Syrah Resources Reports 2 Kilotonnes Graphite Output at Balama Mine, Defers Next Production Campaign to September Quarter Amid Market Weakness

Balama Production Reduced Amid Weak Ex-China Graphite Fines Demand

During the quarter ending 30 June 2026, Syrah Resources’ Balama graphite mine in Mozambique produced 2 kilotonnes of natural graphite, a significant decrease from 23.5 kilotonnes in the previous corresponding quarter. This reduction was a strategic response to weak ex-China demand for natural graphite fines, which constrained near-term market demand. The company completed the remainder of its March quarter production campaign before deferring the next production run to the September 2026 quarter.

Despite lower output, Balama’s infrastructure remained fully operational and ready to scale up as market conditions improve. Planned maintenance, plant optimisation, and reliability projects were completed on critical processing equipment during this period. Mining and plant operations maintained the capacity to rapidly increase production when demand recovers. The graphite produced maintained quality standards with an 89/11 fine to coarse mix and an average fixed carbon content of 96%, despite the reduced throughput.

Deferred Production Campaign and Updated 2026 Guidance

Given current market dynamics and Mozambique government policies, Syrah revised its full-year 2026 production guidance for Balama to 60-80 kilotonnes, down from previous expectations. This adjustment reflects the weak natural graphite fines market and the company’s shift to campaign-based production rather than continuous high-capacity output. The next production campaign has been postponed from the June to the September 2026 quarter to better align supply with demand and avoid excess inventory buildup.

Updated cost guidance was provided for two operating scenarios: at a continuous 20 kilotonnes per month production rate, C1 costs (FOB Nacala or Pemba) are forecast at US$430-480 per tonne, assuming diesel prices normalize; under the campaign mode averaging 10 kilotonnes per month, C1 costs are projected at US$580-620 per tonne. These estimates factor in a 50% diesel price increase implemented by the Mozambique Government during the quarter due to international price volatility and Middle East supply disruptions.

Vidalia Active Anode Material Production Progresses Customer Qualification

Syrah’s Vidalia facility in the US produced 150 tonnes of active anode material in the June quarter, focusing on material testing and quality validations to advance customer qualification processes. These steps are critical to securing offtake agreements with battery and electric vehicle manufacturers. Active anode material is a higher value-added refined graphite product tailored for lithium-ion battery anodes.

This progress aligns with Syrah’s strategy to develop an integrated supply chain from natural graphite mining to anode material production, capturing additional margins and strengthening its position within the battery supply chain. The combination of Balama’s mining operations and Vidalia’s processing capabilities supports US critical minerals policies and energy security priorities.

Sales and Pricing Performance During the Quarter

Despite reduced production, Syrah sold 7 kilotonnes of natural graphite to third-party customers at a weighted average price of US$736 per tonne (CIF). These sales were fulfilled from existing inventory and demonstrate ongoing demand from customers seeking to diversify graphite supply away from China. The pricing reflects current market conditions and Syrah’s role as a reliable non-China supplier with established global logistics.

The sustained sales activity highlights customer interest in supply diversification amid growing electric vehicle adoption and battery production expansion. Syrah’s Balama operation is well-positioned to gain market share by offering secure, quality graphite supply outside China.

Strengthened Cash Position Following US$72 Million Equity Raise

During the quarter, Syrah completed a US$72 million equity raise to fund Balama’s production ramp-up and provide working capital for Vidalia’s commercial advancement. At quarter end, the company held US$98 million in total cash, including US$67 million in restricted cash across subsidiaries in the UAE, Mozambique, and the US, and US$31 million in unrestricted cash available for operations. This liquidity supports near-term operational needs and strategic initiatives.

Post-quarter, Syrah received an US$8 million Section 45X Production Credit payment, reflecting US federal tax incentives for domestic mineral production and supporting critical minerals supply chains outside China. The company is also advancing non-binding strategic funding proposals from the Development Finance Corporation, US Department of Energy, and AustralianSuper to further strengthen its financial flexibility.

Implications of Mozambique Mining Law Amendments

Syrah’s Balama mine is impacted by recent Mozambique mining law changes, including an increase in mandatory state participation from 5% to a minimum 15% free-carried, non-dilutable interest, and new value-addition and in-country processing requirements. Currently, the government holds a 5% free-carried interest in Twigg Exploration and Mining Limitada, which owns Balama, implying future adjustments will be necessary.

The Balama Mining Agreement, valid until 2038, contains stability provisions protecting existing arrangements despite legal changes. The implementation of new regulations depends on forthcoming government legislation. Syrah is actively engaging with authorities and industry groups to shape these regulations. The company does not currently anticipate material operational impacts from value-addition requirements, as Balama already processes mineral concentrates locally and exports high-grade graphite.

Global Graphite Market and EV Demand Trends

Syrah emphasized natural graphite’s strategic role in global energy transition and critical minerals policies. Citing the International Energy Agency’s 2026 Critical Minerals Outlook, graphite is a key strategic mineral, with disruptions in battery-grade graphite trade potentially risking over US$300 billion annually in downstream production outside China. This underscores the importance of alternative supply chains and government support for non-China producers.

Global electric vehicle sales rose 4% in Q2 2026 versus Q2 2025, reaching approximately 5.5 million units, driven by strong growth in Europe and recovering US and China markets. Battery production exceeded a 3 terawatt-hour annual run rate, fueled by energy storage system demand. These trends underpin growing demand for natural graphite and anode materials. Syrah’s integrated graphite-to-anode supply chain positions it to benefit from these secular growth drivers, subject to market cyclicality and customer qualification timelines.

Safety and Operational Readiness Maintained During Production Slowdown

Syrah reported zero recordable injuries across its operations during the June quarter, reflecting strong health and safety standards. Maintaining zero injuries during reduced production periods demonstrates effective safety management despite operational changes.

Operational readiness at Balama was preserved through planned maintenance and reliability projects, ensuring equipment and infrastructure are prepared for rapid production ramp-up when market conditions improve. These efforts position Balama for enhanced performance in upcoming production campaigns.

Cost Structure and Diesel Supply Risk Mitigation at Balama

Balama’s C1 fixed costs during non-operating periods were approximately US$3.7 million per month (FOB Nacala or Pemba), with an additional US$1.0 million per month in variable mining and logistics costs to prepare for future campaigns and sales. These expenses reflect ongoing commitments to maintain production readiness despite lower output.

The Mozambique Government increased diesel prices by about 50% during the quarter due to international price rises and Middle East supply disruptions, with costs passed through to Syrah. However, Syrah benefits from a long-term diesel supply contract ensuring reliable fuel access and has invested in solar and battery systems at Balama, reducing diesel dependency and mitigating supply risks. This infrastructure supports cost management and energy security in Mozambique’s operating environment.

Community Engagement and Mining Agreement Stability

Syrah continues active collaboration with Mozambique’s national and provincial governments, as well as local communities, to enhance community benefits and align operations with local interests. These efforts are conducted under the Balama Mining Agreement and Community Development Agreements, supporting social license to operate and sustainable relationships.

The Balama Mining Agreement’s stability provisions, effective through 2038, provide contractual certainty despite new mining legislation. Syrah’s engagement with government and industry consultations reflects a cooperative approach to regulatory changes, balancing mining sector interests with government policy objectives.