Quarterly report pursuant to Section 13 or 15(d)

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

v3.4.0.3
INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY ("AMAK")
3 Months Ended
Mar. 31, 2016
INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY ("AMAK") [Abstract]  
INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY ("AMAK")
15. INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY (“AMAK”)

As of March 31, 2016, and December 31, 2015, the Company had a non-controlling equity interest (35%) of approximately $53.1 million and $47.7 million, respectively. This investment is accounted for under the equity method. There were no events or changes in circumstances that may have an adverse effect on the fair value of our investment in AMAK at March 31, 2016.

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

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

   
Three Months Ended
March 31,
 
   
2016
   
2015
 
   
(Thousands of Dollars)
 
Sales
  $ 8,992     $ 5,301  
Gross profit
    191       1,712  
General, administrative and other
    2,147       2,501  
Loss from operations
    (1,956 )     (789 )
Gain on settlement with former operator
    16,225       -  
Net income (loss)
  $ 14,269     $ (789 )

Gain on settlement with former operator of approximately $16.2 million relates to a settlement with the former operator of the mine resulting in a reduction of previously accrued operating expenses.

Depreciation and amortization for the periods ended March 31, 2016, and 2015, was approximately $2.7 million and $5.0 million, respectively.  Therefore, net income before depreciation and amortization was as follows:
 
   
Three Months Ended March 31,
   
2016
   
2015
 
   
(Thousands of Dollars)
Net income before depreciation and amortization
  $ 16,978     $ 4,972  
 
Financial Position
 
   
March 31,
   
December 31,
 
   
2016
   
2015
 
   
(Thousands of Dollars)
 
Current assets
  $ 22,459     $ 26,078  
Noncurrent assets
    257,049       259,527  
Total assets
  $ 279,508     $ 285,605  
                 
Current liabilities
  $ 2,467     $ 22,740  
Long term liabilities
    89,271       89,364  
Shareholders' equity
    187,770       173,501  
    $ 279,508     $ 285,605  

The equity in the income of AMAK reflected on the consolidated statement of income for the three months ended March 31, 2016, and 2015, is comprised of the following:

   
Three months ended
March 31,
 
   
2016
   
2015
 
   
(Thousands of Dollars)
 
Company’s share of income (loss) reported by AMAK
  $ 5,030     $ (278 )
Amortization of difference between Company’s investment in
  AMAK and Company’s share of net assets of AMAK
    337       337  
Equity in income of AMAK
  $ 5,367     $ 59  

See our Annual Report on Form 10-K for the year ended December 31, 2015, for additional information.