Vedanta Resources : Production and Financial Results Release for the First Quarter ended 30 June 2018

Vedanta Resources plc

16 Berkeley Street

London W1J 8DZ

Tel: [phone] Fax: [phone]www.vedantaresources.com

6 August 2018

Vedanta Resources Plc

Production and Financial Results Release for the First Quarter ended 30 June 2018

Highlights

Operations

Oil & Gas:

•  Average gross production of 195 kboepd, up 4% y-o-y

•  Execution of $2.3bn (gross) growth projects on track

Zinc India:

•  Mined metal production at 212kt; underground production up 7% q-o-q

Zinc International:

•  Gamsberg commercial production to commence in September 2018

Aluminium:

•  Record quarterly production at 482kt, up 37% y-o-y

•  Commencement of Odisha bauxite delivery

Copper Zambia

•  Mined metal production at 23kt, up 15% y-o-y

•  Integrated production at 25kt, up 19% y-o-y

Iron ore

•  Karnataka mining allocation increased to 4.5mt

•  Goa operations remain closed due to state ban; continue to engage with Government for resumption of mining operations

Steel

•  Acquisition of 90% stake in Electrosteel Steels Limited (ESL) completed, new Board appointed

Power:

•  1,980 MW TSPL plant achieved availability of 91%

Financial

•  EBITDA of US$ 983 million, up 26% y-o-y, driven by higher volumes and commodity prices, partially offset by input commodity inflation

•  Robust EBITDA margin of 33%1

1. Excluding custom smelting at Copper and Zinc

Corporate

•  On 31 July 2018, the Independent Committee of the board of Vedanta Resources

  Plc and Volcan announced the terms of a recommended cash offer to be made by Volcan Investments for the remaining issued and to be issued share capital of

  Vedanta Resources not currently owned or controlled by Volcan Investments. Under the terms of the Offer, Vedanta Shareholders will receive US$10.89 per share in cash for each Vedanta Share in addition to the US$0.41 of dividend in respect of the twelve months ended 31 March 2018

Kuldip Kaura, Chief Executive Officer, Vedanta Resources plc, said: "We delivered strong EBITDA and steady margins this quarter driven by record volumes in aluminium, higher production in Oil & Gas, as well as supportive commodity prices. We are excited about the growth across our portfolio in Zinc, Aluminium and Oil & Gas. The projects are advancing well to meet key milestones and we are confident of a progressive volume uplift in the coming quarters"

Oil & Gas

Particulars	Q1			Q4		Full Year
	FY2019	FY2018	% change YoY	FY2018	% change QoQ	FY2018
OIL AND GAS
Average Daily Total Gross Operated Production (boepd) 1	204,710	196,656	4%	200,032	2%	195,150
Average Daily Gross Operated Production (boepd)	194,986	187,203	4%	190,172	3%	185,587
Rajasthan	164,040	159,351	3%	162,357	1%	157,983
Ravva	14,217	18,361	(23)%	16,271	(13)%	17,195
Cambay	16,729	9,491	76%	11,543	45%	10,408
Average Daily Working Interest Production (boepd)	124,807	119,473	4%	121,929	2%	118,620
Rajasthan	114,828	111,546	3%	113,650	1%	110,588
Ravva	3,199	4,131	(23)%	3,661	(13)%	3,869
Cambay	6,692	3,796	76%	4,617	45%	4,163
KG-ONN	89	-	-	-	-	-
Total Oil and Gas (million boe)
Oil & Gas- Gross	17.7	17.0	4%	17.1	4%	67.7
Oil & Gas-Working Interest	11.4	10.9	4%	11.0	4%	43.3
Brent (US$/bbl)	74.4	49.6	50%	66.8	11%	57.5
Average Price Realisation (US$/boe)	66.5	44.7	49%	58.8	13%	50.5
Oil - US$/bbl	67.2	44.9	50%	59.0	14%	50.7
Gas - US$/mscf	8.4	6.7	25%	8.7	(4)%	7.4
Revenue(US$ million)	480	353	36%	428	12%	1,480
EBITDA(US$ million)	279	218	28%	239	17%	849

Average gross operated production during Q1 FY2019 across our assets was 194,986 barrels of oil equivalent per day (boepd), up 4% y-o-y and 3% q-o-q. The increase in volume was primarily due to the new wells brought online from key projects including Mangala Infill, Bhagyam EOR Polymer and Cambay Infill along with production optimization activities carried out across the assets. All our assets recorded an uptime of over 99%.

Gross production from the Rajasthan block averaged 164,040 boepd for the quarter, 3% higher y-o-y and 1% higher q-o-q. The Mangala infill campaign that commenced in Q2 FY2018, was completed during the quarter and all 15 wells have been brought online. Gross production from Development Area-1 (DA-1), Development Area-2 (DA-2) and

Development Area-3 (DA-3) averaged 145,901 boepd, 17,665 boepd and 474 boepd respectively.

Gas production from RDG averaged 46.6 million standard cubic feet per day (mmscfd) in Q1 FY2019, with gas sales, post captive consumption, at 29.9 mmscfd.

