Media Reports, page-2264

UBS Research - Today at 2:13 AMSyrah Resources "Coming to America" (Buy) AriyasingheResume coverage of SYR with Buy rating and A$1.10/sh price targetWe resume coverage of SYR with a Buy rating and A$1.10/sh price target. While the miner continues to negotiate a tough natural graphite backdrop with the natural graphite price down 30% YTD (and we are below consensus on near-term price recovery and earnings), our optimism on the global EV outlook coupled with our deep-dive into the natural graphite opportunity into the battery anode (link) has us positive on the commodity and the stock.Balama still the bulk of the business...SYR's Balama graphite mine in Mozambique accounts for the bulk of our valuation (~75% of our NPV-based PT) and with the mine effectively turned off in May/June in response to depressed market conditions and SYR pivoting to operating high-capacity 30-day production campaigns means we are far from Balama's 350ktpa capacity. However, with EV demand growth expected to lift 5x to 2030e, we see accompanying robust growth for global battery demand (7x to ~4.5TWh by 2030e) and in turn anode material for which natural graphite is a feedstock. Combined with potential for increasing natural graphite anode share in the battery (~30% today vs. UBSe 50% by 2030e), we see natural graphite demand lifting 6x to >6Mt. As a result, we forecast natural graphite prices recovering from ~US$570/t today to our (newly established) US$850/t LT forecast. We are cognisant near-term sales and costs will be impacted by Balama's reduced run-rate. We model sales of 85/100ktpa in CY23/24E against an average C1 cost of US$640/t before hitting 350ktpa nameplate again in 2025e and with it a C1 cost of ~US$460/t (SYR: $430-480/t)....but Vidalia offers interesting expansion...The planned commissioning of Vidalia in the USA in 4Q23 is a clear catalyst for SYR as it aims to expand downstream to active anode material and in our view is well supported by policymakers and industry alike. The 11.25ktpa facility will be initially underpinned by an 8ktpa TSLA offtake at a fixed price for four years. We model Vidalia hitting capacity in 2H25 and estimate an average realised price of ~US$5100/t (vs. SYR's observable range: US$3620-5800/t) against OPEX of US$3100/t (in line with SYR guidance). We don't model any additional capex past the revised US$190m estimate SYR provided in its JQ23 update and with $63m left to spend. FID for an expanded 45ktpa Vidalia is due in 2H23 but is not yet in our valuation as we await the derisking event of first production.Valuation: Buy rating, A$1.10/sh Price TargetOur NPV-based valuation uses a LT US$850/t graphite price (-100 mesh) and 0.75 AUD/USD exchange rate.