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- Syrah Resources (SYR) recounts its activities during the December quarter which involved progressing its Mozambique and Louisiana-based graphite operations
- The Balama project saw a notable decline in production, largely due to global shipping disruptions and maximised inventory levels
- While just 19,000 tonnes of graphite was sold in the December quarter, the company’s expected sales outlook for the current quarter exceeds 80,000 tonnes of graphite
- Syrah also signed an offtake deal with EV giant Tesla who agreed to offtake active anode materials from its Vidalia project for an initial four-year term
- The company ended the quarter with US$52.9 million (A$75.6 million) in cash
- SYR shares are down 4.36 per cent to trade at $1.65
Syrah Resources (SYR) has updated the market on activities and cashflow for the December 2021 quarter.
The materials stock is focused on the global electric vehicle (EV) industry and has two key operations including the Balama Graphite Project in Mozambique and the Vidalia Active Anode Material (AAM) Project in Louisiana, US.
Balama
During the quarter, Balama produced 13,000 tonnes of natural graphite which is about half the amount produced in the September quarter. The company said production was constrained by maximum finished product inventory positions, ongoing disruption in the global container shipping market and planned maintenance works to avoid disruptions in the new year.
In saying that, product quality was in line with previous quarters and Balama continued to show strong operational performance with an average and maximum daily production run-rate of 16,000 and 24,000 tonnes per month, respectively.
Balama C1 cash costs were US$1159 (A$1658) per tonne, reflecting the impact of fixed costs with constrained production. However, the company expects Balama unit costs to significantly reduce as the rate of production increases beyond 15,000 tonnes per month on the back of additional shipping options from the current quarter.
While Syrah only sold and shipped 19,000 tonnes of graphite in the December quarter, forward contracting with end users reportedly secured over 80,000 tonnes of graphite sales orders for the March 2022 quarter.
Furthermore, the company is experiencing increased demand from Chinese customers due to a nationwide disruption in natural graphite supply and shipping challenges.
To support the increased sales and shipping volumes, Syrah has developed an additional export route from the Pemba port with a 10,000-tonne spot break bulk shipment from Pemba to China scheduled early next month.
Vidalia
In addition, Syrah Resources continued its focus on becoming a vertically integrated producer of natural graphite AAMs to service ex-Asia markets. To do this, it’s developing the Vidalia project into an AAM producer.
A stand-out during the quarter was securing a conditional offtake deal with Tesla to supply natural graphite AAM from Vidalia. Subject to final qualification, the EV manufacturer will offtake 8000 tonnes per annum of AAM at a fixed price for an initial four years.
Syrah is also advancing commercial and technical engagement with other target customers to develop Vidalia AAM for mass production and secure more long-term purchase commitments.
These engagements, as well as the rapid growth of the battery manufacturing pipeline, ha shown that volumes demanded from Vidalia by 2025 are expected to significantly exceed its production capacity.
An independent market forecast for battery manufacturing capacity in North America in 2025 is about 393 gigawatts per house which is estimated to require approximately 384,000 tonnes of AAM per annum. The company is developing a pathway to an accelerated larger expansion of the project.
Financials
Syrah received US$10.1 million (A$14.4 million) in cash receipts from customers. It spent about US$17.9 million (A$25.6 million) on production US$5 million (A$7.1 million) on staff and admin costs. Overall it reported an operating cash outflow of US$12.8 million (A$18.2 million).
About US$7.6 million (A$10.9 million) was used for investing activities and US$455,000 (A$650,800) on financing activities.
The company started the quarter with US$73.7 million (A$105.4 million) in cash and ended it with US$52.9 million (A$75.6 million).
SYR shares were down 4.36 per cent to trade at $1.65 at 11:24 am AEDT.
