Well said Prime! Not just Credit Suisse - Cannacord as well! Sometimes... you come across things that just obviously is going to work!
Hot off the press... from Canaccord:
THE GRAND CRU OF GRAPHITE Initiating coverage with a BUY rating; Target Price A$6.00/share
Investment Perspective Syrah Resources (SYR) has in less than two years established a world-class graphite project, namely the 100%-owned, 1.15-billion-tonne Balama Graphite Project in Mozambique. The truly unique combination of resource size, grade, graphite quality including flake size, geometry, available infrastructure, and geographic location results in Balama having not only substantial value but is almost certainly of strategic importance on a global scale. We initiate coverage of Syrah with a BUY rating. Investment Highlights •?The Inferred Resource delineated in the first half of 2013 at Balama is the world’s largest graphite resource. The size and grade (1.15Bt @ 10.2% Total Graphite Content or TGC) contains 117 million tonnes. To put this globally significant resource into perspective: the rest of the world’s combined graphite contained in reserves is 77Mt. Balama itself has a number of higher-grade zones, including the Ativa Zone which outcrops and has an Inferred Resource of 21Mt @ 20.8% TGC. This small segment of Balama is globally significant in its own right. •?Balama is well located from an infrastructure perspective. Surrounding the project is available infrastructure, including a large capacity dam, sealed national highway within 40km, and grid power under construction within 5km of site. Furthermore, the deep-water port of Pemba on the Indian Ocean is 265km (three-hour drive) from site. •?We believe the combination of deposit size, grade and abundant infrastructure provides a clear competitive advantage to bring Balama into production. We expect that a feasibility study will be completed in late 2013, project financing secured in the first half of 2014, and a 12- month construction period could result in first sales by mid-2015. •?The Balama graphite resource contains a coincident vanadium Inferred Resource. The JORC Resource contains a globally significant 2.5Mt of vanadium. SYR has conducted metallurgical test work, which highlighted that an impressive vanadium concentrate (grading >5%) can be produced utilising a relatively simple magnetic separation process. Albeit at an earlier stage of investigation, the vanadium contained in the Balama deposit could become a strategic and valuable by-product.
Our valuation is principally based upon a DCF (NPV10%) on our estimated mineable oxide resources at Balama. Our price target is set using a combination of our Balama oxide DCF valuation and a sum of the remaining parts NAV. Currently, we have attributed only a nominal, immaterial value to the Vanadium.
SYR Price at posting:
$2.90 Sentiment: LT Buy Disclosure: Held
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