Slide 1: Q2 2017 - Quarterly Activities Report
For personal use only Q2 2017 - Quarterly Activities Report July / August 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: Progress towards becoming the world's pre-eminent supplier of natural graphite
We continue to progress towards becoming the world’s pre-eminent supplier of natural graphite For personal use only Syrah Resources Quarterly Highlights Balama Finance & Downstream Topic Marketing Project Corporate Strategy Construction is over 90% Cash balance at end of Enhanced agreement Option id
Slide 4: Balama Graphite Project Update
Construction completion >90% and we remain on track to produce 140ktpa to 160ktpa in year one For personal use only Balama Graphite Project Update Delay to production commencement Topic Balama Graphite Project from late August to October Construction is over 90% complete. Delay driven by two issues:
Slide 5: Battery Anode Material Strategy Update
Our downstream strategy has progressed and we have signed a development agreement with Cadenza For personal use only Battery Anode Material Strategy Update Battery Anode Material (BAM) Technology Agreement with Topic Strategy Cadenza Innovation Inc Enter the battery anode material (BAM) market Testi
Slide 6: Mining agreement and working capital facility
The mining Agreement has reached the final stage and our working capital facility has progressed For personal use only Corporate Update Topic Mining Agreement Funding Mining Agreement collates all positions agreed and Working capital facility to ensure Syrah can Purpose developed with individual Min
Slide 7: Marketing Update: Marubeni and further sales agreements
We have enhanced our existing relationship with Marubeni and finalised two further sales agreements For personal use only Marketing Update Customer Marubeni Hiller Carbon MINERALS GmBH Progress Expanded Agreement Converted SSI into Agreement Converted SSI into Agreement Extended the agreement from V
Slide 8: Summary
Summary For personal use only Syrah remains on track to produce 140ktpa to 160ktpa in the first year of production. Minor delay to construction and full commissioning but we will soon develop into the world’s largest, low cost, high quality producer of natural graphite. Progress slower than desired
Slide 9: Supporting Information
For personal use only Supporting Information July / August 2017 88
Slide 10: 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 11: Corporate & Balama Project
For personal use only Corporate & Balama Project 10 10
Slide 12: 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, product mix oriented to battery market growth A world class, tier-1 asset by any me
Slide 13: First quartile producer during ramp up and at full capacity
Syrah will be a first quartile producer both during ramp up and at full capacity For personal use only Flake Graphite Producer Cost Curve: 2017/2018 Production ramp up volumes of flake graphite concentrate: Avg. Current Basket Price1 (95% TGC) – US$657/t • Year 1: 140kt to 160kt of production. • Yea
Slide 14: Attractive margins across the graphite value chain
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$600/t
Slide 15: Low risk and low cost mining drives competitive advantage
Low risk and low cost mining drives a significant competitive advantage For personal use only Conventional truck and shovel mining methods Mining 2 Mtpa at a very low average strip ratio of 0.04:1 projected over the life of mine Low grade ore (> 2% to < 9% TGC) will be stockpiled for potential
Slide 16: Summary of Balama Project features
Summary of Balama Project features For personal use only Reserves: 114.5Mt at 16.6% TGC (18.6Mt contained graphite) Reserves and Resources(1) Resources: 1,191Mt at 11.0% TGC (128.5Mt of contained graphite) Simple open pit operation with low strip ratio; operations will commence as Mining Metho
Slide 17: Largest defined reserve and significant grade advantage
Syrah’s Balama project has the largest defined reserve and significant grade advantage For personal use only 160 Syrah Resources’ low-grade stockpiles at 2 – 9% TGC will be greater than most other proposed 140 projects’ head grade Volt Resources 120 18.9 Mt at 9% TGC cut- Syrah Resources off 100 Mag
Slide 18: Major project metrics highlight attractiveness of Balama
Major project metrics highlight the attractiveness the Balama investment For personal use only Capital Intensity Strip Ratio (US$’000 invested or proposed / kt 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 USA Australia Canada Canada Ca
Slide 19: Capital structure
Capital structure For personal use only Key details Geographic analysis of investors(1) Sha res on i s s ue Europe (ex UK) Other 263.9m (a s a t 31 Jul y 2017) 2% 2% Asia Opti ons on i s s ue 8% 9.6m (a s a t 31 Jul y 2017) North America 8% Unl i s ted performa nce ri ghts 0.9m (a s a t 31 Jul y 201
Slide 20: Sales and Marketing
For personal use only Sales and Marketing 19 19
Slide 21: Multi-faceted marketing strategy diversified by sector and geography
