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SYR comments (part only)
Syrah Resources Ltd (SYR:ASX)
(SYR:ASX:A$3.
04
| M/Cap: A$
802M
| Target: A$
5.30
from A$
6.45
| SPECULATIVE
BUY)
See “Downstream strategy update” 21 Nov 2016
Balama mine development
-
expect a prolonged production ramp up
:
F
urther detail
around the projected production ramp
-
up now sees nameplate production rates
(~340ktpa) not achieved until Q3'18,
nine
months later than prior guidance. While
development of the mine remains fully funded, we note that the longer ramp
-
up could
see working capital get tight by
year
-
end 2017. We
note that SYR are advancing a
possible US$30
-
50
M
revolving debt facility, which while earmarked by the company
as a contingency, could likely be called upon
,
in our view.
BAM strategy now better defined:
Syrah Resources plans to achieve i
mproved margins
th
rough downstream integration
, based on
a multi
-
faceted strategy which includes
:
1)
development of a 60ktpa coated + uncoated spherical graphite plant in Louisiana,
USA
;
3) construction of a 2ktpa facility ahead of the commercial plant to accelerate
product
qualification
;
and
4) Construction of a "Technology Centre" to be based in
Perth, Australia, for in
-
house training, product test
-
work and R&D. We also note that
the company has suggested the potential for additional production capacity in Asia as
a medium
-
term objective.
BFS due 1H'17, first BAM production 2019
: While SYR's overall BAM strategy is now
more defined, some project specifics remain unknown (e.
g.,
capex, opex, funding
requirements etc). We expect these to now be firmed up as part of a BFS
(bank
able
feasibility study)
scheduled for completion in 1H'17. Updated project timetables call
for first production from the BAM facility in Q1'19, with a progressive ramp
-
up to

full document available at

http://tinyurl.com/h6xkqou

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