Oman Chromite Company SAOG (OCCI) Earnings Call Transcript & Summary

[Foreign Language] Good evening and good morning. I will start as normal, just quickly give a brief about the result of last half, Arabic and English, and then, we can have the discussion. Also today, I will show a small presentation about how the work is happening in the new concession, 11-A. So I will start in Arabic first. [Foreign Language] An English team shareholder of Oman Chromite Company and investor who are interested in the Oman Chromite, thanks for participating in this meeting. And I will give you a brief summary about the result of the first half of 2025. We produced more than 29,000 tons and sold more than 43,000 tons of chromite ore, which is better than last year. Last year, we sold -- we produced 13,800, and we sold more than 37,000 tons in same period of 2024. Financial results, we achieved OMR 409,000 profit, net profit compared to OMR 633 million net profit in the same period in 2024. The main reason for the drop is the drop in the price of the ore in the market -- in the global market. In 2025, there was a sharp drop in the ore price and commodity prices actually mainly, but chrome is one of the main ore that's impacted. With all this drop in the price of the chrome ore, still the company managed to achieve good profit. Our expectation for the second half of 2025 is to achieve similar results of the first half. We don't expect a big surprise. For short-term planning, we -- [Foreign Language], we managed to receive mining permits for our new mine. So we are just waiting for -- in a few days or 1 week time to receive the environmental permit. And then, we'll start to develop the mine. So we're ready for the production in 2026. On other hand, operation in Concession 11-A is ongoing with a good expectation. I will show you a small presentation about how it works in 11-A. I will try to give the audience a free period, the result of -- and the program, how we are working in that area. We achieved actually 6 targets, but we call it target, not exploration yet because we have to be accurate in the exploration terminology here, but it's a promising area. When these targets become exploration, we can call it an exploration. At that time, we will declare in the market. So I'll start the screen share now. [Foreign Language] presentation.

[Foreign Language].

Okay. So again, who we are as Oman Chromite company, it's the first mining public listed company. Actually, we are the only public-listed company in the mining field. We established by Royal Decree as a partnership between public and private sector. Our vision to be the reference company in chrome ore mining in Oman and in terms of reputation and return on investment. Our mission to contribute to the sustainable development of Oman by mining chrome ore with high efficiency and achieving the best added value economically. Our values, environmental -- environment, safety, customer focus, teamwork, responsibility and transparency. This is the 11-A where we always speak about it. It is located in the north part of Oman in the border with Emirates. Actually, it is in [indiscernible], the north part of [indiscernible]. [Foreign Language] We received the concession Royal Decree by -- in January 2025. During the last period of the 6 months, up to now, we managed to cover 15% by prospecting because we make our strategy to do 2 things for us, the satellite remote sensing study and field exploration by the prospecting, okay? We cover 15%, which is a good achievement in this short time. To give you an idea, the transition period is 5 years. So we're supposed to cover the full area, which is the 1,438 kilometers -- square kilometers in 5 years. Now, we covered 15% in the first 6 months. Of course, we cover the easy part because the difficult part will be the mountains, and we are having different strategy to how to deal with it. This is the remote sensing also and chemistry update at the same time. This is the map here. So we are doing remote sensing analysis by satellite, study of the -- how is the expected channels of the different gig layers. And you can see here there is some targets -- interesting targets. Again, I have to be, let's say, careful we don't call it exploration yet or discovery. We call it as exploration for the targets. When we come to a stake that is discovery or mature enough, we disclose this to the market. But we have a good, interested area we have for the chromite, okay? It's different grades, from 45 high-grade to the 18 to 24, all these grades available. The area look promising. The number of dots doesn't mean mines, it means actually occurrences, okay? So we have appearance of chrome ore, but from these too many dots in the black that is -- and the gray color, we identified around 6 potential targets. We'll keep the market updated about it with the time coming. And some of them is for a high grade. So we are very optimistic about the area. At the same time, we are also exploring for the other metals, mainly copper. There is indication of the copper in the area in this white color -- sorry, yellow color and with a good percentage also. Normally, this 10% to 6% is -- 1% to 10% is high ratio, but doesn't mean it's good mines yet because we have to see the volume and we have to see the other chemical characteristic of the ore. Work ongoing. We'll do more drilling in these areas, and we'll keep the market updated either by -- when we have discovery, we'll disclose in the market or during this biannual meeting also, we'll keep you updated about the progress. That's basically the update about Oman Chromite in the first half of 2025.

