Arabian  American  Development  Co.    

“Excep'onal  Quality,  Outstanding  Service”  

 

ARSD  

April  2014  

Safe  Harbor  

2  

Statements  in  this  presenta.on  that  are  not  historical  facts  are  forward  looking  statements  as  defined  in  the  Private  Securi.es  Li.ga.on  Reform  Act  of  1995.  Forward  looking  statements  are  based  upon  Management's  belief,  as  well  as,  assump.ons  made  by  and  informa.on  currently  available  to  Management.  Because  such  statements  are  based  upon  expecta.ons  as  to  future  economic  performance  and  are  not  statements  of  fact,  actual  results  may  differ  from  those  projected.  These  risks,  as  well  as  others,  are  discussed  in  greater  detail  in  Arabian  American's  filings  with  the  Securi.es  and  Exchange  Commission,  including  Arabian  American's  Annual  Reports  on  Form  10-­‐K  for  the  year  ended  December  31,  2013,  and  the  Company‘s  subsequent  Quarterly  Reports  on  Form  10-­‐Q.  

Snapshot  

3  

Ticker   ARSD  (NYSE)  

Stock  Price1   $10.95  

52  week  High  /  Low1   $13.17  /  $7.07  

Market  Cap1   $265  M  

Avg.  Daily  Volume  (3  month)  1   78,226  

Shares  Outstanding  /  Float   24.2  M  /  18.6  M  

Insider  Ownership   23%  

Net  Debt  to  Capital  Ra.o2,3   5.2%  

Working  Capital2,3   $32.1  M  

Current  Ra.o2,3   3.2:1  

1. All market statistics as of April 10, 2014 2. All balance sheet items as of December 31, 2013 3. See appendix for reconciliation of non-GAAP measures

Business  at  a  Glance  

4  

Company   Division   LocaBon   Ownership  

South  Hampton  Resources,  Inc.   High  Purity  Petrochemical   Sugar  Land,  Texas  Silsbee,  TX  

ARSD  100%  

Al  Masane  Al  Kobra  Mining  Co.   Mining   Kingdom  of  Saudi  Arabia  

ARSD  35%      Saudi  Partners  &  ARMICO  65%  

2012  Listed  on  NYSE  

AMAK  mine  profitable  

2008  Listed  on  NASDAQ  

2006  AMAK  joint  stock  company  formed  

1987  Petrochemical  operaBon  purchased  

1967  ARSD  formed  to  

develop  Saudi  mining  project  

South  Hampton  Resources    Petrochemical  Segment    

5  

!  South  Hampton  Resources  –  processing  facility  in  Silsbee,  Texas  with  ~165  employees;  marke.ng  and  sales  office  in  Sugar  Land,  Texas  

!  Market  share  leader  in  North  America  for  pentanes  for  key  industrial  and  commercial  product  manufacturers  

!  High  purity  hexanes  and  pentanes  are  small  but  cri.cal  components  in  manufacturing  process  for  the  end  market    

!  Stable  customer  base  of  predominantly  Fortune  500  players    

!  High  barriers  to  entry  into  the  high-­‐purity  market  

!  Toll  processing  provider  of  choice  for  three  customers  

!  Focused  on  adding  new    tolling  customers  in  2014/2015  

6  

Products   ApplicaBon   End  Products  Normal  Pentane                               Blowing  Agent                                       Expandable  Polystyrene  (EPS)  Cup  Grade/

Polyurethane  Insula.on  Foams  

                            Condensing  Agent                       Polyethylene  (PE)  

Isopentane               Expanding  Agent                             Foam  Packaging  

Condensing  Agent                       Polyethylene  (PE)  

Catalyst  Carrier                                   Catalyst  used  in  produc.on  of  Polyethylene  (PE)  and  Polypropylene  (PP)  

Normal  Pentane/Isopentane  Blends  (Pentane  Blends)  

Agent  used  in  Blowing/Expanding                        

EPS  Block  and  Shape  Foams,  Polyurethane  Insula.on  Foams,  Extrac.on  Solvent  

Normal  Hexane                                 Carrier  or  Diluents                       Polyethylene  (PE),  Polypropylene  (PP)  and  Synthe.c  Rubber  (SR)  

                          Catalyst  Carrier                                   Catalyst  used  in  produc.on  of  PE,  PP  and  SR  

Isohexane         Carrier  or  Diluents                       PE,  PP  and  SR  Catalyst  Carrier                                   Catalyst  used  in  produc.on  of  PE  and  SR  

Other  ApplicaBons/Processes:       Geothermal,  Adhesives,  Elastomers,  Agricultural,  ROSE  Units,    and        Specialty  Fuels.          

