from the licensed area in accordance with the terms of the
relevant licence.

A person may only undertake reconnaissance, exploration, exploitation or material collection
activities in accordance with a licence granted for the purpose of authorising the relevant
activity. Applications for licences must be in the prescribed form and include the information
specified by the Regulations. Applications must also be accompanied by proof that the
applicant has the necessary technical expertise and capability to conduct the activities
permitted by the licence and that the applicant has sufficient financial resources to fund the
activities in accordance with the requirements of the Regulations. In the case of mining
licences, applications must be accompanied by detailed work plans and project expenditures.
Licences are issued on conditions established by the MPMR, as governed by the
Regulations. Such conditions may not be amended during the term of the licence. As is
discussed further below, when issuing licences the MPMR must also ensure that an applicant
complies with any applicable environmental laws and regulations.

Particulars of applications for licences and licences granted are maintained by the MPMR in
the “Register of Applications” and "Register of Licences” respectively. Only interested


                                              105
investors and licensed entities may access the Register of Applications in respect of their own
application for a licence.

Licences pre-dating the Mining Law continue in effect in accordance with its terms.
Exploration or Exploitation Licences may be transferred to parties with the experience,
technical expertise and financial resources to fulfil the obligations of the licence, and who
would otherwise be qualified to obtain a similar licence in accordance with the provisions of
the Mining Law. Licensees may not otherwise transfer or mortgage licences granted under
the Mining Law without obtaining written approval from the MPMR.

The MPMR may terminate a licence granted under the Mining Law in the following
circumstances:

    •    In the case of a licensee under a building materials quarry licence or materials
         collection licence, delaying payment of amounts due by 90 days;

    •    In the case of a licensee under an exploration licence or exploitation licence,
         delaying payment of amounts due by 150 days;

    •    Provision by the licensee of incorrect information to the MPMR;

    •    Failure by the licensee to carry out (within 60 days of receipt of a written notice from
         MPMR) its obligations prescribed by the Mining Law, Regulations or the licence;

    •    Failure to rectify (within 60 days of receipt of a written notice from MPMR) any
         practice that exposes the health and safety of a licensee's own employees or other
         personnel to hazards or threatens to cause damage to mineral formations; and

    •    Failure to take the necessary action (within 60 days of receipt of a written notice from
         MPMR), to protect the environment, habitats, archaeological sites or tourist areas.

In the event that a licence is terminated, the MPMR has a broad discretionary power to
prevent the licensee from removing assets that are required for the public welfare from the
lands subject to the licence, including but not limited to permanent constructions, power
supply plants, water and sewage stations, and raw materials processing, separation and
processing units.

In addition, the Mining Law grants the Minister of the MPMR a broad right to suspend any
activity under a licence in accordance with the Regulations, such as in the case of material
adverse effects on any property. The Mining Law provides for an appeal process in respect
of such orders.

Types of Licences

Under the Mining Law rights may be granted under a reconnaissance licence, exploration
licence, materials collection licence or exploitation licence. An exploitation licence may be
granted in the form of a mining licence, raw materials quarry licence, small mine licence or
building materials quarry licence. Each of these licence types are described below.

Reconnaissance Licence

A reconnaissance licence entitles its holder to survey and investigate the licence area for a
designated period of time not exceeding two years. The holder has the non-exclusive right to
examine the licence area for minerals, examine ore bodies and collect samples and use
geophysical, geochemical and other scientific methods for the preliminary examination of
lands with potential mining deposits. The licensee is not permitted to undertake any type of
excavation, construct any permanent installations or produce minerals for use or sale from the


                                              106
sample area. The reconnaissance licence does not confer any right to the issuance of an
exploration licence or any other licence under the Mining Law. A reconnaissance licence is
renewable for an additional two years at the discretion of the MPMR.

Specific obligations imposed under a reconnaissance licence include to notify to the MPMR of
the locations of the licensee's field team during reconnaissance activities, to submit of an
annual report on the progress and results of work undertaken and to submit a final report
upon the expiry of the licence.

Exploration Licence

An exploration licence grants the licensee the exclusive right for a period of up to five years to
engage in any detailed scientific and technical activity leading to the discovery of natural
deposits of metallic or non-metallic ores and to explore the licence area, establish camps and
various facilities, and, subject to proving the discovery of an exploitable mineral, obtain an
exploitation licence within the licence area. The area subject to an exploration licence may not
                 2
exceed 100km and the term of the licence is renewable for a further period of up to five
years.

Specific obligations imposed under an exploration licence include undertaking necessary
precautions with respect to any hazards which may be caused by exploration activities,
notifying the MPMR of the location of field teams undertaking exploration activities, submitting
half-yearly reports on the progress of work and a comprehensive report upon the expiry of the
licence.

In addition, exploration licences are subject to “minimum annual expenditure requirements” as
set out in the following table.

Table 16: Minimum Annual Expenditure Requirements for Exploration Licences
 Year of Licence                            Minimum Annual Expenditure per km or Slot (in Saudi Riyals)
 First Year                                                                                        750
 Second Year                                                                                       750
 Third Year                                                                                       3,000
 Fourth Year                                                                                      3,000
 Fifth Year                                                                                       4,500
 Sixth Year                                                                                       4,500
 Seventh Year                                                                                     5,600
 Eighth Year                                                                                      5,600
 Ninth Year                                                                                       7,500
 Tenth Year                                                                                       7,500


Exploitation Licence

The holder of an exploitation licence is permitted to invest and extract raw ores and minerals
(by mining or quarrying) from the land. An exploitation licence confers exclusive rights to
produce and exploit the minerals specified in the terms of the licence, to transport and export
those minerals, and to construct mines and supporting infrastructure in the licence area. In
particular, the holder of an exploitation licence is granted the right to produce and exploit the
minerals specified in the licence by mining, concentrating, smelting and refining the minerals
on the licensed area; the right to transport, export and sell the minerals in their original or
refined forms; the right to construct and maintain mines, buildings, plants, pipelines refineries
and waste dumps within the licensed area; and the right to construct the required railways,
highways, communications systems, power plants and other facilities in the licensed area
after obtaining written authorization of the MPMR.




                                                 107
The holder has no right of possession over any part of the land. The terms of the licence may
be extended to cover any deposits of minerals not already covered by the licence.

Before the licensee commences any development or mining activities on the licence area, an
economic feasibility study and an environmental study must be submitted to the MPMR. If the
exploitation licence covers more than one mineral and the licence fails to exploit one of the
minerals, the MPMR may terminate the licensee's rights with respect to that mineral and grant
an exploitation licence in respect of that mineral to another person.

Exploitation licences may be renewed for a further term which may not exceed the original
term of the licence.

All holders of exploitation licences are required by the Regulations to undertake all operations
using modern technology, to avoid damage to and the waste of natural resources, to develop
pre-production operations as rapidly as possible as justified by the size of the mineral deposit
and by market conditions, to keep the prescribed records and to provide the same to the
MPMR, and to comply with Saudi-ization requirements. In addition, compliance with the
applicable environmental laws and regulations is a condition of all licences.

There are four types of exploitation licences which may be issued, the most important of
which in the case of Ma’aden are the mining licence and the raw materials quarry licence.

Mining Licence

A mining licence entitles the holder to practice mining activities within the licence area and to
exploit the minerals defined as "Class 3" minerals in the Regulations. These include, amongst
others, precious metals (such as gold and silver), base metals (such as copper, lead and
zinc) and minerals which require advance processing and concentration operations (such as
bauxite and phosphate).

Applicants for a mining licence must specify a work programme and provide particulars of the
capital investment required to implement the proposed mining plan and ongoing investment
during operations.

A mining licence may be granted for a period not exceeding 30 years, over an area not
               2
exceeding 50km .

Raw Materials Quarry Licence

A raw materials quarry licence entitles the holder to exploit minerals within the licence area
defined as "Class 1 and 2" minerals under the Regulations. These include, amongst others,
sand, soil materials, stones used for producing concrete and bricks, ornamental rocks and
stones (such as granite, marble and limestone) and industrial minerals and raw materials
such as garnet, low density iron ore, kaolin, magnesium, titanium and coal.

Applicants for a raw materials quarry licence must specify a work programme and provide
particulars of the capital investment required to implement the proposed mining plan and
ongoing investment during operations.

As with a mining licence, a raw materials quarry licence may be granted for a period not
                                                    2
exceeding 30 years, over an area not exceeding 50km .

In addition, the Mining Law and Regulations also provide for Small Mine Licences and
Materials Collections Licences.




                                              108
Environmental Protection under the Mining Law

The Mining Law and the Regulations establish certain environmental protection requirements
in addition to the requirements of the applicable environmental laws. Every mining licence
holder must prepare an environmental study as a condition of being granted a licence, must
rehabilitate the licensed land in accordance with the regulations, and must preserve any
archaeological sites or items on the site. All licensees are required by the Regulations to
abide by all environmental laws applicable in Saudi Arabia, to ensure the efficacy of the
environmental protections required as a result of the mining operations, and to take
precautionary measures capable of preventing or reducing any adverse effects on the
environment by using the best available technologies, so far as possible.

Environmental Laws, Regulations and Compliance
In 1992 Saudi Arabia adopted the Basic Law (commonly referred to as the constitution of
Saudi Arabia) setting out the system of government for the country and the Government's
obligations to the people of Saudi Arabia. Article 32 (Environment, Nature) of the Basic Law
states that, "The state works for the preservation, protection, and improvement of the
environment, and for the prevention of pollution". In addition, over the years Saudi Arabia has
become a signatory to a significant number of international environmental treaties and
conventions.

The Environmental Law

Environmental protection in Saudi Arabia is regulated under the Public Environmental Law
(the "Environmental Law"), enacted by Royal Decree No. M/34 dated 28/7/1422H
(corresponding to 16/10/2001G). The Implementing Regulations in respect of the
Environmental Law were issued by the Minister of Defence and Aviation Resolution No.
1/1/4/5/1/924 dated 03/08/1424H (corresponding to 30/09/2003G) and amended by Minister
of Defence and Aviation Resolution No. 1/1/4/2391 dated 08/05/1426H (corresponding to
15/06/2005) published in the Official Gazette on 22/07/05 (the " Regulations").

The Environmental Law operates as a general regulatory framework for the development and
enforcement of domestic environmental rules and regulations. The stated objects of the
Environmental Law are as follows:

    •    Preserving, protecting and developing the environment and preventing its pollution;

    •    Protecting public health from the hazards of activities and actions that are harmful to
         the environment;

    •    Preserving, developing and rationalizing the usage of natural resources;

    •    Making environmental planning an integral part of comprehensive development
         planning in all areas of industrial, agricultural, urban and other industries; and

    •    Promoting awareness of environmental issues, individual and collective responsibility
         for protecting and improving the environment and national voluntary efforts in this
         regard.

Regulatory bodies

The Presidency of Meteorology and Environmental Protection (the "PME") is the agency
responsible for the application and administration of the Environmental Law. Its specific
responsibilities include:

    •    Conducting environmental studies;

                                              109
    •    Documenting and publishing the results of any environmental studies;

    •    Preparing, issuing and reviewing relevant environmental standards;

    •    Ensuring compliance with relevant environmental standards;

    •    Working in conjunction with other responsible and/or public agencies, in establishing
         plans to deal with environmental catastrophes;

    •    Promoting general awareness for protecting the environment; and

    •    Working in conjunction with other government agencies, in dealing with violations of
         applicable environmental standards.

The Environmental Law anticipates that the PME will co-ordinate with other government
agencies regarding the development and enforcement of environmental standards, and that
the PME, together with any other relevant government agency, will have the power to impose
penalties for violations of any applicable environmental standards, where there are no such
penalties already in place. In particular, other licensing bodies must ascertain that any
projects that may cause negative impacts on the environment has been subject to an
evaluation project at the feasibility stage, and that such a study has been performed in
accordance with the Environmental Law and Regulations. Accordingly, the environmental
protections required under the Environmental Law may in practice be enforced by other
bodies, including the MPMR. In addition, any application to another competent agency must
enclose a certificate stating that the PME has evaluated the existing or new facility and has
ascertained that the facility is in compliance with the standards required by the Environmental
Law and Regulations.

Environmental regulations

The Environmental Law imposes a number of broad obligations on those responsible for
executing projects that may have a negative impact on the environment ("Impact Projects")
including the use of techniques and materials which are likely to minimise any such possible
impact, rationalising the use of natural resources in order to develop the use of renewable
resources and more efficiently use non-renewable resources, recycling resources and
designing and operating projects in such a way to limit the possible negative effects on the
environment. Those undertaking Impact Projects are required to undertake environmental
studies in accordance with applicable regulations. The Environmental Law also generally
reinforces the application of laws which set standards for pollutants from polluting sources or
pollutant concentrations in the environment.

The Environmental Law also places an obligation on those "lending funds" to consider
compliance with applicable environmental standards as a condition precedent to the
disbursement of funds under any loan, although the types of entities which would be
considered entities "lending funds" are not defined.

The Regulations include detailed standards governing the scheduled release of pollutants.
Other obligations imposed by the Environmental Law and Regulations include:

    •    Certain facility owners or operators must prepare contingency plans to prevent and
         address adverse environmental impacts;

    •    Major facilities shall incorporate the best available technology for the control of
         pollutant discharges and the disposal of waste; and

    •    Waste generators shall be held responsible for ensuring that the waste they
         generate are stored, treated and disposed of in an environmentally sound manner.


                                             110
The PME is granted a broad discretionary power for issuing or withholding its consent for
projects so as to ensure compliance with the Environmental Law and the Regulations.

Environmental Impact Assessments

Under the Regulations, any authority responsible for issuing a licence to Impact Projects must
ensure that an environmental impact assessment ("EIA") is prepared by the applicant during
the feasibility study of any Impact Project.

Impact Projects are distinguished into three classes by the Regulations, which annex detailed
lists of the types of projects falling into each class together with various environmental
protection standards which apply to specific types of projects. In addition to an initial
environmental assessment application which is required for each class of project:

    •    A "Class I" project must prepare a simple report describing the project;

    •    A "Class II" project must prepare a brief environmental technical report of the project;
         and

    •    A "Class III" project must prepare a comprehensive EIA.

Class III Projects include metal extraction industries, major transportation systems, thermal
power stations, port expansions, waste water treatment systems, and toxic and hazardous
waste storage, treatment and disposal facilities.

Following its review of the application and the documentation provided, the PME may reject
the applicant's application for PME consent, grant unconditional PME consent or grant PME
consent subject to such conditions as it considers necessary to address its concerns. Where
conditional PME consent is granted, the applicant must undertake to fulfil the conditions as a
prerequisite to the grant of the licence by the relevant licensing authority.

Compliance Measures and Penalties under the Environmental Law and Regulations

The PME and other relevant regulators are given a broad power to ensure that the standards
under the Environmental Law and Regulations are maintained, and in particular, may require
a violator to eliminate or rectify any damage, or to desist from the relevant activity until the
damage ceases. In certain circumstances the PME may also shut down violating facilities for
a period not to exceed 90 days.

Penalties for violations are also set out in the Environmental Law. Polluting the sea and land
of Saudi Arabia with "toxic, nuclear or other similar dangerous materials" may be punished by
one or more of the following: imprisonment for a period of up to five years, a fine of up to
SR500,000, closure of business activities or seizure and confiscation of any vessel
responsible for the pollution for a period of up to 90 days. A violater may also be required to
pay of compensation for damage caused by the pollution, and/or to rectify any damage
caused and to clean up. For repeat offences the maximum term of imprisonment and fine are
increased to 10 years and SR1,000,000 respectively and closure of business or seizure and
confiscation of the vessel may be indefinite.

Other acts of pollution or violations of the Law and Regulations may be punished by a
maximum fine of SR10,000 and/or rectification of any damage and cleaning up. For repeat
offences the range of punishments are the same, except that the maximum fine is SR20,000
and business may be closed for a period not greater than 90 days.




                                              111
                                Corporate Structure
Shareholders
Table 17: The Company’s Shareholders
                                                    Pre-Offer                                    Post-Offer
             Name
                                    Number of                                      Number of
                                                       %         Value in SR                        %         Value in SR
                                     Shares                                         Shares

 Government of the Kingdom
 of Saudi Arabia represented        400,000,000      100%        4,000,000,000     462,500,000       50%      4,625,000,000
 by Public Investment Fund

 General Organization for
                                                -          -                   -    23,125,000      2.5%       231,250,000
 Social Insurance

 Public Pension Agency                          -          -                   -    23,125,000      2.5%       231,250,000

 Public*                                        -          -                   -   416,250,000       45%      4,162,500,000

 Total                              400,000,000      100%        4,000,000,000     925,000,000       100      9,250,000,000


* comprising the individual subscribers and institutional investors

Appointed Board of Directors
The Board of Directors is responsible for the overall strategy and direction of the Company's
business. The basic functions of the Board include the following:

     a) Approving the Company’s strategic trends and key objectives and supervising the
        pursuit and achievement of them;

     b) Setting internal audit controls and rules and supervising the same;

     c) Putting in place a corporate governance code;

     d) Setting clear policies and procedures for the selection of Directors, and causing the
        same to be implemented after having them approved by the General Assembly;

     e) Setting a written policy governing the relationship with the stakeholders in order to
        protect them and preserve their rights;

     f)    Establishment of policies and procedures that ensure compliance with applicable
           laws and regulations and the disclosure by the Company of all material information to
           shareholders, creditors and other stakeholders.

The Board of Directors’ responsibilities also include approving internal, financial,
administrative and technical regulations of the Company, and policies and procedures related
to the staff, forming the committees and granting them appropriate powers, approving the
establishment of subsidiaries, branches, offices and agencies, entering into loans and credit
facilities, and approving the Company's business plan, operating plan and annual budget.

The Board of Directors consists of nine Directors to be appointed by the Ordinary General
Assembly for a term of three years including the President of the Company and four members
representing the Government (represented by the Public Investment Fund), so long as the
Government holds at least 50 % of the shares in the Company. As an exception to the




                                                           112
foregoing, the Board of Directors appointed by the Royal Decree No 32/A dated 13/2/1418H
(corresponding to 20/6/1997G) will remain until the first General Assembly meeting, which is
expected to take place as soon as possible following the Offering.

The Directors confirm their compliance with the requirements of Articles 69 and 70 of the
Companies Regulations. These Articles prohibit a director from having any interest, whether
directly or indirectly, in the business or contracts of the Company or to participate in any
competing business or engage in any commercial activities carried out by the Company
without prior authorization from the Ordinary General Assembly.

The Directors confirm that they shall abide fully by the Corporate Governance Regulations
issued by the CMA. New committees shall be formed and their tasks shall be set by the Board
after the new Board is elected by General Assembly in accordance with the Corporate
Governance Regulations issued by the CMA.

Information about the Company's Directors is set forth in the table below.
Table 18: The Company’s Appointed Directors
                 Name                                 Position          Nationality     Age
 H.E. Ali Ibrahim AI-Naimi               Non-executive Chairman      Saudi                     72
 H.R.H. Prince Faisal Bin Turki Bin
                                         Non-executive Director      Saudi                     42
 Abdulaziz
 Dr. Mohammad S. Al-Jasser               Non-executive Director      Saudi                     52
 Dr. Abdulrahman A. Al-Jafary            Non-executive Director      Saudi                     67
 Dr. Ziad Al-Sudairy                     Non-executive Director      Saudi                     53
 Dr. Abdulaziz, S. Al-Jarbou             Non-executive Director      Saudi                     60
 Mr. Abdullah A. AI-Zaid                 Non-executive Director      Saudi                     65
 Dr. Zuhair Abdulhafiz AlNawab           Non-executive Director      Saudi                     64
 Dr. Abdallah E. Dabbagh                 Director and CEO            Saudi                     62


The experience and qualifications of each of the Directors are set forth below.

H.E. Ali Ibrahim AI-Naimi
Chairman

His Excellency, Engineer Ali Ibrahim Al-Naimi is the Minister of Petroleum and Mineral
Resources in Saudi Arabia, a position he was appointed to in 1995. His Excellency obtained
his Masters degree in Hydrology from Stanford University in 1963.

Prior to being appointed Minister, Engineer Naimi had an extensive career at Saudi ARAMCO
(from 1974 to 1995) where he held his first position in the Human Resources department in
Dhahran. His career progressed at Saudi ARAMCO where he became the President of Saudi
ARAMCO. As President of Saudi ARAMCO, Engineer Naimi worked on and supervised a
number of recent expansion and development projects in Saudi Arabia. Among his other
positions at Saudi ARAMCO prior to being elected as its president on 1 January 1984,
Engineer Naimi served as Deputy Executive to the President of the Lubricant and Gas
Business in 1982, then he became the Head of the Executive Officers in 1988. His Excellency
also has been a director of Ma’aden since 1997 and the chairman of the board of Ma’aden
since 1995.

H.R.H. Prince Faisal Bin Turki Bin Abdulaziz
Director

HRH Prince Faisal Bin Turki Bin Abdulaziz is Advisor to the Ministry of Petroleum & Mineral
Resources in Saudi Arabia since 20/03/1416H. In 1986 he obtained a Bachelor of Science
degree in Industrial Management from the King Fahad University of Petroleum & Minerals in
Dhahran, Saudi Arabia.




                                                113
He has occupied various key roles at the Ministry of Petroleum & Mineral Resources since
1987 including roles concerning the restructuring of Saudi Arabia's refining and distribution
industry, the restructuring of Saudi Arabia's mining industry, and the development of Saudi
Arabia's Gas Strategy.

Dr. Mohammad S. Al-Jasser
Director

Dr. Al-Jasser obtained a PhD in Economics from California State University in 1986, after
previously completing Masters (1981) and Bachelors (1979) degrees from the University of
California.

Dr. Al-Jasser represented Saudi Arabia as an Economic Consultant at the International
Monetary Fund from 1988 to 1989. After 1989, Dr. Al-Jasser served as Vice Executive
Manager for the International Monetary Fund. As a result, Dr. Al-Jasser has a broad
background in monetary management and affairs. Dr. Al-Jasser also served in various
capacities at the Saudi Arabian Monetary Fund, most importantly, as Deputy Governor from
1996 to date.

Dr. Al-Jasser also has experience within the Saudi market where he was appointed Deputy
Governor of the Saudi Monetary Agency and the Chairman of the Arabian Investment
Company in 1997. As a member of the negotiations team and President of the Service Team
in 1996, Al-Jasser was involved in the negotiation process of Saudi Arabia’s entry into the
World Trade Organization.

Dr. Al-Jasser has been a member of the board of directors of Ma’aden since 1997. He is also
a board member at Arabian Investment Company since 1997 and was the chairman of the
board of Saudi Telecommunication Company as well as the chairman of its executive
committee from 1998 to 2003. He has been also a board member at Saudi Airlines Company
since 2002.

Dr. Abdulrahman A. Al-Jafary
Director

Dr. Al-Jafary was awarded a PhD in Business Administration from the University of Oklahoma
in 1979, a Masters of Science in Educational Administration from East Texas State University,
and Bachelors degree in Geology from the University of Washington, Seattle in 1968. Dr. Al-
Jafary is currently a member of the board of directors at Ma’aden.

Prior to joining Ma’aden as a member of the Board, Dr. Al-Jafary worked as a Professor at
King Fahad University from 1979 to 1985. He then served as the Dean of the College of
Industrial Management. Dr. Al-Jafary was then appointed as Secretary General for Gulf
Organizations for Industrial Consulting between 1989 and 1999.

Dr. Al-Jafary was also selected as a Shura Council member in 1993 where he then served for
three consecutive terms. During his time on the Shura Council, Dr. Al-Jafary was the
Chairman of Finance Committee for four years and has been the Governor of the Saudi
Commission for Communication and Information Technology since 2007.

Dr Al-Jafary has also been a board member of Arabian Mining Company since 1997 and of
AlDurais Company since 2006. He was also the chairman of the constitutive board of Sabb
Takaful Insurance Company.




                                            114
Dr. Ziad Al-Sudairy
Director

Dr. Al-Sudairy holds a J.D. from the University of Virginia (1980) and a Bachelors degree in
Political Science from the University of Arizona (1976). He is currently the senior principal of
Ziad bin Abdul Rahman Al-Sudairy Consulting Law Firm, which was established in 1988.

In addition to establishing his own law firm, Dr. Al-Sudairy has worked with the government
and the private sector on a number of occasions including acting as a legal consultant to the
office of the Minister of Interior from 1980 to 1983 and serving as a Shura Council member in
the Saudi government from 1993 to 2005. Dr. Al-Sudairy was also a partner in Al-Sudairy and
Fahad Legal Consultation Firm from 1985 to 1989.

Dr. Al-Sudairy also serves as a board member of United Gulf Company for the Processing of
Iron and Steel and Badran Projects Company Limited, in addition to being a member on
Ma’aden’s board since 1997.

Dr. Abdulaziz S. Al-Jarbou
Director

Dr. Al-Jarbou graduated from the Colorado School of Mines in 1976 with a PhD in Chemical
and Petroleum Refining Engineering and a minor in Economics.

He joined SABIC from its inception. At SABIC he held a number of positions including
representing SABIC in Houston and culminating in seven years as Director General of
Projects’ Implementation from 1980 to 1987.

From 1988 and until the end of 1996, he was the President and Managing Director of Saudi
Amiantit Group, a leading manufacturer in the Middle East, of various pipes, tanks, fibreglass
insulation and rubber products. From 1997, Dr. Al-Jarbou worked independently in business
although he maintained his board position at Amiantit until today.

Dr. Al-Jarbou was appointed to the first board of Saudi ARAMCO for a period of six years
from 1989 to 1995. Also, between 1997 and 2000, he was a board member of the Riyadh
Chamber of Commerce and Industry. In addition to this he was a board member of the Royal
Commission for Jubail and Yanbu from 1995 to 2002 and has been a board member of Riyad
Bank since 1997.

In 1999, by a Royal Decree, Dr. Al-Jarbou was appointed as a member of the Consultative
Committee of the Saudi Supreme Economic Council.

In May 2003, he was appointed as the Chairman of the Board of the Industrialization and
Energy Services Company (TAQA) in which the Government holds a 40% interest. He still
maintain his membership with TAQA today.

Mr. Abdullah A. AI-Zaid
Director

Mr. Al-Zaid holds a Masters in Business Administration from Pennsylvania State University
(1979) and a Bachelor in Economics and Political Science from King Saud University (1973).
In addition, Mr. Al-Zaid completed a number of training courses in Saudi Arabia and overseas
in accounting and business administration.

Mr. Al Zaid has more than 30 years experience in the oil, refinery and mining industry. His
experience includes acting as Governor and board member at Petromin from 1988 to 2000.
Mr. Al-Zaid was also the Chairman of the Executive Committee for the Riyadh refinery and
Petromin and Chairman of the board of the Jeddah and Rabigh refinery from 1986 until 1988.
Mr. Al-Zaid served as a board member of the executive committee of Mahd Ad Dahab mine



                                              115
between 1987 to 1989. He was also a member of the board of the General Institute for
Petroleum and Minerals (Petromin) from 1409H until 1423H. He also served on the Mining
Affairs Association (headed by His Excellency the Minister of Petroleum) until Ma’aden was
established whereupon he become a member of its board.

Mr. Al Zaid also acted as the chairman of the board of directors of Jeddah Refinery Company
from 1407H to 1409H as well as the chairman at the Arabian Company for Petroleum
Consulting (Abicorp) from 1997 until the present.

Dr. Zuhair Abdulhafiz AlNawab

Director

Dr. AlNawab obtained his Ph.D in Geology in Canada in 1976G. He has been the President of
the Saudi Geological Assessment Agency since 2006.

Prior to his current position, Dr. AlNawab worked as the counsel to the Minister of Petroleum
and Precious Metals from 2003 to 2006, and also held the position of Undersecretary of the
Ministry of Petroleum and Precious Metals from 2000 to 2003.

Currently, Dr. AlNawab is a member of a number of agencies, committees, and companies
operating in the petroleum and metals field, and he is also a member of the International
Who’s Who Historical Society in the United States as well as AGID, Petromien and Ma’aden.

Dr. Abdullah E. Dabbagh
President and Chief Executive Officer

Dr. Dabbagh was awarded a Ph.D. in Geology from the University of North Carolina at Chapel
Hill in 1975. He has been the President and Chief Executive Officer of Ma’aden since its
inception in 1997.

Dr. Dabbagh has been a leader in the field of management, education, research and
technological advancement in the Kingdom of Saudi Arabia for over 20 years. His career prior
to joining Ma’aden was highlighted by his work in the establishment of the Research Institute
– a leading contract research organization at King Fahd University of Petroleum and Minerals
– and by significant achievements in the transfer, application and adoption of modern
technology. He has been the recipient of many national achievement awards.

After his appointment as an executive officer at Ma’aden at its inception in 1997, Dr. Dabbah
worked on developing a team for the management of the Company which expanded its
business in the gold mining field and developed large projects in the phosphate, fertilizers,
bauxite and aluminium fields, in addition to other projects in the mineral industry.

Dr. Dabbagh has served on the board of many companies, including the board of directors of
Saudi ARAMCO from 1989 to 1996. He is a Member of the Riyadh Chamber of Commerce
and Industry Board since 2004 and a member of the Executive Committee of the Arab
Business Council and is seen as a leader in the Saudi Arabian business community.


Proposed Board of Directors
At a meeting held on 3/6/1429H (corresponding to 7/6/2008G), the Board of Directors
resolved in accordance with Article 17 of the Company’s Bylaws to nominate the persons set
out below as members of the Board of Directors and to approve the recommendation of the
Nomination and Remuneration Committee to nominate the other persons set out below. The
resolution was made giving consideration to the fact that the current Board of Directors shall
remain in place until the first General Assembly of the Company, the importance for investors




                                             116
to know the names of the nominated members of the next Board of Directors, the nomination
made by H.E. the Minister of Petroleum and Mineral Resources in coordination with H.E. the
Minister of Finance-Chairman of the Board of Directors of the PIF for the Government
representatives, and the recommendation of the Nomination and Compensation Committee
for the members representing the private sector:

The persons nominated by the Board of Directors to become members of the Board of
Directors as Government representatives are:

-   Mr. Mansour Bin Saleh Al-Mayman
-   Mr. Sultan Bin Jamal Chawili
-   Mr. Abdullah Bin Seif Al-Seif
-   Mr. Khaled Bin Hamad Al-Sanani

In addition to Dr. Abdullah Dabbagh, the Chief Executive Officer of the Company, in
accordance with the Company’s By-laws.

The persons recommended by the Nomination and Remuneration Committee for appointment
to the Board of Directors to represent the private sector (as independent Directors) on the
next Board of Directors are:

-   Dr. Ziad Bin Abdulrahman Al-Sudairy
-   Dr. Abdulaziz Bin Saleh Al-Jarbou
-   Mr. Suliman Bin Saad Al-Hameed
-   Mr. Mohammed Bin Abdullah Al-Khorashi

The resolution was passed without prejudice to the right of any shareholder to nominate
himself for election as a member of the Board of Directors at a specified time prior to the next
General Assembly.

The experience and qualifications of each of the nominated directors, other than the current
directors, are set forth below.

Mansur Bin Saleh Al Mayman
Director

Mr. Mansur Bin Saleh Al Mayman holds a Masters degree in Business Administration from
the University of Dallas, Texas-USA (1980) and a Bachelor's degree in Accounting and
Business Administration from King Saud University in 1973G.

Mr. Mansur Bin Saleh Al Mayman has occupied the position of General Secretary of the
Public Investment Fund since 1998G.

Prior to his current appointment Mr. Mansur Bin Saleh Al Mayman worked as Assistant
Deputy Minister for budgeting and organization at the Ministry Finance and Economy (1993G
to 1998G) and prior to that in the Secretariat for Public Investment Fund (1973G to 1993G).

He has been a board member of the Saudi Telecommunications Company since 1998 and a
board member of the Arab Authority for Agricultural Investment and Development since
2000G. He has also held positions on the board of several companies and institutions
including Saudi Bangladesh Company for Investment (1984G to 1990G), Saudi Credit Bank
(1988G to 1991G), Saudi Cairo Bank (1988G to 1994G), Saudi Egyptian Company for
Industrial Investments (1989 to 1997), Addar Al Saudiah for Investment Services (1993G to
1997G), the General organization for Social Insurance (1994G to 1997G), the General
Organization for Petroleum and Minerals (Petromin) (1994G to 1997G), Qassim Cement
Company (1990G to 1998G), Saudi Egyptian Company for Construction (1997G to 2000G),




                                              117
Eastern Region Electricity Company (SCICO) (1997G to 2000G) and The Saudi Company for
Public Transportion (1998G to in 2001G).


Sultan Bin Jamal Shawli
Director

Mr. Sultan Bin Jamal Shawli holds a Masters degree in petrology and environmental studies
of the sedimentation of phosphate rocks in the Kingdom. He currently occupies the position of
Deputy Minister of Petroleum and Mineral Resources. Mr. Sultan Bin Jamal Shawli worked as
a minerals geologist in the Ministry of Petroleum and Mineral Resources in 1976 and was
then promoted to several positions including assistant director of Planning’s Department
(1991G), general director of permits and licences (1998G) and deputy of the Ministry of
Petroleum and Mineral Resources (2002G).

Mr. Sultan Bin Jamal Shawli holds positions on the board of Saudi Railways Organization,
Arab Mining Company in Jordan and Fluor Chemical Manufacturing Company in Tunisia as a
representative of Arab Mining Company.


Abdullah bin Saif Al Saif
Director

Eng. Abdullah Al Saif holds a Bachelor of Science in Petroleum Engineering from the
University of Oklahoma (1970G).

Engineer Abdullah Al Saif has worked for Saudi ARAMCO since 1960G and completed his
university education in 1970G. He initially worked as a petroleum engineer and, thereafter,
headed several administrative positions in the field of petroleum engineering and production
operations. In 1982G he was appointed as Saudi ARAMCO’s vice president of production. He
then occupied several positions including the positions of vice president of manufacturing,
vice president of corporate planning and vice president of crude oil marketing and sales.

In 1992G, Eng. Abdullah Al Saif was appointed as the senior vice president of exploration and
production. Mr. Al-Saif was a member in Saudi ARAMCO’s board of directors from 1998G
until 2007G. He retired from Saudi ARAMCO on 31 December 2007G.

Khalid Al Senani
Director

Eng. Khalid Al Senani holds a Masters degree in construction management from the
University of Colorado (1991G), and a Bachelor of Science degree in civil engineering from
the College of Saint Martins (1984G). Since 2003G, Eng. Khalid Al Senani occupied the
position of senior project engineer in the Central Area Projects’ division of the West and
Central Region Projects Department of Saudi ARAMCO.

Eng. Khalid Al Senani worked as senior project engineer for Saudi ARAMCO in the Fujian
Project Development in Hong Kong from 2001G to 2003G, and as lead project engineer in
Shaybah Development Projects in its Abqaiq plants.

Eng. Khalid Al Senani also worked as a project engineer with the National Guard in the
Department of Engineering and the Research Division in the Department of Operations and
Maintenance from 1988 to 1989.

Dr. Abdullah E. Dabbagh
Please review the summary provided above.




                                            118
Dr. Abdulaziz S. Al-Jarbou
Please review the summary provided above.

Dr. Ziad Al-Sudairy
Please review the summary provided above.

Suleiman bin Saad Al Hamid
Director

Mr. Suleiman Al Hamid holds a Masters in Business Administration, with a major in financing,
obtained from the University of Northern Colorado in 1973G and a Bachelors degree in
business administration, with a major in financing, obtained from the University of Northern
Colorado in 1972G.

Mr. Sulaiman Al Hamid has been working in the General Organization for Social Insurance
since his graduation in 1973G. He was promoted to several positions in the organisation and
currently holds the position of Governor of the General Organization for Social Insurance. He
is also the General Organisation for Social Insurance’s representative in the National
Company for Cooperative Insurance as a chairman of the Board of Directors. In addition, Mr.
Sulaiman Al Hamid holds a position on the board of United Company for Insurance, Saudi
Company for Almaikulaih Center and Saudi Research and Marketing Group.

Mr. Sulaiman Al Hamid also headed the Kingdom of Saudi Arabia’s delegation to several
conferences of the International Organization for Social Insurance, and served as a board
member of the International Social Security Organization. He has also appointed as the
chairman of the financial resources’ committee in the organization. He is also the General
Organisation for Social Insurance’s representative in the National Company for Cooperative
Insurance as a chairman of the Board of Directors. In addition, Mr. Sulaiman Al Hamid holds a
position on the board of United Company for Insurance, Saudi Company for Almaikulaih
Center and Saudi Research and Marketing Group.


Mohammed bin Abdullah Al Kherashi
Director

Mr. Mohammed bin Abdullah Al Kherashi holds a Masters degree in accounting from the
University of Oklahoma City (1980G). He currently occupies the position of Governor of the
General Organization for Retirement. Mr. Mohammed bin Abdullah Al Kherashi has worked in
several positions in the organisation including as assistant of the director of the Department of
Treasury, general director of the Department of Treasury, and general director of financial
affairs. He was appointed in his current position in 2000G.

Mr. Mohammed bin Abdullah Al Kherashi was also the representative of the Kingdom of
Saudi Arabia in the OPEC Fund for international development (1991G to 2006G).

Mr. Mohammed bin Abdullah Al Kherashi is a member of several boards of directors. He is a
board member of the Saudi Telecom Company, a board member of the National Company for
Cooperative Insurance, a board member of the Saudi Research and Marketing Group, and a
board member of the Saudi industrial investment Group.

The experience and qualifications of the Chief General Counsel and Board Secretary is set
forth below.




                                              119
Dr. Bakry Magzoub Mudather
Chief General Counsel and Board Secretary

Dr. Mudather passed his bar exam in the State of New York in 1984. He obtained his Ph.D in
Law in 1984 and his masters in law in 1982 from McGill University, Montreal and his bachelor
degree in 1979 from the University of Khartoum.

Dr. Mudather worked as the manager of the legal department and vice president of a Zenal
Group company from 1985G to 1998G. He also acted as the manager of the legal department
of a Ali Reza Group company from 1998G to 2001G. He also was a board member and
general counsel of Mirage Company and headed the legal department of a number of
companies including ARAMCO Gulf Business, Arabian Oil Company in 2002, and Al Salam
Holding Company from 2002 to 2004. Dr. Mudather joined Ma’aden in 2006 and is currently
the Lead Counsel and Board Secretary of the Company. Dr. Mudather has a wide range
experience in the legal field and has provided many successful companies with legal services.

Senior Management
Ma’aden is currently undertaking an extensive review of its management structure and has
engaged MacKinsey Consulting to assist with this process.

Ma'aden's management is comprised of qualified and experienced senior officers with the
necessary knowledge and expertise to run the Company’s business. The Company is
successful in retaining its senior management team and in developing qualified employees
and promoting them to senior positions in the Company.

The following individuals hold key senior management positions within the Company:
  Table 19: The Company’s Senior Management
   Name                         Position                                                         Nationality   Age
   Dr. Abdallah E. Dabbagh            President and CEO                                            Saudi       62
   Engineer Abdullah S. Busfar        Vice President (Corporate Projects)                          Saudi       50
   Dr. Mohammed            H.   Al-
                                      Vice President (Precious and Base Metals Operations)         Saudi       55
   Dabbagh
   Abdullah I. Al-Fallaj              Vice President (Finance)                                     Saudi       50
   Mr. Khalid S. Al-Mudaifer          Vice President (Industrial Affairs)                          Saudi       46
   Dr. Mansour O. Nazer               Vice President (Planning and Business Development)           Saudi       60
   Engr.   Nabil   Abdulaziz    Al    Executive Director, Human Resources and Health, Safety &
                                                                                                   Saudi       49
   Fraih                              Security
   Engr. Abdullah Abdulgader          Executive Director, Projects                                 Saudi       54




                                                          120
    Company’s Organizational Structure

                                                 CEO
                                           Abdullah Dabbagh




Vice President         Vice President         Vice President                             Vice President (Precious &
(Planning and            (Finance)          (Industrial Affairs)      Vice President     Base Metals Operations)/
   Business                                                             (Projects)       President Gold
Development)          Abdullah AlFallaj      Khaled Mudaifer                              Mohammed Hani Dabbagh
Mansour Naser
                                                                    Abdullah S. Busfar




                                            Executive Director     Executive Director
                                               (Services)             (Projects)
                                                                       Abdullah
                                              Nabil Al Fraih          Abdulgader




    The experience and qualifications of each of the members of senior management is set forth
    below.

    Dr. Abdallah E. Al-Dabbagh
    President and CEO

    Refer to summary above.

    Engineer Abdullah S. Busfar
    Vice President (Corporate Projects)

    Abdullah Busfar graduated with honors from the University of Colorado with a degree in
    Electrical Engineering in 1981. Besides participating in many national and international
    conferences and delegations, Mr. Busfar has completed Columbia University’s Senior
    Executive Programme and other leadership programmes in reputed institutions such as
    Harvard University, Stanford University and the Creative Leadership Center, USA.

    Abdullah S. Busfar has been Vice President, Corporate Projects, of Ma'aden since 2004 and
    is responsible for a wide range of projects, including the Aluminium Project, the Phosphate
    Project, Common Infrastructure and Ma'aden's involvement in the Railway.

    Prior to his current role, Mr Busfar held the position of Vice President, Industrial Affairs, for 5
    years from 1999. Whilst in this role, Mr. Busfar successfully managed the human resources,
    administration, contract and procurement, government relations and public relations
    components of the department. He is a member of the management committee and chairman
    of several other committees.




                                                     121
Mr. Busfar has a total of 26 years of private sector management experience, both in Saudi
Arabia and abroad. He worked in the Saudi Navy Forces as a vice president of the operation
and maintenance department in Jeddah from 1981 to 1983, and in Kima (one of SABIC’s
projects) as a chief engineer from 1983 to 1988. He was also the representative of Amiantit in
Buntamson Company for the establishment of the Dakteel Pipes project in France during
1989. He also worked as the general manager and was one of the founders of Saudi Arabian
Company for Takteel Pipes Limited from 1989 to 1997 and in the Shumrani Industrial Group
as a vice chairman of the executive board from 1997 to 1999 where he was responsible for
six companies and for the development of new industrial projects. During this time, he has
worked in many areas, including engineering, project development, marketing, and industrial
executive management. He has also served on numerous boards for community service and
been a member of each of the following organisations: Chamber of Commerce Industrial
Committee (Dammam Industrial City, from 1994 to 1997), the National Industrial Committee
(Riyadh, from 1998 to 2002), the Prince Sultan Colleges Executive Committee (from 2002 to
2005), the SASO Committee (from 1995 to 1999), the board of the Industrial City in Dammam
in 1995 and the head of Mineral Committee in 1993.

Dr. M Hany K Al-Dabbagh
Vice President (Precious & Base Metals Operations)/ President GOLD

Dr. Hany Al Dabbagh holds a PhD Mining Engineering from Leeds University in the United
Kingdom (2001) and an MSc in Industrial Engineering from King Abdulaziz University, Saudi
Arabia in 1993 as well as a BSc in Civil Engineering from Cairo University, Egypt in 1975.

Dr. Hany Al Dabbagh is responsible for all of Ma’aden’s precious and base metals mining
operations, including five gold mines and various exploration activities, in addition to all
geological explorations of the Company.

Dr. Hany Al Dabbagh has worked in the Saudi Arabian Company for Minerals (an affiliate of
Ma’aden) from 1989to date, first in the capacity as a managing director from 1989 to 1998,
then as a vice chairman of the board and managing director from 1998to date. He also
worked in the Company from 2002 until the date hereof first as the vice president of
operations, then as the vice president for the elements and mineral division and the president
of the gold division.

Prior to joining Ma’aden he had an active career in the oil industry and private industry in civil
and industrial engineering. More specifically, he worked in the Oil Pipeline Project (Petrolin)
and the Petromin Project as well as in other private construction companies from 1975 to
1978.

Dr. Hany Al Dabbagh is a member of the consultation board at the King Abdullaziz University
– Jeddah.

Abdullah I. Al-Fallaj
Vice President (Finance)

Mr. Al-Fallaj joined Ma’aden in September, 2000 as Vice President, Finance. Mr. Al-Fallaj
began his career in Saudi Arabia as head of the Accounting Department at King Faisal
University where he also lectured in Accounting from 1984 to 1987. Subsequently, he moved
to the Eastern Petrochemical Company (SHARQ), a SABIC affiliate, where he worked for
more than thirteen years in various positions from 1987 to 2000, becoming the Director of the
Finance Division.

Mr. Al-Fallaj has a BSc (Honours) in Business, with a Major in Accounting, from King Saud
University, Saudi Arabia (1979) and an MSc in Accountancy from Arkansas State University,
USA in 1984.




                                               122
Engineer Khaled Saleh Al-Mudaifer
Vice President (Industrial Affairs)

Engineer Al-Mudaifer joined Ma’aden in March 2006 as Vice President, Industrial Affairs.
Prior to joining Ma’aden, he held a number of positions, particularly in the Qassim Region,
where he was the General Manager and Board Secretary of Qassim Cement Company from
1993 to 2006 and where he oversaw a period of growth and efficiency gains. He spent the
early years of his career (from 1987 to 1993) with Eastern Petrochemical Company (SHARQ)
where he held a number of roles culminating in his appointment as Vice President, Finance.
He continues to hold a number of public and board positions in Qassim Cement Company
and Saudi Airlines Company.

Engineer Al-Mudaifer holds a BSc in Civil Engineering (Honours) attained in 1984, and an
MBA (Honours) from King Fahad University of Petroleum and Minerals, Saudi Arabia,
attained in 1987.

Dr. Mansour O. Nazer
Vice President (Planning and Business Development)

Dr. Nazer is responsible for overseeing the formulation of the strategic plans and business
development of the company.

Dr. Nazer joined Ma’aden in 1998 as Director, Corporate Planning and assumed his current
responsibilities in 2001.

Prior to joining Ma’aden Dr. Nazer had an active career starting from 1987 to 1998 in both the
private sector, where he worked as a vice president at Saudi Cable Company and academia
at King Fahd University for Petroleum and Minerals. He joined Ma’aden from the Saudi Cable
Company where he held a number of executive positions including Vice President of the
Power Cable Plant and Acting President from 1990 to 1998. Prior to his career in the private
sector, Dr. Mansour Nazer held a number of senior positions at King Fahd University of
Petroleum and Minerals, Saudi Arabia, his most recent position being Secretary General of
the University in 1990.

Dr. Nazer holds a PhD in Mechanical Engineering from Colorado State University, USA,
(1987), an MSc in Mechanical Engineering from the University of Michigan, USA, in 1978 and
a BSc in General Engineering from King Fahd University of Petroleum and Minerals, Saudi
Arabia, (1971).

Engineer Nabil Al Fraih
Executive Director, Corporate Services

Engineer Nabil Abdulaziz M. Al Fraih has been the Executive Director, Corporate Services in
Ma’aden since 17 December 2005. He is responsible for a number of functions, including
Corporate HR and Administration, Corporate Communications, Public Relations and Health,
Safety and Industrial Security.

Engineer Nabil obtained his Bachelor of Science in Civil Engineering from King Saud
University in Saudi Arabia in 1984. He has also attended several management and technical
programmes in the US, Japan and Europe including a one year industrial training programme
with Stone & Webster Engineering Corporation, NY (USA). His 21 years of experience in key
positions with leading private and government organizations in the Kingdom equips him to
lead the Corporate Services function at Ma’aden.

Prior to joining Ma’aden, Engineer Nabil worked as the General Manager of Al Watania for
Container Manufacturing from 1993 to 2005. Prior to this, he held a position with Saudi
Industrial Export Company as its Regional Marketing Manager from 1990 to 1993. He also
worked at the Saudi Industrial Fund from 1984 to 1990 as a technical analyst.




                                             123
Engr. Abdullah Abdulgader
Executive Manager, Projects

Abdullah is a graduate of KFUMT with a degree in Chemical Engineering, attained in 1977.
He has a total of 27 years of operational and engineering experience in petrochemical plants.
He held managerial positions within the operational, engineering and project management
division of SABIC from 1977 to 2007 where he worked as the manager of the operation of the
caustic soda and ethylene di-chloride plants, of the engineering department, of the technology
department and of the ethylene di-chloride department, as well as a general manager of
projects.

Currently he is an Executive Director of Project Management and Engineering at Ma’aden as
of 2007.

Corporate Governance

The Company adheres to the Corporate Governance Regulations issued by the CMA.
Defining the Company’s mission, goals and strategic objectives, providing guidelines and
assuring the efficiency and effectiveness of the overall planning system are the key roles of
the Company’s Board of Directors.

Currently, Ma'aden has two corporate governance committees: the Internal Audit Committee
and the Compensation Committee in place to review the Company’s operations within their
particular areas of expertise and present their reports on their findings and suggestions to the
Board of Directors.

Upon the election of the new Board of Directors by the General Assembly, new committees
will be formed and their functions will be approved by the Board of Directors in accordance
with the Corporate Governance Regulations.

Internal Audit Committee

The Internal Audit Committee reviews the financial risk, controls and audit procedures of the
Company and it shall report to the Board of Directors.

The duties and responsibilities of the Internal Audit Committee also include the following:

     •   Recommending the Independent External Auditor to the Board of Directors;

     •   Determining the compensation, the term of the assignment and the scope of work of
         the Independent External Auditor;

     •   Receiving the annual report from the Independent External Auditor on its
         professional engagements with others and evaluating them to determine the effect of
         such engagements on the Company;

     •   Liaising between the Independent External Auditor and the internal audit functions,
         and between the Independent External Auditor and the Board of Directors;

     •   Reviewing the external and internal audit operations of the Company;

     •   Reviewing the current conditions of the Company and the results of the procedures
         adopted by the Independent External Auditor with respect to the financial
         management of the Company before the declaration of the profits;




                                              124
      •    Drafting a report clarifying whether or not the Company has discussed and reviewed
           the financial statements, the nature of the accounting principles and the major
           changes that affect those statements with the management of the Company and the
           Independent External Auditor;.

      •    Reviewing the texts that are related to the professional ethics of the Company and
           the strategies adopted by the management inside the Company and their
           consistency with applicable legal norms and ethics;

      •    Reviewing the investment management of the Company and its performance and
           results;

      •    Reviewing the procedures and strategies related to the risks undertaken by the
           Company.

The existing Internal Audit Committee is comprised of the following directors:

Table 20: Internal Audit Committee

                      Committee Position                                          Name
   Chairman                                           Dr. Abdulrahman Al-Jafari
   Member                                             Dr. Ziad Al-Sudairy
   Member                                             Dr Abdulaziz Al-Jarbou
   Member                                             Mr. Abdullah Al-Zaid*


* specializes in accounting


Nomination and Compensation Committee

The Nomination and Compensation Committee ensures that the Company’s compensation
policies and practices are in accordance with regulatory requirements and relevant market
conditions. The Committee also reviews the Company’s executive development programs, its
succession plans relating to executives and performance goals and thresholds to be achieved
under specified incentive plans.

The Compensation Committee comprises four members of the Board. The duties of the
Compensation Committee include the following:

      •    Recommend to the Board of Directors the nomination to membership of the Board of
           Directors, provided that no person who has previously been convicted of any
           offences affecting honour or honesty is nominated of such membership.

      •    Reviewing and making recommendations to the Board of Directors regarding:

           o    Compensation policies and practices applicable to executives

           o    The establishment of short and long term benefit plans for all employees


      •    Reviewing and approving the following:

           o    Compensation policies and practices applicable to all employees other than the
                President and CEO and other executives

           o    The total compensation (cash, benefits and equity) for all executives other than
                the President and CEO




                                               125
          o   Human resources policy and procedures

          o   The Company’s executive development programs, executive succession plans
              and performance goals to be achieved under specific incentive plans.

The existing Nomination and Remuneration Committee is comprised of the following
Directors:

Table 21: Nomination and Remuneration Committee
 Committee Position                                                              Name
 Member                                                 Dr. Zuhair Abdulhafiz AlNawab
 Member                                                 Mr. Abdullah A Al-Zaid
 Member                                                 Dr. Abdulrahman A. Al-Jafary


Services Contracts

The members of the Board of Directors are appointed by the General Assembly. The Board
members responsibilities are governed by the Bylaws and the Board of Directors' charter. The
following is a summary of the duties and responsibilities of the Board members and the
President and CEO.

Directors

Duties and Responsibilities

The Board is responsible for the overall strategy and direction of the Company's business.

The basic functions of the Board include the following:

    a) Approving the Company’s strategic trends and key objectives and supervising the
       pursuit and achievement of them;

    b) Setting internal audit controls and rules and supervising the same;

    c) Putting in place a corporate governance code;

    d) Setting clear policies and procedures for the selection of Directors, and causing the
       same to be implemented after having them approved by the General Assembly;

    e) Setting a written policy governing the relationship with the stakeholders in order to
       protect them and preserve their rights;

    f)    Establishment of policies and procedures that ensure compliance with applicable
          laws and regulations and the disclosure by the Company of all material information to
          shareholders, creditors and other stakeholders.

The Board of Directors responsibilities also include approving internal, financial,
administrative and technical regulations of the Company, and policies and procedures related
to the staff, forming the committees and granting them appropriate powers, approving the
establishment of subsidiaries, branches, offices and agencies, entering into loans and credit
facilities, and approving the Company's business plan, operating plan and annual budget.

Compensation and Allowances

Each member of the Board currently receives an annual remuneration of SR40,000 and
SR1,500 per board meeting attended.




                                                  126
The cumulative amount of remuneration and board meeting attendance fees have been paid
to the members of the Board for the years ending 31/12/2005, 2006 and 2007, SR 436,500,
439,500 and 426,000 respectively.

Duration

The Directors’ duration of service is determined in accordance with the Bylaws. The Board of
Directors, and each director, has a term of three years. As an exception to the foregoing, the
Board of Directors appointed by the Royal Decree No 32/A dated 13/2/1418H (corresponding
to 20/6/1997G) will remain until the first General Assembly meeting, which is expected to be
held during the second half of 2008. .

President and CEO
Duties and Responsibilities

The President of the Company shall execute the decisions of the Board of Directors and in
particular shall:

    a) Prepare for the meetings of the Board of Directors;

    b) Prepare the Company’s general budget, profits and losses account and annual
       budgets;

    c) Supervise the Company’s management and personnel; and

    d) Approve expenditures in accordance with the approved annual budgets;

Service Contracts

The CEO of the Company was appointed pursuant to Royal Decree No. A/32 dated
13/02/1418H. His services in the Company are governed by the Saudi Labour Law, GoSI
Regulations and other related laws and regulations.

Except for the CEO, there are currently no service contracts in place for any member of the
Board.

Declaration in Respect of Directors and Key Officers

The Directors, the President and CEO and the Chief Finance Officer declare that they:

    •      Have not at any time been declared bankrupt or been subject to bankruptcy
           proceedings.

    •      Except as disclosed in the service contracts section above, do not themselves, nor
           do any of their respective relatives or affiliates, have any material interest in any
           written or verbal contract, transaction or arrangement made for the account of the
           Company in effect or contemplated at the time of the Prospectus.

    •      Do not participate in any business competitive with that of the Company, or engage
           in any of the commercial activities carried on by the Company.

The Board of Directors declares that no commissions, discounts, brokerages or other non-
cash compensation in relation to the offer or sale of the Company’s shares were granted by
the Company to any member of the Board or its CEO, or any developer or expert in the two
years immediately preceding the date of the share listing application.




                                               127
Remuneration of Directors and Senior Management

Total paid compensation to the Board of Directors for the years ending 31 December 2005,
2006 and 2007 amounted to 436,500, 439,500, and 459,000, respectively.

Total remuneration of the Company’s Executive Officers for the years ending 31 December
2005 and 2006 amounted to 7,674,483 and 10,490,833 respectively. The remuneration
includes basic salaries, bonuses and other overheads. No member of the Board or the CEO
has any authority to vote on the remuneration paid to them, and there is no authority granted
to any member of the Board or a senior executive which would allow him to borrow from the
Company. Moreover, no member of the Board or the CEO has any authority to vote on a
contract or a proposal in which they have a material interest.

The Company has also approved a loan programme for its executive employees to enable
them to purchase houses for accommodation purposes. Through this programme, the
Company provide loans to the employees through a local bank or national financial institution.
The Company bears all banking related service fees in relation to the loan. The employee is
obliged to repay the loan during a period not exceeding 10 years in the amount of 10%
annually. The repayment is made through withholding such amounts from the employee's
monthly salary subject to such withholding not exceeding 25% of the employee’s basic salary.

Employees

The Company has documented and detailed recruitment policies to ensure the recruitment
and retention of qualified personnel. Ma'aden employed a total of 1037 staff as of 31
December 2007. The staff profile of each of Ma'aden's operating divisions/units is as follows:

Gold Division

Table 22: Staff Profile of Operating Divisions/Units (December 2007)
                                                      Trainees and Laborers                      Contractors
 Division/Unit                                      Saudi        Non-Saudi               Saudi            Non-Saudi
 Corporate                                                  1                 1                     0                 0
 Finance                                                    11                7                     0                 0
 Industrial relations                                       1                 0                     0                 0
 Industrial security and safety                             6                 0                     0                 0
 Human resource and admin                                   12                3                     0                 0
 Purchasing and contracts                                   10                4                     0                 0
 Projects and technical services                            2                 2                     0                 0
 Exploration                                                32                13                    0                 0
 Operations                                                 0                 0                     0                 0
 Mahad Gold Mine                                         128              109                       0                 0
 AlHajar Gold Mine                                          34                27                    0                 0
 Sukhaybarat Gold Mine                                      39                54                    0                 0
 Bulghah Gold Mine                                          46                61                    0                 0
 AlAmar Gold Mine                                           68                88                    0                 0
 Total                                                   391              369                       0                 0
 Cumulative Total                                                                  767
Source: Company

Table 23: Staff Profile of Operating Divisions/Units (December 2006)
                                                      Trainees and Laborers                      Contractors
 Division/Unit                                      Saudi        Non-Saudi               Saudi            Non-Saudi
 Corporate                                                  1                 0                     0                 0




                                                     128
                                                       Trainees and Laborers                        Contractors
 Division/Unit                                         Saudi         Non-Saudi              Saudi            Non-Saudi
 Finance                                                       10                8                     0                 0
 Industrial relations                                           0                0                     0                 0
 Industrial security and safety                                 3                0                     0                 0
 Human resource and admin                                       8                3                     0                 5
 Purchasing and contracts                                       9              10                      0                 0
 Projects and technical services                                4                3                     0                 0
 Exploration                                                   33              13                      0                 0
 Operations                                                     0                1                     0                 0
 Mahad Gold Mine                                               124          106                        0                 0
 AlHajar Gold Mine                                             45              32                      0                 0
 Sukhaybarat Gold Mine                                         37              52                      0                 0
 Bulghah Gold Mine                                             38              58                      0                 0
 AlAmar Gold Mine                                              36              53                      0                 0
 Total                                                         347          340                        0                 0
 Cumulative Total                                                                    692
Source: Company


Table 24: Main Companies and Projects (December 2007)
                                               Trainees and Laborers
                                                                                                    Contractors
 Division/Unit                                         Saudi         Non-Saudi
 Corporate Management Office                                   14                9                                       2
 Finance                                                       22              17                                        0
 Industrial Affairs                                            12                5                                       0
 Industrial Security and safety                                 3                1                                       0
 Human Resource and Admin                                      19                9                                       0
 Contracts and Procurement                                      4                3                                       0
 Exploration                                                    5                2                                       0
 Planning and Development                                       5                4                                       0
 Zarghat Magnesite Project                                      2                3                                       1
 Kaolin Project                                                 1                1                                       0
 Projects                                                      14              10                                        1
 Infrastructure Project                                         2                4                                       0
 Aluminium Project                                             19              14                                        3
 Phosphate Project                                             39              18                                        2
 Total                                                         161          100                                          9
 Cumulative Total                                                                    270*
Source: Ma’aden
* this figure includes the 1037 employees referred to above.


