Is Syrah On A Recovery Track?

The Australian-based industrial minerals and technology company Syrah Resources Limited’s (ASX: SYR) shares have increased by 3.63 percent in the last one month from $1.515 on 29 October to $1.570 on 28 November 2018.

Syrah resources was affected by a major setback in the month of October when a fire accident happened in the Primary Classifier section of the Balama process plant. Due to that incident, the production activities were stopped for several weeks. And, to restart the production, the company brought in a new replacement Primary Classifier which was commissioned ahead of schedule. Due to this incident, the company revised its Q4 2018 total production estimate to 30kt to 35kt. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

However, the things are looking better for Syrah now as in the month of November, the company announced two sales milestones, one was the Company’s first binding term sales agreement for the coarse flake to China, and another one was the company’s first sale of 98% fixed carbon grade product.

On 8 November 2018, Syrah Resources Ltd announced the successful replacement of Primary Classifier Unit at the Balama Process Plant which was successfully installed and commissioned before the scheduled time. In Q3 2018, the graphite production of the company uplifted by 83% to 38.7kt as compared to the graphite production of Q2 2018. Due to the fire accident at the process plant, a production loss of 30kt is expected in Q4 2018. Further, the Q3 FY18’s product weighted realized price was slightly ahead of Q2 2018. At the end of September quarter, the cash used in operating activities was $21.37 Mn, and the net cash flow from financing activities was $65.25 Mn.

As at 30 September 2018, the company was having Cash on hand of US$100.3 Mn which includes Institutional Placement gross proceeds of US$67.4 million. Fourth quarter net cash outflow is expected to be around US$23.6 million, inclusive of proceeds from the Share Purchase Plan.

In the general market update which was provided by the company in its September quarter report, the company informed that in Jan-Aug 2018 (YTD), global steel production increased by more than 4.8 percent. Further, the global capacity utilization continues to be strong at around 77 percent. The company also informed that in Jan-Aug 2018 (YTD), global passenger electric vehicle sales were just below 1.1 million and China accounted for 51 percent of YTD sales.

In the past six months, the share price of the company decreased by 50.63 as on 28 November 2018. SYR’s shares traded at $1.630 (up 3.822% intraday) with a market capitalization of circa $539.46 million as on 29 November 2018.


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