Slide 1: Q4 2018 Quarterly Activities Report & Market Update
For personal use only Q4 2018 Quarterly Activities Report & Market Update Shaun Verner – Managing Director & CEO 30 January 2019 0
Slide 2: Important notice and disclaimer
Important notice and 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.
Slide 3: 2018 Achievements and Opportunities
For personal use only 2018 Achievements and Opportunities 2
Slide 4: 2018 Achievements and Opportunities
2018 Achievements and Opportunities For personal use only Balama Operations Sales and Marketing • Strong safety record further improved to TRIFR of 0.3 • UAE Marketing & Logistics hub and China Representative Sales Office established • Balama established as the world’s largest natural graphite produ
Slide 5: Q4 2018 Performance
For personal use only Q4 2018 Performance 4
Slide 6: Q4 2018 Headlines
Q4 2018 Headlines For personal use only Safety • Strong safety record continues to improve further with Total Recordable Injury Frequency Rate (TRIFR) of 0.3 as at end of year vs 0.8 at end of 2017 • Q4 production 33kt, with 104kt FY18, in line with updated guidance • Achieved average graphite recov
Slide 7: Sustainability
Sustainability For personal use only Strong safety record People, Community and Health Total Recordable Injury Frequency Rate (TRIFR) • As at the end of the year 96% of Balama’s direct employees are Mozambican nationals with 55% from the local host communities • Balama Professional Training Centre c
Slide 8: Balama – becoming the World's major producer in first year of operations
Balama – becoming the World’s major producer in first year of operations For personal use only Production Summary FY2018 Q4 Q3 Q4 on Q3 31 Dec 2018 30 Sep 2018 Change Material Mined (>9% TGC1) Tonnes (‘000) 1,356 416 408 2% Material Mined (>2% to <9% TGC1) Tonnes (‘000) 478 133 133 - Waste Mined Ton
Slide 9: Balama Production Improvement Plan
Balama Production Improvement Plan For personal use only Maximise Recovery and Optimise Throughput Critical Equipment Management • Further improvement in secondary grinding performance • Ownership and Expertise: Back to back dedicated senior specialists • Continuous improvement in flotation control
Slide 10: Sales & Marketing – Significant improvement in supply chain logistics
Sales & Marketing – Significant improvement in supply chain logistics For personal use only Recent customer feedback and inbound enquiries highlight potential for material increase in demand for Syrah products Customers and Sales Graphite Sales and Inventory • Reduction of inventory and improvement
Slide 11: Battery Anode Material (BAM) Project – First production achieved
Battery Anode Material (BAM) Project – First production achieved For personal use only BAM Site Louisiana Commercial Plant Feasibility Study • Installation of 5ktpa milling equipment completed on schedule • Phase 1 commercial scale feasibility study for 10ktpa to 40ktpa capacity completed • First pr
Slide 12: Vanadium Opportunity
Vanadium Opportunity For personal use only Review of 2014 Scoping Study1 Review Conclusion Review Conclusion (Using original grid power assumption) (Using diesel power assumption) Capital costs Higher Higher Operation costs Lower2 Higher Project Economics Positive Positive Engineering consultant rev
Slide 13: Natural Graphite Market Update
For personal use only Natural Graphite Market Update 12
Slide 14: Syrah's Natural Graphite Market Views
Syrah’s Natural Graphite Market Views For personal use only Syrah believes China’s maximum supply capacity of natural graphite is less than 750ktpa and current output is China ~450ktpa, output remains constrained by environmental controls and mining limits Supply Syrah’s additional supply meets the
Slide 15: Lithium-ion battery supply chain build out continuing; Daimler and SK Innovation announced new plants in USA
Lithium-ion battery supply chain build out continuing; Daimler and SK Innovation announced new plants in USA For personal use only Region OEM Electric Vehicle Strategy / Targets Major Customers Origin OEM Transport Sector Battery BYD 500k units in 2020, from 200k in 2018 CATL 16GWh produced in 2018,
Slide 16: Global supply transition underway as Syrah's production increases