Table 25: Main Companies and Projects (December 2006)
                                               Trainees and Laborers
                                                                                                    Contractors
 Division/Unit                                         Saudi         Non-Saudi
 Corporate Management Office                                   13                8                                       2
 Finance                                                        6                9                                       0
 Industrial Affairs                                             0                0                                       1
 Industrial Security and safety                                14                6                                       0
 Human Resource and Admin                                       9                3                                       0




                                                        129
 Contracts and Procurement                         0            1                                0
 Exploration                                       0            1                                0
 Planning and Development                          4            5                                0
 Zarghat Magnesite Project                         1            2                                0
 Kaolin Project                                    0            0                                1
 Projects                                          6            9                                0
 Infrastructure Project                            0            3                                0
 Aluminium Project                                 11           9                                1
 Phosphate Project                                 19          16                                9
 Total                                          102            81                                14
 Cumulative Total                                                   197
Source: Ma’aden

Saudi Nationals currently represent more than 50 % of the staff of Ma'aden. Ma'aden
continues to actively pursue the recruitment of Saudi nationals under its Saudi-ization policy
and management has taken key steps towards expanding its Saudi workforce through
implementation of recruitment and training programmes through which new recruits will
receive on-the-job training and class room training and development.




                                             130
                  Related Party Transactions

No Group Company has entered into any contracts or arrangements with the Directors, the
Secretary of the Board, the Chief Executive Officer or Chief Financial Officer or any relative of
theirs in relation to Ma'aden's business.




                                              131
                                 Accountants' Report

Financial Statements

The audited financial statements as at and for each of the three years ended 31 December
2007, 2006 and 2005 and the notes thereto included in Annex A have been prepared and
audited by Deloitte & Touche Baker Abulkhair & Co., a firm of Saudi Accountants.

Deloitte & Touche Baker Abulkhair & Co., a firm of Saudi Accountants do not themselves, nor
do any of their relatives or affiliates have any shareholding or interest of any kind in the
Company. In addition, Deloitte & Touche Baker Abulkhair & Co. has given and not withdrawn
their written consent to the publication in this Prospectus of the Accountants' Report.

Director’s declaration for financial information

The Directors declare that:

    a) The financial information presented in the Prospectus is extracted without material
       change from the audited consolidated financial statements for the years ended 31
       December 2007, 2006, and 2005 and the notes thereto;

    b) The audited consolidated financial statements have been prepared in accordance
       with accounting standards generally accepted in Saudi Arabia; and

    c) There has been no material adverse change in the financial position of the Company
       since the issuance of the last audited consolidated financial statements.

Table 26: Audited Consolidated Financial Statement

                                                       Year Ended December 31
 SR '000                                         2007           2006        2005
 Consolidated income statement
 Sales                                               244,130    349,745      277,964
 Cost of sales                                  (167,407)      (187,733)    (150,764)
 Gross Margin                                         76,723    162,012      127,200
 General and administrative expenses             (96,304)       (58,359)     (47,167)
 Severance fee                                       (4,281)    (23,101)     (17,005)
 Exploration expenses                            (25,500)       (31,187)     (28,039)
 Technical services expenses                         (4,879)     (5,020)      (3,843)
 Other income/ (expense)- net                         27,695           43       3,258
 Profit/ (Loss) before investment income         (26,546)        44,388       34,404
 Investment income                                   225,636    273,591      181,263
 Net income prior to unusual provisions              199,090    317,979      215,667
 Unusual provisions                             (446,293)               -           -
 Net income                                     (247,203)       317,979      215,667
 Consolidated cash flow statement
 Profit before investment income                 (26,546)        44,388       34,404
 Adjustments for non-cash items                       52,258     62,016       51,597
 Unusual provisions                             (446,293)               -           -
 Net change in working capital                  (224,334)        55,934       68,302
 End of service indemnities paid                     (2,121)     (3,305)      (2,089)




                                                     132
Cash flow from operating activities                (647,035)     159,018     152,149
Long-term investments                                       -     65,000     460,000
Interest income received                             292,573     251,640     141,615
Long-term receivable                                   2,452     (16,337)    (35,874)
Additions to pre-operating expenses and
                                                   (173,726)    (298,882)   (195,105)
deferred charges
Additions to property, plant and equipments        (142,317)     (95,887)    (94,806)
Proceeds from investment in company under
                                                  (1,383,663)           -           -
formation
Cash flow from/used in investing activities       (1,404,681)    (94,465)    275,830
Net increase/ (decrease) in cash, cash
                                                  (2,051,716)     64,567     428,044
equivalents and short term investments

Cash, cash equivalents and short term
                                                   4,746,653    4,682,086   4,254,042
investments at the beginning of the year/period
Cash, cash equivalents and short term
                                                   2,694,937    4,746,653   4,682,086
investments at end of the year/period


Consolidated balance sheet
Current assets                                     3,155,902    4,990,300   4,915,697
Non-current assets                                 2,692,491    1,047,349    743,748
Total assets                                       5,848,393    6,037,649   5,659,445
Current liabilities                                  252,537     192,615     148,596
Non-current liabilities                              111,712     113,686      97,480
Shareholders' equity                               5,484,144    5,731,348   5,413,369
Total liabilities and equity                       5,848,393    6,037,649   5,659,445




                                                     133
    Management's Discussion & Analysis of
       Financial Condition & Results of
                  Operations

The following discussion and analysis of the Company’s financial position and results of its
operations is based upon, and should be read in conjunction with the Company’s audited
consolidated financial statements as at and for the years ended 31 December 2005, 2006 and
2007, and the notes thereto, as audited by the Deloitte & Touché, Baker Abulkhair & Co., a
firm of Saudi Accountants, and included elsewhere in this Prospectus.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations
section is primarily concerned with the Company's current financial position and past
performance based on its existing gold business. The Company's activities will change
significantly as a result of the proposed development of the Phosphate, Aluminium and other
Projects. Consequently the following discussion and analysis of the Company’s financial
position and results of its operations should not be relied upon as a reliable indication of the
Company's likely future performance.

The Management’s Discussion and Analysis of Financial Condition and Results of Operations
section is being included in this Prospectus for the purposes of complying with the
requirements of the CMA and it contains forward-looking statements that involve risk and
uncertainties. Actual results of the Company could differ materially from those contemplated
by these forward-looking statements as a result of various factors, including those discussed
below and elsewhere in this Prospectus, particularly in the “Risk Factors” section.

Declaration by the Board of Directors on the Accuracy of the Financial
Information
The Members of the Board of Directors declare that the financial information presented in this
Prospectus is extracted without material changes from the Company’s audited consolidated
financial statements for the years ended 31 December 2005, 2006 and 2007 and that these
statements are prepared in accordance with accounting standards issued by the Saudi
Organization for Certified Public Accountants (SOCPA).

The Members of the Board of Directors declare that except as set forth in this Prospectus,
there has been no material adverse change in the financial or trading position of the Company
during the last three years 2005, 2006 and 2007 or during the period from 1 January 2008 up
to and including the date of this Prospectus.

The Members of the Board of Directors further declare that there was no discontinuation of
the Company’s activities during the last 12 months, which has or could have had significant
effect on the Company’s financial position, and the Company will have sufficient funds to
meet the working capital requirements for 12 months after the Initial Public Offering.

Accounting policies

The Company’s audited financial statements have been prepared on the accrual basis under
the historical cost convention and in compliance with the accounting standards issued by the
SOCPA.




                                              134
The preparation of the Company’s audited financial statements requires management to
make estimates and judgments. The Company’s principal accounting policies are set out as
follows:

Accounting convention

The consolidated financial statements, expressed in Saudi Arabian Riyals, are prepared
under the historical cost convention.

Principle of consolidation

The consolidated financial statements include the accounts of the Company and its wholly
owned subsidiary - Ma’aden Company for Gold and Base Metals (formerly called Saudi
Company for Precious Metals). All material inter-company balances and transactions are
eliminated in the consolidated financial statements.

Use of estimates

The preparation of consolidated financial statements in conformity with generally accepted
accounting standards requires management to make estimates and assumptions that affect
amounts reported in the consolidated financial statements and accompanying notes.
Significant areas requiring the use of management estimates relate to the determination of
mineral reserves, reclamation and environmental obligations, impairment of assets and useful
lives of assets used to compute depreciation, depletion and amortization. Actual results could
differ from those estimates.

Foreign currency translation

Foreign currency transactions are translated into Saudi Riyals at the rates of exchange
prevailing at the time of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are translated at the exchange rates prevailing at
that date. Gains and losses from settlement and translation of foreign currency transactions
are included in the consolidated statement of income.

Cash and cash equivalents

Cash and cash equivalents contain cash on hand, in banks and time deposits with original
maturities of 90 days or less.

Short term investments

Short term investments represent time deposits with original maturities of more than 90 days.

Inventories

Inventories are stated at the lower of cost or net realisable value. Cost is determined, for
finished goods, on a weighted average cost basis and includes cost of materials, labour and
an appropriate proportion of direct overheads. All other inventories are valued on a moving
average cost basis. A provision is also established for items deemed to be slow moving or
obsolete.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Expenditure
on maintenance and repairs is expensed, while expenditure for betterment is capitalized.
Depreciation is provided over the shorter of estimated useful lives of the applicable assets or




                                             135
the estimated life of the mine using the straight-line method. The estimated useful lives of the
principal classes of assets are as follows:

Table 27: Estimated Useful Lives of the Principal Classes of Assets
 Category                                                Years
 Motor vehicles                                                       4
 Heavy equipment                                               5 – 13
 Fixed plant and heap leach facilities                          4–6
 Buildings                                                     9 – 20
 Civil works                                                          4
 Other equipment                                                      4
 Office equipment                                              4 – 10
 Furniture and fixtures                                        4 – 10
Source: Audited Financial Statements


Pre-operating expenses and deferred charges

Acquisition, exploration, evaluation, development and pre-operating expenses are expensed
in the period incurred until a mine/ project is identified as having economical development
potential. Once a mine/ project has been determined to have economical development
potential the subsequent development and pre-operating expenses incurred on the mine/
project are deferred net of proceeds from the sale of any production during the development
period and then amortized over the shorter of the expected life of the mine/ project or a period
of seven years. If a mine/ project is no longer considered economical, the accumulated
project costs are charged to income in the year in which the determination is made.

The Company also defers waste mining cost and has estimated the average of the waste-to-
ore ratio for the quantities contained within the final pit design of the mine. This average is
used to calculate the annual waste mining cost to be expensed as follows:

Average ratio of waste to ore mined X Quantity of ore mined X Average cost of total tons
mined

In periods when the actual costs of waste are higher than the costs expensed according to
this formula, the difference is deferred to be amortized in a future period when the actual
costs are less than the amount to be expensed.

Assets impairment
At each balance sheet date, the Company reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered
an impairment loss. If this has occurred the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs. The recoverable
amount of the assets/ cash-generating unit is the greater of its fair market value or present
value of future cash flows projected from the asset/ cash-generating unit. The Company
estimates the recoverable amounts of its mines/ projects considering all tangible and
intangible assets attributable to each mine/ project as components to the cash-generating unit
represented by each mining/ project.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. Impairment losses are recognised as an expense immediately. Where
an impairment loss is subsequently reversed, the carrying amount of the asset (cash-
generating unit) is increased to the revised estimate of its recoverable amount in a manner




                                                    136
such that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset (cash-
generating unit) in prior years. A reversal of an impairment loss is recognised as income
immediately.

Savings plan programme

In accordance with clause (137) of the Labour Regulations, and in furtherance to clause (76)
of the Company’s Internal Work Regulation approved by Resolution No. 424 dated 6/4/1420H
issued by the Minister of Labour and Social Affairs, a Savings Plan Programme was
introduced to encourage Saudi employees of the Company to save and invest their savings in
areas more beneficial to them, to secure their future and as an incentive for them to continue
working with the Company.

Participation in the Savings Plan Programme is restricted to Saudi Nationals and is optional
with employees required to contribute a monthly minimum instalment of 1% to a maximum of
15% of their basic salary subject to a minimum of SR300. The Company will contribute an
amount equal to 30% of the monthly savings of each employee, which will in turn be credited
to the savings accounts of the member. The Company’s portion will only be paid upon
termination or resignation of the employee.

Mine closure and reclamation

During the start up of a mine, a provision is made for the total estimated costs of future
closure and reclamation of the mining properties. The full estimated costs are deferred and
then amortized to expense over the expected life of the mine on a straight line basis.
Estimates of the ultimate site reclamation costs are based on current laws and regulations
and expected costs to be incurred, all of which are subject to possible changes, thereby
impacting current determinations.

End-of-service indemnities

End-of-service indemnities, required by Saudi Arabian Labour Law, are provided in the
financial statements based on the employees’ length of service.

Revenue recognition

Revenue is recognised when the following conditions are met:

    •   The quality and quantity of the product is determined with reasonable accuracy;

    •   Physical control over the product has been relinquished;

    •   The selling price is determined;

    •   The product is suitable for delivery, and no further processing is required by or on
        behalf of the Company, and

    •   The Company no longer has insurable interest in its full sales value.

Investment income consists of earnings on bank deposits and is recognised on the accrual
basis.




                                             137
Expenses

General and administrative expenses include direct and indirect costs not specifically part of
production costs as required under generally accepted accounting standards. Allocations
between general and administrative expenses and cost of sales, when required, are made on
a consistent basis.

Severance fee

Effective from 2005 onwards, as per the mining code issued based on the Royal Decree No.
47/M dated 20 Sha’aban 1425 H (corresponding to 4 October 2004G), the Company is
required to pay to the Government of Saudi Arabia severance fee representing 25% of annual
net income or the equivalent amount of income tax, whichever is lower.

Forward sales and option contracts

In order to protect against the impact of potential gold price declines, the Company and its
subsidiary Ma’aden Company for Gold and Base Metals (formerly called Saudi Company for
Precious Metals) utilise forward sales to provide a minimum price for a portion of its future
production. Premiums received on the forward sales contracts (if any) are deferred and
recognised upon the settlement of the related option contract.

Overview

Saudi Arabian Mining Company was formed as a joint stock company pursuant to Royal
Decree No.M/17 dated 14/11/1417H (corresponding to 23/3/1997G) and Council of Ministers
Resolution No.179 dated 18/11/1417H (corresponding to 17/3/1997G), with Commercial
Registration (CR) No.1010164391 dated 10/11/1421H (corresponding to 4/2/2001G). The
Company was established with a share capital of SR4,000 million divided into 40 million
ordinary shares of nominal value of SR100 each. The entire shareholding of the Company is
vested with Government of the Kingdom of Saudi Arabia(represented by the Public
Investment Fund)..

The Management subsequently further analysed its financial position and concluded that it
needed to raise further capital which would required an increase of its share capital.

During FY2006 and pursuant to the Council of Ministers resolution number 72, dated
2/4/1427H (corresponding to 30/4/2006G) the capital of the Company was increased from
SR4,000 million to SR8,000 million. This resolution was amended pursuant to the Council of
Ministers’ resolution number 49, dated 25/2/1428H (corresponding to 3/3/2008G) the capital
of the Company will be increased to SR9,250 million.

The proceeds from IPO will be utilised to primarily finance the Phosphate and Aluminium
Projects. These large scale projects are part of Management vision to position the Company
as a leading and diversified mineral resource company from Saudi Arabia.

Existing Business (Gold Mining Projects)

The Company presently operates the following mines:

    •   Mahd Ad’ Dahab gold mine - located in central western Saudi Arabia

    •   Al-Hajar gold mine - located in south western Saudi Arabia

    •   Bulghah gold mine - located in central Saudi Arabia




                                             138
    •   Sukhaybarat gold mine - located in central Saudi Arabia

    •   Al-Amar gold mine - located in Central Saudi Arabia.

Ma'aden's gold production for the years ended 2005, 2006 and 2007 were 239,731 ounces,
166,602 ounces, and 142,783 ounces respectively.

For additional details regarding the Company's gold mining projects see "The Company's
Business - Gold Operations" section.

Exploration Projects

The Company was granted an exploration licence for the Ad Duwayhi prospect in 1998 and
extensive exploration activities were carried out on the licence, which resulted in the
delineation of a significant gold resource at Ad Duwayhi by the end of 2003. Subsequent
exploration programs undertaken on the Central Arabian Gold region has resulted in outlining
a total of six advanced exploration projects, including: Ad Duwayhi, Zalim, As Suk, Ar Rjum,
Mansourah and Masarrah. Preliminary resource estimates completed to date indicate
approximately 7.9 million ounces of gold resource in the region. The deposits will be
developed in sequence starting with Ad Duwayhi in 2009, Mansourah-Masarrah in 2011 and
Ar Rjum 2013. Gold management envisages developing the Mansourah and Masarrah
deposits as one project because of their proximity to each (6.5km).

Currently, a plan is being prepared by the Management to provide water, treated water piping
and other infrastructure support to develop these mines on an economic basis. Discussions
with relevant Government authorities in respect of land access and permit requirements to
award the construction contract for pipeline are underway.

For additional details regarding the exploration projects, see “The Company’s Business –
Gold Operations”.

Future Projects

Ma’aden’s objective is to explore and develop Saudi Arabia’s mineral resources and become
a world class international mineral resource company. Ma’aden has taken significant steps
towards achieving this objective by launching the development of a phosphate mine and
integrated fertilizer production facility for the production of DAP and excess quantities of
ammonia and phosphoric acid (the "Phosphate Project") and a bauxite mine, alumina refinery
and aluminium smelter for the production of aluminium ingot (the "Aluminium Project").

In addition, the Company is developing certain common infrastructure to support those
projects and certain other projects. For additional details regarding the Phosphate Project,
the Aluminium Project and the supporting common infrastructure, see “The Phosphate
Project”, “The Aluminium Project” and “Common Infrastructure” respectively.

Results of Operations

The results of the operations of the Company for the period under discussion solely represent
the Gold business and pre-operating and capital expenses relating to the Phosphate,
Aluminium and other Projects, and supporting common infrastructure. The Management
believes that upon successful completion of the Phosphate and Aluminium Projects, these
projects will represent the core business operations and key drivers of the Company’s sales
and profitability.




                                            139
The following table provides details of the consolidated income statement of the Company
and its subsidiary for the three years 2005, 2006 and 2007:

Table 28: Consolidated Income Statement
                                                                    Year ended 31 December
 SR '000                                                     2007              2006          2005
 Sales                                                           244,130        349,745       277,964
 Cost of sales                                               (167,407)        (187,733)     (150,764)
 Gross profit                                                     76,723        162,012       127,200
 General and administrative expenses                          (96,304)          (58,359)     (47,167)
 Severance fee                                                   (4,281)        (23,101)     (17,005)
 Exploration expenses                                         (25,500)          (31,187)     (28,039)
 Technical services expenses                                     (4,879)         (5,020)      (3,843)
 Other income, net                                                27,695              43        3,258
 Profit/ (loss) before investment income                      (26,546)           44,388        34,404
 Investment income                                               225,636        273,591       181,263
 Profit before extraordinary item                                199,090        317,979       215,667
 Extraordinary item                                          (446,293)                  -             -
 Net income/ (loss)                                          (247,203)          317,979       215,667
Source: Audited Financial Statements

Production, Sales, Volumes and Prices

Table 29: Production, Sales and Prices of Gold for the Period FY2005-07
                                                               Year ended 31 December
                                                                  2007          2006        2005
 Production (ounce)                                                142,763      166,602     239,731
 Sales (ounce)                                                     146,284      203,059     203,655
 Average Realised Price US$                                           445             459      364
Source: Audited Financial Statements


In FY2007, the consolidated sales of the Company decreased by 30.2%, due to a decrease in
sales volume of 56,775 ounces and a decrease in realised average gold price per ounce by
US$14 per ounce in FY2007 as compared to FY2006. The decrease in sales volume is due to
the decrease in gold production and gold recovery rate from the various mines. Gold
production decreased by an annual compound rate of 22.8% during the period 2005 to 2007
to 142,763 ounces for the period ended 31 December 2007. The following table represents
the breakdown of gold production per mine during the period from 2005 to 2007.

Table 30: Mines production (Ounce) for the Period FY2005-07
                                     Years ended in 31 December

Mine                         2007               2006               2005

Mahd Ad Dahab                          58.256           56.108               58.400

Al Hajar                               16.129           26.480               39.448
Al Sukhaybarat                         25.079           27.139               41.588
Bulghah                                43.299           56.875             100.295
Total                               142.763            166.602             239.731
Source: unaudited accounts

The decreases in production volumes for the Al Hajar, Al Sukhaybarat and Bulghah mines
during the period from 2005 to 2007 were due to the decrease in the gold concentration rate




                                                       140
during the period. (for more information about working mines see the “Company Activities,
Current Activities – Working Mines” section.)

Furthermore, gold sales volumes decreased by an annual compound rate of 15.2% during the
period from 2005 to 2007 with gold sale volumes reaching 146,283 ounces year 2007. The
following table represent sales volume per mine during the period from 2005 to 2007.

Table 31: Consolidated sales of the company per mine (ounce)
                                         Years ended in 31 December

Ounce                           2007             2006             2005
Mahd Ad Dahab                           61.094           86.398            30.822
Al Hajar                                15.926           31.190            35.903
Al Sukhaybarat                          26.367           25.653            40.715
Bulghah                                 42.897           59.818            96.215
Total sales                            146.284          203.059           203.655
Source: unaudited accounts

Total gold sales represent sales to customers at prevailing market prices prevailed and at
prices set in forward contracts. The following table represents the breakdown of consolidated
sales of the Company.

Table 32: Breakdown of consolidated sales
                                                                             Years ended in 31 December
SR ‘000                                                                     2007              2006          2005

Mahd Al Dahab                                                             129.780           181.093        46.442

Al Hajar                                                                   25.085            53.064        57.091
Al Sukhaybarat                                                             34.768            34.602        50.222
Bulghah                                                                    54.497            80.986       124.209
Total                                                                     244.130           349.745       277.964
Sales volume against forward contracts (ounce)                            100.098           105.944       121.784
Sales volumes and market price (ounce)                                     46.186            97.115        81.871
Sales volume (ounce)                                                      146.284           203.059       203.655
Ounce average selling price (SR)                                            1,668             1,721         1,365
Source: unaudited accounts

Due to prices set under forward sales contracts the average gold sales price per ounce for
Ma’aden was less than the average prevailing price in international markets during the period
from 2005 to 2007 which contributed to the board of directors' decision to settle the
Company's forward sales contracts. For more information see “settlement of forward
contracts” section.

Table 33: Gold prices
                                                                  Years ended in 31 December

SR                                                                2007              2006          2005

Average market prices                                             2.606             2.272        1.616

Ma’aden average selling price                                     1.668             1.721        1.365
Agreed upon forward prices *                                          -             1.338        1.357
: Source: unaudited accounts
* All forward prices were settled in November 2007




                                                         141
Cost of Sales

During 2007, the consolidated cost of sales of the Company decreased by 10.8%, reaching
SR 167.4 million. The decrease was mainly due to lower sales volume despite higher average
unit cost of sales. The following table highlights mine-wise break-up of consolidated cost of
sales.

Table 34: Mine-wise break-up of consolidated cost of sales
                                                      Years ended in 31 December
SR ‘000                                                2007          2006            2005

Mahd Ad Dahab                                        40,163        45,247           23,325

Al Hajar                                             23,155        41,431           28,306
Al Sukhaybarat                                       39,506        32,356           28,817
Bulghah                                              64,583        69,167           70,784
Accompanying Materials                                       -      (468)            (468)
Total                                               167,407       187,733          150,764
Sales volume (ounce)                                146,284       203,059          203,655
Ounce average cost (SR)                               1,144           925             740
Source: unaudited accounts

Gold sales volume decreased by an annual compound rate of 15.2% during the period from
2005 to 2007. However, consolidated cost of sales increased at an annual compound rate of
5.4% during the period of 2005-07. The increasing cost of sales was mainly due to the
increase in mine operation costs and the decreasing recovery rate of gold. Cost of sales
exhibited for each of the mines are set out below:

     -     Mahd Al Dahab: In 2006, the cost of sales increased as a result an increase 180.3%
           increase in sales volume. By comparison in year 2007, the cost of sales decreased
           as a result of a decrease of 29.3% in sales volume.

     -     Al Hajar: In 2006, the cost of sales increased despite a decrease of sales volume by
           13.1% due to the low recovery rate of 57.4%. In 2007, a decrease in sales volume of
           48.9% resulted in a lower cost of sales.

     -     Al Sukhaybarat: In 2006, the cost of sales increased despite a decrease in sales
           volumes due to lower ore milled tonnage, lower gold grade and lower gold recovery.
           In 2007, sales volume increased by 2.8% resulting in a 22.1% increase in cost of
           sales. This increase in cost of sales was also due to increased ore milled tonnage
           and improved gold grade as compared to year 2006.

     -     Bulghah: In 2006, the cost of sales decreased by 2.3% as a result of a 37.8%
           decrease in sales volumes. In 2007, the cost of sales decreased by 6.6%, while sales
           volumes decreased by 28.3% due to lower stocked ore, lower gold grade and lower
           gold recovery rate.

     The increase in consolidated cost of sales was primarily due to an adjustment made to
     correct an understatement of the cost of sales in previous years resulting from an over
     estimation of the book value of gold inventory contained in the Company’s Heap-in-Leach
     stocks. A general increase in site operation costs also contributed to the increase in
     consolidated cost of sales. The technical consultants were brought in by the Company to
     review the gold inventory and the appropriate adjustment was made pursuant to the
     advice of such technical consultants.




                                                   142
General and Administrative Expenses

Table 35: Breakdown of Consolidated General and Administrative Expenses
                                                                  Year ended 31 December
                                                                                           CAGR %/
 SR '000                                                2007        2006       2005        (CADR)%
                                                                                            2005-07
 Personnel                                                61,209     43,108     34,307         33.6%
 Board of Directors' remuneration                           459        440        467         (0.9%)
 Contracted services                                      24,512      5,783      3,730       156.4%
 Consumables                                               1,405      1,334      1,038        16.3%
 Overheads                                                 6,343      5,126      5,220        10.2%
 Depreciation and amortization                             2,376      2,568      2,405        (0.6%)
 Total general and administrative expenses                96,304     58,359     47,167        42.9%
Source: Audited Financial Statements

Consolidated general and administration expenses remained steady at around 17% of the
Company’s sales during FY2005-06, while it was 39% in 2007. Personnel costs which
included staff salaries and related expenses was the principal cost item. Contracted services
costs relate to consultancy and professional services costs and vary from period to period
based on studies conducted.

In absolute terms, general and administrative expenses in 2006 were SR58.4 million
representing an increase of SR11.2 million compared with 2005. This increase was primarily
due to increased personnel costs, which in turn, resulted from recruitment of new employees
mainly in the second half of 2006 to meet the growing manpower requirements of the
Company with respect to the Phosphate, Aluminium and other Projects.

In FY2007, general and administrative expenses increased by 65.0%. This was mainly due to
increase in personnel cost (due to higher number of employees, increment in staff salaries
and changes in the compensation programs) and increase in contracted services expenses
(due to costs of initial public offering and privatization consultancy costs).

Severance fee

Effective from year 2005 onwards, the Company is required to pay to the Government of
Saudi Arabia a severance fee representing 25% of its annual net income or the equivalent
amount of income tax, whichever is lower. During 2005 and 2006, the Company incurred
fees in the amount of SR17.0 million and SR23.1 million respectively, based on the
Company’s net sales. Severance fees represented 6.1% and 6.6% of the Company’s overall
revenues for the years 2005 and 2006, respectively. During FY2007, the Company incurred a
net loss and as a result the severance fee decreased by SR18.8 million compared to 2006
due to offsetting and reversal of over accrual for FY2005-06 by SR12.0 million.

Exploration expenses

In FY2007, exploration expenses decreased by 18.2% mainly due to lower overhead costs
resulting from reversal of accrued exploration licence cost from prior years, and due to a
reduction in drilling and assaying services and activities, particularly in the Ash-Shaktaliyah,
Mawaq and Al-Oruq areas. Exploration expenses grew at 11.2% during FY2006 to reach
SR31.2 million from SR28.0 million in FY2005. The increase in exploration expenses was
mainly due to expanding exploration activities during the year particularly in the Mawan area.




                                                143
Technical services expenses

In FY2007, technical expenses remained close to the FY2006 level. Technical services
expenses increased in FY2006 by SR1.2 million due to an increase in expenditures made in
relation to feasibility/ technical studies.

Other income

The significant other income for the year ended 31 December 2007 mainly includes a
premium received on account of development efforts carried out by the Company for the
Aluminium Project which were received from Rio Tinto Alcan (SR18.4 million) and a premium
received as consideration for gold sale option (SR13.5 million), offset by a SR6.0 million write
off of Phosphate expenditure from the Wadi Sirhan licence.

Investment income

Investment income comprises interest earned on bank deposits. Investment income earned
by the Company decreased by 17.5% during FY2007 and reached SR225.6 million due to
less surplus funds being placed on term deposits compared to FY2006. Funds were utilised
during FY2007 to meet increased capital expenditure requirements of mega projects, such as
Phosphate, Aluminium and Infrastructure Projects. Annual compound rate of 11.5% achieved
during 2005-07.

Investment income in 2006 was SR273.6 million representing an increase of SR92.3 million
on investment income of SR181.3 million for FY2005. This increase was mainly attributable
to a higher average interest rate of 5.5%.

Extraordinary item

As at 21 November 2007, the Company and its subsidiary had forward sales contracts
outstanding for 256,513 ounces of gold. These were entered into in 2001 and 2003 and
related to the Bulghah and Al Amar mines and were contracted to be settled at a forward
price of US$373.5 per ounce. However, the increase in market demand in succeeding years
led to an increase in the market price of gold from US$335.4 per ounce in March 2003 to
US$783 per ounce in 31 October 2007.

In view of the above and in line with the privatization of Ma'aden, the Board of Directors in
their meeting dated 3 November 2007 decided to unwind all the forward hedge positions.
This was decided to enable Ma'aden to proceed with IPO without any commitments with
respect to forward contracts and to allow public shareholders to take advantage of increasing
gold prices. Accordingly, an amount of US$119.3 million equivalent to SR446.3 million was
paid to JP Morgan Chase Bank N.A. on 28 November 2007 to unwind all forward hedge
positions as of 21 November 2007.

Net income

In FY2007, the Company incurred loss of SR247.2 million. The decrease in net income as
compared to FY2006, was due to lower sale volumes, increase in cost of sales per ounce and
lower gold price per ounce realised by the Company, coupled with the impact of the
extraordinary item described above.

The Company’s consolidated net income in FY2006 increased by SR102.3 million or 47.4%
compared to its consolidated net income of SR215.7 million in FY2005. The increase in net
income in FY2006 was mainly attributable to an increase of SR92.4 million in investment
income.




                                              144
Earnings before Bank Charges, Zakat, Depreciation and Amortization
(EBCZDA)

The following table shows the consolidated earnings of the Company and its subsidiary
before bank charges, Zakat, depreciation and amortization (EBCZDA) for the three years
2005, 2006 and 2007:

Table 36: Income Statement Showing EBCZDA
                                                                Year ended 31 December
 SR '000                                                  2007           2006            2005
 Sales                                                     244,130        349,745        277,964
 Cost of sales- net of depreciation                      (129,073)      (136,560)       (110,604)
 General and administrative expenses- net of
                                                          (93,928)        (55,791)       (44,762)
 depreciation and amortization
 Severance fee                                              (4,281)       (23,101)       (17,005)
 Exploration expenses                                     (25,500)        (31,187)       (28,039)
 Technical services expenses                                (4,879)        (5,020)        (3,843)
 EBCZDA                                                   (13,531)         98,086         73,711
 Depreciation charge                                      (33,445)        (45,507)       (36,519)
 Amortization charge                                        (7,265)        (8,234)        (6,046)
 Investment income                                         225,636        273,591        181,263
 Other income, net                                          27,695              43          3,258
 Extraordinary item                                      (446,293)               -              -
 Net income/ (loss)                                  (247,203)            317,979        215,667
Source: Audited Financial Statements and Management Information

Balance sheet

The following table provides details of the assets, liabilities and shareholders’ equity of the
Company and its subsidiary as at 31 December 2005, 2006 and 2007:

Table 37: Consolidated Balance Sheet
                                                                 As at 31 December
SR '000                                                  2007            2006            2005
Current assets                                           3,155,902      4,990,300      4,980,697
Non-current assets                                       2,692,491      1,047,349        678,748
Total assets                                             5,848,393      6,037,649      5,659,445
Current liabilities                                        252,537        192,615        148,596
Non-current liabilities                                    111,712        113,686         97,480
Shareholders' equity                                     5,484,144      5,731,348      5,413,369
Total liabilities and equity                             5,848,393      6,037,649      5,659,445
Source: Audited Financial Statements
Note: Time deposits maturing after one year where classified as long term investments in the financial statements for
FY2005. These were reclassified in FY2006 as short term investments as the Company always had the right to
withdraw the time deposits before maturity. Accordingly, such time deposits have been reclassified in the above
table for FY2005 (SR65 million) for to be consistent with the presentation adopted in the FY2006 financial statements

The Company’s consolidated assets as at 31 December 2006 increased by SR378.2 million
(or 6.7%) to SR6,037.6 million compared to SR5,659.4 million as at 31 December 2005. The
growth in assets was mainly due to the capital costs of Aluminium and Phosphate Projects.
As at 31 December 2007, total assets decreased by SR189.3 million mainly due to a
decrease in shareholders’ equity, consequent to net loss for FY2007. The decrease in
current assets and increase in non-current assets as at 31 December 2007 compared to 31
December 2006 was due to utilisation of short-term investments to finance the Phosphate and
Aluminium Projects.




                                                        145
Current assets

Table 38: Breakdown of Current Assets
                                                                 As at 31 December
 SR '000                                                2007              2006             2005
 Cash and cash equivalents                                595,937           182,903       2,625,586
 Short-term investments                                 2,099,000         4,563,750       2,121,500
 Investment income receivable                              60,463           127,400        105,449
 Accounts receivable                                      207,511            10,622         11,607
 Inventories, net                                         110,584            98,887        109,929
 Prepaid expenses and other assets                         82,407             6,738          6,626
 Total current assets                                   3,155,902         4,990,300       4,980,697
Source: Audited Financial Statements (after reclassification as per note below Table “Consolidated balance sheet”)

Cash and cash equivalents comprise cash on hand, bank balance and time deposits with
original maturity of 90 days or less. Short-term investments include time deposits of the
Company, with original maturity over 90 days. Cash and cash equivalents and short term
investments together constitute on average 91.9% of total current assets of the Company as
at the relevant balance sheet dates. The primary reason for the movement between cash and
cash equivalents and short term investments between the relevant balance sheet dates is due
to higher or lower time deposits placed with banks with maturity over 90 days. As noted
above, the decrease in the current assets as at 31 December 2007 compared to 31
December 2006 was due to utilisation of short-term investments to finance the Phosphate and
Aluminium Projects.

As of 31 December 2007, Ma'aden had paid an amount of SR168.3 million in excess of its
70% pro rata contribution. Ma’aden will be reimbursed this amount after an evaluation KPMG
Al Fozan and Al Sudhan, which were appointed by SABIC. The amount is classified under
accounts receivable.

Inventories on the average constitute 2.6% of current assets and mainly comprise of gold
inventory, spare parts and consumables and work-in-process.

Prepaid expenses increased by SR75.8 million over FY2005-07 solely due to increase in
advances to vendors relating to the future projects.

Non-current assets

Table 39: Breakdown of Non-Current Assets
                                                                      As at 31 December
 SR '000                                                       2007           2006          2005
 Long-term receivables                                          61,046           63,498     47,161
 Advances against investments in company under
                                                              1,815,797               -            -
 formation
 Property, plant and equipment, net                            341,277        309,908      226,853
 Pre-operating expenses and deferred charges, net              474,371        673,943      404,734
 Total non-current assets                                     2,692,491     1,047,349      678,748
Source: Audited Financial Statements (after reclassification as per note below Table “Consolidated balance sheet”)

Long-term receivables represent payments made by the Company in connection with studies
for North South Railway (“NSR”) plan. Under the plan, the Saudi Railway Company will
construct 1,486km railway track, linking Bauxite and Phosphate mines located in Az Zabirah
and Al Jalamid respectively with Ras Az Zawr and Al Jubail areas. Pursuant to the Council of
Ministers resolution No. 72 dated 30 April 2006, the Company’s commitment to contribute
US$500 million towards NSR plan was waived by the Government, and the amount paid by
the Company will be returned to the Company in 2008.



                                                        146
During FY2007, the Company entered into an agreement with SABIC to exploit the Al Jalamid
phosphate deposit in the Kingdom of Saudi Arabia and utilisation of national resources of
natural gas and sulphur to manufacture DAP, MAP and ammonia fertilizer products. The
capital cost of the project is estimated at US$ 5.6 billion to be contributed by the Company
and SABIC at an agreed proportion of 70% and 30% respectively. The implementation of the
Project will be through the Ma'aden Phosphate Company, which was incorporated on 1
January 2008. As of 31 December 2007 Ma'aden contribution towards its share in the total
cost of project was SR1.82 billion, which is shown as advances against investment in
Ma'aden Phosphate Company - under formation.

Property, plant and equipment mainly comprise of capital work in progress, civil works and
fixed plant and heap leach facilities. The increase in property, plant and equipment in
FY2006 and FY2007 was mainly due to increasing civil work at Al-Amar mine and
commencement of construction of the Phosphate and Aluminium Projects.

Pre-operating expenses and deferred charges incurred for developing new projects and
mainly include cost of infrastructure i.e. management consultancy cost incurred for site
preparation for Phosphate, Aluminium and other Projects.

Current liabilities

Table 40: Breakdown of Current Liabilities
                                                              As at 31 December
 SR '000                                               2007          2006          2005
 Accounts payable                                      146,653        82,951       50,994
 Accrued expenses                                      105,884       109,664       97,602
 Total current liabilities                             252,537       192,615      148,596
Source: Audited Financial Statements

Current liabilities represent accounts payable and accruals made in the ordinary course of
business.

Accounts payable increased by SR95.7 million during FY2005-07, mainly as a result of the
payables recorded towards the close of FY2007 on account of various studies conducted by
the Company in relation to its projects which are currently in the development stage.

The Company records accrued expenses at year end in ordinary course of business.
Accrued expenses increased by SR8.3 million during FY2005-07.

Non-current liabilities:

Table 41: Breakdown of Non-Current Liabilities
                                                               As at 31 December
 SR '000                                                      2007     2006         2005
 Deferred revenue                                                -    13,500       13,500
 Provision for mine closure                              54,853       54,853       43,617
 End-of-service indemnities                              56,859       45,333       40,363
 Total non-current liabilities                          111,712      113,686       97,480
Source: Audited Financial Statements


Non-current liabilities have remained relatively stable during FY2005-07. Deferred revenue
represents premium received as consideration for gold sale option, recognised in FY2007
income statement, on settlement of contract.

Shareholders’ equity




                                                 147
Table 42: Components of Shareholders Equity
                                                                     As at 31 December
 SR '000                                                   2007             2006           2005
 Share capital                                             4,000,000       4,000,000     4,000,000
 Statutory reserve                                            183,180       183,180        151,382
 Retained earnings                                         1,300,964       1,548,168     1,261,987
 Total shareholders' equity                                5,484,144       5,731,348     5,413,369
Source: Audited Financial Statements

The Company has share capital of SR4,000 million divided into 40 million shares of nominal
value of SR100 each as at 31 December 2007. Total shareholders' equity decreased from
2006 to 2007 as a result of the settlement of the Company's gold forward sales contracts.

A statutory reserve is maintained in accordance with applicable regulations in the Kingdom
and 10% of the annual net income of the Company is credited to a statutory reserve until such
reserve equals 50% of the share capital of the Company. Since the Company incurred loss in
FY2007, statutory reserve was not made in that year.

The Company’s Financial Condition and Liquidity
Table 43: Consolidated Cash flow Statement
                                                                  Year ended 31 December
 SR '000                                                      2007          2006           2005
 Profit / (loss) before investment income and extra
                                                              (26,546)       44,388         34,404
 ordinary item
 Adjustments for non-cash items                                52,258        62,016         51,597
 Extraordinary items                                       (446,293)               -              -
 Net change in working capital                             (224,333)         55,934         68,302
 End of service indemnities paid                               (2,121)       (3,305)        (2,089)
 Cash flow from/ (used in) operating activities            (647,035)        159,033        152,214
 Interest income received                                     292,573       251,640        141,615
 Long-term receivable                                           2,452       (16,337)       (35,874)
 Additions to pre-operating expenses and deferred
                                                           (173,726)       (298,882)     (195,105)
 charges
 Additions to property, plant and equipments               (142,317)        (95,887)       (94,806)
 Advance against investment in company under
                                                         (1,383,663)               -              -
 formation
 Cash used in investing activities                       (1,404,681)       (159,466)     (184,170)
 Net decrease in cash, cash equivalents and short
                                                         (2,051,716)           (433)       (31,956)
 term investments
 Cash, cash equivalents and short term investments
                                                           4,746,653       4,747,086     4,779,042
 at the beginning of the year
 Cash, cash equivalents and short term
                                                           2,694,937       4,746,653     4,747,086
 investments at end of the year
Source: Audited Financial Statements (after reclassification as per note below Table “Consolidated balance sheet”)

For the purposes of this cash flow statement, cash and cash equivalents comprises cash and
cash equivalents as stated in the balance sheet and short term investments.

Operating activities

Net cash flow from operating activities remained positive during the financial years ended 31
December 2005 and 2006, while negative in 2007, mainly due to increase in receivable from
SABIC (in relation to the Ma'aden Phosphate Company as discussed above) and loss on
settlement of forward contracts.




                                                        148
Table 44: Cash cycle
                                                     Year ended 31 December
 Days                                                2007     2006    2005
 Accounts receivable number of days                     59      11       15
 Inventory number of days                              241     192      266
 Accounts payable number of days                      (314)   (159)   (122)
 Cash cycle                                            (14)     44      159
Source: Management information

Cash cycle for the Company has fluctuated during 2005, 2006 and 2007. In 2005, cash cycle
in days totalled 159 days mainly due to high inventory days. In 2006, cash cycle in days
totalled 44 days because of the decrease in inventory days and increase in accounts payable
days which decreased the total cash cycle. In 2007, cash cycle in days totalled negative 14
days because of the increase in inventory days and accounts payable days, which decreased
the total cash cycle.

Investing activities

The Company recorded net cash used in FY2006 and FY2007 in respect of investing
activities during the period under discussion. Significant investment has been made by the
Company in its existing and future projects. The surplus funds which were placed by the
Company in bank term deposits and income earned thereon were the main sources of
funding for investment in the projects.

Financing activities

The Company is 100% equity financed and hence there are no debt financing activities during
the period under discussion.

Commitments and contingent liabilities

Forwards Contracts

As described above, the Company and its subsidiary unwound all forward sales hedge
contracts outstanding as at 21 November 2007, and accordingly there were no outstanding
forward sale contracts as at 31 December 2007 (31 December 2006: forward sale contracts
were outstanding in respect of 356,611 ounces). As a result of the development of the
Phosphate and Aluminium Projects, it is expected that major important changes will occur to
the Company’s operations. Accordingly, the discussions and analysis of company’s balance
sheet and results of its operations must not be taken as indication to future performance of
the Company. Except as already mentioned, there are currently no expected obligations of
the Company.

Capital commitments

As at 31 December 2007, the Company had total capital commitments amounting to SR10.3
billion (31 December 2006: SR607.8 million). Commitments have been made in connection
with the development of the future projects.

Letters of Guarantee

As at 31 December 2007, the Company has a contingent liability of SR40,000 in respect of
the guarantee issued by a bank on behalf of the Company, in favour of a contractor.




                                            149
Business risks

Credit risk

Credit risk is the risk that one party will fail to discharge an obligation and cause the other
party to incur a financial loss. The Company has no significant concentration of credit risk.
Cash is substantially placed with national banks with sound credit ratings. Accounts
receivable are carried net of provision for doubtful debts, if needed.

Commission rate risk

Commission rate risk is the exposure to various risks associated with the effect of fluctuations
in the prevailing commission rates on the Company’s financial position and cash flows. The
Company monitors the fluctuations in commission rates and believes that the effect of the
commission rate risk is not significant.

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in
foreign exchange rates. The Company’s transactions are principally in Saudi riyals and US
dollars. Management monitors the fluctuations in currency exchange rates and believes that
the currency risk is not significant.

Fair value

Fair value is the amount for which an asset could be exchanged, or a liability settled between
knowledgeable willing parties in an arm’s length transaction. As the Company’s financial
instruments are compiled under the historical cost convention, differences can arise between
the book values and fair value estimates. Management believes that the fair values of the
Company’s financial assets and liabilities are not materially different from their carrying
values.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet
commitments associated with financial instruments. Liquidity risk may result from an inability
to sell a financial asset quickly at an amount close to its fair value. Liquidity risk is managed
by monitoring on a regular basis that sufficient funds are available to meet any future
commitments.

Current Trading and Prospects

Consolidated income statement for the year ended 31 December 2007 has resulted to a net
loss of SR247.2 million as compared to net income of SR318.0 million for FY2006, mainly due
to higher average cost of sales per ounce, lower realised gold price per ounce, decreased
investment income, loss on settlement of forward contracts and increase in general and
administrative expenses.

During FY2007, the Company entered into heads of agreement with Rio Tinto Alcan Inc., for
the development, ownership and operation of an integrated mine, refinery, smelter and power
project for aluminium in the Kingdom of Saudi Arabia, after undertaking an evaluation and
selection process of a group of international companies, with which Ma’aden has close ties,
that specializes in this field The total cost of the project is estimated at approximately
US$10.55 billion.

Current financial position and past performance of the company is related to its current
activities in gold. Major changes are expected in the company activities due to the




                                               150
development of Phosphate and Aluminium Projects, accordingly the discussions and analysis
of company’s financial position and results of its operations must not be taken as indication to
its future performance. The management considers that successful completion of Phosphate
and Aluminium Projects will be mainly the source of company future sales and profits.

Statement of Management’s Responsibility for Financial Information

The Management’s Discussion and Analysis of Financial Condition and Results of Operations
(“MD&A”) has been drafted by the Management of the Company and approved by the Board
of Directors. Except as set forth in this Prospectus, the Management believes that there has
been no material adverse change in the financial position or prospects of the Company as of
the date of this Prospectus and accepts full responsibility for the authenticity and accuracy of
the information and analysis of financial results and confirm, after making all reasonable
inquiries, that full and fair disclosure has been made and there are no other information or
documents the omission of which make any information or statements therein misleading.

Save as disclosed therein, the Management declares that there are no mortgages, rights, and
charges against assets of the Company as of the date of this Prospectus.




                                              151
                               Dividend Policy

Dividends may be distributed by the Company from its annual net profit after deducting
general costs and other costs. However, prior to the payment of dividends, the Company is
required to deduct 10 % of the net profit after deducting general costs and other costs and
allocate such amount to statutory reserves. The Ordinary General Assembly may discontinue
this deduction when the statutory reserves amount to half of the Company’s paid-up capital.

Any declaration of dividends will be dependent upon the Company’s earnings, its financial
condition, the condition of the markets, the general economic climate, and other factors,
including analysis of investment opportunities and reinvestment needs, cash and capital
requirements, as well as other legal and regulatory considerations.

Although it is Ma'aden’s intention to pay annual dividends to its shareholders, it is unlikely that
the Company will be in a position to make annual dividend payments to its shareholders
during the development phases of the Phosphate and Aluminium Projects and does not make
any assurance that any dividend will actually be paid thereafter, nor any assurance as to the
amount, which will be paid in any given year.

The distribution of dividends is subject to certain limitations contained in the Bylaws (please
refer to the paragraphs under the heading "Distribution of Annual Profits" in the "Summary of
Bylaws" section).




                                               152
                                 Use of Proceeds

The total proceeds from the Offering are estimated to be SR9,175,000,000. This will be paid
to the Company and will be primarily used to assist in funding (the costs of) the Phosphate
and Aluminium Projects as well as the other projects noted below.

The Government, as represented by the Public Investment Fund, will not receive any part of
the proceeds from the Offering.

The Company shall bear all the costs and expenses associated with the Offering and
amounting to SR75,000,000. This will include the fees of each of the Financial Advisers,
reporting accountants and the legal advisers to the Company plus the Underwriters,
Receiving Bank and Lead Managers' expenses, marketing expenses, printing and distribution
expenses and other Offer related expenses. The following is an elaboration of the cost of the
projects and the financing thereof.

Overview

The total cost of the projects is estimated at SR 65.766 billion including the costs of design,
supply, construction, services and material contracts (including emergency costs) as well as
the cost of development, financing during construction, preliminary working capital,
emergency costs and loan service reserves. It is expected that the costs will be financed
through shareholder contributions and commercial loans divided as 37:63 split respectively.

Costs of Projects

Table 45: Projects Cost
                                    Total Cost (million Saudi
Project                                                          Percentage of Total Cost
                                            Riyals)
Phosphate                                              20,850                        31.7%
Aluminium                                              39.562                        60.2%
Chlor Alkali                                             1,500                          3%
Infrastructure                                            863                           3%
Magnesite                                                 236                         0.4%
Low Grade Bauxite and Kaolin                               12                         0.0%
Other                                                    2.743                        4.2%
Total                                                  65,766                         100%
Source: Ma’aden

The cumulative cost of the Aluminium Project does not take account of projected annual inflation and
estimated financing costs

Phosphate Project


The total cost of the Phosphate Project is estimated at US$5.56 billion (SR20.85 billion)
taking account of projected annual inflation and estimated financing costs and based on
projected capital costs of US$4.54 billion (SR17.03 billion). Over 70% of the total capital costs
have been contracted at a fixed rate under signed LSTK contracts for the engineering,
procurement and construction ("EPC") of a beneficiation plant, DAP, ammonia, sulphuric acid
and phosphoric acid processing plants and certain supporting infrastructure. The total cost
also includes the costs of preparing the mine and the facilities and infrastructure at Al
Jalamid, and the preparation of the Ras Az Zawr location and its infrastructure, storage
facilities for Phosphate concrete as well as the energy and water distillation plants. For further
details please review the “Company Business – Phosphate Project” section.




                                                   153
Aluminium Project


The total cost of the Aluminium Project is estimated at SR39.56 billion (US$10.55 billion)
taking into working capital and contingency costs but not projected annual inflation or
estimated financing costs during construction phase. This estimate is based on projected
capital costs of approximately SR35.04 billion (US$9.34billion). It is currently expected that
30% to 40 % of the total costs will be funded through equity contributions from Ma'aden and
Rio Tinto Alcan with the balance to be funded through limited recourse debt. It is possible that
Ma'aden and Rio Tinto Alcan may provide this contribution by way of a subordinated
shareholder loan. Ma’aden may also resort to other sources of financing. The costs comprise
the development, design, construction and operation of the following locations:

    •    The mining facilities at Az Zabirah, consisting of a bauxite mine and ore handling
         facilities; and

    •    The aluminium complex facilities at Ras Az Zawr, consisting of an alumina refinery,
         an aluminium smelter and a dedicated power plant.

For more information please review “Company Business – Aluminium Project” section.

Chlor Alkali Project

The total cost of the Chlor Alkali Project is approximately SR1,500 million (US$ 400 million)
(within a margin of +/- 30%) comprising the engineering, supply and construction contract for
the caustic soda and ethylene di-chloride plant. For more information please review the
“Company Business – Other Projects – Chlor Alkali Project” section.

Infrastructure

The cumulative cost of the infrastructure projects is estimated at SR862.5 million (US$230
million), consisting of the following:

    •    Primary services, roads, sanitation facilities, electric power, and national electric
         power connections;

    •    Power distribution and transmission;

    •    Worker accommodation at Ras Az Zawr – housing for bachelor workers; and

    •    Residential land at Al-Jubail – housing for family workers.

For more information please review the “Company Business – Infrastructure” section.

Magnesite

The total cost of the Magnesite project is expected to be SR236 million (US$63 million)
comprising the costs of the development of the Zarghat mine, which is located in the middle
zone of northern Saudi Arabia as well as the amounts needed for the construction of a
processing plant at Al Madinah Al Munawarah.

For more information please review the “Company Business – Other Projects – Magnesite”
section.

Bauxite and Kaolin




                                              154
The total cost of the kaolin and low grade bauxite project is estimated to be SR12 million
(US$3million) comprising the cost of developing the mine which is located in the middle zone
of Az Zabirah for the purpose of mining the appropriate bauxite for the production of cement
and kaolin.

For more information please review the “Company Business – Other Projects – Low Grade
Bauxite and Kaolin” section.

Other Projects

The total cost of other projects is estimated at SR3,104 million (US$824million) including the
cost of developing and constructing projects for Ma’aden Industries, the development of the
Central Arabian Gold Region and the expenses related to the Company’s principal office,
fulfilment guarantees, emergency costs, fees and expenses related to this Offering.

Project Financing


Table 46: Projects financing
                                           Million Saudi Riyals          Percentage of Total Cost
Capital Financing
                              Ma’aden                        15,518                              23.6%
           Other Joint Venture Partners                       8,887                              13.5%
Loan                                                         41,360                                63%
Total                                                        54,805                               100%
Source: Ma’aden
Notice: It is anticipated that the financing for the Aluminium Project shall be divided 65% to 35% debt to capital ratio.

Capital financing

In accordance with the Council of Minister Resolution dated No. 49 dated 25/02/1429H
(corresponding to 04/03/2008G) which increased the capital of Ma’aden to SR 9,250 million:

       •     The Saudi Government, represented by the Public Investment Fund has subscribed
             for 62,500,000 shares in the Company for SR1,250 million;
       •     The Company is offering 50% in the shares of the Company for public subscription,
             pursuant to the Offering and the expected proceeds are estimated at SR9,175 million.

Ma’aden will finance the remaining portions of the Phosphate, Aluminium and other Projects
list above from available cash accounts and cash flows expected during the construction
periods of those projects.

The joint venture partners in the joint projects shall participate in the financing based on their
expected shareholding in such projects as follows:


Table 47: Projects financing
                                                   Partner                Percentage ownership in          Share Capital (million Saudi
Project
                                                                                  Project                           Riyals)
Phosphate                                 SABIC                                                    30%                           1,877
Aluminium                                 Rio Tinto Alcan                                          49%                           5,535
Chlor Alkali                              Sahara                                                   50%                             225
Source: Ma’aden

Loans

Total loans shall amount to 63% of the total cost of the projects.




                                                            155
Phosphate Project

PhosCo has signed financing agreement in June of 2008 pursuant to which a number of
banks (subject to the satisfaction of certain conditions) agreed to loan US$2,760 million
(SR10,354 million)3 for the financing of the Phosphate Project through long-term banking
facilities, commercial facilities for the financing of working capital as well as two Islamic Ijara
facilities (“Commercial Banking Facilities”).

In addition to the Commercial Banking Facilities, PhosCo received a conditions of loan letter
dated 20 January 2008 from PIF under which the PIF has indicated its willingness (subject to
satisfaction of certain conditions) to provide debt funding to PhosCo for the Phosphate Project
in an amount of up to US$ 1,067 million.

PhosCo is currently in negotiations with the Export-Import Bank of Korea and the Korea
Export Insurance Corporation in relation to additional funding facilities in an amount of up to
US$ 600 million. Any funding facilities provided by the two Korean export credit agencies will
reduce the amount of the Commercial Banking Facilities by the amount so provided.

PhosCo is also in negotiations with the Saudi Industrial Development Fund ("SIDF") in
relation to additional funding in an amount of up to US$ 135 million. If, for any reason, the
SIDF does not participate in funding the Phosphate Project, the shareholders of PhosCo (in
their respective shareholder proportions) will fund the SIDF portion themselves or procure
substitute funding.

Other Projects

In accordance with the usual financing terms and conditions of the projects, it is expected that
the financing documentation will include, among other things, certain provisions relating to the
successful completion of the Offering, as well as other acknowledgments, undertakings,
conditions, representations (including a condition not to distribute any dividends to the
shareholders in the event certain financial covenants – to be agreed upon - are not met) and
other default situations that are usually included in limited recourse financing arrangements.

It is expected that the Islamic, local, regional and international banks in addition to
governmental and semi-governmental entities will participate in the financing of the projects,
with the share of Islamic banks in the financing activities being increased.

Sufficiency of Working Capital

The proposed members of the Board of Directors believe that the Company will have
sufficient working capital for the next 12 months following the date of this Prospectus upon the
Company’s receipt of the Offering’s proceeds.




3
    including guarantees for commercial loans and import guarantees institutions.




                                                          156
                                  Underwriting
Shares Committed for Subscription and Shares Committed for
Underwriting
The cumulative Offer Shares total 462,500,000 offered at an offering price of SR 20 per
shares. Ma’aden has secured commitment letters issued by GOSI and PPA confirming their
commitment to participate in the Offering. GOSI has committed to subscribe to 23,125,000
shares representing 5% of the Offer Shares and PPA has committed to subscribe to
23,125,000 representing 5% of the Offer Shares, resulting in their combined committed to
subscribe to 46,250,000 shares , representing 10% of the Offer Shares. As such, the total
number of shares committed to be underwritten is 416,250,000, representing 90% of the Offer
Shares.

