HZL expects to increase its silver production from the current levels of approximately 100-120 mt/y to approximately 500 mt/y in the form of silver and silverbearing residue. A large part of this increase would be from the Sindesar Khurd mine where silver occurrences are at levels of about 200 ppm and from the use of appropriate technology in the new smelters.

According to the company, the expansion is supported by HZL’s reserves and resources of 232.3 million mt containing 27.5 million mt of zinc-lead metal. To support the increased smelting capacities, HZL will expand its ore production capacity at the Rampura Agucha mine from 5 to 6 million mt/y. Ore production at the Sindesar Khurd mine will be increased from 300,000 to 1.5 million mt/y. HZL will also start mining at the Kayar project which will have a production capacity of 300,000 mt/y.

A captive 160-MW thermal power plant will also be set up at Rajpura Dariba. The zinc and lead smelters as well as the power plant and the Rampura Agucha mine expansion will be complete by mid-2010. The expansions at the Sindesar Khurd and Kayar mines will be completed in phases by early 2012.

The total investment in these projects is estimated at Rs. 3,600 crore (crore = ten million in the Indian numbering system), including the cost of the smelters, captive power facilities, mine development and shaft sinking and other infrastructure. According to the company, the expansion will utilize the same technology and project management approach that delivered the Chanderiya II expansion project ahead of schedule.

Prior to the expansion announcement, HZL reported that its ongoing exploration activities had produced an increase of 28.7 million mt to its reserves and resources, prior to a depletion of 5.8 million mt in FY 2008. Contained zinc-lead metal has increased by 4 million mt, prior to a depletion of 0.6 million mt during the same period. The company said the reserves and resources position had been independently reviewed and certified as per JORC standard.

The favorable exploration results were primarily from the Sindesar Khurd and Rampura Agucha mines. Exploration and aggressive drilling at Sindesar Khurd augmented the resource base to the current level of 37 million mt, making it the second largest orebody in HZL’s portfolio after Rampura Agucha, with potential for further additions through ongoing exploration. In FY 2008, the drilling program increased the strike length by 300 m, to 1,600 m averaging 5.8% zinc, 3.8% lead and 215 ppm silver.

At Rampura Agucha, 28,000 m of drilling in 32 holes were carried out to outline mineralization below a depth of 550 m. Of these, 29 holes intersected ore widths with significant grades averaging 15.5% zinc and lead. Combined reserves and resources at Rampura Agucha increased to 107.3 million mt.

According to the company, its exploration philosophy has been to replace every ton of ore mined with at least one ton of resource. An aggressive exploration approach has resulted in an addition of 110.7 million mt of reserves and resources, before depletion of 22.1 million mt, in the period from April 2003 to March 2008.

HZL is a subsidiary of Sterlite Industries (India) Ltd. and Vedanta Resources plc.