Syrah with BHP Billiton Management, page-19

I'll attempt to answer your question:

Using the feasibility study production number for the first 10 years (355,000 tons) and the Opex numbers:



Fixed General administration costs are expected to be 355,000*$43.50 = $15,442,500.

If we assume a very conservative graphite basket price of $624 (to avoid objections), then the break even tonnage would be 83,884 tons which Syrah will easily sell in the first year:


(Note: Net Income = Break Even for the purpose of illustration here; the entire General administration amount is included in the Opex column when 355,000 tons is used as the Tons Processed figure)

Syrah will be cash flow positive in the first full year of production. And will progressively displace other producers in the decades to come much as China did in the past:



Syrah will thrive in the decades to come and will crush its competitors. I'm afraid that even in stress-tested conditions, we will be cash flow positive; even before spherical and vanadium operations.

To further alleviate your concerns about Syrah's near term cash flow, in today's AFR article, new CEO Shaun Verner said that:

"We are about 90 per cent covered for our initial year's production and obviously the work I've been doing in the last three months is about placing the balance of that production, and commercial negotiations are progressing very well,":

90% production:


Shaun also said that:

"We certainly believe in the next three years, out to 2019, that there is a deficit in the market and space for around 100,000 tonnes of spherical graphite produced from natural graphite and that equates to around 200,000 tonnes of flake, so we certainly believe in the initial stages that the market is well and truly OK in terms of having space for Balama,".

"You look at it on any parameter, whether it's size, quality, consistency or cost of production, it is absolutely a tier-one asset and after 20 years with BHP Billiton if there is one thing you learn it is the value of a tier-one asset."

Your opinions on Syrah Unicrumba are incorrect and will be proved so with time. Syrah is a tier-one asset. It will be cash flow positive over the first full year of production. It will expand graphite production for the vanadium using free cash flow from spherical production:

Syrah is not well understood by the market. Vanadium is a bigger story than graphite on a free cash flow basis. The feasibility study for Vanadium scales with graphite expansion; i.e. you get significant free cash flow from vanadium even if you sell graphite at cost. This is why it makes sense economically to expand graphite expansion in the medium/long term funded by free cash flow from spherical. Other competitors like your Kibaran Resources (which I used to like) will be crushed economically, I saw the light on this and changed my mind from favouring Kibaran to favouring Syrah. Syrah is going to win, it is the rock upon which all others will break.