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

And that 30% of sales, right, or 30% of profit are you saying?

30% of the profits. We are giving to the MDO. They are the owner of the materials. I think one thing here, we have signed [indiscernible] new now is the relationship with investors, okay? So his name and his contact in the [indiscernible] Exchange. If any questions, you can tend of course, we reply. Any other persons? Any other questions?

I'm sorry, if there are no other questions, I can --

Please go ahead.

Okay. So my next question is on your sales. You mentioned that you expect 80,000 to 85,000 tons of materials to be sold this year. If I'm looking at your half year's numbers, you have already sold 58,000 during the half year. So for the next 6 months, isn't your total sales lower than I mean, way lower than what they were. If your number -- if I take 85,000 that's only 35,000 when it was 58,000 in the first half. So isn't this number a little bit low?

Yes, because we produce actually last year, we produced around 74,000 roughly, and this year is 75, 000. But the sales in the 2 years, last year was above 80,000 and this 80,000 also this year would be 80,000 to 85, 000. That means we are -- what happened in this year, we accelerate the sales. [indiscernible]. So we have to compensate it by more production. So in general, we are selling more than what we produce actually on the industry going down. I expect next year to rebuild this, and we have more of [indiscernible]. And hopefully, the sales will be following the production. This was -- we accelerated the sales [indiscernible] to liquidate inventory and to say half as a cash flow in cash. This is actually still an -- we can to from the beginning to sales like at 80,000. But normally, we sell the say, like 50-50, but because when the geopolitical situation started, we -- this important point to mention, we changed our shipping to bulk shipping, okay? So on the bulk shipping, it's not like you have consistent month by month. You have one big deal with you are [indiscernible] ship. [indiscernible]. That also we have deal with the new companies that on [indiscernible] company. They take off of the sales of that or the export mining or to outside. So in conjunction with them, we are working to supply to them. I don't [indiscernible] for users and the portion the bulk shipment and sent as big quantity.

Okay. Okay. Great. My next question is regarding your new [ 11A ] concession area, the mining that you were starting in this year. And then, obviously, as you mentioned that at the start, the production is not at full capacity. But by next year, how much production increase do you expect coming from here. So 75,000 tonnes is what your normal production is on average in a given year with this new contract, how much production do you expect in 2027?

Yes. That's surely a good question because let's take you to the history, the back. If you notice the performance, the company was going to be done and that's because we didn't have the new concession. There was a stop to issue a new permits and we bid to a new concession, which we [indiscernible] at 1.5 years from now. Normally, the exploration takes time. So we were busy last year and have to make accelerate our exploration. And until to we start to have the new resources coming -- it's too early to judge because normally in exploration take 3 years exploration. So [indiscernible] because of our reality that we don't have too much resources. Having said that, we expect growth. I don't want to comment too much, but in my mind to have like 20% growth every year from our production. So 75% plus, hopefully, we'll have 20% to go. And in addition to that, we are preparing ourselves to sell MDO as the main operator, okay? And I hope until our next session, I can give you a more clear, let's say, outlook about 2027 and beyond the program.

Yes. That will be very helpful because when we value a company, we obviously look at it on a going concern basis. Now Oman Chromite, the company is doing really well. The margins are great. The production is good. You guys are managing the inventory really well. And as you mentioned, you're very proactive, you saw that the geopolitics are not in your favor. And therefore, you sold a bulk portion of the current year's production plans ahead of it which portrays actually that the management is actively looking into the operations. And obviously, that's very commendable. I appreciate you guys. But the thing is that, obviously, you guys -- the business that Oman Chromite operates in is practically finite or limited, right? So you have a mine, the mine has limited resources. Until we know how many resources or how much life the mine actually has got, it will be very hard for us to value a company, right? So in that sense, would you be able to give us some clarity on how many more years do you think that you will be able to sustain at least this 75,000 tonnes production level?

Yes, I think with the growth with the new area, I have no, let's say, doubt we have at least for 5 years ahead, okay? But I don't have it as a fact as [indiscernible] formations now. What we have is the early indication of that, number of mines we can see in the surface. We have to do a lot of work to do with drilling. We have to follow up proper [indiscernible] standards, we are losing the [indiscernible] jog, which can tell us how much reserve we have. But however, [indiscernible] estimation based on our history, what we can see in the new area should take us for the next 5 years, in a month.

Great. And then after the next 5 years, you guys obviously will have opportunities for other exploration, right, in the area as well and that should provide with exploration, the production should continue on if, obviously, there are reserves --

Exploration in the mining common. We have to always do what is like a sustaining investment for us is the exploration. Yes, you are right, we have to continue. We're also exploring underground mining now, still early stage of engineering, but that means if that works -- normally, underground [indiscernible] deposits. But what we have in here much small deposits. So -- but we try to find solution from a company or from companies work in the same -- other countries work in the same business situations. If that work, we could unlock and let's say, 2-year resources, which is underground can be out of locked. Of course, have to be economical, have to be visible but the potential is there.

Great. Okay. And my final question is regarding your dividends, obviously. So as you mentioned, you guys have planned for exploration and all of that. And with the accelerated selling, I guess that you guys have inventory that is free now, and therefore, free cash flows would be higher. So should we expect a similar payout ratio to what it was last year because last year, if I'm not wrong, you had announced 100 [ base ] cash and then a 10% bonus. So is that a set limit that it's either going to be 100, that's a cap or it can increase with the increase in profitability because profitability should -- is expected to go up this year, right?

We know many [indiscernible] as positive, we need to keep a considerable amount of the profits of the revenue of [indiscernible] cash generated from operations for [indiscernible] sustaining. We normally try to balance definitely between 10% to 20%. And the rest we'll keep it as let's say, no selling investments for [indiscernible]. I cannot comment we have to see this year performance. So the end of the year performance until we have the -- as normal, we have the board discussion. But I -- my expectation is to have similar like what we did last year. This thing that I have to say also is a good point to mention. We -- because when we are going to distribute the dividend, we have the [indiscernible] the stock of the sales and handing that we fund a domestic solutions [indiscernible]. But at that down, we decided to split the dividend to ensure that we have safety cash. We are going to say, muted September dividend of last year as we many the dividend as announced. Okay. And listen there, we have to have, say, contingency political situation. We always as a company should be strong. We have sure to have [ multi ] options, and we're selling all that options now. We believe it does -- would be able to give dividend to the shareholders at the same time to go right.

Just a small follow-up on the dividend. You said that it's expected to be similar to what it was the last year. So last year, you obviously split the dividends between cash and bonus, right? So the biosimilar, you mean that the split would also be there? Or is it only going to be cash? Because we investors and analysts, we always like the cash dividend more than the bonus. So is it going to be a split like last year or just cash on the similar payout ratio basis?

Well, this is -- the Board decision normally operate things. Our management can [indiscernible] some things, okay. And I cannot commit now. My recommendation it's the same work situation for me and other things to have the same, [indiscernible] plus 10, okay? But if things improve, I would like even to up 20% cash. This one to the situation now to the I see the cash at the global situation. So there is no other comments. Then I would like to thank all of you for the interest. Always I'm -- because I'm a [indiscernible] so I encourage the analysts to keep it [indiscernible] will change the process. As I mentioned, the company went to billions decline, and now we are turning the care. [indiscernible] and also [indiscernible] have good results. Thank you very much. Thanks.