Syrah Raises AU$74 Million for Graphite Mine and Battery Plant

The firm has a capital raising target of AU$110 million and plans to hold another offering for eligible retail shareholders next week.

Australian graphite company Syrah Resources (ASX:SYR) has raised AU$74 million via an institutional placement and an entitlement offer.
The firm said on Tuesday (September 19) that it is looking to raise a total of AU$110 million, with AU$25 million coming from the institutional placement and AU$85 million coming from the entitlement offer. The entitlement offer consists of institutional and retail components, and the institutional portion was completed on Thursday (September 22).
Syrah said in Tuesday’s release that the money will primarily be used for working capital requirements associated with the ramp up of production at its Mozambique-based Balama graphite project; funds will also be used for the development of its battery anode materials strategy.


The company decided on debt funding and not equity funding in part due to cost. Using funds from debt financiers would also “limit Syrah’s flexibility to accelerate its value-adding strategic options,” Syrah said on Tuesday. In a note released Wednesday (September 20), Canaccord Genuity (TSX:CF) says that “[t]he raising should now remove uncertainty over SYR’s funding position.”
Construction at Balama is now over 90 percent complete, and commissioning is underway, according to Syrah’s interim report for the half-year ended June 30. Balama is expected to produce 140,000 to 160,000 tonnes of flake graphite concentrate in its first year of production, and 250,000 to 300,000 tonnes in its second year. The mine was originally scheduled to begin production in August 2017, but Syrah now expects to start production in late October. Balama will have a mine life of 42 years, a 2015 feasibility study on the project states.
Syrah is also looking to break into downstream processing for graphite concentrate. It is looking to develop a commercial battery anode materials plant in Louisiana to supply the battery anode market, and recently entered into a research and development agreement with Cadenza Innovation; as part of the deal, Cadenza will engage in the development and testing of battery anode materials.
Earlier this month, Syrah signed an offtake agreement with Jixi BTR Graphite Industrial, a subsidiary of Chinese battery anode manufacturer BTR New Energy Materials; Syrah will supply the company with 30,000 tonnes of graphite from Balama in the mine’s first year of production. Syrah also has sales agreements confirmed with Hiller Carbon, Marubeni (TSE:8002) and MINERALS GmbH.
With its institutional placement and the institutional portion of the entitlement offer now complete, only the retail component of Syrah’s entitlement offer remains. Syrah plans to hold that offering on Monday (September 25). Shares for the retail component of the 1-for-10.5 pro rata accelerated non-renounceable entitlement offer will be priced at AU$3.38, the same pricing used for institutional shareholders. The offering is expected to close on October 5.
Canaccord Genuity is maintaining a “speculative buy” rating for Syrah, and said that the money raised “should now provide sufficient capital for the mine and most of Stage 1 of the BAM project.” That said, the firm notes that “some uncertainty remains over the longer-term BAM ramp up and product mix, making it difficult to accurately value at this point.”
In light of the capital raising efforts, Canaccord Genuity has reduced its target price for Syrah Resources to AU$4.05 from AU$4.65. Syrah’s share price closed down 7.63 percent, at AU$3.51, on Thursday; it is up 15.08 percent year-to-date.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.
Featured
Nouveau Monde commissions its advanced R&D facility at its premises in Saint-Michel-des-Saints » The new laboratory will provide Nouveau Monde with the in-house capacity for testing advanced anode material and providing customized specifications to battery and EV manufacturers » Nouveau Monde has recruited two additional leading scientists, expanding its R&D and technical team to 25 professionals including six ...

» Nouveau Monde commissions its advanced R&D facility at its premises in Saint-Michel-des-Saints

» The new laboratory will provide Nouveau Monde with the in-house capacity for testing advanced anode material and providing customized specifications to battery and EV manufacturers

read more Show less

Last week’s top-gaining stocks on the TSX were NextSource Materials, Gear Energy, Entree Resources, Pipestone Energy and Crew Energy. 

The S&P/TSX Composite Index (INDEXTSI:OSPTX) opened lower last Friday (September 24), trading at 20,401.85 by midday. It closed the period at 20,400.44.

The index avoided a weekly loss, although healthcare and technology stocks were trending lower.

read more Show less
city harbour with boats

Australia isn't a producer of graphite (yet), but three states in the country are home to millions of tonnes of reserves and resources.

Graphite has been growing in popularity in recent years as its applications as a battery mineral are realised, and as the popularity of electric vehicles grows around the world.

A form of carbon, graphite is a good conductor and is invaluable in electronics. It comes in three different forms, each with their own valuable applications in modern technology, making it a sought-after commodity without which supply lines for many industries around the world would grind to a halt.

Graphite isn't produced in Australia (yet), but the country sits on 1.05 million tonnes of ore reserves, and 7.14 million tonnes of economic demonstrated resources (EDR), as per 2017 government data — and those numbers are way up from the previously disclosed data from Canberra in 2013.

read more Show less

MARKETS

Markets
TSX21210.20+84.30
TSXV955.75+11.70
DOW35227.08+327.74
S&P 5004667.44+72.82
NASD15808.65+316.99
ASX7279.30-128.00

COMMODITIES

Commodities
Gold1784.91-10.34
Silver22.87-0.44
Copper4.34+0.05
Palladium1799.00+14.50
Platinum958.45-21.55
Oil70.97+2.82
Heating Oil2.18+0.09
Natural Gas4.87-0.61