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AN INDEPENDENT MINERAL EXPERTS’ REPORT ON THE GOLD MINING AND EXPLORATION ASSETS OF SAUDI ARABIAN MINING COMPANY (Ma’aden) Prepared for: Saudi Arabian Mining Company JPMorgan Chase Bank N.A., (Ma’aden), 8th Floor, Al Faisaliyah Tower, Riyadh Head Office Al-Olaya, P.O. Box 68861 Riyadh 11537, Riyadh 11491, Al Riyadh Province, Al Riyadh Province, Kingdom of Saudi Arabia. Kingdom of Saudi Arabia. Prepared by: SRK Consulting (UK) Limited 5th Floor Churchill House, 17 Churchill Way, City and County of Cardiff, CF10 2HH, Wales, United Kingdom. Tel: +44-(0)29-2034 8150 Fax: +44-(0)29-2034 8199 U3330_Ma'aden MER.doc November, 2007 SRK Consulting Engineers and Scientists SRK Consulting Ma'aden Gold MER – Report Details COPYRIGHT Copyright of all text and other matter in this document, including the manner of presentation, is the exclusive property of SRK Consulting (UK) Limited. It is a criminal 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 Consulting (UK) Limited and shall not be used for any activity that does not involve SRK Consulting (UK) Limited, without the written consent of SRK Consulting (UK) Limited. Project Manager Signed Date Mark Campodonic, November, 2007 Senior Consultant. Project Director Signed Date Iestyn Humphreys, November, 2007 Director. Job No.: UK3330 Report Name: U3330_Ma'aden MER.Doc Copy No.: Name/Title Company Copy Date Authorised by APPROVAL SIGNATURE: U3330_Ma'aden MER.doc November, 2007 SRK Consulting Ma'aden Gold MER – Executive Summary Table of Contents TABLE OF CONTENTS – Executive Summary Section Description Page No. 1.0E INTRODUCTION i 1.1E Background i 1.2E Review Process ii 2.0E THE GOLD ASSETS v 2.1E Introduction v 2.2E Ma’aden Gold v 2.2.1E History x 2.2.2E Strategy xi 2.3E Mining Business xi 2.3.1E Description of Properties xi 2.3.2E Exploration xii 2.4E Overview of the Gold Assets xii 2.4.1E Mahd Ad’Dahab xii 2.4.2E Al Amar xiv 2.4.3E Bulghah xvi 2.4.4E Sukhaybarat xix 2.4.5E Al Hajar xx 2.4.6E Ad Duwayhi xxii 2.4.7E Exploration Assets xxiv 2.4.8E Head Office xxv 3.0E MINERAL RESOURCES AND ORE RESERVES xxvi 4.0E GENERAL SRK COMMENTS xxix 4.1E Introduction xxix 4.2E Mineral Resources and Ore Reserves xxix 4.3E Environmental xxx 5.0E VALUATION xxxi 5.1E Limitations and Reliance on Information xxxi 5.1.1E Limitations xxxi 5.1.2E Reliance on Information xxxi 5.2E Valuation Methodology xxxii 5.3E Enterprise Value: Basis of Valuation xxxii 5.4E Enterprise Value: Post-Tax–Pre-Finance Cashflows xxxiii 5.5E Enterprise Value: Net Present Value and Sensitivities xxxiv 5.6E Valuation of Advanced Exploration Properties xxxv 5.7E Valuation Adjustments xxxvi 5.7.1E Derivative Instruments xxxvi 5.7.2E Unallocated Head Office expenditures xxxvi 5.7.3E Net (Debt)/Cash position xxxvi 5.7.4E Summary of Valuation Adjustments xxxvi 6.0E RISKS AND OPPORTUNITIES xxxvii 6.1E Introduction xxxvii 6.2E General Risks and Opportunities xxxvii 6.3E Specific Risks and Opportunities xxxviii 7.0E COMPANY EQUITY VALUE xl 7.1E Introduction xl 7.2E Equity Value xl 7.3E Comparable Transaction Analysis xli 8.0E CONCLUDING REMARKS xliii LIST OF TABLES – EXECUTIVE SUMMARY Table No. Description Page No. 2.1E Gold Assets vi 2.2E Ma’aden Gold: salient historical (2004-2007H1 inclusive) and forecast (2007H2, 2008) operating statistics vi 2.3E Mining Assets: human resource statistics (historical and forecast) vi 2.4E Gold Assets: environmental (biophysical and social) liabilities vii 2.5E Mining Assets: safety statistics vii U3330_Ma'aden MER.doc November, 2007 Page i SRK Consulting Ma'aden Gold MER – Executive Summary Table of Contents 2.6E Ma’aden Gold: Plant production capacities and throughputs xii 2.7E Mahd Ad’Dahab: historical and forecast operating results xiv 2.8E Al Amar: historical and forecast operating results xvi 2.9E Bulghah: historical and forecast operating results xix 2.10E Sukhaybarat: historical and forecast operating results xx 2.11E Al Hajar: historical and forecast operating results xxii 2.12E Exploration Assets (including Ad Duwayhi) Mineral Resource statements (1 July 2007) xxiv 2.13E Exploration