Syrah Resources Limited · ASX:SYR
Syrah Resources — Investor Presentation (March 2024)
56 slides from Syrah Resources's investor presentation, Mar 13, 2024
Slide 1: Equity Capital Raising Presentation
Equity Capital Raising Presentation 13 March 2024 NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES syrahresources.com.au Syrah Resources | ASX: SYR1 13 March 2024
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer Important notice and disclaimer IMPORTANT: You must read the following carefully before continuing or making use of the information contained in this Investor Relations presentation. By attending an investor presentation or briefing, or accepting, accessing or reviewi
Slide 3: JORC Reporting
Important Notice and Disclaimer JORC Reporting (continued) Investors should note that while the Company’s Mineral Resource and Ore Reserve estimates comply with the JORC Code, they may not comply with the relevant guidelines in other countries and, in particular, do not comply with (i) National Inst
Slide 4: Past performance
Important Notice and Disclaimer Past performance Past performance and any pro forma information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of the Company's views, nor anyone else’s, on its future performance, financi
Slide 5: Diagram, charts, graphs and tables
Important Notice and Disclaimer Diagram, charts, graphs and tables Any diagrams, charts, graphs and tables appearing in this presentation are illustrative only and may not be drawn to scale. Not an offer NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES This presentation is no
Slide 6: Our position
Our position Syrah is a major ex-China natural graphite and active anode material ("AAM") supplier for global customers, with upstream and downstream expansion potential underpinned by its world-class Balama resource NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Natural gr
Slide 7: Our value proposition
Our value proposition Syrah is leading ex-China natural graphite and anode material production capacity and sales growth NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Vertical Operating and Cost Position ESG Position Expansion Integration Development Potential Natural gr
Slide 8: Context and rationale of Equity Raising
Context and rationale of Equity Raising Preserves Balama operating mode optionality NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Equity Raising • Responding to China’s implementation of export licence controls across the graphite Fully underwritten institutional placeme
Slide 9: Table of Contents
Table of Contents NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Company Update and Equity Raising Overview 10 Market and Supply Chain Update 18 Operational Update 22 Transaction Details 30 Key Risks 36 International Offer Restrictions 52 9
Slide 10: Equity Raising Overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 1 Raising Overview Company Update and Equity 10
Slide 11: Company update
Company update Market & Corporate Balama & Vidalia Health & Safety5 – Global EV sales in 2023 up 37% compared to 2022 to – Balama sales for the March 2024 quarter are expected to be similar ~14.7 million units1 to the December 2023 quarter, while Balama production is expected 1.2 – Chinese anode pro
Slide 12: Syrah's 2024 targets embedding unique advantages
Syrah’s 2024 targets embedding unique advantages Recent milestones 2024 targets Capital Structure Dec-21 – Binding offtake agreement with Tesla for the supply of natural graphite AAM Commercial and offtake sales from 11.25ktpa AAM from Vidalia Jul-22 – Received a US$102m binding loan from US DOE f
Slide 13: Equity Raising and AustralianSuper convertible notes
Equity Raising and AustralianSuper convertible notes Syrah is undertaking a fully underwritten equity raising of ~A$98m consisting of a ~A$61m institutional placement (the “Placement”) and a ~A$37m 1 for 10.2 pro-rata accelerated non-renounceable entitlement offer (the “Entitlement Offer”) (collec
Slide 14: Progressing US Government loans to fund Vidalia and Balama
Progressing US Government loans to fund Vidalia and Balama US$150m conditional loan commitment for Balama approved by United States International DFC Board of Directors1 and signed by Syrah DFC loan is available in the following tranches, subject to satisfaction of certain conditions precedent:
Slide 15: Equity Raising sources and uses
Equity Raising sources and uses Overview Sources and Uses1 Sources A$m US$m NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES A$24m (US$16m)1 of existing cash has funded project capital costs, including operational readiness costs and DOE loan related costs, from 1 January 2
Slide 16: Syrah leads ex-China industry in development and operations
Syrah leads ex-China industry in development and operations >8 years advanced on ex-China peers, with >US$700m of investment to date in development, operations, product qualification and commercial sales; deep operating experience Balama Bankable NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION I
Slide 17: Syrah fundamentally changing Balama sales composition
Syrah fundamentally changing Balama sales composition Driving toward higher and more stable utilisation of Balama’s production capacity NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Balama natural graphite Balama natural graphite Target Balama natural graphite sales compos
Slide 18: Market and Supply Chain Update
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 2 Update Market and Supply Chain 18
Slide 19: Market and supply chain update
