First of all, congratulations on the wonderful results. Sir, how the premiums are working, especially for lead and silver, because they have been higher than what historically has been seen?
So as far as the premiums are concerned, this is a part of our net sales realization, and we separately don't report the premium over whatever we earn through the LME. But what we can say, the premiums are in line with the market, which we are getting in India. In case of lead, in a domestic primary lead market share, our market share is 90% plus. And silver, as you say, it is quite volatile in the Indian market as well. We benchmark ourselves with the CRISIL, and we have been doing in line with whatever CRISIL has been publishing for the premium or discount for the month.
Would it be possible for you to give the targeted silver volumes for FY '27? And how will the silver volumes look in Q4?
Traditionally, we do our best in Q4. So I'm hoping that the same trend will continue because, one, of course, all shutdowns are cleared, and we'll have more availability of equipment running, as well as the weather and the ambient conditions are favorable for both mines as well as smelter. So, you can expect better than what we have reported in Q3 kind of a number, if possible. Second is, with the same, can we throw some light on next year? I think let us carry our business plan sessions first. That's what we are undergoing now. And I think by April or May Board meeting, we should be able to give you the guidance for the next year.
While the zinc cost of production has been the lowest in the last five quarters, but if I look at overall cost of production, that's actually inched up. I think in the opening comment, Mr. Misra alluded to some mine development costs being higher. So say, on a year-on-year basis, what would that number be, incremental mine development cost?
No, I think he was saying it's getting offset with the mine development rate, because there has been certain positives and there is certain -- as the mines go deeper, if you see, that will be always such kind of scenario. So, mine development Y-o-Y last year was 14 kilometers, this year, 15 kilometers. So that impact will come. Then the inflation of the mine development rate. So, the major cost reduction is happening in the power cost due to three things. This year, we had -- this quarter, we had 58% domestic coal utilization; second, our imported coal prices were lower; and third, RE power share.
Okay. And sir, secondly, in terms of hedging for next year, as our policy of 10% to 20% of the volume we normally hedge. And as far as, even if we assume 720 kt for next year, we have hedged around 8% of the silver volume now. And now silver price is $93 per ounce. So do you think that we are going to hedge more in next 1 or 2 months?
Sandeep here. So, it will remain dynamic. So, we're also watching the market. We also have the in-house experts, who will keep advising us. So, depending upon that, we'll be hedging. And it's not like when we hedge, we hedge on the day 1 complete quantity. It's like a staggered manner. So whatever quantity I have said, this is what mostly for April to October. So remaining 5 months, we'll see when we move near to February and March.
So, what's your view, sir, in terms of silver as well as zinc price? Do you think that these prices may sustain for a while also or may increase? Or do you think that it's the right price to hedge a little more?
So, as I say that hedging is not for the purpose of this playing with the prices, it is more about having the locking-in margin when it is more than business plan or consensus prices. So especially on the silver, I unfortunately don't have any price cues. Given the volatility which is going to the market, so many geopolitical tensions, one statement makes the prices down or prices up, I think it's very, very difficult to comment upon the silver prices. Zinc, we believe that given the -- maybe a bit of the surplus maybe in the calendar year '26, but still, I think the prices should be in the range which is going on, $3,000 to $3,200.
Could you give us the number of hedge quantities for Q3 FY '26? And are we trying to hedge further quantities for FY '27 at higher prices?
So hedge quantity for the Q3 FY '26 was 47 kt for zinc, which got squared off, and 55 tons was the silver, which got squared off within the quarter 3. For FY '27, we are hedged by 66 kt of the zinc and silver by 56 tons at $58 per troy ounce and zinc at $3,170 per ton. And FY '26, we are hedged at silver for 68 tons at the price of $39 per troy ounce. And for the quarter 4, we are hedged for zinc 53 kt at $2,900 per ton.
Congratulations on the good performance. First one was on the COP. You gave some reasons for the low cost of production. So how much of this is sustainable? And going forward in Q4, can we expect a similar level of COP?
So Pallav, Sandeep here. And this COP, if you see, the last quarter also we said it should be a sustained basis. As we said earlier, the sustained COP should be between $950 to $1,000. That is a sustained level which we can do. On a quarter basis, it may be dependent bearing upon the volume, grade, or some of the byproduct realization, or any other items. But on a year basis, we should be assuming $950 to $1,000 on a sustained basis. Of course, this year, we expect to perform well below the guided range.