Underwriters
The Company and the Underwriters have entered into an underwriting agreement to
underwrite 416,250,000 shares, representing 90% of the Offer Shares. The agreed principal
terms of the Underwriting Agreement are set out below.


Sale and Underwriting of the Offer Shares


Under the terms of the Underwriting Agreement:

1. The Company undertakes to each Underwriter that, on the first Business Day after the
   Authority approves the allocation of the Offer Shares following the end of the Subscription
   Period (the “Allocation Date”), it will:

    •   Issue and allot the Offer Shares to all Individual Subscribers, Institutional Investors,
        the General Organization for Social Insurance and the Public Pension Agency, whose
        application for Offer Shares has been accepted by a Receiving Bank; and/or

    •   Issue and allot to the Underwriters any Offer Shares that are not purchased pursuant
        to the Offering by Individual Subscribers and Institutional Investors.

2. Each Underwriter also undertakes to the Company that it will purchase the Offer Shares
   that are not subscribed for by successful Applicants in the proportions stated below:


                    Underwriter                                     Number of Offer Shares
 Samba Capital                                                                                     1,350
 Saudi Hollandi Capital                                                                             300
 ANB Invest                                                                                         800
 Aljazira Capital                                                                                   600
 Riyad Capital                                                                                     1,225
 NCB Capital                                                                                        300
 Calyon Saudi Fransi                                                                                500
 AlBilad Investment Co.                                                                             400
 Alistithmar Capital                                                                                500




                                             157
 Al Rajhi Financial Services Co.                                                           1,350
 HSBC Saudi Arabia Limited                                                                 1,000


The Company undertakes to the Underwriters that it will abide by all provisions of the
Underwriting Agreement.


Fees and expenses
The Company has agreed to pay the Underwriters a fee based on the number of Offer Shares
each Underwriter has agreed to underwrite.




                                          158
                        Description of Shares

Summary of Share Terms

Share Capital

The share capital of the Company is SR9,250,000,000 divided into 925,000,000 nominal
indivisable shares, each with a nominal value of SR10.

Once it is ascertained to be economically feasible and after obtaining the approval of the
competent authorities, the General Assembly may, in an Extraordinary Meeting, adopt a
resolution to increase the Company’s capital once or several times, provided that the original
capital shall have been paid in full, with due consideration to the requirements of the
Companies Regulations. The said resolution shall specify the mode of increasing the capital
and the Shareholders shall have pre-emptive rights to subscribe for the new shares where
these shares are issued for consideration. The Shareholders must notify their desire to
exercise such rights within 15 days of their receipt of the aforementioned notice. The said
shares shall be allotted to the original Shareholders who have expressed their desire to
subscribe thereto, in proportion to the original shares owned by them, provided that the
number of shares allotted to them shall not exceed the number of new shares they have
applied for. The remaining new shares shall be allotted to the original Shareholders who have
asked for more than their proportionate share, in proportion to the original shares they own,
provided that that their total allotment does not exceed the number of new shares they have
asked for. Any remaining new shares shall be offered for public subscription.

The Company may, based on certain justifiable causes, reduce its capital if it proves to be in
excess of the Company’s needs or if the Company sustains losses. This decision must be
made through a resolution adopted by the General Assembly in an Extraordinary Meeting,
and requires approval of the Minister of Commerce and Industry and CMA. Such resolution
shall be issued only after reading the auditor’s report on the reasons calling for such
reduction, the obligations to be fulfilled by the Company and the effect of the reduction on
such obligations, with due consideration to the provisions of the Companies Regulations. The
resolution shall provide for the manner in which the reduction shall be made. If the reduction
of the capital is due to it being in excess of the Company’s needs, then the Company’s
creditors must be invited to express their objection thereto within sixty (60) days from the date
of publication of the reduction resolution in a daily newspaper published in the city where the
Company’s head office is located. Should any creditor object and present to the Company
evidentiary documents of such debt within the time limit set above, then the Company shall
pay such debt, if already due, or present an adequate guarantee of payment if the debt is due
on a later date.

Shares

The shares shall be nominal shares and may not be issued at less than their nominal value.
However, the shares may be issued at a value higher than their nominal value, in which case,
the difference in value shall be added to the legal reserve, even if the reserve has reached its
maximum limit. A share shall be indivisible. If a share is held by several persons, they shall
designate one person to act on their behalf in exercising the rights connected with the share.
In such a case, they shall be jointly responsible for the obligations resulting from the share
ownership.




                                              159
Transfer of Shares

Transfers of shares shall be subject to the rules and regulations governing listed companies
on the Saudi Exchange (Tadawul).

Voting Rights

Each Shareholder shall have the right to attend the General Assemblies, and each
Shareholder may authorise another Shareholder, other than the members of the Board of
Directors, to attend the General Assembly on their behalf. Votes at the meetings of Ordinary
and Extraordinary General Assemblies shall be computed on the basis of one vote for each
share represented at the meeting.

Resolutions of the Ordinary General Assembly shall be adopted by an absolute majority of the
shares represented thereat. Resolutions of the Extraordinary General Assembly shall be
adopted by a majority vote of two thirds of the shares represented at the meeting. However, if
the resolution to be adopted is related to increasing or reducing the capital, extending the
Company’s period, dissolving the Company prior to the expiry of the period specified under
the Bylaws or merging the Company with another company or establishment, then such
resolution shall be valid only if adopted by a majority of three-quarters of the shares
represented at the meeting.

Each Shareholder shall have the right to discuss the items listed in the General Assembly’s
agenda and to direct questions to the members of the Board of Directors and the Auditor in
this respect. The Board of Directors or the Auditor shall answer the Shareholders’ questions
to the extent that this does not jeopardise the interest of the Company. Should a Shareholder
consider the reply unsatisfactory, he can resort to the General Assembly whose resolution is
to be considered as final.

Shareholders’ Rights

Each share shall give its holder equal rights in the Company’s assets and dividends as well
as the right to attend and vote at meetings of the General Assembly.

Ordinary General Assembly

A General Assembly duly convened shall be deemed to represent all the Shareholders, and
shall be held in the city where the Company’s head office is located.

Except for matters reserved for the Extraordinary General Assembly, the Ordinary General
Assembly shall be in charge of all matters concerning the Company. The Ordinary General
Assembly shall be convened at least once a year, within six months following the end of the
Company's fiscal year. Additional Ordinary General Assembly meetings may be convened
whenever needed.

The Extraordinary General Assembly shall have the power to amend the Bylaws.
Furthermore, the Extraordinary General Assembly may pass resolutions on matters falling
within the competence of the Ordinary General Assembly under the same conditions
applicable to the latter.

A notice of the date and agenda of the General Assembly shall be published in the Official
Gazette and in a daily newspaper circulated in the city where the Company's head office is
located at least 25 days prior to the time set for such meeting. The Board of Directors shall
convene a meeting of the Ordinary General Assembly if requested to do so by the Auditors or
by a number of Shareholders representing at least five % of the Company’s capital.




                                             160
The meeting of the Ordinary General Assembly shall not be quorate unless attended by
Shareholders representing at least 50 % of the Company’s capital. If such quorum cannot be
attained at the first meeting, a second meeting shall be convened within the following 30
days. Such notice shall be published in the same manner described above. The second
meeting shall be deemed valid irrespective of the number of shares represented.

To have a quorum, the meeting of the Extraordinary General Assembly should be attended by
Shareholders representing at least 50 % of the Company’s capital. If such requirement is not
met in the first meeting, a second meeting shall be convened within the following 30 days.
The second meeting shall be considered as having the quorum if attended by a number of
Shareholders representing at least one-quarter of the Company’s capital.

The General Assembly shall be presided over by the Chairman of the Board of Directors or, in
his absence, the person designated by him. The Chairman shall appoint a secretary for the
meeting and a canvasser. Minutes shall be prepared for the meeting showing the names of
Shareholders present in person or represented by proxy, the number of the shares held by
each, the number of votes attached to such shares, the resolutions adopted at the meeting,
the number of votes assenting or dissenting to such resolutions and a comprehensive
summary of the discussions that took place at the meeting. Such minutes shall be regularly
recorded after each meeting in a special register to be signed by the Chairman of the
Assembly, the secretary and the canvasser.


Duration of the Company

The duration of the Company shall be 50 years commencing on the date of issuance of the
Royal Decree authorising the incorporation of the Company. The Company’s period of
duration may always be extended for similar or shorter periods.


Dissolution and Winding-up of the Company

Upon the expiry of the Company’s period of duration, or if it is dissolved prior to the time set
for the expiry thereof, the Extraordinary General Assembly shall, based on a proposal by the
Board of Directors, decide the method of liquidation, appoint one or more liquidators and
specify their powers and fees. The powers of the Board of Directors shall cease upon the
Company’s expiry. However, the Board of Directors shall remain responsible for the
management of the Company until the liquidators are specified. The Company’s
administrative departments shall maintain their powers to the extent that they do not interfere
with the powers of the liquidators.




                                              161
                          Summary of Bylaws

Objectives of the Company

The purpose of the Company is to practice various sorts of mining activities in relation to all
the stages of the mining industry including the development and the improvement of the
mineral industry, its products and derivatives and all the related industries. Oil and natural gas
are not included in the Company’s objects except to the extent related to the improvement of
the mineral products and preparations.


Duration of the Company

The duration of the Company shall be 50 years commencing on the date of issuance of the
Royal Decree authorising the incorporation of the Company. The Company’s period may
always be extended for similar or shorter periods.
Share Capital
The share capital of the Company is SR9,250,000,000 divided into 925,000,000 shares.
Bonds

The Company may issue negotiable and indivisible bonds and Sukuk, and offer them to the
public or otherwise, within Saudi Arabia or outside Saudi Arabia, in accordance with
applicable regulations and instructions.

Tradability of Shares

The Company's shares are tradable according to the rules and regulations of the Authority.

Increase of Share Capital

Once it is ascertained to be economically feasible and after obtaining the approval of the
competent authorities, the General Assembly may, in an Extraordinary Meeting, adopt a
resolution to increase the Company's capital once or several times by issuing new Shares
provided that the original capital shall have been paid in full, with due consideration to the
requirements of the Regulations for Companies. The said resolution shall specify the method
of increasing the capital, and the Shareholders shall have pre-emptive rights to subscribe for
the new Shares where these shares are issued for cash consideration. Each shareholder
must express his intent to use his pre-emptive right within 15 days of publication of the
decision to increase the share capital in a daily newspaper. The said Shares shall be allotted
to the original shareholders in proportion to the original Shares owned by them, provided that
the number of Shares allotted to them shall not exceed the number of new Shares they have
applied for. The remaining new Shares shall be allotted to the original Shareholders who
have asked for more than their proportionate share, in proportion to the original Shares they
own, provided that that their total allotment does not exceed the number of new Shares they
have asked for. Any remaining new Shares shall be offered for public subscription.

Decrease of Share Capital

The Company may, based on certain justifiable causes, reduce its capital if it proves to be in
excess of the Company's needs or if the Company sustains losses. This decision must be
made through a resolution adopted by the General Assembly in an Extraordinary Meeting,
and requires the approval of the Minister of Commerce and Industry. Such resolution shall be




                                               162
issued only after reading the auditor's report on the reasons calling for such reduction, the
liabilities of the Company and the effect of the reduction on such liabilities, with due
consideration to the provision of the Regulations for Companies. The resolution shall provide
for the manner in which the reduction shall be made. If the reduction of the capital is due to it
being in excess of the Company's needs, then the Company’s creditors must be invited to
express their objection thereto within 60 days from the date of publication of the reduction
resolution in a daily newspaper published in the city where the Company's head office is
located. Should any creditor object and present to the Company evidentiary documents of
such debt within the time limit set above, then the Company shall pay such debt, if already
due, or present an adequate guarantee of payment if the debt is due on a later date.


Constitution of the Board of Directors

The Company shall be managed by a Board of Directors composed of nine members to be
appointed by the Ordinary General Assembly for a term of three years including the President
of the Company and four members representing the Government, represented by Public
Investment Fund, so long as the Government holds at least 50 % of the shares in the
Company. As an exception to the foregoing, the Board of Directors appointed by the Royal
Decree No 32/A dated 13/2/1418H will remain until the first General Assembly meeting.


Qualification Shares

Each member of the Board of Directors shall be a holder of a number of the Company’s
shares having a nominal value of not less than SR10,000. Such shares shall be deposited in
a bank designated by the Minister of Commerce and Industry within 30 days from the date of
the appointment of the relevant director.


Vacancies

Membership of the Board shall be terminated upon the expiration of the appointment period,
or resignation of the Director, or death of the Director. If the post of a Board member
becomes vacant, then the Board of Directors may temporarily appoint a member to such
vacant office, provided that such appointment is presented for approval at the first Ordinary
General Assembly following such appointment. The new member of the Board shall complete
his predecessor's term of office. In the case that the number of the members of the Board of
Directors falls below the quorum required for the proper convening of Board meetings, then
the General Assembly shall be called for an Ordinary Meeting held as soon as possible in
order to appoint the necessary number of Board members.


Authority of the Board of Directors

The Board of Directors shall be vested with full powers to manage the business of the
Company and supervise its affairs.

The Board of Directors responsibilities also include approving internal, financial,
administrative and technical regulations of the Company, and policies and procedures related
to the staff, forming the committees and granting them appropriate powers, approving the
establishment of subsidiaries, branches, offices and agencies, entering into loans and credit
facilities, and approving the Company's business plan, operating plan and annual budget.


Chairman of the Board

The Board of Directors shall appoint a Chairman from among its members. The Chairman
shall have the powers to convene the Board to meet and preside over its meetings.




                                              163
The Chairman shall be authorised to represent the Company in its relationship with others
and before judicial bodies, Government departments, notaries public, courts of law,
commissions for settlements of disputes, the power to sell, purchase or vacate real property.
The Chairman shall also have the power to sign articles of association and amendments
thereto relating to the companies which the Company founds and may delegate any Board
member, or other, to carry out certain activity or activities.


President of the Company

The Board of Directors shall appoint a President for the Company. The President of the
Company shall execute the decisions of the Board of Directors and in particular shall:

    a)   Prepare for the meetings of the Board of Directors;

    b)   Prepare the Company’s general budget, profits and losses account and annual
         budgets;

    c)   Supervise the Company’s management and personnel;

    d)   Approve expenditures in accordance with the approved annual budgets; and

    e)   Delegate to other executives management responsibilities as appropriate.


Board Meetings

The Board of Directors shall meet upon invitation of the Chairman at least twice a year. The
Chairman of the Board of Directors shall call for a meeting if so requested by any two Board
members.


Quorum and Representation

A Board of Directors meeting shall be valid only if a majority of the Board members including
the Chairman or his representative are present.


Minutes of Meetings

Decisions of the Board of Directors shall be issued with the approval of the majority of the
votes present at the meeting and, in the event of a tie, the Chairman’s vote shall carry.

Deliberations and resolutions shall be recorded in minutes to be signed by the Chairman and
the Secretary. Such minutes shall be recorded in a special register to be signed by the Board
Chairman and the Secretary.


Conflicts of Interest

Members of the Board cannot have any personal interest, whether direct or indirect, in any
proposal, transaction or contract made for the account of the Company.


General Meeting of Shareholders

A General Assembly duly convened shall be deemed representing all the Shareholders, and
shall be held in the city where the Company's head office is located.




                                             164
Except for matters reserved for the Extraordinary General Assembly, the Ordinary General
Assembly shall be in charge of all matters concerning the Company. The Ordinary General
Assembly shall be convened at least once a year, within six months following the end of the
Company's fiscal year. Additional Ordinary General Assembly meetings may be convened
whenever needed.

The Extraordinary General Assembly shall have the power to amend the Company's Bylaws.
Furthermore, the Extraordinary General Assembly may pass resolutions on matters falling
within the competence of the Ordinary General Assembly under the same conditions
applicable to the latter.

General Assemblies shall be held upon the invitation of the Board. The Board must convene
a meeting of the Ordinary General Assembly if requested to do so by the Auditors or by a
number of Shareholders representing at least 5% of the Company's capital.

The notice of the date and agenda of the General Assembly shall be published in the Official
Gazette and in a daily newspaper circulated in the city where the Company's head office is
located at least 25 days prior to the time set for such meeting. The meeting of the Ordinary
General Assembly shall be valid only if attended by Shareholders representing at least 50 %
of the Company's capital. If such quorum is not met at the first meeting, a second meeting
shall be convened within the following 30 days. The second meeting shall be considered
valid regardless of the number of shares represented in the meeting

The meeting of the Extraordinary General Assembly shall be valid only if attended by
Shareholders representing at least 50 % of the Company's capital. If such quorum is not met
at the first meeting, a second meeting shall be convened within the following 30 days. The
second meeting shall be considered valid only if attended by a number of Shareholders
representing at least one quarter of the Company’s capital.

The General Assembly shall be presided over by the Chairman of the Board or, in his
absence, the representative designated by him. The Chairman shall appoint a secretary for
the meeting and a canvasser. Minutes shall be prepared for the meeting showing the names
of Shareholders present in person or represented by proxy, the number of the Shares held by
each, the number of votes attached to such Shares, the resolutions adopted at the meeting,
the number of votes assenting or dissenting to such resolutions and a comprehensive
summary of the discussions that took place at the meeting. Such minutes shall be regularly
recorded after each meeting in a special register to be signed by the Chairman of the
Assembly, the Secretary and the canvasser.


Voting Rights
Each Shareholder shall have the right to attend the General Assemblies, and each
Shareholder may authorise another Shareholder, other than the members of the Board, to
attend the General Assembly on their behalf.

Votes at the meetings of Ordinary and Extraordinary General Assemblies shall be computed
on the basis of one vote for each share represented at the meeting.

Resolutions of the Ordinary General Assembly shall be adopted by an absolute majority of the
Shares represented thereat.

Resolutions of the Extraordinary General Assembly shall be adopted by a majority vote of two
thirds of the Shares represented at the meeting. However, if the resolution to be adopted is
related to increasing or reducing the capital, extending the Company's period, dissolving the
Company prior to the expiry of the period specified under the Company's Bylaws or merging
the Company with another company or establishment, then such resolution shall be valid only
if adopted by a majority of three quarters of the Shares represented at the meeting.




                                            165
Each Shareholder shall have the right to discuss the items listed in the General Assembly's
agenda and to direct questions to the members of the Board of Directors or the auditor in this
respect. The Board or the Auditor shall answer the Shareholders' questions to the extent that
does not jeopardise the interest of the Company. Should a Shareholder consider the reply
unsatisfactory, he can resort to the General Assembly whose resolution is to be considered
as final.


Appointment of Auditor

The Company shall have one auditor or more to be selected from among the certified public
auditors licensed to work in Saudi Arabia. The auditor shall be appointed and its remuneration
fixed by the Board of Directors. The Board of Directors may reappoint the same Auditor.


Access to Records

The auditor shall have access at all times to the Company’s books, records and any other
documents, and may request information and clarification as it deems necessary. It may
further check the Company’s assets and liabilities.


Auditor’s Report

The auditor shall review the annual budget and final accounts, including the balance sheet
and profit and loss statement, and prepare a report about the business, activities and financial
status of the Company and its opinion as to whether the Company's accounts conform to the
facts and whether it has discovered any violations of the articles of association.


Financial Year

The Company’s fiscal year shall commence as on 1 January and expire at the end of
December of each year.


Annual Accounts

The Board of Directors shall prepare 40 days prior to the end of each fiscal year an inventory
of the Company’s assets and liabilities on such date, the Company’s balance sheet and profit
and loss account, a report on the Company’s activities and its financial position for the
preceding year and its proposals as to the distribution of the net profits. The Board of
Directors shall put such documents at the auditor’s disposal at least 55 days prior to the time
set for convening the General Assembly. The Chairman of the Board of Directors shall cause
the Company’s balance sheet, profit and loss account, a comprehensive summary of the
Board of Directors’ report and the full text of the auditor’s report to be published in a
newspaper circulated in the city where the Company’s head office is located, and shall send
copies of such documents to the Companies Department at the Ministry of Commerce and
Industry and to the Capital Market Authority at least 25 days prior to the date set for the
General Assembly.


Distribution of Annual Profits
The annual net profit of the Company shall be distributed after deducting general costs and
other costs, as follows:

    a) 10 % of the net profit shall be deducted and allocate such amount to statutory
       reserves and the Ordinary General Meeting Assembly shall discontinue said




                                              166
         deductions when the statutory reserve amounts to half of the Company’s share
         capital;

    b) There shall be paid to the holders of preferred shares the specified percentage
       pertaining to such shares;

    c) The Ordinary General Assembly may, if proposed by the Board proposal, set aside a
       percentage from the net profit to form a reserve for certain purposes, as may be
       determined by the Ordinary General Assembly;

    d) Using the remaining amount, a first dividend payment of 5% shall be allocated to the
       shareholders out of the paid-in capital;

    e) The Board compensation shall be allocated from the rest; and

    f)   The rest shall be distributed to the shareholders as an additional share of the profits.

The Company may distribute semi-annual and quarterly dividends after complying with the
applicable requirements established by the competent authorities.

The Capital Market Authority shall be notified of any resolution to distribute dividends or any
recommendation to do so. Dividends scheduled to be distributed among shareholders shall
be paid at the place and time determined by the Board of Directors.

If the Company does not distribute dividends at any financial year, the dividends of the
following year shall be distributed after the preference shares shareholders are paid their
dividends in accordance with the Company's Bylaws.


Company Losses

If the Company’s losses total three-quarters of its capital, then the members of the Board
shall call the Extraordinary General Assembly for a meeting to consider whether the Company
shall continue to exist or be dissolved prior to the expiry of the period specified in the
Company’s Bylaws. In all cases the Assembly’s resolution shall be published in the Official
Gazette.


Directors’ Indemnity

The Company shall compensate, within reasonable limits, the members of the Board of
Directors and the managers of the Company for all the expenses and amounts incurred or
paid by them in relation to any judicial cases or procedures filed against them for their
behaviour or services as Board of Directors or managers of the Company. However this
compensation shall not extend to matters in which the member of the Board of Directors or
the manager of the Company shall be judged responsible for the consequences because of
his negligence or misconduct while performing his duties.




                                               167
         Subscription Terms and Conditions

All Applicants must carefully read the Subscription Terms and Conditions prior to completing
the Subscription Application Form, since signing the Subscription Application Form
constitutes acceptance and agreement to the Subscription Terms and Conditions.

This initial public offering (the "Offering”) of 462,500,000 Shares ("Offer Shares”) with a
nominal value of SR10 per Share, represents 50 % of the Company's issued capital. The
price per share shall be SR20 (SR 10 representing the nominal value of the shares and SR
10 represents the premium paid).

Subscriptions under the Offering will be restricted to the following tranches:

Tranche (A) the General Organization for Social Insurance (“GOSI”) and the Public Pension
Agency (“PPA”). At least 46,250,000 Offer Shares representing 10% the Offer Shares will be
allocated to GOSI and the PPA, each subscripting to 5%.

Tranche (B) Institutional Investors ("Institutional Tranche"). This Tranche comprises a number
of institutional investors (collectively referred to as “Institutional Investors”). The Institutional
Investors shall be selected from among the institutions approached by the Sole Bookrunner
after consultation with the Company in accordance with standards previously specified by the
CMA. 124,875,000 Offer Shares representing 27% of the Offer Shares will be allocated to
Institutional Investors. This allocation may be decreased to 23,125,000 Shares (representing
5% of the Offer Shares), in the event that the number of Offer Shares allocated to Individual
Subscribers is increased as described below.

Tranche (C) Individual Subscribers ("Retail Tranche"): includes Saudi individuals and Saudi
women divorced or widowed having minor children from a non-Saudi husband who shall have
the right to subscribe in their names for her own benefit (referred to individually as “Individual
Subscriber” and collectively as "Individual Subscribers”). 291,375,000 Shares will be
allocated to Individual Subscribers representing 63% of the Offer Shares. This allocation may
be increased to 393,125,000 Shares (representing 85% of the Offer Shares)

The Offer Shares comprised in the Retail Tranche shall be allocated in two stages. During the
first stage at least 25 Shares shall be allocated to each Individual Subscriber. In the event that
there is additional demand from Individual Subscribers, during the second stage each
Subscriber for 2000 shares or less shall receive full allocation of his subscription provided that
the total allocated shares shall not exceed the total of the shares allocated to the Retail
Tranche (291,375,000 shares). The remaining Offer Shares (if any) shall be allocated on a
basis pro-rata to the number of Offer Shares applied for by the Subscriber. In the event that
there is additional demand from Individual Subscribers, the number of Offer Shares allocated
to Individual Subscribers may be increased by an amount of up to 101,750,000 shares
resulting in a total allocation to the Retail Tranche of 393,125,000 shares representing 85% of
the total Offer Shares.

Subscription application forms shall be available for Subscribers during the subscription
period at the branches of the Receiving Banks. Subscription can be done through the
internet, phone banking service, or automated teller machines at the Receiving Banks that
provide one or all of such services for the subscribers who previously subscribed for any
subscription recently offered provided that:

    a) The subscriber has a bank account with the Receiving Bank which provides such
       services; and




                                                168
   b) No changes have taken place to the subscriber’s information or data since his/her last
      subscription to a recently offered subscription.

Subscription

The signature of the Subscriber on the Subscription Application and its submission to the
Receiving Banks shall represent a legally binding agreement between the Company and the
Subscriber.

The Subscribers who have submitted their subscription applications may obtain the
Prospectus, the mini-Prospectus and the Subscription Application Forms from the following
Receiving Banks:


Samba Financial Group
Principle Office, P.O. Box 833, Riyadh 11421, Kingdom
of Saudi Arabia
Telephone: +966 1 477 0477; Fax: +966 1 479 9402

Riyad Bank
Principle Office, P.O. Box 22622, Riyadh 11416,
Kingdom of Saudi Arabia
Telephone: +966 1 401 3030; Fax: +966 1 404 2618

Arab National Bank
Principle Office, P.O. Box 9802, Riyadh 11423,
Kingdom of Saudi Arabia
Telephone: +966 1 402 9000; Fax: +966 1 402 7747

Banque Saudi Fransi
Principle Office, P.O. Box 56006, Riyadh 11554,
Kingdom of Saudi Arabia
Telephone : +966 1 404 2222 ; Fax: +966 1 404 2311

The Saudi British Bank (SABB)
Principle Office, P.O. Box 9084, Riyadh 11413, Kingdom
of Saudi Arabia
Telephone: +966 1 405 0677; Fax: +966 1 405 0660


The Saudi Investment Bank
Principle Office, P.O. Box 3533, Riyadh 11481, Kingdom
of Saudi Arabia
Telephone: +966 1 478 6000; Fax: 966 1 477 6781



The National Commercial Bank
Principle Office, P.O. Box 3555, Jeddah 21481, Kingdom
of Saudi Arabia
Telephone: +966 2 649 3333; Fax: +966 2 643 7426

Bank Al Bilad
Principle Office, P.O. Box 140, Riyadh 11411, Kingdom
of Saudi Arabia
Telephone: +966 1 479 8888; Fax: +966 1 479 8898




                                           169
Bank Al Jazira
Principle Office, P.O. Box 6277, Jeddah 21442, Kingdom
of Saudi Arabia
Telephone: +966 2 651 8070; Fax: +966 2 653 2478

Saudi Hollandi Bank
Principle Office, P.O. Box 1467, Riyadh 11431, Kingdom
of Saudi Arabia
Telephone: +966 1 401 0288; Fax: +966 1 403 1104

Al Rajhi Bank
Principle Office, P.O. Box 28, Riyadh 11411, Kingdom of
Saudi Arabia
Telephone: +966 1 462 9922; Fax: +966 1 462 4311


The Subscription period shall commence on 02/07/1429H (corresponding to 05/07/2008G,
and shall last for ten (10) days including the last closing day on 11/07/1429H (corresponding
to 14/07/2008G). During this period the Subscription Applications of the Subscribers for their
allocated shares shall be received at the aforementioned Receiving Banks’ branches
throughout the Kingdom. The Company has the right to consider the Application of the
Applicant, who does not abide by all the instructions and requirements stated in the
Subscription Application Forms or if any of the following conditions is not fulfilled, as partially
or completely void. Hence, the applicant does not have the right to demand any
compensation for any damage that has resulted from this cancellation. The conditions are
listed below:

    a) The Form must be filled in completely and accurately along with an acknowledgement
       made by each subscriber declaring that he/she agrees to subscribe for the Offer
       Shares and purchase the number of Shares in the Subscription Application Form
       submitted by him/her.

    b) The total value of the Shares must be paid for; the subscriber submits to subscribe for
       the Shares in full. This value shall represent the number of Shares, he or she
       submitted to purchase multiplied by the price of SR20 per Share. This sum shall be
       paid to any of the Receiving Banks' branches through the subscriber’s own account,
       and if the subscriber does not have an account at the Receiving Bank, he or she must
       open an account to be able to register his or her subscription, in accordance with the
       instructions issued by the Saudi Arabian Monetary Agency.

    c) The Application must be stamped by the Receiving Bank.

    d) The minimum subscription is 25 Shares. Any increase in the number of shares must
       be in multiples of 25. The maximum subscription amount for Subscribers is 5,000,000
       Shares.

    e) The original and a copy of the Identification Card or the family identification card must
       be attached to the Subscription Application Form. The official clerk in the Bank will
       return these documents to the Subscriber after comparing the copies with the original.

In the event that the Application is submitted by the Subscriber on behalf of the children and
parents only, the following must be adhered to:

    a) The proxy must write his or her name and must sign the Subscription Application
       Form.




                                               170
    b) The proxy must attach the original and a copy of an effective power of attorney or the
       constitutive document. The official clerk in the bank will return the original documents
       to the Subscriber after comparing and verifying the copies.

    c) The power of attorney must be issued by the (Public Notary) for those who are
       residents in Saudi Arabia, or through the Saudi Embassies and Consulates located in
       the place of residence of those who live outside the Kingdom of Saudi Arabia.

One Subscription Application Form should be completed for each head of family applying for
himself and members appearing on his family identification card if dependent Applicants apply
for the same number of Offer Shares as the primary Applicant. In this case:

    a) All Offer Shares allocated to the primary Applicant and dependent Applicants will be
       registered in the primary Applicant’s name;

    b) The primary Applicant will receive any refund in respect of amounts not allocated and
       paid for by himself and dependent Applicants; and

    c) The primary Applicant will receive all dividends distributed in respect of the Offer
       Shares allocated to himself and dependent Applicants.

Separate Subscription Application Forms must be used if:

    a) The Shares that will be allocated are to be registered in a name other than the name
       of the primary Applicant; or

    b) Dependent Applicants wish to apply for a different quantity of Offer Shares than the
       primary Applicant.

A wife must complete a separate Subscription Application Form as a primary subscriber if she
wishes to subscribe in her name and to add allocated Shares to her account. If the husband
makes a subscription on her behalf, her Subscription Application shall be recognised, the
allocated shares shall be added to her account, and the Subscription Application made by her
husband shall be cancelled.

Each Applicant shall be considered the owner of the number of Offer Shares that were
approved pursuant to his Application upon:

    a) Delivery by the Applicant of the Subscription Application Form to any of the Receiving
       Banks;

    b) Payment in full by the Applicant to the Receiving Bank of the total value of Offer
       Shares subscribed for; and

    c) Delivery to the Applicant by the Receiving Bank of the allotment notice specifying the
       number of Offer Shares allotted to him.

Allocation and Refunds Policy
The Offer Shares in the Retail Tranche shall be allocated as follows:

-   the minimum allocation amount is 25 Shares to each Subscriber;

-   the remaining Shares shall be allocated to each Subscriber within the limits of 2,000
    Shares or less;




                                             171
-   the remaining Offer Shares (if any) shall be allocated on a pro-rata basis based on the
    number of shares applied for by each Subscriber to the cumulative number of requested
    shares for subscription.

In the event that demand is increased by Individual Subscribers, the number of Offer Shares
allocated to the Individual Subscribers shall be increased by an amount of 101,750,000
shares so that the total allocated to the Retail Tranche would increase to 393,125,000
representing 85% of the total Offer Shares.

Excess of subscription monies, if any, will be refunded to all Applicants (Subscribers and
Institutional Investors) without any charge or withholding by the relevant bank. Notification of
the final allotment and refund of subscription monies, if any, will be made no later than on
Sunday 17/07/1429H (corresponding to 20/07/2008G).

The Receiving Banks shall send notification letters to their Applicants informing them of the
final allocated number of Offer Shares together with the amounts, if any, to be refunded
without any fee or deduction. Applicants should contact the branch of the Receiving Banks
where they submitted their Subscription Application Form for any further information.

Acknowledgements

By completing and delivering the Subscription Application Form, the Applicant:

        •   Accepts to subscribe in the Company for the number of Shares specified in the
            Subscription Application Form;

        •   Warrants that he has carefully read the Prospectus and understood all its
            contents;

        •   Accepts the Bylaws of the Company and all the terms mentioned in the
            Prospectus, and accordingly, applied to subscribe for the mentioned Shares;

        •   Reserves his/her/its right to sue the Company for damages caused by material,
            incorrect or incomplete information contained in the Prospectus, or by ignoring
            substantial information that should have been part of the Prospectus which could
            affect the Applicant’s decision to purchase the Shares;

        •   Declares that neither he nor any of his family members included in the
            Subscription Application Form has previously subscribed for the Shares, and the
            Company has the right to reject all applications;

        •   Accepts the number of Shares allocated to him and all other subscription
            instructions and terms mentioned in the Prospectus, and the Subscription
            Application Form; and

        •   Warrants not to cancel or amend the Subscription Application Form after
            submitting it to the Receiving Banks.



Miscellaneous
The Subscription Application Form and all related terms, conditions and covenants hereof
shall be binding upon and inure to the benefit of the parties to the subscription and their
respective successors, permitted assigns, executors, administrators and heirs; provided that,
except as specifically contemplated herein, neither the Subscription Application Form nor any




                                              172
of the rights, interests or obligations arising pursuant thereto shall be assigned or delegated
by any of the parties to the subscription without the prior written consent of the other party.


The Prospectus has been released in both Arabic and English Languages. In the event of a
discrepancy between the English and Arabic text, the Arabic text of the Prospectus will
prevail.

The Saudi Arabian Stock Exchange (Tadawul)
Tadawul was founded in 2001 as the successor to the Electronic Securities Information
System. In 1990, full electronic trading in Saudi Arabia equities was introduced. The market
capitalisation was SR 843billion at the end of 07/06/1429H (corresponding to 11/06/2008G).
As of that date, 119 companies were listed on the Exchange.

Trading on the Exchange occurs through a fully integrated trading system covering the entire
process from trade order to settlement. Trading occurs each business day between 11:00 am
to 3:30 pm during which time orders can be entered. Other than during this time, orders can
be entered, amended or deleted from 10:00 am to 11:00 am and from 3:30pm to 4:30pm.
From 10:00 am new entries and inquiries can be made. For the opening phase (starting at
11:00 am), the system starts opening procedures, it establishes the opening prices and
determines orders to be executed according to the matching rules.

Transactions take place through the automatic matching of orders. Each valid order is
accepted and generated according to the price level. In general, market orders (orders placed
at best price) are executed first, followed by limit orders (orders placed at a price limit),
provided that if several orders are generated at the same price, they are executed according
to the time of entry.

The Exchange distributes a comprehensive range of information through various channels,
including in particular the Exchange's website and the Exchange's Information Link. The
Exchange's Information Link supplies trading data in real time to information providers such
as Reuters.

Exchange transactions are settled on a T+0 basis, meaning that ownership transfer takes
place immediately after the trade is executed.

Issuers are required to report all material announcements via the Exchange for onward
dissemination to the public.

Surveillance and monitoring is the responsibility of the Exchange as the operator of the
market. The aim of supervision is to ensure fair trading and an orderly market.


Trading on the Exchange

It is expected that dealing in the Shares will commence on the Exchange upon finalisation of
the allocation process. The Exchange will announce the start date of trading once this is
determined. Dates and times included in this Prospectus are indicative and may be changed
or extended subject to the approval of the Authority.

Furthermore, Shares can only be traded after allocated Shares have been credited to
Applicants’ accounts at the Exchange, the Company has been registered in the Official List
and its Shares listed on the Saudi Stock Exchange. Pre-trading is strictly prohibited and
Applicants entering into any pre-trading activities will be acting at their own risk. The
Company shall have no legal responsibility in such an event.




                                             173
                           Legal Information

Establishment of the Company

Saudi Arabian Mining Company (Ma'aden) (hereinafter referred to as the “Company”) was
formed as a joint stock company pursuant to Royal Decree No. M/17 dated 14/11/1417H
(corresponding to 23/3/1997G) and Council of Ministers Resolution No. 179 dated
8/11/1417H (corresponding to 17/03/1997G), with Commercial Registration Number
1010164391 dated 10/11/1421H (corresponding to 4/2/2001G) and with a share capital of
SR4,000,000,000, comprising 400,000,000 shares with a nominal value of SR10 each (the
"Shares"). Pursuant to Council of Ministers Resolution No. 49 dated 25/02/1429H
(corresponding to 04/03/2007G) the capital of the Company will be increased to SR
9,250,000,000 comprising 925,000,000 Shares with a nominal value of SR10 each.

PhosCo was established as a Saudi limited liability company with commercial registration
certificate no. 2055008906 issued in Jubail and dated 22/12/1428H (corresponding to
01/01/2008G). The share capital of PhosCo is SR5,961,500,000 divided into 596,150 shares
each with a nominal value of SR10,000 of which SR637,500,000 (divided into 63,750 each
with a nominal value) has been paid up.

The Saudi Mining Company for Precious Metals (which has been renamed Ma’aden Gold and
Essential Mineral Company (SCPM) was established as a Saudi limited liability company with
commercial registration certificate no. 4030066297 issued in Jeddah and dated Jeddah on
8/1/1410H (corresponding to 11/8/1989G). The share capital of SCPM is set at
SR103,000,000 divided into 103,000,000 each with a nominal value of SR1. SCPM’s capital
was increased to SR 300,000,000 divided into 30,000,000 shares, each with a nominal value
of SR10. The Articles of Association of SCPM were notarized by the Public Notary on
20/12/1428H (29/01/2008G).

The Company confirms that its share capital and the share capital of its affiliated companies
are not subject to any options.

Capital Increase and Share Price Determination
Council of Minister Decision No. 72 Dated 03/04/1427H

On 03/04/1427H the Council of Minister Decision No. 72 was issued providing that the setting
out the price of the Company’s shares for public subscription shall be carried out in
agreement with the Minister of Petroleum and Precious Minerals and the Minister of
Finance(also the Chairman of the Board of the Public Investment Fund) taking into account
the Company’s financial position at the time of the Offering.

Minutes Dated 16/11/1428H

Pursuant to the Council of Minister Decision No. 72 dated 03/04/1427H, the Minister of
Petroleum, the Minister of Financing and the Chairman of the Board of the Public Investment
Fund have agreed that the price for each of the Company’s shares offered for public
subscription shall be SR20 which includes SR10 reflecting the nominal value of the shares
and SR10 reflecting the subscription premium.




                                            174
Council of Minister Decision No. 49 Dated 25/02/1429H

On 25/02/1429H the Council of Minister Decision No. 49 was issued requiring the following:

    •    increasing the capital of the Company to SR 9,250,000,000;

    •    Amending Article 8 of the Company’s Bylaws to read “the Capital of the Company
         shall be SR9,250,000,000 divided into 925,000,000 shares, each with a nominal
         value of SR10. The Government, represented by the Public Investment Fund, has
         subscribed to 462,500,000 shares, with the remaining shares of 462,000,000 being
         offered for public subscription.

Mining and Exploration Licences and Other Permits and
Authorisations
Phosphate Project

Al Jalamid Site
                                                                                  2
The mining licence for the Al Jalamid site covers an area of 49.55km . This area
encompasses the Al Jalamid Deposit and the four other prospective deposit areas identified
in the immediate area around the Al Jalamid Deposit. The Al Jalamid Deposit is located within
in the Sirhan Turayf region of northern Saudi Arabia, and is the subject of a mining licence
M/43 issued on 01/07/1427H (corresponding to 27/07/2006G) by the Ministry of Petroleum &
Mineral Resources ("MPMR"). The term of licence is 30 Hijri years from the date of issue and
the annual surface rent for the licence is SR 500,000.
                                                                                               2
Ma'aden has also been granted a separate mining licence which covers an area of 37.82km
and encompasses the Al Khabra deposit site and three other prospective deposit targets
identified in the Umm Wu’al area. The Al Khabra mining licence was granted by way of
licence M/42 issued on 01/07/1427 (corresponding to 27/07/2006G) and is also for a period of
30 Hijri years. The annual surface rent for the licence is also SR 380,000.
                                                                                               2
The Al Jalamid mining licence is located within a greater area of approximately 9,883.25km
that was the subject of an exploration licence (the Turayf licence) granted to Ma'aden. This
licence was initially issued as licence G/25 on 4/4/1420H (corresponding to 18/07/1999G) and
was renewed as licence G/77 on 13/9/1425H (corresponding to 27/10/2004G) for a term of 4
Hijri years ending on 13/9/1429H (corresponding to 14/9/2009G).
                                                                            2
In view of the introduction of the limitation of the size of licences to 100km and imposition of
minimum expenditure requirements to replace agreed expenditure programmes such as that
which applies to this exploration licence, Ma’aden has now relinquished the Turayf licence
                                                    2
and apply for several smaller licences of 100km covering a total area of approximately 2000
   2
km which represents those portions of the former licence area which it considers hold the
best prospects for successful exploration. The application is under consideration by the
MPMR and the Company is not aware of any reason why it should not be granted.

Key infrastructure at the Al Jalamid site will include a power plant. Initial authorisation for
planning the construction of this plant was granted to Ma'aden pursuant to Decision 16/A
dated 29/03/1428H (corresponding to 17/04/2007G) issued by the Electricity & Co-Generation
Regulatory Authority (Licensing & Legal Affairs Department). A further licence permitting the
construction and operation of the power station has also been issued for the Al Jalamid site
pursuant to licence 071011 issued by the Electricity and Co-Generation Regulatory Authority
(Licensing and Legal Affairs Department) on 19/09/1428H (corresponding to 01/10/2007G).

Several water wells will need to be drilled for the purpose of drawing water at the Al Jalamid
site for the operation of the beneficiation plant. On 12/05/1428H (corresponding to



                                              175
29/05/2007G) Ma'aden was granted a licence by the Acting Deputy Minister for Water Affairs
of the Ministry of Water and Electricity to permit the drilling and use of seven producer wells
and four observation wells.

Ras Az Zawr Site
                                                                            2
The Ras Az Zawr site comprises a plot of land covering an area of 78km north of Jubail on
                                                      2
the coast of the Arabian gulf. Approximately 3km of the site is proposed to be used for the
construction of the fertilizer facility and related infrastructure for the Phosphate Project and
                      2
approximately 21.6km is proposed to be used for the construction of the alumina refinery and
aluminum smelter and related infrastructure for the Aluminium Project. The remainder of the
land has been designated for expansions of operations and accommodating third party
downstream industry premises.

The land plot for the Ras Az Zawr site is owned by the Government and was subject to a
"right of use" granted in favour of Saudi ARAMCO which was subsequently released so as to
make the land available for Ma'aden's Phosphate and Aluminium Projects. It is intended that
ownership of the land will remain with the Government as represented by the Property
Department of the State. Steps are currently under way to register the land in the name of the
State for use by Ma’aden At that stage the allocation of the land to Ma'aden will be formalised
and the terms and conditions of occupation of the by Ma’aden and following the Offering will
be agreed with the relevant Government Agencies (including the period of the allocation, and
whether a rent or some other fee will be payable by the Company in connection with its
occupation of such land or Ma’aden’s right to sublease or licence portions of the land to
PhosCo and AlumCo).

Ma'aden has also obtained an industrial licence for the production of 2.9 Mtpy of DAP at its
proposed fertiliser production facilities at Ras Az Zawr. The licence was granted by the
Decision no. 1814/SAD dated 27/10/1426H (corresponding to 29/11/2005G) issued by the
Ministry of Commerce & Industry. The licence may be cancelled by the Ministry if Ma'aden
violates any of the stipulated conditions.

On 29/03/1428H (corresponding to 17/04/2007G) Ma'aden obtained an initial authorisation for
planning the construction of an electricity and co-generation station at the Ras Az Zawr site
for the Phosphate Project issued by the Electricity & Co-Generation Regulatory Authority
(Licensing & Legal Affairs Department). A further licence permitting the construction and
operation of a power station has also been issued for the Ras Az Zawr site pursuant to
licence 071010 issued by the Electricity and Co-Generation Regulatory Authority (Licensing
and Legal Affairs Department) on 19/09/1428H (corresponding to 01/10/2007G).

On 12/04/1428H (corresponding to 30/04/2007G) Ma'aden was granted a certificate of
environmental approval with respect to the proposed operations at its fertiliser production
facilities at Ras Az Zawr site by the PME. Should Ma'aden propose to change the nature,
volume or production at the facilities, the certificate shall be deemed revoked unless Ma'aden
obtains a supplementary approval based on the new capacities notified to the PME. Any such
supplementary approval granted by the PME may be subject to further conditions.

Aluminium Project

Az Zabirah Site

The south zone of the Az Zabirah Deposit in the north central region Saudi Arabia, is the
subject of three mining licences issued by the MPMR (licences M/6, M/7, and M/8) issued on
25/1/1428H (corresponding to 13/2/2007G). The terms of each licence is 30 Hijri years from
the date of issue and the licences cover a total area of 147.76km. The annual surface rent for
each licence is SR1,480,000.




                                              176
Ma'aden has also applied for two contiguous exploration licences which will cover the central
                                                            2
zone of the Az Zabirah Deposit with a total area of 164km ; the applications were submitted
on 15/4/1427H (corresponding to 13/05/2006G). The term of these licences, if granted, will be
5 Hijri years each. Ma’aden is currently not aware of any reason why these licences would not
be granted.

Ras Az Zawr Site

In addition to those to be issued or granted for the purpose of the Phosphate Project, several
other licences, permits and authorisations are required for the facilities and infrastructure to
be constructed at Ras Az Zawr for the Aluminium Project including an industrial licence which
was granted to Ma’aden on 26/02/1427H (corresponding to 27/03/2006G) by the Ministry of
Commerce & Industry. The permitted production capacities specified on the licence are 0.20
Mtpy of surplus alumina available for sale (that portion not to be used by the smelter for the
production of aluminium) and 0.63 Mtpy of aluminium. Currently alternative production
capacities of up to 1.6 Mtpy for alumina and up to 0.72 Mtpy of aluminium are being
considered.

The terms of the licence require Ma’aden to inform the Ministry of any changes to the
production capacities of the Aluminium Project as the project design is further developed.
Accordingly, Ma’aden will need to notify the Ministry of an amendment to the terms of its
licence.

The industrial licence stipulates that production at the refinery or smelter at Ras Az Zawr may
not commence until such time as a certificate of environmental approval has been obtained
from the PME. Ma’aden has made application to the PME for this certificate and approval is
pending.

Ma'aden has obtained a separate co-generation licence for the development of a power,
desalination and steam plant pursuant to the licence dated 21/5/1427 (corresponding to
18/06/2006G) issued by the Electricity & Co-Generation Regulatory Authority (Licensing &
Legal Affairs Department). This licence is required to be updated for the construction and
operation of the proposed plant.

Ma'aden will also require a generation licence in connection with the operation of the power,
desalination and steam plant. Ma'aden has made application for these licences and
anticipates that these will be granted on completion of the SEC agreements.

Gold Operations

Mining licences

Ma'aden currently holds the following mining licences for each of its operating mines at Al
Amar, Mahd Ad Dahab, Sukhaybarat, Bulghah, and Al Hajar.

Mahd Ad Dahab
                                                                                     2
The Mahd Ad Dahab licence issued by Royal Decree M/9 covers an area of 10.3km and was
issued on 04/04/1409H (corresponding to 14/11/1988G) for a period of 30 Hijri years. The
licence is for precious and base metals and the annual surface rent is SR 110,000.

Sukhaybarat
                                                                                     2
The Sukhaybarat licence issued by Royal Decree M/10 covers an area of 50km and was
issued on 04/04/1409H (corresponding to 14/11/1988G) for a period of 30 Hijri years. The
Sukhaybarat open-pit gold mine is located 250km north of Mahd Ad Dahab. The licence is for
gold and the annual surface rent is SR 60,000.




                                              177
Bulghah
                                                                             2
The Bulghah licence issued by Royal Decree M/41 covers an area of 39km and was issued
on 18/08/1422H (corresponding to 05/11/2001G) for a period of 30 Hijri years. The Bulghah
gold mine operates as a satellite open cut mine to the Sukhaybarat mine. The licence is for
gold and the annual surface rent is SR 390,000.

Al Hajar
                                                                         2
The Al Hajar licence issued by Royal Decree M/3 covers an area of 6km and was issued on
24/01/1419 (corresponding to 21/05/1998G) for a period of 30 Hijri years. The licence is for
precious and base metals and the annual surface rent is SR 60,000.

Al Amar
                                                                         2
The Al Amar licence issued by Royal Decree M/17 covers an area of 5km and was issued on
10/05/1418H (corresponding to 13/9/1997G) for a period of 30 Hijri years. The Al-Amar gold
mine is located 210km west of Riyadh, in central Saudi Arabia 900m above sea level. The
licence is for precious and base metals and the annual rent is SR 50,000.

Exploration Licences

For administrative purposes Ma'aden's exploration licences are grouped into two regions: the
Central Arabian Gold Region and the Northern Shield Region (also referred to as the
Sukhaybarat - Bulghah Area).

With the introduction of the new Mining Law in 2004 and its Regulations in 2005, holding large
areas of exploration licences became expensive due to new minimum expenditure
                                         2
requirements calculated at a rate per km which increased with each year of the licence term.

When Ma’aden's exploration licences were initially granted, the Saudi Arabian mining laws
                                                 2
allowed for a single licence to be up to 10,000km in size. Exploration expenditures were not
fixed and depended upon the work programme proposed by the company holding the licence.
Under the new Mining Law the maximum size of newly granted licence has been reduced to
        2                                                                            2
100km and an annual minimum exploration expenditure ranging from SR 750 per km in the
                                                 2
first year and second year to SR7,500 per km in the ninth and tenth years has been
imposed. The areas of licences granted prior to the introduction of the new Mining Law are
                                        2
not required to be reduced to 100m although holders of these licences are required to
comply with the new minimum expenditure requirements.

Ma’aden was granted a grace period by the DPMR until January 2007 to comply with new
minimum expenditure requirements. To reduce the financial burden associated with
complying with the new minimum expenditure requirements, Ma'aden proposes to reduce the
extent of its licence area by relinquishing areas considered to have low potential for hosting
economic deposits. Ma'aden has submitted requests for the renewal of all of its gold
exploration licences and is currently preparing an application for the renewal of the
exploration licence for the Al Hajar area which expires in 21/11/1428H (corresponding to
1/12/2007G). Upon grant of Ma'aden's renewal applications Ma'aden's total gold exploration
                                                2               2
licence area will be reduced from 71,044km to 48,492.42km representing a decrease of
               2
22,551.58km or 31.7% The majority of Ma'aden's applications for renewal are still pending
approval. Applications for renewal often take up to a year to grant. By the end of 2007
Ma’aden plans to relinquish up to a further 50 % of the remaining exploration area or identify
and enter into joint venture agreements to finance further exploration work and earn an
interest in the Ma'aden exploration properties.

Central Arabian Gold Region (CAGR) Exploration Licences




                                             178
Ad Duwayhi (Ad Duwayhi licence)

The Ad Duwayhi site is covered by the Ad Duwayhi exploration licence, issued by Ministerial
                                                2
Decision G/31, and covering an area of 646km . This licence was initially granted to Ma’aden
on 13/06/1419H (corresponding to 05/10/1998G) for a period of five Hijri years and was
renewed by Minister Decision G/83 on 20/09/1424H (corresponding to 15/11/2003G) for a
further four Hijri years. The DPMR has since requested that Ma’aden divide the current
                        2                                                 2
licence area of 646km into seven new licences to comply with the 100km area limit imposed
by the new Mining Law. This has been agreed with Ma’aden on the basis that the new
licences will be for five Hijri years and for minimum expenditure requirement purposes the
licences will start at Year 6. The new licence applications were submitted on 10/07/1428H
(corresponding to 25/07/2007G) and are currently pending approval.

Mansourah (Al Uruq licence)

The Mansourah deposit is located some 460km northeast of Jeddah and 77km south east of
the town of Zalim. This falls within the scope of the Al Uruq licence issued by Ministerial
                                                        2
Decision G/53, which covers an area of 6,758km and was issued on 19/07/1424H
(corresponding to 609/2003G) for a term of 5 Hijri years. Although the licence will be in effect
                                                                                          2
until 21/07/2008G, Ma’aden’s request to reduce the current licence area to 4302.3km has
been approved by the DMMR. Ma’aden has submitted an application to renew the licence for
four years on 20/05/1429H (corresponding to 25/05/2008G).

Massarah (Ash Shakhtaliyah licence)

The Masarrah prospect falls within the scope of the Ash Shakhtaliyah licence issued by
                                                         2
Ministerial Decision G/6, which covers an area of 9,953km and was issued on 18/01/1423H
(corresponding to 01/04/2002G) for 5 Hijri years. The licence expired on 09/01/1428H
(corresponding to 28/01/2007G) and has been renewed for a term of 4 Hijri years until
237/01/1432 (corresponding to 23/12/2010). Ma'aden’s request to reduce the licence area to
          2
6,333 km has been approved by Ministerial decision No. G/20. The licence is contiguous
with the Al Uruq licence.

Ar Rjum (Ash Shakhtaliyah licence)

The Ar Rjum project falls within the area of the Ash Shakhtaliyah licence, described above.

As Suk (Ash Shakhtaliyah licence)

The As Suk project falls within the area of the Ash Shakhtaliyah licence, described above.

Zalim
                                                                                     2
The Zalim licence issued by Ministerial Decisions G/37 covers an area of 288.5km and was
issued on 09/06/1420H (corresponding to 20/09/1999G) for a period of 9 Hijri years. The
licence was renewed on 18/09/1425H (corresponding to 01/11/2004G) by Minister Decision
G/87 for a term of 4 Hijri years ending on 18/09/1429. The DMMR has requested to split the
                                                                           2
current licence area of 288.5 in to three licences to comply with the 100km area restriction
imposed by the new Mining Law. This has been agreed with Ma’aden on the basis that the
new licences will be for 5 Hijri years and for minimum expenditure requirement purposes the
licence will start at year 6. The licence renewal application has been submitted on
28/05/1429H (corresponding to 02/06/2008G).

Northern Shield Region (Sukhaybarat - Bulghah Area) Exploration Licences

Humaymah (Miskah Licence)




                                              179
                                                                                      2
The Miskah licence issued by Ministerial Decision G/60 covers an area of 9,774km and was
issued on 15/08/1423H (corresponding to 22/10/2002G) for a period of 5 Hijri years. A
                                                                         2
renewal application submitted to reduce the licence area to 7,063km and to renew the
licence for four years term until 14/08/1432 (corresponding to 16/07/2011G) has been granted
on 26/02/1429H (corresponding to 05/03/2008G) by Ministerial Decision No. G/17. The
Humaymah gold prospect located 35km southeast of the Bulghah mine is the second
grassroots gold prospect discovered as a result of systematic exploration activities by
Ma’aden exploration teams. An exploration licence reduction application has been submitted
                                                     2
to the DMMR to reduce the licence area to 7,013km .

Shabah
                                                                                      2
The Shabah licence issued by Ministerial Decision G/68 covers an area of 9,621km and was
issued on 06/09/1422H (corresponding to 22/11/2001G) for a period of 5 Hijri years. A
renewal application was submitted on 21/04/1428H (corresponding to 09/05/2007G) has been
granted and the licence has been renewed for four years until 05//09/1431 (corresponding to
16/08/2011) by Ministerial Decision No. G/15. Ma’aden’s request to reduce the total licence
                2
area to 6,944km has also been granted.

Al Jardawiyah

The Al Jardawiyah licence issued by Ministerial Decision G/55, which originally covered an
                  2
area of 9,961km was issued 07/08/1422H (corresponding to 25/10/2001G) for a period of 5
Hijri years. A renewal application was submitted on 20/04/1428H (corresponding to
08/05/2007G) has been approved and the licence has been renewed for four years until
06/08/1431H (corresponding to 18/07/20010) by Ministerial Decision No. G/18. Further
reduction of the licence area is imminent. The Sukhaybarat mine area is located within the
scope of this licence.

An Najadi / Hablah South / Hablah North, Nugrah Licence and Mawan

The licence covering An Najadi, Hablah South, Hablah North, Nugrah Licence and Mawan
was issued by Ministerial Decisions G/51 on 07/08/1422H (corresponding to 25/10/2001G) for
a period of 5 Hijri years and was subsequently renewed by Minister Decision G/102 on
26/12/1430H (corresponding to 14/12/2009G)). The licence had originally covered an area of
        2                                           2
3,919km , but this has been reduced to 1,846.1km . Further reduction of this licence is
expected to be minimal.

Tawan

The licence covering Tawan was issued by Ministerial Decision G/89 on 26/10/1423H
(corresponding to 31/12/2002G) for a period of 4 Hijri years. A renewal application was
submitted on 03/06/1428H (corresponding to 19/06/2007G) and is currently pending.
                                                                 2         2
Ma’aden’s request to reduce the total licence area from 1508km to 743.12km is pending
approval. Minimal further reduction of this licence is expected.

As Siham
                                                              2
The As Siham licence originally covered an area of 9,970km , but now only covers an area of
            2
5,504.4km , was issued on (05/06/1423H (corresponding to 14/08/2002G) for a period of 5
Hijri years. A further major reduction of this licence is imminent. An application for renewal of
this licence was made on 25/05/1428H (corresponding to 11/06/2007G) was granted for four
years by Ministerial decision No. G/19. The licence is now valid until 04/06/1432H
(corresponding to 08/05/2011G).