Assets(1): Historical and forecast exploration expenditures xxv 2.14E Exploration Assets(1): Historical and forecast exploration expenditures xxv 2.15E Head office: historical and forecast operating results xxvi 3.1E Ma’aden Gold: Total Mineral Resource and Ore Reserves (1 July 2007)(1) xxvi 3.2E Ma’aden Gold: Total Ore Reserve Sensitivity (1 July 2007) xxvii 3.3E Ma’aden Gold: Mineral Resources and Ore Reserves by asset (1 July 2007) xxvii 3.4E Mining Assets: Ore Reserve Economic Viability Assessment xxix 5.1E Base case commodity price and macro-economic projections(1),(2) xxxiii 5.2E Weighted Average Cost of Capital calculations for the Mining Assets xxxiii 5.3E Plant, Property and Equipment Net Book Value as at 1 July 2007 xxxiii 5.4E Ma’aden Gold: Financial Model in US$ real terms (1 July 2007) xxxiv 5.5E Mining Assets (excluding Head office): NPV (US$m) at various discount factors xxxiv 5.6E Mining Assets (excluding Head office): Sales Revenue and Total Working Cost simultaneous sensitivity at a real DCF of 10% xxxv 5.7E Mining Assets (detail): NPV (US$m) at various discount factors xxxv 5.8E Head Office: NPV (US$m) at various discount factors xxxv 5.9E Commodity (gold) derivatives xxxvi 5.10E Summary of Valuation Adjustments xxxvi 7.1E Ma’aden Gold Equity Value xli 7.2E Ma’aden Gold Equity Value: discount factor sensitivity analysis xli 7.3E Ma’aden Gold Equity Value: sales revenue and total working cost sensitivity xli 7.4E Comparable Transactions – population analysis xlii LIST OF FIGURES – EXECUTIVE SUMMARY Figure No. Description Page No. 1.1E Ma’aden Gold: Divisional Structure iv 2.1E Ma’aden Gold: location of Gold Assets viii 2.2E Ma’aden Gold: company cash cost curve analysis (calendar 2006 results) ix 2.3E Mining Assets: mine cash cost curve analysis (calendar 2006 results) ix 2.4E Ma’aden Gold: LoMp equivalent gold production (koz) and cash costs (US$/oz) xi 7.1E Comparable transaction cumulative frequency: global database (producing assets) non- time value adjusted (US$/oz) xlii 7.2E Comparable transaction cumulative frequency: global database (producing assets), time value adjusted and gold price indexed (US$/oz) xliii 7.3E Comparable Transaction data plot: Transacted unit price versus transacted ounce xliii U3330_Ma'aden MER.doc November, 2007 Page ii SRK Consulting (UK) Limited, 5th Floor Churchill House, SRK Consulting 17 Churchill Way, Cardiff CF10 2HH, Wales, United Kingdom. Engineers and Scientists E-mail: [email protected] URL:http://www.srk.co.uk/ Tel: +44 (0)29-2034 8150 Fax: +44 (0)29-2034 8199 AN INDEPENDENT MINERAL EXPERTS’ REPORT ON THE GOLD MINING AND EXPLORATION ASSETS OF SAUDI ARABIAN MINING COMPANY (Ma’aden) - EXECUTIVE SUMMARY 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). The MER (available in full electronically on the Company’s website and by hard copy on request from the Company) has been prepared by SRK. An extract from the MER will be included in its entirety 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. The MER 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”. In the absence of any detailed specific rules relating to the disclosure requirements for resource companies, SRK has in generating the MER, relied on the following for guidance: • “CESR’s recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses No. 909/2004”, published in January 2005: specifically paragraphs 131 to 132, section 1b – Mineral Companies, hereinafter referred to as the “CESR Recommendations”; and • The “Guidance note for Mining, Oil and Gas Companies, March 2006”: specifically the content requirements at Appendix 2 and the summaries set out in Appendices 1 and 3 ( a document published by the London Stock Exchange Limited (the “LSE”) in accordance with the Alternative Investment Market Rules of the LSE. The MER contains a detailed valuation of the Gold Assets, accordingly the MER constitutes a competent person’s report within the meaning of Chapter 19 of the United Kingdom Listing Authorities’ (“UKLA”) 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 UKLA. Accordingly 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”).