Syrah Resources Limited · ASX:SYR
Syrah Resources — Deutsche Bank – Australian Future Metals Corporate Day 2017
48 slides from Syrah Resources's conference presentation, May 25, 2017
Slide 1: Deutsche Bank – Australian Future Metals Corporate Day
For personal use only Deutsche Bank – Australian Future Metals Corporate Day Sydney – 25 May 2017 Shaun Verner – Managing Director & CEO
Slide 2: Disclaimer
Disclaimer For personal use only This presentation is for information purposes only. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction. This presentation may
Slide 3: Syrah Resources – The Future of Graphite
Syrah Resources – The Future of Graphite For personal use only The only major, fully funded, natural graphite development project in construction globally Will be the largest natural graphite producer globally, oriented to battery market growth A world class, tier-1 asset by any measure Sign
Slide 4: What is graphite?
What is graphite? For personal use only Graphite is a grey crystalline allotropic form of carbon and is known for its electrical conductivity, lubrication and resistance to corrosion and high temperatures. Graphite ore is mined and then processed via simple flotation before being dried and class
Slide 5: Global graphite market definition and flow
Global graphite market definition and flow For personal use only Global Graphite Market Flow (2016) Total Graphite Natural 2.45 Mt Synthetic • The total graphite market refers to Graphite Graphite the sum of natural and synthetic 950, 000t 1.5 Mt graphite production. End Use Markets • Synthetic grap
Slide 6: Syrah's integrated supply chain will service traditional and battery markets
Syrah’s integrated supply chain will service traditional industrial and growth battery markets from start up For personal use only Balama ore Processing Export Traditional markets (Mozambique) - Refractory - Grinding - Lubricants - Flotation - Recarburisers - Screening - Bagging Lithium ion battery
Slide 7: Balama has the largest defined reserve and significant grade advantage
Syrah’s Balama project has the largest defined reserve and significant grade advantage For personal use only 160 Syrah Resources’ low-grade stockpiles at 2 – 9% TGC will be greater than most other proposed 140 projects’ head grade Volt Resources 120 18.9 Mt at 9% TGC cut- Syrah Resources off 100 Mag
Slide 8: Tailings storage facility
Tailings storage facility For personal use only Truck parking area Administration Building Fixed plant workshop Raw water dam Power station Product storage building Fuel storage facility Process plant 77 ROM pad 50m
Slide 9: Balama commissioning activities have commenced with first production August 2017
Balama commissioning activities have commenced with first production scheduled for August 2017 For personal use only Balama Project is approaching 80% complete; commissioning activity has commenced Capital budget remains at US$193 million plus a project contingency of US$7 million Production r
Slide 10: Major project metrics highlight the attractiveness of the Balama investment
Major project metrics highlight the attractiveness the Balama investment For personal use only Capital Intensity Strip Ratio (US$ invested or proposed / tonne of capacity) (tonne of waste per tonne of graphite ore) 4.0 2.00 3.0 1.50 2.0 1.00 1.0 0.6 0.50 0.04 0.0 0.00 Australia Mozambique Mozambique
Slide 11: Syrah's graphite is in demand, and characteristics provide advantages
Syrah’s graphite is in demand, and characteristics provide production and cost advantages For personal use only Characteristics of Syrah Resources’ graphite 1 Optimal flake size -100 mesh maximises production yield for battery Syrah Resources Spherical Graphite market. +100 mesh material primaril
Slide 12: In 2016, approximately 75% of natural flake graphite was sourced from China
In 2016, approximately 75% of natural flake graphite was sourced from China For personal use only Norway 10,000t Russia Canada 9,000t 5,000t Ukraine 11,000t China 490,000t India 25,000t Madagascar Brazil 8,000t 90,000t Zimbabwe <5,000t Global Total ~650,000t Source: Syrah Resources, Benchmark Minera
Slide 13: Chinese domestic supply of natural graphite is declining
Chinese domestic supply of natural graphite is declining at a time of increased demand For personal use only China natural flake graphite production Issues Ktpa Grade Decline 700 Forecast -25% Ore grades have dropped from >10% to 5 -10% 660 across the country in recent years. High quality -20% graph
Slide 14: By 2020 Syrah will be the largest natural flake graphite producer
By 2020 Syrah will be the largest individual natural flake graphite producer in the world with ~40% market share For personal use only Norway 10,000t Russia 9,000t China 400,000t India 25,000t Mozambique 350,000t (100% SYR Namibia capacity) Brazil 20,000t 60,000t Madagascar 16,000t Global Total ~900
Slide 15: Syrah will be a first quartile producer
Syrah Resources will be a first quartile producer both during ramp up and at full capacity For personal use only Flake Graphite C1 Cost Curve (Not concentrate TGC adjusted, first 12 months of production for Syrah Resources, 2017/18) Source: Syrah Resources 14 14 Notes: Cost curves include current op
Slide 16: Balama production ramp up driven by strong global demand growth
