Lloyds Metals & Energy has received board approval for two significant strategic initiatives that could reshape its business operations in the metals and mining sector. The company's board meeting approved a major acquisition deal and a comprehensive strategic partnership framework, as disclosed in its regulatory filing and press release.

Board Approvals and Transaction Structure

The board approved the acquisition of a 50% equity stake in Nexus Holdco FZCO through its wholly owned subsidiary, Lloyds Global Resources FZCO. The transaction details are outlined below:

Congo Mining Operations and Strategic Assets

Nexus Holdco FZCO serves as a holding company with significant mining assets in the Democratic Republic of Congo. The company holds approximately 80-90% equity stake in Surya Mines SARL and eight other companies incorporated in the Democratic Republic of Congo.

These subsidiary companies collectively hold various mining concessions and operate a copper processing plant, positioning Lloyds Metals for expansion into the growing commodity segment in the Congo region. The target entity is located in Dubai, United Arab Emirates, within the Dubai Multi Commodities Centre Zone.

Comprehensive Tata Steel Partnership Framework

The board approved entering into a non-binding Memorandum of Understanding with Tata Steel Limited, represented by CEO & MD T V Narendran, while Lloyds Metals is represented by MD B Prabhakaran. This strategic partnership will examine multiple cooperation areas:

Gadchiroli District Strategic Focus

Under the MOU, both companies intend to explore specific opportunities in Gadchiroli district of Maharashtra. The partnership aims to cooperate in operating mining concessions and associated infrastructure to increase iron ore production and establish the region as a prominent steel hub. Additionally, Tata Steel will evaluate potential strategic cooperation in existing integrated steel projects being developed by Lloyds Metals.

Tata Steel has also become a co-owner in Brahmani River Pellet Limited (BRPL) by acquiring a 50.01% stake in the company, which operates a 4.00 MTPA pellet plant in Jajpur, Odisha, along with a 212 km slurry pipeline connecting a beneficiation plant at Barbil.

Regulatory Compliance and Strategic Impact

The transaction requires statutory approvals and filings in Dubai and the Democratic Republic of Congo. The company has disclosed all necessary details under Regulation 30 of the SEBI Listing Regulations, ensuring full compliance with regulatory requirements. The consideration for the acquisition is entirely cash-based, to be paid by Lloyds Global Resources FZCO.

This dual-pronged strategy demonstrates Lloyds Metals' commitment to expanding its mineral exploration and processing capabilities while strengthening partnerships with established industry players. The USD 55.00 million investment in Congo mining operations, combined with the comprehensive Tata Steel collaboration, positions the company for enhanced market presence in the competitive metals sector and expansion of existing business operations in mineral exploration and processing.

Lloyds Metals & Energy Limited (LMEL) has reported strong performance for the second quarter, with significant growth in revenue and profitability. The company's strategic investments in pellet production and operational efficiencies have begun to yield substantial returns.

Financial Highlights

• Total income stood at INR 25,754.00 million, up 75% year-on-year
• EBITDA reached INR 8,693.00 million, a 95% increase from the previous year
• EBITDA margin expanded by 348 basis points to 33.75%
• Profit after tax (PAT) grew by 22% year-on-year to INR 6,056.00 million

Operational Performance

The company's performance was driven by several key factors:

1. Iron Ore Production: Iron ore production reached 3.42 million tons, with sales of 2.50 million tons, up 77% and 10% year-on-year respectively.

2. Pellet Plant Ramp-Up: The newly commissioned 4 million ton pellet plant at Konsari achieved full utilization within four months of commencement.

3. Slurry Pipeline Efficiency: The 85-kilometer slurry pipeline has become a major enabler, providing seamless evacuation and structural cost reduction.

4. DRI Expansion: LMEL commissioned its DRI expansion at Ghugus during the quarter, further strengthening its integrated operations.

Financial Strategy and Outlook

LMEL's management highlighted several key points regarding their financial strategy and future outlook:

• The company plans to raise INR 9,500.00 crores through an NCD issue over the next six months.
• LMEL aims for a debt to EBITDA ratio of 1, focusing on internal accruals for future growth.
• The company expects to receive around INR 350.00-400.00 crores annually from Industrial Promotion Subsidy (IPS) benefits.

Future Projects and Expansion

LMEL continues to progress on several major projects:

1. BHQ Beneficiation: The company has mined 1.20 million tons of BHQ and plans to commission the first unit of its beneficiation plant by the last quarter of next fiscal year.

2. Pellet Capacity: LMEL aims to reach a total pellet capacity of 12 million tons in the coming years.

3. Steel Plant: The company is planning a 3 million ton integrated steel plant, with construction expected to start by the end of FY27.

4. Green Initiatives: LMEL plans to reduce conversion costs by transitioning to LNG and increasing green power usage to 25-35% in the next six months.

Management Commentary

Rajesh Gupta, Managing Director of LMEL, stated, "This has been a half year where operational commissioning of the pellet plant has taken center stage. DRI plant has started, the value-added products have further strengthened their profile, and our project pipeline has moved forward as predicted with the planning. Across the board, the business continues to demonstrate resilience and direction."

He further added, "We remain committed to creating a business at a structurally low cost, fully integrated, environmentally responsible and built to deliver sustainable shareholder value."

LMEL appears well-positioned to navigate the market cycles with its integrated operations and focus on cost efficiency. The company's strategic investments in pellet production and operational improvements are expected to drive growth in the coming quarters.