Syrah Resources Soars On Inking A Binding Term Sales Agreement With Taida

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On 7 November 2018, Syrah Resources Limited (ASX: SYR) announced regarding a binding term sales agreement with Qingdao Taida-Huarun New Energy Technology Co. Ltd., which is based in Shandong, China and it is involved in the research and development and production of carbon materials including spherical graphite for battery anode materials. The agreement will start immediately, and it is for 20kt of natural graphite from Balama by 31 August 2019. After the release of this news, the share price of the company increased by 10.393 percent as on 7 November 2018.  

As per Syrah Resources Limited’s CEO Mr. Shaun Verner, through this contract the company is trying to penetrate its Balama graphite product into China and the battery anode material market. The company is trying to establish Balama product as a baseload for battery anode materials and other industrial specialty applications and it is looking forward to a successful relationship with Taida.

In the September quarter, the total graphite production was 38.7kt which was 83 percent higher than the last quarter. In the fourth quarter the company is expecting to produce between 30kt to 35kt and the FY 2018 production target is 101kt- 106kt. The mining activities and steady state ore mining continued to perform well during the September quarter with ore mined (>9% TGC) of 408kt, and total material moved ahead of plan. The company sold 20kt in Q3 or 36kt nine months year to date, with an additional 19kt allocated to sales orders at Nacala, with timing impacted by shipping schedule, customs resourcing and port throughput. The production performance of 2018 has impacted sales contract fulfilment, with remaining volumes expected to rollover into 2019, resulting in later settlement of some new contracts. As at 30 September, the company was having cash on hand of US$100.3 million, which includes Institutional Placement gross proceeds of US$67.4 million. The net cash outflow for the September quarter was US$21.6 million which was earlier forecasted to be around US$17 million, and the variation was mainly due to timing difference of cash receipts from sales, impacted by shipping rescheduling with inventory increase at Nacala.

Recently, the company also announced regarding the sanction of mining agreement by the Administrative Court in Mozambique. Through the Mining Agreement the company will gain clarity around the governing laws, mining rights and other obligations for the Balama Operation in Mozambique. The company has continued its comprehensive production improvement plan and its focus areas include enabling recovery improvement, rigorous process control optimization and governance of operating practices. The Recovery improvement enabling works and identified maintenance items will be advanced during the Primary Classifier repair period to reduce future downtime and facilitate improved recovery rates. Thus, the group is moving as per its plan on Primary Classifier Unit Repair.

In the last six months, the share price of the company decreased by 43.31 percent as on 6 November 2018. SYR’s shares traded at $1.965 with a market capitalization of circa $611.61 million as on 7 November 2018 (AEST 2:44 PM).


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