Syrah Resources Limited · ASX:SYR
Syrah Resources — Investor Presentation (June 2019)
51 slides from Syrah Resources's investor presentation, Jun 19, 2019
Slide 1: Convertible Note and Entitlement Offer Presentation
For personal use only Convertible Note and Entitlement Offer Presentation 19 June 2019 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 0 0
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES IMPORTANT: You must read the following before continuing. This presentation has been prepared by Syrah Resources Limited (ABN 77 125 242 284) (and / or its subsidiaries, as the context requires
Slide 3: Important notice and disclaimer
Important notice and disclaimer For personal use only Non-IFRS Financial Measures NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Investors should also be aware that certain financial data included in this presentation may be "non‐IFRS financial information" under Regulatory Guide 230 Disclosin
Slide 4: Important notice and disclaimer
Important notice and disclaimer For personal use only Not an offer NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES This presentation is not and should not be considered an offer or an invitation to acquire Company securities or any other financial products and does not and will not form any par
Slide 5: Table of contents
Table of contents For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Company update and transaction overview 5 Balama Graphite Operation and marketing update 10 Battery Anode Material (BAM) strategy 22 Vanadium Resource 25 Transaction details 27 Key risks 34 International off
Slide 6: Overview and transaction overview
For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Company update and transaction overview 5 Photo: Bagged Balama Graphite Product
Slide 7: Balama Graphite Operation and funding summary
Company update For personal use only • Commercial production(1) declared with effect from 1 January 2019(2) NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Q2 2019 Balama production expected to be approximately 45kt(3) (vs. 48kt in Q1 2019, 33kt in Q4 2018) • Balama progressing towards expect
Slide 8: Transaction overview
Transaction overview For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Syrah’s ramp-up at the Balama Graphite Operation (Balama) continues and is nearing production volumes that are expected to generate positive operating cash flows • Balance sheet solid (~US$43m cash posi
Slide 9: Transaction rationale
Transaction rationale For personal use only • Pricing for natural graphite products is opaque and drivers are complex. Contract prices are subject to direct negotiation NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Pricing depends on various market factors, including segment demand, quality
Slide 10: Investment highlights
Investment highlights For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Long life asset, with over 50 years of mine life(1) and 350kt per year of graphite concentrate production capability(2) • Balama is the largest integrated natural graphite mine and processing plant glo
Slide 11: Balama Graphite Operation and marketing update
For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Balama Graphite Operation and marketing update 10 Photo: Balama Graphite Operation Process Plant
Slide 12: Balama Graphite Operation – a Tier 1 producing asset
Balama Graphite Operation – a Tier 1 producing asset For personal use only Location • Mozambique (Cabo Delgado Province) NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Reserves and • Graphite Reserves: 113.3Mt at 16.4% Total Graphitic Carbon (TGC) – 18.5Mt of contained graphite Resources(1) •
Slide 13: Ramp-up of the world's largest graphite mine well progressed
Ramp-up of the world’s largest graphite mine well progressed For personal use only • Continued delivery of production improvement plan expected, target of 82% flake graphite recovery by the end of 2019(1) NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Performance in Q2 2019 to date has been
Slide 14: Enablers in place expected to deliver improved operational performance
Enablers in place expected to deliver improved operational performance For personal use only • Root-causes of recovery losses are known, structured process in place to implement recovery loss mitigations to achieve NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES recovery targets • Production im
Slide 15: Product mix and finished product grade optimisation
Product mix and finished product grade optimisation – near term enablers for improved weighted average price For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Syrah’s Product Suite Syrah’s Product Mix • Syrah classifies its products by mesh size (#) and Fixed Carbon (FC%) •
Slide 16: Evaluating option to transition Balama to dry stacking of tailings
Syrah evaluating option to transition Balama to dry stacking of tailings to provide life of mine financial and environmental benefits For personal use only Context NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Current design and operation of Balama Tailings Storage Facility (TSF) conforms t
Slide 17: Price ranges achieved to date from initial market entry
Price ranges achieved to date result from initial market entry and expansion of the customer base by sector and geography For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Product Price Ranges Achieved in 2019 YTD (US$/t, CIF basis) Coarse Flake Products (+50#, +80#, +100#)
Slide 18: Key variables of weighted average price have strong upside potential
Key variables of Syrah weighted average price have strong upside potential For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • In the short term, production and marketing flexibility needs to be maintained to react to supply / demand dynamics and conduct orderly price negoti
Slide 19: Sales prices determined by short term market balance
Syrah’s sales prices are primarily determined by the short term market balance – frequent pricing provides exposure to market demand growth For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • The proposed capital raising is expected to provide Syrah flexibility to balance Ba
Slide 20: Base case demand view supports Balama reaching full capacity
Base case demand view supports Balama reaching full capacity; driven by battery anode material and China flake graphite demand For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Significant fines growth driven by battery anode material demand China expected to soon become a n
Slide 21: Syrah is the primary source of ex-China supply
Syrah is the primary source of ex-China supply For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4 Estimated 2019 global natural flake graphite production (kt) (1) 500 3.5 Norway Russia Higher Production Estimated 2019 flake graphite production (kt) Ukraine 400 3 China Lower
Slide 22: China has structurally changed the trade flow of commodities before
China has structurally changed the trade flow of commodities before; market balance and quality differentials will drive imports For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Despite having its own significant natural endowment of iron ore and coal, China has shown a g
Slide 23: Battery Anode Material (BAM) strategy
For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Battery Anode Material (BAM) strategy 22 Photo: Syrah’s BAM plant in Louisiana
