Syrah Resources Limited · ASX:SYR
Syrah Resources — Investor Presentation (December 2020)
59 slides from Syrah Resources's investor presentation, Dec 10, 2020
Slide 1: Equity Capital Raising and Convertible Note Deed Presentation
Equity Capital Raising and Convertible Note Deed Presentation 10 December 2020 - NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important notice and disclaimer
Important notice and disclaimer NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES IMPORTANT: You must read the following carefully before continuing or making use of the information contained in this presentation. This presentation has been prepared by Syrah Resources Limited (ABN 77 125 242 284)
Slide 3: Important notice and disclaimer
Important notice and disclaimer NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Past performance Past performance and any pro forma information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of the Company's views,
Slide 4: Important notice and disclaimer
Important notice and disclaimer NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Not an offer This presentation is not and should not be considered an offer or an invitation to acquire, or a solicitation or recommendation in relation to the subscription, purchase or sale of, Company securities (
Slide 5: Table of contents
Table of contents NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction overview 5 Company and market update 8 Vidalia Battery Anode Material Project 19 Balama Graphite Operation 26 Vanadium Resource opportunity 31 Transaction details 33 Key risks 40 International offer restrictions 55 4
Slide 6: Transaction overview
DRAFT FOR DISCUSSION PURPOSES ONLY – STRICTLY CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction overview 5 Photo: Bagged Balama Graphite Product
Slide 7: Transaction overview
Transaction overview • Progress towards a final investment decision for the construction of a 10ktpa Active Anode Material (“AAM”) plant at Vidalia during 2H 2020, subject to end customer commitments or NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Use of proceeds strategic / financial partne
Slide 8: Transaction rationale
Transaction rationale NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • A$23m (US$17m)(1) of proceeds from the Placement will be used to progress towards a final investment decision for the construction of a 10ktpa AAM plant at Vidalia during 2H 2020, subject to end customer commitments or stra
Slide 9: Company and market update
DRAFT FOR DISCUSSION PURPOSES ONLY – STRICTLY CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Company and market update 8 Photo: Syrah’s BAM plant in Louisiana
Slide 10: Vidalia Battery Anode Material Project (USA)
Company update NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • A Bankable Feasibility Study (“BFS”) has confirmed a strong business case for natural graphite AAM production at Syrah’s Vidalia facility in USA • Completion of the BFS allows commercial discussions for project development to prog
Slide 11: Syrah's value proposition
Syrah’s value proposition NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ● Electric Vehicle (“EV”) adoption is gaining momentum Electric Vehicles require graphite ● Anodes in lithium-ion batteries used in EVs are comprised of graphite ● ESG factors are increasingly important considerations for
Slide 12: Syrah's positive ESG profile
Syrah’s positive ESG profile NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ISO:45001 and ISO:14001 certification at Balama Leading health and safety standards Vidalia battery anode project being developed to ISO operating standards Sustainability frameworks based on: Global Reporting In
Slide 13: Global EV sales recovery indicates growing natural graphite demand
Global EV sales recovery indicates growing natural graphite demand NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES H1 2020 EV Sales Down 17% YoY YTD H2 2020 EV Sales Up 84% YoY +128% +88% 300 -13% +67% -14% +53% Global EV Sales (thousand units) -19% -34% -2% +4% 0 Jan Feb Mar Apr May Jun Jul Au
Slide 14: Battery demand in early stages of growth – driven by EV adoption
Battery demand in early stages of growth – driven by EV adoption NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Electric Vehicles a key driver of battery demand growth Strong growth forecast for battery demand We are here We are here Source: BloombergNEF Source: BloombergNEF 13
Slide 15: Graphite has high intensity of use in batteries commonly used in EVs
Graphite has high intensity of use in batteries commonly used in EVs NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 100% Material Composition % Mass(1) Graphite Graphite Graphite Graphite Graphite 0% NMC(111) NMC(622) NMC(811) NCA LFP Graphite Lithium Cobalt Nickel Manganese Aluminum Iron Phos
Slide 16: Natural graphite is forecast to remain a critical battery mineral
Natural graphite is forecast to remain a critical battery mineral NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES (1) Source: Benchmark Minerals Intelligence (1) LiB = Lithium Ion Batteries 15
Slide 17: Government policy and focus on critical mineral supply chains
Government policy and focus on critical mineral supply chains are supportive of ongoing EV adoption NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Executive Order (30 Sept 2020) declaring a national emergency in relation to critical minerals supply(1): Quote: “United States is 100 percent re
Slide 18: USA and Europe are significantly underinvested in anode capacity
USA and Europe are significantly underinvested in anode capacity NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1 2 3 Supply Chain Mining / Ore Processing Active Anode Material Precursor Active Anode Material Stages Value Add Processing Steps MILLING/ CARBON THERMAL MINING CONCENTRATION PURIFI
Slide 19: Syrah is a potential supply option for USA and European markets