Also, sir, now that we've probably reached a net cash position in Q3, so can we expect that March also should be a strong quarter? And if any maturity of debt is there in the fourth quarter? And what would be the maintenance capex?
So Pallav, the maturity of debt is not very large, the INR1,300 crores in Q4. So that's not a big issue. And I'm sure with the current -- as Misraji had said, volume normally remains -- we delivered quarter 4 as the best quarter within the year, and also the bond prices and the structural cost reduction, we should be in this direction. Only one thing, the growth capex, which is $180 million till December, we have spent. So, we may be having around $300 million total year growth capex. Maintenance capex is routine, which will be around $90 million to $100 million for Q4, and the whole year should be $400 million.
So, can you please tell us if you're maintaining the FY '26 guidance for mined metals and for silver? So, are we expecting any rise in the silver volumes in 4Q or 680 tons is the guidance for FY '26?
So, I think we revised the guidance in the October, 680 plus/minus 10 tons. We should be closer to the silver guidance. One thing which I would like to also highlight that during the quarter, the company also sold a concentrate of the lead concentrate given that there was a tightness in the market globally. And at the same time, the silver prices were quite higher. So, it was a good strategy from getting the realization of the inventory and the realization of the EBITDA. So that we sold 21 tons equivalent to silver during the quarter 3. So, you will have to -- so from the guided EBITDA point of view, you should be adding that number in my view.
Can you give us a sense of the cost of production without byproduct credits? I mean, we're just trying to understand how has the underlying COP moved ex of byproduct?
So, you should reduce around $100, $120 per ton from this thing, because if you have to compare from the historical past, then you will have to use different data. But at this point of time, if you have to compare like-to-like, you may have to reduce $60 to $70 reduction. And that's why I have said that on a constant basis, we should be assuming $950 to $1,000 cost of production.
My second question is, the cash profits were roughly INR5,000 crores in the quarter. How were they utilized in terms of spending?
So, we generated a free cash flow around INR3,400 crores, pre-growth capex, and out of which our growth capex was invested. If I just add the net profit plus depreciation, that comes to, yes, INR4,700 crores, out of which INR800 crores has been invested in the sustaining capex and INR500 crores has been invested in the growth capex. So INR1,300 crores was invested out of that INR4,800 crores. So, there was a INR3,400 crores net cash accretion.
Sir, first question is, could you share what were the grades for this quarter versus last year, or some previous comparison?
So, this quarter, the grade was 7.3%, and last quarter similar period was 7.4%. So grade overall for the 9 months, it has been 7.4%.
Sir, the silver production guidance of 680 tons plus minus 10 tons, are we confident of achieving it, because the ask rate suggests some 230-odd tons of requirement in the fourth quarter?
So, if you look at silver now, since we are unable to utilize all the concentrate in our smelters for various reasons, so if you look at the silver number that way, we have sold silver through concentrate up to 21 tons, and we have produced silver actually 451 tons. So, two together would be 470 tons -- 472 tons. So that is the number. If you look at that, and in quarter 4, normally, it is much better than quarter 3 and one of the highest in the year, so I think we'll be close to our guidance that we gave.
Sir, and what would be the RE mix in terms of overall power contribution for this quarter, and your guidance was '27?
So this quarter, we were 20% for the RE power, and we should be exiting at 25% as the wind power capacity getting installed. For the next year, we should be between 35% to 40%. And after the next year, 70%. That has been our statement earlier as well, because battery storage and wind is now getting commissioned.
Okay. And sir, in terms of cost saving from, say, 25% this year to 75% in FY '28, so incrementally, 50%. What would be the cost saving in, say, rupee crores or something or dollar per ton?
So, $20 to $25 per ton saving will be through RE power, but there will be -- like as we go deeper into the mines and grade differentiation also happens. So as I said, that's why we should be assuming between $950 to $1,000 per ton of the cost. But if you ask only from the RE power point of view, we should be saving annually, with this incremental, almost INR250 crores to INR300 crores annually.
Understood. And just one last question on our hedging strategy. You said 10% to 20%. When did we -- I mean, have we been doing, since last 2, 3 years, hedging? I thought it will be more of a this year phenomenon.