And I will leave it for the discussion. If any question, either Arabic or English because there is Arabic speaker here also. [Foreign Language]. Yes, Joice Mathew.

I just had some few basic questions. You said there is a mining license that you obtained for a new mine. Could you throw some light on what's the reserve in that mine? And how much production are we expecting? And you said 2026, so when in 2026 should we start production?

Yes. Actually, this mine is -- we applied for it long time back. Unfortunately, the process in Oman is slow. So -- and we do it during exploration we did in 2020. The results of the mine is not -- for, yes, around 10,000 tons, but our expectation is to have more than that. Based on all these facts, we are aiming to achieve in 2026 through the new mine, existing things, around 70,000 tons also, same like this 2025 results. We will start to make the road. We already made the road actually. We are reexploring or reclarifying that potential of the area. Why 2025? Because normally, we have to make the developments, means we have to remove the rocks around the mine, make the access road. Normally, these things take time. If we manage to achieve this faster and we accelerate in 2025, we will do.

Okay. So should we expect it by early 2026 sometime?

Yes, yes.

All right. And how many mines do we have right now active?

Active now is basically 2 in the North of Oman, Mahra and Al Wasit, we call it. And both of them -- Mahra is almost end of its life. There is more resources, but it is for underground mining. And we try to bring, let's say, the expertise in this field of underground mining. So I cannot put it in the plan for the market. As soon we come to maturity level or good maturity level, we will disclose that, that will unlock additional reserve for us. And just to give you an idea that when you compare the resources, which is available ore comparing to the reserve, which we can mine economically, the resource is around 2/3 the reserves. There is a high potential for underground activity in Oman. But we're still in the early phase of checking this technically and economically. Mahra, the first one, might be for -- is under study for the underground mining. But for open pit, which is our current activity, is almost end of the life. I think by end of this year, we will do the maximum to extract the ore from this mine. Al Wasit in Sohar is working, and we will continue. Actually, we mine from it. We also can tell you exploring in the same time, so we're finding more, and we add more reserve to the mine. It will be enough for this year, and hopefully, also part of next year. In addition to the new mine, which we expect, that is [ Rahab ] coming to picture now.

Okay. So once Mahra is going out of resources -- not resources, reserves, probably Al Wasit and the new mine will contribute -- compensate for that. Is that what your expectation is?

Yes, that's true. Mahra coming out, and [ Rahab ] will cover other things. So that's why you expect to give the same level in 2026. Now, what will come from 11-A, we expect 11-A in 2027. It's not that easy to convert from exploration to production. It takes time, either from exploration period and also for the permitting period. So short term, yes, we should expect the same, I guess, [ Rahab ] to cover the Mahra -- absent of Mahra and 11-A coming in the pipeline [Foreign Language] for 2027.

Okay. And see, you are selling more than what you are producing right now. So how are you planning to manage your inventory for the second half of this year or maybe for the next 18 months because your average annual sales is around 80,000 tons, and you're producing maybe around 70,000 tons, or even this year, it might be slightly lower, right?

No, it's a good point. Actually, 2 years back, we produced 100,000 tons, and we sold 70,000. The years after, we started to sell 80,000, 80,000, and we produced 70,000, so that's why the year 2026, maybe we'll be back to selling what we are producing. We keep minimum stock level of 30,000 tons, which is enough for sales of, let's say, of 5 to 6 months. Always we keep this as minimum stock to try to cover it. So we don't see a short fall in this year. We will be able to sell 80,000 also. We have enough stock to cover. Next year might be challenged to achieve 80,000, and we have to see how to compensate.

Okay. And could you please give me some idea about your export sales and your domestic sales because right now, probably you are -- you have a stake -- you had a stake in Gulf Alloys and you have increased the stake in Gulf Alloys? So are they becoming a major customer for Oman Chromite you're supplying to them primarily and the balance is exported? How is that dynamic is working?