Other Exploration Licences

Wurshah



                                              180
The Wurshah licence issued by Ministerial Decision G/66 originally covered an area of
          2                                        2
7,146km and has since been reduced to 5,764km . The licence was issued on 03/09/1422H
(corresponding to 19/11/2001G) for a period of 5 Hijri years. A renewal application was
submitted on 21/04/1426H (corresponding to 30/05/2007G) and has been granted on
26/02/1429H (corresponding to 05/03/2008G) by Ministerial Decision No. G/16 and the
licence is valid until 02/09/1431H (corresponding to 13/08/2010G). The land that falls within
this licence is considered by Ma’aden to have a favourable geological setting and regional
reconnaissance sampling is on-going. Ma'aden is currently considering further reducing the
size of this licence area or entering into a joint venture arrangement with respect to the
licence area.

Licences for Other Projects

In addition to the licences referred to above, Ma'aden holds a number of mining, quarrying
and exploration licences for the exploitation of various industrial minerals. In addition, other
exploration licences are pending. Details of these licences and applications are set out
below.

Zarghat

Ma’aden holds a mining licence for magnesite, issued by Royal Decree M/8 on 27/02/1421H
(corresponding to 01/06/2000G) and running for a period of 30 Hijri years. This licence
              2
covers 2.69km . Annual rent is SR 30,000.

Az Zabirah

Ma’aden holds a raw materials quarry licence for kaolin and low grade bauxite, issued by
Royal Decree M/5 on 25/01/1428 (corresponding to 13/02/2007G) and running for a period of
                                          2
30 Hijri years. This licence covers 27.9km . Annual rent is SR 280,000.

Ma’aden is required to establish certain water wells for water-related purposes at the Bauxite
mine. In 22/05/1426H (corresponding to 29/06/2005G), Ma’aden secured licence no. 17307
from the Conservation Department at the Ministry of Water and Electricity for the drilling of
two production wells and four monitoring wells. The licence expires in 21/08/1429H
(corresponding to 22/08/2008G)

Zarghat, Jabal AL Rokham and Jabal Abt

Ma’aden holds an exploration licence for the exploration of magnesite, initially issued on
27/12/1422H (corresponding to 12/03/2002G) for a term of 5 Hijri years and covering
        2
3,163km . This licence was renewed by Ministerial Decision G/82 dated 16/10/1425H
(corresponding to 29/11/2004G) for a period of 4 additional Hijri years.

Jabal Sawda

Ma’aden has received an exploration licence for the exploration of nepheline syenite and
other related minerals and related metals in Jabal Sawda pursuant to Ministerial Decision No.
G/61 dated 04/07/1428H (corresponding to 18/07/2007G).

Jabal Kirsh

Ma’aden has submitted an application for an exploration licence in respect of kaynite and
associated metals, on 03/06/1428H (corresponding to 19/06/2007G) covering an area of
        2.
50.04km If granted this licence would run for a period of 5 Hijri years.

General




                                              181
Ma'aden has been granted a reconnaissance licence for all locations in Saudi Arabia except
certain areas excluded under Mining Investment Law. The licence was granted by Ministerial
Decision W/1030 for a period of two years commencing on 06/04/1427H (corresponding with
05/05/2006G) and permits Ma'aden to conduct preliminary geological surveys prior to
conducting detailed exploration surveys. The licence covers all industrial minerals, base
metals and precious metals in Saudi Arabia. The duration may be extended for a period of 2
years.

Zakat

On 15/03/1429H (corresponding to 24/03/2008G), an agreement between the Company’s
Board of the Directors, headed by the Minister of Petroleum and Precious Minerals and the
Minister of Finance, was reached, indicating that Ma’aden does not have any obligations to
the DZIT as of the date of the Offering. The Company shall, however, be subject to Zakat
payment after the Offering.




                                           182
           Summary of Material Agreements

Phosphate Project
Project Management Consultant Agreement

On 22 February 2006, Ma'aden entered into a project management consultant agreement
("PMCA") with Worley Arabia Limited ("WorleyParsons") for provision of certain project
management services relating to all contracted works and services to be carried out in
connection with the development of the Phosphate Project and the Common Infrastructure.

Services to be provided by WorleyParsons include project management, design and
engineering, project scheduling and execution, project cost controls, procurement, contract
and construction management, commissioning and operational readiness support, training
support and operations, maintenance and technical support. In addition WorleyParsons
undertakes to co-ordinate its activities with the development of the Aluminium Project (having
regard to commonalities or interdependencies between the two projects), construction of the
Railway, SABIC and Saudi ARAMCO and other suppliers of raw materials and the
government of Saudi Arabia.

WorleyParsons is to be paid on the basis of hourly rates, overheads and profit, and
reimbursable expenses. The estimated total fee payable by Ma'aden to WorleyParsons for
performance of the Phosphate Project services under the contract is US$95.1 million
(SR356.63 million) (subject to adjustment for certain bonuses and penalties) plus
reimbursement of costs. However, as is customary in an agreement of this nature this is not a
fixed price.

WorleyParsons covenants to perform the services in a timely, efficient and economical
manner so as to enable the achievement of project milestones within the prescribed times.
WorleyParsons warrants that it possesses the requisite level of expertise and experience to
provide the services for a project of the size, nature and complexity of the Phosphate Project.
The agreement contains certain other warranties, covenants and indemnities provided by
WorleyParsons which are usually provided by a contractor in an agreement of this nature.

WorleyParsons' total liability under the agreement is capped as is customary for an
agreement of this nature other than in respect of liability arising out of (a) fraud or wilful or
reckless misconduct; (b) death or personal injury caused by negligence; (c) third party claims
caused by negligence; (d) third party claims not caused by negligence; (e) insurable losses up
to the level of the minimum insurance cover WorleyParsons is required to obtain.

The contract also contains certain other provisions which are usual for an agreement of this
nature including provisions concerning a monthly 10 % retention amount deducted from fees
payable by Ma'aden to WorleyParsons to be released annually subject to confirmation of
satisfactory performance, mutual indemnities for certain losses arising out of negligent acts or
omissions, failure to pay tax or breaches of duty imposed by law, insurance to be maintained
by WorleyParsons and the vesting in Ma'aden of intellectual property rights in design
documents produced by WorleyParsons.

Ma'aden may terminate the agreement at any time without cause giving notice to
WorleyParsons and paying the appropriate portion of fees for services rendered up until the
time of termination.




                                              183
Contract for Mining Phosphate Ore and Waste

On 1 October 2007, Ma'aden entered into a mining services contract ("Mining Contract") with
Saudi Comedat Company Ltd ("Saudi Comedat"), for the provision of mining services and
related activities at the Al Jalamid mine.

Saudi Comedat is required to extract phosphate ore from the Al Jalamid mine and deliver it to
Ma'aden's crusher, or into stockpiles designated by Ma'aden. Pre-stripping operations (to
uncover the ore) are required to commence on 1 June 2009, with ore production required to
commence on 1 December 2009. The term of the Mining Contract is scheduled to run until
30 November 2017, unless target production levels are achieved earlier and Ma'aden
chooses to terminate at that stage.

Saudi Comedat is required to mine 92.4 million tonnes of material during the contract term, of
which 40.1 million tonnes is to be phosphate ore. Ma'aden can require adjustments to these
production quantities within specified ranges.

The contract price for achieving the target production levels is SR945 million (equivalent to
US$252 million), subject to adjustment for (i) periodic changes in certain variable costs of
production (plant, consumables, labour); (ii) any variation to the scope of services instructed
by Ma'aden; and (iii) the levels of production actually achieved. Saudi Comedat is also
entitled to reimbursement of specific costs, including the cost of maintaining insurance in
accordance with the Mining Contract.

Saudi Comedat warrants that it will perform the services in a competent, proper and
workmanlike manner and in accordance with good industry practice. Saudi Comedat also
warrants that it has the necessary expertise, experience and capability to perform the
services and to operate the mine in accordance with the Mining Contract.

Saudi Comedat's total liability under the agreement is capped as is customary for a contract
of this nature, except in respect of liability arising out of (a) fraud, illegality or wilful
misconduct; (b) death, personal injury or property damage caused by negligence or breach of
the Mining Contract; or (c) losses that should have been insured against by Ma'aden.

Ma'aden may terminate the Mining Contract at any time without cause, on three months'
notice to Saudi Comedat. Either Ma'aden or Saudi Comedat may also terminate the Mining
Contract in certain other circumstances, including insolvency of the other party, material
breach of the Mining Contract by the other party or prolonged force majeure. In case of
termination by Ma'aden without cause or termination by Saudi Comedat for Ma'aden's default,
Saudi Comedat may require Ma'aden to purchase the mining equipment, at market value. In
case of termination on other grounds, Ma'aden can require Saudi Comedat to make the
equipment available for its continued use until Ma'aden has had a reasonable time to arrange
replacement equipment.

LSTK Contracts

LSTK EPC Contracts for Construction of the Sulphuric Acid Plant

On 25 June 2007 Ma'aden (the "Employer") entered into the following contracts relating to the
construction of the sulphuric acid plant at Ras Az Zawr:

        a)   A construction contract (the "SAP Onshore Contract") with Gama Industry Arabia
             Ltd (the "SAP Onshore Contractor") for the construction of facilities and provision
             of performance guarantees. The value of the contract is SR506, 250,000 (US$
             135,000,000);

        b)   An engineering and procurement contract (the "SAP Offshore Contract") with
             Outotec GmbH (the "SAP Offshore Contractor") for certain services, plant and



                                             184
             materials to be provided outside Saudi Arabia. The value of the contract is
             SR1,350,000,000 (US$ 360,000,000); and

        c)   A co-ordination agreement with the SAP Onshore Contractor and SAP Offshore
             Contractor to assist the co-ordination of the activities of the SAP Onshore
             Contractor under the SAP Onshore Contract and the SAP Offshore Contractor
             under the SAP Offshore Contract;

(the above contracts collectively being referred to as the "SAP LSTK Contracts" and the SAP
Onshore and SAP Offshore Contractors collectively being referred to as the "SAP
Contractors").

Under the SAP LSTK Contracts, the SAP Contractors will be responsible for the field-
engineering, field-procurement, construction, testing, commissioning and completion of a
sulphuric acid plant at Ras Az Zawr and certain related works ("Works") on a turn-key basis
including the supply of all equipment and materials necessary for the construction of the plant.
The SAP Contractors will also be responsible for ensuring that the completed Works are fit for
the intended purpose and for remedying any defects in the Works.

In addition the SAP Contractors are responsible for providing proprietary process technology
for the production of sulphuric acid.

The total contract price of US$495 million (SR1,856.25 million) under the SAP LSTK
Contracts is fixed, subject to adjustments for changes in SAP Contractors' costs which result
from variations in the scope of the Works made by the Employer, or changes in related
legislations.

The SAP Contractors are required to complete all Works by 1 August 2010.

The Employer will be entitled to damages for delay if the SAP Contractors fail to complete the
Works on time. Such damages will be calculated at agreed daily rates, subject to a cap. The
SAP Contractors' total liability under the SAP LSTK Contracts (excluding liabilities in respect
of certain matters such as the provision of additional plant remedy; re-testing; IP infringement
claims and specified indemnities) is capped as is customary for agreements of this nature.

The SAP Contractors are required to provide to the Employer a performance security in the
amount of 10 % of the contract price. The SAP Contractors may reduce the value of the
performance security to five % of the contract price when the Works are taken over by the
Employer. The SAP Contractors are also required to provide to the Employer a retention
guarantee which is to be adjusted on an ongoing basis such that the amount is equal to 10 %
of the total amounts invoiced at any time. The Employer is required to return the retention
guarantee to the SAP Contractors once it has taken over the whole of the Works.

The SAP LSTK Contracts contain various warranties, covenants and indemnities of the kind
usually found in agreements of this nature, including covenants by the SAP Contractors to
execute the Works properly in accordance with recognised good practice to carry out all tests
of the plant required by law and good practice and to repair or remedy any defects in the
Works. The SAP Contractors' total liability under the SAP LSTK Contracts (excluding certain
liabilities in respect of certain matters such as environmental pollution, failure to meet certain
minimum performance standards, IP infringement claims, specified indemnities and amounts
received from insurances) is capped as is customary for agreements of this nature.

The Employer shall be entitled to terminate the SAP LSTK Contracts in certain
circumstances, including if the SAP Contractors fail to provide the performance security,
abandons the Works, commits a material breach of the contract or applicable laws, becomes
liable to pay damages for delay or failure to meet performance guarantees, or fails to
complete any section of the Works within 60 days of the prescribed time for completion. The
Employer may also terminate the contract, at any time without cause by giving notice in which



                                               185
case the SAP Contractors will be entitled to payment for work carried out and various costs
incurred.

LSTK EPC Contracts for the Phosphoric Acid Plant

On 25 June 2007 Ma'aden (the "Employer") entered into the following contracts relating to the
construction of the phosphoric acid plant at Ras Az Zawr:

         a)   A construction contract (the "PAP Onshore Contract") with a consortium of
              Litwin Saudi Arabia and Tefken Construction & Installation Co. Inc. Saudi
              Arabia Branch (together, the "PAP Onshore Contractor") for the construction of
              facilities and provision of performance guarantees. The contract value is SR
              900,000,000;

         b)   An engineering and procurement contract (the "PAP Offshore Contract") with
              Litwin Europe Middle East and Africa B.V. (the "PAP Offshore Contractor") for
              certain services, plant and materials to be provided outside Saudi Arabia. The
              contract value is SR1,060,627,000; and

         c)   A co-ordination agreement with the PAP Onshore Contractor and PAP Offshore
              Contractor to assist the co-ordination of the activities of the PAP Onshore
              Contractor under the PAP Onshore Contract and the PAP Offshore Contractor
              under the PAP Offshore Contract;

(the above contracts collectively being referred to as the "PAP LSTK Contracts" and the PAP
Onshore and PAP Offshore Contractors collectively being referred to as the "PAP
Contractors").

Under the PAP LSTK Contracts the PAP Contractors will be responsible for the field-
engineering, field-procurement, construction, testing, commissioning and completion of a
phosphoric acid plant at Ras Az Zawr and certain related works ("Works") on a turn-key basis
including the supply of all equipment and materials necessary for the construction of the plant.
The PAP Contractors will also be responsible for ensuring that the completed Works are fit for
the intended purpose and for remedying any defects in the Works.

The total contract price under the PAP LSTK Contracts is fixed at US$522,833,922
(SR1,960,627,207.5), subject to adjustments for changes in the PAP Contractors' costs which
result from variations in the scope of Works made by the Employer or changes in related
legislations.

The PAP Contractors are required to complete all Works by 30 April 2011. The time for
completion may be extended where completion is likely to be delayed due to a variation in the
scope of Works, any other cause attributable to the Employer or certain other circumstances.

The Employer will be entitled to damages for delay if the PAP Contractors fail to complete the
Works on time. Such damages will be calculated at agreed daily rates and are capped as is
customary for agreements of this nature. The Employer shall also be entitled to damages in
the event that the plant fails to achieve certain agreed performance guarantees.

Other than as described above, the terms of the PAP LSTK Contracts are materially the same
as those of the SAP LSTK Contracts.

LSTK EPC Contracts for the Ammonia Plant

On 8 July 2007 Ma'aden (the "Employer") entered into the following contracts relating to the
construction of the ammonia plant at Ras Az Zawr:




                                              186
    a)   A construction contract (the "Ammonia Onshore Contract") with Samsung Saudi
         Arabia Ltd (the "Ammonia Onshore Contractor") for the construction of facilities and
         provision of performance guarantees. The value of the contract is SR956,250,000;

    b)   An engineering and procurement contract (the "Ammonia Offshore Contract") with
         Samsung Engineering Co., Ltd (the "Ammonia Offshore Contractor") for certain
         services, plant and materials to be provided outside Saudi Arabia. The value of the
         contract is SR2,608,340,000; and

    c)   A co-ordination agreement with the Ammonia Onshore Contractor and Ammonia
         Offshore Contractor to assist the co-ordination of the activities of the Ammonia
         Onshore Contractor under the Ammonia Onshore Contract and the Ammonia
         Offshore Contractor under the Ammonia Offshore Contract;

(the above contracts collectively being referred to as the "Ammonia LSTK Contracts" and the
Ammonia Onshore and Ammonia Offshore Contractors collectively being referred to as the
"Ammonia Contractors").

Under the Ammonia LSTK Contracts, the Ammonia Contractors will be responsible for the
field-engineering, field-procurement, construction, testing, commissioning and completion of
an ammonia plant at Ras Az Zawr and certain related works ("Works") on a turnkey basis
including the supply of all equipment and materials necessary for the construction of the plant.
The Ammonia Contractors will be responsible for ensuring that the completed Works are fit for
the intended purpose and for remedying any defects in the Works.

In addition, the Ammonia Contractors are responsible for providing proprietary process
technology for production of ammonia.

The total contract price of US$950,557,220 (SR3,564,589,575) under the Ammonia LSTK
Contracts is fixed, subject to adjustments for changes in Ammonia Contractors' costs which
result from variations in the scope of the Works made by the Employer, or changes in related
legislations.

The Ammonia Contractors are required to complete all Works by 27 December 2010.

The Employer will be entitled to damages for delay if the Ammonia Contractors fail to
complete the Works on time. Such damages will be calculated at agreed daily rates, subject
to a cap. The Ammonia Contractors' total liability under the Ammonia LSTK Contracts
(excluding liabilities in respect of certain matters such as environmental pollution, failure to
meet certain minimum performance standards, IP infringement claims, specified indemnities
and amounts received from insurances) is capped as is customary for agreements of this
nature.

Other than as described above, the terms of the Ammonia LSTK Contracts are materially the
same as those of the SAP LSTK Contracts.

LSTK EPC Contracts for the DAP Plant

On 25 June 2007 Ma'aden (the "Employer") entered into the following contracts relating to the
construction of the sulphuric acid plant at Ras Az Zawr:

    a)   A construction contract (the "DAP Onshore Contract") with Dragados Gulf
         Construction (the "DAP Onshore Contractor") for the construction of facilities and
         provision of performance guarantees. The value of this contract is SR757,500,000;

    b)   An engineering and procurement contract (the "DAP Offshore Contract") with Intecsa
         Ingenieria Industrial S.A. and Initec Energia S.A. Union Temporal de Empresas
         (collectively the "DAP Offshore Contractor") for certain services, plant and materials



                                              187
         to be provided outside Saudi Arabia. The value of this contact is SR1,065,046,000;
         and

    c)   A co-ordination agreement with the DAP Onshore Contractor and DAP Offshore
         Contractor to assist the co-ordination of the activities of the DAP Onshore Contractor
         under the DAP Onshore Contract and the DAP Offshore Contractor under the DAP
         Offshore Contract;

(the above contracts collectively being referred to as the "DAP LSTK Contracts" and the DAP
Onshore and DAP Offshore Contractors collectively being referred to as the "DAP
Contractors").

Under the DAP LSTK Contracts, the DAP Contractors will be responsible for the field-
engineering, field-procurement, construction, testing, commissioning and completion of a DAP
plant at Ras Az Zawr and certain related works ("Works") on a turn-key basis including the
supply of all equipment and materials necessary for the construction of the plant. The DAP
Contractors will be responsible for ensuring that the completed Works are fit for the intended
purpose and for remedying any defects in the Works.

The total contract price of US$486,012,307 (SR1,822,546,151.25) under the DAP LSTK
Contracts is fixed, subject to adjustments for changes in the DAP Contractors' costs which
result from variations in the scope of the Works made by the Employer or changes in related
legislations.

The DAP Contractors are required to complete all Works by 6 January 2011.

The Employer will be entitled to damages for delay if the DAP Contractors fail to complete on
the Works on time. Such damages will be calculated at agreed daily rates, subject to a cap.
The DAP Contractors' total liability under the DAP LSTK Contracts (excluding liabilities in
respect of certain matters such as environmental pollution, failure to meet certain minimum
performance standards, IP infringement claims, specified indemnities and amounts received
from insurances) is capped as is customary for agreements of this nature.

Other than as described above, the terms of the DAP LSTK Contracts are materially the same
as those of the SAP LSTK Contracts.

LSTK EPC Contracts for the for the Energy and Water Distillation Plant

On 17 December 2007 Ma'aden (the "Employer") entered into the following contracts relating
to the construction of the Energy and Water Distillation Plant at Ras Az Zawr:

    a)   A construction contract (the "Energy and Water Onshore Contract") with Hanou
         Saudi Contracting (the " Energy and Water Onshore Contractor") for the construction
         of facilities and provision of performance guarantees. The value of this contract is
         SR344,795,620 (corresponding to US$ 91,945,499);

    b)   An engineering and procurement contract (the "Energy and Water Offshore
         Contract") with Hanou Engineering and Construction Company (the "Energy and
         Water Offshore Contractor") for certain services, plant and materials to be provided
         outside Saudi Arabia. The value of this contact is SR705,204,379 (US$
         188,054,501); and

    c)   A co-ordination agreement with the Energy and Water Onshore Contractor and
         Energy and Water Offshore Contractor to assist the co-ordination of the activities of
         the Energy and Water Onshore Contractor under the Energy and Water Onshore
         Contract and the Energy and Water Offshore Contractor under the Energy and
         Water Offshore Contract;




                                             188
(the above contracts collectively being referred to as the "Energy and Water LSTK Contracts"
and the Energy and Water Onshore and Energy and Water Offshore Contractors collectively
being referred to as the "Energy and Water Contractors").

Under the Energy and Water LSTK Contracts, the Energy and Water Contractors will be
responsible for the field-engineering, field-procurement, construction, testing, commissioning
and completion of an Energy and Water plant at Ras Az Zawr and certain related works
("Works") on a turn-key basis including the supply of all equipment and materials necessary
for the construction of the plant. The Energy and Water Contractors will be responsible for
ensuring that the completed Works are fit for the intended purpose and for remedying any
defects in the Works.

The total contract price of US$280 million (SR1,050 million) under the Energy and Water
LSTK Contracts is fixed, subject to adjustments for changes in the Energy and Water
Contractors' costs which result from variations in the scope of the Works made by the
Employer or changes in related legislations.

The Energy and Water Contractors are required to complete all Works by 30 June 2010. The
time for completion may be extended where completion is likely to be delayed due to a
variation in the scope of Works, any other cause attributable to the Employer or certain other
circumstances.

The Employer will be entitled to damages for delay if the Energy and Water Contractors fail to
complete all the Works on time. Such damages will be calculated at agreed daily rates,
subject to a cap. The Energy and Water Contractors' total liability under the Energy and
Water LSTK Contracts (excluding liabilities in respect of certain matters such as
environmental pollution, failure to meet certain minimum performance standards, IP
infringement claims, specified indemnities and amounts received from insurances) is capped
as is customary for agreements of this nature.

The Energy and Water Contractors are obligated to provide Ma’aden with a performance
guarantee in the amount of 10% of the value of the contract. They are also obligated to
provide Ma’aden with a holding agreement, amended continuously so that the amount held at
all times equals to 10% of their cumulative in-takes (the billed amounts). Ma’aden must return
the performance guarantee to the Energy and Water Contractors once Ma’aden receives all
the works.

LSTK EPC Contracts for the Beneficiation Plant

On 17 December 2007 Ma'aden (the "Employer") entered into the following contracts relating
to the construction of the beneficiation plant at Al Jalamid:

        a)   A construction contract (the "Beneficiation Plant Onshore Contract") with
             Wengfu Arabia Ltd (the "Beneficiation Plant Onshore Contractor") for the
             construction of facilities and provision of performance guarantees. The contract
             value is US$151,506,970 (corresponding to SR568,151,137.50).

        b)   An engineering and procurement contract (the "Beneficiation Plant Offshore
             Contract") with Guizhou Hongfu Industry And Commerce Development
             Company (the "Beneficiation Plant Offshore Contractor") for certain services,
             plant and materials to be provided outside Saudi Arabia. The contract value is
             US$198,493,030 (corresponding to SR744,348,862.50).

        c)   A co-ordination agreement with the Beneficiation Plant Onshore Contractor and
             Beneficiation Plant Offshore Contractor to assist the co-ordination of the
             activities of the Beneficiation Plant Onshore Contractor under the Beneficiation
             Plant Onshore Contract and the Beneficiation Plant Offshore Contractor under
             the Beneficiation Plant Offshore Contract.



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(the above contracts collectively being referred to as the " Beneficiation Plant LSTK
Contracts" and the Beneficiation Plant Onshore and Beneficiation Plant Offshore Contractors
collectively being referred to as the " Beneficiation Plant Contractors").

Under the Beneficiation Plant LSTK Contracts, the Beneficiation Plant Contractors will be
responsible for the field-engineering, field-procurement, construction, testing, commissioning
and completion of a beneficiation plant at Al Jalamid and certain related works ("Works") on a
turn-key basis including the supply of all equipment and materials necessary for the
construction of the plant. The Beneficiation Plant Contractors will also be responsible for
ensuring that the completed Works are fit for the intended purpose and for remedying any
defects in the Works.

The total contract price under the Beneficiation Plant LSTK Contracts is fixed at US$350
million (SR1,312.5 million), subject to adjustments for changes in the Beneficiation Plant
Contractors' costs which result from variations in the scope of Works made by the Employer
or changes in legislation.

The Beneficiation Plant Contractors are required to complete all Works by 6 May 2010. The
time for completion may be extended where completion is likely to be delayed due to a
variation in the scope of Works, any other cause attributable to the Employer or certain other
circumstances.

The Employer will be entitled to damages for delay if the Beneficiation Plant Contractors fail to
complete the Works on time. Such damages will be calculated at agreed daily rates, subject
to a cap. The Beneficiation Plant Contractors' total liability under the Beneficiation Plant LSTK
Contracts (excluding liabilities in respect of certain matters such as environmental pollution,
failure to meet certain minimum performance standards, IP infringement claims, specified
indemnities and amounts received from insurances) is capped as is customary for
agreements of this nature.

The Beneficiation Plant Contractors are required to provide to the Employer a performance
security in the amount of 10 percent of the contract price. The Beneficiation Plant Contractors
are also required to provide to the Employer a retention guarantee which is to be adjusted on
an ongoing basis such that the amount is equal to 10 percent of the total amounts invoiced at
any time. The Employer is required to return the retention guarantee to the Beneficiation Plant
Contractors once it has taken over the whole of the Works.

Other than as described above, the terms of the Beneficiation Plant LSTK Contracts are
materially the same as those of the SAP LSTK Contracts.

Technology Agreements

Licence Agreement for Process Technology for the production of Phosphoric Acid

On 4 July 2005, Ma'aden entered into a licence agreement with Yara for the provision of
technology rights and designs for process technology for the production of Phosphoric Acid.

The total fee payable to Ma'aden for the licence, basic design package and associated
services to be provided under the agreement is €5,815,000 (SR30,808,808). Yara's liability
under the agreement is capped as is customary for an agreement of this nature.

Other than as specified above, the agreement is on the same terms as the Licence
Agreement for Process Technology for the production of DAP.




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Licence Agreement for Process Technology for the production of DAP

On 14 November 2005, Ma'aden entered into a licence agreement with Incro S.A. ("Incro") for
the provision of technology rights and designs for process technology for the production of
DAP.

Under the agreement, Incro grants Ma'aden a perpetual and irrevocable licence to use its
proprietary process technology for the production of DAP and MAP to (i) design, construct
and operate a production plant; (ii) manufacture, market and sell the products world-wide
without restriction; (iii) further develop and modify the licensed technology; and (iv) copy
documentation provided by the licensor as necessary to build and operate the relevant plant.
The licence is granted on a non-exclusive, royalty-free basis. In addition Incro agrees to
provide a basic design package to enable Ma'aden to carry out the detailed engineering for
the production plant and certain associated services.

The total fee payable to Ma'aden for the licence, basic design package and associated
services to be provided under the agreement is €1,350,000 (SR7,152,518).

Incro warrants that use of the process technology and information provided in accordance
with the licence does not infringe any intellectual technology rights anywhere in the world and
indemnifies from losses or damages arising out of any claim regarding such an infringement.
Save for liability in the case of fraud, deliberate default or reckless misconduct, Incro's liability
under the agreement is capped as is customary for an agreement of this nature.

The agreement contains strict confidentiality restrictions which prohibit disclosure of
confidential information for a period of 20 years from the date of the agreement.

Ma'aden may terminate the agreement on notice and either party may terminate the
agreement if the other party becomes bankrupt or insolvent or is in default of an obligation
under the agreement which will have a material adverse effect on the other party.

Joint Venture Agreement with SABIC

Ma'aden entered into the Phosphate Project Shareholders' Agreement on 15 September 2007
("Phosphate JVA") in respect of the Phosphate Project with SABIC. Under the terms of the
JVA the parties agreed to establish Ma'aden Phosphate Company ("PhosCo") as a limited
liability company in Saudi Arabia through which the parties will hold their respective interests
in the Phosphate Project in Joint Venture. PhosCo will be 70 % owned by Ma'aden and 30 %
owned by SABIC.

The term of the Phosphate JVA is 25 years, and will be renewed automatically for a further
term of five years upon expiration unless either of Ma'aden or SABIC has given their written
notice of its intention not to renew three years before the expiry date.

Ma'aden's obligations under the Phosphate JVA in respect of the Phosphate Project include
the novation and transfer to PhosCo of all its rights and benefits of all permits, licences,
permissions or agreements granted or entered into by Ma'aden that are relevant to the
Phosphate Project including the Al Jalamid Deposit and procuring certain rights, benefits and
services for PhosCo from third parties that are necessary in relation to the Project, which are
currently under negotiation. Ma'aden will also provide certain support services including
assisting in the obtaining of approvals and consents from governmental and non-
governmental entities in Saudi Arabia, procuring certain other rights and benefits for the
Company and providing project management services. Ma'aden's obligations in this respect
will be governed by a separate services agreement to be negotiated between Ma'aden and
the PhosCo.

SABIC's obligations under the Phosphate JVA in respect of the Phosphate Project include
providing the Company with research and technology services and marketing services on



                                                191
arm's length commercial terms; and technical and operational support, project management
and construction support, manpower secondment and training and development services on
terms equivalent to the most favourable terms on which SABIC provides similar services to its
affiliates.

In accordance with the terms of the Phosphate JVA the PhosCo board of managers shall
comprise six managers; four appointed by Ma'aden and two appointed by SABIC. The senior
management team appointed by the Board will include a president (chief executive officer)
nominated by Ma'aden and a chief financial officer nominated by SABIC.

The initial capital contributions of Ma'aden and SABIC to acquire their respective interests will
be represent 70 % and 30 % of the issued capital of PhosCo respectively. Should additional
funding be required for future expansions of the Phosphate Project the shareholders shall be
invited to subscribe for additional shares on a pro rata basis. Should a party not subscribe to
Shares offered to it, the other Party may subscribe for the Shares, and the first shareholder
will be diluted accordingly. Alternatively, the party declining to subscribe for additional shares
may require a break-off project to be set up to carry out the expansion.

No party shall compete with the marketing of granular DAP or MAP produced by the
Phosphate Project, in a material way within Saudi Arabia, whilst it is a shareholder and for a
period of five years thereafter, subject to Ma'aden being permitted to participate in any break-
off project set up to implement an increase in the capacity and production of the Phosphate
Project and SABIC being permitted to participate in the existing operations and future
expansions of the Ibn Al Baytar Project in Al Jubail Industrial City.

Subject to transfers to an affiliate and Ma'aden being permitted to sell or transfer any of its
shares to any entity in which the Government holds an interest, no party may transfer any
shares to another person before the fifth anniversary of the commercial production date and
no party may grant any security interest over its shares without the prior written consent of the
other party. Any transfer of shares to a third party after the five year lock in period shall
require the approval of the other party and be subject to pre-emption rights in favour of the
other party.

The Phosphate JVA will automatically terminate if PhosCo is dissolved and liquidated for any
reason. In the event that the proposed debt financing is not completed within 18 months of the
date of the Phosphate JVA either party may request that the Company is dissolved and
liquidated, provided that the other party may acquire the requesting party's shares at book
value.

Under the Phosphate JVA, a party becomes a defaulting party if a petition seeking
adjudication of bankruptcy or insolvency is filed by or against a party (or a person controlling
that party); proceedings for the dissolution or liquidation of a party (or a person controlling that
Party) are commenced; a receiver, administrator or trustee is appointed in respect of a
substantial portion of the business or assets of a party (or a person controlling that party); a
party is in default of an obligation which causes a material adverse effect (as defined in the
Phosphate JVA), to the other party or PhosCo, and fails to remedy such a default within 28
days of receiving written notification from the other party; or it is in default of an obligation to
provide funds to PhosCo pursuant to the terms of the Phosphate JVA.

If a party becomes a defaulting party the non-defaulting Party may terminate the Phosphate
JVA, by electing to purchase all, or any number of, the shares in the Company then held by
the defaulting Party and its affiliates at a price equal to 80 % of the per share equity
contribution of the defaulting party if the default occurred before the commencement of
commercial production, or at a price equal to 80 % of the share price if default occurred after
the commencement of commercial production date. Alternatively, if the defaulting party and its
affiliates together hold 50 % or more of the shares in PhosCo the non-defaulting party may
require the defaulting party to purchase its shares at fair market value (as determined in
accordance with the terms of the Phosphate JVA).




                                               192
The Phosphate JVA contains such other warranties, covenants and provisions considered
usual for an agreement of this type.

Aluminium Project
Heads of Agreement

On 30 April 2007 a Heads of Agreement ("HoA") in relation to the Aluminium Project was
concluded by Rio Tinto Alcan and Ma'aden. The HoA envisages that the Aluminium Project
will be owned and operated through AlumCo, which is to be incorporated as a limited liability
company and owned 51 % by Ma'aden and 49 % by Rio Tinto Alcan. The conclusion of a
definitive joint venture agreement ("Aluminium JVA") is subject to further negotiation and to
the successful completion of a feasibility study in respect of the refinery.

Under the HoA each joint venture partner will contribute an equity contribution in proportion to
its project interest. The HoA also outlines each partner's responsibilities towards the project
with Ma'aden being responsible on a reasonable endeavours basis for, amongst other things,
procuring the provision of certain infrastructure and services, licences for the production of
power, steam and desalinated water, property and mining leases for the Az Zabirah and Ras
Az Zawr sites, caustic soda and fuel supply contracts. Rio Tinto Alcan is obliged to provide
AlumCo with certain management support services including the provision of skilled
personnel from other Rio Tinto Alcan plants, training, human resources management,
developing and updating of certain operational policies and procurement services. In addition
Rio Tinto Alcan is obliged to ensure that certain of its affiliates provide licences for alumina
refining and aluminium smelting technologies and that these affiliates also enter into technical
support arrangements with AlumCo

The HoA contains a number of provisions regarding the governance and management of
AlumCo, including the following:

    •   All matters to be considered by shareholders shall require a resolution passed with a
        majority representing 55 % of the voting share capital, save for certain reserved
        matters such as the amendment of AlumCo's articles, changes in AlumCo's
        shareholding structure or capital increases or decreases other than as contemplated
        in the HoA and a material change in business, which shall require a 75 % majority;

    •   The board of managers of AlumCo shall comprise six members in total with three
        being nominated by Ma'aden (including the Chairman) and three being nominated by
        Rio Tinto Alcan (including the Vice-Chairman);

    •   Decisions of the board of managers may be approved by simple majority vote, save
        for certain reserve matters such as approvals of project expansion proposals, entry
        by AlumCo into any project, financing or related party agreements and acquisitions
        and disposals with a value in excess of US$1,000,000 (SR3,750,000,) which shall
        require approval by a 75 % majority;

    •   The appointment of senior officers of AlumCo made by the board of managers and
        approved by a 75 % majority. The senior management team shall include a chief
        executive officer recruited by Ma'aden, a chief operating officer recruited by Rio Tinto
        Alcan and chief financial and chief human resources officers jointly recruited by
        Ma'aden and Rio Tinto Alcan;

    •   Pending execution of the Aluminium JVA, Ma'aden and Rio Tinto Alcan shall form a
        project development committee ("Development Committee") comprising eight
        members, four of which are to be appointed by Ma'aden and four of which are to be
        appointed by Rio Tinto Alcan. The Development Committee shall be responsible for
        co-ordination of the development of the Aluminium Project and setting budgets for




                                              193
        project costs. Upon execution of the Aluminium JVA, the Development Committee will
        be replaced by a project steering committee which will assume the functions of the
        Development Committee.

Neither party may transfer any part of its shareholding in AlumCo during the five year period
commencing on the date of commercial operation of the Aluminium Project. After the expiry of
the five year lock-in period, each party will have a right of first refusal with respect to any
proposed sale of shares by the other party. Ma'aden, however, shall be entitled to transfer its
shares to any agency or entity in Saudi Arabia in which the Government of Saudi Arabia holds
a controlling interest or conduct an initial public offering provided Public Investment Fund
retains a controlling interest in Ma'aden, without Rio Tinto Alcan's consent. Rio Tinto Alcan
shall be entitled to transfer its shares to any of its wholly-owned subsidiaries without
Ma'aden's consent.

Under the terms of the HoA Ma'aden and Rio Tinto Alcan have each agreed to enter into an
offtake agreement with AlumCo to purchase their pro rata share (according to their respective
project interests of 51 % and 49 %) of aluminium produced by the project at a price based on
LME prevailing prices.

It is proposed that Rio Tinto Alcan and Ma'aden enter into a sales agency agreement
pursuant to which Rio Tinto Alcan will act as Ma'aden's sales agent for the sale of a portion of
Ma'aden's share of smelter aluminium outside Saudi Arabia in consideration for the payment
of an agency fee. It is anticipated that the term of the agreement will be 15 years from the
first date of full commercial production from first line of the smelter. The portion of Ma'aden's
share of aluminium production to be subject to the agreement and the agency fee payable to
Rio Tinto Alcan is yet to be agreed in principle.

It is proposed that each year after the fifth year of the term of the sales agency agreement,
Ma'aden will be entitled to reduce the amount of aluminium which Rio Tinto Alcan may sell on
its behalf in increments of up to 25 % of Ma'aden's pro rata share of aluminium provided it has
first given Rio Tinto Alcan 12 months' notice. The gross proceeds of sale (before deduction of
the commission payable to Rio Tinto Alcan) remitted to Ma'aden upon sale of smelter
aluminium by Rio Tinto Alcan on behalf of Ma'aden will be determined with reference to the
average price achieved by Rio Tinto Alcan on sales of smelter aluminium in arm's length
transactions with third parties.

It is also proposed that Rio Tinto Alcan shall have the right to terminate the sales agency
agreement at any time after the fifth year of the term by providing to Ma'aden 12 months' prior
written notice.

Pursuant to the HoA, Rio Tinto Alcan and Ma'aden also propose entering into an exclusive
sales agency agreement for Saudi Arabia on substantially the same terms for the sale of Rio
Tinto Alcan's share of the smelter aluminium that Rio Tinto Alcan determines may be sold to
purchasers within Saudi Arabia. Ma'aden will have the right to terminate the sales agency
agreement at any time after the fifth year of the term on 12 months' prior written notice to Rio
Tinto Alcan.

The HoA will terminate in the event of (i) the insolvency of either party, (ii) a material breach
by the other party not remedied within 14 days of notice, (iii) the joint venture agreement for
the Aluminium Project not being signed on or prior to 16 July 2008, or any extended period
thereafter but in any event by 31 December 2008, or (iv) any material delay in the
development work programme and timetable as agreed in the HoA.

The term of the Aluminium Joint Venture Agreement, as contemplated under the HoA, is
intended to be 30 years and subject to renewal for an additional term of 20 years unless the
parties agree otherwise. Thereafter, it is contemplated that the joint venture shall be subject
to renewal for subsequent 10 year terms by mutual agreement between the parties.




                                              194
Common Infrastructure
Power Interconnection Agreement with SEC

On 19 December 2006 Ma'aden entered into an interconnection agreement with SEC
("Interconnection Agreement") which outlines the basis on which backup power from the
SECs power grid may be purchased by Ma'aden and imported to co-generation power plants
for each of the Phosphate and Aluminium Projects at Ras Az Zawr and surplus power may be
sold by Ma'aden back to the SEC grid.

The Interconnection Agreement records Ma'aden and the SECs agreement to proceed with
the construction of certain interconnection assets including a 122km long, 380kV double
circuit overhead transmission line between SECs 380kV substation at Jubail to a 380kV
substation to be constructed by Ma'aden at Ras Az Zawr which will enable the import and
purchase of back-up power from SECs 380kV network to support operations at Ras Az Zawr
and the export and sale of power to the SEC's 380kV network from Ma'aden's facilities at Ras
Az Zawr. The Interconnection Agreement commits SEC and Ma'aden to agreeing certain
technical and commercial agreements to achieve the objects of the Interconnection
Agreement.

Ma'aden will fund and implement the interconnection and, on completion, the transmission
lines will be handed over to SEC. Ma'aden will also be responsible for funding and
implementing the construction of the 380kV substation to be located at Ras Az Zawr. SEC will
provide Ma'aden with technical and operational support for the testing, commissioning and
acceptance of the interconnection. SEC also agrees to supply interim power to the facilities at
Ras Az Zawr (at the standard industrial tariff) until full operation of the Phosphate co-
generation plant.

Ma'aden shall pay to a percentage of the actual cost of material and construction of the
transmission line (which is estimated under the agreement to be SR300 million) as
reimbursement for SECs costs of providing engineering, technical support, field supervision
and services in relation to the interconnection project. The fees will be payable in five
instalments.


Insurance Policies

Ma’aden currently maintains an insurance programme which covers a range of classes
including property (all risks), business interruption, machinery breakdown, public liability,
motor, marine and land transit, life & personal accident and medical expenses. Ma'aden
maintains and periodically reviews its policies with the assistance of its insurance consultant.
The reviews include an assessment of any new exposures or risks that may have developed
since the last review.

Ma'aden has appointed Aon, as an insurance advisor and placing broker to Ma’aden to
manage insurance programmes for existing operations as well as new projects, including the
Phosphate and Aluminium Projects.

It is intended that PhosCo, on behalf of all parties involved in the Phosphate Project, will
effect the appropriate insurance both during the construction and operational phases. "Early
works" insurance policies have already been implemented to cover the construction phase of
the Phosphate Project.

It is envisaged that an insurance programme similar to that to be implemented in relation to
the Phosphate Project with respect to the Aluminium Project at the appropriate time.




                                              195
Litigation

The Directors and Management confirm that the Company and/or any of its affiliated
companies are not involved, as of the date of this Prospectus, in any litigation, arbitration or
administrative proceedings that would, individually or in aggregate, have a material adverse
effect on its financial condition and results of its operations. Moreover, so far as the Directors
and Management are aware, there is no expected or threatened litigation, arbitration or
administrative proceedings that would, individually or in aggregate, have a material adverse
effect on its financial condition and results of operations.




                                               196
        Documents Available for Inspection

The following documents will be available for inspection at the Company’s head office located
at Al-Ma’ather Street, Ministry of Petroleum and Mining, Saudi Arabia, Riyadh between the
hours of 8:30 am to 2:00 pm one week prior to and during the Subscription Period:

    •   The Bylaws of the Company and the Articles of Association of its affiliated
        companies;

    •   The Commercial Registration Certificates of the Company and its affiliated
        companies;

    •   The CMA’s approval of the Offering;

    •   Written approval of Baker & McKenzie Limited and Baker & McKenzie LLP for the
        inclusion of their names in this Prospectus as the Offering’s Legal Advisors;

    •   The valuation report prepared by the Financial Advisor;

    •   Financial Advisor’s Letter;

    •   Audited Financial Accounts of the Company for the years ending 31 December 2004,
        2005, 2006 and 2007, which were prepared by Deloitte & Touché, Baker Abulkhair &
        Co., a firm of Saudi Accountants;

    •   Gold Mineral Expert’s Report prepared by SRK;

    •   Phosphate Mineral Expert’s Report prepared by Behre Dolbear; and

    •   Aluminium Mineral Expert’s Report prepared by Behre Dolbear.

    •   Council of Minister Resolution No. 72 dated 03/04/1427H.

    •   Minutes of meeting dated 16/11/1428H between Minister of Petroleum and Precious
        Minerals and the Minister of Finance(Chairman of the Board of the Public Investment
        Fund) to determine the Share Offering price.

    •   Council of Minister Resolution No. 49 dated 25/02/1429H providing for the increase in
        Ma’aden’s capital to SR 9,250,000,000.




                                              197
                   Mineral Experts Reports

Each of the Gold MER, Phosphate MER and Aluminium MER (set out in the "Mineral Expert
Reports" section) were prepared in or prior to November 2007 and as such address the
matters stated therein at that time or at the times otherwise specified and do not take account
of any changes or developments which may have occurred since. These reports have not
been updated prior to the date of this Prospectus.




                                             198
                             Gold Mineral Expert's Report


 An Independent Mineral Experts’ Report on the Gold Mining and Exploration Assets of Saudi
                           Arabian Mining Company (Ma’aden)

1.0E INTRODUCTION

1.1E Background

    SRK Consulting (UK) Limited (“SRK”) is an associate company of the international group holding
    company, SRK Global Limited (the “SRK Group”). SRK has been commissioned by the board of
    directors of Saudi Arabian Mining Company (“Ma’aden” also referred to as the “Company”) to
    prepare an independent mineral experts’ report (“MER”) on the gold mining assets (the “Mining
    Assets”) and gold exploration assets (the “Exploration Assets”), collectively referred to as the
    “Gold Assets” of the Company (Figure 1.1E).

    This extract (the “Extract”) has been prepared in accordance with the Listing Rules as defined by
    the Capital Market Law (the “CMA”) issued by Royal Decree No M/30 dated 1 August 2003,
    hereinafter referred to as the “CMA Listing Rules”. The Extract contains a valuation of the Gold
    Assets. The valuation of the Gold Assets is limited to the valuation of the Ore Reserves and
    specifically excludes all other assets of the Company’s gold division (“Ma’aden Gold”).

    The MER, available in full, electronically on the Company’s website, has been prepared by SRK.
    The Extract is compiled from the MER by SRK and will be included in the prospectus (the
    “Prospectus”) to be published by the Company in connection with the simultaneous offering (the
    “Offer”) of ordinary shares in the Company and the proposed admission (the “Admission”) of
    such shares to trading on the Saudi Stock Exchange. Accordingly the Extract should not be
    considered a MER within the meaning of Chapter 19 of the United Kingdom Listing Authority’s
    Listing Rules as it existed on 30 June, 2005 (prior to its deletion upon the implementation in the
    UK on 1 July, 2005 of the Prospectus Directive) as published by the Financial Services Authority
    from time to time and governed by the United Kingdom Listing Authority.

    The standard adopted for the reporting of the Mineral Resource and Ore Reserve statements for
    the Mining Assets is that defined by the terms and definitions given in “The 2004 Australasian
    Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC
    Code”) as published by the Joint Ore Reserves Committee of the Australasian Institute of Mining
    and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia”. The
    JORC Code is an internationally recognised Mineral Resource and Ore Reserve reporting code.

    The Extract has been prepared under the direction of the Competent Persons (the “CPs”, see
    Section 1.2E) as defined by the JORC Code who assume overall professional responsibility for
    the Extract. The Extract, however, is published by SRK, the commissioned entity, and
    accordingly SRK assumes responsibility for the views expressed herein. Consequently with
    respect to all references to CPs and SRK: ‘all references to SRK mean the CP and vice-versa’.

    The Extract is addressed to the Company and JPMorgan Chase Bank N.A. (the “Financial
    Advisor”). Drafts of the Extract were provided to the Company, but only for the purpose of
    confirming both the accuracy of factual information and the reasonableness of assumptions
    relied upon in the Extract.

    SRK has given and has not withdrawn its written consent to the inclusion of its Extract set out as
    the “Extract from the Gold Mineral Experts’ Report” and references to its report and its name in
    the form and context in which they are respectively included and has authorised the contents of
    its report for the purposes of compliance with the Listing Rules.

    In respect of all matters in relation to limitations, reliance on information, declarations, Consent
    and Copyright, the reader is referred to Section 1.3E of the Extract.

                                             105
    The Extract includes technical information, which requires subsequent calculations to derive
    subtotals, totals and weighted averages. Such calculations may involve a degree of rounding
    and consequently introduce an error. Where such errors occur, SRK does not consider them to
    be material.

1.2E Review Process

    The Extract is dependent upon technical, financial and legal input. The technical information as
    provided to and taken in good faith by SRK, has not been independently verified by SRK by
    means of complete re-calculation of the Mineral Resources and Ore Reserves. SRK has,
    however, conducted a review and assessment of all material technical issues likely to influence
    the future performance of the Mining Assets which included the following:

        •   Inspection visits to the Mining Assets’ mining and processing facilities, surface structures
            and associated infrastructure undertaken most recently April 2006;

        •   Discussion and enquiry following access, to key project and head office personnel
            between June 2007 and October 2007;

        •   An examination of historical information (2004, 2005, 2006 and 2007H1) and results
            made available by Ma’aden Gold in respect of the Mining Assets; and

        •   A review, and where considered appropriate by SRK, modification of Ma’aden Gold’s
            production forecasts contained in the relevant Life-of-Mine plans (“LoMp”).

    SRK has also:

        •   Assumed certain macro-economic parameters and commodity prices and relied on these
            as inputs to undertake a break-even analysis of Ma’aden Gold’s Ore Reserve estimates
            (hereinafter referred to as the Ore Reserve economic viability assessment - the “Ore
            Reserve EVA”) and to derive the equity value of Ma’aden Gold; and

        •   Satisfied itself that such information is both appropriate and valid for the Ore Reserve
            EVA and derivation of the equity value as reported herein.

    Where fundamental base data has been provided (LoMp, capital expenditures, operating
    budgets etc) for the purposes of review, SRK has performed all necessary validation and
    verification procedures deemed appropriate in order to place an appropriate level of reliance on
    such information.

    The forecast of commodity prices in real terms (Table 4.1E) is based on the following:

        •   For gold, a combination of the short-term and-long term price profiles as provided by
            Brook Hunt & Associates Limited (“Brook Hunt”); and

        •   For silver, zinc, copper and lead the consensus market forecasts (annual averages of
            various market analysts forecasts).

    In undertaking the Ore Reserve EVA a break-even gold price which:

        •   Is equivalent to the weighted average LoMp real terms total costs;

        •   Reflects the current (2007H1) cash costs reported on a by-product basis; and

        •   Is required to return a zero NPV at a real terms discount factor of 10%.

    The Competent Person with overall responsibility for reporting of Mineral Resources is Mr Martin
    Pittuck, CEng, MIMMM, MSc who is an employee of SRK. Mr Martin Pittuck is a mining




                                                 200
    geologist with 12 years experience in the mining industry and has been responsible for the
    reporting of Mineral Resources on various properties internationally during the past five years.

    The Competent Person with overall responsibility for reporting of Ore Reserves is Mr David
    Pearce, CEng, A.AusMMM, MSc, MBA, who is an employee of SRK. Mr David Pearce is a
    mining engineer with 20 years experience in the mining industry and has been involved in the
    reporting of Ore Reserves on various properties internationally during the past five years.

1.3E Limitations, Reliance on Information, Declaration, Consent and Copyright

1.3.1E   Limitations

    Save for the responsibility arising under paragraph 1(c)(2) of Annex 4 of the Listing Rules issued
    by the CMA to any person as and to the extent provided therein or under any other law, to the
    fullest extent permitted by law SRK does not assume any responsibility and will not accept any
    liability to any other person for any loss suffered by any such other person as a result of, arising
    out of, or in connection with this Extract or statements contained therein, required by and given
    solely for the purpose of complying with item paragraph 1(c)(2) of Annex 4 of the Listing Rules
    issued by the CMA, consenting to its inclusion in the Prospectus.

    The Company has confirmed in writing to SRK that to its knowledge the information provided by
    it (when providing) was complete and not incorrect or misleading in any material respect. SRK
    has no reason to believe that any material facts have been withheld and the Company has
    confirmed in writing to SRK that it believes it has provided all material information.

    The achievability of the LoMps are neither warranted nor guaranteed by SRK. The LoMps as
    presented and discussed herein have been proposed by the Company’s management and
    adjusted where appropriate by SRK, and cannot be assured; they are necessarily based on
    economic assumptions, many of which are beyond the control of the Company. Future
    cashflows and profits derived from such forecasts are inherently uncertain and actual results may
    be significantly more or less favourable.

1.3.2E   Reliance on Information

    SRK believes that its opinion included in the Extract must be considered as a whole and that
    selecting portions of the analysis or factors considered by it, without considering all factors and
    analysis together, could create a misleading view of the process underlying the opinions
    presented in the Extract.

    SRK’s equity value for the Company is effective at 1 July 2007 and is based on information
    provided by the Company throughout the course of SRK’s investigations, which in turn reflect
    various technical-economic conditions prevailing at the date of this report. In particular, the
    equity value and Ore Reserve EVA are based on expectations regarding the commodity prices
    and exchange rates prevailing at the date of this report. These and the underlying technical-
    economic parameters (“TEPs”) can change significantly over relatively short periods of time.
    Should these change materially the Equity Value could be materially, different in these changed
    circumstances. Further, SRK has no obligation or undertaking to advise any person of any
    change in circumstances which comes to its attention after the date of the Extract or to review,
    revise or update the Extract or opinion.

1.3.3E   Declaration

    SRK will receive a fee for the preparation of this report in accordance with normal professional
    consulting practice. This fee is not contingent on the outcome of the Offer and SRK will receive
    no other benefit for the preparation of this report. SRK does not have any pecuniary or other
    interests that could reasonably be regarded as capable of affecting its ability to provide an
    unbiased opinion in relation to the Mineral Resources, the Ore Reserves, the LoMp and the
    equity value of the Company.




                                                 201
    Neither SRK, the CPs nor any directors of SRK have at the date of this report, nor have had
    within the previous two years, any shareholding in the Company, the Mining Assets or advisors
    of the Company. Consequently, SRK, the CPs and the Directors of SRK consider themselves to
    be independent of the Company.

    In the Extract, SRK provides assurances to the Board of Directors of the Company that the
    TEPs, including production profiles, operating expenditures and capital expenditures, of the
    Mining Assets as provided to SRK by the Company and reviewed and where appropriate
    modified by SRK, are reasonable, given the information currently available.

1.3.4E   Consent

    SRK has given and has not withdrawn its written consent to the inclusion of its Technical Report
    set out in the “Prospectus: the Extract from the Gold Mineral Experts’ Report” and references to
    its report and its name in the form and context in which they are respectively included and has
    authorised the contents of its report and context in which they are respectively included and has
    authorised the contents of its report for the purposes of compliance with the CMA Listing Rules.

1.3.5E   Copyright

    Copyright of all text and other matter in this document, including the manner of presentation, is
    the exclusive property of SRK. It is an offence to publish this document or any part of the
    document under a different cover, or to reproduce and/or use, without written consent, any
    technical procedure and/or technique contained in this document. The intellectual property
    reflected in the contents resides with SRK and shall not be used for any activity that does not
    involve SRK, without the written consent of SRK.

1.3.6E   Disclaimers

    Ore Reserve estimates are based on many factors, including, in this case, data with respect to
    drilling and sampling. Ore Reserves are derived from estimates of future technical factors, future
    production costs, future capital expenditure, future product prices and the exchange rate
    between the SAR and the US$. The Ore Reserve estimates contained in this report should not
    be interpreted as assurances of the economic life of the Mining Assets or the future profitability of
    operations. As Ore Reserves are only estimates based on the factors and assumptions
    described herein, future Ore Reserve estimates may need to be revised. For example, if
    production costs increase or product prices decrease, a portion of the current Mineral Resources,
    from which the Ore Reserves are derived, may become uneconomical to recover and would
    therefore result in lower estimated Ore Reserves.

    The LoMp, the TEPs and the financial models include forward-looking statements. These
    forward-looking statements are necessary estimates and involve a number of risks and
    uncertainties that could cause actual results to differ materially.




                                                 202
Figure   1.1E Ma’aden Gold: operating structure




                                   203
2.0E THE GOLD ASSETS

   Ma’aden Gold’s principal activities include exploration, development, and operation of gold mines
   and metallurgical processing facilities which in addition to gold and silver also produce precious
   metals rich copper and zinc concentrates for third party toll smelting (Mahd Ad’Dahab and Al
   Amar). Ma’aden Gold’s assets are all located in Saudi Arabia and include: five operations (Mahd
   Ad’Dahab, Al Amar, Bulghah, Sukhaybarat (processing facility only), and Al Hajar); one
   development property (Ad Duwayhi); five advanced exploration properties (Mansourah, Ar Rjum,
   Masarrah, As Suk and Zalim – collectively the “AEPs”) and 33 exploration prospects (Figure
   2.1E, Table 2.1E), collectively the “EPs”.

   In 2006, Ma’aden Gold (Table 2.2E) processed approximately 5.4Mt of ore and produced
   approximately 167koz of gold (192koz gold equivalent) at a by-product cash cost of US$283/oz.
   For the six-month period ending 30 June 2007, Ma’aden Gold processed approximately 2.1Mt of
   ore and produced approximately 75koz of gold (86koz gold equivalent) at a by-product cash cost
   of US$292/oz.

   Ma’aden Gold employs a total of 728 total employees costed (“TEC”), 607 of whom are
   employed directly at the Mining Assets: Mahd Ad’Dahab (234), Al Amar (112), Bulghah (106),
   Sukhaybarat (94), Al Hajar (61); and a further 121 are employed at Ma’aden Gold’s head office in
   Jeddah.

   Total environmental liabilities comprise bio-physical and social (“Terminal Benefits”) of
   US$25.2m (“Bio-physical” – US$17.1m; Terminal Benefits – US$8.1m). At 30 June 2007,
   Ma’aden Gold had total Plant Property and Equipment (“PP&E”) valued at US$62.2m.

   As at 1 July 2007, Ma’aden Gold (Table 3.1E) had Ore Reserves of 1.3Moz of gold contained
   within 21.7Mt and grading 1.9g/t Au and Mineral Resources of 10.0Moz of gold (10.1Moz gold
   equivalent) contained within 132.8Mt and grading 2.3g/t Au (2.4g/t Au Eq).

   An analysis of international gold companies based on 2006 calendar statistics indicates that
                               th                            th
   Ma’aden Gold is ranked 46 in respect of production and 18 in respect of cash costs. Figure
   2.2E presents the industry cash cost curve for mining companies based on equity participation
   and by-product reporting principles.

