With the price of gold going into meltdown, many mining companies are quaking in their boots.
But Saudi Arabian Mining Company, also known as Ma'aden, had difficulties in making money from its gold-mining operations even when the price of bullion was rising. Famously, Ma'aden recorded a loss of 9.19 million riyals last year, despite the price of gold surging 27.8 per cent that year.
But what now for the company's stock after gold plunged as much as US$208 per troy ounce in a three-day period?
Ironically, the company's large cash deposits from brisk sales of bullion were to blame, after Ma'aden underestimated its Zakat payments, worth 207.3m riyals.
So far this year, the company has performed more favourably. Ma'aden reported profits of 61.9m riyals in the second quarter following a sharp increase in revenue from gold sales. But with the growth in revenues now looking uncertain, the company may need to get to grips with its Zakat provisions sooner rather than later.
"The recent rally in gold prices … coupled with relatively low Zakat provision fed through to an exceptional increase of 100 per cent in net profit," wrote Mazhar Khan, an equity research analyst at Al Rajhi Capital, in a research note.
"Nevertheless, we believe that low provision on Zakat is unsustainable and set to rise."
Ma'aden's ability to profit is likely to hinge upon management's ability to recycle its cash reserves.
Early signs are that the company has been able to do so - Ma'aden has developed a $5.6 billion phosphate joint venture with Saudi Basic Industries Company to produce diammonium phosphate, which is used for a variety of purposes including as fertilisers and fire retardants.
This is now starting to pay off, with recently announced shipments to India. Aluminium production is also expected to start in 2013.
Nevertheless, worth bearing in mind is the fact that in the year to date, gold has been the better investment - even accounting for the plunge of the past few days.