Syrah Resources Limited · ASX:SYR
Syrah Resources — Investor Presentation (October 2012)
56 slides from Syrah Resources's investor presentation, Oct 10, 2012
Slide 1: Syrah Resources October 2012
For personal use only Syrah Resources October 2012
Slide 2: Important notice and disclaimer
For personal use only Important notice and disclaimer IMPORTANT: You must read the following before continuing. This presentation has been prepared by Syrah Resources Limited (ABN 63 009 193 980) ( “Company”). Summary information This presentation contains summary information about the Company and i
Slide 3: Important notice and disclaimer (cont.)
For personal use only Important notice and disclaimer (cont.) Future performance This presentation contains certain "forward‐looking statements". The words "expect", "anticipate", "estimate", "intend", "believe", "guidance", "should", "could", "may", "will", "predict", "plan" and other similar expre
Slide 4: Important notice and disclaimer (cont.)
For personal use only Important notice and disclaimer (cont.) This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of, any 'U.S. person‘ (as defined in Regulation S under the U.S. Secu
Slide 5: Table of contents
For personal use only Table of contents 1. Offer Details 2. Company Overview 3. Industry Overview 4. Balama Project 5. Upside Opportunities 6. Key Risks 7. Selling restrictions 4
Slide 6: Offer Details
Unsaved Document / 21/09/2012 / 20:01 For personal use only 1. Offer Details 5
Slide 7: Equity raising
For personal use only Equity raising Offer Syrah Resources is offering approximately 7.15 million New Shares at $2.25 per New Share to raise structure approximately $16 million via an Institutional Placement to professional and sophisticated investors (“the Offer”) New Shares issued will rank eq
Slide 8: Equity raising: indicative timetable
For personal use only Equity raising Indicative timetable(1) Wednesday 10 October SYR enters trading halt (after market close) Wednesday 10 October Announcement of Institutional Placement and Bookbuild opens (after market close) Bookbuild closes Thursday 11 October Settlement under the Institutional
Slide 9: Company Overview
Unsaved Document / 21/09/2012 / 20:01 For personal use only 2. Company Overview 8 8
Slide 10: Syrah Resources
For personal use only Syrah Resources Strategic focus on exploration for and development of high value graphite and related Uganda Kenya Rwanda mineral deposits in Southern African Democratic Republic Burundi Tanzania Key focus is the Balama Graphite Project in of the Congo Wembere Tanzania HM M
Slide 11: Investment highlights
For personal use only Investment highlights Highly strategic flake graphite discovery at Balama, Mozambique Potential to be a globally significant, large flake, high grade natural graphite deposit Over 7km strike distance and up to 2km of surface width of outcropping graphite and vanadium High
Slide 12: Board of Directors
For personal use only Board of Directors Tom Eadie Non‐Executive Chairman (since 2007) 30+ years experience in the Australian and international resource sector Also Executive Chairman of Copper Strike Ltd Paul Kehoe Managing Director (since 2011) 15+ years experience in corporate finance and r
Slide 13: Current capital structure
For personal use only Current capital structure Overview Syrah share price and volume – last 2 years ASX listed $5.00 6.0 Market capitalisation (undiluted) of ~A$340 million at $4.50 A$2.68/share as at 10 October 2012 5.0 $4.00 126,723,021 shares on issue $3.50 First Balama drill hole results
Slide 14: Industry Overview
Unsaved Document / 21/09/2012 / 20:01 For personal use only 3. Industry Overview 13
Slide 15: Introduction to graphite
For personal use only Introduction to graphite Overview World graphite market based on graphite type Principal characteristics of graphite include 2010 natural graphite world production − Resistant to corrosion and heat ~925,000 – ~1,100,000 tonnes − Excellent conductor of heat and electricity − H
Slide 16: Characteristics of a good flake graphite deposit
For personal use only Characteristics of a good flake graphite deposit Characteristic Balama Large flake size – usually a higher purity of concentrate Latest metallurgy test work shows around half of concentrate in medium – jumbo flake size ranges High grade – determines project cash costs a
Slide 17: Current supply and uses for natural graphite
For personal use only Current supply and uses for natural graphite USGS estimated world resources: 77Mt Current natural graphite industry uses India 14% Other 10% Other Batteries Steel & 14% China 10% Refractory 72% 41% Carbon Brushes 11% Natural graphite production According to USGS, China’s Lubric
Slide 18: Non-Chinese sources of supply becoming increasingly strategic
For personal use only Significant, high quality, non‐Chinese sources of supply are becoming increasingly strategic in nature Supply issues are appearing Range of emerging technology uses to drive demand Majority of Chinese production is low quality amorphous Traditional steel industry applicatio
Slide 19: Natural flake graphite pricing and demand
For personal use only Natural flake graphite pricing and demand Benchmark graphite prices have more than doubled since 2007 Some softening in Chinese refractory and steel demand has recently weakened prices Prices have dramatically increased over the past few years… …with battery technology expe
Slide 20: Refractories account for ~40% of current graphite demand