Market and supply chain update NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Major disruption to global natural graphite and anode material markets has continued with the implementation by the Chinese Government of export licence controls on 1 December 2023 for designate
Slide 20: Recent market conditions have been challenging
Recent market conditions have been challenging Global EV sales1 vs. China AAM production2 China Natural Graphite Production2 vs. China AAM Production2 200 2,000 200 NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 160 1,600 160 NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUT
Slide 21: China graphite controls immediately impacted ex-China market
China graphite controls immediately impacted ex-China market Chinese export data for graphite products in January 2024 and February 2024 has not been released China natural graphite exports (kt) China spherical graphite exports (kt) China natural graphite AAM exports (kt) 70 NOT FOR RELEASE TO US WI
Slide 22: Operational Update
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 3 Operational Update 22
Slide 23: Balama update
Balama update Production Continuing campaign operating mode in the March 2024 quarter, targeting ~30-day high-capacity utilisation production campaigns followed by curtailment NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES periods determined by inventory levels and new sa
Slide 24: Balama production, operations and sales
Balama production, operations and sales Plant operations and production in campaigns from Q2 to Q4 2023 Natural Graphite Production (kt) Product Mix (% Fines) NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 35 41 91% 91% 87% 88% 87% 15 18 20 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 202
Slide 25: Balama is the premier graphite resource and operation
Balama is the premier graphite resource and operation Ex-China natural graphite reserves and reserve grade1 Balama operating costs (US$/t FOB) at different production rates BALAMA 25 CUT-OFF 10kt per month 15kt per month 20kt per month 25kt per month ~30kt per month NOT FOR RELEASE TO US WIRE SERVIC
Slide 26: Balama's infrastructure in place and optimised over six years
Balama’s infrastructure in place and optimised over six years NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Process plant, product Ativa pit warehouse and ROM stockpiles Tailings 11.25 MWp storage solar facility photovoltaic (cells array 1 & 2) 26
Slide 27: Vidalia update
Vidalia update Vidalia Production, Qualification and Sales (11.25ktpa AAM Vidalia Facility) Syrah commenced integrated AAM production in early February 20241 Vidalia operations team is fully staffed with 101 employees engaged in the commissioning process and ramping up operations and production
Slide 28: 11.25ktpa AAM Vidalia facility commenced production in February 2024
11.25ktpa AAM Vidalia facility commenced production in February 2024 NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Milling Purification area area Land for Vidalia Further Expansion to 45ktpa AAM 11.25ktpa AAM facility 11.25ktpa (milling area) AAM facility (furnace area) Fu
Slide 29: Vidalia is the cornerstone of Syrah's downstream business
Vidalia is the cornerstone of Syrah’s downstream business Downstream expansion is underpinned by Balama’s world-class resource Vidalia, USA NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Asia (ex-China) Joint Venture / Tolling (>20ktpa) Technology Support to 3rd Party (ex-C
Slide 30: Transaction Details
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 4 Transaction Details 30
Slide 31: Equity Raising overview
Equity Raising overview Syrah is undertaking a fully underwritten Equity Raising of ~A$98m consisting of: ‒ A fully underwritten Placement to raise approximately A$61m (US$41m 1) Offer Structure ‒ A fully-underwritten 1 for 10.2 pro-rata non-renounceable Entitlement Offer of New Shares to eligible
Slide 32: AustralianSuper Series and Notes Conversion
AustralianSuper Series 1 and 3 Notes Conversion Overview Process Syrah and AustralianSuper agreement to revise the conversion price and for Syrah intends to propose the Series 1 and 3 Notes Conversion resolutions at its 2024 AustralianSuper to convert the Series 1 and 3 Notes, subject to Syrah s
Slide 33: Syrah pro forma capital structure and financial position
Syrah pro forma capital structure and financial position Pro Forma for Equity Pro Forma for Equity Series 1 and 3 NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Pro forma metrics Status Quo1 Equity Raising7 Raising & Series 1 and 3 Raising Notes Conversion8 Notes Conversion
Slide 34: Syrah pro forma shareholding
Syrah pro forma shareholding Syrah shares held by % Syrah shareholding held All Syrah shares AustralianSuper and associates by AustralianSuper and (millions) (millions)5 associates5 NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Syrah fully paid ordinary shares on issue1 67
Slide 35: Equity Raising timetable
Equity Raising timetable NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Event Date Trading Halt Wednesday, 13 March 2024 Announcement of Offer Wednesday, 13 March 2024 Placement and Institutional Entitlement Offer opens Wednesday, 13 March 2024 Placement and Institutional E
Slide 36: Key Risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 5 Key Risks 36
Slide 37: Key risks
Key risks This section discusses some of the key risks associated with any investment in Syrah, which may affect the value of Syrah shares. The risks set out below are not necessarily listed in order of NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES importance and do not co
Slide 38: Key risks (continued)
