Highlights

  • Syrah Resources (ASX:SYR) will receive a further US$15 million DFC disbursement for working and sustaining capital at Balama graphite in Mozambique, bringing total disbursements to US$83 million.
  • DFC has temporarily waived existing events of default to allow the disbursement, while reserving all rights and pursuing a permanent resolution.
  • DFC gains the right to appoint a nominee director to Syrah's board, subject to FIRB approval.
  • Jefferies has been appointed sole financial adviser on a partnering process to secure longer-term capital for the company.

Another Disbursement, Another Waiver

Syrah Resources has secured a further US$15 million disbursement from its loan with the US International Development Finance Corporation, or DFC, to fund working and sustaining capital at its Balama graphite operation in Mozambique. The funds are expected to be received by 31 October. The disbursement comes after DFC temporarily waived existing events of default under the loan facility, while reserving all its rights. Syrah says it is working toward a permanent resolution.

The Cost of the Money

The new US$15 million tranche carries interest at 6.0% per annum plus DFC's cost of funds, along with a 1.0% advance fee. With this disbursement, total drawdowns will reach US$83 million. The pro forma loan balance at 30 September was US$93 million including accrued interest, implying an average interest rate of 9.36% per annum across disbursements. DFC will receive 5,414,036 warrant shares in connection with this advance, with approximately 17.5 million further warrant shares still to be issued for earlier disbursements and an interest deferral.

Board Nominee Right

DFC has gained the right to appoint a nominee director to Syrah's board, subject to approval from Australia's Foreign Investment Review Board. This gives the lender direct representation in board deliberations, extending its influence beyond that of a conventional creditor. The combination of the waiver, board nominee right and escalating warrant position reflects the extent of DFC's exposure and leverage over Syrah.

Partnering Process

Alongside the DFC support, Syrah is pursuing partnering discussions for additional capital and has appointed Jefferies as sole financial adviser on that process. The company has not disclosed potential counterparties, a target amount or a timetable. A transaction could involve corporate equity, asset-level investment or offtake-linked funding.

What Comes Next

The key near-term indicators are the outcome of the permanent default resolution with DFC, any FIRB decision on the nominee director, and progress on the Jefferies-led partnering process. Syrah's next quarterly report should provide further detail on Balama's operating performance and cash position.