No. If you see the last 3 years, we have been doing this. Before that year and before that year also, we did it. And this has been consistently 10% to 20% of the hedging. Silver, we started hedging in the FY '25 itself. Zinc, it's the third year; silver, it's the second year.
Sir, if I look at it on a year-on-year basis, employee costs, power and fuel, all of them are lower on a per ton basis. But there's this line item, which is other expenses, including manufacturing. That metric has inched up by almost $150 on a year-on-year basis. So, I was just curious what are the factors that have contributed to this growth?
So, in other expenses, you will see one of the key reasons is the revenue since our brand fees are linked with the turnover. So, in case the turnover is increasing Y-o-Y, it will be also increasing. So, it remains 3% of the turnover, but in terms of absolute value, it will increase.
Sir, you spoke of hedging. So, in Q3, did I get it right, almost 55 kt of silver was hedged? And what's the net debt on books as on 31st December?
Q3, 55 tons was hedged, which got squared off. Q4 is 68 tons. 55 tons was hedged at $37. So, hedging was done in the month of June, July for the quarters of quarter 3 and quarter 4. It's a net cash at INR329 crores.
Just want an update on the tailings project. What sort of progress have you made on that? Also, on the 2x expansion, so specifically on the lead and silver portion, how has the progress been over there?
Tailings groundwork has started, which is ground clearing, setting it up for construction. So that has started. Also, we have to go through the various regulatory clearances. No, we are not doing 2x in the form or lead and silver. It's all -- our mine is zinc and lead mine. And both are -- they are not separately lead mine and separately zinc mine. So, we'll be expanding. They will add maybe some amount of silver, but the fact that the volume will double, automatically, the silver quantity, even if we say take even today's worth silver PPM, if I make it 650, then also we'll have 1,300 tons.
Sir, just wanted to understand our strategy, where on one hand we are selling lead and silver concentrate in the market, and at the same time, you yourself said that at least one quarter you usually run at a lead-heavy pyro mode, which is not happening this time. So didn't understand why we are doing so?
We are currently running the pyro in the lead plus zinc mode, because we are having a very good zinc price as well. So, if I just go into lead mode, we do that when the zinc prices are, say, $2,000 or $2,200 a ton and the silver prices are around $30 a troy ounce, then it makes a heavy sense not to produce so much of zinc, but produce more of silver. So right now, with the zinc prices, there is no reason that why we should convert everything to lead mode only. Second, what have we sold? The lead concentrate produced by the RD mill, which was in the beginning in the commissioning stage, they were lead concentrate, but the concentrate grade was poor.
Noted. So, by that account means even at the current silver prices, the barter is more towards the lead production higher? So given the current zinc prices, for next year also, the most likelihood of...
We will continue in the lead plus zinc mode only, because we will have surplus MIC at the end of the year, zinc MIC, and we want to run through it in the month of April, May. And if the zinc prices have also remained stable at that $3,200, $3,300, then why should we not produce zinc. We'll keep on producing zinc and try to see what debottlenecking of lead production facility we can do, so that we can increase silver production. That we are working on this business plan. And I think once the Board approves, then we will let you know what is that incremental facility in lead production we will do.
Noted, sir. And sir, just one more thing. Any update on the fumers which...
So current fumer is operating. So, we had some trouble after the Chinese visit and all that, but our engineers have got trained. And I think this year, in 9 months, we have added about 3 tons of additional silver only through running the fumer. 8 tons, we have added in 9 months, and we will continue. As now shutdowns are over, then fumer will operate far better in Q4 as well. In case of fumer, we have been running at a 60% capacity utilization.
Many congratulations for the results. Sir, my question is on the volume guidance. You are not changing your guidance assuming that fourth quarter normally is a seasonally good quarter. But at the same time, if you look at -- we are not changing the lead-zinc mode, and obviously, then how silver volumes will be higher as more than 200,000 tons?
So, one of the debottlenecking which is pushing in higher current in the electrowinning processes at both Dariba as well as Chanderiya, they have been completed and they are stabilized, working absolutely to the capacity, which have got a capability of adding 25,000 tons per annum capacity. So, we will use that. At the same time, of course, fourth quarter always sees better grades, in terms of which selectively we will ensure that we have to get more silver. And the silver recovery processes in the mills, we have already commissioned a graphite pre-float process in Agucha, which was not there in quarter 2 or first part of quarter 3.