Syrah Resources shares.
Syrah Resources has secured the biggest graphite offtake contract in history, signing up Japanese trading house Marubeni.
Shares in the Melbourne-based graphite play hit a record high of $6.44 on the back of the news, giving it a market capitalisation of just under $1.5 billion.
Under the offtake agreement announced yesterday, Marubeni will buy 50,000 tonnes a year of processed graphite from Syrah to onsell to Japanese and Korean customers.
Syrah managing director Tolga Kumova said the agreement proved there was genuine industry belief in and appetite for the battery quality graphite it plans to produce.
“Today’s announcement says that ‘this is real, this market is here, and these customers need this product’,” Mr Kumova said.
“Syrah is in the key position globally both from a management perspective and a finance perspective, and it’s clearly the tier-one graphite deposit in the world.”
Syrah is building the world’s biggest graphite mine at Balama in Mozambique. Fine flake graphite from Balama will be shipped to a processing facility Syrah plans to build in the US, where it will be converted into coated and uncoated spherical graphite for use in the new generation of lithium-ion batteries.
Syrah’s plans to upgrade the basic graphite mined at Balama stand to significantly increase the price it receives for its output, as well as put it on the doorstep of the North American lithium-ion battery industry.
The fine flake graphite planned to come out of Balama can sell for about $US800-$US1000 a tonne. It takes two tonnes of fine flake graphite to produce one tonne of battery grade spherical graphite, with the uncoated spherical graphite selling for around $US3500-$US4000 a tonne, and coated spherical graphite fetching $US7000- $US10,000 a tonne.
Syrah had already signed an offtake agreement with Marubeni earlier this year to sell 20,000 tonnes a year of flake graphite for use in traditional applications such as lubricants and foundries.
Investor interest in graphite has taken off in recent years due to its use in lithium-ion batteries. Demand for the batteries is forecast to surge over the next decade on the back of growth in the electric vehicles and home energy storage applications such as those pioneered by Tesla.
Syrah’s success with Marubeni appeared to boost the broader graphite sector.
Magnis Resources, which owns the Nachu deposit in Tanzania, climbed 9 per cent to hit a record high of $1.03 a share.
Syrah had $166 million at the end of March, having raised $210m in equity late last year.
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