Analysts have been heaping praise on the Saudi mining company Ma'aden for the past year.
With 9.2 million ounces of potential gold reserves, the discovery of two high-grade prospects and plans to triple production by 2015, it is easy to understand why investors believe it has the Midas touch.
But when Ma'aden posted a loss in the fourth quarter of 65 million Saudi riyals, many of them were left asking: what happened?
The answer lies in Zakat, the action of almsgiving, which is a fundamental pillar of Islam.
The company, based in Riyadh, recalculated its Zakat for last year and charged 70 million riyals provision in the fourth quarter, underestimating Zakat for the first nine months of the year.
The company paid 12.8 million riyals in Zakat in the fourth quarter of 2009. It is payable to the department of Zakat and income tax at the kingdom's ministry of finance.
Ma'aden keeps 11 billion riyals in murabaha deposits, a form of Islamic savings that bears profits or losses. "Ma'aden pays high Zakat on its profits because it has these deposits," said Mazhar Khan, an equity research analyst at Al Rajhi Capital.
By the end of last September, the company had amassed 12.1bn riyals in debt to finance the company as it diversified away from gold into other minerals such as phosphate and aluminium production, as part of its plan to become one of the world's largest fully integrated and cheapest producers of the metals.
Ma'aden's second business line, a US$5.6bn phosphate joint venture with Saudi Basic Industries Company to produce diammonium phosphate, is not expected to be commissioned until the second quarter of this year, instead of last year's fourth quarter, under the original timetable.
This could represent a drag on profits over the next two quarters, Mr Khan said.
