Exhibit 10(k)
Memorandum of Understanding

 
On this day, Sunday 23/4/1427 H. corresponding to 21/5/2006 G., in the presence
of each of the following:

1.  
First Party: Engineer Hazem Al-Khalidi, the executive president of Arabian
Shield Development Company, the owner of the franchise, issued by virtue of
Royal Decree No. 137 dated 5/11/1413 H.

Hereinafter referred to as “First Party”

2.  
Second Party: Engineer Muhammad Mane’a Abal Ola, representing Thamarat Najran
Company, a company established pursuant to the Regulations of the Kingdom of
Saudi Arabia, Commercial Registration No. 5950010275 dated 6/1/1426 H., whose
Head Office is in the City of Najran.

Hereinafter referred to as “Second Party”

Preamble: Pursuant to the project proposed by the First Party for the formation
of a company with a mixed capital for the production of base minerals and
precious metals in the franchise area pertaining to Arabian Shield Development
Company by virtue of Royal Decree No. 137 dated 5/11/1413 H., and pursuant to
the request of the Second Party, after reviewing the Strategic Summary submitted
by the First Party concerning the project pertaining to the formation of a mixed
Saudi-American Company for the production of base minerals and precious minerals
in the Masaane’a area in the Arabian Shield in the Najran Area.

Discussion took place between the above mentioned two Parties concerning the
possibility of joint work between the two Parties for the exploitation of the
mining franchise owned by Arabian Shield Development Company by virtue of Royal
Decree No. 137 dated 5/11/1413H.

Whereas the First Party has provided the members of the Second Party with all
information and data pertaining to the Project, including the feasibility
studies, issued by well known world consultation companies, in addition to the
study pertaining to the cost of equipping the Project, as well as the cost of
operation for commencing the production and mining of ores and the production of
the copper, zinc, and the ingots of gold and silver. The Second Party has also
reviewed the concepts and operations carried out by Arabian Shield Development
Company, represented by the Project Developer and the Executive President of the
Company, Engineer Hatem Al Khalidi. The Second Party also received all the
economic and financial studies and the cash flows of the project for the future
ten years.

This offer has been met with satisfaction by the members of the Second Party, as
represented by Engineer Muhammad Abal Ola, who affirmed the sincere desire to
join Arabian Shield Development Company as a partner in order to exhibit the
mining franchise which was issued under Royal Decree No. 137 dated 5/11/1413 H.,
through the formation of a company with a mixed capital, which capital was
estimated on the basis of
 

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the above mentioned studies at US$140,000,000 (a hundred forty million) in equal
shares to be held on the basis of 50% for each shareholder.

Now, therefore, agreement was reached by each of the following:

1.  
Arabian Shield Development Company, a company formed pursuant to the Public
Companies Laws of Delaware State, whose address is 10830 North Central Express
Y-Dallas- 75231, United States of America, represented for the signing of the
Agreement by Mr. Hatem Al-Khalidi, in his capacity as the Company’s General
Manager, hereinafter referred to as  (First Party)

2.  
Thamarat Najarat Company, a company formed pursuant to the Regulations of the
Kingdom of Saudi Arabia, Commercial Registration No. 5950010275, dated 6/1/1426
H., whose main office is in the city of Najran, represented for the signing of
the Agreement by Engineer Ayman bin Abdul Rahman AL-Shibil in his capacity a s
the Company’s representative, hereinafter referred to as (Second Party – The
Developer)

As follows:

First:
The above mentioned preamble shall be an integral part of this Memorandum.

Second:
The Second Party (the Developer) shall seek to form a Saudi company, with a
proposed name “Al-Masane’a Mining Company”, referred to at any stage of the
Agreement as “The Saudi Company”, and shall have all the powers to select the
shareholders therein, as well as all the powers to make the material and
administrative arrangements for the Saudi Company.

Third:
The First Party and the Saudi Company shall form a company with a mixed capital
under the name of “The Mining Major Factories Company”, provided the Saudi
Company shall have all the powers necessary for the executive management of the
mixed Company.

Fourth:
The Company’s capital shall be US$140,000,000 (a hundred forty million)

Fifth:
The shares shall be distributed between the shareholders as follows: 50% for
each shareholder. The Mixed Company’s Board of Directors shall comprise six
persons: three to represent the First Party and three to represent the Saudi
Company. Their powers and the validity of their resolutions shall be determined
in separate contracts of in the Articles of Association of the Mixed Company.

Sixth:
The Second Party acknowledges his consent to the assessment of the effort,
expertise and assets of the First Party, as well as the franchise granted to him
which is issued by Royal Decree No. 137 dated 5/11/1413 H., and estimated at
US$35,000,000 (thirty five million), which the Second Party shall pump into the
Company’s capital, and which represents the fair amount for the obtaining by the
Saudi Company of 50% against all the mining activities, the assets and the
tangible and intangible assets, including the mining franchise, which the First
Party has preformed since 1967 up till now.

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Seventh:
The Saudi Company shall pump UD$35,000,000 (thirty five million) for initiating
the purchase of equipment and equipping the present site of the factories for
mining production of the base minerals and the associated minerals.

Eighth:
The First Party shall seek to obtain bank facilities on the basis of the
assistance and guarantee of the Saudi Company, without any other additional
costs, for a sum of US$35,000,000 (thirty five million), which the First Party
shall repay from his share in the annual profits of the Company.

Ninth:
It is agreed that the activity of the Company which is to be formed shall be the
mining of base ores known as copper, zinc, and the associated gold and silver
minerals, under the franchise granted to Arabian Shield Development Company, the
production and sale of copper condenser, zinc condenser, silver and gold ingots,
under the franchise granted to him and issued by virtue of Royal Decree No. 137
dated 5/11/1413 H.

Tenth:
It is agreed by the two Parties that Arabian Shield Development Company has
carried out exploration activities in the Major Factories area, which it shall
assign to the Mining Major Factories Company after the formation thereof for
subsequently obtaining the exploration license and franchise.

Eleventh:
The mining franchise issued to the First Party shall be transferred to the Mixed
Company after the formation thereof.

Twelfth:
the application for licensing the exploration that was filed in the name of the
First Party shall be transferred to the Mixed Company after the formation
thereof.

Thirteenth:
This Memorandum shall be binding on its two Parties upon signing its final form
by the First Party and the Second Party and the approval of the Board of
Directors of the two companies and the activities shall be conducted on the
basis there of and pursuant thereto. Moreover, each of the First Party and the
Second Party shall work jointly and in full cooperation for realizing their
objective. The two Parties shall commence the implementation of the provisions
of this Memorandum and shall commence the formalities relating to the formation
of Mining Major Factories Company, as mixed Saudi-American Company within ninety
days of the singing of the Memorandum. They shall also work within the framework
of the work plan indicated in the mining franchise issued by virtue of Royal
Decree No. 137 dated 5/11/1413 H.

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Fourteenth:
This Memorandum has been drawled up in three counterparts of which each Party
has kept one in order to act in accordance therewith. The third counterpart
shall be kept by Kadasa Law Firm for Legal Consultations.

 
Allah is the bestower of success.

           First Party
Second Party

Arabian Shield Development Company
Thamarat Najran Company

Name: Hatem Hussein Al-Khalidi
Muhd bin Mane’a Abal Ola

Capacity: Company President
Capacity: Company Representative

Signature: /s/ Hatem El-Khalidi
Signature: /s/ Muhd bin Mane'a Abal Ola

 
 

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