Syrah’s Balama production ramp up will be driven by the strong global demand growth profile For personal use only Natural Flake Graphite Global Demand Forecast ktpa Sector 2016 – 2020 1,000 CAGR Batteries for: 900 Electric Vehicles ~20% 800 Power 700 Storage 600 Consumer Electronics 500 Other ~4% 40
Slide 17: Majority of incremental demand growth is for smaller flake used in batteries
Majority of incremental demand growth is for smaller sized flake used in the battery sector For personal use only Graphite Types, Market Size and Prices Mesh Size & End User Market Growth Current Price1 Syrah Resources Description Markets 2016 to 2020 & 2020 Market Value Product3 - 100 Batteries 315
Slide 18: Syrah's product quality and grade will command a premium price
Syrah’s product quality and grade will command a premium price For personal use only Flake prices are determined based on a range of value in The market already appreciates this value. An additional use variables such as graphite content, flake size and +1% of TGC equates to a +4 - +7% value uplift,
Slide 19: Price historically driven by steel; now and in future by battery demand
Price historically driven by steel and industrial applications; now and in future by battery demand For personal use only Graphite Price USD$ (USD, real 2016 terms) 1,400 Post Depressed prices for Japan, Korea & China New price depression 25 years as the global industrialization driver; 1,200 recove
Slide 20: Syrah's marketing strategy is diversified across end user markets and geographies
Syrah’s marketing strategy is to be diversified across end user markets and geographies For personal use only China direct flake & tolling Hairong Europe Morgan Traders Hairong Offtake SSI Morgan 4ktpa* Marubeni Refractory Hiller Marketing Offtake Producer SSI Carbon 14ktpa* 100ktpa* 15ktpa SSI 30kt
Slide 21: Syrah's flake concentrate sales are well progressed
Syrah’s flake concentrate sales are well progressed – all production will be placed For personal use only Customer Type Region Product Tonnes p.a. Duration Status Being operationalised (timing, customer Chalieco Offtake China Flake graphite 80,000 3 years volumes, pricing) Being operationalised (tim
Slide 22: Battery Anode Material – vertical integration
Battery Anode Material – vertical integration through production, partnership and development For personal use only Initial BAM team mobilised to Louisiana / COO appointed Finalising site lease for Qualification Plant Environmental permitting progressing well concurrently Front End Engineeri
Slide 23: Current downstream commercial arrangements for Battery Anode Material
Syrah’s current downstream commercial arrangements for Battery Anode Material For personal use only Customer Type Region Product Tonnes p.a. Duration Status Ongoing sample testing and Japan & Uncoated Marubeni Offtake 50,000 5 years customer engagement. Awaiting Korea spherical graphite production f
Slide 24: Blending natural and synthetic graphite in anodes
Blending natural and synthetic graphite in anodes enables a balance of performance and cost For personal use only Anode capacity and graphite type penetration Natural Synthetic 55% 30% 12% 25% 100% 50% 100% 25% Natural Graphite 100% penetration per anode producer 50% 20% 55% 33% 100% 100% 100% Volum
Slide 25: A higher proportion of natural graphite drives down battery cost
A higher proportion of natural graphite drives down battery cost, and improves capacity For personal use only Natural graphite Natural graphite anode active material has an average capacity +6% greater than synthetic graphite. Substituting a higher proportion of natural graphite into the anode reduc
Slide 26: Timetable
Timetable For personal use only 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Balama Graphite Project, Mozambique Balama Plant Construction Commissioning First Ore & Production Ramp Up Full Production Capacity BAM - Qualification Plant, Louisiana USA Development Customer Product Qualification BAM - Commercial Plan
Slide 27: Conclusion
Conclusion For personal use only Syrah is the only major natural graphite development project in construction globally, and is fully funded for production of graphite concentrate from Balama in only a few months’ time We have an extraordinary deposit – with almost 60 years mine life as the large
Slide 28: Appendices – Corporate overview
For personal use only Appendices Corporate overview 27 27 27
Slide 29: Corporate / Finance
For personal use only Corporate / Finance 28 28
Slide 30: The world's pre-eminent graphite resource
– The world’s pre-eminent graphite resource For personal use only Unsaved Document / 21/09/2012 / 20:01 Map imaged sourced from Routledge (Taylor & Francis Group) Flake Graphite Battery Anode Material 29
Slide 31: Our vision and values
Our vision and values For personal use only Syrah’s vision is to be the leading supplier of superior quality graphite products, working closely with our customers and supply chain to innovate and bring enhanced value to industrial and emerging technology markets globally. Syrah is committed to: • WO
Slide 32: Capital structure
Capital structure For personal use only Key details Geographic analysis of investors(1) Shares on issue 263.8m (as at 17 May 2017) Other Asia 2% Europe (ex. UK) 12% Options on issue 3% 9.3m (as at 17 May 2017) North America Unlisted performance rights 8% 0.8m (as at 17 May 2017) Australia UK 67% 8%
