Syrah Resources Ltd

SYR Details
 
Continues to maintain strong momentum: Syrah Resources Ltd.’s (ASX: SYR) Balama project commissioning activity has commenced in May-2017 with first production scheduled for August 2017. The production ramp-up is currently expected to be 140,000 to 160,000 tons of flake graphite concentrate in the first year of production, and 250,000 to 300,000 tons in the second year. Further, comprehensive logistics contract (mine to port) has been signed with Grindrod, while Mining Agreement is being progressed through the Mozambican government. During the quarter, multiple sales initiatives have been progressed including Memorandum of Understanding (MOU) with BTR New Energy Materials, the world’s largest battery anode manufacturer, and finalization of a Statement of Sales Intent (SSI) with a European trader consortium for 15,000 to 25,000 tons per annum of flake graphite for 5 years. Moreover, the company has received a proposal for US$50m in debt funding.
 
 
Off take agreements for Balama production; (source: company reports)
 
During Q1 CY2017, US$24.5 million was spent on the Balama Graphite Project, resulting in total project development expenditures of US$137.4 million as at 31 March 2017. An additional US$30.6 million in development expenditures have been committed as at the end of the quarter, which brings total actual and committed capital expenditures to US$168 million. Total project capital cost remains unchanged at US$193 million plus a project contingency of US$7 million. SYR is also advancing with the downstream Battery Anode Material project to capitalize on the available margins and exponential growth in the global battery market.  Global battery market is the fastest growing sector of the natural flake market moving from 15% to 35% share by 2021. Over the past one year, the stock has declined 60.40% on account of management changes and its transition process. However, given the ongoing project developments and growing market opportunity for SYR products,we give a “Buy” recommendation at the current price of $ 2.65

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