Key risks (continued) Mineral Resources and Ore Reserves are estimates of mineralisation that have reasonable prospects for eventual economic extraction in the future, as defined by the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“J
Slide 39: Key risks (continued)
Key risks (continued) Details of the sources and uses of the funds to be raised under the Offer are set out on page 15 of this presentation. The funds raised under the Offer, together with Syrah’s existing cash NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES reserves, are cu
Slide 40: Balama Graphite Operation
Key risks (continued) Balama Graphite Operation At Balama, there is a risk that difficulties may arise as part of the processing and production of minerals, including failures in plant and equipment, difficulties in obtaining and importing NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE U
Slide 41: Vidalia Active Anode Material Facility
Key risks (continued) Vidalia Active Anode Material Facility NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES At Vidalia, there is a risk that difficulties may arise as part of the production of nature graphite active anode material, including failures in plant and equipment,
Slide 42: Key risks (continued)
Key risks (continued) Syrah’s businesses are subject, in each of the countries in which it operates, or the countries into which it sells its Products, to various national and local laws and regulations relating to, among other things, construction, exploration and mining activities as well as the i
Slide 43: Key risks (continued)
Key risks (continued) The ability of Syrah to achieve its stated objectives will depend on the performance of contractual counterparties. NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Syrah has entered into sales, marketing and distribution agreements for the Balama Graphi
Slide 44: Offtake Agreements
Key risks (continued) As announced to ASX on 23 December 2021 and 29 December 2021, Syrah entered into an offtake agreement with Tesla, Inc. to supply 8kt per annum of natural graphite Active Anode Material from Syrah’s production facility in Vidalia. The offtake obligation is subject to the satisfa
Slide 45: Key risks (continued)
Key risks (continued) Environmental regulations in the jurisdictions in which Syrah has operations impose significant obligations on companies that conduct the exploration for and mining of commodities. These regulations also cover the processing of ores into final products and subsequent transporta
Slide 46: Key risks (continued)
Key risks (continued) Syrah’s operations could be affected by political instability in Australia, Mozambique, the USA, UAE, China or other countries or jurisdictions in which it has operations, investment interests, NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES conducts ex
Slide 47: Currency and Exchange
Key risks (continued) Syrah’s activities may generate revenues, and Syrah may incur expenses, in a variety of different currencies, meaning its financial performance and position are impacted by fluctuations in the value of relevant currencies and exchange rates. In particular, Syrah is required to
Slide 48: Share Price Fluctuations
Key risks (continued) The market price of the Company’s shares will fluctuate due to various factors, many of which are non-specific to Syrah, including recommendations by brokers and analysts, Australian and international general economic conditions, inflation rates, interest rates, changes in gove
Slide 49: Key risks (continued)
Key risks (continued) Syrah has entered into an underwriting agreement with Jarden Australia Pty Ltd ("Lead Manager"). The Lead Manager has agreed to act as sole lead manager and underwriter in relation to the NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Entitlement Offer
Slide 50: Key risks (continued)
Key risks (continued) a director of Syrah: I. is charged with an indictable offence relating to any financial or corporate matter or any regulatory body commences any public action against the director in his or her capacity as a director of Syrah or announces that it intends to take any such acti
Slide 51: Key risks (continued)
Key risks (continued) any of the following occurs: NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES I. a general moratorium on commercial banking activities in Australia, the United States or the United Kingdom is declared by the relevant central banking authority in any of
Slide 52: International Offer Restrictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 6 International Offer Restrictions 52
Slide 53: International offer restrictions
International offer restrictions International Offer Restrictions This document does not constitute an offer of new ordinary shares (“New Shares”) of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares m
Slide 54: International offer restrictions
International offer restrictions European Union This document has not been, and will not be, registered with or approved by any securities regulator in the European Union. Accordingly, this document may not be made available, nor may the New Shares be offered for sale, in the European Union except i
Slide 55: International offer restrictions
International offer restrictions Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in co
Slide 56: International offer restrictions
International offer restrictions United States This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The New Shares have not been, and will not be, registered under the US Securities Act of 1933 or the NOT FOR RELEASE TO US WIRE SE