Slide 33: Short sell volume over the last months
Short sell volume over the last 12 months For personal use only 4,500,000 20.0% 4,000,000 18.0% 16.0% 3,500,000 14.0% 3,000,000 12.0% 2,500,000 10.0% 2,000,000 8.0% 1,500,000 6.0% 1,000,000 4.0% 500,000 2.0% 0 0.0% 2 May 2016 2 August 2016 2 November 2016 2 February 2017 2 May 2017 Daily short sell
Slide 34: Board of directors and executive management team
Board of directors and executive management team For personal use only Jim Askew Sam Riggall Dr. Christina Lampe-Onnerud Rhett Brans José Caldeira Non-Executive Chairman Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Over 40 years of experience Over 20 ye
Slide 35: Solid balance sheet with no debt
Solid balance sheet with no debt (as at 31 Mar 2017) For personal use only Fully funded to deliver the development of the Balama Project US$50 million to fund working capital requirements for the Balama Project through to positive cash flows across a range of reasonable assumptions 34 34
Slide 36: Balama Project
For personal use only Balama Project 35 35
Slide 37: Summary of Balama Project features
Summary of Balama Project features For personal use only Reserves: 114.5Mt at 16.6% TGC (18.6Mt contained graphite) Reserves and Resources(1) Resources: 1,191Mt at 11.0% TGC (128.5Mt of contained graphite) Simple open pit operation with low strip ratio; operations will commence as Mining Metho
Slide 38: Low risk and low cost mining drives a significant competitive advantage
Low risk and low cost mining drives a significant competitive advantage For personal use only Conventional truck and shovel mining methods Mining 2 Mtpa at a very low average strip ratio of 0.04:1 projected over the life of mine Strip ratio is inclusive of economic low grade ore (> 2% to < 9%
Slide 39: Balama commissioning will be staged sequentially
Balama commissioning will be staged sequentially to commence as section construction completes For personal use only Wet commissioning of the processing plant remains on schedule for Q2 2017, followed shortly afterwards by ore commissioning Commissioning will be staged to be completed in paralle
Slide 40: Across the graphite value chain, a quality supplier can capture attractive margins
Across the graphite value chain, a consistent, high quality supplier can capture attractive margins For personal use only Flake Uncoated Uncoated Coated Coated Graphite Spherical Spherical Spherical Spherical Products US$300/t (1) (1) US$2,300/t US$3,200/t(2) (2) US$3,200/t Cost US$2,300/t US$560/t
Slide 41: Traditional and developing markets for graphite
Traditional and developing markets for graphite offer a multi-channel marketing opportunity For personal use only Traditional markets Refractories – act as protective insulating materials in industrial processes which involve extremely high temperatures, corrosive and abrasive environments Lubri
Slide 42: Properties of flake graphite ensure the largest variety of applications
Non-metallic and metallic properties of flake graphite ensure the largest variety of applications For personal use only Graphite Types, Properties & Uses End Markets Graphite Type Disadvantages Advantages Metallurgical Batteries Technical Other Low cost, low impurities, Inconsistent Flake crystallin
Slide 43: Chinese exports have been on a downward trend since 2011
Chinese exports have been on a downward trend since 2011 due to the reduced availability of export quality material For personal use only China Flake Graphite Exports Ktpa 160 140 Trendline 120 100 80 60 40 20 0 2011 2012 2013 2014 2015 2016 Source: Syrah Resources, Ministry of Land and Resources 42
Slide 44: How much does an additional GWh of battery production impact flake graphite demand?
How much does an additional GWh of battery production impact flake graphite demand? It depends… For personal use only Factory to Flake Calculation Natural Natural 40% Flake Graphite Graphite recovery Feedstock Content Demand 3 4 5 20% 210t 462t 1 2 Factory Anode Material 40% 420t 924t Capacity 1 gig
Slide 45: BAM Project
For personal use only BAM Project 44 44
Slide 46: Why does product qualification take time?
Why does product qualification take time? For personal use only Demonstrating consistency in product across the qualification period places Syrah in a strong position Observed demand pressure on raw material supply is assisting in building relationships and facilitating collaboration with key cu
Slide 47: Establishing a Louisiana Product Qualification Plant
Establishing a Louisiana Product Qualification Plant will accelerate commerciality For personal use only 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 BAM - Qualification Plant, Louisiana USA Development Customer Product Qualification Detailed design completed and in discussions with US authorities on location a
Slide 48: A Perth based Technology Centre will provide sales and marketing data
A Perth based Technology Centre will provide sales and marketing data and optimise process development For personal use only 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 BAM - China / Perth China Pilot Plant Perth Technology Centre Currently specifying design, coordinating spheroidisation of material and purifi
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