TIDMVED
RNS Number : 7841E
Vedanta Resources PLC
20 July 2016
Vedanta Resources plc
16 Berkeley Street
London W1J 8DZ
Tel: +44 (0) 20 7499 5900
Fax: +44 (0) 20 7491 8440
www.vedantaresources.com
20 July 2016
Vedanta Resources plc
Hindustan Zinc announces Q1 FY2017 Results
Vedanta Resources plc's subsidiary Hindustan Zinc Limited today
announced results for the first quarter ended 30 June 2016.
Hindustan Zinc Limited
Results for the First Quarter Ended June 30, 2016
"Silver production higher by 20%;
Lower production as per plan with second half to be
substantially stronger"
Operational Highlights
-- Mined metal production of 127kt as per mine plan, second half
to be substantially stronger
-- Integrated zinc and lead production at 101kt and 25kt; down
46% and 11% respectively compared to Q1 FY 2016, in-line with mined
metal
-- Integrated silver production at 89 MT; up 20% compared to Q1
FY 2016
-- Rampura Agucha and Sindesar Khurd mines amongst the top ten
best mines in the country that were awarded with Ministry of Mines'
Five Star rating
Udaipur, July 20, 2016: Hindustan Zinc Limited today announced
its results for the first quarter ended June 30, 2016.
Mr. Agnivesh Agarwal, Chairman -
"In line with strong zinc fundamentals and our expectations,
zinc prices surged 14% in Q1 FY 2017 as compared to the previous
quarter, making it the best performing base metal. We also
witnessed a rally in silver prices, which along with increasing
volumes is accentuating its contribution in our profits, having
reached almost 20% at present. Our transition to underground mining
is progressing well with robust mine development, especially during
last few months. Production from our underground mines has also
ramped up significantly."
Financial Summary
(In Rs. Crore, except as stated)
Particulars Q1 Q4
=========================================
2017 2016 Change 2016
========================================= ======= ======= ======= =======
Net Sales/Income from Operations
Zinc 1,726 2,787 -38% 2,013
Lead 301 411 -27% 538
Silver 332 259 28% 403
Others 142 139 2% 116
Total 2,501 3,596 -30% 3,070
========================================= ======= ======= ======= =======
EBITDA 1,130 1,679 -33% 1,296
Profit After Taxes 1,037 1,940 -47% 2,146
Earnings per Share (Rs.) 2.45 4.59 -47% 5.08
========================================= ======= ======= ======= =======
Mined Metal Production ('000 MT) 127 232 -45% 188
========================================= ======= ======= ======= =======
Refined Metal Production ('000 MT)
Integrated Refined Metal
Zinc 101 187 -46% 154
Saleable Lead(1) 25 27 -11% 38
Zinc & Lead 126 214 -41% 193
Saleable Silver(2,3) (in MT) 89 74 20% 122
Total Refined Metal
Zinc 102 187 -45% 154
Saleable Lead(1) 25 31 -20% 38
Zinc & Lead 127 218 -42% 193
Saleable Silver(2,3) (in MT) 89 75 18% 122
Wind Power (in million units) 148 127 17% 62
========================================= ======= ======= ======= =======
Zinc CoP without Royalty (Rs. / MT) (4) 62,138 50,955 22% 58,028
Zinc CoP without Royalty ( $ / MT) (4) 928 802 16% 860
========================================= ======= ======= ======= =======
Zinc LME ($ / MT) 1,918 2,190 -12% 1,679
Lead LME ($ / MT) 1,719 1,942 -11% 1,744
Silver LBMA ($ / oz.) 16.8 16.4 2% 14.9
USD-INR (average) 66.9 63.5 5% 67.5
========================================= ======= ======= ======= =======
(1) Excluding captive consumption of 1,084 MT in Q1 FY2017 as
compared with 2,184 MT in Q1 FY 2016 and 909 MT in Q4 FY 2016
(2) Excluding captive consumption of 5.5 MT in Q1 FY2017 as
compared with 11.3 MT in Q1 FY 2016 and 4.7 MT in Q4 FY 2016
(3) Silver occurs in Lead & Zinc ore and is recovered in the
smelting and silver-refining processes
(4) The COP numbers are after adjusting for deferred mining
expenses under Ind-AS. Without this adjustment, Zinc CoP per MT
would have been Rs. 76,448 ($1,142) as compared with Rs. 50,955
($802) in Q1 FY 2016 and Rs. 58,044 ($860) in Q4 FY 2016
Note:
1) Historical numbers have been revised as per Ind-AS
reporting
2) Numbers may not add up due to rounding off; historical
numbers may have changed due to regrouping