For personal use only Refractories account for ~40% of current graphite demand Graphite is used as an additive to boost the quality of the World crude steel consumption refractory Natural graphite is preferred trending towards the use of graphite with higher grades and higher flake sizes for bet
Slide 21: Battery market – up to 10% of current graphite market
For personal use only Battery market – up to 10% of current graphite market Overview of lithium‐ion batteries Current uses of Li‐ion batteries EVs Lithium‐ion batteries is a fast growing battery segment 6.6% HEVs / PHEVs ~US$14 billion market in 2011 2.0% Consumer Expected to rapidly grow, dri
Slide 22: Major automaker PHEVs, HEVs and EVs scheduled for release
For personal use only Major automaker PHEVs, HEVs and EVs scheduled for release Japanese firms have lead the development of eco‐cars, with Company Model Category Toyota’s Prius (1997) and Honda’s Insight (1999) at the Prius ɑ HEV HEV RAV 4 EV EV vanguard iQ EV Prius now the third top selling car
Slide 23: Large-scale fuel-cell applications being developed
For personal use only Large‐scale fuel‐cell applications are being developed that could consume as much graphite as all other uses combined Unlike batteries, fuel cells both generate and store electricity Fuel cell design through chemical reactions Over 70MW of installed fuel cell capacity in th
Slide 24: Other emerging graphite uses – Pebble bed nuclear reactors
For personal use only Other emerging graphite uses – Pebble bed nuclear reactors Generation IV nuclear reactors (pebble bed reactors) are smaller, safer and more economic to construct and operate Nuclear fuel comprises uranium dioxide particles embedded in machined graphite spheres Both synthe
Slide 25: Balama Project
Unsaved Document / 21/09/2012 / 20:01 For personal use only 4. Balama Project 24
Slide 26: Balama overview
For personal use only Balama overview Over 7km strike distance and up to 2km of surface Location width of outcropping graphite and vanadium Balama is a high quality graphite deposit − Coarse grained flakes − High grade zones >20% graphite Located 240 km west of Pemba port − 109 km2 granted Pro
Slide 27: Indicative project timeline
For personal use only Indicative project timeline(1) CY2011 CY2012 CY2013 CY2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Acquisition of Balama project Drilling started First major drill results Metallurgical testing results JORC resource Scoping study Feasibility study Development Commission
Slide 28: Balama 3D view from North
For personal use only Balama 3D view from North Over 40 diamond drill holes have been completed in two zones: Balama West and Balama East − Comprise small portion of overall Balama project − The central area of the deposit is only lightly explored Resource estimates for both Balama West and Bala
Slide 29: Balama West
For personal use only Balama West Drilling results from 5 drill holes at Balama West were announced in Sep‐12, with wide intercepts of very high grade graphite and vanadium returned − BMDD0006: 196m @16.9% TGC and 0.41 V2O5 from 100m to 296m − BMDD0007: 186m @ 16.7% TGC and 0.46 V2O5 from 131 m to
Slide 30: Balama West (cont.)
For personal use only Balama West (cont.) Cross section Two very high grade zones intercepted to date at Balama West The first has widths up to 196m and averaging between 10 – 17% TGC. This zone is open to the west and east The second has widths up to at least 100m and averaging between 15 – 2
Slide 31: Balama West (cont.)
For personal use only Balama West (cont.) Graphite rich drill core View of section BMDD0007 under the microscope. The 23.3% TGC and 0.455% V2O5 bronze coloured mineral shown is graphite. Gangue minerals shown are mostly quartz and calcite. The field of view is 2mm across indicating that almost
Slide 32: Balama East
For personal use only Balama East Syrah has completed 25 diamond drill holes at Balama East − Most have intersected thick mineralised sequences starting from surface Assays pending 31
Slide 33: Metallurgy
For personal use only Metallurgy Overview Flake size results Metallurgical test work has been conducted on a 58 kg 47% of the concentrate has a flake size in the medium to sample of Balama graphitic material by Mintek(1) jumbo range, with the mix of flake sizes considered ideal for Final resul
Slide 34: Processing flowchart
For personal use only Processing flowchart Rod mill Flotation Feed Product Flotation Graphite processing is very simple with graphite being highly Product amenable to flotation Vanadium expected to be present in tailings (methods for economical Pebble mill extraction currently under Flotation in
Slide 35: Balama infrastructure
For personal use only Balama infrastructure Balama is located 240 km west of deep water port facilities at Pemba − Third largest port in Mozambique − Anticipated that Balama graphite concentrate will be transported and shipped from Pemba Port Less than 1km from major road connecting the project
Slide 36: Mozambique overview
For personal use only Mozambique overview Annual GDP growth Population 23 million, former Portuguese colony 15.0% One of sub‐Saharan Africa's fastest growing economies, averaging annual GDP growth of 7.2% over 2005‐2011 − EIU forecast GDP growth of 7.4% for FY12 and average real 5.0% growth of 8
Slide 37: Investment highlights
For personal use only Investment highlights Highly strategic flake graphite discovery at Balama, Mozambique Potential to be a globally significant, large flake, high grade natural graphite deposit Over 7km strike distance and up to 2km of surface width of outcropping graphite and vanadium High
