Vedanta reports stable production in first quarter

(ShareCast News) - Vedanta Resources posted its production numbers for the first quarter to 30 June on Monday, with production stable and the contribution from Mangala Enhanced Oil Recovery - the world's largest polymer EOR program - increasing to 42 kboepd.The FTSE 250 firm reported Rajasthan water flood opex at $4.4/boe, and a blended cost at $6.4/boe.In Zinc India, silver production was up 20% year-on-year, although there was a lower mined metal production as per plan, and H2 production expected to be substantially higher than H1.Vedanta said it maintained first decile cost of production, and in Copper Zambia, Konkola underground production was up 2% year-on-year due to improved equipment availability with the overall cost of production 8% lower.Vedanta's aluminium division saw an exit production run-rate of 1.1mtpa.It reported the ramp-up of the first line of the 1.25mt Jharsuguda-II smelter was completed, with the second line commenced in July and the 325 kt BALCO-II smelter nearing completion.The firm's iron ore production at Goa ramped up, to see 40% of allocated annual capacity produced at Goa in Q1.Vedanta's power unit saw the two units at TSPL operated at 72% availability, with the third unit to be capitalized in Q2, and at BALCO the second 300 MW IPP unit was capitalised during the period.Vedanta's gross debt was reduced by around $0.3bn during the quarter, with FY17 bond maturities paid.The company said it repaid $680m of 6.75% bonds due in June 2016 and $515m of 5.5% convertible bonds due in July.It also announced revised and final terms for the Vedanta Ltd and Cairn India merger on22 July, with the transaction expected to complete in the current financial year."We have made good progress on the ramp up of capacities at our Aluminium, Power and Iron Ore businesses during the quarter," said Vedanta chief executive Tom Albanese."These would be significant contributors to earnings as the year progresses."Albanese said Zinc-India was impacted by lower mined metal production as per the mine plan, and the second half is expected to be substantially higher with the company also making good progress towards optimising costs at Copper-Zambia."We are focused on generating strong free cash flow and de-levering the balance sheet, in line with our strategic priorities."Another of these priorities, the simplification of the group structure, is also on track following the recent announcement of the revised and final terms for the Vedanta Ltd-Cairn India merger," Albanese added.