   

End  Market  Uses  

7  

Polyolefins,  41%  

Expandable  Polystyrene,  19%  

Polyurethane  Foams,  12%  

SyntheBc  Rubber,  8%  

Extruded  Polystyrene,  4%  

Other,  16%  

Penhex  Capacity  and  UBlizaBon  

8  

!  Permiped  capacity  of  7,000  barrels  per  day  

!  Based  upon  historic  feed  and  capacity  !  2012  u.liza.on  rate  of  72%  !  Up  from  64%  in  2011  and  54%  in  2010  

!  Expected  to  periodically  u.lize  capacity  during  2014  !  Capacity  doubled  in  2008  into  two  independent  process  units  

!  Improved  reliability  by  reducing  total  down  .me  

!  Recently  completely  total  capacity  tes.ng  

!  Currently  evalua.ng  expansion  op.ons  to  meet  future  demand  

!  Polyethylene  facili.es  and  ethylene  cracker  projects  in  pipeline  !  Due  to  begin  to  come  on  line  in  2016-­‐2018    

!  Fueled  by  shale  gas  boom  

Dedicated  Toll  Processing  FaciliBes    

9  

!  Four  processing  units:  Aroma.cs  Hydrogena.on,  White  Oils  Frac.ona.on,  Hydrocarbon  Processing  Demonstra.on,  P-­‐Xylene  Unit  

!  Operated  as  independent,  completely  segregated  processes  

! White  Oils  capacity  2,000  barrels/day  

!  Aroma.c  Oil  capacity  500  barrels/  day  

!  Bio-­‐jet  demonstra.on  unit  10,000  gallons/month  

!  Para-­‐xylene  demonstra.on  unit  started  up  in  September.  

!  Customers  supply  and  maintain  .tle  to  their  feedstock.  

!  Process  feedstock  into  products  based  upon  customer  specifica.ons  

!  These  units  have  historically  run  below  capacity  on  a  take  or  pay  basis.  

South  Hampton  Resources  Process  

10  

25%  

25%  13%  11%  

26%  Isopentane  

Normal  Pentane  

Normal  Hexane  

Isohexane  

Other  

Approximate  %  of  Revenue  

Natural Gas Source

Pipeline Grade

Natural Gas

Natural Gas Liquids

Propane C3

23%

n-Butane nC4 10%

i-Butane iC4 10%

Pentanes+ C5’s – C8’s

13%

Ethane C2

44%

Natural  Gas  Liquids  Key  to  U.S.  Cost  Advantage  

!  Natural  gas  liquids,  especially  ethane,  are  primary  feedstock  for  chemical-­‐making  in  the  U.S.    

!  Companies  overseas  mostly  use  an  oil-­‐based  feedstock  

!  Due  to  vast  new  NGL  supplies,  U.S.  ethane  feedstock  is  selling  at  historically  low  prices  

!  Huge  NGL  growth  predicted;  sustained  opportunity  for  U.S.  chemical  industry  NGL  produc.on  to  double  by  2020  

Ethane  supplies  to  quadruple  by  2025    

IHS  Report:  “America’s  New  Energy  Future:  The  Unconven@onal  Oil  and  Gas  Revolu@on  and  the  U.S.  Economy  –  Volume  3:  A  Manufacturing  Renaissance,”  Sept.  2013

US  Chemical  Industry  Capital  Investment:  Incremental  Due  to  Shale  Gas    

$0  

$2  

$4  

$6  

$8  

$10  

$12  

$14  

$16  

2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020  

Billions  of  2012  Dollars  !  The  $89  billion  in  investment  announced  as  of  

October  31,  2013  is  spread  over  10  years  !  Peak  year  for  investment  spending:  2016  

Source: ACC analysis

Customer  Base  

13  

Executed  ObjecBves  in  2013    Record  Annual  Results    

14  

!  Record  revenue  up  6%  to  $236  million    

!  Record  volume  up  6%  to  67.1  million  gallons    

!  Record  opera.ng  income  up  14%  to  $20  million  

!  Strong  Interna.onal  results  with  increase  in  revenue  and  volume  

!  Revenues  up  5.5%  

!  Volume  up  5.6%  

!  Expanded  South  Hampton  management  team  with  a  new  President  

!  Tasked  with  diversifying  product  line    

!  Broadening  customer  base  and    

!  Expanding  domes.c  and  interna.onal  business  

Strategic  ObjecBves  South  Hampton  Resources  

15  

Create  near-­‐term  Growth  !  Expand  Toll  Processing  customer  base  !  Increase  capacity  through  deboplenecking    !  Acquire  strategic  business  –  add  new  products  and  diversify  

customer  base  !  Build  interna.onal  business  

Improve  Profitability  !  Improve  margins  on  sales  !  Control  costs  throughout  enterprise  

PosiBon  for  Future  Growth  !  Evaluate  future  expansion  op.ons  !  Online  by  2016  for  an.cipated  ethylene  crackers  

Growing  InternaBonal  Presence  

16  

South  Hampton    Sales  Office  

TX  

Brazil  

Shanghai  

“AMAK”  

