SYR Details
 
Syrah Resources Ltd’s (ASX: SYR) stock surged 5.77% on March 24, 2017 post the release of its 2016 annual report and Balama Project updates, and overall improving sentiments.
 
Balama Project Updates: SYR has highlighted good progress with development and construction activities as the process plant construction has been 52% complete as at 31 December 2016. The group had indicated for commissioning to commence during Q2 2017 while production ramp-up has been indicated for Q3 2017. SYR had reported for achieving Total Graphitic Carbon (TGC) grades of up to 98% across all flake sizes during the year. There also has been a 40% rise in proven and probable reserves to 114.5 Mt at 16.6% TGC with regards to the ore reserve upgrade for the Mualia Zone. 
 
Balama West Stage 1 Pit Shell (Source: Company Reports)
 
Strategic review for the downstream project: SYR inked a five-year offtake agreement with Marubeni Corporation to purchase a total of 50,000 tonnes of coated and uncoated spherical graphite per annum for major battery and anode customers in Japan and Korea. Marubeni is said to have the exclusive right to import and sell Balama coated and uncoated spherical graphite in above territories.
Overall, the downstream battery anode material project has been progressing well under the updated battery anode material (BAM) strategy including establishment of a technology centre, Product Qualification Plant and Commercial Plant.
 
Financial performance: SYR reported that the loss for the consolidated entity after income tax was $14.5 million during the year ended 31 December 2016 while the revenue for the year comprised interest income of $1.3 million, which was driven by a higher cash and cash equivalents balance during the year compared to the prior period. There has been a rise in the total assets of the consolidated entity during the year to $330.0 million as at 31 December 2016 from $192.0 million of 2015.This was at the back of successful completion of a fully underwritten $144.1 million (A$193.6 million) capital raising in June 2016.
 
Stock Performance: Owing to some volatility, SYR stock had fallen 41% in last six months (as at March 23, 2017). Given the prospects and Balama project updates, we maintain a “Buy” recommendation at the current price of $ 2.75
 

SYR Daily Chart (Source: Thomson Reuters)

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