Our marketing strategy is multi faceted to ensure we are diversified by sector and geography For personal use only Sell to customers across all geographic regions Sell to customers across all sectors of the market • As the world’s biggest producer of graphite we will • As the world’s biggest produce
Slide 22: Marketing strategy diversified across customers, markets and geographies
Syrah’s marketing strategy is to be diversified across customers, end user markets and geographies For personal use only Our Flake Graphite Marketing Plan Six major sales Agreement will form the backbone of our ramp up profile over the next three years. Our internal consumption for BAM production an
Slide 23: Graphite Market
For personal use only Graphite Market 22 22
Slide 24: Graphite market overview
Graphite market overview For personal use only Increasingly stringent and enforced environmental rules across the graphite China industry has led to supply pressure in Shandong province. Supply Syrah’s new supply will enter the global market in the next quarter in the first Ex - China quartile and d
Slide 25: Four global and structural trends for flake graphite demand
We believe future flake graphite demand is going to be influenced by four global and structural trends For personal use only Increased demand for electric vehicles Increased size of batteries used in electric vehicles Increased use of natural graphite in battery anodes China becoming a net importer
Slide 26: Strong global demand growth profile
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 Flake Size ktpa Sector CAGR 1,000 Batteries for: 900 Electric Vehicles 800 Power ~20% ≤ Fines only 700 Storage 600 Consumer Electronics 500
Slide 27: Incremental demand growth is for smaller flake used in batteries
Majority of global incremental demand growth is for smaller sized flake used in the battery sector For personal use only Market Size Incremental Demand Potential Supply Growth 2016 2016 to 2020 2016 to 2020 Mesh Size & Name +50 35 >Large 5 30 240 +80 105 15 40 440 Large +100 175 5 40 215 Medium -100
Slide 28: China's demand for -100 mesh flake graphite is increasing
China’s demand for -100 mesh flake graphite is increasing at a time of reducing domestic supply For personal use only • China’s commodity self sufficiency • (% of demand produced domestically) Net Importer Net Exporter China’s self sufficiency of commodities is a Battery Industry factor of its econo
Slide 29: 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 30: By 2020 Syrah largest graphite producer with ~40% market share
By 2020 Syrah will be the largest individual 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 ~900,000t Source:
Slide 31: Product profile matches incremental demand growth
Syrah’s product profile matches incremental demand growth, large flake size demand growth limited For personal use only Incremental Graphite Demand & Company Product Mix 100% Every natural flake graphite size market has its own supply and demand fundamentals. 80% Although larger flake sizes obtain h
Slide 32: Natural graphite anode material requires over twice the flake feedstock
Each kilogram of natural graphite anode material requires over twice the amount of flake as feedstock For personal use only Battery to Flake Graphite Calculation Natural Natural 40% Flake Graphite Graphite recovery Feedstock Content Demand 3 4 5 20% 200g 500g 1 2 Graphite Lithium ion Anode 40% 400g
Slide 33: 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 34: Price historically driven by steel; now 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 35: End User Markets
For personal use only End User Markets 34 34
Slide 36: Properties of flake graphite and 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 37: Focus on electric vehicles due to graphite use per unit
We focus on electric vehicles due materiality of graphite use in each unit and the expected growth in the sector For personal use only Graphite per device Mobile phone 0.01 Power tool 0.05 Tablet / laptop 0.30 E-bike 4 Plug in Hybrid 10 Focus of our technical and market analysis Battery Electric 40
Slide 38: Global awareness and investment in electric vehicles
Global awareness, planning and investment continues to build for electric vehicles For personal use only Source: Bloomberg, Financial Times, Economic Times, Electrek, ABC 37 Notes: Selection of headlines between 1 May and 28 June 2017. 37
Slide 39: BEV penetration and China electric bus sales
Largest car markets have high BEV penetration, China electric bus sales have risen significantly since 2014 For personal use only Battery Electric Vehicle (BEV) Sales China Electric Bus Sales % of 2016 total EV sales % thousands 100 150 +25% 76 +700% 116 73 75 63 62 100 94 58 56 55 50 28 50 25 13 1.
Slide 40: Battery Anode Material (BAM) Project
For personal use only Battery Anode Material (BAM) Project 39 39
Slide 41: 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 42: Higher natural graphite proportion lowers 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 43: Syrah's graphite is in demand; 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