Syrah Resources Limited (ASX: SYR) is an Australian-based company with its operations in industrial minerals and technology. It is the owner and developer of the Balama Graphite Project in Mozambique. Balama is a high-grade asset, and it has transformed to operations with sales and shipments to a global customer base which includes the battery anode producers. Syrah is also progressing its downstream Battery Anode Material strategy with the first production of spherical graphite achieved in December 2018 from its plant in Louisiana, USA.
The company, today on 14 March 2019, has announced its interim updates for Q1 2019. It continues to increase the operations in Balama Graphite project in Mozambique and provides an update on its expected Q1 2019 graphite pricing, production and cash position.
The production of the company is on track in Q1 2019 for approximately 45kt in line with the lower end of guidance range of 45kt – 50kt. The production optimisation and cost management actions are continuing. The company expects the sales volumes to exceed its production volumes, between 45kt – 50kt dependent on shipping completions in March. The pricing for Q1 2019 is close to completion, however subject to the final shipping schedules.
The expected weighted average graphite price achieved is US$460 – US$470 per tonne (CIF) in Q1 2019 versus the guidance range of US$500 – US$600 per tonne with difference mainly due to, product mix and final vessel scheduling weighted towards sales of fines graphite and faster than anticipated progress towards close out of lower-priced contract volumes from 2018 to extinguish those contract volumes from the sales book. The company has an optimistic view of achieving improved prices based on the forward contract and product mix.
Despite lower than forecast prices, the cash position as at the end of Q1 2019 is expected to be ~US$55 million – US$57 million (guidance ~US$57 million); however this is subject to disciplined cost management. The company re-emphasises that Q2 2019 group net cash draw is forecasted to be lower than Q1 2019 owing to reasons including majority of the Battery Anode Material Project capital expenditure spend for the spherical graphite processing site in Louisiana USA, is completed in Q1 2019 and continued operational ramp up at Balama and focus on product mix of sales. Syrah continues to focus on optimising production volume and cost against price.
The company will release the 2018 Annual Report on 29 March 2019 and Q1 2019 Quarterly Activities Report and Appendix 5B to be released on 29 April 2019.
The stock of Syrah Resources Limited is currently trading at $1.150 with an increase of ~8.49 per cent during the day’s trade, with a market capitalisation of $364.25 million . The stock has generated a YTD return of -30.94% and a return of -55.08%, -41.44% and -22.63% over the past six months, three months and one-month period respectively. It had a 52-week high price of $3.880 and a 52-week low price of $1.035, with an average trading volume of ~3.05 million.
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