Stock prices surged by 3% following the acquisition of exploration and mining rights for Block 22B in Oman
Stock prices surged: The shares of the exploration services provider surged by up to 3 percent following the company’s Joint Venture Company being awarded exploration and mining rights.
South West Pinnacle Exploration Ltd, with a market capitalization of Rs 385.47 crore, saw its shares trading at Rs 138.15 per share, marking a 3.29 percent increase from the previous closing price of Rs 133.75 per share.
The rise in share value can be attributed to South West Pinnacle Exploration Ltd’s joint venture, M/s Al Hadeetha Mining LLC (AHML), securing exploration and mining rights for block 22B in IZKI Town, Oman. This 1452 km² block is rich in minerals such as copper, gold, silver, chromite, and basalt.
The Concession Agreement outlines a two-phase approach, with Phase 1 focusing on exploration over three years, extendable for two additional three-year periods subject to Ministry of Energy & Minerals (MEM) approval. Phase 2 involves exploitation post-exploration completion and commerciality approval by MEM, Oman.
In terms of financial performance, the company’s revenue increased by 17 percent from Rs 23.27 crore in Q2FY24 to Rs 27.35 crore in Q2FY25. However, net profit decreased by 68 percent from Rs 0.97 crore to Rs 0.31 crore during the same period.
South West Pinnacle Exploration Ltd offers a wide range of services, including aquifer mapping, CBM exploration and production, mining, coal and mineral drilling, geological and geophysical services, 2D/3D seismic exploration, and workover rig services to support resource extraction and energy production.
The company’s clientele includes prominent names such as Oil India, CMPDI, Central Ground Water Board, Directorate of Geology, Dept. of Mines, SAIL, NMDC, Odisha Lift Irrigation Corporation, Odisha Mineral Corporation, Mineral Exploration Corporation, Geological Survey
Capital Expenditure Plan
The company has been granted a coal block in Jharkhand and is aiming to commence production by FY26, with a capital expenditure (capex) of ₹200 crore allocated for approvals, equipment, land, and infrastructure. The capex for FY24 is estimated to be between ₹20-25 crore, which will be financed through debt, FPO, QIP, or internal accruals.
International Project
The company currently operates two rigs in Oman for exploration and drilling activities. It has also established a joint venture, Alara Resources LLC, in collaboration with Alara Oman Operations, Southwest Pinnacle Exploration, and Al Tasnim. This JV has successfully secured an 11-year, $125 million copper mining contract, which has been outsourced to Al Tasnim.
Financial Analysis
The company’s key financial ratios indicate a decline in the return on equity from 7.88 percent in FY22-23 to 6.80 percent in FY23-24, and a decrease in the return on capital employed from 12.80 percent to 11.59 percent. The net profit margin (NPM) for the fiscal year 23-24 stands at 5.34 percent.
Shareholding Structure
In the most recent shareholding pattern, the Promoters hold a 73.61 percent stake in the company, while Retail shareholders own 26.02 percent, and Foreign Institutional Investors hold a 0.36 percent stake.
Company Overview
South West Pinnacle Exploration Limited is an India-based company specializing in exploration services. The company offers comprehensive drilling, exploration, and related services to coal, ferrous, non-ferrous, atomic, and base metal mining industries, as well as water and unconventional energy sectors.
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