Operational Performance
Ore production from Sindesar Khurd decline reached the
originally conceived capacity of 3.75 million MT per annum rate and
production from Rampura Agucha underground mine crossed one million
MT per annum production rate during the quarter. Mined metal
production was in-line with mine plan and guidance with lower
production from Rampura Agucha open cast mine as more waste was
excavated than ore in accordance with the waste-ore sequence. Mined
metal production during the quarter was 127kt, 45% lower y-o-y and
33% lower than previous quarter. The transition to underground
mines is progressing well and mined metal production for the full
year will be higher than previous year. The production plan for the
year outlines second half volumes to be substantially higher than
first half; in the first half, Q2 will be much stronger.
In accordance with mined metal availability and accretion to
inventory, refined zinc production during the quarter decreased by
46% y-o-y and 34% from previous quarter. Integrated lead production
during the quarter was lower by 11% y-o-y and 36% sequentially for
the same reason.
Integrated silver metal production was up by 20% y-o-y on
account of higher volumes from Sindesar Khurd mine, though lower by
27% compared to previous quarter due to accretion to inventory and
lower volumes from Rampura Agucha mine. Silver recoveries were
better during the quarter driven by higher recoveries from Sindesar
Khurd mine and enhanced smelter efficiency.
Five Star Rating by Ministry of Mines - Rampura Agucha and
Sindesar Khird mines were awarded the prestigious Five Star rating
recently initiated by Ministry of Mines for the efforts and
initiatives taken for implementation of the Sustainable Development
Framework and for exemplary compliances & best practices. The 1
to 5 scale evaluation is based on performance in the area of
scientific and efficient mining, addressing social impacts of our
resettlement and rehabilitation requirements, local community
engagements and welfare programmes, steps taken for progressive and
final mine closure and over all reporting and adoption of
international standards. This five star rating was bestowed to only
ten best mines in the country, including two of Hindustan Zinc.
Changes in Accounting
The Company has adopted Indian Accounting Standards (Ind-AS)
reporting from the current financial year. Correspondingly,
comparative periods of previous year have also been re-cast where
necessary. Ind-AS also incorporates the IFRS methodology of
temporarily capitalising excess overburden in periods of high
waste-to-ore ratio in open cast mining to more closely relate the
costs to actual production volumes; accordingly, Rs. 189 Crore was
capitalised which will be reversed in H2 FY 2017 where waste
excavation is expected to be low.
Additionally, cumulative mark-to-market gain on corporate bonds
of Rs. 160 Crore was capitalised including Rs. 66 Crore for the
current quarter. Change in method of depreciation on Plant &
Machinery increased this head by Rs. 171 Crore.
The net impact of these accounting changes has resulted in a
reduction in Profit before tax by Rs. 48 Crore for the quarter.
Financial Performance
Revenues during the quarter were Rs. 2,501 Crore, which is 30%
lower from a year ago. The decrease was on account of lower
volumes, primarily zinc, and lower LME partly offset by higher
rupee depreciation and higher silver price. On a sequential basis,
revenue decreased by 19% due to lower volumes, partly offset by
higher zinc & silver prices.
The zinc metal cost of production per MT before royalty (COP)
during the quarter increased Rs. 62,138 ($928) in line with
production plan of lower volumes from Rampura Agucha open cast mine
in the current quarter and thus lower average grades. This was
partly offset by lower coal & commodity prices, cost
optimization projects in procurement & commercial and higher
by-product credits. This incorporates the Ind-AS adjustment
outlined under 'Changes in Accounting' section. The COP in dollar
terms will be better in FY 2017 compared to previous year.
