Hindustan Zinc Limited - Operations Visit & Management Meet Note - A C Choksi Institutional Research

We recently visited the mining and smelting operations of Hindustan Zinc Limited and also met key management personnel of the company.

We visitedRampura Agucha Mine&Mill, Sindesar Khurd Mine & Mill, Dariba Smelter and Chanderiya Smelter during our 2 day visit to Udaipur, Rajasthan.

We maintain our BUY Rating on the firm with target of 144.

Key takeaways fromour interaction:

- Open cast mining in Rampura Agucha is planned upto 372m, currently at 220 m, beyond that it will go underground, capacity to remain at 6.15mt. OC strip ratio at its peak (1:13/1:14). Planning a vertical shaft at Agucha, currently using a spiral ramp.UGCOPto remain at presentOCCOPlevels.

- Geologists have found in Andhra Pradesh, patches of rock having similar characteristics to that of Udaipur and some mines inAustralia.

- Exploration budget at $10mn each year, focus on addition to R&R.

- Lead volumes to ramp up to 110-115 kt integrated and 150kt total. Lead ramp up to 185 kt in couple of years.

- SK mine silver ppm is targetted at 130 ppm, overall mine life average at 180 ppm. Silver grade to improve asSKgoes deep underground.

- Silver volumes to ramp up to 350 tonnes from integrated and 450 in total, balance through custom smelter.

- Capex at 15,000mn - 18,000 mn, including sustaining capex of 3,500 mn.

- No communication from the Government on 29.5% residual stake offer from the promoters.

- Kayar Underground mine is under progress; production is expected to start from FY14.

- Company expects final SC verdict on renewal of mining lease for Zawar in couple of quarters time. All other approvals are in place.

Source : Equity Bulls

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