Arabian American Development Announces Signing of Multi-Year Production Contract for Al-Masane Al-Kobra Mine

Arabian American Development Co. (Nasdaq: ARSD) today announced a three-year, $79 million contract with China National Geological & Mining Corporation effective July 3, 2011 for the operation, management and maintenance of the surface works of the Al-Masane Al-Kobra mine. This contract is in addition to a five-year contract with CGM, effective June 29, 2010, that totaled $125.0 million USD which covered the engineering, design, mobilization, rehabilitation of existing mine workings and production work and included a provisional sum of $8.1 million USD for equipment that CGM has the option to provide. Arabian American is the original developer and now a 37% equity owner of the AMAK mine project.

The Company also announced that the AMAK mining operation has entered into an agreement with Walid S. Bugshan & Partners Co. Ltd., for the design, supply and construction of a seaport storage facility in Jizan, Saudi Arabia.

Nick Carter, president and CEO commented, "This contract is another major milestone for the AMAK mining project which is nearing completion in the Najran Province area of southwest Saudi Arabia. The $79 million cost of operations over the three year contract is in line with the previous cash flow expectations based on 2000 tons per day and includes approximately $29.4 million for reagents to be used in the mill process. In conjunction with our new equity partner ARMICO, the mining project has the capital to bring the mine into operation as well as working capital to support the new contract with CGM and we anticipate the start of operating cash flows assuming successful operational testing of the mill beginning in early 2012."