Global supply transition underway as Syrah’s production increases, increasing product quality and impurity differentiation For personal use only Natural Flake Graphite Supply Outlook Base Case and Range (kt) 1600 China supply moderation driven by grade decline, resource depletion and environment con
Slide 17: Positive demand outlook for natural graphite; annual demand growth of 9% to 12%
Positive demand outlook for natural graphite; annual demand growth of 9% to 12% expected over the next three years For personal use only Natural Flake Graphite End Use Sector Demand Outlook 800 Base Case and Range (kt) 700 End Use Sectors Base Case CAGR Steel 600 • Minimal growth expected from the s
Slide 18: Base case demand view supports Balama reaching full capacity
Base case demand view supports Balama reaching full capacity; significant fines growth driven by battery anode material demand For personal use only kt Natural Graphite Demand Outlook 1200 +40 1,015 1000 +230 800 745 600 825 400 595 200 150 190 0 2018 Incremental Fines Demand Incremental Coarse Dema
Slide 19: Global trade flows of natural graphite re-shaped by Syrah's market entry
Global trade flows of natural graphite re-shaped by Syrah’s market entry; China expected to move to a net importer in the short term For personal use only China market balance (kt) 150 120 100 55 50 - (5) (50) (100) (85) (150) (170) (200) 2017 2018 2019 2020 2021 Source: Syrah Resources 18
Slide 20: Price ranges achieved to date reflect the execution of Syrah's marketing strategy
Price ranges achieved to date reflect the execution of Syrah’s marketing strategy to expand the customer base by sector and geography For personal use only Coarse Flake Products (+100#, +80#, +50#) Product Price Ranges Achieved in 2018 • Large Flake / Coarse products achieving significant penetratio
Slide 21: Natural Graphite Pricing – a disaggregated market
Natural Graphite Pricing – a disaggregated market For personal use only Natural Graphite China Ex China Global natural graphite market Demand Growth Fines Currently net exporter therefore marginal Pricing reflects incentive for China to ~600kt High off large base (-100 mesh) pricing influenced by Ch
Slide 22: Pricing Expectations – key variables of Syrah weighted average price
Pricing Expectations – key variables of Syrah weighted average price have strong upside potential over the short and medium term For personal use only Pricing factor Extent Currently Expected Expected price development Priced-In Forward Impact Market entry pricing & Reduced qualification and entry p
Slide 23: Operations & Sales Strategy and Outlook
For personal use only Operations & Sales Strategy and Outlook 22
Slide 24: Sales and Operations Planning – the current unit cost / price trade off
Sales and Operations Planning – the current unit cost / price trade off, and driver for 2019 production guidance For personal use only 2019 production strategy driven by unit cost reduction and price increase Unit Cost vs Price tradeoff • Drive unit cost decrease through increased production volume
Slide 25: Production and Price Outlook
Production and Price Outlook For personal use only Balama Graphite Operations Production Enablers • Q1 2019 production target 45kt-50kt1 • Production ramp up towards 250ktpa driven by market fundamentals, appropriate pricing margins achieved and ongoing production improvement plan • FY 2019 producti
Slide 26: Projects Outlook
Projects Outlook For personal use only Battery Anode Material Project Vanadium Project 1H19 • Phase 1 commercial scale feasibility capital efficiency review underway • Sampling and analysis of vanadium content within the graphite processing circuit in preparation for metallurgical test work • Improv
Slide 27: Finance
Finance For personal use only Cash • Q4 2018 net cash outflows include: Q4 2018 Q1 2019 • US$20.9 million on production ramp up activities and sustaining capital projects (Actual) (Forecast) net of sales receipts and a VAT refund of US$5.5 million. Cash at start of period US$m 100.3 77 • BAM plant c
Slide 28: Summary
For personal use only Summary 27
Slide 29: Summary
Summary For personal use only • 2018 provided enormous learning across both production and market • Achievable 2019 production plan developed - driving to positive operational cashflow, whilst managing market impact • Significant positive catalysts ahead for 2019: • Driving production volume and str