Syrah is a potential supply option for USA and European markets NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Vidalia Battery Anode Material Project Export Markets • Planning to establish USA based anode • Potential for Syrah to export from USA to ex-USA markets. Potentially providing ex-Chin
Slide 20: Vidalia Battery Anode Material Project
X of funding to progress… Vidalia Battery Anode Material Project NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 19 Image: 3D model from BFS of a 10ktpa facility within Syrah’s 25-acre industrial site in Vidalia, Louisiana, USA
Slide 21: Syrah progressing to be a vertically integrated natural graphite anode supplier
Syrah progressing to be a vertically integrated natural graphite anode supplier NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ESG auditable with anode material from Vidalia to have a single chain of custody back to the source Balama Natural Graphite Operation(1) Vidalia Battery Anode Material
Slide 22: Vidalia expansion significantly de-risked
Vidalia expansion significantly de-risked NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Date De-risking Milestones Dec 2020 BFS confirms robust economics for large scale AAM production at Vidalia Oct 2020 First production of AAM (toll treated) using anode precursor from Vidalia First producti
Slide 23: Vidalia has key requirements for large scale AAM production
Vidalia has key requirements for large scale AAM production NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Proximity to potential customers Access to key utilities Options to expand facility size Direct barge/port access to Mississippi river Supportive government relations Access t
Slide 24: BFS confirms attractive margins at current AAM prices
BFS confirms attractive margins at current AAM prices NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES BFS key outcomes: Operating Cost – US$/t AAM • The BFS assed the expansion of the existing Vidalia plant up to 40ktpa of AAM production Observable natural graphite spot AAM price(4): US$5,471/t
Slide 25: Progressing to become an integrated natural graphite AAM producer ex-China
Progressing to become an integrated natural graphite AAM producer ex-China NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Vidalia expansion to 10ktpa AAM production: • Syrah is continuing with FEED for the initial 10ktpa facility, with FEED to be completed in Q1 2021 • Commitment to a Detailed
Slide 26: Significant investment to date to enable product qualification
Significant investment to date to enable product qualification NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Current asset base has been established with intent to demonstrate Syrah’s capability to supply Anode Active Material that: has equivalent or superior physical and electrochemical pr
Slide 27: Balama Graphite Operation
Balama Graphite Operation 26 Picture: Balama Graphite Operation
Slide 28: Balama Graphite Operation
[CURRENT STATUS] Balama Graphite Operation NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Balama sold 163,000 tonnes of natural graphite into the global market in 2019 • Production at Balama was temporarily suspended in March 2020 due to COVID 19 impacts(1): • Travel restrictions • Lower end
Slide 29: Balama a unique operation, positioned to meet growing demand
Balama a unique operation, positioned to meet growing demand NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Ex- China Natural Graphite (Reserves) 150 Operational SYRAH Greenfield Project Reserve Tonnage (Mt) 16% grade 17 Mt of contained 100 graphite 50 0% 5% 10% 15% 20% 25% 30% Grade (% TGC) S
Slide 30: Balama product has a track record of supply chain / customer acceptance
Balama product has a track record of supply chain / customer acceptance NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Bubble size = 2019 natural graphite tonnes sold into geography. Total 163kt natural graphite sold in 2019. China Europe America Asia (Excl. China & India) India Source: Syrah
Slide 31: Balama Graphite Operation asset summary
Balama Graphite Operation asset summary NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overviews Graphite Mineral Resources and Ore Reserves Location Cabo Delgado Province, Mozambique Classification Tonnes (Mt) TGC (%) Life of Mine(1) ~50 years Total Reserves 107.54 15.73 Mining Simple open pi
Slide 32: Vanadium Resource opportunity
DRAFT FOR DISCUSSION PURPOSES ONLY – STRICTLY CONFIDENTIAL Vanadium Resource opportunity NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 31 Photo: Balama Graphite Open Pit Mining Operation
Slide 33: Syrah's vanadium opportunity
Syrah’s vanadium opportunity • NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Vanadium (a designated critical mineral) in the processed Balama graphite ore, which would otherwise report to tailings, can be refined into a saleable product (V2O5)(1) and presents a medium term, high value opportu
Slide 34: Transaction details
DRAFT FOR DISCUSSION PURPOSES ONLY – STRICTLY CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction details 33 Photo: Balama Graphite Operation Process Plant
Slide 35: Sources and uses of proceeds
Sources and uses of proceeds NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Sources and Uses(1) Comments Sources A$m US$m • A$23m (US$17m)(4) of proceeds from the Placement will be used to progress towards a Expected cash position at end of Q4 2020 43 32 final investment decision for the const
Slide 36: Convertible Note overview
Convertible Note overview NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Unsecured Security and status • Prior to conversion, the Convertible Notes will rank equally with all other unsecured and unsubordinated debt obligations of Syrah including with Series 1 Note • Series 2 Note: A$28m (US$
Slide 37: Convertible Note overview (continued)
