Government awards 41 RSCs to Vedanta, stock opens gap-up

The second largest mining and minerals company by market capitalisation, Vedanta, had proposed entry into the 41 revenue sharing government contracts. Accordingly, the company is bestowed upon 41 exploration blocks in India with a total bid cost of US$ 551 million. Vedanta would have to share 33 per cent of the revenue on the onshore block for the first 2 years and ranging 3-5 years in case of deep ultra and deep ultra-water blocks. Further, the percentage would change as per the revenue.

The 41 exploration blocks include 33 onshore and 8 offshore in sedimentary basins throughout the country pursuant to Open Acreage Licensing Policy, which is the first major auction of its kind for hydrocarbon blocks taking place in the country since 2010. Once these Revenue Sharing Contracts (RSC) are signed, the company would earn a licence permission for exploration with duration of around 6 years, development and production operations with maximum of 20 years on receiving petroleum mining lease.

The stock of Vedanta opened with a gap-up of nearly Rs. 3 and surged as much as 3.4 per cent in intraday trade, but retreated to fill the gap-up in the late morning session amid overall pessimism in the markets. The stock is trailing at its major resistance at 232-234 after a bottoming out on a provisional basis. Volumes and oscillators quoting above 55 support the momentum.