Slide 38: Upside Opportunities
Unsaved Document / 21/09/2012 / 20:01 For personal use only 5. Upside Opportunities 37 37
Slide 39: Vanadium prospectivity at Balama
For personal use only Vanadium prospectivity at Balama Vanadium represents significant potential upside although economics are very favourable on the graphite alone − Roscoelite, the main vanadium ore mineral, has been shown to separate from the graphite during flotation − Roscoelite is metallurgi
Slide 40: Nachingwea graphite project
For personal use only Nachingwea graphite project Nachingwea is located in Tanzania Reported strike length of 2.8km, width 1km and hosted on hills rising 200m from the plains High grade, coarse flake graphite has been observed − Visual grades up to 60% graphite reported − Historical report ind
Slide 41: Other opportunities
For personal use only Other opportunities Tanzania mineral sands Syrah controls >1,000km2 − Strike extent of ~100km of prospective coastline Geology conducive to build up of mineral sands deposit World class Kwale deposit 70km to the north All prospects are lightly drilled and have open zone
Slide 42: Key Risks
Unsaved Document / 21/09/2012 / 20:01 For personal use only 6. Key Risks 41
Slide 43: Key risks
For personal use only Key risks This section discusses some of the risks associated with an investment in Syrah Resources. Syrah Resources‘ business is subject to a number of risk factors both specific to its business and of a general nature which may impact on its future performance and forecasts.
Slide 44: Key risks: specific risks
For personal use only Key risks Specific risks Commodity price The demand for, and the price of, commodities are highly dependent on a variety of factors, including international supply and demand, risk the price and availability of substitutes, actions taken by governments and global economic and p
Slide 45: Key risks: specific risks (cont.)
For personal use only Key risks Specific risks (cont.) Non‐JORC There can be no assurance that any of the tenements, or any other licences which may be acquired in the future, will result in the discovery of an economic deposit. Even if an economic deposit is identified, there is no certainty that i
Slide 46: Key risks: specific risks (cont.)
For personal use only Key risks Specific risks (cont.) Funding risk The Company's continued ability to operate its business and effectively implement its business plan over time will depend in part on its ability to raise funds for operations and development activities and to service, repay and refi
Slide 47: Key risks: specific risks (cont.)
For personal use only Key risks Specific risks (cont.) Remote Due to the remoteness of the Balama Project and the other areas in which the Company intends to undertake exploration work the operating Company is subject to risks which include lack of infrastructure (such as port and electricity) and u
Slide 48: Key risks: specific risks (cont.)
For personal use only Key risks Specific risks (cont.) Currency and As the Company’s activities may potentially produce revenues and does incur expenses in a variety of different currencies, its financial exchange rate performance and position are impacted by fluctuations in exchange rates. Accordin
Slide 49: Key risks: specific risks (cont.)
For personal use only Key risks Specific risks (cont.) Tax risk The Company is subject to taxation and other imposts in Australia, Mozambique and other jurisdictions in which the Company has activities, investments and exploration interests. Future changes in taxation laws in those countries, includ
Slide 50: Key risks: specific risks (cont.)
For personal use only Key risks Specific risks (cont.) Litigation The Company is not currently involved in any litigation or disputes. However, the Company may become involved in unforeseen litigation and disputes which could have a material adverse effect on the Company, its operations and its fina
Slide 51: Selling restrictions
Unsaved Document / 21/09/2012 / 20:01 For personal use only 7. Selling restrictions 50
Slide 52: Foreign Selling Restrictions
For personal use only Foreign Selling 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. New Shares may not be offered or sold in any country outside Australi
Slide 53: Foreign Selling Restrictions (cont.)
For personal use only Foreign Selling Restrictions (cont.) Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies Ordinance (Cap. 32) of Hong Kong (the "Companies Ordinance"), nor has it been authorised by the Securities and Futures Commission
Slide 54: Foreign Selling Restrictions (cont.)
For personal use only Foreign Selling Restrictions (cont.) Canada (British Columbia, Ontario and Quebec provinces) This document constitutes an offering of New Shares only in the Provinces of British Columbia, Ontario and Quebec (the "Provinces") and to those persons to whom they may be lawfully dis
Slide 55: Foreign Selling Restrictions (cont.)
For personal use only Foreign Selling Restrictions (cont.) Canada (British Columbia, Ontario and Quebec provinces) (cont.) 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 purcha
Slide 56: Foreign Selling Restrictions (cont.)
For personal use only Foreign Selling Restrictions (cont.) Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared witho
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