   The Company’s Health, Safety and Environmental Policy commits to the establishment of a
   health, safety and environmental management system. Ma’aden has designed an environmental
   management system (“EMS”) and an occupational health and safety system (“OHSS”) manuals
   and intends to introduce these to the whole Ma’aden group in the second half of 2007.

   The Company is not currently ISO 14001 compliant and SRK notes that the proposed EMS
   system and policy statement do not reference compliance with the World Bank, Equator
   Principles or the principles established by the International Council of Mining and Metals
   (“ICMM”). Notwithstanding this limitation, the Company has employed external consultants for
   the generation of certain regulatory documentation: specifically Environmental Impact
   Assessments (“EIAs”) for some mines and closure plans for some mines. SRK has assessed
   Ma’aden Gold’s performance in this area in respect of compliance with World Bank, Equator
   Principles, ICMM and local regulatory requirements. Details regarding these components are
   given in the site specific sections of the full MER.

   The overall safety performance of the Mining Assets during 2007H1 (measured against
   performance during 2006) is summarised as follows: no fatalities; and an increase in the LTIFR
   from 9.74 to 15.64 per million man hours worked. For comparison, the Ontario benchmark target
   is 0.15 per million man hours for fatality rates and 7.50 per million man hours for LTIFR.
                               (1)
      Table 2.1E Gold Assets
                                             (2)                                              (3)
      Gold Assets                         Type                             Licence   Expiry          Area
                                                                                                    (km2)
      Mining




                                                   204
Operations                                                                                                                                           110.3
Mahd Ad'Dahab                                                  u/g                                         Mahd Ad‘Dahab            Dec-2017          10.3
Al Amar                                                        u/g                                               Al Amar            Dec-2026           5.0
Bulghah                                                        o/p                                               Bulghah            Dec-2030          39.0
Sukhaybarat                                                    s/f                                            Sukhaybarat           Dec-2017          50.0
Al Hajar                                                       s/f                                               Al Hajar           Jun-2027           6.0
Development Property                                                                                                                                 646.0
Ad Duwayhi                                                     o/p                                                 Aduwayah         Oct-2007         646.0
Exploration
Advanced Exploration Properties                                                                                                                   10,923.8
Mansourah                                                      o/p                                                Al Uruq            Jul-2008      4,302.3
Ar Rjum                                                        o/p                                        Ash Shakhtaliyah          Feb-2007       6,333.0
Masarrah                                                       o/p                                        Ash Shakhtaliyah          Feb-2007       6,333.0
As Suk                                                         o/p                                        Ash Shakhtaliyah          Feb-2007       6,333.0
Zalim                                                          o/p                                                  Zalim           Jun-2008         288.5
Exploration Prospects                                                                                                                             36,597.2
3 Prospects                                                    n/d                                               Aduwayah           Oct-2007         646.0
6 Prospects                                                    n/d                                                 Al Hajar         Dec-2007       1,499.5
2 Prospects                                                    n/d                                          Al Jardhawiyah          Aug-2006       7,609.0
4 Prospects                                                    n/d                                                 Al Uruq            Jul-2008     4,302.3
8 Prospects                                                    n/d                         An Najadi, Nugrah, Mawan, Habla          Dec-2009       1,847.1
2 Prospects                                                    n/d                                                As Siham           Jun-2007      5,504.4
2 Prospects                                                    n/d                                         Ash Shakhtaliyah         Feb-2007       6,333.0
1 Prospects                                                    n/d                                                  Miskah          Aug-2007       7,013.0
1 Prospects                                                    n/d                                                  Tawan           Nov-2006         415.7
1 Prospects                                                    n/d                                                  Shabah          Sep-2006       6,944.5
3 Prospects                                                    n/d                                                 Wurshah          Sep-2006       5,764.0
(1)
              The Mining Licences and the Exploitation Licences reflect the anticipated position by the Company for Ma’aden Gold following relinquishment
              of certain areas in accordance with the licence conditions.
(2)
              u/g – underground; o/p – open pit; s/f – surface sources; n/d – not determined.
(3)
              For all licences which are expired as of 30 June 2007 or are due to expire in 2007, SRK has been informed that the necessary applications for
              renewal have been lodged with the regulatory authorities.


Table            2.2E           Ma’aden Gold: salient historical (2004-2007H1 inclusive) and forecast
                                (2007H2, 2008) operating statistics
Statistics                                                 Units               2004             2005       2006       2007H1(1)         2007H2       2008
Processing
Tonnage                                                     (kt)               5,638            5,813      5,449          2,134           2,208      5,100
Grade                                                     (g/t Au)               1.9              1.6        1.2            1.3             1.3        1.5
Production
Gold                                                      (koz Au)              265              240        167                75            71        182
Silver                                                    (koz Ag)              467              434        293               149           133        379
Zinc                                                        (t Zn)                0                0        983               294           617      6,150
Copper                                                      (t Cu)              660              668        730               425           329      1,476
Lead                                                        (t Pb)                0                0          0                88            96        193
Gold Equivalent                                         (koz Au Eq)             279              256        192                86            81        233
Expenditures
Cash Cost(2) - on mine                                    (US$/t)              11.14             9.33      10.57          12.04           14.73      15.10
Cash Cost(3) - Co-product                                (US$/oz)                233              220        317            320             425        376
Cash Cost(4) - By-product                                (US$/oz)                225              207        283            292             391        293
Capital Expenditure                                       (US$m)                9.77            26.59      20.28          10.45            5.60      10.55
(1)
              The reduced cash operating costs for 2007H1 compared with 2007H2 is impacted by the significant (US$5.8m) under spend of corporate
              overheads (General and Administration, Projects and Technical Services, and Exploration). This under spend equates to a unit cash cost (by-
              product) basis of US$70/oz and is not assumed to continue in the current LoMp.
(2)
              On mine cash costs excluding concentrate and bullion related treatment, refining and realisation charges.
(3)
              Co-product cash cost based on cash cost excluding by-product credits divided by gold equivalent production (payable).
(4)
              By-product cash cost based on cash costs net of by-product credits divided by gold production (payable).




                                                                      205
Figure   2.1E   Ma’aden Gold: location of Gold Assets




                                   206
      Figure                          2.2E                                          Ma’aden Gold: company C1 cash cost curve analysis (calendar 2006
                                                                                    results)
                            800                                                                                                                                                                        800

                                                                                                                                                                   Spot Gold Price 1 July 2007,
                                                                                                                                                                           US$779/oz




                                      Ma'aden Gold, US$187/oz
                            700                                                                                                                                                                        700




                            600                                                                                                                                                                        600
                                                                                                                                                         3 Year Average Daily Price to 30 June
                                                                                                                                                                   2007, US$529/oz

                            500                                                                                                                                                                        500




                                                                                                                                                                           Q3, US$365/oz
      Cash Costs (US$/oz)




                                                                                                                                                                                                             Cash Costs (US$/oz)
                                                                                                                               Q2, US$304/oz
                            400                                                                                                                                                                        400
                                                                    Q1, US$234/oz




                            300                                                                                                                                                                        300




                            200                                                                                                                                                                        200




                            100                                                                                                                                                                        100




                             0                                                                                                                                                                         0
                                  0                             5                   10    15     20       25            30                     35   40            45                       50     55
                                                                                                      Gold Production 2006 (Moz)




   The above graphs are derived from data provided by Brook Hunt in October 2007 where C1
   Cash Cost comprises cash costs incurred from mining through to refined metal. Costs are net of
   by-product credits for primary gold mines (i.e. those where gold provides more than 65% of net
   revenues). For by-product gold mines (i.e. those where gold provides less than 65% of net
   revenues), costs are allocated pro-rata according to gold contribution to net revenue.

3.0E MINERAL RESOURCES AND ORE RESERVES

   SRK has not re-estimated the Mineral Resource and Ore Reserve statements for the Gold
   Assets as estimated by Ma’aden Gold. SRK has, however, undertaken sufficient check
   calculations and where appropriate, made necessary adjustments to the estimates as presented
   herein and incorporated such adjustments into the respective Mineral Resource and Ore
   Reserve statements and LoMps.

   Table 3.1E and Table 3.2E summarise SRK’s statements of Mineral Resources and Ore
   Reserves.




                                                                                                       207
  Table           3.1E            Ma’aden Gold: Mineral Resources and Ore Reserves by asset (1 July
                                  2007)
  JORC Code Statements                            Tonnage                     Grade                                   Content
                                                      (kt)         (g/t Au)                 (g/t Au Eq)         (koz Au)        (koz Au Eq)
  Ore Reserves
  Proved
  Mahd Ad'Dahab                                       447             10.6                        11.0                153              158
  Subtotal                                            447             10.6                        11.0                153              158
  Probable
  Mahd Ad'Dahab                                        792             7.6                         7.9                 194              202
  Al Amar                                            1,350             9.9                        10.2                 429              441
  Bulghah                                           16,768             0.8                         0.8                 428              428
  Sukhaybarat                                          164             0.4                         0.4                   2                2
  Al Hajar                                           2,143             1.3                         1.4                  87               99
  Subtotal                                          21,218             1.7                         1.7               1,140            1,172
  Ore Reserves
  Mahd Ad'Dahab                                      1,239             8.7                         9.0                 347              360
  Al Amar                                            1,350             9.9                        10.2                 429              441
  Bulghah                                           16,768             0.8                         0.8                 428              428
  Sukhaybarat                                          164             0.4                         0.4                   2                2
  Al Hajar                                           2,143             1.3                         1.4                  87               99
  Total Ore Reserves                                21,665             1.9                         1.9               1,293            1,329
  Mineral Resources
  Measured
  Mahd Ad'Dahab                                        344            21.3                        21.9                235              243
  Ad Duwayhi                                         7,222             2.8                         2.8                648              648
  Subtotal                                           7,566             3.6                         3.7                884              891
  Indicated
  Mahd Ad'Dahab                                        727            13.4                        13.9                 313              325
  Al Amar                                            1,864            11.3                        11.6                 679              698
  Bulghah                                           21,537             0.8                         0.8                 561              561
  Sukhaybarat                                          164             0.4                         0.4                   2                2
  Al Hajar                                           2,143             1.3                         1.4                  87               99
  Ad Duwayhi                                         6,359             5.7                         5.7               1,169            1,169
  Advanced Exploration Projects                     31,635             2.3                         2.3               2,369            2,369
  Subtotal                                          64,430             2.5                         2.5               5,181            5,223
  Measured + Indicated
  Mahd Ad'Dahab                                      1,071            15.9                        16.5                 549              568
  Al Amar                                            1,864            11.3                        11.6                 679              698
  Bulghah                                           21,537             0.8                         0.8                 561              561
  Sukhaybarat                                          164             0.4                         0.4                   2                2
  Al Hajar                                           2,143             1.3                         1.4                  87               99
  Ad Duwayhi                                        13,581             4.2                         4.2               1,817            1,817
  Advanced Exploration Projects                     31,635             2.3                         2.3               2,369            2,369
  Total Measured + Indicated                        71,996             2.6                         2.6               6,064            6,113
  Inferred
  Mahd Ad'Dahab                                        174            16.8                        17.5                  94               98
  Al Amar                                              141             9.5                         9.7                  43               44
  Bulghah                                            2,431             0.7                         0.7                  56               56
  Ad Duwayhi                                         3,493             2.7                         2.7                 299              299
  Advanced Exploration Projects                     54,528             2.0                         2.0               3,448            3,448
  Subtotal                                          60,766             2.0                         2.0               3,939            3,944
  Mineral Resources
  Mahd Ad'Dahab                                      1,245            16.1                        16.6                 643              665
  Al Amar                                            2,005            11.2                        11.5                 722              742
  Bulghah                                           23,968             0.8                         0.8                 617              617
  Sukhaybarat                                          164             0.4                         0.4                   2                2
  Al Hajar                                           2,143             1.3                         1.4                  87               99
  Ad Duwayhi                                        17,074             3.9                         3.9               2,116            2,116
  Advanced Exploration Projects                     86,164             2.1                         2.1               5,817            5,817
  Total Mineral Resources                          132,762             2.3                         2.4              10,004           10,058



  Table           3.2E            Ma’aden Gold: Total Ore Reserve Sensitivity (1 July 2007)
  Gold Price                          Tonnage              Grade                                                Content
  (US$/oz)                                (kt)       (g/t Au)                 (g/t Au Eq)                 (koz Au)              (koz Eq Au)
  350                                    8,700               2.9                      3.0                     817                       831
  450                                   14,178               2.4                      2.5                   1,087                     1,117
  550                                   21,665               1.9                      1.9                   1,293                     1,329
  650                                   22,204               1.8                      1.9                   1,293                     1,332
  750                                   31,636               1.5                      1.6                   1,565                     1,607



When considering the Mineral Resource and Ore Reserve statements as presented herein, the
following applies:

   •      Measured and Indicated Mineral Resources are inclusive of those Mineral Resources
          modified to produce Ore Reserves;

   •      Mineral Resources are quoted at an appropriate in-situ economic cut-off grade which
          satisfies the requirement of ‘potentially economically mineable’ for open-pit and
          underground mining assets separately. Furthermore, the commodity prices incorporated
          into the in-situ cut-off grade calculations are as follows: US$550/oz for gold; US$9.00/oz


                                                       208
       for silver; USc65/lb for zinc; and USc140/lb for copper. The resulting cut-off grades have
       then in general been discounted by 25% to report Mineral Resources and to
       accommodate the ‘potentially economically mineable’ consideration.             SRK notes
       however that where potential exists for both open-pit and underground mining
       (specifically Ad Duwayhi and the AEPs) the stated Mineral Resources have not been
       sub-divided into those Mineral Resources which are potentially economically mineable
       by open-pit methods (typically by using a optimisation shell at higher commodity prices
       than that used for the Ore Reserves) and underground methods (higher cut-off grades).
       Accordingly consideration at this stage for Ore Reserve potential within the AEPs is
       difficult given this limitation;

   •   Ore Reserves are due to currency of the LoMps (i.e. Al Amar feasibility study 2001;
       Bulghah mining study 2005Q4) based on a range of commodity prices which are
       generally lower than the current three year average as derived from daily closing prices.
       Notwithstanding this aspect, SRK has confirmed the validity of the statements as
       presented at the following long term commodity prices: gold at US$550/oz; silver at
       US$9.00/oz; zinc at USc65/lb; and copper at USc140/lb;

   •   Mineral Resources and Ore Reserves were originally prepared by Ma’aden Gold based
       on various LoMps. These statements have not been adjusted by means of re-estimation
       but have been adjusted by SRK to reflect depletion and any other necessary
       adjustments deemed necessary to reflect JORC Code compliant statements as at 1 July
       2007;

   •   Unless otherwise stated all Mineral Resources and Ore Reserves are quoted on an
       equity attributable basis assuming 100% ownership as at 1 July 2007;

   •   All Ore Reserves are quoted in terms of RoM tonnage and grades as delivered to the
       metallurgical processing plants and are therefore inclusive of all appropriate modifying
       factors;

   •   Ore Reserve statements are derived from LoMps which are based solely on Measured
       and Indicated Mineral Resources and specifically exclude Inferred Mineral Resources;

   •   Ore Reserve sensitivities, where reasonable to estimate, have been derived from
       application of the relevant in-situ cut-off grades and application of modifying factors at a
       range of commodity prices for gold, silver, zinc and copper. In respect of the open-pits
       incremental optimised shells were developed for the range of commodity prices which
       were then used to constrain the open-pitable Ore Reserves. It should, however, be
       noted that these are not supported by appropriately detailed LoMps and should therefore
       be considered as incremental changes to the declarations as reported herein;

   •   All references to Mineral Resources and Ore Reserves are stated in accordance with the
       JORC Code; and

   •   Surface sources at the Mining Assets comprise low grade stockpiles which are
       notoriously difficult to sample, given the range of particle sizes commonly present and
       the resultant heterogeneity of grade encountered during small-scale sampling
       operations. Notwithstanding the fact that certain of the stockpiles are an integral part of
       the mining and processing operations and are in current use, SRK has classified all
       stockpiles as Indicated Mineral Resources and where planned to be processed
       economically reported these as Probable Ore Reserves.

Table 3.3E presents the results of the Ore Reserve EVA for the Mining Assets whereby the
current (2007H1) cash costs (by-product basis) are compared with the LoMp weighted averages
and the commodity prices required to return the post-tax pre-finance break-even position at a
real terms discount factor of 10%.

  Table     3.3E     Mining Assets: Ore Reserve economic viability assessment



                                            209
       Mining Asset                           Cash Costs (by-product basis)              +ve NPV
                                                    2007H1                      LoMp               Gold Price
                                                   (US$/oz)                   (US$/oz)              (US$/oz)
       Mahd Ad'Dahab                                    121                       170                    266
       Al Amar                                            0                        94                    296
       Bulghah                                          263                       349                    308
       Sukhaybarat                                      309                       551                    601
       Al Hajar                                         194                       298                    441
       Head office                                       85                       125                     n/a
       Ma’aden Gold                                     292                       337                    438




4.0E     VALUATION

4.1E     Valuation Methodology

   The valuation methodology for arriving at the equity value of the Mining Assets is based on the
   sum of the parts approach comprising the following:

        •    The “Enterprise Values” defined as the sum of the Net Present Values (“NPVs”) of the
             five Tax Entities; and

        •    Various valuation adjustments.

   The Enterprise Value is also defined as the Net Asset Value (“NAV”) of the Mining Assets. The
   sum of the NAV and the valuation adjustments are defined as the equity value attributable to
   Ma’aden Gold.

   SRK has not undertaken a valuation of the Exploration Properties and accordingly the NAV of the
   Gold Assets is the aggregate NPV of Mahd Ad’Dahab, Al Amar, Bulghah, Sukhaybarat, and Al
   Hajar.

   The methodology for undertaking the Ore Reserve EVA is based on the commodity price which:

        •    Is equivalent to the weighted average LoMp real terms total costs;

        •    Reflects the current (2007H1) cash costs reported on a by-product basis; and

        •    Is required to return a zero NPV at a real terms discount factor of 10%.

4.2E     Enterprise Value: Basis of Valuation

   The Enterprise Values are based on the application of Discounted Cashflow (“DCF”) techniques
   to the post-tax pre-finance cashflows represented by the Financial Models as developed for each
   Tax Entity. The financial Models are based on the various LoMps, including the TEPs.

   The financial models are based on annual cashflow projections ending 31 December 2007 and
   TEPs stated in 1 July 2007 money terms. As the Effective Date is 1 July 2007, the cashflow
   projection for Year 1 includes projections for six months only.

   In generating the Financial Models and deriving the Enterprise Values, SRK specifically, has:

        •    Incorporated the macro-economic forecasts as reflected in Table 4.1E;

        •    Incorporated the commodity price forecasts as reflected in Table 4.1E;

        •    Applied a real discount factor of 10% which can be compared with the Weighted Average
             Cost of Capital (“WACC”) of 7.36% real;




                                                  210
         •     Relied upon Ma’aden Gold to the extent that for all accounting inputs as required for the
               generation of the Financial Models in respect of the Net Movement in Working Capital;

         •     Relied upon the Board of Directors of the Company for all accounting inputs as required
               for the generation of the Financial Models in respect of: the un-depreciated opening
               balances; a general depreciation rate of 20%; trading loss carried forward indefinitely but
               limited to 25% of any given year’s taxable profit; corporate income tax (“CIT”) of 20%;
               and Zakat based on 2.5% of the net book value of the assets at the close of each period;

         •     Reported Enterprise Values for the Mining Assets as at 1 July 2007 which are based on
               a DCF valuation of the post-tax pre-finance cashflows resulting from the Financial
               Models;

         •     Performed sensitivity analysis to ascertain the impact of discount factors, commodity
               prices and total working costs; and

         •     Excluded the impact of salvage value on cessation of operations.
                                                                                                                           (1),(2)
       Table          4.1E           Base case commodity price and macro-economic projections
       Parameter                                   Units               2007H2              2008    2009    2010    2011              2012
       Commodity Prices - Real
       Gold                                       (US$/oz)                  675              676     577     544    511               511
       Silver                                     (US$/oz)                13.22            12.75   11.53   10.52   9.50              9.50
       Zinc                                       (USc/lb)                  160              144     113      89     65                65
       Copper                                     (USc/lb)                  318              294     245     192    140               140
       Lead                                       (USc/lb)                   91               78      67      54     40                40
       Commodity Prices - Nominal
       Gold                                       (US$/oz)                 693              713     624     604     583               599
       Silver                                     (US$/oz)                  14               13      12      12      11                11
       Zinc                                       (USc/lb)                 164              152     122      99      74                76
       Copper                                     (USc/lb)                 327              310     265     214     160               164
       Lead                                       (USc/lb)                  93               83      73      60      46                47
       Macro-Economics
       US CPI                                       (%)                   2.7%             2.7%    2.7%    2.7%    2.7%              2.7%
       SA CPI                                       (%)                   3.0%             3.0%    3.0%    3.0%    3.0%              3.0%
       Exchange Rate - Real                      (US$:SAR)                 3.75             3.75    3.75    3.75    3.75              3.75
       Exchange Rate - Nominal                   (US$:SAR)                 3.75             3.75    3.75    3.75    3.75              3.75
       (1)
                   All commodity prices are quoted at the closing period of 31 December.
       (2)
                   CPI rates for 2007 are annualised.




4.3E         Enterprise Value: post-tax pre-finance cashflows

   Table 4.2E presents the consolidated cashflows for the Mining Assets as well as the head office
   expenditures, accordingly this is included for summary presentation purposes only. The first
   period 2007H1 reports the forecast six-month projections to 31 December 2007, thereafter the
   projections are annual ending 31 December.




                                                                         211
       Table             4.2E           Ma’aden Gold: financial model in US$ real terms (1 July 2007)
       Period                                       Units      Total/Avg    2007H2         2008         2009       2010          2011        2012        2013      2014
       Production
       Mining Production - u/g + o/p + s/f
       Tonnage                                       (kt)       21,195        2,845        6,407       5,795       4,990           385         380         199       194
       Grade                                       (g/t Au)       1.9           1.3          1.4         1.4         1.5          10.8        10.3        10.4       8.2
                                                   (g/t Ag)       6.2           5.6          5.6         6.3         4.3          22.1        20.1        14.7      13.8
                                                    (% Zn)      0.42%        0.05%        0.18%       0.25%       0.28%         3.66%       3.74%       5.62%     4.58%
                                                   (% Cu)       0.07%        0.02%        0.03%       0.04%       0.05%         0.63%       0.63%       0.99%     0.67%
       Processing Production - u/g + o/p + s/f
       Tonnage                                       (kt)       21,665        2,208        5,100       5,147       4,768         2,168       1,026         799       449
       Grade                                       (g/t Au)       1.9           1.3          1.5         1.5         1.6           2.6         4.3         3.2       3.9
                                                   (g/t Ag)       6.2           7.3          7.2         7.2         4.6           4.1         7.9         3.7       5.9
                                                    (% Zn)      0.43%        0.08%        0.24%       0.29%       0.30%         0.68%       1.45%       1.40%     1.97%
                                                   (% Cu)       0.07%        0.02%        0.04%       0.04%       0.05%         0.11%       0.23%       0.25%     0.29%
       Payable Sales
       Gold                                       (koz Au)       1,016          71          182          183         181          149         126          72         51
       Silver                                     (koz Ag)       1,744         133          379          385         287          221         195          74         70
       Zinc                                         (t Cu)      52,156         617        6,150        8,465       7,940        8,172       8,306       6,910      5,596
       Copper                                       (t Zn)      11,321         329        1,476        1,559       1,816        1,805       1,790       1,590        956
       Lead                                         (t Pb)       1,057          96          193          193         193          193         188           0          0
       Gold - Equivalent                          (koz Au)       1,314          81          233          243         230          187         164         102         74
       Commodity Price
       Gold                                        (US$/oz)                     675          676          577        544           511         511         511       511
       Silver                                      (US$/oz)                  13.22        12.75        11.53      10.52           9.50        9.50        9.50      9.50
       Zinc                                        (USc/lb)                     160          144          113         89            65          65          65        65
       Copper                                      (USc/lb)                     318          294          245        192           140         140         140       140
       Lead                                        (USc/lb)                      91           78           67         54            40          40          40        40
       Sales Revenue                                (US$m)       578.8         47.9       123.4        105.7        98.6          76.0        64.5        36.6      25.9
       Gold                                         (US$m)       578.8         47.9       123.4        105.7        98.6          76.0        64.5        36.6      25.9
       Operating Expenditure Summary                (US$m)      (313.2)      (32.1)       (57.0)       (58.9)     (62.3)        (40.8)      (27.1)      (20.5)    (14.5)
       Mining                                       (US$m)       (89.1)       (5.8)       (15.9)       (17.1)     (17.9)        (11.2)      (11.1)       (7.0)     (3.2)
       Processing                                   (US$m)      (149.6)      (10.8)       (27.9)       (29.5)     (26.3)        (19.5)      (17.4)      (10.0)     (8.0)
       Overheads                                    (US$m)       (71.9)       (3.7)       (11.9)       (11.9)     (11.9)        (10.7)      (10.1)       (6.5)     (5.2)
       TC/RC/Realisation/Transportation             (US$m)       (61.1)       (1.7)       (10.7)       (11.5)      (9.7)         (8.1)       (8.2)       (6.4)     (4.7)
       By-product Credits                           (US$m)       167.6          6.4         34.3         34.2       26.5          19.6        19.4        15.5      11.6
       Other Corporate                              (US$m)      (106.2)      (12.2)       (21.3)       (21.7)     (21.7)        (11.4)       (7.6)       (5.1)     (5.3)
       Environmental                                (US$m)       (17.1)       (1.6)        (3.4)        (3.4)      (3.0)         (2.3)       (2.0)       (0.9)     (0.5)
       Terminal Benefits                            (US$m)        (5.2)           -            -            -      (0.3)         (0.4)       (1.8)       (0.1)     (2.6)
       Net Change in Working Capital                (US$m)        19.3        (2.7)        (0.2)          2.0        2.0           3.1        11.6         0.0       3.4
       Operating Profit                             (US$m)       265.6         15.9         66.4         46.9       36.4          35.2        37.4        16.1      11.4
       Tax Liability                                (US$m)       (34.1)       (2.6)        (9.6)        (6.6)      (4.5)         (4.0)       (4.8)       (1.4)     (0.7)
       Capital Expenditure                          (US$m)       (62.0)       (5.7)       (14.7)       (11.1)      (9.9)         (8.5)       (7.2)       (2.8)     (2.1)
       Final Net Free Cash                          (US$m)       169.5          7.6         42.1         29.2       22.0          22.7        25.4        11.9       8.6
       Cash Operating Costs                      (US$/oz Au)      236           345          229          237        265           221         212         192       201
       Total Cash Costs                          (US$/oz Au)      236           345          229          237        265           221         212         192       201
       Total Working Costs                       (US$/oz Au)      253           364          244          251        279           235         236         201       244
       Total Costs                               (US$/oz Au)      286           469          307          288        314           264         209         228       226




4.4E      Enterprise Value: Net Present Value and Sensitivities

   The following section presents the NPVs of the real term cash flows as derived from the
   Financial Models for individual Mining Assets (see MER). The various NPV tables include the
   following:

        •       NPVs at a range of discount factors; and

        •       NPV sensitivity to simultaneous adjustments for sales revenue and total working costs.

       Table             4.3E           Mining Assets (excluding Head office):                                             NPV (US$m) at various
                                        discount factors
       Discount Factor                                                                                                                                 Net Present Value
       (%)                                                                                                                                                       (US$m)
       0.00%                                                                                                                                                       296.9
       3.00%                                                                                                                                                       268.7
       5.00%                                                                                                                                                       252.3
       7.50%                                                                                                                                                       233.9
       10.00%                                                                                                                                                      217.7
       12.50%                                                                                                                                                      203.3
       15.00%                                                                                                                                                      190.4



       Table             4.4E           Mining Assets (excluding head office): sales revenue and total
                                        working cost simultaneous sensitivity at a real discount factor of 10%
       NPV (US$m)                                                                                   Sales Revenue Sensitivity
                                                                   -30%           -20%             -10%             0%              10%              20%           30%
                                                      -15%          120.9         164.1            205.2          246.0             286.5            326.8         367.1
       Total                                          -10%          109.8         154.2            195.6          236.6             277.1            317.4         357.8
       Working Cost                                    -5%           98.5         144.0            185.9          227.2             267.6            308.1         348.4




                                                                            212
       Sensitivity                       0%          87.0          133.6     176.2     217.7         258.2          298.7           339.1
                                         5%          75.3          122.7     166.3     208.0         248.8          289.3           329.7
                                        10%          63.6          111.4     156.2     198.4         239.4          279.8           320.3
                                        15%          51.8           99.8     145.9     188.7         229.8          270.4           310.9



       Table             4.5E   Mining Assets (detail): NPV (US$m) at various discount factors
       Discount Factor              Mahd Ad'Dahab           Al Amar        Bulghah    Sukhaybarat            Al Hajar              NPV
       (%)                                 (US$m)            (US$m)         (US$m)        (US$m)              (US$m)             (US$m)
       0.00%                                 105.2             138.5           49.0          (5.2)                9.4              296.9
       3.00%                                  96.3             121.4           45.9          (3.8)                8.9              268.7
       5.00%                                  91.0             111.7           44.0          (3.0)                8.6              252.3
       7.50%                                  85.1             101.0           41.8          (2.2)                8.2              233.9
       10.00%                                 79.8              91.7           39.9          (1.4)                7.8              217.7
       12.50%                                 75.0              83.5           38.1          (0.8)                7.5              203.3
       15.00%                                 70.7              76.4           36.4          (0.3)                7.2              190.4



       Table             4.6E   Head Office: NPV (US$m) at various discount factors
       Discount Factor                                                                                                  Net Present Value
       (%)                                                                                                                        (US$m)
       0.00%                                                                                                                      (127.3)
       3.00%                                                                                                                      (115.8)
       5.00%                                                                                                                      (109.1)
       7.50%                                                                                                                      (101.5)
       10.00%                                                                                                                      (94.8)
       12.50%                                                                                                                      (88.8)
       15.00%                                                                                                                      (83.5)




4.5E      Valuation of Advanced Exploration Properties

   The Mineral Resource statements for the Development Property of Ad Duwayhi and the
   Advanced Exploration Properties of Mansourah, Ar Rjum, Masarrah, As Suk and Zalim comprise
   a total Mineral Resource of 7.9Moz of gold contained within 103.2Mt at a grade of 2.4g/t Au. Ad
   Duwayhi, the most advanced of these has a total Mineral Resource of 2.1Moz of gold contained
   within 17.1Mt at a grade of 3.9g/t Au representing some 25% of the total gold content of the
   Mineral Resources reporting as Ad Duwayhi and AEPs.

   SRK has not valued the Ad Duwayhi or the AEPs (Mansourah, Ar Rjum, Masarrah, As Suk and
   Zalim). Notwithstanding this limitation, SRK notes the following:

        •       Ad Duwayhi: A pre-feasibility study was completed for the Ad Duwayhi development
                property in February 2007 by SRK. The pre-feasibility study assumes the construction
                (in 2010) of an open-pit mining operation processing through a carbon-in-leach plant with
                a rated processing capacity of 1Mtpa at a capital cost of US$92m. The pre-feasibility
                study was multi-disciplinary in scope, demonstrated the technical feasibility of the project
                as well as its economic viability given certain assumptions and included a discounted
                cashflow valuation for the project. Development of the project is however, dependent
                upon the establishment of regional infrastructure, specifically a water pipeline, the total
                capital expenditure requirement for which (to be expended in 2010) is some US$90m (at
                10% DCF this equates to US$64.4m in 1 July 2007 money terms).

                The pre-feasibility study assumes that the capital cost for the development of this
                regional infrastructure is funded by third parties and that offtakers (Ad Duwayhi) are then
                charged for water supply. The pricing for this supply assumes recovery of the capital
                costs over a 20 year period in addition to the annual unit operating costs which also
                assume that other offtakers (including some of the AEPs) have been developed.

                Accordingly given that Ad Duwayhi on a stand alone basis, does not justify the
                development of the pipeline, and the conditionality of economic viability on this
                assumption, no Ore Reserves are declared for the Ad Duwayhi development project.
                Based on the commodity price forecasts as included herein, SRK has updated its
                cashflow model and at a discount factor of 10% real, this results in a NPV of US$40m
                excluding the capital cost for the construction of the regional water pipeline. The project
                assumes a LoMp inventory of 10.2Mt mined at a grade of 3.5g/t Au, metallurgical
                recoveries of 93.0%, a processing rate of 1Mtpa and LoMp weighted cash cost of
                production of US$224/oz; and



                                                            213
              •         The technical studies completed for the AEPs are generally at the conceptual level and
                        would require the completion of a scoping study followed by a pre-feasibility study to
                        advance these to a similar level of confidence as Ad Duwayhi. Furthermore, their
                        development is also constrained by the availability of a reliable water source.
                        Accordingly Ma’aden Gold considers their potential development in combination with Ad
                        Duwayhi (collectively termed the “Central Arabian Gold Project”; the “CAG Project”).

       SRK considers that the scope as presented in the Ad Duwayhi pre-feasibility study to be an
       appropriate proxy for any assessment of the potential development of the CAG Project.

4.6E           Valuation Adjustments

4.6.1E Derivative Instruments

       SRK has been informed that Ma’aden Gold has the following derivative instruments as at 1 July
       2007:

              •         Commodity contracts for gold amounting to 29,615oz at a weighted average strike price
                        of US$279/oz; and

              •         Commodity contracts for gold amounting to 190,452oz at a weighted average strike price
                        of US$374/oz.

       This amounts to a total of 220,067oz of gold with a weighted average strike price of US$361/oz
       (Table 4.7E).

            Table           4.7E             Commodity (gold) derivatives
            Item                    Units        Totals/Avg.              2007H2              2008            2009             2010            2011            2012
            Hedge                   (koz)           220                        68               29              30               32              36              25
            Strike Price          (US$/oz)          361                       332              374             374              374             374             374


       Based on the spot price as at 1 July 2007 of US$779/oz, the market-to-market value, estimated
       by the net difference between the spot price and the weighted average strike price multiplied by
       the hedged ounces, is estimated at a negative US$92.08m.

4.6.2E Unallocated Head Office expenditures

       The NPV at 10% real of the unallocated Head Office expenditures are estimated at negative
       US$94.8m.

4.6.3E Net (Debt)/Cash position

       As at 30 June 2007, Ma’aden Gold had net (debt)/cash position of US$31.9m.

4.6.4E Summary of Valuation Adjustments

       Table 4.8E presents a summary of the valuation adjustments for derivation of the equity value of
       Ma’aden Gold.

            Table           4.8E             Summary of Valuation Adjustments
            Valuation Adjustment                                                                                             Units                          Amount
            Commodity Derivatives - mark-to-market value(1)                                                                 (US$m)                            (92.1)
            Net (Debt)/Cash position                                                                                        (US$m)                              31.9
            Unallocated Head Office Expenditures                                                                            (US$m)                            (94.8)
                  (2)
            Total                                                                                                          (US$m)                            (155.0)
(1)
         Subsequent Events: Since the preparation of this Extract we have been informed by the Company that it has unwound its gold hedge position represented by the
derivative instruments described above at a cost of US$119.25m. As a result the valuation adjustment for the commodity derivative shown in Table 4.8E is no longer
appropriate and no such adjustment would be made to any valuation of Ma'aden Gold prepared as at date of this Prospectus.




                                                                               214
(2)
      Accordingly and given (1) above the Total as presented in Table 4.8E would be adjusted to a negative US$62.9m.




                                                           215
5.0E   RISKS AND OPPORTUNITIES

5.1E   Introduction

   SRK has included its view on the achievement of the LoMp and the appropriateness of the
   Mineral Resource and Ore Reserve statements when presenting technical and financial data in
   this Extract. As of the Effective Date (1 July 2007) SRK considers these projections to be
   achievable.

   In all likelihood many of the identified risks and/or opportunities will have an impact on the cash
   flows as presented in Section 5.0E, some positive and some negative. The impact of one or a
   combination of risks and opportunities occurring cannot be specifically quantified to present a
   meaningful assessment. SRK has however provided a sensitivity table for simultaneous (twin)
   parameters. The sensitivity range covers the anticipated range of accuracy in respect of
   commodity prices, operating expenditures and capital expenditure projections. In this way the
   general risks are, with the aid of sensitivity tables, adequately covered.

5.2E   General Risks and Opportunities

   The Mining Assets are subject to certain inherent risks and opportunities, which apply to some
   degree to all participants of the international precious metals mining industry. These include:

       •   Commodity Price Fluctuations: These many be influenced, inter alia, by commodity
           demand-supply balances for gold, silver, zinc, copper and lead. In the case of gold and
           silver this is also impacted by consumption in industry and jewellery, actual or expected
           sales by central banks, sales by gold and silver producers in forward transactions and
           production cost levels for gold and silver in major producing countries. In the three-year
           period between 1 July 2004 and 30 June 2007 the following apply:

           −   gold price ranging between US$387/oz and US$651/oz with a resulting three year
               average of US$529/oz which can be compared with the long-term price of
               US$511/oz and the current 1 October 2007 spot price of US$743/oz,

           −   silver price ranging between US$5.88/oz and US$14.94/oz with a resulting three-
               year average of US$9.64/oz which can be compared with the long-term price of
               US$9.50/oz and the current 1 October 2007 spot price of US$13.78/oz,

           −   zinc price ranging between USc43/lb and USc210/lb with a resulting three-year
               average of USc104/lb which can be compared with the long-term price of USc65/lb
               and the current 1 October 2007 spot price of USc138/lb,

           −   copper price ranging between USc121/lb and USc398/lb with a resulting three-year
               average of USc230/lb which can be compared with the long-term price of USc140/lb
               and the current 1 October 2007 spot price of USc369/lb,

           −   lead price ranging between USc37/lb and USc163/lb with a resulting three-year
               average of USc63/lb which can be compared with the long-term price of USc40/lb
               and the current 1 October 2007 spot price of USc156/lb;

       •   Exchange Rate Fluctuations: Specifically related to the related strength of the US$,
           the currency in which commodity prices are generally quoted. During the period
           between 1 July 2004 and 30 June 2007 the US$:SAR exchange rate was pegged at
           3.75;

       •   Inflation Rate Fluctuations: Specifically related to the macro-economic policies of the
           individual countries. During the period between 1 July 2004 and 30 June 2007, United
           States CPI ranged between 1.3% and 4.7% reported on a 12-month basis. During the


                                                216
           period between 1 July 2004 and 30 June 2007, Saudi CPI ranged between -0.2% and
           3.6%;

       •   Country Risk: Specifically country risk including: political, economic, legal, tax,
           operational and security risks;

       •   Legislative Risk: Specifically changes to future legislation (tenure, mining activity,
           labour, occupational health, safety and environmental) within Saudi Arabia;

       •   Exploration Risk: Resulting from the elapsed time between discovery of deposits,
           development of economic feasibility studies to bankable standards and associated
           uncertainty of outcome;

       •   Mining Risk: Specifically Ore Reserve estimate risks, uninsured risks, industrial
           accidents, labour disputes, unanticipated ground water conditions, human resource
           management and safety performance; and

       •   Development Project Risk: Specifically technical risks associated with green field
           projects for which technical studies are limited to pre-feasibility studies or less and
           development and production has not commenced.

   In addition to those stated above, the Mining Assets are subject to certain specific risks and
   opportunities, which independently may not be classified to have material impact (that is likely to
   affect more than 10% of the Tax Entities annual pre-tax profits), but in combination may do so.

5.3E   Specific Risks and Opportunities

   In addition to the specific risks and opportunities identified below, addressing the general
   deficiencies identified by SRK is important to: unlocking the potential of the Gold Assets; to
   further assess the impact of lower recoveries at Bulghah and Sukhaybarat; and to maintain and
   increase production beyond 2010. The deficiencies identified are:

       •   Mineral Resource and Ore Reserve:

           −   The application and documentation of Quality Control and Quality Assurance,

           −   The lack of a formal Mineral Resource and Ore Reserve Management system as
               exemplified by the currency of core data (>2 years), lack of detailed reconciliation,
               reliance on manual methods, lack of detailed mine design and production scheduling
               beyond the immediate budget (1 year) reporting period; and

       •   Environmental Management, specifically the limitations in respect of:

           −   EIAs for Mahd Ad’Dahab and Sukhaybarat,

           −   Rudimentary social assessments arising from the limited public involvement,

           −   Monitoring processes.

       The additional specific risks and opportunities are:

       •   Environmental Risk: The inability of the Mining Assets to fund the environmental
           liabilities from estimated operating cashflows, should operations cease prior to that
           projected in the LoMp. This would result in an unfunded liability since the estimated
           rehabilitation expenditure is not currently funded. As at 1 July 2007, Ma’aden Gold’s
           environmental liability is estimated at US$17.1m. SRK notes that certain components of
           this risk may be mitigated as no assumptions have been made regarding the ability to




                                                217
    generate revenue through recovery of metals or sale of scrap when reporting this
    environmental liability. Specific environmental risks at each of the Gold Assets include:

    −   At Sukhaybarat, the seepage from the tailings storage facilities (“TSFs”) and the
        cessation of abstraction of polluted water emanating from the site,

    −   Some 2.2Moz of the total 5.8Moz of gold associated with the Exploration Properties
        is attributed to the Ar Rjum AEP which is located within the Mahazat Assaid
        Conservation Area which was established in the 1980s as a safe haven for
        endangered species such as the Arabian Oryx and indigenous Arabian Ostrich.
        Conversion of the Exploration Licence for Ar Rjum to an Exploitation Licence will
        require completion of a feasibility study and an Environmental Impact Study. In this
        respect a risk remains that the completion of such environmental work will not
        adequately address all environmental issues satisfactorily to ensure the conversion
        to an Exploitation Licence;

•   Environmental Compliance: All Mining Assets that are operational were granted
    mining leases (now called Exploitation Licences) when the old Mining Code
    (promulgated by Royal Decree No. M/21, dated July 1972) was in effect. The general
    environmental legislation, by means of Article 15 of the Implementing Regulations,
    allows all projects existing at the time of issue of the regulations a maximum grace
    period of five years (until September 2008) to ensure their compliance with both the
    Public Environmental Law and the Implementing Regulations. Accordingly whilst an
    extension is possible it is crucial that the Company adheres to a process to achieve the
    intended deadline;

•   Exploration Risk: During 2007 the Company significantly reduced the area of
                                                                     2
    exploration licences under direct management to 47,521.0km . Ma’aden Gold’s current
                                                            2
    strategy assumes a further reduction to 14,000.0km and total operating expenditures of
    US$33.5m. The exploration programme in the Northern-Arabian Shield (“NAS”) Region
    (US$17.4m) includes target generation where no JORC Code compliant Mineral
    Resources have been defined. Accordingly there remains a risk that the necessity to
    relinquish further licence area in the near future may not allow sufficient time to advance
    these properties as planned. This risk is further heightened by the fact that historical
    activity to date in the NAS region in respect of drilling appears significant by comparison
    with the Central Arabian Gold Region;

•   Terminal Benefits Liability Risk: The inability of the Mining Assets to fund the terminal
    benefits liabilities from estimated operating cashflows, should operations cease prior to
    that projected in the LoMp. This would result in an unfunded liability since the estimated
    terminal benefits expenditure is not currently funded. As at 1 July 2007, Ma’aden Gold’s
    terminal benefits liability is estimated at US$8.1m;

•   The combined operational and economic risk as reflected in the LoMps, specifically:

    −   at Al Amar, that projected dilution is greater than that envisaged in the 2001
        Feasibility Study given the current development dimensions and the acquisition of
        larger underground equipment than initially planned. In addition the planned
        processing expenditures are some 17% lower than currently experienced at Mahd
        Ad’Dahab Plant, despite the similarities in respect of planned production rates and
        flowsheet arrangements.

    −   at Bulghah, specifically in respect of the planned significant increase in the
        processing of lower grade fresh ore with significantly reduced metallurgical
        recoveries,

    −   at Sukhaybarat, the projected decline in processed grades beyond 2009 resulting in
        cash operating costs in excess of US$600/oz,




                                        218
       −   Al Hajar’s re-crushing project given the estimation risks associated with sampling
           historically stacked heap leach material and ensuring the representivity of
           metallurgical testwork;

   •   Development risks associated with the Development Property and the Advanced
       Exploration Properties given:

       −   that only a pre-feasibility study has been completed for Ad Duwayhi,

       −   that only conceptual/scoping studies have been completed for Mansourah, Ar Rjum,
           Masarrah, As Suk, and Zalim,

       −   that all of the above are to some degree dependent upon the establishment of a
           regional water pipeline at an overall capital cost of US$90m;

   •   The opportunity to increase Ore Reserves, through:

       −   upgrading of Inferred Mineral Resources at the AEPs through further drilling as well
           as completion of appropriate technical studies demonstrating the technical feasibility
           and economic viability of the CAG Project,

       −   re-optimisation of open-pits at Bulghah at the long-term commodity prices and
           consideration of the applicability of the current positive bias between grade-control
           models and exploration models,

       −   upgrading of Inferred Mineral Resources at Mahd Ad’Dahab, Al Amar and Bulghah
           to the Indicated Mineral Resource category through further drilling and completion of
           the necessary technical studies for modification to Probable Ore Reserves; and

   •   The opportunity to increase Mineral Resources through:

       −   further drilling, specifically targeting the areas which have not been closed off by
           drilling at Ad Duwayhi and the AEPs,

       −   application of improved geological wireframing at certain of the AEPs specifically
           Mansourah where the current Mineral Resource could be significantly expanded
           without the necessity of further drilling,

       −   further exploration at the prospects situated within 30km of Sukhaybarat: Hablah
           South; Red Hill; La prospect; and Al Habla,

       −   further exploration at the six prospects situated within 30km of Al Hajar: Hajeej;
           Sheers; Jadmah; Gossan-14; Waqba and Shabat Al Hamra,

       −   implementation of the planned exploration at the Exploration Properties which have
           not yet reported JORC Code compliant Mineral Resources.

SRK has not been informed of the use of proceeds from the Admission and accordingly cannot
comment on whether this will be utilised in the further development of Ma’aden Gold.




                                           219
6.0E COMPANY EQUITY VALUE

6.1E Introduction

    The following section includes an assessment of the equity value of the Company which is based
    on the sum of the parts approach combining: the valuation of the Mining Assets as represented
    by the Enterprise Values and the Valuation Adjustments.

6.2E Equity Value

    Table 6.1E gives the equity value of Ma’aden Gold at a discount factor of 10% real. Table 6.2E
    gives the equity value at a range of real discount factors and Table 6.3E gives the sensitivity of
    the equity value to changes in sales revenue and total working costs for the Enterprise Values
    and the value of unallocated Head Office overheads.




                                                220
             Table             6.1E          Ma’aden Gold equity value
             Valuation Component                                                                                      Units                                     Valuation
             Enterprise Value (Mining Assets)
             Mahd Ad'Dahab                                                                                           (US$m)                                          79.8
             Al Amar                                                                                                 (US$m)                                          91.7
             Bulghah                                                                                                 (US$m)                                          39.9
             Sukhaybarat                                                                                             (US$m)                                          (1.4)
             Al Hajar                                                                                                (US$m)                                            7.8
             Subtotal                                                                                                (US$m)                                         217.7
             Exploration Assets                                                                                      (US$m)                                              -
                                           (1)
             Gold Assets (Net Asset Value)                                                                           (US$m)                                         217.7
             Valuation Adjustments                                                                                   (US$m)                                       (155.0)
             Equity Value                                                                                            (US$m)                                          62.7
             Mineral Resources (Gold Assets)                                                                       (koz Au Eq)                                    10,058
             Ore Reserves (Gold Assets)                                                                            (koz Au Eq)                                      1,329
             EV per Mineral Resource Unit(1)                                                                     (US$/oz Au Eq)                                          6
             EV per Ore Reserve Unit                                                                             (US$/oz Au Eq)                                         47
(1)
        Subsequent Events: Since the preparation of this Extract we have been informed by the Company that it has unwound its gold hedge position represented by the
derivative instruments described above at a cost of US$119.25m. As a result the valuation adjustment for the commodity derivative shown in Table 6.1E is no longer
appropriate and would be reduced to a negative US$62.9m, which would result in a revised Equity Value of US$154.8m.
             (2)
                          The Equity Value per Mineral Resource unit contained within the Mining Assets (2.1Moz) is estimated at US$30/oz.

             Table             6.2E          Ma’aden Gold equity value: discount factor sensitivity analysis
             Discount Factor                           Mining Assets              Head Office                      Other Valuation Adjustments               Equity Value
             (%)                                            (US$m)                   (US$m)                                            (US$m)                     (US$m)
             0.00%                                              296.9                 (127.3)                                               (60.2)                  109.3
             3.00%                                              268.7                 (115.8)                                               (60.2)                   92.7
             5.00%                                              252.3                 (109.1)                                               (60.2)                   83.0
             7.50%                                              233.9                 (101.5)                                               (60.2)                   72.2
             10.00%                                             217.7                  (94.8)                                               (60.2)                   62.7
             12.50%                                             203.3                  (88.8)                                               (60.2)                   54.3
             15.00%                                             190.4                  (83.5)                                               (60.2)                   46.7
(1)
         Subsequent Events: Since the preparation of this Extract we have been informed by the Company that it has unwound its gold hedge position represented by the
derivative instruments described above at a cost of US$119.25m. As a result the valuation adjustment for the commodity derivative shown in Table 6.1E is no longer
appropriate and would be reduced to a positive US$31.9m, which would result in a revised Equity Value of US$154.8m.

             Table             6.3E          Ma’aden Gold equity value: sales revenue and total working cost
                                             simultaneous sensitivity at a real discount factor of 10%
             NPV (US$m)                                                                                Sales Revenue Sensitivity
                                                                         -30%            -20%         -10%             0%           10%              20%             30%
                                                         -15%            (22.1)           21.1          62.2         103.0          143.5            183.8          224.1
             Total                                       -10%            (37.2)            7.2          48.6          89.6          130.1            170.4          210.8
             Working Cost                                 -5%            (52.5)          (7.0)          34.9          76.2          116.7            157.1          197.4
             Sensitivity                                   0%            (68.0)         (21.4)          21.2          62.7          103.2            143.7          184.1
                                                           5%            (83.7)         (36.3)           7.3          49.1           89.8            130.3          170.7
                                                          10%            (99.4)         (51.6)         (6.7)          35.4           76.4            116.9          157.3
                                                          15%           (115.2)         (67.1)        (21.1)          21.7           62.8            103.4          143.9
(1)
         Subsequent Events: Since the preparation of this Extract we have been informed by the Company that it has unwound its gold hedge position represented by the
derivative instruments described above at a cost of US$119.25m. As a result the Equity Value of US$62.7m would be revised to US$154.8m




7.0E CONCLUDING REMARKS

        Ma’aden Gold’s Mineral Resource and Ore Reserve statement (Table 3.1E) as included in this
        Extract are JORC Code compliant and includes a total Mineral Resource of 10.0Moz of gold
        contained within 132.8Mt grading 2.3g/t Au (2.4g/t Au Eq) and total Ore Reserves of 1.3Moz of
        gold contained within 21.7Mt grading 1.9g/t Au.

        In assessing the potential beyond this, the reader is referred to the various Ore Reserve
        sensitivities in Table 3.2E and SRK’s comments regarding the advanced exploration properties
        and the exploration properties. The sensitivities, however, are not based on detailed LoMp and
        should only be considered on a relative basis.

        The equity value of the Company as stated in this Extract at US$62.7m should be considered in
        conjunction with the accompanying sensitivity analyses as reported in Table 6.3E.

        SRK has not been informed of the use of proceeds from the Admission and accordingly cannot
        comment on whether this will be utilised in the further development of Ma’aden Gold.




                                                                                  221
                  For and behalf of SRK Consulting (UK) Limited



Martin Pittuck,                 Iestyn Humphreys,                        David Pearce,
Principal Consultant,           Director,                         Corporate Consultant,
SRK Consulting                  SRK Consulting                         SRK Consulting




                                      222
                         Phosphate Mineral Expert's Report

               An Independent Mineral Experts’ Report on the Phosphate Project

1.   Introduction

1.1 Purpose of Report

     This report has been prepared by Behre Dolbear International Limited (“Behre Dolbear”) for
     inclusion in the Prospectus to be published by the Saudi Arabian Mining Company (“Ma’aden”) in
     connection with an offer of ordinary shares in Ma'aden and proposed admission of ordinary
     shares to the Official List of the Capital Market Authority and the trading of those shares on the
     Saudi Arabian Stock Exchange.

     Behre Dolbear was instructed by the directors of the Company to prepare a Minerals Expert’s
     Report (“MER”) for the Al Jalamid Phosphate Project (“the Phosphate Project”). This report,
     which summarises the findings of Behre Dolbear’s review has been prepared to satisfy the
     requirements of a Mineral Expert’s Report as set out in Chapter 19 of the listing rules of the
     UKLA and, with respect to resources and reserves, the “Australasian Code for Reporting Mineral
     Resources and Reserves” (September 1999) published by the Joint Ore Reserves committee
     (“JORC”) of the Australasian Institute of Mining and Metallurgy, Australasian Institute of
     Geoscientists and the Minerals Council of Australia (“the JORC Code”). The JORC Code
     establishes the nature of evidence required to ensure compliance with the code. The review was
     conducted with regard to the JORC Code because it is internationally recognised. In this report,
     all resource and reserve estimates are reported in accordance with the JORC Code and have
     been substantiated by evidence obtained from Behre Dolbear’s site visits and observation. They
     are supported by details of drilling results, analyses and other evidence and take account of all
     relevant information supplied by Ma’aden management and contractors.

1.2 Capability, Independence and Disclaimer

     This report was prepared on behalf of Behre Dolbear by the signatories of this report. Details of
     the qualifications and experience of the consultants who carried out the work are in Annex A to
     this report.

     Behre Dolbear operates as an independent technical consultant providing resource evaluation,
     mining engineering and mine valuation services to clients. Behre Dolbear has received and will
     receive professional fees for its preparation of this report. None of Behre Dolbear nor any of its
     directors, staff or sub-consultants who contributed to this report has any financial interest in:

         •   Ma’aden;

         •   the mining assets reviewed;

         •   the outcome of the Offer

     Behre Dolbear has conducted an independent technical review of the Ma’aden Phosphate
     Project including a visit to the project sites by minerals experts. Behre Dolbear has reviewed
     technical data, reports, and studies produced by other consulting firms as well as information
     provided by Ma’aden and their contractors. The review was conducted on a reasonableness
     basis and Behre Dolbear has noted herein where such provided information engendered
     questions. Except for the instances in which we have noted questions, Behre Dolbear has relied
     upon the information provided as being accurate and suitable for use in this report.

     Metric units are used throughout this report and all financial estimates are in United States
     dollars (US$).




                                                 223
1.3 Scope of Work

    Behre Dolbear was engaged as Technical Consultant by Ma’aden to prepare a Mineral Experts’
    Report to include:

        •   the background to the project,

        •   an opinion on the phosphate mineral resource and reserves,

        •   an assessment of the proposed mining unit,

        •   an assessment of the process plants (beneficiation plant at Al Jalamid and chemical
            plants at Ras Az Zawr),

        •   an analysis of the infrastructure and capital projects,

        •   human resources analysis,

        •   health and safety review,

        •   environmental planning and issues,

        •   assessment of the implementation plan,

        •   valuation of the project assets.

1.4 Sources of Information

   Documentary information is available dating from identification of the phosphate deposits in the
   Thaniyat area in 1965. Sources include:

        •   Reports by Riofinex ( a subsidiary of Rio Tinto plc) and the Directorate General of
            Mineral Resources from 1976 to 1986;

        •   United States Geological Survey (“USGS”) reports from 1987 to 1992;

        •   Saudi Arabian Mining Consortium (“SAPC”) with the SNC-Lavalin/Jacobs consortium
            from 2004.

   The Behre Dolbear project team visited the Al Jalamid site and the project office in May 2006 and
   subsequent visits to review recent ongoing feasibility study work, including a meeting in
   September 2007.

1.5 Inherent Mining Risks

   Mining is carried out in an environment where not all events are predictable. While an effective
   management team can, firstly, identify the known risks and, secondly, take measures to manage
   and mitigate these risks, there is still the possibility of unexpected and unpredictable events
   occurring. It is therefore not possible to remove totally all risks or state with certainty that an
   event which may have a material impact on a mine will not occur.

   In the case of the Al Jalamid deposit, the proposed mining method is a regular truck and shovel
   operation for both overburden and phosphate ore, requiring drilling and blasting activities. This is
   a standard system for the mining of a bulk mineral in an arid environment. There are no
   perceived unusual inherent mining risks.




                                                 224
1.6 Glossary of Terms

     Words and Expressions used in this report are defined in the Glossary of Terms of the
     Prospectus.

2.   The Project

     The Ma’aden Phosphate Project is the development of the Al Jalamid phosphate deposit to
     produce about three million tonnes per year of phosphate fertilizer products for a minimum of
     twenty years from 2010. Under an agreement between Ma’aden and Saudi Arabian Basic
     Industries Corporation (“SABIC”) the project will be undertaken by PhosCo, a company which is
     intended to be jointly owned by Ma’aden with a 70% equity interest and SABIC with a 30% equity
     interest. The location of PhosCo’s operations is shown in Figure 2.1.
                                                                                                   2
     At Al Jalamid, Ma’aden has exclusive exploration rights over an area of almost 10,000 km and a
     mining licence covering a deposit where an open-cut mine is planned, capable of producing 11
     Mtpy of run-of-mine ore with more than adequate Ore Reserves to support the operations
     beyond the designated 20-year life of the project. Behre Dolbear has reviewed the licence
     issued by the Ministry of Petroleum and Mineral Resources (“MPMR”) for exclusive rights to mine
     phosphate ore for a period of 30 years.

     Developments on the Al Jalamid site will include a beneficiation plant, involving crushing and
     flotation and drying to produce 5.0 Mtpy (dry basis) of phosphate concentrates containing 32% to
     33% P2O5, and related facilities including a power generating plant, workshops, and warehouses.

     The phosphate concentrates are to be processed in a chemical complex with related
     infrastructure at Ras Az Zawr (“RAZ”), a new port on the Arabian Gulf, 90km north of Al Jubail
     and 200km south of the Kuwait border. The complex is designed to convert the concentrates to
     2.922 Mt/y Diammonium Phosphate fertilizer (“DAP”), using local sulphur and natural gas. The
     four chemical process plants are a sulphuric acid plant (“SAP”), a phosphoric acid plant (“PAP”),
     an ammonia plant (“TAP”) and the DAP plant.