Now, we're almost 50-50, 50% exported, 50% in Oman. Our main client is Tamman because they are using the ferrochrome. They have the ferrochrome plant, which is using the chrome ore. About Gulf Alloys, which we increased our shares, actually, it is not yet ready to receive the ore as in its current format. We have to do beneficiation plant to convert the ore from lumps to concentrate, which is in the planning of the company. We don't -- we cannot commit now when we will be ready to do, is actually important topic that we upgrade our ore of concentrated to the level that the market will demand. And so our participation in Gulf Alloys that was the plan for future. So we'll be in the market with good shares to support the ongoing or the ongoing plans to upgrade our ores to the right level.

Okay. So if we are -- so since you're not supplying to Gulf Alloys and you have plans to supply to Gulf Alloys through the beneficiation plant, what's -- when do you expect that beneficiation plant to be -- to come on stream? And what could be the investment that is required there?

It's all under discussion with investment on 1.5 million. We might invest ourselves or through some third party. We are discussing all options now. This might also -- we are doing the technical study because it's just to check what is the right technology applicable for Oman ore. And I expect 2027 to start this if we go. The installation doesn't take more than 1 year of this beneficiation of washing plants. If we decide by 2026, then 2027, we'll be able to do it.

Okay. Got it. And on Block 11-A, what's the kind of CapEx that we will be expecting for the prospecting phase and maybe in 2026 and '27 for development of the mines? And how are you planning to fund it?

Now, we spent around -- the commitment is OMR 4.5 million for 5 years. And first 2 years, lower cost spending because we spend around -- we're going to spend around OMR 600,000 to OMR 800,000. We will increase later because it will be more heavy drilling later on. So year 3 and 4 and 5 will be more drilling. We are doing drilling now, but not the extensive ones, okay? Currently, the plan is financed from its own -- from the company resources. And we are discussing with the Board now different financing options, which is going to come to the market soon, okay? When we finalize our strategy about how to finance the heavy exploration and the appraisal cost, we'll let you know. Also, we'll keep the market updated.

Sure. Sure. This OMR 60,000 to OMR 80,000 that you mentioned, is it for 2 years or per annual...

Every year, every year.

Every year, okay.

Which is also coming because there is a decrease in the -- because we are also spending money for exploring the existing permits, which is going lower now. And we focus so just like we are shifting, not all, but we're shifting part of the budget to the 11-A. But for sure, when the -- for this big area later on, in the year 3 and 4, we'll need much more money.

Okay. Got it. And what's your outlook on chrome ore prices? Right now, it has been stable almost throughout this year in the first half. So how do you see that in the third quarter and fourth quarter? And what's your medium-term outlook on it?

Yes. The analysts talk short term because nobody -- this is very crazy market now to predict medium and long term. But in the short term, we expect improvement, okay? And the price is happening showing gradual increase, I can see last month. More than that, when you speak about forecast in the long term, people, let's say, they expect things to be in the same level with plus or minus. But anything can happen because there is a big growth in stainless steel market. But at the same time, there's economy, let's say, issues in China, which is the main market, so we are watching. The main things for us is to keep our production cost as much as possible, and that's how we can -- because we cannot control the market price. We keep our forecast based on the worst scenario, and our productions have to match these things. And that's why the production from 11-A also becomes critical for us because that will increase the production. At the same time, we will reduce our cost with the new mines there.

Okay. So what was our average selling price last year -- no, this first half? Was that around OMR 53, OMR 54 per ton?

Yes. And last year was OMR 10 more roughly. So we lost most of the profit losses. Our drop in the profit was, of course, of the market unfortunately, which is anyway, common in this commodity business. I think, Mr. Mohammed, there was one person trying, Mohammed [indiscernible] or I forgot the name. Maybe he left, okay. Any other questions?

My name is Hiba Al Mabsali from U-Capital. I just wanted to ask about the production of Block 11-A. How much will it increase? As you said in 2026, [ Rahab ] will the cover for Mahra mine? What...

Mahra, yes.

Yes. What about for 11-A? Will it more increase the production? Or how it would be?

No, this is the plan, [Foreign Language]. It will increase in -- we expect to add to the business in 2027, mostly 2026. How much will increase? It's difficult to say now because we are in the middle of the exploration, but we are very optimistic because we speak about 6 targets now -- I mean, 6 mines, if you can compare with 3 mines, and all of them are new with higher grade, so yes, I cannot commit number now publicly, but we are aiming to reach to 300,000 in the long term.