The above revenue and cost of production resulted in a 33% y-o-y
decline in EBITDA during the quarter to Rs. 1,130 Crore and 13%
decline from previous quarter. Silver EBITDA during the quarter was
Rs. 293 Crore, up 32% from Rs. 222 Crore a year ago.
The smaller investment corpus on account of dividend pay-out in
the beginning of the quarter led to lower investment income, which
along with higher tax rate and higher depreciation resulted in net
profit of Rs. 1,037 Crore, lower by 47% y-o-y and 52% from previous
quarter.
Expansion Projects
The Company continued with high pace of mine development,
achieving 14,011 metres of total mine development during the
quarter, up 18% from a year ago.
During the quarter, mine development at Rampura Agucha
underground mine crossed the 4,000 metre benchmark for second
quarter in a row. Further, all three surface ventilation fans of
250 kW were commissioned for north decline. Main shaft sinking
crossed 900 meters against the final depth of 950 meters and winder
erection work commenced during the quarter.
Sindesar Khurd main shaft sinking work has already been
completed to the ultimate depth of 1,052 metres and off shaft
development work continues to be ahead of schedule even as work on
up-ramp commenced during the quarter. Progress of new 1.5 mtpa
capacity mill and power up-gradation projects are in full pace and
in line with commissioning by end of the financial year.
Zawar mill debottlenecking along with associated power and
infrastructure projects are progressing well while Kayad mine
project is near completion having achieved its eventual capacity of
1 million MT per annum.
Liquidity and investment
The Company's net cash and cash equivalents are at Rs. 23,349
Crore as at June 30, 2016, after outflow of Rs. 12,205 Crore of
Special Golden Jubilee dividend including dividend distribution tax
in April 2016.
Earnings Call on Thursday, July 21, 2016 at 3:00 pm (IST)
The Company will hold an earnings conference call on Thursday,
July 21, 2016 at 3:00 pm IST, where senior management will discuss
the Company's results and performance. The dial in numbers for the
call is given below:
Primary: +91 22 3960 0762 Secondary: +91 22 6746 5962
For further information, please contact:
Communications Finsbury
Roma Balwani Rebecca Fitchett
President - Group Communications, Tel: +44 20 7251 3801
Sustainability
and CSR
Tel: +91 22 6646 1000
gc@vedanta.co.in
Investors
Ashwin Bajaj Tel: +44 20 7659 4732
Director - Investor Relations Tel: +91 22 6646 1531
ir@vedanta.co.in
Radhika Arora
Associate General Manager
- Investor Relations
Ravindra Bhandari
Manager - Investor Relations
About Vedanta Resources
Vedanta Resources plc ("Vedanta") is a London listed diversified
global natural resources company. The group produces aluminium,
copper, zinc, lead, silver, iron ore, oil & gas and commercial
energy. Vedanta has operations in India, Zambia, Namibia, South
Africa, Ireland and Australia. With an empowered talent pool
globally, Vedanta places strong emphasis on partnering with all its
stakeholders based on the core values of trust, sustainability,
growth, entrepreneurship, integrity, respect and care. For more
information, please visit www.vedantaresources.com.
Disclaimer
This press release contains "forward-looking statements" - that
is, statements related to future, not past, events. In this
context, forward-looking statements often address our expected
future business and financial performance, and often contain words
such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "should" or "will." Forward-looking statements by their
nature address matters that are, to different degrees, uncertain.
For us, uncertainties arise from the behaviour of financial and
metals markets including the London Metal Exchange, fluctuations in
interest and/or exchange rates and metal prices; from future
integration of acquired businesses; and from numerous other matters
of national, regional and global scale, including those of a
political, economic, business, competitive or regulatory nature.
These uncertainties may cause our actual future results to be
materially different that those expressed in our forward-looking
statements. We do not undertake to update our forward-looking
statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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