     Other facilities within PhosCo’s battery limits include a desalination plant to supply fresh water, a
     power generation plant utilising steam generated by the SAP and a seawater cooling facility.

     Other essential developments are: the North-South Railway (“NSR”) that will connect Al Jalamid
     and RAZ, to be built and operated by the Saudi Arabia Railway Company (“SAR”); the Ras Az
     Zawr Port, being constructed by the Saudi Port Authority; and support infrastructure provided to
     the PhosCo at RAZ by Infraco, a subsidiary of Ma’aden.

     The Phosphate Project plan is to produce DAP fertilizer at an average operating cost over the
     first 20 years, including the cost of by-products, but not allowing for by-product credits, of $98 per
     tonne of DAP. Start-up is forecast for fourth quarter of 2010, and the initial capital cost is
     estimated to be $4.54 billion in Q1 2007 terms not including financing costs. Sustaining capital is
     estimated at $252 million over the mine life.




                                                   225
2.1 Location Map

    Scale: 1cm to 140km




                                                                 PLANTS AND PORT




2.2 The Technical Consultant Team Visits

    Behre Dolbear assigned a team of nine professionals to the project, and has conducted three
    reviews of the project as it has developed. In May 2006, documents were reviewed and copied
    from the data room at PhosCo’s offices in Al Khobar, including the “Bankable Feasibility Study”
    (“BFS”) prepared by SNC Lavalin Jacobs (“SAPC – Saudi Arabian Phosphate Consortium”)
    dated February 2005. Over the course of several days, presentations were given by the staff of
    Worley Parsons (“WP”), the project management contractor engaged by Ma’aden primarily to
    cover developments since completion of the BFS. The mine site at Al Jalamid and the chemical
    and fertilizer plant site at RAZ were visited with PhosCo personnel. The team also attended a
    briefing on the North-South Railroad.

    The second review was made in January, 2007, to receive an update on the progress during the
    preceding six months. Behre Dolbear reviewed a number of revised documents, conducted site
    visits, and received updated detailed presentations from WP and Ma’aden personnel on the
    PhosCo Project, the infrastructure and port, and by the Saudi Public Investment Fund (“PIF”) on
    the NSR.

    The third review by Behre Dolbear was conducted in June 2007 to update the overall progress of
    the project, the development of the port and the NSR, project schedule, current capital cost




                                               226
     estimates, and to review construction contracts for the sulphuric acid plant, phosphoric acid
     plant, ammonia plant and DAP plant.

3.   Geology, Resources and Reserves

3.1 Geology

     The Al Jalamid phosphate deposit occurs within the Thaniyat member of the Jalamid Formation,
     which straddles the boundary between the Cretaceous and Tertiary periods. The phosphate-
     bearing Thaniyat member is reasonably shallow, flat and easily accessible. It is up to 25m thick
                                                                                              2
     in the Al Jalamid resource area, with overburden 8 to 15 m, and encompasses 32.7km (up to
     30km long on an NW-SE alignment and of variable width up to 3km). Ma’aden controls an area
                         2
     of almost 10,000km in terms of an Exploration Licence and subsequent Ministerial Decisions
     issued by the Kingdom of Saudi Arabia.

3.2 Resource and Reserve Estimate

     The phosphate resources estimated within the Al Jalamid resource area are classified as
     “Measured,” according to JORC Code guidelines. The criteria for defining the resources are
     based on the following factors:

        •    There have been many periods of geologic exploration, beginning with the regional
             identification of phosphate rock from water-well drill-hole cuttings in 1965 and culminating
             in 2004 with an extensive drilling, sampling, and testing programme;

        •    The post-1980s work was completed in the presence of a Competent Person as generally
             defined by JORC and the resource/reserve estimates have been prepared using the
             JORC guidelines;

        •    The drilling, sampling and chemical analysis were of 257 drill-hole samples with the
             average distance between the drill holes reported at about 350m,

        •    Nine manually excavated pits exposed the mineral; and

        •    A trial-cut mine has extracted a bulk sample of the mineral.

     The total phosphate resource within the resource area is estimated at 534 million tonnes (“Mt”)
     with a probability of 97.5% that the tonnage exceeds 505 Mt.

     Not all the measured phosphate resource estimate will be economically mineable and so defined
     as reserves. The proven ore reserve estimate, based on a 20-year mining plan and the
     economics of the project, is shown, together with the resource estimate in Table 3.1 below.

     Table 47: Estimates of Al Jalamid Phosphate Mineral Resources and Proven Ore Reserves for the 20-Year Mining
     Area
     Mineral Estimate                   Tonnes                Strip Ratio           % P2O5         % MgO


     Measured Resources                 534,000,000                                 19.74          4.85


     Proven Reserves                    223,305,000           2.0:1                 20.35          3.55


     The Ore Reserves shown are limited to the 20-year mining plan, and are a part of the measured
     resources, not additional. A mining plan for measured resources within the drilled and tested
     area would enable conversion of more resources to reserves, probably about 200 Mt, but they
     would have higher stripping ratios. Developments since these estimates were made, including an
     increase in assumed product prices and improved beneficiation recovery would lead to a modest
     increase in the estimate.




                                                      227
Behre Dolbear believes that the Proven Reserve estimate prepared by the Phosphate Project
reflects the project phosphate reserves because:

   •     The ore sampling programme conformed to industry standards and included several
         quality control features such as duplicate chemical analyses within the primary laboratory
         and at independent laboratories; and

   •     The information prepared by Ma’aden is sufficient for an accurate description of the
         classical geology and the estimation of the Al Jalamid phosphorite resources within the
         area; the reserve estimates for the projected 20-year mine life conform to JORC criteria
         and meet international industry standards for describing the physical, chemical, resource,
         and reserve characteristics for phosphate rock deposits; and

   •     There are more than sufficient phosphate resources to support the 20-year mining plan,
         including an additional 194 million tonnes of measured resources adjacent to the
         proposed mine plan area that could be mined. The stripping ratio is indicated to be
         higher and a mine plan has not been developed to determine if these are economical but
         it is expected that a significant portion of these resources would support extension of the
         existing mine plan. Further, the assumptions regarding ore recovery appear to be
         conservative and could result in additional ore being recovered within the current mine
         plan area. This observation is further supported by the contract miner’s technical
         proposal indicating that they believe they can improve ore recovery as a result of their
         proposed mining process.

Thus there are more than sufficient reserves to support the 20-year mining plan. Figure 3.1
shows the general layout of the orebody and mine plan.

       Figure 3.1 Ore Body and Mine General Layout




                                              228
4.   Exploitation

     Figure 4.1 shows a chart of the processes involved in exploitation of the phosphate resource.

     Figure 4.1 Ma’aden Phosphate Project Block Flow Diagram



                    BENEFICIATION PLANT                                          MINE OPERATIONS
                                                           ≈ 12M TPY
                          Al Jalamid                                              ≈ 18.6M BCM/YR
                                                              ORE
                                                                                   OVERBURDEN


                                                       Al Jalamid
                                                       Ras Az Zawr
                     PHOSPHATE
                   CONCENTRATE                                          SULPHUR             MOLTEN SULPHUR
                 ≈ 5.020M TPY (DRY                                      STORAGE               1.520M TPY
                        BASIS)                                           20,000 T
                Via Rail to Ras Az Zawr


                    CONCENTRATE                                     SULPHURIC ACID
                      STORAGE                                             PLANT
                          200,000 T                                    4.663M TPY
                          (14 days)                                                             COOLING
                                                                      (Storage 108,000T)
                                                                           (8 Days)



        CLAY (KAOLIN)
            0.07 MTPY                                                                        NATURAL GAS
       + SILICA 0.03 MTPY
                                                                                            32.317 MMBTU/yr

                           PHOSPHORIC                                     AMMONIA PLANT
                           ACID PLANT                                       1.089M TPY
                            1.521M TPY
                        1 day 40% Acid Storage                             (Storage 60,000 T)
                        1 day 48% Acid Storage                                  (18 days)

                                                                                                   COOLING
                                                                                                  SEA WATER
          FSA to                                                                                   36,850m3/hr
       Neutralization

                PHOSPHOGYPSUM                                                 DAP/MAP
                    STACK                                                   GRANULATION
                   8.3M TPY                      SALES to SABIC                 PLANT
                                                  PHOSPHORIC                 2.922M TPY
                                                      ACID
                                                   162,000 TPY


                                      CONVEYOR               DAP STORAGE                    TO PORT FOR
            TO PORT                   2.922M TPY                    200,000 T                 EXPORT
          FOR EXPORT                                                (22 Days)                437,000 TPY




                                                 229
4.1 Licences and Permits

     Behre Dolbear has reviewed the licence issued by the Ministry of Petroleum and Mineral
     Resources (“MPMR”) for exclusive rights to mine phosphate ore for a period of 30 years. The
     licence has provisions for termination if PhosCo fails to make mining fee payments and file
     appropriate reports in a in timely manner. Numerous other permits have been issued or applied
     for relating to both Phosco’s Al Jalamid and RAZ sites including roads, water, waste disposal,
     explosives, security, safety, medical centers and environmental controls. No reason is seen for
     these not being granted.

5.   Planned Mine and Facilities at Al Jalamid

     The Al Jalamid project area includes the surface phosphate mine, the beneficiation plant, a
     railway loadout facility, a railway spur for the delivery of supplies to Al Jalamid, a diesel-powered
     electrical generation plant, maintenance and warehousing facilities for the beneficiation plant,
     water supply, employee bachelor quarters, a helipad, and a waste-water treatment facility.

5.1 Al Jalamid Mine

     The mining plan is based on surface mining of some 11 Mt/y of ore from one of two phosphate
     beds. Only the upper bed occurs in the area to be mined in the initial years of mining. Both beds
     will be recovered in the areas where they are mineable.

     Ma’aden plans to engage a contract miner to undertake mining operations for an initial 8-year
     period. The contractor will use diesel-powered hydraulic shovels, blast-hole drills, haulage
     trucks, front-end loaders, dozers, graders and other support equipment to remove overburden,
     and to mine and transport the ore to a crushing and screening plant owned and operated by
     PhosCo. A mining contractor has been selected after a competitive tendering process in which
     seven bids were received from nine invitations and Ma’aden has signed the mining contract.

5.2 Phosphate Ore Beneficiation Plant

     Ma’aden has selected a process developed by SAPC and then optimized by Litwin for the
     beneficiation plant after pilot-plant tests were conducted on ore samples from the Al Jalamid test
     mine showed an improved recovery of phosphate as compared to the earlier tests. The process
     involves:

         •   particle size reduction using crushers and rod mills,

         •   desliming,

         •   froth flotation to remove carbonates,

         •   concentrate dewatering, drying to around 4% moisture and storage,

         •   concentrate reclaim and rail loadout,

         •   waste disposal, and

         •   process water recovery and distribution.

     The plant design is based on a annual production rate of up to 5 Mt of phosphate rock
     concentrates containing an average of 33% P2O5 on a dry basis, with a concentrate yield of
     about 40%.

     The proposed beneficiation plant engineering, procurement and construction (“EPC”) contract,
     which will be on a lump-sum turnkey (“LSTK”) basis, covers:

         •   the mobile crushing plant located near the mining operations;



                                                  230
        •   the overland ore conveyor system to transfer the ore from the mobile crushing plant to
            the stockpiling facility at the beneficiation plan;

        •   the crushed ore stockpiling facilities at the beneficiation plant;

        •   the beneficiation plant;

        •   the wet concentrate storage and reclaiming facilities;

        •   the concentrate drying plant;

        •   the dry concentrate storage and reclaiming facilities;

        •   an in-motion railcar loading system for the concentrate loadout

        •   the tailings distribution system from the beneficiation plant to the tailings pond, the dam
            and tailings water reclaim system.

    Behre Dolbear concurs with the selection of the beneficiation process developed because the
    phosphate recovery increases, in spite of increased capital and operating cost. However, there
    are some concerns with the beneficiation process testing and its impact on the operations,
    including potential MgO contamination. The report on the bench and pilot scale tests qualifies
    the results indicating that the method of simulating the MgO content may not be representative
    conditions where the ore has a high inherent MgO content. However, Behre Dolbear
    understands that Datong has a proprietary reagent to remove MgO that should minimize this
    concern. Also, the bulk and pit samples used for testing were not from the area to be mined
    during the first eight years of operations. However, the ore characteristics are generally
    consistent across the reserve area and Ma’aden is requiring the beneficiation contractor to
    perform beneficiation tests on samples representing the initial 8 years of the mining operations.
    It is important that beneficiation tests on samples representing the early years of mining should
    be performed.

5.3 Al Jalamid’s Industrial and Social Infrastructure

    The industrial infrastructure for PhosCo’s operations at Al Jalamid includes:

        •   a concentrate-loading facility;

        •   a well field for water supply;

        •   a power plant and power distributions system;

        •   maintenance and warehousing complex for the beneficiation plant;

        •   administrative offices; and

        •   bachelor quarters at the mine site.

    PhosCo will own and operate the concentrate loading facility, but the North-South Railway will
    own and operate the rail tracks into the site.

    The availability of water for industrial and town-site distribution is a critical component of the Al
    Jalamid mine operation. The regional assessment of the groundwater resources indicates
    multiple sources of adequate quantity and water quality. The design basis of the water treatment
    plant is in accordance with WHO standards and the storage capacity appears adequate. The
    use of a reverse-osmosis plant is appropriate for this application.




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     The independent power supply is based on combustion turbine generators using diesel fuel.
     Various services that require emergency backup are provided with diesel generator sets. The
     planned power plant should be adequate to meet the power requirements of Al Jalamid.

     The maintenance facilities will primarily service the beneficiation plant. The mining contractor will
     be responsible for his own maintenance facilities.

     Most of PhosCo’s employees will live in existing towns near Al Jalamid, and the only social
     infrastructure will be a bachelor housing for some PhosCo employees. Behre Dolbear concurs
     with PhosCo’s decision not to construct and operate a town site at the mine location. Most
     mining companies are avoiding the development of employee town sites because they are
     difficult to manage and costly to operate.

6.   PhosCo’s Chemical Complex at Ras Az Zawr

     The chemical complex at RAZ consists of four major processing plants, as detailed below.

6.1 Sulphuric Acid Plant (SAP)

     Ma’aden selected Outotec, a subsidiary of Outokumpu Oy, to design the large-capacity sulphuric
     acid plants using Outotec/Lurgi technology with the capacity to produce 4.66 million tonnes per
     year of 98.5% sulphuric acid. Behre Dolbear supports this selection. The design provides for
     three sulphur-burning acid-production lines with common acid-storage and molten-sulphur
     receiving area. Each production line will have a design capacity of 4,500 t/d of 98.5% sulphuric
     acid, will consume 1,505 t/d of sulphur with a conversion efficiency of 99.7% and will produce
                                                              2
     230 t/h of high-pressure steam at 482°C and 66kg/cm . About 1.5 Mt/y of molten sulphur,
     supplied by Saudi Aramco in road tankers, will be consumed per year.

     The sulphuric acid plants employ the double-contact/double-absorption process where acid is
     produced by burning molten sulphur to produce sulphur dioxide followed by catalytic conversion
     to sulphur trioxide, and absorption with water to form sulphuric acid. The design of the sulphuric
     acid plants will be flexible and with debottlenecking they should be able to produce up to 5,000
     tonnes per day. The sulphuric acid is utilised in the phosphoric acid plant to produce phosphoric
     acid from phosphate concentrates.

     Behre Dolbear concurs with Ma’aden’s decision on the process and the selection of contractor.
     One concern is the limited designed capacity to store acid. There is adequate area to add to this
     storage at a later date with addition to the capital cost if it is proven necessary.

6.2 Phosphoric Acid Plant (PAP)

     The Yara technology has been selected by Ma’aden for the production of phosphoric acid with an
     annual plant production capacity of 1.52 Mt/y The PAP is based on the hemihydrate process,
     which is a proven process. Yara, a Norwegian company is the world's leading producer and
     marketer of mineral fertilizers and in the last 10 years probably half of the world’s new PAPs
     have used Yara technology.

     The design covers three 1460 t/d phosphoric acid lines for a total capacity of 1.52 Mt/y of 48%
     P2O5 strong acid. The total consumption will be 5.02 Mt/y of phosphate concentrate and 4.49
     Mt/y of sulphuric acid. Weak acid at 40% P2O5 is fed to three acid-concentration evaporators to
     produce strong acid which is pumped to the DAP plants.

     The Al Jalamid concentrate has been adequately tested to demonstrate the potential for
     producing a commercial grade acid. The concentrate storage capacity of 200,000 tonnes,
     equivalent to 14 days of operation, should be adequate to ensure continued production in event
     of all normally anticipated problems on the railway or in the beneficiation plant.

     There is provision for only one day of acid storage, between the PAP and the DAP plant. Behre
     Dolbear believes that the PAP may not operate efficiently with only one day of acid storage, and
     this will cause the costs of producing phosphoric acid to be higher than projected due to frequent


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    cut-backs in production. There is ample area for expanded storage and additional storage
    capacity could be installed at minimal cost relative to the overall project should storage capacity
    prove to be a problem in optimizing operations. However, Behre Dolbear recommends that the
    acid storage capacity be expanded to at least 3 days during the initial construction to allow the
    plant to operate more efficiently and reduce production costs.

    The process produces phosphogypsum as a waste by-product to be stacked in an area south of
    the PAP with capacity to store over 20 years of phosphogypsum production. There will be a
    series of stockpiles rising to 50m in height south of the concentrate unloading station and
    advancing south from there. The plant also produces fluosilicic acid which is neutralized in a
    neutralization system.

    Behre Dolbear concurs with PhosCo’s decision to award the LSTK contract to construct the PAP
    to the consortium of Litwin Chemical Technologies and Tekfen Construction.

6.3 Ammonia Plant

    The technology selected by Ma’aden for the ammonia plant is the SAFCO IV design using
    Uhde’s process, a standard design with proven success which should meet annual production
    projections. Behre Dolbear concurs with this process selection and with the selection of
    Samsung to construct a plant based on a recently successfully commissioned 3,300tpd SAFCO
    IV design using Uhde’s process. The plant is designed to produce ammonia with a minimum
    NH3 content of 99.8% at a capacity of 3,300t/d (1.09Mt/y). This will produce more ammonia than
    required for the DAP production of 2.922Mt/y, but it has been determined that there is a market in
    the region for additional ammonia, and the excess capacity will be exported until such time as
    downstream users at Ras Az Zawr require offtake and/or an expansion of the phosphate project
    occurs.

    The primary raw material for the plant is natural gas, about 32 billion BTUs a year, which will be
    supplied by Saudi Aramco by pipeline.

    The ammonia storage capacity of 60,000 tonnes appears to be adequate considering that SABIC
    will market the excess ammonia production and has the capacity to store additional ammonia if
    necessary.

6.4 DAP Fertilizer Plant

    Behre Dolbear concurs with the selection of the Incro’s Mixed Process using a pre-neutralizer
    and pipe reactor and the contract award to the consortium of Intecsa-Ingenieria Industrial S.A.,
    INITEC Energia S.A. and Dragados Gulf Construction. The DAP plant is designed to produce
    2.92Mt/y of DAP fertilizer and the Incro process should meet annual production projections. The
    plant will have: four DAP units each having 2,250t/d production capacity. It will consume 0.465
    tonnes of phosphoric acid and 0.223 tonnes of ammonia per tonne of DAP produced, and
    produce DAP with a content of 18% N, 46% P2O5; and MAP content of 11% N, 52% P2O5. It is
    also capable of producing the same amount of monoammonium phosphate fertilizer (MAP).

    The designed storage of DAP/MAP is 200,000 tonnes. Behre Dolbear believes that the storage
    capacity of 200,000 tonnes may not be adequate in view of the seasonal nature of the fertilizer
    business even when shipping to a two-season market, and if PhosCo decides to produce both
    MAP and DAP, the fertilizers will need to be kept separate and more storage capacity will be
    required. PhosCo has indicated that it plans to be ready to add another 100,000 tonnes of
    storage if it is shown that this is a required, and the storage area is also large enough to increase
    total storage capacity to 600,000 tonne if this should be necessary.

6.5 PhosCo’s Infrastructure at Ras Az Zawr

    PhosCo’s industrial infrastructure includes a power generation plant utilising steam from the
    sulphuric acid and ammonia plants, a desalination plant, concentrate unloading system and
    water cooling facility. The power plant is a robust system with reliable and safe operating
    characteristics. The plant will also be connected to the national grid, both to receive power for


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     start-up and in emergencies, and to permit the export and sale of surplus generating capacity.
     The desalination plant has not been reviewed in detail, but these are generally off-the-shelf
     facilities and there should be no significant problems with it.

     An administration building and a training center are located at the extreme south-west of the plot
     assigned to PhosCo, south of the warehouse and maintenance complexes. The maintenance
     facilities are concentrated in a central shop to service all four of the process units in the PhosCo
     complex. The maintenance shops are of adequate size and the work force will be common to all
     facilities.

7.   Other Entities Supporting PhosCo’s Operations

     The following entities are not part of the PhosCo project, or the responsibility of PhosCo, but are
     being considered as part of the review because of their critical role in the successful
     development of PhosCo’s project. The capital costs of these entities are not charged to PhosCo,
     but the cost of their services will be part of PhosCo’s Opex.

7.1 North-South Railway

     This project requires the construction of a completely new railway of some 1500km from the mine
     at Al Jalamid to the chemical complex at Ras Az Zawr. The objective is to ensure timely
     implementation of operating NSR to carry mineral traffic in an economical fashion from mines at
     Al Jalamid and Az Zabirah to facilities in RAZ. The system is designed for a mineral freight
     capacity sufficient for transport of both phosphate concentrates and bauxite, plus general freight
     and passengers.

     Behre Dolbear has reviewed the design and progress of the North-South Railway in May 2006, in
     January 2007 and again in June 2007. Significant progress has been made in expediting the
     construction of the railway during the past year and the construction is on schedule. The
     projected completion date for the mineral line in the Third Quarter of 2010 should meet the
     current shipping requirement for the delivery of concentrates from Al Jalamid to RAZ.

     PhosCo has developed a trucking option in the event the railway is not completed on time, and it
     appears to be a viable, although more expensive, alternative for up to a nine-month delay in the
     railway start-up. Behre Dolbear believes that the NSR project will be operational on schedule
     and should not cause the project startup to be delayed, and welcomes the additional comfort of
     trucking backup in event the railway is delayed.

7.2 Infraco

     A subsidiary of Ma’aden, Infraco, is to be formed to provide certain supporting common
     infrastructure to PhosCo’s chemical plants at RAZ and to the Aluminium Project. Based on the
     current schedules, the Infraco supporting infrastructure essential for PhosCo operations will be
     completed by October 2009, nearly a year before they are required by PhosCo.

7.3 Ras Az Zawr Port

     WP developed the conceptual design in late 2006, managed the EPC bidding cycle through early
     2007. The bids have been submitted to the Saudi Port Authority, who will construct and operate
     the port. The construction schedule indicates that the port will be operational before it is required
     by PhosCo in the third quarter of 2010.

7.4 Employee Accommodation

     The two villages for PhosCo employees at RAZ for bachelors and a family village at Al Jubail are
     well planned communities providing quality housing and services for employees and designed to
     match comparable accommodation for the range of staff employed in other similar local industrial
     complexes. They should be a benefit in recruiting and retaining employees at all levels,
     especially expatriate managers.



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     Behre Dolbear concurs with the decision to transfer the employee housing to a BOT contractor
     because it relieves PhosCo of the responsibility of managing and maintaining employee housing
     and is consistent with industry practice. Behre Dolbear believes that the villages will be available
     in time for their required occupation, and if not there are other actions that PhosCo can take to
     provide temporary housing.

8.   PhosCo Work Force Recruiting and Training

     Ma’aden has developed a comprehensive recruiting plan to attract qualified and high-potential
     employees to its operations, and a comprehensive training programme to attract and develop a
     highly skilled workforce. It is planned to achieve a Saudization of 45% in Phosco on start-up in
     2010, increasing to 50% in 2013 and 80% in 2019.

     Training will focus on the immediate business needs for the period up to start-up and the first
     year of operation, and on health, safety, and environment (HSE). This training will be targeted to
     match requirements, and will differ due to the range of staff such as managerial, supervisory,
     technical, technicians, or others and different area requirements. All training will be competency
     based. Experienced expatriate personnel with plant-specific production background for the
     various plants will be recruited in mid-2007 to form a training programme development team.

     Behre Dolbear believes that the comprehensive recruiting and training programme PhosCo has
     developed will attract qualified and high potential employees to its operations, which should
     result in an efficient organization and operations.

9.   Environmental Impact Statements

     Separate Environmental Impact Assessments (“EIAs”) and supplementary EIAs have been
     prepared for the Al Jalamid and RAZ. The highest standards were required and compliance with:
     Islamic Principles for Conservation of the Environment; the applicable KSA regulations; the
     corporate environmental policy for Phosco; the Equator Principles; The World Bank Group
     standards; and WHO guidelines. A Community Impact Study has been completed to identify the
     potential social impact that the project may bring to the communities. It is anticipated that there
     will be no material impacts on the project. Any minor impacts identified will be accommodated by
     suitable amendments to the respective licences if necessary. Behre Dolbear has found that the
     EIAs have been prepared to generally accepted standards.

     The construction and operation of the RAZ chemical complex is not anticipated to generate any
     major negative impacts on the natural and human environment. Concentrations of cadmium and
     uranium in the ore, which are usually associated with phosphate deposits, are low. Threats to
     human health and the environment are considered insignificant.

10. Evaluation of the Construction Contracts

     Ma’aden has received four LSTK bids for EPC contracts for the plants and field camps at Al
     Jalamid and RAZ. EPC contracts have been awarded as of July 2007 for the SAP, PAP,
     ammonia plant, and DAP plant. A summary of all awarded contracts is given in table 10.1

Table 48: Summary of the Awarded Contracts and Contract Bids as of July 2007
                        Type     of Projected
Facility                Contract or Cost             Contractor/Comments                              Award Date
                        Bid         ($Millions)
Sulphuric Acid Plant    LSTK         $495.0           Outotec GmbH and Gama Industry Arabia EPC       June 2007
                                                      Litwin and Tekfen Construction EPC, YARA
Phosphoric Acid Plant   LSTK         $522.8                                                           June 2007
                                                      technology contractor
                                                      Samsung EPC contractor
Ammonia Plant           LSTK         $950.6                                                           July 2007
                                                      Uhde as technology subcontractor
                                                      Intecsa-Ingenieria Industrial S.A. and INITEC
                                                      Energia S.A. and Dragados Gulf Construction
DAP Plant               LSTK         $486.0           EPC,                                            June 2007
                                                      INCRO technology contractor




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PAP Phosphogypsum                                   Based on bid received from Litwin, but
                          LSTK       $110.0                                                         TBA
Stockpiling System                                  engineering is being re-evaluated
                                                    Contract negotiations in progress
Beneficiation Plant       LSTK       $353.0                                                         TBA

Ras       Az       Zawr
                                                    Bids being evaluated but have not been
Cogeneration        and   LSTK       $249.2                                                         TBA
                                                    awarded
Desalination Plants
Total                                $3166.60       Total represents 70% of Base Capital Estimate


        Two types of LSTK contracts have been developed: an In-Kingdom contract (“I-K”) deals with the
        construction of facilities and performance guarantees; an Out of Kingdom (“OOK”) contract deals
        with the procurement, engineering, and fabrication. Both contracts ultimately affect plant
        performance and compliance with performance standards. The contracts are usually tied to
        coordination agreement which forms an administrative agreement between the parties.

        The contracts developed to date are detailed and rigorous and the penalties are significantly
        onerous to encourage good planning and execution of the project by the EPC contractors. The
        protection afforded Ma’aden under the contracts is exceptionally good, but the contracts allow for
        flexibility depending on changing conditions from deliveries, scope of work and other unforeseen
        circumstances. All of the contractors are highly experienced in their fields and have accepted the
        performance criteria and apparently sufficiently confident to accept the terms.

11. Construction Schedule

        The successful completion of the Phosphate Project, with start-up in the fourth quarter of 2010
        and a ramp-up to full production rate in 2012, is dependent not only on the completion of
        PhosCo’s own projects, but also on the completion of the North-South Railway, the Ras Az Zawr
        port and the Infraco projects that support the phosphate facilities at RAZ. A schedule has been
        developed by WP based on the project contracts that have been agreed to and time estimates
        for the completion of each segment of the project that is not currently under contract. WP’s
        current projected status of the individual projects is summarized as follows:

           •   The mining contract bids have been received, the contractor has been selected and the
               contract is scheduled to be awarded in October 2007. With this schedule, the pre-mine
               development work can be completed well in advance of the schedule for delivery of ore to
               the beneficiation plant.

           •   Pre-mine stripping and construction of the tailings dams are scheduled to begin in
               June 2009.

           •   Delivery of ore from the mine to the beneficiation plant is scheduled for December 2009
               although this date will be adjusted to meet final Beneficiation Plant start date.

           •   The seawater cooling facilities are scheduled for completion in November 2009, well in
               advance of the startup of the chemical plants.

           •   The power generating plant EPC contract bids have been received and it is scheduled to
               be operational by July 2010, 3 months before the startup of the ammonia plant.

           •   The beneficiation plant is scheduled to be in commercial operation no later than the end
               of June 2010, based on firm bids from two bidders, well in advance of the startup of the
               ammonia plant. This schedule is firm because it is based on an LSTK bid.

           •   The sulphuric acid plant EPC contract has been awarded and the plant is scheduled for
               commercial operation in September 2010, one month in advance of the ammonia plant
               startup. This schedule is firm because it is based on a negotiated LSTK contract.




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   •   The phosphoric acid plant EPC contract has been awarded and is scheduled for
       commercial operation in September 2010, firm because it is based on a negotiated LSTK
       contract. It is scheduled to be completed more than 1 month before the ammonia plant.

   •   The ammonia plant is on the critical path for the completion of the entire project. The
       EPC contract for the plant has been awarded, and it is scheduled to be operational by
       end of October 2010 and in full production December 2010. This is firm because it is
       based on a negotiated LSTK contract.

   •   The DAP plant EPC contract has been awarded and is scheduled for commercial
       operation in October 2010. This schedule is firm because it is based on a negotiated
       LSTK contract.

The facilities outside the battery limits of the Phosphate Project include the North-South Railway,
the Ras Az Zawr port, the accommodation at RAZ and Jubail, the cooling water intake, utilities,
roads and communications systems. The current status of these facilities is as follows:

   •   The port schedule for completion of construction and the beginning of full operations in
       December 2009 is based on bids that have been tendered.

   •   The North-South Railway has been a prime concern due to the difficulties that were
       anticipated in the construction of the Railway across a desert. Major progress has been
       made in accelerating the construction of the Railway during the past year, and the railway
       between Al Jalamid and Ras Az Zawr is scheduled to be operational by July 2010, to
       meet the required date for the delivery of concentrate to the chemical complex. If this
       schedule is not met, PhosCo has a viable backup plan for truck haulage of concentrates.

   •   The power transmission line to the Ras Az Zawr site is scheduled for completion in
       October 2009.

   •   The Ras Az Zawr village bachelor quarters for employees at the chemical plant site is
       scheduled for completion of the PhosCo units by Q3 2009.

   •   The Jubail Village family housing for the employees is scheduled for occupancy
       beginning in the October 2010, but this should not be critical to the project startup.

The Phosphate Project has progressed to the point where the schedules of the critical facilities
are becoming firm due to LSTK contracts, the reception of firm bids, or detailed engineering. The
only facility on the critical path of the project is the ammonia plant, and the design of this facility is
based on an existing plant that was constructed by the same contractor as that selected for
PhosCo’s ammonia plant. The other aspects of the project appear to have more than adequate
lead times on their completion to provide assurance that they will be completed before the
ammonia plant.

In a large complex project like this where the startup and the achievement of full production of all
of the facilities are dependent upon each other there are many opportunities for slippage in the
schedule to occur. The schedules are not only dependent on the performance of the
construction contractors, but on the delivery of individual pieces of equipment from a large
number of manufacturers located throughout the world. The completion dates are also based on
the ability of the contractors to achieve the performance and completion tests, which may be
difficult to do in the scheduled time frames. While this may not impact the project reaching full
production, which is scheduled for October 2012, it could delay the ramp-up schedule and the
shipping schedule of products. Behre Dolbear believes that:

   •   the scheduled date for full production, October 2012, will be achieved; but

   •   there is a fair probability that the ramp-up schedule could slip by as much as 3 to
       4 months, which could impact shipping schedules.




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    Since most of the capital costs are tied to LSTK contracts these most likely will not be impacted,
    but a delay in startup will impact PhosCo’s need for working capital. Due to the project’s size
    and complexity it will need to be monitored regularly to ensure that the milestones are being met
    in a timely manner.

12. Project Risk Analysis

    Behre Dolbear has developed a risk analysis for the Phosphate Project which is summarized
    below.

    Ore Reserves                                                                         Low Risk

    The Ore Reserves have been adequately explored for a 20-year mine life, have a high level of
    confidence, and meet the JORC criteria. There is potential to expand the reserves with
    additional exploration.

    Mining Operations                                                                    Low Risk

    The 20-year mine plan has been sufficiently defined to initiate mining, but will require continual
    updating. The current plan is to utilise a contract miner to operate the mine. Bids have been
    received for the mining and a contractor is being considered to operate who has experience in
    mining phosphate in Jordan, and the contract is expected to be awarded by the end of 2007.
    There are opportunities to reduce the projected mining costs after the mine is in operation.

    Beneficiation Plant                                                                  Low Risk

    PhosCo has completed extensive testing of the ore for beneficiation and has selected the
    process developed by SAPC and optimised by Litwin to produce concentrate to feed the
    phosphoric acid plant. The plant design conforms to industry standards, the plant should achieve
    the production projections, and the projected operating costs are consistent with industry norms.

    Al Jalamid Infrastructure                                                            Low Risk

    Engineering is still in progress, but the well field design for water supply is finalized and the
    power plant is basically an off-the-shelf item and should not delay the project startup. The town
    site only consists of bachelor quarters and should not delay the project startup either.

    Sulphuric Acid Plant                                                                 Low Risk

    The engineering for the plant is complete, and a LSTK construction contract has been awarded
    to a well qualified contractor. The projected capital costs are based on the awarded contract,
    plus nominal contingencies. The plant design conforms to industry standards, the plant should
    achieve the production projections, and the projected operating costs are consistent with industry
    norms.

    Ammonia Plant                                                                    Medium Risk

    The engineering for the plant is complete, and a LSTK construction contract has been awarded
    to a well qualified contractor. The projected capital costs are based on the awarded contract,
    plus nominal contingencies. The plant design conforms to industry standards, the plant should
    achieve the production projections, and the projected operating costs are consistent with industry
    norms. However, the plant schedule for completion is on the critical path for the entire PhosCo
    project and any delay in the plant startup could delay the startup of the entire project

    Phosphoric Acid Plant                                                                Low Risk




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A different process has been selected from the process tested in the BFS, but the selected
process is being utilised through the industry and the engineering is in the advanced stages so
the capital and production cost estimates are fairly well defined.

DAP Plant                                                                              Low Risk

The engineering for the plant is complete, and a LSTK construction contract has been awarded
to a well qualified contractor. The plant design conforms to industry standards and there should
be few start-up and operating problems. It is of adequate size to meet the requirements of the
project and the projected operating costs are consistent with industry norms.

Ras Az Zawr Infrastructure                                                             Low Risk

Detailed engineering is complete and it appears that the facilities will be operational before
required to meet the production schedule.

Environmental Impact Statements                                                        Low Risk

These have been conducted to conform to highest world standards and there are few potential
environmental problems.

Workforce and Organization                                                             Low Risk

PhosCo has developed a comprehensive recruiting and training programme that should ensure
that well qualified managers and workers will be attracted to the operations and will be properly
trained for their responsibilities initially. PhosCo also plans to have an ongoing retraining
programme to continually upgrade the employees’ skills.

North-South Railway                                                                    Low Risk

The mine and the chemical plants are connected by a railway that will be constructed and
operated by Saudi Railway Company. Construction has begun and is on schedule. The
scheduled completion date is two months before the required delivery of concentrate and
PhosCo has developed a back-up plan to deliver concentrates if they are required before the
railway is operational.

Infraco Infrastructure                                                                 Low Risk

The roads are under construction, and the remaining detailed engineering has been completed
on most of the other facilities. It appears that the facilities will be operation before required to
meet the production schedule.

Ras Az Zawr Port                                                                       Low Risk

The detailed engineering has been completed, construction bids have been received and
evaluated, and the EPC contract will be awarded by the end of 2007. The port is scheduled to
be operational in Q4 2009, over a year before PhosCo will be shipping chemical products.

Production Costs                                                                   Medium Risk

Behre Dolbear has reviewed the production costs generally and they appear reasonable based
on various studies, including the BFS, WP and standards of work which have been updated to
reflect the current scope. Actual costs experienced once in operations will be dependent on
many factors arising over the life of the project that cannot be accurately predicted now, and may
vary from those indicated, including escalation factors.




                                             239
    Capital Cost Projections                                                             Medium Risk

    Although 70% of the Base Capital cost estimates are based on LSTK contracts, 30% are based
    on engineering estimates with varying degree of accuracy. This suggests that the capital costs
    could exceed the current 5% contingency provision.

    Completion Schedule                                                                  Medium Risk

    In a large complex project like this, where the startup and the achievement of full production of all
    of the facilities are dependent upon each other, there are many opportunities for slippage in the
    schedule to occur. The Mechanical Completion schedules are not only dependent on the
    performance of the construction contractors, but on the delivery of individual pieces of equipment
    from a large number of manufactures located throughout the world. The Financial Completion
    dates are based on the ability of the contractors to achieve the performance and completion
    tests, which may be difficult to do in the scheduled time frames. While this may not impact the
    project reaching full production, which is scheduled for October 2012, it could delay the ramp-up
    schedule and the shipping schedule of products.

12.1 Conclusions on Risk

    The conclusion is that the Phosphate Project has a relatively low risk at this time for reasons
    including:

         •   the engineering and design is in the advanced stage and proven process technologies
             have been selected for the beneficiation and chemical plants;

         •   the contractors selected to construct the facilities are reputable and highly experienced;
             and

         •   the high percentage of the capital that is committed to LSTK construction contracts

13. Capital Cost Estimates

    The current base capital cost estimate, as of the first quarter of 2007, is $4.54 billion, excluding
    any financing costs. The estimate is based on LSTK awards or bids or on WP’s engineering
    estimates. Details are given in Table 13.1.

    Mining

    PhosCo’s initial mining Capex is projected to be $3.35M to cover the contractor’s pre-production
    construction of tailings dams, etc. The projected capital expenditures should be reviewed to
    ensure that the mine capital costs projections include all of the current and future capital
    requirements.

    Beneficiation Plant

    The Base Capital Estimate for the beneficiation plant is $351.0 million. This cost is based on
    preliminary LSTK construction contract bids. A firm LSTK EPC contract is currently being
    negotiated with the preferred bidder.

    Al Jalamid Infrastructure

    The Base Capital Cost estimate is $229.1 million for the water supply, temporary construction
    facilities and industrial and social infrastructure is based on detailed engineering that is subject to
    continued engineering.




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Sulphuric Acid Plant

The Base Capital Estimate for the SAP is $501.2 million and is based on preliminary LSTK bids.
A LSTK EPC contract has been awarded to the consortium of Outotech GmbH and Gama
Industry Arabia, LTD on June 25, 2007.

Phosphoric Acid Plant

The Base Capital Estimate for the phosphoric acid plant is $642.8 million (including $110.0M for
the phosphogypsum stacking system) or 14.1% of the Total Base Capital Estimate. The capital
cost estimate includes liners for the first 4 years of the phosphogypsum stacking area, and the
cost for future liners has been included in the sustaining capital estimate. The estimates are
based on a preliminary LSTK contract from Litwin of $532.8 million for the phosphoric acid plant
itself and on a LSTK bid of $110.0M received from Litwin (but not awarded ) for the
phosphogypsum stacking system. The latter contract is pending further engineering review.

Ammonia Plant

The Base Capital Estimate of $948.9 million is based on preliminary LSTK EPC contracts. A firm
LSTK EPC contract was awarded to Samsung on July 4, 2007, which includes a 5% increase in
production guarantee over the 3,300 t/d design.

DAP Plant

The Base Capital Estimate of $483.0 million is based on a preliminary LSTK EPC contract. A
firm LSTK EPC contract was awarded to the consortium of Intecsa-Ingenieria Industrial S.A.,
INITEC Energia S.A., and Dragados Gulf Construction on June 25, 2007.

RAZ Infrastructure

The Base Capital cost for the infrastructure inside PhosCo’s battery limits at RAZ is estimated to
be $754.8M.

 Table 49: Ma’aden Phosphate Project Base Capital Cost Summary
ITEM                                              ESTIMATES Q1 2007
                                               US$ Millions           Percentage
At Al Jalamid
Mine                                           3.4                    0.1%
Beneficiation Plant             LSTK           351.0                  7.7%
Infrastructure and Indirects                   229.1                  5.0%
Sub-total Al Jalamid                           583.5                  12.9%


At Ras Az Zawr
Sulphuric Acid Plant            LSTK           501.2                  11.0%
Phosphoric Acid Plant           LSTK           532.8                  11.7%
Phosphogypsum Stacking          LSTK           110.0                  2.4%
Ammonia Plant                   LSTK           948.9                  20.9%
DAP Plant                       LSTK           483.0                  10.6%
Power Generation and Desalination LSTK         249.2                  5.5%
Infrastructure and Indirects                   505.6                  11.1%
Sub-total Ras Az Zawr                          3,330.7                72.8%


Owner’s Cost                                   196.6                  4.3%
Project Management Contractor                  199.4                  4.4%
Contingency                                    230.3                  5.1%



Total Base Capital Cost Estimate               4,540.5                100%




                                               241
    The Base Capital cost of $4.54 billion is based on a combination of awarded LSTK EPC
    contracts, bids for LSTK EPC contracts, and WP’s engineering estimates with:

       •   70% ($3,176 million) based on preliminary LSTK contracts (four awarded to date) or
           LSTK bids;

       •   11% ($506 million) based on detailed cost estimates, such as the Ras Az Zawr
           infrastructure;

       •   5% ($232 million), such as the Al Jalamid infrastructure, requiring further engineering
           development;

       •   9% ($396 million) being the owner’s cost and WP cost; and

       •   5% ($230 million) being the current contingency.

    Behre Dolbear concurs that the potential for major cost overruns of the LSTK EPC contract
    prices due to change orders is low due to the high degree of engineering that has been
    completed on the facilities with LSTK contracts. WP has provided for $230 million in contingency
    at the current stage of the project, which still includes some facilities that are in various stages if
    engineering development. However, WP’s Monte Carlo simulation method of estimating the
    contingency required for these facilities appears to be reasonable.

    Sustaining Capital

    The financial model also provides $252 million in sustaining capital during the 20-year term of the
    project. The sustaining capital includes funding for staged construction of synthetic tailings pond
    liners in the event they are required. The initial cell liner is estimated to cost $6 million with future
    expenditures planned as required. The liner may not be required as Ma’aden is in discussions
    with environmental regulators to finalize tailings dam design. PhosCo believes that it is probable
    that a liner will not be required and a much more economical substitute will be used, eg, clay or
    compacted earth. The first major sustaining capital expenditures are scheduled to occur in 2013
    and are scheduled to increase as the facilities age. This represents a typical cash flow scenario
    associated with sustaining capital where the expenditures occur only after several years of
    operation. Behre Dolbear believes, based on its experience, that the sustaining capital budget of
    $252 million during the first 20 years of operation is a reasonable estimate for this project.

14. Operating Costs

    PhosCo’s projected costs of production by function are summarized in Table 14.1. These costs
    are the average estimated cash production costs over the first twenty years life of the mine and
    are in real 2007 terms. The production cost estimates developed for the PhosCo project are,
    with the exception of the mining costs and raw material costs, generally based on the costs
    developed in the BFS, which was prepared in 2005 and updated as required.

    Phosco’s total operating cost estimate of about $290 million a year or $98 per tonne of DAP
    produced is made up approximately of:

       •   Costs at Al Jalamid – mining, beneficiation and infrastructure:         30%

       •   Railway transportation                                  18%

       •   RAZ Chemical Complex                                    36%

       •   Administration, RAZ Infrastructure and Port                   16%

    Behre Dolbear accepts these as being realistic. It is understood that a severance tax or mining
    fee is also applicable, amounting to just under 10% of the operating cost. Marketing costs of
    about 4% of sales have been deducted in the financial analysis.



                                                   242
Ammonia and phosphoric acid are to be sold as by products and, if these were to be treated as
credits to the cost of DAP production, the net cost would be about $67/tonne.

A low stripping ratio of 1.2 tonnes waste per tonne of ore in the first 8 years will allow a low cost
of mining, but the stripping ratio increases to an average of 2.1:1 over the life of mine to give an
average real cost of $2.5/t ore equivalent to $13.5/t DAP. Beneficiation operating costs are
estimated at $9.1/t concentrates or $14.0/t DAP. Adding infrastructure cost and assuming 3%
concentrate loss in handling and transportation, the total Al Jalamid cost of concentrate received
at RAZ is estimated at $32.2/t concentrates or $49.3/t DAP.

Ma’aden understands that PIF will charge $10.00 per tonne of concentrate for the 1,500km
distance to Ras Az Zawr during the first 7 years, with an increase after that. This cost is high
relative to other producers due to the distance hauled, but the rate per tonne-kilometre is less
than half world standards for railway haulage. Average transportation cost estimate for
concentrate delivered is $12.1/t concentrate or $18.5/t DAP.

The total cost of concentrate delivered to the chemical complex is $32.2/t concentrate or $49.3/t
DAP, which is almost half of the total cost of DAP. This cost is high compared with the industry
standards due to high transportation costs, lower ore grade and above-average mining costs.

The chemical complex will have the advantage of relatively low prices for sulphur and natural gas
sold at market rates by Saudi Aramco. The price of sulphur is further discounted from market
based on Saudi Aramco cost avoidance and net transportation credits.

In summary the data and information available regarding the production costs of PhosCo’s
competitors indicate that PhosCo’s:

   •   cost of concentrate delivered to the chemical complex is 40% to 50% higher than
       PhosCo’s competition due to lower ore grade, and cost of transportation;

   •   cost of sulphuric acid is significantly lower than PhosCo’s competitors;

   •   cost of ammonia is about average compared to PhosCo’s competitors; and

   •   other costs are lower due to the economies of scale arising from the large sizes of the
       chemical plants.

The total cost of producing DAP at $98/t in real terms should be competitive on the international
market. Moreover, PhosCo has the advantage in India and the Pacific Rim of having a
significantly lower transportation cost than its competition. The phosphoric acid and ammonia
sales, treated as credits to the DAP costs, result in a net production cost of about $67 per tonne.

Behre Dolbear has reviewed the projected production costs for the mine and chemical complex
and believes that they generally reflect the costs of production for PhosCo’s operating conditions.

The operating cost projections discussed above include productivity improvement assumptions
that might be typical over the term of similar projects. True gains from productivity improvements
are generally realised as a result of increased production, which has not been presented by
Ma’aden as Phosco’s operating plan. However, Behre Dolbear believes there is the potential to
increase production over time, thus leveraging the fixed costs which are estimated to be about
30% of total costs. There is also potential for some improvement in the consumption of raw
materials through efficiencies and the economy of scale of these large plants.

Behre Dolbear has incorporated this concept in its financial analysis of Phosco with a very
preliminary estimate of the impact of expanding ammonia and phosphoric acid production.
Ammonia production is increased incrementally up to +5% relying on the “side letter”
commitment from Samsung that the capacity is built into the plant. This increase is assumed to
be sold into the market. The increased amount of phosphoric acid is also assumed to be sold
into the market. The cost of the increased production is based only on the base variable costs



                                             243
    associated with each process thus leveraging the fixed costs associated with each process as
    well as the general administration related costs. A preliminary indication from Ma’aden suggests
    that the plants have this capability once debottlenecking is complete and experience is gained.
    The increase in ammonia production begins to ramp up during the 2012 and reaches the full 5%
    increment in 2014. The phosphoric acid increase only occurs after year six with incremental
    gains each year thereafter reaching 15% in the final year.

    The project should still have some further upside potential to reduce the net cost of DAP through
    improvements in cost as experience is gained in operating the plants and through a change in
    mining equipment as the stripping ratio increases. The assumption concerning mining is that a
    contract miner is utilised at a fixed unit cost for moving overburden and ore. However, in real
    terms, as the stripping ratio goes up standard practice would call for larger equipment that is
    more productive, thus decreasing the unit cost of moving overburden. There are many issues
    influencing this that prevent the benefit from being quantitatively captured at this point but Behre
    Dolbear believes the potential is real.

    In summary, Phosco’s cash flow has the potential to improve over time more than presented
    here. Some minor amounts of capital may be required for additional in-process storage of
    materials to achieve these improvements.

15. Revenue and Valuation

15.1 DCF Calculation

    PhosCo’s principal product will be Diammonium Phosphate, while ammonia and phosphoric acid
    surplus to the requirements of the DAP plant will be sold as by-products. British Sulphur
    Consultants (“BSC”), part of the CRU group, undertook market studies for Ma’aden and forecast
    prices for PhosCo sales, which Behre Dolbear accepts. These prices are in real 2007 terms.
    Behre Dolbear has assumed an incremental increase in ammonia sales and ultimately doubled
    the external sales of phosphoric acid as a result of capturing the economic benefit associated
    with the potential operations improvements over time. Behre Dolbear believes the market will
    support both of the increases as they are small in relation to the market.

    On the basis of forecast production rates, these prices and the Capex and Opex estimates
    covered in Sections 13 and 14, a net present value (“NPV”) has been estimated by a standard
    discounted cash flow (“DCF”) method.

   A 21-year mine life is assumed and no residual value of the plant or equipment. For this analysis,
   prices and costs are expressed in constant 2007 Q3 terms and an all-equity basis is assumed.
   The valuation date is taken as the end of 2007.

15.2Assumptions

   Capital Cost

   The estimated capital cost, as summarized in Table 13.1, is US$4,540 million. For this cash-flow
   determination, expenditure has been taken as $2,096M by the end of 2008, $2,028M in 2009 and
   $416M in 2010.

   The sustaining capital provision of $252M over the mine life should also cover rehabilitation
   costs, if necessary.

   Product sales

   The average base annual sales are taken as:

       •   DAP: 2.922 million tonnes at $276/t;

       •   Ammonia: 437,000 tonnes at $230/t



                                                  244
       •     Phosphoric Acid: 162,000 tonnes at $393/t.

    Operating Costs

    As covered in Section 14, the total estimated average annual base operating cost at full
    production is $290M/y on a real basis.

    Marketing Costs average $40M/y

    Tax, comprising severance fee and Zakat, estimates have been provided by Ma’aden to average
    $27M/y.

15.3 Net Present Value Calculations

    The outcome at a range of discount rates from mid-year points to the end of 2007 are as follows.

           Discount Rate NPV in US$
           9% 231M
           8% 651M
           7% 1,139M
           6% 1,530M
           5% 2,150M

    These are, of course very approximate numbers. They are in real, 2007, terms and show a
    substantial value for the project.

16. Conclusions

   Behre Dolbear concludes from this independent technical review on the Ma’aden Phosphate
   Project that:

       •     Ma’aden’s management and consultants have sufficient geological and geotechnical
             mining knowledge to support short, medium and long term planning of the Al Jalamid
             phosphate mine project;

       •     The mine plans appropriately consider geological and geotechnical factors to minimize
             mining hazards;

       •     Ma’aden’s management and their PMC contractor, Worley Parsons, have sufficient
             processing and engineering ability to execute the design, construction and start-up of the
             chemical and ancillary plant at Ras Az Zawr;

       •     The start up of the complex to produce DAP, scheduled for Q4 2010 is unlikely to be
             more than four months late;

       •     Environmental and community issues are being seriously addressed and are unlikely to
             affect the development of the project;

       •     The capital cost estimate of US$ 4.54 billion (in Q1 2007 terms) is not likely to be
             exceeded by more than 4%;

       •     The operating cost estimates developed appear to be realistic;

       •     The risk factors identified by Behre Dolbear are understood by Ma’aden and appropriate
             action to mitigate them will be taken.

       •     On the basis of a rough pre-tax cash flow analysis of projected sales, capital and
             operating costs, and a discount rate of 7%, Behre Dolbear has estimated a net present
             value of US$1,139 million.


                                                 245
       •   Not included in this value is any assessment of the strategic importance of the project or
           the benefits to the community and country from the multiplier effect of consequential
           industrial activity and employment.

       •   There is further upside value potential, not quantifiable at this time, including:

                o   Optimizing the mining operations as stripping ratio increases to reduce unit cost
                    of mining.

                o   Increase in market prices of fertilizer products above core inflation, based on
                    CRU market projections, thus improving margins.

                o   The sale of phosphate concentrate directly into the market. This would take
                    some additional capital investment in beneficiation and port facilities. The
                    margins should be more than adequate to support the investment and contribute
                    to the overall value of PhosCo and the reserve base would support additional
                    production.

    Behre Dolbear’s greatest concerns are whether:

       •   the start-up of the facilities will be accomplished within the projected time frame due to
           the rigorous performance and completion test terms and conditions in the construction
           contracts for the chemical plants;

       •   the adequacy of the storage for materials in process are sufficient to permit efficient
           operation of the plants.

Behre Dolbear believes that PhosCo has the potential, with continuing good management, to achieve
a successful outcome and a valuable contribution to Saudi Arabia’s industrial development.




                                                  246
Annex A – Qualifications and Experience of Behre Dolbear Personnel

Project Manager, Donald P Bellum, BS Min Eng (UCLA) MS Eng Admin (Utah).

Mr Bellum is a Director and Senior Associate of Behre Dolbear & Company, Inc. A mining
engineer with over forty years of operations and technical experience in the mining industry
including senior management positions with major mining companies. He was Project
Manager for Behre Dolbear’s 1998 Ma’aden Project, and also Project Manager for Behre
Dolbear’s technical advisory consultancy for the privatization of Jordan Phosphate Mining
Company.

Project Director/Administrator, Denis Acheson, BSc Chem Eng (Cape Town), MMMSA,

Mr Acheson is Chairman of Behre Dolbear International Limited and Director of Behre
Dolbear & Company, Inc. He has 50 years experience in the mining industry in metallurgical
processing, marketing, general management and consulting.

Geologist, Henry J Lamb, BS Geology (NCSU), MS (MTU), CPG

Mr. Lamb has over 30 years professional experience in mining and production geology, mine
planning, and reserve evaluation of mineral deposits, particularly phosphate rock. As an
exploration geologist, Mr. Lamb has evaluated phosphate rock deposits in the United States
(Florida, California, Utah, Michigan, North Carolina), South America (Peru, Chile, Brazil), Asia
(Kazakistan, The Philippines), Jordan and Uganda.

Mining and Evaluation Specialist, James B Dodd, BS Eng (Auburn) MBA (UP), RPE

Mr Dodd has over 30 years experience with operations utilising draglines, shovels, trucks,
longwall and continuous miners and has held management positions with responsibility for
production, maintenance, customer service, human resources, accounting, engineering,
safety, environmental and purchasing activities. He has undertaken several assignments
including financial analysis and was a Mining Specialist for Behre Dolbear’s technical advisory
consultancy for the privatization of Jordan Phosphate Mining Company.

Processing and Environmental Engineer, Ralph W Crosser, BS (UN)

Mr. Crosser has over 40 years of experience in the minerals industry related to the
management of operations including mines, mineral beneficiation plants fertilizer plants and
chemical plants, and evaluation and development of plant operations, capital projects, and
environmental management.

Beneficiation Plant Specialist, Edward P Finch

Mr. Finch has over 35 years of worldwide experience in the phosphate industry in the
operation and design of phosphate beneficiation plants. He assisted JPMC in the start up the
flotation plant at Eshidiya and later oversaw the entire beneficiation operation for a period of
one – year while debottlenecking the plant in order to achieve “design” operating rates.

Chemical and Fertilizer Plant Specialists, James W Cox

Mr Cox has over 30 years of international experience in the design, construction and
operation of phosphate fertilizer and chemical plants. He was the Chemical/Fertilizer
Specialist for Behre Dolbear’s recent technical advisory consultancy for the privatization of
Jordan Phosphate Mining Company and evaluated the chemical and fertilizer operations in
Aqaba, Jordan.
Infrastructure Engineer, John S Tait

Mr Tait is a Registered Professional Engineer with over 40 years experience of design,
construction supervision and management of mining, smelting/refining, civil engineering and
multidiscipline industrial projects in the UK, Saudi Arabia, Central Asia, Russia, Africa, Europe
and North America. He has also worked on railway construction. His experience covers all
relevant aspects of project management, construction management, engineering,
administration, programming, quality and cost control.

Human Resources, Health and Safety, Robert F Revitte

Mr Revitte has more than 40 years experience in senior management at staff and operating
level, specializing in Human Resources, Employee and Labour Relations in the international
mining industry as well as the automotive and airline industries. He was the Human
Resources Specialist for Behre Dolbear’s the Ma’aden study in 1998 and the technical
advisory consultancy for privatisation of Jordan Phosphate Mining Company and for the study
of the Nigerian coal Industry.

Marketing and Logistics, Arthur J Roth

Mr Roth has more than 35 years of management experience in domestic and international
nitrogen, phosphate and potash fertilizer marketing, project management and new project
development, phosphate and potash mine and chemical plant operation and administration,
bulk materials transportation and distribution, asset acquisition and divestiture, structured
finance transactions and international trading.
                        Aluminium Mineral Expert's Report

               An Independent Mineral Experts’ Report on the Aluminium Project



1.   Introduction

1.0 Introduction

1.1 Purpose of report

This report has been prepared by Behre Dolbear International Limited (“Behre Dolbear”) for inclusion
in the Prospectus to be published by the Saudi Arabian Mining Company (“Ma’aden”) in connection
with an offer of ordinary shares in Ma'aden and proposed admission of ordinary shares to the Official
List of the Capital Market Authority and the trading of those shares on the Saudi Arabian Stock
Exchange.