300,000 tons?

No. This is our aim. Anyway, this is, of course, we are in a very exciting exploration period now. And that's why I said just to keep you and keep the interested people about the OCC updated about the exploration results. It might be more technical now. But as part of transparency, we'll show what we have up to now every period, every half year. And if there is any news, we will put it also in the market week on these things. So you need to wish us good luck in the exploration also. If there is no further questions, then we will close the meeting.

Just -- sorry, Mr. Murshidi, this is [ Abbas Muslemi ] from U-Capital. Always a pleasure interacting with you. When you -- just -- when you said just wish us good luck in exploration, I wanted to know the concession area that you have. I mean, this is based on already some research, some surveys that you've done, right? So there's a very high probability of extraction. I just wanted to understand the opportunity that we're talking about because the last sentence stayed with me. So I quickly went on the call and thought I will ask you.

Yes. No, good point. Actually, how it works in Oman? Normally, when you apply for a concession, you should have basic information, okay? But the system here in Oman, they -- it is different. So I don't know different countries when they have enough data to show -- they give to [indiscernible] bidding, so people bid with higher price. Here, no, it's different. They give us the concession area with mandate to collect the data. And at the same time, whatever we find it will be ours. Means, if I discover copper, for example, and I have enough maturity to say I have a mine for copper, I have the ownership of this all ore, I can convert it to mining. First, I have to do the appraisal, and I can also offer it to any partner who can join us because we are not copper company. So I can bring any bid to participate. So basically, we don't have enough data. About the chromite, luckily because we are in the -- we work in the country for a long time and we know that [indiscernible] Oman, the potential, whatever, and we know some -- I mean, pre-information. Based on that things, we bid for 11-A, and we managed to get it. Up to now, the funding is very good because of the service data. Drilling will confirm. Anything -- any information necessarily doesn't mean you have enough mine, but the trend of the ore, if we look at the ore from our existing mines and the trend towards 11-A, we are very -- let's say, our confidence level is high, okay? That's basically. So it's not like -- that's why I'm saying good luck. We need a good luck, of course, in this exploration, but it's also how is the design of the business in Oman for the mining. It's not very -- it's actually unique. It's not too many country doing this way because it's -- officially, it's very, what they call it, greenfield. If we don't call it greenfield, you call it -- what we call it, we call it blue sky, too early stage.

Okay. Now I understand. That was helpful. So let's say, you find success here, how do you -- like what does success mean to you in terms of the annual sort of production? Because for me, I just wanted to scale that to something that you're already doing, just for us to appreciate the opportunity on the chromium side. Yes -- chromite side, sorry. Yes, yes.

For me, chromite, I want to reach 300,000. That's the aim for us. I think that's for me success. Below that, it will be success, but not for -- something that we will be proud of. We reported our study to produce from 300,000 to 500,000, okay? Does 11-A has this potential? We think yes. But still, we have to prove it by the proper data collection. Considering what we achieved last 4 years from the mines that we have, small area, actually, the total area which we have of the mines, not more than 10 kilometers, now we have 1,400, so it's totally different scale, different game. It doesn't mean multiply by 10, of course, but means there is bigger areas to -- bigger opportunity to find more mines and convert it to proper business. Hopefully, we will reach 300,000 sure. We are keeping...

But the 300,000 is almost 5x from where you are right now, right, 4 to 5x compared to where your production is for the last full year?

Yes. Yes. The company is capable to -- we already produce 100,000, and we are strengthening our muscles or our structure to be able to mine more making also not only the volume, also the quality of the work because the mining in -- now is not like mining, let's say, before. We have to do it with ESG, right technology, right safety, okay? So now we are making a professional company, as you saw in our Vision and Mission. And thus, we try to prove ourselves to mine in MDO area because MDO, also, they have bigger areas there. We want to mine in their area. It's actually a discussion only now. When we come to also agreement with them, we'll also tell the market. That will be the main company in mining of chrome ore. Yes, it's a big expansion, 5x, more than that also. How we will reach to this increase and the capacity? We have plans now. We just try to make it involved with the exploration, like gradual. If we have to do sharp increase in the things and I need more capital increase, which actually, I'm working on the strategy now or I'm trying to get, let's say, connecting with people now and specialized firms to make, let's say, a proper study. And this sharp increase coming, of course, we'll need more money from fund and either it will be from fund or through shareholder equity. Soon, we will discuss with the shareholders this matter for sure. So it's...