Convertible Note overview (continued) NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Syrah may, at its discretion, decide not to proceed with issuing either the Series 2 or Series 3 Notes, or may issue such notes for a lower amount (subject to payment of a break Termination fee, as described
Slide 38: Timetable - Convertible Note
Timetable - Convertible Note NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Event Date Execution and announcement of Convertible Note Deed Thursday, 10 December 2020 (pre-market open) Notice of General Meeting to approve Convertible Note issue dispatched Mid to late January 2021 General Meetin
Slide 39: Placement and SPP overview
Placement and SPP overview NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • A fully underwritten institutional Placement to raise A$56m / US$42m (1) • Approximately 62.2m New Shares to be issues (equivalent to approximately 15.0% of Syrah’s current undiluted share capital, prior to the Placeme
Slide 40: Timetable – Placement and SPP
Timetable – Placement and SPP NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Event Date SPP Record Date 7:00pm, Wednesday, 9 December 2020 Trading Halt Wednesday, 9 December 2020 Announcement of Offer and Bookbuild opens Thursday, 10 December 2020 Bookbuild closes Thursday, 10 December 2020 Tr
Slide 41: Key risks
DRAFT FOR DISCUSSION PURPOSES ONLY – STRICTLY CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks 40 Photo: Balama Ore
Slide 42: Key risks
Key risks 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 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES COMMODITY PRICE RISK price and availability of
Slide 43: Key risks
Key risks 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 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES AND ORE RESERVES Edition of the Australasian Code
Slide 44: Key risks
Key risks GEOLOGICAL AND There is a risk that unforeseen geological or geotechnical issues may be encountered when developing and mining ore reserves, such as unusual or unexpected geological conditions, pit NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES GEOTECHNICAL RISKS wall failures, taili
Slide 45: Key risks
Key risks COUNTERPARTY RISK The ability of Syrah to achieve its stated objectives will depend on the performance of contractual counterparties. NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES (INCLUDING RISKS Syrah has entered into sales, marketing and distribution agreements for the Balama Gra
Slide 46: Key risks
Key risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ENVIRONMENTAL Environmental regulations in the jurisdictions in which Syrah has operations impose significant obligations on companies that conduct the exploration for and mining of commodities, or MATTERS industrial materials processing
Slide 47: Key risks
Key risks 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, rising fuel NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ENVIRONMENT costs, unexpected
Slide 48: Key risks
Key risks SOVEREIGN/POLITICAL 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, investment NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES RISK, WAR AND interests, conduct
Slide 49: Key risks
Key risks NATURAL DISASTERS As with any mining operation, Syrah is also at risk of natural disasters, both to the Balama Graphite Operation and Vidalia and also to the logistics chain, which may include among other NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES matters, abnormal or severe weat
Slide 50: Key risks
Key risks VIDALIA Relative to the Balama Graphite Operation, Syrah’s Vidalia operation is at an early stage. Accordingly, it is subject to a range of risks and variables which may impact upon Syrah’s ability to NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES execute that strategy. These risks a
Slide 51: Key risks
Key risks LIQUIDITY AND CAPITAL On 27 March 2020, Syrah announced the suspension of production at the Balama Graphite Operation from 28 March 2020 as a result of the impact of the COVID 19 pandemic including NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES MANAGEMENT / FUNDING measures implement
Slide 52: Key risks
Key risks 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 fluctuations in NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES EXCHANGE RATE RISK the value of rel
Slide 53: Key risks
Key risks 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 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES coverage at reasonable rates (or at all)
Slide 54: Key risks
Key risks UNDERWRITING RISK f) any event specified in the timetable is delayed for more than 2 business days without the prior written approval of the Joint Lead Managers; NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES g) a director of Syrah: I. is charged with an indictable offence relating t
Slide 55: Key risks
Key risks RISK OF DILUTION Investors should note that if they do not participate in the Placement, then their percentage shareholding in Syrah will be diluted to a greater extent than would be the case if they NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES participate (noting that, in any even
Slide 56: International offer restrictions
DRAFT FOR DISCUSSION PURPOSES ONLY – STRICTLY CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions 55 Photo: Balama flotation
Slide 57: International offer restrictions
International offer restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 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. In particular, this document may n
Slide 58: International offer restrictions
International offer restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised
Slide 59: International offer restrictions
International offer restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES This document has been given to you on the basis that you are (i) an "institutional investor" (as defined in the SFA) or (ii) an "accredited investor" (as defined in the SFA). If you are not an investor falling wit
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