Behre Dolbear was instructed by the directors of the Company to prepare a Minerals Expert’s Report
(“MER”) for the Az Zabirah Aluminium Project (“the Aluminium Project”). This report, which
summarises the findings of Behre Dolbear’s review, has been prepared in accordance with the
Committee of European Securities Regulation and the guidelines of Chapter 19 of the listing rules
                        st
(as in effect prior to 1 July 2005) published by the Financial Services Authority (“FSA”) and, with
respect to resources and reserves, to satisfy the “Australasian Code for Reporting Mineral Resources
and Reserves” (December 2004) published by the Joint Ore Reserves Committee (“JORC”) of the
Australasian Institute of Mining and Metallurgy, Australasian Institute of Geoscientists and the
Minerals Council of Australia (“the JORC Code”). The JORC Code establishes the nature of
evidence required to ensure compliance with the code. The review was conducted with regard to the
JORC Code because it is internationally recognised and embodied in similar codes, guidelines and
standards published and adopted by the relevant professional bodies in Australia, Canada, South
Africa, USA, UK, Ireland and many other countries in Europe. The definitions in this edition of the
JORC Code are either identical to, or not materially different from, those international definitions. In
this report, all resource and reserve estimates are reported in accordance with the JORC Code and
have been substantiated by evidence obtained from Behre Dolbear’s site visits and observation.
They are supported by details of drilling results, analyses and other evidence and take account of all
relevant information supplied by Ma’aden management and contractors.

Whilst Behre Dolbear has conducted its review according to the requirements of Chapter 19 of the
listing rules of the UKLA and, with respect to resources and reserves, the JORC Code, Behre
Dolbear notes that the inclusion of a valuation for the Aluminium Project in Section 15 Report
Conclusions does not comply with the principals of Chapter 19 which does not permit the inclusion of
a valuation in respect of a deposit which has not been classified as a reserve under the JORC Code.
A summary of the further work recommended by Behre Dolbear to convert the resource at Az
Zabirah to a reserve is set out in section 4.2 of this report. The location of the South Zone deposit is
shown in Fig.1.0, cross section in Fig.3.1 and plan area in Fig.3.3

1.2 Capability, Independence and Disclaimer

This report was prepared on behalf of Behre Dolbear by the signatories of this report. Details of the
qualifications and experience of the consultants who carried out the work appear in Annex A to this
report.

Behre Dolbear operates as an independent technical consultant providing resource evaluation,
mining engineering and mine valuation services to clients. Behre Dolbear has received and will
receive professional fees for its preparation of this report. None of Behre Dolbear nor any of its
directors, staff or sub-consultants who contributed to this report has any financial interest in:




                                                  249
        •   Ma’aden;

        •   the mining assets reviewed;

        •   the outcome of the Offer

Behre Dolbear has conducted an independent technical review of the Ma’aden Aluminium Project
including a visit the project sites by minerals experts. Behre Dolbear has reviewed technical data,
reports, and studies produced by other consulting firms as well as information provided by Ma’aden
and their contractors. The review was conducted on a reasonableness basis and Behre Dolbear has
noted herein where such provided information engendered questions. Except for the instances in
which we have noted questions, Behre Dolbear has relied upon the information provided as being
accurate and suitable for use in this report.

Metric units are used throughout this report and all financial estimates are in United States dollars
(“US$”).

1.3     Scope of Work,

Behre Dolbear was engaged as Technical Consultant by Ma’aden to prepare a Competent Person’s
Report to include:

        •   the background to the project,

        •   an opinion on the bauxite mineral resource and reserves,

        •   an assessment of the proposed mining unit,

        •   an assessment of the proposed refinery, smelter and power plant at Ras Az Zawr,

        •   an analysis of the infrastructure, logistics and capital projects,

        •   human resources analysis,

        •   health and safety planning,

        •   environmental planning and issues,

        •   assessment of the implementation plan, and

        •   valuation of the project assets.

1.4 Sources of Information

The sources of information for this MER are, principally:

        •   the Hatch Feasibility Study of 2003;

        •   the “Feasibility Study Report” (“FSR”) prepared by Bechtel in January and February 2005
            which comprises 2 volumes;

        •   a subsequent “FSR cost update” in September 2006 and updates to the study by
            Ma’aden through June 2006;

        •   reviews of several supporting and individual studies commissioned by Ma’aden and
            Bechtel,




                                                   250
        •   visits to the sites relevant to the Project; and

        •   review with Ma’aden Project personnel.

1.5 Inherent Mining Risks

Mining is carried out in an environment where not all events are predictable. While an effective
management team can, firstly, identify the known risks and, secondly, take measures to manage and
mitigate these risks, there is still the possibility of unexpected and unpredictable events occurring. It
is therefore not possible to remove totally all risks or state with certainty that an event which may
have a material impact on a mine will not occur.

In the case of the Az Zabirah deposit, the proposed mining method is a regular truck and shovel
operation for excavating both overburden and bauxite, requiring drilling and blasting activities. This
is a standard system for the mining of bauxite in an arid environment. There are no perceived
unusual mining risks.

1.6 Glossary of Terms

Words and Expressions used in this report are defined in the Glossary of Terms of the Prospectus

2.0 The Project

The Aluminium Project covers the development of a bauxite mine at Az Zabirah in Central Saudi
Arabia, and a processing facility at Ras Az Zawr (“RAZ”). The bauxite will be exploited by surface
mining and hauled to load onto railroad cars.

The processing complex at RAZ is located some 90km north of the Saudi Arabian city of Al Jubail, on
the western shore of the Arabian Gulf, 200km south of the Kuwaiti border. It will receive about 3.5
million tonnes per year (Mt/y) of crushed bauxite by rail from the Az Zabirah mine, and will include an
alumina refinery, an aluminium smelter, support facilities, power plant and export shipping
installations.

The project reviewed by Behre Dolbear is estimated to produce and market 650,000 tonnes of
aluminium metal per year at a projected operating cost of $1056/t of aluminium. Start-up is projected
to occur in 2012 and the initial capital is estimated at $6.7 billion. Any surplus alumina and power
produced would also be sold. An up-lift in capacity using more advanced technology to produce
720,000 t/y of aluminium is presently being studied (“the FEL-2 study”) and will be reported on in
early 2008. It is expected that this change will contribute positively to the economics of the project,
but Behre Dolbear has not reviewed the revised plans.

Behre Dolbear has had sight of a Heads of Agreement concluded between Alcan, Inc. (“Alcan”) and
Ma’aden to set up a joint venture in which Ma’aden will own 51% of the equity, while Alcan will own
49% and provide technical and management services.

The map shows the location of the Az Zabirah mine and the RAZ industrial facilities as well as the
crucial North-South Railroad connecting them and other developments.




                                                   251
Figure 2.1 Map of Saudi Arabia

                         Scale: 1cm to 140km




3.0 Geology and Resources

3.1 Geology

Economic bauxite mineralization with an average 3m thickness is within a 10 to 25m thick lateritic
profile, in its entirety labelled “the Bauxite Zone”. The lateritic profile was formed by the weathering
of the top of a sandstone sequence of late Triassic to early Jurassic geological age (160 million
years). The chemical weathering itself is of early Cretaceous age (100 My). An overburden
sequence of late Cretaceous and more recent sediments overlay the lateritic weathering profile. The
contact between the lateritic profile and the soft sandstone overburden is unconformable: the contact
is usually sharp and well distinguishable. Within the Bauxite Zone three subdivisions are discerned –
labelled upper clay zone, pisolitic bauxite zone and lower clay zone – but the lithological boundaries
between them are not sharp and in fact, more often, chemically determined and not visible. The
pisolitic bauxite zone is the ore zone. Both Upper and Lower Clay zones may contain high total
alumina content values, but also relatively high reactive silica in the form of clay minerals, mostly




                                                  252
kaolinite and montmorillonite. Reactive silica affects the refining process, reducing the recovery of
alumina and increasing costs.



            0E                                           1000E                                                                  2000E                                                               3000E                                                                  4000E
 640RL




                                                                                                                                                                                                                                                                                   640RL
 620RL




                                                                                                                                                                                                                                                                                   620RL
 600RL




                                                                                                                                                                                                                                                                                   600RL
                                                                                                                                                                                                                                                    72
                                                                                                                                                                                                                                                         3            15
                                                                                                                                                                                                                   88                          C0                17
                                                                                                                                                                                 87                                              14       AZ
 580RL




                                                                                                                                                                                                                                                                                   580RL
                                      3                                                                                                          6                                             13             02            17
                                 28                                      84                                 85                              28                12            02            17             AZ
                             0                       9               2                   0              2               1   1           0                17            AZ
                          AZ                  1   70          A   Z0              1   71         A   Z0              17              AZ
 560RL




                                                                                                                                                                                                                                                                                   560RL
                      -                   -
                                                          -                   -              -                   -
                                                                                                                                 -                   -
                                                                                                                                                                   -                  -
                                                                                                                                                                                                     -
 540RL




                                                                                                                                                                                                                                                                                   540RL
                                                                                                                                                                                                                        -
                                                                                                                                                                                                                                      -                      -
 520RL




                                                                                                                                                                                                                                                                                   520RL
            0E                                           1000E                                                                  2000E                                                               3000E                                                                  4000E




Fig.3.1 Typical cross section South Zone.

Vertical scale 10 x exaggerated (Source SMGC Geological Report)

The Bauxite Zone outcrops along a NW-SE strike length of some 105km either side of Az Zabirah, to
the north of Qibah. The deposits are flat and near-horizontal, dipping to the East with a 1 or 2%
overall gradient (South Zone deposit). Locally, gradients may be higher. Three main areas of
mineralization are distinguished along strike, which have been labelled respectively the North,
Central and South Zones. In-fill drilling to prove Ore Reserves for the project has in recent
campaigns been restricted to South Zone and it is considered that the South Zone contains sufficient
resources for the Project.

Behre Dolbear has seen Ma’aden’s mining licence covering the South Zone permitting mining for 30
years from 2006. It is expected that this will not limit the life of the mine.

With the thickness of economic bauxitisation averaging only some 3m - varying from a minimum
minable thickness of 1m to 8m - the deposits have been drilled to a maximum overburden depth of
approximately 30 metres. This depth is considered a practical limit for economical Ore Reserves,
involving a stripping ratio of 10:1. The resulting width of drilled-out mineralization is up to about 5km
but with an average of 2.5km.

A list of studies relevant to the geology and mine planning is provided in 3.6 and 5.1 below.

3.2 Overview of Resources

Behre Dolbear considers that there are sufficient mineral resources to support the project, assessing
the total resource for the South Zone to be 240 Mt at 50% available alumina and 8% SiO2. Even if
only half of this is converted to reserves, a reasonable assessment, it would allow for a mine life of
well over 30 years at the currently proposed alumina production rate of 1.4 Mt/y from a bauxite
supply rate of 3.5 Mt/y. Additional resources may be available from Central Zone, which has drilled
out resource potential (partly Measured but mostly Inferred classification) of over 100 Mt @ 50%
available alumina and 8% SiO2.

Behre Dolbear considers that the differences between the resources of the Project Feasibility Study,
by Hatch (2003), (refer to Section 3.6), and the more recent updates by Ma’aden and SMGC, the
latter a geological services company, must be resolved. To this effect, new resource modelling
should be undertaken, based on a clear and consistent set of criteria to define the ore zone, without
subjective inclusion or exclusion of intercepts modifying the apparent continuity of the mineralization.
The transfer of resources to reserves should then take account of ore losses and dilution, based on
the trial mine test results and the observed hanging wall and footwall configuration.



                                                                                                                                253
Under the current FEL-2 Study contract with SNC-Lavalin, Hatch has been contracted to perform this
work. This study is being given a high priority and is on track to complete by end of 2007. It would
be prudent to then give this work an independent audit.

3.3 Independent Technical Audit by SRK (2005)

A comprehensive audit of the resource base was made upon the completion of infill drilling after the
completion of the Bechtel FSR (refer to section 3.6). The infill drilling upgraded the classification of a
major quantity of resources from Inferred to Indicated Mineral Resource. The audit included site
visits, check assaying and a thorough review of the existing geology, resource, mining and reserve
estimation reports. The audit concludes that additional work is necessary to firm up the reserve base
for the project and Behre Dolbear supports the findings of this report. Behre Dolbear shares the
conclusions of this audit in that additional desk study is required, but we also support SRK’s positive
comment:

“… However, the calculation of the reserve quantum is not in question as there is abundant
availability of economic resources for the project definition. …”

3.4 JORC Code

This review conducted by Behre Dolbear has been carried out using the guidelines and terminology
of the JORC Code. The following figure shows the relationship between Mineral Resources to Ore
Reserves (Source: JORC, blue edition 2004).




    Fig 3.2 General Relationship between Exploration Results, Mineral Resources and Ore Reserves




3.5 Exploration

The occurrence of outcrops of lateritic clay and bauxite north of Qibah was first recorded on the
legend of “Miscellaneous Geologic Investigations Map 1-206A” (1963), compiled by the US
Geological Survey from mapping by Saudi ARAMCO.              The ensuing exploration history is
comprehensively summarised in SRK’s audit report and is in summary:




                                                   254
 •   Riofinex Limited, a subsidiary of Rio Tinto plc, conducted an exploration programme at Az
     Zabirah between 1979 and 1984 (Black et al, 1982). The programme comprised a
     reconnaissance study, which included regional mapping and outcrop and channel sampling,
     followed by a regional drilling programme, with some additional close spaced drilling to provide
     data for a geostatistical assessment. Riofinex drilled a total of 358 holes in the South, Central,
     and North Zones.

 •   A second drilling programme was conducted by BRGM and the Directorate General for Mineral
     Resources (“DGMR”, part of the Deputy Ministry) between 1987 and 1993, as part of a pre-
     feasibility study (hereafter referred to as the BRGM study). A total of 430 holes were drilled in
     the South and Central Zones.

 •   Ma’aden conducted an infill drilling programme, recommended by the then Hatch Kaiser
     Engineers (Hatch), over selected areas of the South and Central Zones from May 2002 to
     February 2003. A total of 398 holes were drilled to provide additional data to support a
     feasibility study.

 •   An additional infill drilling programme was carried out by Saudi Arabian Bechtel between August
     and November 2003. This programme comprised 603 drill holes and was aimed at upgrading
     the classification of the bauxite resources of the area from Inferred to Indicated and Measured
     categories.

 •   The last two drilling programmes, by Ma’aden in 2003, were undertaken based on the (2002)
     Geological Data Review by Hatch, which analysed the Riofinex and BRGM data. Drill grids of
     125 x 125m and 250 x 250m were deemed necessary to delineate the required quantities of the
     Measured and Indicated Resource categories. The Ma’aden drilling consisted of two parts:

            o   Drilling to delineate 12 years of Measured and Indicated Resources for the feasibility
                study (considering an annual production of 3.5 Mt), covering areas of respectively 2
                x 2km (pattern 125 x 125m) and 2 x 3km (250 x 250m).

            o   The drill campaign to upgrade the remainder of the South Zone from Inferred to
                Indicated Resources.

In addition, a ‘trial mining’ operation was conducted during 2003, mining 26,000 tonnes of bauxite,
the results of which have been incorporated in the FSR (2005) report together with a number of
closer spaced holes for geostatistical purposes. The latter work was executed by SMGC.

3.6 Bauxite Resource Estimates

Each of the above exploration programmes was followed up by diligent geological study, data
validation, geostatistical analysis and resource/reserve estimates using state-of-the-art orebody
modelling systems. All (four) estimates by Riofinex, BRGM, Hatch and Ma’aden/SMGC are well
documented in their individual reports.

The Riofinex and BRGM drilling, sampling and assaying work is of excellent quality and a valuable
source of geological information on the deposits. The estimates are generally confirmed by the later
work and also very useful for the purpose of comparison, even though the drilling is of too large a
spacing for feasibility-stage Ore Reserves.

The Hatch 2003 geological modelling study and resource estimate was part of the Bechtel FSR and
remains the definitive report to-date. The resulting orebody model was used for the mine planning
reports (Hatch, Runge) which are also part of the Bechtel FSR.

The Ma’aden/SMGC modelling work and resource estimate were completed in October 2004 with an
update in February 2005 to incorporate geostatistical data from the close-spaced drilling and the trial
mine. This resource model incorporated both the (Hatch) 125 x 125m and 250 x 250m drilling inside




                                                 255
the two blocks drilled for the specific purposes of the feasibility study as well as the 250 x 250m
drilling in the remainder of South Zone.

The different resource-class areas of the Hatch and SMGC estimates are illustrated in Fig. 3.3.

                  0E           5000E                               0E           5000E




                                                          45000N




                                                                                        45000N
         45000N




                                       45000N




                                                          40000N




                                                                                        40000N
         40000N




                                       40000N




                                                          35000N




                                                                                        35000N
         35000N




                                       35000N




                                                          30000N




                                                                                        30000N
         30000N




                                       30000N




                                                          25000N




                                                                                        25000N
         25000N




                                       25000N




                  0E           5000E                               0E           5000E




Figure 3.3. Measured, Indicated and Inferred Resources - South Zone only

(left) Hatch South Zone Resource Areas (2003).

In red: (2 x 2km drilled at 125 x 125 m) Measured Resource and (2 x 3km, drilled at 250 x 250 m)
Indicated Resource. In green: Inferred Resource according to Hatch.

(right) Maaden/SMGC resource areas (2005).

In red: Measured Resource (square 2 x 2km block) and Indicated Resources. In green: Inferred
Resource, drilled at 250 x 250 m) Ma’aden/SMGC, (with Hatch’s green Inferred boundary
superimposed).




                                                 256
The South Zone Geological Resource estimates by Hatch and SMGC are tabulated in Table 3.1. A
comparison between the two estimates is discussed in our analysis paragraphs below, the
comparison focuses on the Measured Resource categories (marked red in the table) which are
based on the same geological information.




                                            257
Table 50: Geological Resources by Ma’aden / SMGC (2005) and Bechtel/Hatch (2003) - Based on dry bulk density
measurements on 245 samples from 23 diamond core holes with an average dry density of 2.01 t/m3




Ucz = Upper clay zone, Lcz = Lower clay zone, Bxz = (Pisolitic) Bauxite zone (all three together
forming the “bauxite zone” = lateritic weathering profile on top of the parent rock)

4.0 Conversion of Mineral Resources to Ore Reserve

The in-situ geological resource cannot be mined with exact precision. Ore will be lost at the contacts
with hanging wall and footwall and at the same time, mined ore will be diluted with off-grade waste
material. A loss-and-dilution algorithm must therefore be applied to convert the in-situ geological
resource to the as-mined tonnages and grades constituting the Ore Reserves.

The transition from the upper clay zone to the pisolitic bauxite (ore) zone more often is chemically
determined and does not always follow the lithology where visible. The footwall is a gradational
transition, with again a chemically determined boundary. The situation is aggravated by the fact that
both hanging and footwall trend higher in reactive silica and thus carry a substantial penalty in
caustic soda consumption when taken as dilution and treated at the refinery.

Introducing loss-and-dilution into the reserve estimates is a complex process with interrelated steps.
The first loss-and-dilution is introduced with the drill sampling process. With down-hole compositing
further loss and dilution are introduced into the resource model. When converting resources to
reserves the mining method must be taken into account and a loss-and-dilution algorithm must also
be applied, taking all previously introduced loss-and-dilution into account.

The loss-and-dilution used by Hatch (2003) for the conversion to reserves, with a loss of 0.25m at the
hanging wall only with no further losses or dilution is not realistic. Behre Dolbear shares SRK’s
reservations on the loss-and-dilution applied in later studies. In view of this and the fact that the
resource modelling itself needs additional work, we do not consider that sufficient work has been
done to produce a reserve estimate in accordance with the requirements of the JORC Code.




                                                   258
4.1 Analysis of Procedures

The complete sequence of tasks from drilling, sampling, assaying and geological interpretation, up to
and including resource modelling, resource estimation, the mining study and the conversion of
resources to minable Ore Reserves has been conducted with due diligence by the parties involved.
Variographic study generally confirms the choice of exploration drill spacing used for resource
categorization and we agree that sufficient drill data are available for the feasibility stage of the
project. Drilling methods, sample recovery, assaying methods, variographic studies, quality control,
density measurements and determination of limit of mineralization, are summarized in the SRK
report. Further fieldwork is not required at this stage

However, Behre Dolbear has reservations as to the geological modelling and resource estimates
procedures followed. In our opinion there are assumptions which need to be corrected before the
reserve can be recalculated and endorsed. Behre Dolbear has expressed our concerns to Ma’aden
personnel during our visit to the Al Khobar Ma’aden office and discussed them in some detail.

Behre Dolbear’s reservations with both the Hatch and Ma’aden/SMGC’s estimates follow a series of
questionable points through the procedures from data validation up to the conversion from Mineral
Resource to Ore Reserves and focuses on the following steps in the total procedure:

    •   Down-hole Compositing of Boreholes:

In essence, we consider both hanging-wall and footwall contacts as chemically determined. In our
opinion, no further use should be made of the lithology descriptions for compositing purposes as the
descriptions have proven to be unreliable. Mining limits will be based on chemical boundaries. In a
number of individual boreholes inspected by us, off-grade material has been included as ore with the
aim to create continuity in mineralization. Agreed cut-off criteria must be used in a consistent
manner without interference. The compositing procedures must be laid down in strict algorithms
which are consistently applied throughout.

    •   Cut-Off Grade Determination

Tables and curves are presented and used to justify cut-off grades, describing grade-tonnage
relationships within a pre-determined, fixed envelope of bauxite mineralization. This envelope was
based on lithological descriptions which were often erroneous. The latest SMGC study clearly states
that some 30% of the holes still need to be re-checked. Cut-off criteria should instead be based on
cut-off grade curves rather than on grade-tonnage curves. The difference is that cut-off grade curves
represent a series of different envelopes, each from down-hole compositing for different sets of cut-
off criteria. From each set of down-hole composite, an ore envelope is to be developed and resource
tonnages estimated. Only on the base of such exercise can a realistic cut-off criterion be
established. An important consideration in this evaluation is the continuity of the orebody; that is, the
question for which set of cut-off grade criteria (SiO2, available alumina and stripping ratio) continuity
and minability are within practical and economical limits.

    •   Resource Modelling : Comparison of 2-D versus 3-D

Both Hatch and SMGC use 3-D block modelling. We share reservations with SRK on the usefulness
of 3-D block modelling for the orebody in question. In our opinion it may overcomplicate the
essentials, clouding major issues and in particular, considering that the ore will in any way be mined
in a single ore lift.

    •   Loss-and-Dilution

The original Hatch assumption that neither loss nor dilution would occur at the footwall beside
minimal losses at the hanging wall does not appear realistic. Later, more generous allowances for
loss-and-dilution (Hatch/Runge, SMGC) are in our opinion still insufficient, particularly considering
the undulations and other irregularities in the orebody which have been suppressed to an extent by
using zonal control and the introduction of zero thickness intersects into the borehole database. In




                                                  259
this context we note that SMGC has used diamond-drilled holes only to model the ore envelope,
using only the assays from the RC holes.

4.2 Conclusion/Recommendations on Resources and Reserves

On the basis of the analysis above, Behre Dolbear holds the opinion that neither the Hatch (2003)
reserve estimate which is part of the current FSR nor the update by SMGC (revised version February
2005) are ready for endorsement as in compliance with JORC blue edition 2004 requirements or with
the requirements of Chapter 19 of the UKLA Listing Rules. We share a number of reservations and
recommendations with both Snowden’s review of the original Hatch estimates and, in particular, with
the SRK technical audit which also covered the later Ma’aden/SMGC estimate.

Behre Dolbear recommends that the following work is undertaken:

    •   Rework complete down-hole compositing.

Compositing must be based on a clear and consistently applied set of cut-off grade criteria. “Manual”
interference, ie, including or excluding intercepts contrary to stated cut-off criteria aiming to improve
the apparent continuity of the orebody, must be avoided. The down-hole composites are to be tested
by modelling and the effect on continuity of mineralization is to be thoroughly analysed. If continuity
is insufficient with too many ‘dry holes’ inside the orebody, the cut-off grade must be lowered. The
analysis must reflect practical and realistic mining conditions.

    •   Cut-off grade determination

As stated in the above analysis, a complete cut-off grade exercise should be done based on down-
hole compositing with different cut-off criteria, generating a series of ore envelopes as a function of
the cut-off criteria chosen for each individual run.

    •   Final Pit determination

We agree with SRK that the economic runs by Hatch and Runge are not suited to provide the basis
for mine scheduling. The economics-generated mine plan is overly complicated and not practical.
The primary goal of providing feedstock to the refinery of constant and consistent grades is missed.
The Lerch-Grossmann algorithm which forms part of the NPV routine is perfectly suited to the
purpose but the NPV ‘time value’ component is not applicable and the programme should be used to
establish the final pit limit or outer boundary of economical mineralization only. Intermediate pits
should be scheduled with the foremost aim of providing feedstock of constant grades.

    •   Review of loss-and-dilution throughout the reserve estimating process

Loss and dilution is introduced throughout the whole process from sampling drill holes up to the final
conversion of resources to minable reserves. Each of the steps where loss-and-dilution is introduced
is inter-related to the others. All steps need to be evaluated in conjunction and the loss and dilution
algorithm for conversion from in-situ resources to minable Ore Reserves is to be thoroughly
reconsidered.

    •   Variability characteristics

The variability characteristics of the deposit were apparently not taken into account in previous
modelling work and, in particular, in the latest SMGC/Ma’aden model. A wealth of information on
variability characteristics is available but not fully used. Komlossy’s report (referred to below) is
effectively a draft which only covers part of the trial mine test work. The SMGC report makes only
limited use of the available information. Smoothing the orebody envelope by disregarding RC drilling
based elevations (SMGC) creates a false impression of regularity and continuity of the orebody.
Local undulations of hanging and footwall – whether due to faulting, folding or grade variations –
must be kept in the model like all other factors of variability.




                                                  260
    •   Resource Modelling – Ore Envelope

As stated, we would probably have a slight preference for 2-D modelling as a more appropriate
method of modelling resources and ultimately for estimating reserves in this case with a single ore-lift
mining operation. It may, or may not, assist in better presentation and understanding of the
variability of the deposit. We recommend that a 2-D model is prepared and evaluated against a 3-D
model. The work is due to be completed early in 2008.

This work was discussed with Ma’aden and is incorporated in the scope of the FEL-2 study
mentioned above

5.0 Bauxite Mining

The bauxite mining operation is to supply the feedstock for the bauxite-to-aluminium metal project. A
supply of bauxite of consistent quality is to be secured from the South Mine at Az Zabirah, with ore-
grade variations within narrow limits. The bauxite is to be delivered to the crushing and rail load-out
facility at the Az Zabirah railhead, adjacent to the mine. Stockpiling and blending of mined bauxite
and ore quality control (grade control) measures are included in this section as these are closely
related to the geological features of the ore and the operation of the mine. These activities will be
part of a mining contract.

The Bechtel FSR (2004-2005) assumes an annual rated capacity of 1.4 million tonnes of alumina
requiring 3.5 Mt of bauxite. Plans currently under review suggest that capacities may increase to 1.6
Mt of alumina requiring 4.0 Mt of bauxite, ie, a 15% increase of rated capacity, in order to increase
the aluminium production to 720,000 t/y. This increase can be readily accommodated by the mine.

5.1 Mine Planning Background

This review is based on the following series of documents

    •   Bechtel Mining & Metals (2004-2005). Sections 1 - 7 of Feasibility Study Report.

This still is the definitive feasibility report which is, however, currently under review. The sections on
mining are based on the Hatch and Runge reports:

    •   HATCH Kaiser Engineers (2003). Az Zabirah Mine Planning Study.

This is the ‘original’ comprehensive mine planning study which is incorporated in the Bechtel
feasibility report.

    •   RUNGE Pty Ltd (2004). Review of Hatch Mine Feasibility Study.

This review provides revised mining schedules based on narrow limits for ore quality variations
besides detailed mining cost estimates.

    •   SMG Consultants(Pty Ltd (2005). Geology Report and Mining Study. Rev. February 2005.

The mine planning volume of this report is an update of the Hatch/Runge studies incorporating
increased ore resources and a revised ore reserve.

    •   Dr G. Komlossy e.a., (February 2004). Report on the Additional Infill Drilling and Trial Mining
        Programmes, Geo-Kom Geological Exploration Ltd.

This report gives an in-depth geological description of the trial mining operation but is a draft version,
covering only the first half of the complete trial mining programme.

    •   SRK Consulting Engineers and Scientists (August 2005). Ma’aden Az Zabirah Bauxite
        Project, Independent Technical Audit for Geology and Mine Planning.




                                                   261
This audit reviews the resource modelling and resource estimates in particular. Mine planning and
production schedules are also reviewed. Mining methods and equipment selection are generally
endorsed.




Fig. 5.1 Trial Pit October 2003 with excavator standing on blasted bauxite and trucks on footwall /
lower clay zone (pit floor)

5.2 Current Design Engineering

As set out in the preceding section on geology and reserve base, the orebody is virtually horizontal
with an average eastward dip of 1 to 2%, ie, the crossfall which is usually applied in open-pit mining
on ‘level’ benches to allow for natural surface water drainage. For all practical means and purposes
in open-pit mining, this crossfall and, accordingly, the working surfaces in the future mining operation
may be considered horizontal. Haul roads for truck transport – the largest single cost component for
the mining operation - will have gradients to match and may, for productivity calculation purposes, be
considered as having zero gradients beside, of course, the rolling resistance inherent to unsealed
mine roads. Ambient temperatures at Az Zabirah and tyre ratings are a complicating factor but this
aspect of truck selection is well understood and manageable.

While truck transport will be the largest single cost component for the mining operation, selectivity of
mining is equally important. Proper clean-up of the pit floor is an absolute necessity, recovering
payable bauxite with an average thickness of 3m only while at the same time, avoiding dilution with
clayey material and reactive silica from both the hanging wall and the footwall to avoid the penalties
involved with diluting the bauxite with clay.

Considering this, primary loaders for bauxite lifting need to be selected with special care. For
overburden, the selection procedure is relatively easy. For the latter, the criterion simply is to load
trucks at the lowest possible overall cost and this translates directly into a choice of shovel which can
load the chosen truck in 4 passes or 2 minutes loading time for each truck. At an overburden
stripping rate of approximately 10 million cubic metres or 20 million tonnes per year this is an obvious
choice. As for bauxite ore lifting in the region of four million tonnes per year, the precision of mining
is the most important consideration. Any quantity of clayey material from hanging wall or footwall
dug up will carry a penalty if mixed with bauxite ore going to the refinery.

5.3 Resource Base

Notwithstanding reservations made with regard to the conversion of resource estimates to Ore
Reserves, Behre Dolbear is of the opinion that the Hatch and SMGC figures are a reasonable
indication of the resource base. We support the following statement by SRK in their Independent
Technical Audit (2005) as follows:




                                                  262
    “…The total potential of mineral resources, including the Inferred category, is of the order of 380
    Mt (HATCH estimate of 390 Mt at 50% TAA and 8% SiO2) providing a mine life of over 100
    years. Even if only 50% of the Inferred category is converted to reserves, it implies a mine life
    of well over 50 years. …”

Note that SRK and Hatch include here some 140 Mt in the Central Zone which is not under current
mining title.

5.4 Mining Method and Equipment Selection

The engineering studies agree that a shovel-and-truck operation is generally appropriate for Az
Zabirah. Overburden is to be removed using the same mobile equipment as for ore lifting.
Overburden is to be dumped in mined-out areas at close distance, varying from 200 m or less up to
3km haul in the first year while opening up the deposit, with an average just under 1km (Runge). Ore
haulage to the crusher is an average 3.8km (Runge). A 100-t rear-dump truck is recommended, to
be loaded by a 300-t class mass excavator. A total number of about 10 trucks (Ma’aden-SMGC
revised projection) would be required and this is considered an appropriate match, balancing
flexibility with economies of scale.




Fig. 5.2 Illustration of Az Zabirah Shovel-and-Truck Mining Operation

The major equipment for the 3.5 million t/y operation will therefore comprise standard mining
                                                                       3
hardware, including a fleet of 100t off-highway trucks teamed with 10m bucket excavators, backed
up by mobile loaders, bulldozers, a grader and blast-hole and grade-control drills and sundry smaller
mobile units. Such equipment is readily available on the world market as regular production units.
The actual equipment spread will now become the responsibility of the selected mining contractor.

Grade control is projected to be based on a pre-production drilling on a 10 x 10m ore sampling grid.
The most important requirement for bauxite sent to the refinery is that grade variations are kept
within narrow limits. For this purpose, the run-of-mine bauxite is envisaged to be dumped onto
100,000 tonnes blending stockpiles from which it is recovered before crushing and ‘shipment’ in daily
11,000 tonnes train loads. The practice will involve ‘double handling’ of all run-of-mine ore but is
considered worthwhile towards the goal of smoothing refinery feed grade. Ma’aden recognise that
the stockpile design will need revision to add an insurance cover in the light of the change to
contractor mining.

Grade variations within each of the blending stockpiles are to be within +/- 0.5% TAA and +/- 0.2%
SiO2. Hatch/Runge demonstrate on the basis of the resource/reserve model that 10 years production
can be scheduled in such a way that this can be achieved.

Scope Changes have arisen over time, but the series of documents clearly reflects a convergence of
opinions between the various engineering groups involved.

Major changes since the Runge study are:




                                                 263
    •   A possible increase in bauxite production level from 3.5 to 4.0 million tonnes per year, i.e. a
        14% increase
                                                                                                       3
    •   Repeated recommendations to increase the shovel size from the rated bucket size of 10 m
               3
        to 14 m .

    •   Similarly to increase the bulldozer/ripper size from CAT D9 to D10 or D11, the latter of which
        is twice the weight and horsepower of the D9.

5.5 Conclusions/Recommendations on the Mining Operation

Behre Dolbear generally supports the mining methods and equipment selection as comprehensively
presented in Runge’s report and agrees with the above refinements and recommendations.

With the proposed 14% increase in production level the equipment selection would generally remain
unchanged but the number of trucks would increase accordingly. The larger shovel size would
accommodate the increased number of trucks. Similarly, the larger size bulldozer with heavy single
shank ripper attachment, recommended for having much better ripping capabilities, would at the
same time be quite capable to cope with the increased production level.

The capital costs would increase accordingly by approximately 15% and the operating costs per
tonne of bauxite would very marginally decrease due to a minor economy-of-scale effect. This
should be manageable within the mining contract.

With regard to grade control by the system of 10m x 10m pre-production drilling, systematic mine
planning, in-pit inventory of exposed Ore Reserves in combination with 100,000 t blending stockpiles,
we consider the entire system well designed and appropriate for an owner operation. As regards the
feasibility of fulfilling the grade variation requirements Behre Dolbear is somewhat less confident,
based on our experience with similar bauxite producing mines elsewhere. A revised orebody model
with increased variability characteristics may demonstrate larger variations.

Apart from the necessity of revised production schedules and cost estimates for the mining
operations, Behre Dolbear recommends that the following should be addressed:

    •   The results of the trial mining are not clearly analysed with regard to possible consequences
        for the projected mining operation and not reviewed and incorporated into any of the mining
        studies. This needs to be done and we recommend that, in particular, the undulations of the
        footwall and hanging wall and other variability characteristics with possible repercussions on
        the choice of excavators (excavator size) are investigated. Mining loss and dilution are to be
        re-assessed.

    •   Grade control and, in particular, the limit to grade variations will need to be re-assessed once
        revised reserve models are available. Re-assessment may entail revisions to the stockpiling
        sizes and strategy. Ma’aden also needs to determine how control of quality can be
        monitored in a contract situation.

    •   Stockpile size and, in fact, the whole materials-handling supply chain through to the railroad
        loading point needs to be reviewed in the light of the switch to contractor mining and
        consequent need for insurance against poor performance or similar situations.

These topics and that of mine stockpile management will be addressed in the current Hatch FEL-2
study.

6.0 Alumina Plant

Alumina refining relies on good management of a combination of complex and inter-related process
stages and the economic success of a refinery project will be judged on quickly meeting nameplate
production level and producing an alumina product of consistent quality.




                                                 264
The conclusions drawn in this report are based on the Aluminium Project information made available
to Behre Dolbear and discussions with members of the Project team. However, the Project team is
reviewing certain aspects of the process design and will not consolidate the flowsheet conditions until
2008. In this sense Behre Dolbear does not regard the refinery design at a “bankable feasibility
study” stage.

6.1     Refinery Design

To recover alumina from Az-Zabirah bauxite efficiently, and to satisfy the requirement for producing a
smelter-grade, sandy, product, the refinery technology required is quite sophisticated, relying on a
digestion extraction step at 275-280 ºC, which is at the high end of practice in the industry using
Bayer process technology. Also, to minimise the capital cost of the refinery, the design will aim at a
high-yield process to minimise process flows and equipment size.

The selected process requires the application of tube digestion and the Project will seek support for
process design, equipment design and subsequent operation from a party having proven experience
with this technology. This is viewed as being critical and is fully endorsed.

Production of a consistent quality, smelter-grade alumina is mainly defined by the design and
operation of the precipitation and hydrate classification processes. The current Project specifications
are based on well founded principles and are suitably matched to the conditions set for the digestion
process.

Representative samples of Az Zabirah bauxite have been tested in reputable laboratories and the
results of that work provide a suitable basis for specifying the process conditions in the refinery.
Further work is ongoing and this report makes a recommendation to expand the scope of that work,
and to include testing of some non-representative grade samples, before finalising the design and
equipment selection. In evaluating project risk, due allowance must be given to the fact that Az
Zabirah bauxite has not been commercially processed, nor has a pilot plant test been completed.
The high silica content of the bauxite might pose problems of rapid scale deposition in the digestion
section. This can be best confirmed by carrying out pilot scale test with Az Zabirah bauxite under
design digestion conditions and the Project team is encouraged to investigate the opportunity for
carrying out such a test programme.

The design assumptions for operating factor, design margin, sparing philosophy, plant layout and
plant staffing have been reviewed and are, in general, endorsed. It is recommended that the Project
team reviews the assumptions for the design operating factor and/or the rate of increasing the
production to design level in the first 4-5 years of operation. Although the design assumptions are
quite challenging, Behre Dolbear considers that the production debottlenecking increase assumed by
the Project in Year 4 and thereafter are realistic.

Major inputs to the refinery include heat and caustic soda. The adjacent Power Plant will supply
process steam and caustic soda will be sourced from local producers at a cost competitive with
imported CIF prices.

Disposal and storage of the solid residues (red mud) from the bauxite is often viewed as a significant
environmental liability of the alumina refining industry. The proposal to use sea water to neutralise
the residues is viewed as the most secure disposal option for the Ma’aden project. However, Behre
Dolbear recommends that the Project obtains confirmation of the licence conditions for operating this
process. It is also noted that the Project might have to complete laboratory tests simulating
neutralisation of residue before applying for such licence.

The expected alumina conversion ratio at the smelter indicates that, at the 1.4Mt/y production rate,
some 150,000 t/y notional balance should be available for sale on the world alumina market. Most of
the documents available to Behre Dolbear pertained to the scope as defined in the 2004 report by
Bechtel for a nameplate capacity of 1.4 Mt/y. The process changes for the potential upgrade to 1.6
Mt/y were defined in the flowsheet of May 2007 and aspects of the changes to the required facilities
since 2004 were fully discussed with the Project team. The relevant Front End Loading, Stage 2




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(“FEL-2”) phase of the project is being based on the higher aluminium production rate and is
expected to be completed in early 2008.

Based on the documentation reviewed, and the discussions with members of the Project team, the
following conclusions are made on the current design provisions of the alumina refinery:

   •   The flowsheet is based on technologies which are well proven in the industry and with a
       skilled production team should realise consistent production rate and consistent quality,
       smelter-grade alumina and a high-efficiency refinery;

   •   The proposals for technology and equipment are acceptable, including:

           o   Stockpiling and blending of crushed bauxite;

           o   Closed-circuit grinding of bauxite;

           o   Pre-desilication of bauxite at ~100 ºC;

           o   Tube digestion at 275-280 ºC; (It is recommended that the Project ensures access to
               support for the design and operation of this process from an experienced source
               such as Hatch.)

           o   High rate technology for mud separation and washing;

           o   Sea-water neutralisation of mud residues (red mud) and secure impoundment of the
               benign residues. Both the neutralisation and associated drystacking activities are
               modern, yet proven technology

           o   Split-seeded precipitation circuit with inter-stage cooling;

           o   Two stage hydrocyclone classification of hydrate with washing of fine seed and
               deliquoring of coarse seed;

   •   The default design margin at 10% is acceptable but will require selection of equipment which
       has been well proven in the industry. The minimum design flows at 50% also will require
       careful selection of equipment to ensure that operation stability can be maintained.

   •   The proposals for sparing of equipment are acceptable.

   •   The proposals for plant layout are endorsed, as are the concepts for expansion of the plant.

   •   The proposed staffing of the refinery with a core of skilled management should lead to
       effective operation.

   •   A reasonable amount of laboratory testing of the Az-Zabirah bauxite has been completed by
       experienced and respected authorities. The extent of testing which has been completed is
       adequate for defining the flowsheet conditions.

   •   The current, ongoing test work is endorsed

6.2 Production Ramping and Incremental Production

The construction plan shows commissioning of the second digestion unit some 3-4 months after
start-up of the first unit. This concept is endorsed as it will allow the operating team to gain
necessary experience with the operation of installed equipment and the control of the process. In
this initial period of operation, frequent interruption to feeding bauxite must be expected and the
production will be reduced. As operational experience is gained and equipment defects are resolved
the continuity of production will improve.




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The provisional start-up plan recognises this progressive improvement in production continuity and
predicts that design production will be achieved between Years 2 and 3. This is considered to be a
realistic target but success will depend on adequate pre-start-up training and selection/installation of
well proven equipment.

The design flowsheet assumptions for high caustic concentration and high alumina/caustic ratios in
the liquor are challenging for design of a greenfield refinery, as is the default design factor (10%).
Nevertheless, each of the design assumptions for flow, process yield and, to a lesser extent,
operating factor will have an upside which Ma’aden will be able to exploit to realise incremental
production in Year 4 and following. The provisional production improvement indicated by the Project
team is acceptable.

6.3 Conclusions/Recommendations concerning the Alumina Plant

Based on the documentation reviewed, and the discussions with the Project team, the current scope
for the alumina refinery is considered to provide a stable platform for a successful project. However,
this report refers to various aspects of the current scope which will be reviewed in the ongoing FEL-2
work Programme before finalising design details. These recommendations for offsetting risk were
discussed with the Ma’aden team and are summarised below:

    •   Investigate further the scaling rate on heat exchangers, through a pilot test

    •   Consider slight reductions in the design operating factor and the target alumina
        concentration from the digestion process to bring these design assumptions closer to those
        normally specified for greenfield alumina refinery projects.

    •   Review the rate of production specified for each quarter in the first 2 years following start-up.

    •   Complete the ongoing laboratory studies and extend the scope of that work to include testing
        of anomalous grades of Az-Zabirah bauxite and other aspects detailed herein.

    •   Review the equipment provisions for the calcination and evaporation sections to optimise the
        capital investment.

    •   Confirm the source and cost of support for the engineering, training and operation of the tube
        digestion process.

    •   Confirm that equipment to be selected for the project will have been well proved in similar
        duties in alumina refineries.

    •   Confirm the source of support for overseas training of key members of the operating team.

Critical to the success of the start-up will be the skills of the management team and the external
support provided. The Project concepts for training employees both locally and overseas are
endorsed but should be confirmed early in the execution phase of the project.

7.0 Smelter

The Ras Az Zawr smelter is the centrepiece of the greenfield, integrated bauxite/alumina/aluminium
metal project planned by Ma’aden. The smelting technology to be used is based on the proven
Pechiney AP30 design series, which has subsequently been significantly improved by Alcan.

The ongoing worldwide escalation in capital costs, as well as in many operating cost components,
has forced the aluminium smelting industry to plan for ever larger and larger greenfield smelters,
where the economies of scale can partially compensate for this ongoing escalation. The RAZ
smelter has been planned on a very large scale - measured by world standards - with two potlines
from the start, making it a mega-project. Behre Dolbear expects the production cost to sit in the
lower half of the worldwide cost curve.




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This, and the need for the most up-to-date technology, has led Ma’aden to involve a major aluminium
producer – Alcan - into the planning, execution, establishment, and operation of the RAZ smelter,
which is now entering the advanced stages of pre-feasibility studies. The studies to date have
indicated that this project makes economic sense and that the smelter should be able to evolve into a
successful venture. It is the present plan of the sponsors to have a more definite project outline by
early 2008, to arrive at a Notice-to-Proceed by the third quarter of 2008, and to have the financing in
place by end of 2008.

7.1 Project Scope

The Bechtel 2005 FSR was based largely on the AP 30 Series technology developed by Aluminium
Pechiney (“Pechiney”), now a subsidiary of Alcan, which is widely accepted and used and has
become the basic world standard. The parameters for the technology to be used at RAZ had been
transmitted by Pechiney to Bechtel in a document entitled “Technical Basis Data, General, Feasibility
Study” dated 02-04-04. These data were summarized by Bechtel in a document called “Basic
Design Data” dated 20 February 2004.

Some of the main, original parameters used in the FSR are listed in Table 7.1

Table 51: Key Smelter Design Criteria (Original Plan)
Production
        Number of Pots                                                          672
        Nominal Amperage                                                        335kA
        Annual Production @ 99.62% Utilisation, 94.5% Current Efficiency        622,858 tons
Power
        Current Efficiency                                                      94.5% ± 0.1%
        Pot Voltage                                                             4.3 V ± 0.1 V
        DC Power Consumption                                                    13,563kWh/t A1
Anodes
        Number Anodes Per Pot                                                   40
        Size of Baked Anode Block                                               1,500 x 650 x 620mm
        Baked Anode Weight                                                      895kg
        Anode Cycle                                                             640 hours
        Net Carbon Consumption                                                  415kg/t Al
Metal Tapping
        Metal Tapping Cycle                                                     32 hours
Raw Materials
        Alumina Required Per Year                                               1,195,887 t
        Fluoride Required Per Year                                              11,211 t
        Coke Required Per Year                                                  229,490 t
        Pitch Required Per Year                                                 49,763 t


Behre Dolbear’s review covers Ma’aden’s 2006-2007 updated plan for production of 650,000 t/y of
metal, operating at a nominal pot amperage of 336kA and requiring some 1,249,000 t/y of alumina
feed, leaving a surplus of alumina for export to world markets. This plan is the base case.

In the new plan being studied, Ma’aden, with the involvement of Alcan in the planning process has
continued to direct the project design work towards more pots and operating at higher amperage
than shown in Table 7.1 above. The new plan calls for the use of AP-36 technology and similarly two
lines of 360 pots per line, ie, 720 in total, but operating these at a higher 360kA, producing 720,000
t/y of saleable metal, equivalent to a demand of 1,382,000 t/y of alumina.

These evolving changes in plans for metal production will require accompanying changes in all of the
auxiliary facilities. Most particularly, Behre Dolbear agrees that the anode baking capacity must be
expanded, not only in number but also in size and weight.




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The final scope of this aluminium smelter project is now being developed with Alcan participation in
the Montreal office of Bechtel. This scope should be definitive by early 2008. It is estimated that the
Notice-to-Proceed will be issued by the middle of 2008.

7.2 Technology

In the light of the experience of Aluminerie Alouette Inc. (“AAI”) and the involvement of Alcan, Behre
Dolbear considers that the Ma’aden aluminium smelter project should be able to access the latest
available technical achievements, provided the various technology transfer technical support
agreements are in place.

The Pechiney proposal, and also the initial plans at AAI, called for an anode size of 1,500mm, a
standard size. AAI stretched this to 1,550mm and thereby gained extra weight and efficiency. A
further increase to 1,600mm is under consideration. It appears that Ma’aden will opt for the standard
22.7kg (50 lb) ingots, with casting equipment which has been proven for many years. This type of
ingot fits the usual traditional markets. However, it has been proposed to also install one sow caster,
just in case there should be a complete breakdown of the conventional casting equipment.

One field where Pechiney has less know-how, and which Behre Dolbear considers of great
importance, is the coordination and integration of their specifically designed, computerized control
programmes with those used by the many other manufacturers. As it is, each of those individual
manufacturers of machinery and systems all have always used their own programmes. It is
important that all of these systems are integrated into one control process before construction starts.

7.3 Project Execution

Ma’aden has worked closely in the study phases with Bechtel, one of the major EPCM firms in
Montreal with extensive experience in building smelter projects in the Middle East. The close
association with Alcan, with their enormous world-wide experience, will add substantially to the
project.

The “Heads-of-Agreement” and later subsidiary arrangements with Alcan call for a 5-point
Programme:

      •   TFS or Technical Feasibility Study: this deals with the basic design of the smelter and
          involves the transfer to Ma’aden of some 200 documents; ongoing right now.

      •   TTAs or Technology Transfer Agreements for both refinery and smelter: these are most
          important; for a fee, they provide technology licences, engineering and technical support
          for start-up.

      •   TSA or Technical Service Agreements for both refinery and smelter: these provide on-
          going technical support during operation.

      •   MSA or Management Service Agreement: this provides for management services during
          operations.

      •   OSA or Operating Support Agreement: this provides for up to 10 people from Alcan to be
          seconded to and integrated into the new smelter and refinery operating team.

Behre Dolbear considers these agreements to be essential for technical and economic success.
Based on this set of technology transfer and operating agreements, the Ras Az Zawr smelter should
not encounter any insurmountable problems in the construction phase as well as in operations later.

Given the availability of suitable construction manpower, management has estimated that the smelter
could be built in 33 months from financing to first metal line. A bar chart entitled “Alcan/Ma’aden
Aluminium Project – Master Schedule” dated 15 July 2007 shows a starting point for FEL-2 in Q2
2007 and a first metal line construction completion in Q1 2011. Electric power from the first Project




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unit may not be available until early 2012, but power from the SEC grid may be available for start-up.
The construction time for the power plant is estimated at 42 months to the start-up of just the first
unit. Also, a 32 months construction time for the first metal line is ambitious for a greenfield
construction project. The AAI project in Canada, which was merely the addition of a parallel line with
limited additions to the existing infrastructure and services, took 28 months from financing to first
metal was 28 months. Behre Dolbear considers that early 2012 is the best that can be expected for
metal production.

One important consideration in any new smelter construction project is the manufacture of the major
or most numerous components. This can pertain to some of the most commonly used pieces of
equipment such as the metallic shells of the pots. During the construction of AAI, which is located in
a part of the world where much of this equipment has always been manufactured, a timing crunch
developed with regards to the delayed manufacture of these pot shells. Therefore, it is positive for
the Project that a major producer of pot shells is established in Bahrain employing Canadian-trained
engineers, who have, already, supplied 336 shells to Line 5 of ALBA, 300 to Fjardaal, and 360 to
Sohar. Likewise, there is now a manufacturer for aluminium bus-bar in the area.

In summary, now that Alcan, a major aluminium producer and technology leader, will be involved in
the project, with one of the most experienced smelter construction ECPM teams in the world, should
assure a timely progress and ultimate success in execution.

7.4 Smelter Conclusions

The Ras Az Zawr smelter faces the usual aluminium smelter project risks. Specific aspects are:

      •   Geography: The Project’s location at a deep-water port permits ready access to imported
          alumina (if so needed), coke, pitch, etc, and export of finished metal. It will be connected
          to the mine by railroad and is adjacent to a dedicated source of power. This makes the
          project much less dependent on inputs from the outside.

      •   Raw Materials: The most important raw material, alumina, is manufactured in an adjacent
          company-owned plant processing company owned mines. Coke and pitch are available in
          the open market, but are subject to price variations. The dedicated power plant has a
          long-term agreement with the Government for the supply of oil.

      •   Power: The power plant will have capacity for an ample excess and thereby allow for the
          critically important margin of safety for the essential, uninterrupted supply of energy.

      •   Personnel: The manpower to manage such an aluminium mega-project will need to be
          trained by an experienced, long term operator, and the agreement with Alcan will assure
          this.

      •   Operating Costs: The operating costs for this project will depend primarily on the cost of
          alumina. While long term, contractual alumina prices have been largely fixed at around 12
          % to at times as much as 15 % of the LME metal price, the spot market prices have seen
          wide variations. The internally produced alumina will, depending on the cost of caustic, be
          in a reasonable range of about $155 to $180/t. Elsewhere in this report, the cost or price
          of alumina is taken as $160/t. Electric power based on low-cost fuel, depends primarily on
          the capital cost component and is estimated to be about $24/MWh. Labour costs are a
          relatively low constituent. The total operating cost has been estimated with reasonable
          confidence at $1,056/t of aluminium metal, which places the Ras Az Zawr smelter in the
          lower half of the world-wide production cost curve,

      •   Capital Costs: The capital costs to establish the Ras Az Zawr smelter may continue to
          escalate with most large equipment at a rate above general inflation. The estimate of
          $6,742 million is detailed in Section 12.




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      •   Project Execution: Construction of such a large greenfield project poses several
          challenges, which are much reduced if a project starts with only a single line, not the case
          here. The most important of these challenges are:

            •    Assembling a leadership team (owners and contractors) to execute such a project,

            •    Controlling both construction time and cost overruns,

            •    Supervising the production progress at several different equipment makers,

            •    Transferring the required operating know-how and training of operators,

            •    Training a competent technical operating and management team,

      •   Currency: Since supplies are mostly in US dollars or Saudi Riyals, pegged to the US$, the
          operating cost exposure to currency movements is minimal. For capital costs the major
          risk lies in equipment imported from the Euro zone.

      •   Market: There should be minimum market risk. World-wide aluminium supply additions are
          quite limited due to the shortage of sources for cheap electric power. For this same reason
          several old smelters are due to be shut down.

8.0 Infrastructure

The principal elements of the infrastructure at RAZ, outside the Aluminium Project battery limits are
common with the Phosphate Project, as is the North South Railway which will transport bauxite from
Az Zabirah to RAZ.

8.1 Ore Transport

The transport of bauxite ore from Az Zabirah to the Refinery at RAZ will be by the North-South
Railway (“NSR”) which is a key link for both the Phosphate and Aluminium Projects. The NSR is
being designed and constructed by the Public Investment Fund (“PIF”), an independent organization
set up by the government. It is outside the scope of the Ma’aden projects and, while information on
progress is provided and dates when the line will be in service are agreed between PIF and Ma’aden,
there is minimal technical input or direct monitoring of this work by Ma’aden or the technical
consultants. Progress on the NSR has been covered in detail in Behre Dolbear’s MER on the
Ma’aden Phosphate Project, with the conclusion that there is a good probability of the railroad being
completed in the second half of 2010, well in time for bauxite transportation.

The section of the NSR between Az Zabirah and RAZ, for a distance of approximately 543km plus
holding and maintenance sidings, is outside the An Nafud desert and the easier terrain presents less
difficulty for the contractor than that section.

Rail loading facilities at Az Zabirah and unloading facilities at RAZ are included in the PIF scope and
will have to be coordinated with the civil works for the individual facilities.

8.2 Infraco

Infraco has been established by Ma’aden to provide industrial facilities in RAZ. The scope included
the design, contracting and supervision of the following elements:

      •   Site clearing and controlled fill

      •   Road-works

      •   Port




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      •   Dredged Channel

      •   Utility distribution to edge of battery limits of individual process units

      •   Accommodation Village

      •   Cooling Water Intake and Outfall

8.3 Port Facility

Responsibility for the development of the Port has been given to the Ministry of Transport (“MoT”).
Based on the Aluminium Master Schedule, the Port facility is to be partially available for operational
use during 2009 and thus would be well within the requirements for use by the Aluminium Project.

The interface between the Aluminium Project and MoT will have to be developed.                    Current
understanding of this area is:

      •   Electrical distribution for port facilities: This was originally an Infraco responsibility but is
          now at the Port battery limit so the port substation and distribution will now be the
          responsibility of MoT.

      •   Loading and unloading facilities: All conveyor, pipeline and bulk handling systems for the
          transfer of products from the two projects will have to be defined and negotiated between
          the individual process units and MoT for all installations beyond the port battery limits. In
          this context it is necessary to consider berthing and material transfer requirements for
          import of alumina (or bauxite if necessary) should this be required. While alumina export
          has not been built into the port capability it will be considered in conjunction with potential
          import facilities.

      •   Port discharge: Port use to discharge large prefabricated process modules will be selected
          by the Aluminium Project design engineers. It is likely that most heavy conventional
          equipment will be delivered through Al Jubail.

      •   Cooling water outfall structures: These are currently in the design stage and are planned
          to be built into the south perimeter of the Port area. This will involve a design interface
          and, as part of the final works, some dredging / profiling of the port basin adjacent to the
          outfalls. At the time of the team’s visit the Infraco group were in the final stages of
          preparing an update report on the current situation.

8.4 Social Infrastructure Ras Az Zawr and Al Jubail

All staff accommodation for RAZ was to be provided on a dedicated site on the north-west extremity
of the parcel of land assigned to the Ma’aden facilities at RAZ, but the plan is now to split the
accommodation into two separate units, one for family and managerial accommodation at Al Jubail
and one to remain at the RAZ site for bachelor and technician accommodation. Responsibility for the
village at Al Jubail has been transferred to a Royal Commission. The village at RAZ is to be a
development for both the Phosphate Project and the Aluminium Project. It is recognised that the
latter’s needs will be integrated into the Master Plan.

At the mine site at Az Zabirah, a staff village was to be constructed on the same concept as was
developed for the village at Al Jalamid. In the current situation, this concept will depend on the
eventual decision as to whether Ma’aden will carry out the mining operations directly or will assign
the mining to a contractor. In the latter case the contractor would be responsible for the village.

8.5 Power Supply

From the presentation given by Ma’aden, it is clear that much preliminary study has been done on
the various options for the main power supply to the Aluminium Project and the inter-relation of this




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with the grid supply to provide maximum reliability. Negotiations have been carried out with Saudi
Electricity Company (“SEC”) to agree the interfaces between the SEC grid and the RAZ distribution
infrastructure and the procedures to provide back-up power in the event of outages of Ma’aden
equipment.

The total generating capacity of the Aluminium Project power plant is projected as about 2,000 MW,
although a range of 1,800 to 2,400MW is under consideration. In steady-state operation, the smelter
and the refinery will require 1,400MW of this capacity, with considerable spare capacity available for
external sale through the SEC tie-line. A further important duty for the plant is the supply of process
steam. Fuel supply will be Saudi oil.