Okay. This should be the next big one, basically. Okay. That's interesting.

Yes, yes. Yes. No, this is basically, yes, next step. Now, exploration, and are we going to have like a sharp acceleration or gradual acceleration will come? It's too early to discuss with the shareholder these things now, okay, because just let's have basic data and then later on we will discuss, we have the 2 options. Again, we will achieve 300,000 in, let's say, you want -- we want to achieve it in 5 years or in 2 years. That will depend on the -- technically, we can make it in 2 years, just we have to see commercially and also financially how to do these things. And of course, before all these things, you have to ensure you have the enough reserve to this.

So now if I look at your goal post, which is 300,000 tons a year, given the current 2 mines that you're operating and this area that you're exploring, is that -- because you mentioned the MDO part, and I'm a little confused about the MDO part. Now that's something you're not currently engaged with, right? There's no exploration. There's no agreement. It's an aspiration of yours, right? Or is that the discussions already started?

Discussion started, okay? So this is 11-A in the north of Oman. You can see the presentation. All of this area, which I'm moving my cursor, if you can see, south -- below or south of this 11-A, big areas belong to 11-A. And also, we want to make ourselves a strong company that can mine for MDO also, okay? This is an ongoing discussion. I did not put it in the presentation because just in the, let's say, call it, early discussion. When we are ready with MDO also ready, then we'll also have it disclosed to the market. [Foreign Language] next -- I am expecting next conference or this meeting like this, it'll be more mature to show it, okay? Why this one I put it? Because this might be a driver to accelerate the production faster than a gradual increase. So it might be sharp increase in the production, okay? And that means the company will need to increase its capital.

So just based on your studies, if you ignore the MDO part, let's say that discussion is postponed in the future, and you focus on your current mines, and of course, the 11-A, the greenfield sort of exploration, where do you see the potential for the company in terms of production and sales of chrome ore based on your initial studies that you've done from -- at least from the chrome ore point of view?

That's why in the exploration difficult to comment yourself, but we think we are aiming 300,000, okay?

This is the existing, wow, okay. Okay. I was...

Existing, yes. If MDO coming, then we'll go to 500,000, let's call it.

And you feel that -- and do you feel that you -- from a technology perspective, expertise perspective, Oman Chromite currently has everything on board? Or do you need to partner with someone else strategically as well? Or you feel like you are comfortable with the team that you have to sort of achieve your targets?

No. For the Chromite, we are comfortable. Of course, we have to upgrade the team for more volume. And also, we need to have some functions that match in the future requirements. So I don't think we'll need partnership. Chromite, I'm sure is supposed to be -- and designed to be the main body for mining the chrome ore in Oman. And that's how we put our structure, and we'll continue to like this. For the copper and other metals, of course, we are -- we don't want to lose the focus or the compass, so we'll bring partners, and we'll update you how we are going to do with these things later on.

Yes. Now, from an incremental news flow point of view, so we get this opportunity to talk to you twice a year, and all of us really welcome this because we get to learn something about a sector that we're still -- we have a nascent understanding about. So in terms of -- now, in terms of the incremental news flow, right, you will declare your next -- the next quarterly numbers after the September quarter. Now what are the things that we need to sort of look out for to see how successful exploration specifically in 11-A is? Or are you going to announce something to the market? I'm just trying to think about what is the incremental news flow that you're going to announce to the market beyond how much you produce and how much you sold because you're very good with that disclosure. Just for me to appreciate what's happening in Block 11-A because now I'll talk to you next Feb, I think -- next Jan or Feb, so I'm just trying to see in the interim, how do we gauge success of the company.

This is -- let's call it, in exploration, it's fairly difficult to because it's not like gradual things, okay, or trend. But when you hear about discovery, okay, we declare about discovery, that means there is something can give more life -- production life, the company production, also capacity. All what I show to you now that what is early stage of the exploration, I'll show you in the presentation about prospecting targets, whatever. But when we announce there is exploration, that means we are on the right track.

