Syrah locks in $112m for graphite operations

Melbourne's Syrah Resources is raising funds from a $56 million placement and convertible notes deal with major shareholder AustralianSuper to fund the development of its US-based graphite plant and operational restart in Mozambique.

Syrah will use $23 million raised to progress a final investment decision for the construction of a 10,000 tonnes per annum processing plant at its Vidalia battery anode project in Louisiana.

The company recently completed a bankable feasibility study for the plant, which also considered an expansion to 40,000tpa.

A final investment decision is expected before the end of the year.

Syrah says Vidalia is the most advanced project for an alternate source of natural graphite anode product outside of China.

It said it had observed strong sales growth in the electric vehicle market and increasing government support to decarbonise the transport sector.

The balance of the equiy raising and convertible note deed will go towards a restart decision at Syrah’s Balama operations, in Mozambique’s Cabo Delgado Province where the company halted production in March due to coronavirus regulations.

Syrah said it had implemented cost reduction strategies to preserve cash. It had $US53 million at the end of the second quarter in 2020.

The company will issue $US42 million ($A56 million) in convertible notes to 16.5 per cent shareholder AustralianSuper in two equal tranches before March and June next year, respectively.

That deal is subject to Syrah completing a $US42 million placement and gaining shareholder approval. A meeting is expected to be held in late February.

Syrah also plans to raise up to $12 million from a share purchase plan.

The equity raising is priced at 90 cents and represents an 11 per cent discount to Syrah’s last traded price of $1.015 per share.

Credit Suisse and Sydney-based Foster Stockbroking are acting as joint lead managers and bookrunners to the placement.

Syrah remains in a trading halt, expected to lift tomorrow.