Reading for Investors, page-25

Hello Pauldola

The pegmatite dikes are a consequence of the large granite intrusion in Balama East. SYR have discovered that this intrusion is a newer or younger metamorphic event than the initial metamorphic event that affected the greater Balama substructure. The granite intrusion is localised in the SYR tenement, specifically Balama East.

Pegmatite dikes are created by very high temperature events. Graphite grades are improved under high temperatures. Therefore the theory formed by SYR is that medium to high grades of graphite were formed by the first metamorphic event (facies). Later on, under very high temperatures caused by the granite intrusion, the grades were improved to very high grade. Vein graphite has the highest grades of TGC (+90) is formed under metamorphic facies creating extremely high temperatures.

The pegmatite contains no graphite and causes a zero measurement for that block in the calculation of the measured resource. The average weighted grade would be higher if the pegmatite dikes were not creating waste. Ironically, if the SYR theory is accurate, without the pegmatite dikes and granite intrusion event the grades would be much lower anyway.

From SYR Web site - Balama comprises a series of hills consisting of graphitic schist which rise up to 250 metres from the surrounding plains. The outcropping strike extent of the graphite is in excess of 7 km. The outcropping width of the graphite mineralisation is up to 2 km. The plains lie in an alluvial river valley and the cover deepens away from the outcropping graphitic schists. To the east of the main Balama hills is a granite intrusion that is younger in age than the graphitic schists. Syrah believes that heat from this intrusion likely recrystallised and upgraded much of the deposit. This is one aspect that is considered to be unique about the Balama deposit.

Cheers