Syrah Resources Ltd

Sales and marketing update:Syrah Resources Ltd.’s (ASX: SYR) stock rose 2.8% on January 05, 2018 after the release of the company’s sales and marketing update. The company has signed first spot sales agreement with Yichang Xincheng Graphite Co Ltd, which is a leading global producer of specialty expandable graphite products. This is another important import of Balama graphite into China. SYR has also signed the binding three-year agreement with CS Additive GmbH & Co, a leading producer of specialty carbon and sulphur products, for a minimum of 6,000 tonnes in 2018, with volume increasing to 2020. This agreement is for industrial purposes. Another agency agreement is signed with Magus Marketing for distribution to the Indian subcontinent, where orders have already been received and scheduled for shipment. Moreover, SYR has made a decision not to activate certain elements of the Chalieco offtake agreement including the minimum tonnage supply requirement. This allows SYR the flexibility to develop the sales book into the Chinese industrial market in a manner better aligned with the strategic objectives.
 
In year 2017, SYR was one of the most shorted stocks on ASX and the current agreements sets the group to be well placed in terms of diversification across the globe and key end use markets, which in a way curbs the volatility risks to some extent.The group also aims to flourish from the booming battery market. With production target ramped up, the group expects to have production ranging between 160,000 tonnes and 180,000 tonnes this year. With numerous efforts on having higher-grade products and favourable macro factors including Chinese crackdown on pollution benefitting graphite stocks, SYR is expected to continue its winning drive.
 
Meanwhile, SYR stock has risen 33.90% in last three months as on January 4, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of  $4.83

 
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