Thoughts on SYR’s Quarterly Activities Report

Hi Darren,

Like you, we have been reticent to buy Graphite given a long term mindset is certainly required and we’ve been very uncertain about what comes in the short term for this emerging sector. A few points on your question:

• If we were to buy a Graphite stock, Syrah (SYR) would be our preferred pick.
• A buy price ~$1.00 looks interesting from a risk/reward perspective, however this is an incredibly volatile stock/sector, with plenty of risks in the near term. We are unlikely to step up to the plate.
• In terms of their production numbers, Balama were higher QoQ but a long way below the markets expectations. They need higher production to reduce costs, and that simply did not happen. This moves the dial from being EPS positive in CY23, to a negative.
• As a response, they did announce a series of convertible notes being issued to Australian super totalling $150m (over 3 tranches), with the current outstanding notes expected to be converted to equity. That creates more dilution to the equity but is a positive for their funding position.
• The initial Vidalia expansion remains on track for commissioning in 3QCY23, and the 45ktpa expansion DFS highlighted solid economics. This is was a positive and not too far off.
• If all goes to plan, SYR is worth around ~$2 in our view, so buying nearer $1 makes sense from a risk/reward perspective.
• Note, this is a very high-risk stock.

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Syrah Resources Ltd (SYR)

LAST UPDATED 28/04/2023 12:09

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Syrah Resources Ltd (SYR)

LAST UPDATED 28/04/2023 12:09