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Highlights:
- Syrah shared that one of the conditions of the offtake agreement with Tesla has been fulfilled.
- The parties have agreed upon the AAM’s final specification by 31 December 2022.
- The company shared that definitive feasibility study to expand the production capacity of Vidalia is underway.
Shares of industrial minerals and technology company, Syrah Resources Limited (ASX:SYR) are on investors today (23 December 2022) as the group has shared an update on the offtake agreement with Tesla, Inc.
During the early trading hours, Syrah shares gained little and later entered the territory. At 12:55 PM AEDT, the shares were spotted trading 1.54% lower at AU$2.24 per share with a market capitalisation of AU$1.52 billion. Including today’s fall, the share price has gained 39.44% in the past one year, and on a year-to-date basis, it has increased by 16.32%. In the last six months, the share price has zoomed up by 93.53%.
Meanwhile, the benchmark index, ASX 200 Materials (INDEXASX:XMJ) was down 0.86% to 17,638.10 points.
What is the update on the offtake agreement?
Back in December 2021, an agreement was inked between Tesla and Syrah to provide natural graphite active anode material (AAM). As reported, under the agreement, the AAM will be supplied from the vertically integrated AAM production facility located in Vidalia, USA.
The offtake obligation was conditional on the companies agreeing to the AAM’s final specification by 31 December 2022.
Today, the company informed the market that it has fulfilled this condition of the offtake agreement. As reported, the final specifications are in line with the planned AAM product from Vidalia, which informed the final investment decision to expand the production capacity to 11.25kta AAM.
Worth mentioning here is that the offtake agreement remains conditional that Syrah achieves the final qualification of AMM by 31 May 2025. Also, the contract can be terminated if production does not begin by 31 May 2024, said Syrah.
According to ASX announcement, the production at the Vidalia facility is targeted to start in September 2023 quarter.
What else?
Through ASX filing, Syrah shared that Tesla has used its option to offtake 17ktpa AAM from the Vidalia production facility at a fixed price for an initial term of around four years. The option exercised by Tesla is subject to the expansion of the production capacity to 45ktpa AAM.
A definitive feasibility study to expand the production capacity of Vidalia to a minimum of 45ktpa AAM is underway. Syrah said that the detailed engineering, procurement and construction phase for the expansion would follow the DFS sequentially after getting the board approval and financing and customer commitments.