The Ravva block produced at an average rate of 14,217 boepd for the quarter, down 23% y-o-y and 13% q-o-q primarily due to planned plant shut-down during the quarter.

The Cambay block reported an average production rate of 16,729 boepd for the quarter, up 76% y-o-y and 45% q-o-q primarily on account of the gains from the infill drilling campaign completed in May 2018 and well intervention activities carried out during the quarter.

Key upcoming project milestones to achieve 220-250 kboepd target:

• • MBA Infill, EOR Polymer & ASP Project on track: 16 wells online by Q2, 50+ wells online by Q4 FY2019

• • Gas production to increase substantially during the year:

  • • GIGL pipeline and facility debottlenecking will lead to 50% increase in production by Q2 FY2019

  • • Early gas production facility will double the gas production by Q4 FY2019

• • Progressively increasing the MPT liquid handling capacity & debottlenecking facility

• • Tight Oil (ABH): First oil on track for Q3 FY2019, 10+ wells online by Q4 FY2019

In Q1 FY2019, revenue increased by 36% y-o-y and 12% q-o-q, primarily on account of higher realisations due to higher crude oil prices and increased volumes. Overall oil price realisation increased by 14% q-o-q to US$ 67.2/bbl.

EBITDA was up 28% y-o-y and 17% q-o-q mainly on account of higher crude oil prices and increased volumes.

As guided previously, we expect gross volumes in the range of 220-250 kboepd as more wells are added through the year with the execution of growth projects.

Zinc India

Particulars (in'000 tonnes, or as stated)	Q1			Q4		Full Year
	FY2019	FY2018	% change YoY	FY2018	% change QoQ	FY2018
ZINC INDIA
Mined metal content	212	233	(9)%	255	(17)%	947
Refined Zinc - Integrated	172	194	(11)%	206	(17)%	791
Refined Lead - Integrated	42	35	20%	50	(16)%	168
Silver- Integrated (in mn ounces)	4.4	3.7	20%	5.5	(19)%	17.9
Average LME - Zinc ($/t)	3,112	2,596	20%	3,421	(9)%	3,057
Average LME - Lead ($/t)	2,388	2,161	11%	2,523	(5)%	2,379
Average Silver Prices ($/oz)	16.5	17.2	(4)%	16.8	(1)%	16.9
Revenue (US$ million)	779	695	12%	961	(19)%	3,369
EBITDA (US$ million)	409	367	11%	567	(28)%	1,903

Mined Metal production was at 212,000 tonnes, 9% lower y-o-y and down 17% q-o-q. The decrease was driven primarily on account of closure of open-cast operation as Zinc India transitioned to full underground mining this quarter and mined metal production from underground mines was up by 13% y-o-y and 7% q-o-q.

Integrated zinc production was down 11% y-o-y and 17% q-o-q to 172kt on account of lower availability of mined metal. Integrated lead production was at 42kt, up 20% y-o-y in line with the availability of lead mined metal and down 16% q-o-q due to maintenance related shutdowns. Integrated silver production was 4.4 moz, up 20% y-o-y due to higher SKM production and better silver grades. Sequentially, silver production declined by 19% on account of lower lead production.

Projects Update:

•  At the Rampura Agucha underground mine, the development of ventilation system was completed in July 2019. Off shaft development is on track and production from main shaft is expected to start from Q3 FY2019.

•  Sindesar Khurd has received Environment Clearance by the Ministry of Environment, Forest & Climate Change to increase ore production from 4.5 to 6.0 mtpa. During the quarter, Sindesar Khurd's main shaft skip winder was cold commissioned. Production from the shaft is expected to start in Q3 FY2019. Civil work and equipment erection of the new 1.5 mtpa mill is progressing well and is expected to commission by Q3 FY2019.

•  Civil construction of the new 2 mtpa mill at Zawar is on track and expected to be commissioned by Q4 FY2019.

•  The Fumer project is 75% complete and equipment erection is expected this quarter with commissioning by Q3 FY2019.

Revenue during the quarter was US$ 779 million, up 12% y-o-y mainly due to higher zinc LME and higher lead & silver volumes, partially offset by lower zinc production. Revenue was down 19% q-o-q due to lower production and lower LME.

Zinc cost of production (CoP) before royalties during the quarter was at US$ 1,043 per tonne, 7% higher y-o-y and 13% up q-o-q primarily on account of lower overall volume due to open-cast closure, input commodity inflation (metcoke, coal) and the impact of long-term wage settlement.

EBITDA was US$ 409 million for Q1 FY2019, up 11% y-o-y and down 28% q-o-q.

As previously guided, mined metal and refined zinc-lead production in FY2019 is expected to increase progressively during the year with the continued ramp-up of underground mines and will be slightly higher than that of last year despite closure of open-cast operations. Silver production is expected to be in the range of 21 to 23 moz (650 to 700 mt) and CoP before royalty is projected to be in the range of US$ 950 to 975 per mt in FY2019

We are on track for ramp up of mined metal production to 1.2 mt by FY2020. Planning for the next phase of expansion from 1.2 to 1.35 mtpa capacity announced in the last results, is also underway.