Okay. So you will announce in terms of the reserves you found and all those things, the announcement will be specific regarding that?

It will be in 2 stages because as per agreement with the ministry, we have to do the, what they call, declaration of exploration. So we discover some things, and that will happen by drilling a few -- not too many holes, a few holes, just to see there is enough to call it and exploration. And then we have to do commerciality of that thing. So we have to do the appraisal if you use the term in the oil, so we have to confirm this reserve by drilling more holes. So -- and then at that time, also, we will tell how much the reserve of that mine, okay? And that's supposed to be done in an international standard. In Oman, we are using the JORC Standard, the Australian standard for the proof in the reserves, so it will be in 2 stakes actually.

Okay. And just out of interest, how deep do you find these ores, like how deep do you have to drill before you come across? And how do you gauge quality? I mean, just for me to understand and appreciate this business a little more.

Yes. Most of the work now is surface, so means up to 70 meters, okay? Some -- of course, it depends on the topography, but 70 meters, you can say we can do open bit. More than that, we have to see underground mining. It can reach 220 meters. But we don't speak about so deep. It's that range, up to 120.

Okay, okay. And in terms of the quality, how is quality judged in this industry compared to, let's say, our current reserve, your current mine versus the new one?

No, let me open -- okay, you can see this grade here, 80-24, okay? And then, we have different grades, okay? Currently, we are -- unfortunately, I'm producing in this range, 18 to 24, and that's why my income is going down. When things coming to the grade 38 or above 35, the price, let's say, jump $10. It will cost you the same money, but you have more revenue when you have better grade. So if we achieve -- and as we say, if we achieve good profit with this range of 18 to 24, actually -- sorry, 18 to 24, we are in this range, 24 to 32, okay? And then we are -- if we have anything more than 32 means much better return to the company. We found ordering. It's difficult to tell you which one, but actually we found even 45 to 55. So that's why we are so excited about the area.

Okay. This is very helpful. Okay. And in the current concession, what -- if you have to break it up by percentages in terms of the quality of the ore, in what range are you following? Basically, how much is 45 to -- how much is 24 to 32, just ballpark? Yes.

24 to 32 is almost 90% of our production now.

Clear. Okay. And for the new concession area, when you said that there is excitement, do you feel like the number could be lower than 90, could it be 70, will it be 60? Yes.

Yes. That's what I asked you to wish us all the best. No, no, we expect [Foreign Language] 35 to 38. And so I -- the curve should be more -- the graph or curve should be more. It's unhealthy to be in 24, 30 or 32, it's not a good situation. And that's because we are -- I think the mines become older and older. Only the new mine coming now, we have to see what -- which is [ Rahab ]. [ Rahab ], it will be around 32 to 33. But the new mine, of course, I will start with high grade. If we'll make priority list, if there is no like close to, yes, and a difficult environmental area, I will start with the high grade discovery. That's where we keep our -- so we'll have higher return and which can finance the -- give, of course, better results and finance the exploration, also activity for the future. But since -- I can tell you this is increase in the grade can increase our profit by 30% to 40% easily.

Okay. So a couple of things to be excited about. One is, of course, the new sort of discovery [Foreign Language], which hopefully helps you reach your target of 300,000 tons per year, and also, the quality itself, right? So there's a couple of angles here for the company. And of course, then if you find copper or any other ores, then that brings another level of excitement to the company. So there are multiple ways to look at this business now, right, from where we stand.

Yes. If we discover copper, of course, we will sell it to other company, which we will keep percentage, minority, and then, we'll bring a partner who can be operating. Yes, we can cover all our commitment if we have really good mine.

Okay. All the best to you. Good luck.

[Foreign Language] We'll have to see. Well, it's exciting. We are excited also about the [indiscernible] area and every, say, 6 months we will have this conference. And [Foreign Language], I'll have more, let's say, and with numbers at least that we have this reserve or this number of mines with also potential.

So hopefully, within -- in the next 6 months, you should be able to come up with that announcement.

I hope I have 1 target or 2 targets, at least. I'm working hard on this. Any other question? [Foreign Language] Thank you to all of you who participated in this meeting. And [Foreign Language], we will be meeting with you in 6 months' time or before there is a very big discovery. [Foreign Language] Thank you very much.