The philosophy adopted by the Ma’aden power engineering group tends to favour a smaller number
of large generating units rather than a larger number of smaller units which is likely to be the more
favoured option of the Alcan/Ma’aden design group. This will be resolved later in 2007, after which
engineering and bid documentation have to be prepared for selection of an equipment supplier.
Ma’aden now indicates award of a Power EPC in late 2007, with an indicated period of 42 months to
production of reliable power on the first unit.

Power supply at Az Zabirah is expected to be provided by an independent diesel-fired power station
to meet the mining, process and village requirements. There should be no particular difficulties in
procurement of this equipment which is readily available in modular units.

9.0 Environment, Health and Safety

Behre Dolbear reviewed the environment, health and safety (“EHS”) planning for the Aluminium
Project including EHS considerations contained in the project Feasibility Study and two
Environmental Impact Assessment (“EIA”) reports (Az Zabirah Mine and Ras Az Zawr Industrial
Facility). These studies were executed by GHD, a sub-consultant to the FSR. Their reports are
consistent with expectations for a project at this stage of development

9.1 Regulatory Framework

The Kingdom of Saudi Arabia has established a limited regulatory framework for EHS control and
licensing. The General Law on the Environment was enacted in 2001 and gives environmental
control regulatory powers to the Presidency of Meteorology and the Environment. Completion of the
Ma’aden Aluminium Project EIA’s is a requirement of Article 5 of the General Law on the
Environment. The Kingdom has established standards for ambient air quality and air pollution
sources.

The Ma’aden Project must comply with Islamic Principles for the Conservation of the Natural
Environment. The Kingdom potentially has unlimited power to change the regulations for the project.
This creates some uncertainty with respect to EHS expectations. Behre Dolbear agrees with
Bechtel’s recommendation in the Feasibility Report that clarification is needed by the Kingdom as to
the expected application of the principles.

In the Feasibility Report, Bechtel identified four regulatory permits required in order to develop the
Ma’aden project (Mining Lease & Water Permit at the mine and Land Use Permit & Port Operation
Permit at the Industrial Facility). This represents a limited number of permits compared with
greenfield project developments in most other international jurisdictions. Confirmation should be
sought to ensure that any additional permits that may be required, are identified and addressed.

It will be of value for Ma’aden to be closely linked with international aluminium producers
associations to ensure that it remains up to date on applying industry best practices for EHS
management.

Ma’aden has expressed its intentions to develop the project by applying world-class management
systems based on principles of sustainable development. Behre Dolbear recognises Ma’aden’s
significant efforts to date, toward identifying the potential environmental risks associated with the
project and its efforts in developing appropriate mitigation measures defined in formal Environmental




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Mitigation and Monitoring Plans. Generally, the company’s approach appears reasonable in
addressing anticipated impacts. Continuing this current risk-based management approach and
applying internationally recognised environmental management system standards (ISO 14001) is a
positive element for the project. Ma’aden may consider incorporating principles of ISO 26000
(Sustainable Development) into its management system approach. This standard is currently under
development and is targeted for release in 2009.

Ma’aden intends to hire a number of EHSQ professionals to implement its management systems and
manage monitoring Programmes and mitigation measures to protect the environment. The
organization proposed in the EIA reports generally appears appropriate.

Although much environmental baseline monitoring has already been collected, there are areas where
additional collection of baseline data will provide value: groundwater conditions, air quality trends,
site-specific meteorological conditions and marine conditions. A more robust data set defining
baseline conditions will assist in making improved design decisions.

9.2 Community Consultations

Some information was provided in the EIA describing activities conducted recently to assess the
concerns of neighbouring communities, but it would appear that consultation efforts to date have
been limited. Consultation will be important as the project proceeds, particularly with residents of the
Bi’ithah community and Bedouin communities that will be directly impacted. Consultation with small
businesses, commercial enterprises and fishing communities will be needed since they are important
stakeholders that will be impacted, likely more in a positive way.

9.3 Environmental Issues

Cultural or Archaeological Heritage Studies

Early indications from the EIA indicate that there is no major cultural or archaeological heritage
significance within the project boundaries. If it has not already done so, Behre Dolbear suggests that
a comprehensive and documented survey be conducted by trained heritage and archaeological
professionals.

Potable Water and Sewage treatment

The EIA provides some level of detail about plans for supplying potable water using desalination
technology. These plans appear reasonable given conditions of limited water availability. The EIA
reports provide some information about sewage plants that will treat the sanitary wastes. The reports
proposed that treated effluents may be used for irrigation, recycled with the process water or
discharged to the marine environment; sewage sludge will be used as fertilizer. Effluent criteria are
to be met for discharges to the marine environment.

Chemical Storage in Bunded Areas

The project intends to contain possible spillage of products and chemicals by constructing concrete
pads and berms. These are effective when properly designed and constructed, but cracks can
weaken the protective barriers with time. The Environmental Monitoring Plans should consider a
rigorous monitoring Programme to inspect bunded storage areas for cracks and damage and ensure
that repairs are applied as needed.

Az Zabirah Mine

Proposed mitigation strategies for the loss of vegetation and fauna include limiting the time that
overburden is replaced, excluding mining and related activity from the escarpment and sabkha areas,
replacing topsoil to facilitate rehabilitation, fencing working areas and continuing ecological
assessment to ensure a detailed understanding of the local landscape processes.




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The EIA lists mitigation strategy for potential social and economic impacts from the mining operation,
including relocation of the Bi’ithah village outside the mine lease, provision of appropriate services to
the new village location, encouraging job applicants from local communities, facilitating employment
opportunities and providing alternate access roads.

Process water is be drawn from a deep aquifer (between 200 and 600m in depth) and be pumped
25km to the mine site. Pumping tests and other related studies will be needed to determine
drawdown effects and potential interference with other users.

RAZ Local marine hydrology and water quality

The impact is likely to result in important consequences, especially thermal effects to the coral reef
from the power plant cooling water discharge and habitat disruption from dredging. The thermal
plume has a footprint that extends up to 20km from the discharge point. Mitigation strategies include:

 •   incorporating environmental design elements for the port facility and water discharge,

 •   establishing limits for minimizing direct and indirect impacts,

 •   bunding of fuel and chemical storage areas and other areas of potential contamination,

 •   ensuring onsite disposal is within lined cells,

 •   implementing monitoring Programmes to limit operational impacts and

 •   constructing a compensatory coral reef habitat.

Behre Dolbear generally supports the mitigation approach, which will require a carefully executed
management Programme during construction and operations.

Air quality impact

This is expected to result in major consequences locally and minor consequences regionally.
Mitigation strategy includes:

 •   applying emission controls,

 •   optimizing stack heights,

 •   eliminating local grazing,

 •   relocating Bedouin encampments,

 •   relocating the Coast Guard Listening Station and

 •   applying dust suppression.

Valuable modelling work has been done to predict air quality impacts which have the potential to
exceed the capacity of the local airshed to meet the criteria established as part of the study, but
further consideration of emission controls would be of value to identify alternative approaches to
meeting these criteria. Effects within the regional airshed should be further considered in finalizing
abatement decisions and application of best practices.

Potential effects from fluoride emissions from the facility led to the conclusion in the EIA study that
grazing activities should be restricted in the peninsular and the Bedouin encampments relocated.
Although the population is small, work is needed to define the property rights of the Bedouin, the
social implications and possible compensation alternatives.




                                                   275
There is a potential for the alumina refinery sludge (red mud) disposal cells to contribute to dust
emission problems during operations and into the future. Mitigation plans will need to address dust
containment, usually conducted through a process of revegetation using plant species tolerant to
site-specific ground and climatic conditions.

Local Groundwater

Moderate consequences are expected. Mitigation strategy includes

 •   installation of two layers of HDPE geosynthetic membrane, an associated leak detection and
     interception system, and recovery of supernatant liquor and storm water from within the bauxite
     residue (red mud) storage

 •   enclosed storage for spent pot linings for the first five years of operations, with planning towards
     a long term strategy

Behre Dolbear supports the application of best practices in constructing the bauxite residue area
from the perspective of groundwater protection and dam stability. This should apply to landfill
disposal areas and it would be beneficial to implement a site groundwater monitoring Programme on
an ongoing basis.

Loss of Vegetation, Fauna and Habitat

Some impact is unavoidable and will be mitigated by

 •   limiting disturbances outside of the facility area,

 •   limiting disturbance to foreshore areas during construction, and

 •   fencing the end of the peninsula to reduce grazing pressures and livestock impacts.

Social and Economic Impacts from the Facility Operation

On the positive side, employment opportunities would be created and revenue generated. On the
negative side, relocation of the Bedouin community and Coast Guard have been proposed

Planning for Decommissioning

The EIA for the Az Zabirah Mine included a strategy for preparing a mine closure plan and
addressing long term decommissioning issues. A similar approach was not seen in the Ras Az Zawr
EIA. World Bank requirements and industry best practice would suggest that a decommissioning
plan should also be developed for the mineral processing facilities. It is recommended that closure
plans include decommissioning provisions for any landfills used as part of the operations.

9.4 Occupational Health and Safety

Ma’aden has given occupational health and safety (“HS”) issues a relatively low priority at this stage,
but Behre Dolbear suggests that more planning is needed early in the design process. A
comprehensive HS risk assessments for each component of the project should be undertaken and
mitigation plans be developed as soon as possible and policies should be established and
communicated.

Behre Dolbear supports the plan to integrate its EHS management plans with its quality management
plan in keeping with international best practice (ISO 14001, ISO 9001 and BSI OHSAS 18001) into
the HSEQ management system approach which is a trend being followed by many large companies.




                                                   276
Control of Dusts, Fumes and Gases at the Ras Az Zawr Industrial Facility

Personnel working in the aluminium industry may experience a range of significant exposures to
harmful dusts, fumes, gases and electromagnetic effects in the work room environment. Mitigation
measures should be addressed as soon as possible in the design stage. International experiences
at other aluminium refineries and smelters, can provide valuable guidance on control measures that
will be needed.

Dust Control at the Az Zabirah Mine

The mine EIA referred to dust as not being a significant issue from an environmental perspective, but
it was determined to be a significant worker health issue. The report indicated that workers would be
protected by personal protective equipment. If this infers use of a respirator, this would not be a very
effective approach under the hot environmental conditions experienced in Saudi Arabia. It is
suggested that the project carefully examine applying whatever means it can to reduce dust
emissions at their source.

10.0 Human Resources, Staffing, Training

Human Resources, staffing, training and safety structures are in place for the mine site and the RAZ
complex and are rational and appear effective.             Behre Dolbear suggests a number of
recommendations relating to opportunities to improve productivity and provide for a highly qualified
workforce with the ultimate goal of a nearly all Saudi National workforce. Current planning indicates
a direct employee total of around 2,000 nationals and expatriates

The staffing levels and assigned grade levels appear appropriate, but one concern that Behre
Dolbear has identified is the possibly optimistic localization of its workforce at start-up. It would be
more effective to stagger the hiring of new employees consistent with operational needs and
capacity. Employee productivity is generally not optimal until some period after hire, depending upon
qualifications, experience and training.

Maximum use should be made of equipment vendor training, which is especially important at start-
up. Vendor contracts should provide that vendor training representatives be on site during the critical
first year of operations to assure employees become familiar with the operation and maintenance of
vendor provided equipment. Contract professional trainers who have mining/refinery/smelter
experience should be retained during the first year of start-up to assure a workforce that is trained in
the performance of their jobs. Such trainers should be considered a resource for annual refresher
training, as needed. Safety should also be an important element of all training.

11.0 Implementation Plan

The FSR assumes that EPCM services will be undertaken by internationally recognised
engineering/construction companies with extensive experience in alumina refining, aluminium
smelting, and projects in the Kingdom. The contractors would execute engineering from their home
offices, with a satellite engineering and procurement office in the Eastern Province of the Kingdom
and would establish construction site offices at the mine site and RAZ. Procurement activities would
be performed at the same offices as the engineering work. The EPCM contractors would establish
field procurement offices to include materials management and logistics in the Eastern Province to
handle freight forwarding and customs clearance.

11.1 Project Schedule

The Integrated Project Schedule, or Master Schedule, assumes that the completion of engineering
overlaps the start of construction. The critical path for construction runs through the construction of
the Power Plant, with construction to the Refinery digestion and precipitation areas closely following
in terms of critical importance. The Master Schedule is based on full release of project funds and
construction notice to proceed (“NTP”) by Q3 2008




                                                  277
A Master Schedule for the Project has been developed based on the criterion that the first production
from the potlines of molten aluminium could occur 31 months after NTP if imported power and
alumina were available. Significant intermediate milestones required to achieve this “First Hot Metal”
date include:

        •   Railway system available for testing 26 months after NTP

        •   Mine and mine processing facilities operational 32 months after NTP

        •   First unit of Power Plant available 42 months after NTP

        •   Line 1 of Refinery operational (Bauxite Charge) 43 months after NTP

        •   First Smelter Potline construction complete 31 months after NTP

        •   Line 2 of Refinery Operational 47 months after NTP

        •   Second Smelter Potline operational 40 months after NTP

        •   Import of bridging power and alumina from Q2 2011 to Q2 2012.

On a probability basis, Behre Dolbear considers that Q1 2012 is the earliest likely date for First Hot
Metal, with Q2 2012 being the most likely.

One of the EPCM contractors selected for the smelter or the refinery will provide the overall project
coordination and integration function for the whole project to ensure satisfactory interfaces. The
EPCM contractors for each area would perform all the engineering, but selected packages would be
handled as turnkey design, supply and install (or just design and supply) contracts.

Behre Dolbear concurs with this procedure for implementing such a large, complex project, even
though it means using the same management for the overall co-ordination as for the one of the
EPCM contracts. Detailed arrangements to avoid conflict of interest will be needed.

11.2.       Conclusions and Recommendations on Project Implementation and Schedule

        •   The Execution Plan of the Ma’aden Aluminium Project is typical of a well established and
            recognised method amongst today’s experienced consulting and engineering organizations
            and there are no concerns in this respect.

        •   The present, highly active construction climate can result in unusually long lead times even
            for fairly conventional items like structural steel, tank plate and piping. Long lead items
            need to be specifically identified in the study for accurate planning and scheduling of the
            Project.

        •   More investigations are suggested towards the proposal to use the same management for
            the PMC as for one of the constituent EPCMs.

        •   Behre Dolbear suggests that certain parts of the Refinery like the Digestion, Precipitation
            and Field Tanks and Evaporation be carried out on a turnkey contract basis.

        •   The Master Schedule for the Project needs firming up. Specifically, reliable power for first
            unit needs links to first alumina and certainly prior to first metal. The schedule must also
            indicate key dates of tie-ins to the SEC grid.

        •   In addition to the critical path activities mentioned above, Behre Dolbear suggests other
            areas receive special attention, such as piping, special materials and procurement
            strategy.




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      •   The smelter green-carbon plant, carbon-baking furnace, and anode-rodding plant are
          major facilities with long lead material and long duration construction activities that must be
          on line to provide anodes for the First Hot Metal milestone.

      •   It has been assumed in the schedule that power from the captive power station or the main
          grid is available to support smelter start-up schedule.

12.0 Capital Costs

The project current base plan is to produce 1.4 Mt/y of alumina per year at a cost of $160 per tonne
and 650,000 tons of aluminium at a cost of $1056 per tonne. First Hot Metal (Line 1) is targeted to
occur in Q1 2012 with full production in Q4 2012. The initial capital cost is currently estimated to be
$6.742 billion in Q3 2007 US$.

A summary of the updated Capital Costs is presented in Table 12.1

              Table 51: Aluminium Project Capital Cost
                                                          US$ Millions Q3 2007
               Az Zabirah
               Mine Site                                  150
               Ras Az Zawr
               Refinery                                   1,194
               Smelter                                    2,905
               Power Plant                                2,493


               Total                                      6,742


               Note: These estimates include indirects and owner’s costs and contingency.


Mine Site Capital

The mine facilities include the bauxite processing, storage, and load-out facilities. The mine
infrastructure includes roads, earthwork, support buildings, shops and warehouses, laboratory,
drainage, fencing, well field, water supply and reticulation, sewerage, and operations village. The
Mine capital includes the mining fleet and mobile equipment and the costs of prestripping prior to
operation, but periodic replacement of Mine equipment is included in the estimate of operating costs.
Runge provided the equipment cost for the Mine, plus unit and total job hours for construction
(prestripping) labour. Bechtel applied the Feasibility study Project unit labour rates, contractor
distributable costs, and other indirect costs based on job hour data provided by Runge. The
estimation methods used, for both initial and sustaining mining capital, are sound.

Alumina Refinery

Bechtel based the Capital Cost Estimate on an EPCM method of project execution. They have
included the costs for contractors’ labour, indirect costs for temporary facilities and services,
construction equipment, supervision, start-up assistance, overhead, and profit in the installation
costs. The costs of engineering, procurement, construction management services, and contingency
have been included for all elements of the Capital Cost Estimate. The methodology and process for
estimating the capital costs for the refinery are recognised as appropriate in present day conditions
and the projected capital appears to be within the accuracy of the type estimate generated.

Smelter

The Smelter includes all the material handling equipment at the port, the reduction plant, the carbon
plant, the casthouse, certain ancillary facilities, and the smelter yard electrical and utilities. The
methodology and process for estimating the capital costs for the smelter are recognised as
appropriate in present day conditions and the projected capital appears to be within the accuracy of
the type estimate generated.




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Power Plant

The power plant construction will be executed as a single EPC turnkey contract and the current
capital estimate is on an indicative cost basis

Total Funding

Based on the above capital cost numbers, Behre Dolbear understands that the total financing
requirement of the project is US$7,500 million.

13.0 Operating Costs

The Mine operating cost (“Opex”) estimate is based on an annual production rate of 3.5 Mt of bauxite
ore, assuming a 25-year operating period. To reduce the initial capital cost outlay Ma’aden intends
to sub-contract various mining operations, reducing its workforce at the mine from 285 to 138. The
Opex estimate for mining was adjusted for the reduced labour component. The average cost of
bauxite delivered to Ras Az Zawr was calculated at $24.60/t in 3Q 2007 prices, including a royalty
fee and rail freight costs

The Alumina Plant Opex estimate is based on an annual production rate of 1.4Mt of sandy grade
alumina and a 25-year plant operating period. The estimate of $158/t calcined alumina, in Q3 2007
terms, is about the average for the world’s refinery costs. At the specified conversion rate to the
smelter of 1.92, there will be a production balance of up to 150,000t/y available for sale on the world
alumina market.

The Smelter Opex estimate, based on an annual production rate of 650,000 tonnes of metal, over a
25-year plant operating period, is an average of $1056 per tonne of ingot, in Q3 2007 prices.

The Power Plant cost including amortization was estimated to justify a tariff of $24/MWh delivered to
the Smelter substation or to the SEC tie-line.

14.0 Valuation

Even though the Az Zabirah bauxite mineral deposit does not have JORC-compliant reserve
estimates, Behre Dolbear is confident that the mineral resources can be converted to reserves which
will sustain a mine as proposed by Ma’aden and described in this report. On this basis a valuation of
the resources has been estimated using the forecast production and sales estimates given in this
report together with Capex and Opex estimates. A net present value (“NPV”) has been estimated by
a standard discounted cash flow (“DCF”) method.

The model assumes that the project runs until 2050 as there is no reason to expect that the bauxite
resource would be exhausted before then. There is no allowance for residual value of the plant or
equipment. Prices and costs are expressed in constant 2007 Q3 terms and an all-equity basis is
assumed. The valuation date is taken as the end of 2007.

14.1 Assumptions

Capital Cost

The estimated capital cost, as summarized in Table 12.1, is US$6,742 million, excluding sunk cost.
For this cash-flow determination, expenditure has been spread at a rate of $1000M in 2008, $1500M
in each of 2009, 2010 and 2011 and the remaining $1242M in the start-up year 2012.

A sustaining capital provision of 0.1% per year of the initial capital, ie, $6.7M, is included, which
would also cover rehabilitation provision.




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Product sales

The annual sales of aluminium ingot at full production are taken to be 650,000 tonnes at a unit price,
provided by CRU, of $1888/t. Production is taken as starting at the beginning of 2012, with sales in
that year being 75% of a full year. Surplus power is assumed to be sold to SEC at $24/MWh.

Operating Costs

As covered in Section 13, the total estimated annual operating cost to produce the 650,000 t/y
aluminium is $686M or $1056/t in Q3 2007 terms.

Tax and Zakat

Behre Dolbear has not estimated taxes applicable to the project, which are not based directly on
earnings and amortization, and has accepted Ma’aden’s estimates.

Net Present Value Calculations

The cash-flow analysis on these assumptions gives the following net present value estimates
discounted at the rates shown below to the end of 2007 from the middle of each following year.

Discount Rate       NPV in US$M
9%                       - 690
8%                       - 113
7%                        614
6%                       1538
5%                       2721

15.0 Report Conclusions

Behre Dolbear concludes from this independent technical review on the Ma’aden Aluminium Project
that:

     •   Ma’aden’s management and consultants have sufficient geological and geotechnical mining
         knowledge to support short, medium and long term planning of the Az Zabirah bauxite mine
         project, holding the statutory right to mine the South Zone;

     •   The South Zone mineral resources do not qualify as reserves in JORC terms, but Behre
         Dolbear believes that when reserves are proven there will be more than sufficient to provide
         suitable bauxite for the project for thirty years and beyond;

     •   The mine plans appropriately consider geological and geotechnical factors to both minimize
         mining hazards and execute appropriate rehabilitation;

     •   Ma’aden’s management and their engineering contractors have developed competent
         studies on the alumina refinery, aluminium smelter and power plant at Ras Az Zawr, but
         these are not yet at the stage of bankable feasibility study;

     •   Reviews of support projects provided by other parties, such as the NSR and Infraco indicate
         that design work is at an appropriate level for this stage in the Master Schedule;

     •   The association of Alcan with the smelter development is a major benefit to the project;

     •   The planned start of aluminium metal production, now first half of 2012 is realistic;




                                                   281
    •   The capital cost estimate is not firmly fixed, but around $6,750 million, including power plant,
        for a complex producing 650,000 tonnes of aluminium metal a year appears a reasonable
        estimate.

    •   Potential exists and studies are proceeding for an increase of production to 720,000 t/y of
        metal

    •   The operating cost estimates developed appear to be realistic;

    •   Environmental and community issues are being seriously addressed and are unlikely to
        negatively affect the development of the project and the regulatory framework is recognised

    •   The risk factors identified by Behre Dolbear are understood by Ma’aden and appropriate
        action to mitigate them will be taken. Where leading edge technology is proposed, it is not at
        a pioneer level

    •   On the basis of a rough pre-tax cash flow analysis of projected sales, capital and operating
        costs, in Q3 2007 terms and discount rate of 7% Behre Dolbear has estimated a net present
        value of $614 million. Not included in this value is any assessment of the strategic
        importance of the project or the benefits to the community and country from the multiplier
        effect of consequential industrial activity and employment.



Yours faithfully
Behre Dolbear International Limited
Winchester House
256-269 Old Marylebone Road
London, NW1 5RA

Denis Acheson
Director and Chairman




Colin Chapman, MIMMM
Senior Associate and Project Manager




                                                 282
MA’ADEN ALUMINIUM PROJECT MER

Annex A – Qualifications and Experience

Denis Acheson, BSc Chem Eng (Cape Town), BA (Hons) Oxon, MMMSA

Mr Acheson is Chairman of Behre Dolbear International Limited and Director of Behre
Dolbear & Company, Inc. He has 50 years experience in the mining industry in metallurgical
processing, marketing, general management and consulting.

Colin Chapman, ARSM, BSc Eng, C.Eng, MIMMM, Project Manager

Mr Chapman is a Senior Associate of Behre Dolbear International Ltd with more than 40
years experience in the international mining industry, especially on bauxite mining, including
senior management roles with Billiton International, and numerous assessments of operations
and projects.

Dominique Butty, MSc Geology (Lausanne), MA (Leiden)

Rob Herinckx, MSc Min Eng (Delft), C.Eng, MIMMM

Butty Herinckx and Partners, geological and mining consultants and specialists in resource
and reserve estimations with wide international experience in bauxite mines, sub-contractors
to Behre Dolbear.

Paul Dixon, BSc Chem Eng (Durham), Senior Consultant to Behre Dolbear, Refinery
Specialist.

Mr Dixon has 40 years experience, much of it with the Alcan group and subsequently as a
consultant.

Kurt Pralle, Met Eng, (Loeben) CIMM

Mr Pralle is a Senior Associate of Behre Dolbear with 40 years experience in the aluminium
and steel smelting industry. He consulted for Citicorp for many years and has reviewed
several Alcan smelters and projects.

Patrick Bolger, MSc, Certified Environmental Auditor, Consultant to Behre Dolbear

Mr Bolger has 30 years of professional experience in environment, health and safety.

John Tait, BSc Civil Eng (Glasgow), MSc (London) P Eng

Mr Tait is a consultant to Behre Dolbear specialising on railway and construction matters.

Robert Revitte PhB (Detroit)

Mr Revitte is a consultant to Behre Dolbear with forty years experience in mining company
human resources, employee relations and communications, with previous experience in
Saudi Arabia.

Dionysios Dallas, MA (Boston), MIACE

Mr Dallas is a consultant to Behre Dolbear on cost estimation and financial analysis.




                                             283
               Glossary of Technical Terms

Term                     Definition

Ammonia                  A compound of nitrogen and hydrogen, chemical formula
                         NH3, which is the main intermediate in the production of
                         nitrogen fertilizers, and may also be used for direct
                         application as a fertilizer. Most ammonia is produced by the
                         steam reforming of natural gas

AAI                      Aluminerie Alouette Inc, a Canadian aluminium smelter

Acid insoluble residue   (A.I. and/or A.I.R.) The material remaining after samples have
                         been digested for chemical analysis.          This material is
                         essentially inert in the manufacture of phosphoric acid

Rio Tinto Alcan          Rio Tinto Alcan, Inc., a major Canadian aluminium company
                         and subsidiary of the Rio Tinto group, formally Alcan, Inc.

Al2O3                    Alumina. A commonly used term for expressing aluminum
                         content

ANFO                     Ammonium nitrate fuel oil mixture used as an explosive

apatite                  A group of variously coloured hexagonal minerals consisting
                         of calcium phosphate together with fluorine, chlorine,
                         hydroxyl, or carbonate in various amounts. Also any mineral
                         of the apatite group such as fluorapatite, chlorapatite,
                         hydroxylapatite, carbonate-apatite and francolite

Aramco                   Saudi Aramco, the state-owned national oil company of Saudi
                         Arabia

autothermal              self sustaining reaction

availability             The expression on a percentage basis of the scheduled
                         production time a piece of production equipment is
                         mechanically available to the mine operations for production

Az Zabirah               The site of the bauxite mine and beneficiation plant of the
                         Aluminium Project

Ball mill                A pulverizer that consists of a horizontal rotating cylinder, up
                         to three diameters in length, containing a charge of tumbling
                         or cascading mineral ores, which may also contain steel balls,
                         pebbles, or rods to assist in reducing the ore particle size

Ball mill feed           A cylindrically shaped steel container filled with steel balls
                         into which crushed ore is fed. The ball mill is rotated, causing
                         the balls to cascade, which in turn grinds the ore

Bayer process            The Bayer process is the principal industrial means of refining
                         bauxite to produce alumina




                                   -284-
Term                         Definition

bench scale                  Test procedure using laboratory apparatus to experiment with
                             unit operations, techniques, and chemicals, etc. and to
                             establish and/or confirm practicability of process. Conducted
                             usually in batch processes

Beneficiation                A series of unit operations to liberate and then separate ore
                             minerals from gangue minerals.             The products of
                             beneficiation are referred to as: 1) concentrates (enriched in
                             ore minerals), 2) tailings (depleted of ore minerals) or 3)
                             slimes (fines rejected by washing)

BFS                          Bankable Feasibility Study

BOT                          Build, Operate and Transfer

BRGM                         A French public institution in the geoscience field

bulk density                 In-situ specific gravity (or specific weight in place,
                             undisturbed) of identified types of rock or burden, including
                             natural moisture

°C                           Degrees Celcius

Calcination                  A process in which a material is heated to a temperature
                             below its melting point to effect a thermal decomposition or a
                             phase transition other than melting

Calcining                    The heating of a substance to a high temperature, but below
                             the melting or fusing point, causing loss of moisture,
                             reduction or oxidation, and the decomposition of carbonates
                             and other compounds

Calcite                      Common rock-forming mineral: CaCO3

CaO                          Calcium oxide, lime, or quicklime. Also the analytical format
                             for expressing calcium analysis

CAPEX or Capex               Capital Expenditures

Captive phosphate reserves   Reserves of phosphate ore that are held under a mining or
                             retention licence

Carbon in Leach (CIL)        CIL is a gold recovery process in which a slurry of gold ore,
                             free carbon particles and cyanide are mixed together. The
                             cyanide dissolves the gold from the ore into a solution, and
                             simultaneously the gold is adsorbed onto the carbon. The
                             carbon is subsequently separated from the slurry to recover
                             the gold

Catalyst                     A substance that increases the rate of a chemical reaction by
                             reducing the activation energy, but which is left unchanged by
                             the reaction

Category A Project           Categorization under the World Bank “Equator Principles” of
                             projects with potential significant adverse social or




                                       -285-
Term                 Definition
                     environmental impacts that are diverse, irreversible or
                     unprecedented

Category B Project   Categorization under the World Bank “Equator Principles” of
                     projects with potential limited adverse social or environmental
                     impacts that are few in number, generally site-specific, largely
                     reversible and readily addressed through mitigation measures

Category C Project   Categorization under the World Bank “Equator Principles” of
                     projects with minimal or no social or environmental impacts

Cd                   Cadmium. A heavy metal that may exist as trace quantities in
                     phosphate rock

CIS                  Community Impact Study

Clarification        The separation of solids from liquids as in a thickener or
                     clarifier

comminution          Crushing and/or grinding of ore by abrasion, impact, and
                     compression: 1) Liberation (freeing of specific minerals from
                     interlocked minerals by crushing and/or grinding), 2) Size-of-
                     grind (the particle size distribution created by grinding), 3)
                     Size-of-grind (the particle size distribution created by grinding
                     expressed in terms of the weight percentage passing (or
                     retained) on a given sieve size minerals by crushing and/or
                     grinding) and 4) Liberation size (the sieve size at which a
                     specific mineral is freed from other mineral components)

concentrate          Commercial quality of phosphate rock containing variable
                     content of P2O5 obtained by beneficiation of crude phosphate
                     ore

concentrated acid    Concentrated phosphoric acid at 48 % P2O5

Cut off Grade        The lowest grade of material that can be mined and
                     processed considering all applicable costs, without incurring a
                     loss or gaining a profit

DAP                  Diammonium Phosphate: A fertilizer of typical N:P:K grade
                     18:46:0. Produced by reacting phosphoric acid and ammonia.
                     DAP is the most popular source of phosphate worldwide, both
                     for direct application and for bulk blending

debottlenecking      The process of optimization of a process or processes.

Defoamer             Substances used to reduce the amount of foaming in flotation

desalination         The process of removing dissolved salt and other minerals
                     from seawater to create freshwater

DGMR                 A German consultancy

Digestion            Digestion in a Bayer alumina refinery refers to the mixing of
                     ground bauxite with a solution of sodium hydroxide. By
                     applying steam and pressure in tanks containing the mixture,



                               -286-
Term                Definition
                    the bauxite slowly dissolves. The alumina on the bauxite
                    reacts with the sodium hydroxide to form a sodium aluminate
                    solution and leaves behind an insoluble reside containing
                    most of the impurities in the ore

dihydrate           Dihydrated calcium sulfate

dilution            The excavation in mining of minor amounts of waste material
                    with ore, specifically at the ore/waste contacts, which results
                    in decreasing the quality of ore and increasing the mined
                    quantity from estimations based on geological plans

dolomite            Widely occurring rock formed from limestone by the
                    replacement of calcium by magnesium as carbonate of
                    calcium and magnesium, CaMg(CO3)2

Downstream          A process that occurs after a prior process, i.e. the reaction of
                    ammonia with phosphoric acid to make di-ammonium
                    phosphate occurs downstream of the reaction of Phosphate
                    rock with sulphuric acid to make phosphoric acid

dragline            Large mechanical-electrical excavation machine equipped
                    with a long boom and a drag bucket suspended by cables,
                    designed for the mass excavation of surface material. The
                    dragline is set on the surface and excavates overburden to
                    several tens of metres in depth, then casts the excavated
                    overburden to its side, in spoil piles

Dry basis           Phosphate produced on a dry basis has a moisture content of
                    less than five % H2O

Dry process         Phosphoric acid is produced by either a dry or wet process. In
                    the dry process, rock phosphate is treated in an electric
                    furnace. This treatment produces a very pure and more
                    expensive phosphoric acid (frequently called white or furnace
                    acid) used primarily in the food and chemical industry. The
                    wet process involves treatment of the rock phosphate with
                    acid producing phosphoric acid (also called green or black
                    acid) and gypsum which is removed as a by-product. The
                    phosphoric acid produced this process is used for the
                    manufacture of dry fertilizers

DWT                 Dead weight tones

EHS                 Environment, Health and Safety

EIA                 Environmental Impact Assessment

EID                 Elliptical Inverse Distance

EIR                 Environmental Information Report

EIS                 Environmental Impact Studies

Electrolytic cell   An electrolytic cell is a type of chemical cell in which the flow
                    of electric energy from an external source causes a redox



                              -287-
Term                 Definition
                     reaction to occur.

                     The Hall-Heroult process, the primary means of aluminium
                     smelting worldwide, uses a series of carbon-block anodes in
                     each electrochemical cell. During the smelting process, the
                     electrochemical reduction of aluminium oxide occurs at the
                     anode surface, yielding oxygen. This oxygen then reacts with
                     the carbon, resulting in steady consumption of the anode, as
                     well as the release of carbon dioxide (CO2)

EMP                  Environmental Management Plan

EPC                  EPC means the company is contracted to provide
                     engineering, procurement and construction services. The
                     project is largely Contractor managed and the cost risk and
                     control are weighted towards the Contractor and away from
                     the Owner

EPCM                 EPCM means the company is contracted to provide
                     engineering, procurement and construction management
                     services. Other companies are contracted by the Owner to
                     provide construction services and they are usually managed
                     by the EPCM contractor on the Owner’s behalf. The project
                     is largely Owner managed and the cost risk and control is
                     weighted towards the Owner

EPFI                 Equator Principle Financing Institution

Equator Principles   A financial industry benchmark for determining, assessing
                     and managing social & environmental risk in project financing

exothermic           A chemical reaction occurring with the liberation of heat

Fe2O3                Ferric oxide or hematite; the analytical format for expressing
                     iron analysis

Feedstock            A feedstock is a substance used as a raw material in an
                     industrial process. Examples of di-ammonium phosphate
                     feedstocks are natural gas, sulphur and phosphate rock

FEL-2                The current SNC-Lavalin feasibility study

flotation            A process in which a prepared mixture of minerals is
                     conditioned with reagents and subjected to agitation and
                     aeration to cause those minerals rendered hydrophobic to
                     float and the other minerals to sink

flowsheet            A diagram showing relationships between process units, or
                     process areas, and process streams. May be in the form of a
                     block diagram or a symbol diagram

fluorapatite         a form of apatite in which fluorine predominates over chlorine

fluosilicic acid     FSA, H2SiF6 Fluosilicic acid often used in water fluoridation




                               -288-
Term                    Definition

francolite              A variety of carbonate fluorapatite occurring in most
                        commercial phosphate rocks of sedimentary origin. The
                        mineral may have a high degree of anion and cation
                        substitution in the fluorapatite structure

FSR                     Feasibility Study Report: by Bechtel for the Aluminum Project

G                       Giga, 1,000,000,000 (billion)

GHD                     A sub-consultant on Bechtel’s FSRfor the Aluminum Project

GJ                      Giga Joule

Grade control           Grade control is used in selective mining operation to
                        determine the boundaries between ore and waste

Granular DAP            DAP that has been formed into granules to improve its
                        properties

Granulation             Granulation is used to improve the flow of powder mixtures
                        and mechanical properties of tablets, usually obtained by
                        adding liquids (binder or solvent solutions) DAP is granulated
                        to improve its handling and storage properties and to control
                        the release of nutrients when applied to crops

g/t                     An abbreviation for grams per metric tonne, commonly used
                        as a measure of the richness of gold bearing materials

Gypsum                  By-product of the (wet-process) phosphoric acid production
                        process

Gypstack                Term used to describe the stockpiles of disposed by-product
                        gypsum

H2SO4                   Sulfuric Acid

ha                                                                   2
                        Hectare, a unit of area equivalent to 10000 m or 2.471 acres

HDPE                    High-density polyethylene

Heap-leach operations   A process whereby gold is extracted by “heaping” broken ore
                        on sloping impermeable pads and repeatedly spraying the
                        heaps with a very diluted cyanide solution which dissolves the
                        gold content. The gold-laden solution is then collected for
                        gold recovery

Heap Leach Pad          The foundations, generally impermeable, upon which crushed
                        ore and a leaching agent is placed, specifically a Heap leach
                        Facility

Hemihydrate             (HH) Hemihydrated calcium sulphate

HF                      hydrogen fluoride – hydrofluoric acid

HSE                     Health, Safety, and Environmental



                                  -289-
Term                          Definition

Hydrocyclone                  A classifier used to separate a pulp into coarse/heavier
                              product and a fine/lighter product

IFC                           International Finance Corporation of the World Bank

I-K                           In Kingdom sources

Incro                         Spanish company specializing in DAP production processes

Indicated Mineral Resources   That part of a Mineral Resource for which tonnage, densities,
                              shape, physical characteristics, grade and mineral content
                              can be estimated with a reasonable level of confidence. It is
                              based on exploration, sampling and testing information
                              gathered through appropriate techniques from locations such
                              as outcrops, trenches, pits, workings and drillholes. The
                              locations are too widely or inappropriately spaced to confirm
                              geological and/or grade continuity but are spaced closely
                              enough for continuity to be assumed

Inferred Mineral Resources    That part of a Mineral Resource for which tonnage, grade and
                              mineral content can be estimated with a low level of
                              confidence. It is inferred from geological evidence and
                              assumed but not verified geological and/or grade continuity. It
                              is based on information gathered through appropriate
                              techniques from locations such as outcrops, trenches, pits,
                              workings and drill holes which may be limited or of uncertain
                              quality and reliability

Infraco                       A company to be incorporated as a subsidiary of Ma’aden for
                              the purpose of building and maintaining the Ras Az Zawr
                              infrastructure shared with other facilities

Interburden                   A strata of non-ore bearing material sandwiched between two
                              ore strata

intertidal                    the coastal zone measuring from the lowest to the highest
                              tide mark

ISBL                          Inside the Battery Limits, area containing infrastructure
                              directly supporting the chemical plants

ISO                           International environmental standards

IUCN                          International Union for Conservation and Natural Resources

J                             Joule, Metric (SI) unit of work and energy

JORC Code                     The Code for Reporting of Mineral Resources and Ore
                              Reserves (the JORC Code) is widely accepted as a standard
                              for professional reporting purposes

K                             Kilo, 1000

Kaolin                        Kaolin refers to rocks that are rich in the clay mineral
                              kaolinite. Kaolinite is a layered silicate mineral, used in




                                           -290-
Term               Definition
                   ceramics, medicine, coated paper, as a food additive, in
                   toothpaste, as a light diffusing material in white incandescent
                   light bulbs, and in cosmetics. The largest use is in the
                   production of paper, including ensuring the gloss on some
                   grades of paper

Kg or kg           kilograms (1000 grams), equivalent to 2,205 pounds
         2
Kg/cm              Gauge pressure

Kingdom            Kingdom of Saudi Arabia

KJ                 Kilo Joule

koz                Kilo ounce

kt                 Kilo tonne

ktpa               Kilo tonne per annum

KSA                Kingdom of Saudi Arabia

kV                 Kilovolt

kW                 Kilowatt, equivalent to 1.341 horsepower (HP)

kWh                Kilowatt Hour

L or l             Litre, equivalent to 0.254 US liquid gallons

Leached material   Material that has had one or more of its constituents removed
                   by dissolution in a liquid that percolates through it

LoMp               Life of mine plan

Litwin             part of the Bateman Litwin Group based in Amsterdam

LOIs               Letter of intent

LP                 Low Pressure

LSTK               Lump Sum Turn Key contract in which the contractor
                   constructs the project to the stage where it is ready to operate
                   for a fixed fee

Lump Sum EPC       A fixed price EPC contract

m                  Abbreviation for meter, equivalent to 39.37 inches

M                  Million
     2
m                  Square meter
     3
m                  Cubic meter




                                -291-
Term                 Definition
    3
m /h                 Cubic meter per hour

MAP                  Monoammonium phosphate. An NP fertilizer of typical grade
                     11:53:0. Produced by reacting phosphoric acid and ammonia

MER                  Mineral Experts Report

Measured Resources   A category for classifying ore tonnage and grade estimates
                     under the JORC code which represents the highest level of
                     geological knowledge and confidence

Mg                   Magnesium. A light metal that may exist as trace quantities
                     in phosphate rock

MgO                  Magnesium Oxide

Milled               To grind, pulverize, or break down into smaller particles in a
                     mill

Mineral Resources    A concentration or occurrence of material of intrinsic
                     economic interest in or on the Earth’s crust in such form,
                     quality and quantity that there are reasonable prospects for
                     eventual economic extraction. The location, quantity, grade,
                     geological characteristics and continuity of a Mineral
                     Resource are known, estimated or interpreted from specific
                     geological evidence and knowledge. Mineral Resources are
                     sub-divided, in order of increasing geological confidence, into
                     Inferred, Indicated and Measured categories

Mineralisation       A rock containing an undetermined amount of minerals or
                     metals

mm                   Millimeter (0.001 m)

MMSCFD               Million cubic feet per day

MoT                  Ministry of Transport (KSA)

Mt                   One million tones

Mtpy                 Million tonnes per year

MW                   Megawatt

MWh                  Megawatt Hour

My or my             Million years (geologic age)

N                    Nitrogen element, nitrogen content in fertilizer

NCWCD                National Commission          for   Wildlife   Conservation   and
                     Development

NH3                  Ammonia




                                -292-
Term               Definition
     3
Nm                 Normal Cubic Meter

NOx                Nitrogen Oxides

N:P:K              Signifies the ratio of primary plant nutrients nitrogen (N),
                   phosphorus (P2O5) and potassium (K2O), contained in a
                   fertilizer or applied

NSR                North South Railroad, railroad being constructed by Saudi
                   Arabia Railway Company that will connect the mine sites to
                   Ras Az Zwar

NTP                Notice to proceed

O&M Plan           Operations and Maintenance Plan

OOK                Out of Kingdom sources

Open cast mining   Extracting minerals found near the earth’s surface, i.e. no
                   tunneling is required

OPEX or Opex       Operating Expenditure

Ore                Material which contains some for of mineralization
Ore Reserves
                   The economically mineable part of a Measured and/or
                   Indicated Mineral Resource. It includes diluting materials and
                   allowances for losses, which may occur when the material is
                   mined. Appropriate assessments and studies have been
                   carried out, and include consideration of and modification by
                   realistically assumed mining, metallurgical, economic,
                   marketing, legal, environmental, social and governmental
                   factors. These assessments demonstrate at the time of
                   reporting that extraction could reasonably be justified. Ore
                   Reserves are subdivided in order of increasing confidence
                   into Probable Ore Reserves and Proved Ore Reserves
Ounces
                   Troy ounces

Overburden         Sedimentary rock composed predominantly of carbonates,
                   which overlies the phosphorite layers of the resource

P                  Phosphorous element

P2O5               Literally ‘Diphosphorus Pentoxide’: A measure of the
                   phosphate content of products

PAP                Phosphoric Acid Plant

PhosCo             Ma’aden Phosphate Project

Phosphate          A compound containing P2O5

Phosphogypsum      A by-product of the reaction between sulfuric acid and
                   calcium fluorophosphate ore in the phosphoric acid plant; a



                             -293-
Term                Definition
                    mixture of sodium and calcium waste from the phosphoric
                    acid plant process consisting of essentially 97 to 98 %
                    gypsum, with small amounts of other materials including
                    sand, aluminum, phosphate, and radium

Phosphoric Acid     Intermediary material used in the production of phosphate
                    fertilizers such as DAP

Phosphorite         A sedimentary rock composed principally of phosphate
                    minerals. Most commonly it is a bedded, marine rock
                    composed of microcrystalline carbonate-fluorapatite in the
                    form of laminae, pellets, oolites, nodules, and skeletal and
                    shell fragments. The term is subject to a myriad of sub-
                    classifications based on a wide range of conditions related to
                    phosphogenesis and phosphorite-genesis; “a rock or
                    specimen containing substantial amounts of sedimentary
                    apatite”; used in this study to descriptively designate
                    correlateable zones of substantial amounts of phosphate
                    minerals (resources)

PIF                 The Saudi Public Investment Fund

Pilot plant         An installed prototype of a process in which each of the
                    processing units are replicated at a reduced scale to permit
                    operation on a semi-continuous basis under a controlled
                    environment where measurements and efficiencies can be
                    observed and measured

PM                  particulate matter

PM10                particulate matter less than 10 microns in size

PMC                 Project Management Consultancy

PME                 Presidency of Meteorology and Environment

Pot                 A vessel for melting metal/an electrolytic cell for reducing
                    certain metals, e.g. aluminium, from fused salts

Powder factor       The amount of blasting agent used for the fragmentation of
                    the rock in the mine, expressed in weight (kg) of ANFO to be
                    used for one tonne of rock to be fragmented

PPAH                Pollution Prevention and Abatement Handbook, by World
                    Bank

ppm                 Parts per million.

Precipitation       The formation of a solid in a solution during a chemical
                    reaction

Probable Reserves   The economically mineable part of an Indicated, and in some
                    circumstances, a Measured Mineral Resource. It includes
                    diluting materials and allowances for losses which may occur
                    when the material is mined. Appropriate assessments and
                    studies have been carried out, and include consideration of



                               -294-
Term                     Definition
                         and modification by realistically assumed mining,
                         metallurgical, economic, marketing, legal, environmental,
                         social and governmental factors. These assessments
                         demonstrate at the time of reporting that extraction could
                         reasonably be justified. A Probable Reserve has a lower level
                         of confidence than a Proved Reserve but is of sufficient
                         quality to serve as the basis for a decision on the
                         development of the deposit

Project Execution Plan   WorleyParson's document outlining the key components of
                         the project

Proven Reserves          The reserve classification under the JORC code which
                         represents the highest level of certainty in relation to the
                         modifying factors affecting extraction of resources relating to
                         mining,    metalugical,     economic,      marketing,     legal,
                         environmental and social factors.

QRA                      Quantitative Risk Assessment

RAZ                      Ras Az Zawr, the new port and site of the chemical plants

reclaimer                Large machine used in bulk material handling applications. A
                         reclaimer’s function is to recover bulk material such as ores
                         from a stockpile

RC                       Reverse circulation

RFT                      Request for Technology

ROI                      Return on Investment

Royal Commission         Royal Commission is an agency of the Saudi Arabian
                         government

Run of mine ore or ROM   Uncrushed ore in its natural state

SAP                      Sulfuric Acid Plant

SAPC                     Saudi Arabian Phosphate Consortium

SASO                     Saudi Arabian Standards Organization

SEA                      Social and Environmental Assessment

SEC                      Saudi Electricity Commission

SEIA                     Supplemental Environmental Impact Assessment

Sintering                Method to make objects by heating powder of a certain
                         material

SiO2                     Silica

Slimes                   Fine particulate material that can interfere with flotation due to
                         excessive reagent consumption, excessive frothing, or slimes



                                    -295-
Term              Definition
                  coatings. Frequently, the fine gangue material is removed
                  from ore by washing and size classification

SMGC              SMG Consultants, mine planning specialists

Snowden           Snowden Mining Industry Consultants Pty Limited

SO2               Sulfur Dioxide

SO3               Sulphur trioxide (Chem.), a white crystalline solid, obtained by
                  oxidation of sulphur dioxide. It dissolves in water with a
                  hissing noise and the production of heat, forming sulphuric
                  acid. It is employed as a dehydrating agent

SNC-Lavalin       A Canadian engineering construction firm

SR                Saudi Riyal

SAR               The Saudi Arabia Railway Company

SRK               A minerals industry consultancy

Stripping ratio   The ratio of waste material to ore

surficial         Of, relating to, or occurring on or near the surface of the earth

TAA               Total available alumina

Tailings          Waste material removed from sized ore in the beneficiation
                  flotation process

TAP               The Ammonia Plant

TDS               Total Dissolved Solids

Tonnes            metric tonnes equivalent to 32k ounces

Tpd               Tonnes per day

TPH               Total Petroleum Hydrocarbons TPH is defined as the
                  measurable amount of petroleum-based hydrocarbon in an
                  environmental media

turndown          lowest load at which a process will operate efficiently as
                  compared to the process's maximum design load

UKLA              United Kingdom Listing Authority

Upstream          A process that occurs towards the source of production,
                  especially at a stage in the extraction and production process
                  before the raw material is ready to be refined.

USEPA             United States Environmental Protection Agency

USGS              United States Geological Survey




                            -296-
Term                       Definition

wadi                       A valley, gully, or streambed that remains dry except during
                           the rainy season

Waste                      Rock within the designed mine plan which contains
                           insufficient economical quantity, or no measured quantity of
                           phosphorite. It is basically sterile rock material, which is
                           required to be removed to access economical phosphorite,
                           designated as ore

Weak acid                  Filter acid at 40 % P2O5

Wet basis or wet process   Phosphate produced on a wet basis usually has a moisture
                           content of more than five % H2O

WHO                        United Nations World Health Organization

WP                         Worley Parsons




                                     -297-
                                                                SAUDI ARABIAN MINING COMPANY (MA’ADEN)
                                                                (A SAUDI JOINT STOCK COMPANY)

                                                                CONSOLIDATED FINANCIAL STATEMENTS
                                                                AND AUDITORS' REPORT
                                                                FOR THE THREE YEARS ENDED
                                                                DECEMBER 31, 2007, 2006 AND 2005




LONDOCS-#2861807-v4-Final_Ma'aden_English_Prospectus_(20_06_08).DOC
SAUDI ARABIAN MINING COMPANY (MA’ADEN)

(A SAUDI JOINT STOCK COMPANY)



CONSOLIDATED FINANCIAL STATEMENTS AND AUDITORS' REPORT

FOR THE THREE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005




  INDEX                                                               PAGE

  Auditors’ report                                                      1

  Consolidated balance sheets                                           2

  Consolidated statements of income                                     3

  Consolidated statements of changes in shareholders’ equity            4

  Consolidated statements of cash flows                                 5

  Notes to the consolidated financial statements                      6 – 21




LONDOCS-#2861807-v4-Final_Ma'aden_English_Prospectus_(20_06_08).DOC
                                    AUDITORS’ REPORT


To the shareholders
Saudi Arabian Mining Company (Ma’aden)
Riyadh, Saudi Arabia

We have audited the accompanying consolidated balance sheets of Saudi Arabian
Mining Company (Ma’aden) (a Saudi joint stock company) as of December 31, 2007,
2006 and 2005, and the related consolidated statements of income, changes in
shareholders’ equity and cash flows for the three years then ended, and notes 1 to 26
which form an integral part of these consolidated financial statements as prepared by the
Company in accordance with Article (123) of the Regulations for Companies and
presented to us with all the necessary information and explanations. These consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting standards used and
significant estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Saudi Arabian Mining Company
(Ma’aden) as of December 31, 2007, 2006 and 2005 and the results of its operations and its cash
flows for the three years then ended, in conformity with generally accepted accounting standards
appropriate to the nature of the Company, and comply with the relevant provisions of the
Regulations for Companies and the articles of the Company as these relate to the preparation and
presentation of these consolidated financial statements.
These financial statements have been audited by us and are being reissued as one set of financial
statements for the three years at the request of the management of the Company for management
purposes and for submission to the Capital Market Authority “CMA”, and should not be
considered as a replacement for the Company’s statutory audited financial statements. The
statutory financial statements were audited by us for the years ended December 31, 2007, 2006
and 2005 and we have expressed unqualified opinion in our reports dated March 4, 2008,
March 19, 2007 and March 10, 2006 respectively. Audit report for the year ended December 31,
2006 was issued with an emphasis of matter paragraph.
Deloitte & Touche
Bakr Abulkhair & Co.



Bakr A. Abulkhair
License No. 101
Safar 26, 1429
March 4, 2008

                                                -1-
SAUDI ARABIAN MINING COMPANY (MA’ADEN)

(A SAUDI JOINT STOCK COMPANY)



CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2007, 2006 AND 2005




1.1                                                                       2007             2006            2005
                                                        Note               SR                SR              SR
                                                                                                        Restated
1.1.1.1.1.1.1.1.1 ASSETS
Current assets                                                                                         (Note 18)
Cash and cash equivalents                                 3       595,936,585   182,903,023 2,625,585,926
Short term investments                                          2,099,000,000 4,563,750,000 2,056,500,000
Investment income receivable                                       60,462,655   127,399,965   105,448,924
Accounts receivable                                       4       207,511,129    10,621,904    11,607,482
Inventories, net                                          5       110,583,786    98,887,046   109,929,260
Prepaid expenses and other assets                         6        82,407,532     6,737,816     6,625,114
Total current assets                                            3,155,901,687 4,990,299,754 4,915,696,706

Non-current assets
Long-term investments                                                       -                -        65,000,000
Long-term receivable                                      7        61,045,987       63,498,054        47,160,880
Advances against investment in company under
formation                                                19b    1,815,796,834                -                 -
Property, plant and equipment, net                        8       341,277,507      309,907,784       226,853,464
Pre-operating expenses and deferred charges, net          9       474,371,224      673,943,054       404,734,015
Total non-current assets                                        2,692,491,552 1,047,348,892          743,748,359
TOTAL ASSETS                                                    5,848,393,239 6,037,648,646 5,659,445,065


1.2    LIABILITIES AND SHAREHOLDERS'                   1.3              1.4              1.5              1.6
       EQUITY


Current liabilities
Accounts payable                                         10       146,652,664       82,951,107        50,994,052
Accrued expenses                                         11       105,883,831      109,663,891        97,602,140
Total current liabilities                                         252,536,495      192,614,998       148,596,192

Non-current liabilities
Deferred revenue                                         12                  -      13,500,000        13,500,000
              mine closure and notes form an                                        54,852,895
Provision for The accompanying reclamation integral part13 these consolidated financial statements
                                                          of      54,852,895                          43,616,778
End-of-service indemnities                               14       56,859,438        45,333,034        40,363,432
                                                    -2 -
SAUDI ARABIAN MINING COMPANY (MA’ADEN)

(A SAUDI JOINT STOCK COMPANY)



CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2007, 2006 AND 2005




Total non-current liabilities                                      111,712,333      113,685,929        97,480,210

Shareholders’ equity
Share capital                                                 1   4,000,000,000 4,000,000,000 4,000,000,000
Statutory reserve                                            15     183,179,887   183,179,887   151,381,981
Retained earnings                                                 1,300,964,524 1,548,167,832 1,261,986,682
Total shareholders' equity                                        5,484,144,411 5,731,347,719 5,413,368,663
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY                                              5,848,393,239 6,037,648,646 5,659,445,065




             The accompanying notes form an integral part of these consolidated financial statements

                                                      -3 -
SAUDI ARABIAN MINING COMPANY (MA’ADEN)

(A SAUDI JOINT STOCK COMPANY)



CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005




                                                                           2007               2006               2005
                                                      Note                  SR                  SR                 SR

Sales                                               16 & 22       244,130,229        349,744,899          277,963,936
Cost of sales                                                    (167,406,905) (187,733,009) (150,764,461)
Gross margin                                                       76,723,324        162,011,890          127,199,475
General and administrative expenses                    17         (96,304,044)       (58,358,544)         (47,166,903)
Severance fee                                                      (4,280,984)       (23,100,775)         (17,004,924)
Exploration expenses                                              (25,499,987)       (31,187,174)         (28,038,929)
Technical services expenses                                        (4,879,317)        (5,019,587)          (3,843,080)
Other income, net                                      20          27,694,952             42,032            3,258,492
(Loss) income before investment income
 and extraordinary item                                           (26,546,056)        44,387,842           34,404,131
Investment income                                                 225,635,873        273,591,214          181,262,735

Income before extraordinary item                                  199,089,817        317,979,056          215,666,866

Extraordinary item                                     21        (446,293,125)                    -                 -
NET (LOSS) INCOME                                                (247,203,308)       317,979,056          215,666,866




                The accompanying notes form an integral part of these consolidated financial statements

                                                         -4 -
SAUDI ARABIAN MINING COMPANY (MA’ADEN)

(A SAUDI JOINT STOCK COMPANY)



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005




                                                                   Statutory           Retained
                                             Share capital           reserve           earnings                Total
                                 Note                 SR                 SR                 SR                   SR

January 1, 2005                             4,000,000,000        135,336,329 1,117,575,806             5,252,912,135
Net income for 2005                                          -              -     215,666,866           215,666,866
Transfer to statutory reserve      15                        -   21,566,686       (21,566,686)                    -
December 31, 2005 as
 previously reported                        4,000,000,000 156,903,015 1,311,675,986                5,468,579,001
Prior year adjustment              18                        -   (5,521,034)      (49,689,304)          (55,210,338)
December 31, 2005 as
 restated                                   4,000,000,000 151,381,981 1,261,986,682                5,413,368,663
Net income for 2006                                          -               -    317,979,056           317,979,056
Transfer to statutory reserve      15                        -    31,797,906      (31,797,906)                    -

December 31, 2006                           4,000,000,000        183,179,887 1,548,167,832         5,731,347,719

Net loss for 2007                                            -               - (247,203,308)           (247,203,308)

December 31, 2007                           4,000,000,000        183,179,887 1,300,964,524         5,484,144,411




             The accompanying notes form an integral part of these consolidated financial statements

                                                       -5-
SAUDI ARABIAN MINING COMPANY (MA’ADEN)

(A SAUDI JOINT STOCK COMPANY)



CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005




                                                                               2007              2006           2005
                                                                                SR                 SR             SR
                                                                                                             Restated
OPERATING ACTIVITIES                                                                                        (Note 18)
(Loss) income before investment income and extraordinary item          (26,546,056)       44,387,842      34,404,131
Adjustment for:
Depreciation                                                            33,445,411        45,507,088      36,520,215
Amortization of pre-operating expenses and deferred charges