Hindustan Zinc conducted a conference call on 27 April 2021 to discuss the financial performance for the fourth quarter ended March 2021 and FY21 and way forward. Mr Arun Mishra, CEO- Designate of Hindustan Zinc addressed the conference call.

Highlights of the Concall

• The Company has posted 85% surge in the net profit to Rs 2,841 crore on the back of 58% jump in income from operation at Rs 6,947 crore for the fourth quarter ended March 2021, on account of higher metal and silver volumes, recovery in metal prices and lower cost of production. The Company zinc sales volume increased 15% y-o-y and lead by 29% y-o-y in line with higher production and robust demand. Operating margin (OPM) inclined to 56% from 45% corresponding previous quarter, leading to 97% rise in operating profit (OP) to Rs 3,875 crore.

• The Company total mined metal production for the quarter (Q4FY21) was up 15% y-o-y to 288kt on account of higher ore production, partly offset by lower overall grade. For the full year, MIC production was up 6% y-o-y to record 972 kt primarily on account of higher ore production partially offset by slightly lower grades. This was despite losing 18 days equivalent of production in the fiscal year 2021 due to lockdown and other workforce related restrictions to combat Covid-19.

• Integrated metal production was 256kt for the quarter, up 16% y-o-y in line with higher mined metal availability and higher closing MIC inventory. Integrated zinc production was 195kt, up 14%. Integrated lead production was 61 kt, up 24% in line with higher mined metal availability. Integrated silver production was 203 MT, up 21% from a year ago in line with higher lead production, partly offset by lower grades at Sindesar Khurd (SK) mine. For the full year, metal production was up 7% to 930kt and silver production was up 16% to a record 706 MT in line with higher lead production and better silver grades at SK.

• Zinc cost of production before royalty (COP) during the quarter was $945 (Rs. 68,969) per MT, lower by 5% y-o-y, both in INR & USD terms, primarily due to higher volume, lower power costs, higher sulphuric acid credits and lower cement costs partly offset by higher met coke and diesel costs. For the full year, zinc COP excluding royalty was $954 (Rs. 70,681), lower by 9% y-o-y (5% lower in INR terms).  The full year COP decrease reflects higher production volume, lower met coke and power costs, lower cement costs partly offset by higher diesel costs and Covid-related donation.

• During Q4FY21, LME Zinc prices rose 29% to $2,750 per MT and Lead prices rose 9% to $2,018 per MT. Silver prices gained 55% to $26.30/oz.

• The Company total ore reserves increased from 114.7 million tonnes at the end of FY 2020 to 150.3 million MT at the end of FY 2021 while mineral resources totalled 297.6 million MT. Total R&R increased to 448 million MT as we replenished more than we consumed during the year.

• The Company has completed shaft Integration at Rampura Agucha during the Q4FY21. This improved the accessibility of shaft section, alternate emergency evacuation, ease in mine equipment deployment at lower levels, face charging with emulsion explosives, face drilling with long feed jumbo.

• The Company RKD circuit of Fumer plant also commissioned during the Q4FY21, and is now in operation. Delay was primarily on final commissioning of complete plant was on account of restrictions around travel outside China. Given the fast-evolving situation with Covid-19 infections in the country, the Company expects to commission complete Fumer plant by Q2FY22.

• The Company's expects both mined metal and finished metal production in FY2022 will be higher than last year and is expected to be 1025-1050 KT each. FY2022 saleable silver production is expected to be higher and projected at 720 MT.

• The Company's expects Zinc cost of production in FY2022 to remain below $1000 per MT. The project capex for the year is expected to be approximately US$100 million.