17  

AMAK  Basics  

18  

!  Mining  lease  area  of  approximately  44  square  kilometers  in  Saudi  Arabia  

!  ARSD  has  35.25%  ownership  in  AMAK  

!  In  development  since  1967;  in  opera.on  and  profitable  since  Q4  2012  

!  Metal  concentrates  trucked  and  stored  at  Port  of  Jizan  facility  

!  Currently  at  capacity  for  zinc  and  copper  concentrate  with  rou.ne  shipments    to  Far  East  

!  Precious  metals  circuit  undergoing  modifica.ons-­‐  opera.onal  late  2014  

!  IPO  required  two  years  aser  apaining  profitability  

AMAK  Mining  ParBculars  Per  Feasibility  Study  

19  

Mine  Ore  available    to  Mill   8,267,000  tons  proven  reserves:  Zinc  =  3.85%  Copper  =  1.13%  Gold  =  0.89  g/t  Silver  =  28.90  g/t      

Annual  Mine  Ore  to  Mill   720,000  tons  per  annum    

Targeted    Product  Grade    

Copper  =  24%  Zinc  =  50%  

Targeted  ProducBon   Copper  Concentrate  =35,000  dry  t/a  Zinc  Concentrate  =  45,000  dry  t/a    Gold  =  7,600  oz  Silver  =  193,000  oz  

Mine  Life  (producBon)   11.5  years  with  current  proven  reserves  

AMAK  Mining  ParBculars  

20  

Year-to-DateDescription 12/31/2013

Running time, hours 7,637.3 Mill throughput, DMT 699,316 Processing rate, DMT/hour 91.6 Raw ore grade

Copper 1.48%Zinc 3.19%

Concentrate quantity, DMTCopper 35,140 Zinc 33,460

Concentrate gradeCopper 25.20%Zinc 49.80%

RecoveryCopper 85.70%Zinc 74.60%

Shipments, wmtCopper 39,760 Zinc 42,254

Cash Cost (~$/tonne ore) 60$

ARSD  Income  Statement  

21  

ARSD  Balance  Sheet  December  31,  2013  

22  

Management  Team  

23  

!  Nicholas  N.  Carter  -­‐  President,  CEO  and  Director:    Over  30  years  of  petrochemical  opera.ng  experience  with  South  Hampton  -­‐involved  with  ARSD  for  the  last  seven  years.  Has  a  BBA  degree  in  Accoun.ng  from  Lamar  University.      

!  Simon  Upfill-­‐Brown  –  President,  South  Hampton  Resources:  Has  over  20  years  in  the  Chemical  Industry.  Has  a  BS  in  Mathema.cal  Sta.s.cs  and  Chemistry  and  an  MBA  from  Stanford  Graduate  School  of  Business.  

!  Connie  Cook  –  CFO,  Secretary,  Treasurer  :    Has  served  South  Hampton  for  over  20  years,  with  a  BBA  degree  in  Accoun.ng  Lamar  University  and  is  a  CPA.  

!  Mark  Williamson  –  VP  Marke@ng:  Has  a  BBA  degree  in  Marke.ng  and  has  been  with  South  Hampton  over  25  years.      

!  Ron  Franklin  -­‐  VP  Manufacturing:  Has  a  BS  in  Electrical  Engineering  and  a  Masters  in  Engineering  Management  with  31  years  of  petrochemical  experience.  

Reasons  to  Invest  

24  

!  Robust  sales  pipeline  and  stable  customer  base  

!  Capacity  expansion  and  tolling  opportuni.es    

!  U.  S.  shale  gas  expansion  will  produce    a)  Plen.ful  feedstock  supply  b)  Expansion  of  domes.c  customer  base  

!  AMAK  Mine  producing  and  ramping  to  full  commercial  capacity    

!  Opportuni.es  to  expand  AMAK  mine  to  other  leases  with  

addi.onal  minerals  including  silver  and  gold  

Q&A  

25  

Thank  you    

Please  visit  our  websites:    

www.arabianamericandev.com  

www.southhamptonr.com  

www.amak.com.sa  

Appendix  RECONCILIATION  OF  SELECTED  GAAP  MEASURES  TO  NON-­‐GAAP  MEASURES(1)  

26  

(1) This  presenta.on  includes  non-­‐GAAP  measures.    Our  non-­‐GAAP  measures  are  not  meant  to  be  considered  in  isola.on  or  as  a  subs.tute  for  comparable  GAAP  measures  and  should  be  read  only  in  conjunc.on  with  our  consolidated  financial  statements  prepared  in  accordance  with  GAAP.  

12/31/13(in thousands except ratio)

Current assets 46,350$

Current liabilities 14,288

Working capital 32,062$ (current assets less current liabilities)

Current ratio 3.2(current assets divided by current liabilities)

Total long term debt 13,239$ less cash 7,608Net long term debt 5,631$

Total capital 103,219$

Net debt to capital ratio 5.2%(net debt divided by net debt plus capital)