Slide 24: Vidalia battery anode material plant – key for market progression
Vidalia (Louisiana) battery anode material plant – key for market progression through qualification and product development For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Lithium-ion battery supply chain – Natural Graphite Mar 2018 Syrah precursor(1) testing and benchmark
Slide 25: Uncoated natural spherical graphite supply was entirely Chinese
Until recently, uncoated natural spherical graphite supply was entirely Chinese – Syrah can provide an alternative source of supply For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Source: Syrah Resources Internal Analysis 24
Slide 26: Vanadium Resource
For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Vanadium Resource 25 Photo: Balama Graphite Open Pit Mining Operation
Slide 27: Syrah's vanadium opportunity
Syrah’s vanadium opportunity For personal use only • NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Vanadium in the processed graphite ore, which currently reports to tailings, can be refined into a saleable product (V 2O5)(1) and presents a medium term, high value opportunity • Balama is a gl
Slide 28: Transaction details
For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction details 27 Photo: Balama on-site laboratory
Slide 29: Sources and uses of proceeds
Sources and uses of proceeds For personal use only Sources and Uses(1) Comments NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Sources A$m US$m • Syrah’s ramp-up at the Balama Graphite Operation (Balama) continues and is nearing production volumes that are expected to generate positive Expecte
Slide 30: Convertible Note overview
Convertible Note overview For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Unsecured Security and status • Prior to conversion, the Convertible Note will rank equally with all other unsecured and unsubordinated debt obligations of Syrah • A$55.8 million (~US$38.2 million)
Slide 31: Convertible Note overview (continued)
Convertible Note overview (continued) For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Syrah may terminate the Convertible Note Deed and not proceed with issuing the Convertible Note (subject to payment of a break fee, as described below), if it receives: • a financing of
Slide 32: Timetable - Convertible Note
Timetable - Convertible Note For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Event Date Execution and announcement of Convertible Note Deed Wednesday, 19 June 2019 (pre-market open) Notice of General Meeting to approve Convertible Note issue dispatched Tuesday, 25 June 201
Slide 33: Entitlement Offer Overview
Entitlement Offer Overview For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • 1 for 5 fully underwritten pro-rata accelerated non-renounceable Entitlement Offer ("Offer" or “Entitlement Offer") at A$0.81 per New Share to raise Offer size and approximately A$55.8m (approxima
Slide 34: Timetable – Entitlement Offer
Timetable – Entitlement Offer For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Event Date Trading halt and announcement of capital raising Wednesday, 19 June 2019 (pre-market open) Institutional Entitlement Offer opens Wednesday, 19 June 2019 Institutional Entitlement Offer
Slide 35: Key risks
For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks 34 Photo: Balama Ore
Slide 36: Key risks
Key risks For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES COMMODITY PRICE RISK The demand for, and the price of, natural flake and spherical graphite is highly dependent on a variety of factors, including international supply and demand of graphite and substitutes, the pri
Slide 37: Key risks
Key risks For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES MINERAL RESOURCES 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 AND ORE RESERVES Edition of
Slide 38: Key risks
Key risks For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES GEOLOGICAL AND In addition, there is a risk that unforeseen geological or geotechnical issues may be encountered when developing and mining ore reserves, such as unusual or unexpected GEOTECHNICAL RISKS geological c
Slide 39: Key risks
Key risks For personal use only ENVIRONMENTAL Environmental regulations in the jurisdictions in which Syrah has operations impose significant obligations on companies that conduct the exploration for and mining of NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES MATTERS commodities. These regula
Slide 40: Key risks
Key risks For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES REMOTE OPERATING Due to the remoteness of the Balama Graphite Operation, Syrah is subject to an increased number of risks including a lack of access to key infrastructure, security requirements, ENVIRONMENT rising f
Slide 41: Key risks
Key risks For personal use only Syrah’s operations could be affected by political instability in Australia, Mozambique, the USA, UAE or China or other countries or jurisdictions in which it has operations, NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES SOVEREIGN/POLITICAL RISK, WAR AND investm
Slide 42: Key risks
Key risks For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NATURAL DISASTERS As with any mining operation, Syrah is also at risk of natural disasters, both to the mine site and also to the logistics chain, which may include among other matters, abnormal or severe weather co
Slide 43: Key risks
Key risks For personal use only Relative to the Balama Graphite Operation, Syrah’s Battery Anode Material Project is at an early stage. Accordingly, it is subject to a range of risks and variables which may NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES BATTERY ANODE MATERIAL impact upon Syrah
Slide 44: Key risks
Key risks For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES LIQUIDITY AND CAPITAL Syrah's continued ability to operate its business and effectively implement its business plan over time will depend in part on its ability to generate free cash flow, to raise funds for MANAGEM
Slide 45: Key risks
Key risks For personal use only CURRENCY AND 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 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES EXCHANGE RATE RISK fluctuatio
Slide 46: Key risks
Key risks For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES INSURANCE RISKS Syrah maintains insurance coverage as determined appropriate by its Board and management, but no assurance can be given that Syrah will continue to be able to obtain such insurance coverage at reason
Slide 47: International offer restrictions
For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions 46 Photo: Balama flotation
Slide 48: International offer restrictions
International offer restrictions For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International Offer Restrictions This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not
Slide 49: International offer restrictions
International offer restrictions For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the New Shares purchased pursuant to
Slide 50: International offer restrictions
International offer restrictions For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shares a
Slide 51: International offer restrictions
International offer restrictions For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or any other stock exchange or regulated trading facility in Switzerland.