May 5, 2005
via facsimile and U.S. mail
Mr. John A. Crichton
President and Chief Executive Officer
Arabian American Development Company
10830 N. Central Expressway, Suite 175
Dallas, Texas 75231
Re: Arabian American Development Company
Form 10-K, filed April 11, 2005
File No 000-06247
Dear Mr. Crichton:
We have reviewed the above filing and have the following
engineering comments. Our review has been limited to the areas
identified below. Please provide us a response to the comments
and
include appropriate disclosure in future filings. If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with supplemental information so we may better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Engineering Comments
General
1. For all properties, provide the disclosures required by
Industry
Guide 7 (b). In particular, provide:
* The location, means of access to the property, and
transportation
from the property.
* Any conditions that must be met in order to obtain or retain
title
to the property.
* A brief description of the rock formations and mineralization of
existing or potential economic significance on the property.
* A description of any work completed on the property and its`
present condition.
* The details as to modernization and physical condition of the
plant
and equipment, including subsurface improvements and equipment.
* Provide a description of equipment and other infrastructure
facilities.
* The current state of exploration of the property.
* The total cost of the property incurred to date and planned
future
costs.
* The source of power and water that can be utilized at the
property.
* If applicable, provide a clear statement that the property is
without known reserves and the proposed program is exploratory in
nature.
Refer to Industry Guide 7 (b) (1)-(5) for specific guidance. The
internet address for Industry Guide 7 is
http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7.
2. Insert a small-scale map showing the location and access to the
properties. Note that SEC`s EDGAR program now accepts digital
maps,
so please include these maps in any future amendments that are
uploaded to EDGAR. It is relatively easy to include automatic
links
at the appropriate locations within the document to GIF or JPEG
files, which will allow the figures and/or diagrams to appear in
the
right location when the document is viewed on the Internet. For
more
information, please consult the EDGAR manual, and if additional
assistance is required, please call Filer Support at 202-942-8900.
Otherwise, provide the map to the staff for review.
Saudi Arabian Properties
Al Masane Project, page 7
3. The first paragraph of page 10 discussed the mineral reserve
estimates. It is the staff`s position that prior to declaring
reserves, the company should have obtained a "final" or "bankable"
feasibility study, and employed the historic three-year average
price
for the economic analysis. In addition, the company should have
submitted all necessary permits and authorizations, including
environmental, to governmental authorities.
Revise the definitions accordingly. In addition, revise the
disclosure throughout this document to ensure the company does not
prematurely indicate mining operations on mining a property before
a
proper feasibility study and economic viability determination has
been conducted.
4. Mineral reserves must have been delimited using an economically
based "cutoff" grade to segregate reserves from just
"mineralization." Disclose the cutoff grade and the analysis used
to
delimit the tonnage estimates. Also disclose the relevant factors
that realistically reflect the mine location, deposit scale, ore
continuity, assumed mining methods, metallurgical processes,
operational & capital costs, and reasonable metal prices.
5. Unless the company can substantiate significant technical
training
and/or experience in minerals exploration or mining by members of
management, include a risk factor early in the risk factor section
that management lacks technical training and experience with
exploring for, starting, and/or operating a mine. With no direct
training or experience in these areas, management may not be fully
aware of many of the specific requirements related to working
within
this industry. The decisions and choices may not take into
account
standard engineering or managerial approaches mineral exploration
companies commonly use. Consequently, the operations, earnings,
and
ultimate financial success could suffer irreparable harm due to
management`s lack of experience in this industry.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
amendments to expedite our review. Please furnish a cover letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to the company`s disclosure, they
are responsible for the accuracy and adequacy of the disclosures
they
have made. In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging
that:
* The company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* Staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* The company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact George (Ken) Schuler, mining engineer, at
(202)
824-5527 or, in his absence, Roger Baer, mining engineer, at (202)
942-2965, if you have questions regarding engineering comments.
Please contact me at (202) 942-1870 with any other questions.
Direct
all correspondence to the following ZIP code: 20549-0405.
Sincerely,
H. Roger Schwall
Assistant Director
??
??
??
??
Mr. John A. Crichton
Arabian American Development Company
May 5, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE