SYR - Syrah Resources

[chakvetadze]

Some good posts here but one point I think is lost on most is the graphite price.
SYR's resource is so large and their predicted costs of production so low, the graphite price is not actually that important. Well, it's important to a degree but premium flake graphite currently sells for approximately $3000/tonne.
SYR will make truckloads at a graphite price of $1,500 let alone $3000.
The graphite market is not a spot market. It's direct agreement between suppliers and buyers. If you've got the largest resource and the lowest costs (remember the strip ratio at Balama will be zero) you control the market.
The Chinese control the amorphous graphite market but not the flake graphite market.

 

[burglar]

Balama Update:

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01315607

 

[pixel]

Balama Update:

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01315607

bad timing: Market didn't care today, smashed the news regardless.

 

[burglar]

bad timing: ...

This often happens.

Is it that Directors don't know or that they just don't care?

 

[basilio]

That was a very painful response to the latest drill results.

A quick jump to 3.10 and then POP!! - down to 2.67 on close. Has the bubble burst on SYR? Are there simply too many companies finding moutains of graphite ? What will it take for SYR (or any of the competitors) to mine and make a profit from their discoveries?

 

[prawn_86]

Does anyone know how much they intend to spend on the drilling of Balama? I can see they raised capital recently, but didnt give the split of exactly how it will be spent

 

[basilio]

Big surge on SYR today. Currently up 26c to 3.14 (all time high) . JORC announcement should be imminent. Be interesting to see if there are any off take announcements in the wings as well..

 

[prawn_86]

Maiden JORC released today. It is one hell of a deposit with a lot more to come by the sounds of it. Can they succesfully transition into selling into a small market? Or will they look to sell the company off?

 

[basilio]

So what is happening to SYR ? Practically 50% drop in SP in a few days on no news at all ? Currently $1.895.

Unnerving...

 

[basilio]

Still dropping like a stone. Currently 1.69 with an anchor..

This is absolutely crazy stuff. There is absolutely no indication that anything has changed with the size/quality and value of SYR graphite/vanadium holdings. If I understand correctly from another site it seems that the SP crash is happening as consequence of shortsellers attempting to profit from a series of mini warrant positions..

Saw identical behaviour with IAU last year. Yes, it's all about shorting and driving the price down to trigger mini warrant stop losses.
The warrant holders lose everything (Yep 100% loss) and the "issuer" has to sell stock at the stop loss price to close out the trade. "Someone" ends up with millions of SYR at rock bottom prices.
Pretty sure there were about 10M mini warrants issued.

From my perspective it looks like market manipulation.

 

[prawn_86]

I dont know much about warrants, but im pretty sure the other site you are referring to is full of conspiracy theorists who always blame shorters for any form of stock fall.

Could it be a case of the warrant issue creating a floor price and the stock naturally gravitating there similar to how it generally does with a capital raising?

Would love input from SKC, McLovin etc as to if the proposed theory makes sense.

 

[pixel]

Still dropping like a stone. Currently 1.69 with an anchor..

This is absolutely crazy stuff. There is absolutely no indication that anything has changed with the size/quality and value of SYR graphite/vanadium holdings. If I understand correctly from another site it seems that the SP crash is happening as consequence of shortsellers attempting to profit from a series of mini warrant positions..

From my perspective it looks like market manipulation.

Hi Basilio;

You can't say nothing has changed when there is a gigantic elephant standing right next to you: The share price has changed! Whether it's market sentiment, people's perception of value, or their wish to take some of the profit off the table - doesn't matter.

Talk about manipulation is as old as trading. It's human nature.
Whenever someone's expectation about the future fails to be fulfilled, we tend to blame it on some devious inimical interference. Because "I couldn't POSSIBLY be wrong!"

The Greeks had their Gods to blame; in the Middle Ages it was witches and their cats; and now it's the evil institutions and short-sellers.

There is only one remedy:
• Recognise when your assumption turns out no longer to apply.
• Don't whinge that you're now only half as wealthy as you could've been.
• Remain unemotional and reassess the situation day by day, week by week.
• Then take appropriate action before you've lost a significant part of your net worth.

 

[Trembling Hand]

From my perspective it looks like market manipulation.

You would have to say that that is BS. There is only 0.3% of issued shares sold short. If that is manipulation I want in on that game.......

 

[McLovin]

Would love input from SKC, McLovin etc as to if the proposed theory makes sense.

Don't really know much about warrants. Seems strange that someone would go to the effort of shorting a stock with a $270m MC for the sake of flushing out a few leveraged retail customers who probably have a couple of million bucks exposure, max. How much of the stock is short anyway?

 

[Boggo]

You can't say nothing has changed when there is a gigantic elephant standing right next to you: The share price has changed! Whether it's market sentiment, people's perception of value, or their wish to take some of the profit off the table - doesn't matter.

Talk about manipulation is as old as trading. It's human nature.
Whenever someone's expectation about the future fails to be fulfilled, we tend to blame it on some devious inimical interference. Because "I couldn't POSSIBLY be wrong!"

The Greeks had their Gods to blame; in the Middle Ages it was witches and their cats; and now it's the evil institutions and short-sellers.

There is only one remedy:
• Recognise when your assumption turns out no longer to apply.
• Don't whinge that you're now only half as wealthy as you could've been.
• Remain unemotional and reassess the situation day by day, week by week.
• Then take appropriate action before you've lost a significant part of your net worth.

Excellent post pixel.
That is the cold hard reality of trading, get out, discard and move on, anything more than that is an attempt to justify a faulty psychological approach to a volatile business !

 

[skc]

I dont know much about warrants, but im pretty sure the other site you are referring to is full of conspiracy theorists who always blame shorters for any form of stock fall.

Could it be a case of the warrant issue creating a floor price and the stock naturally gravitating there similar to how it generally does with a capital raising?

Would love input from SKC, McLovin etc as to if the proposed theory makes sense.

The share price has really started to fall since Apr and the volume is ~13m... it doesn't seem to make much sense to smash the share price using 13m shares so they can make money on 5m warrants.

I don't know much about warrants, but I doubt these instos sell them naked. Their risk would potentially be unlimited. If they hold the underlying to hedge their issue (and they profit only from the transaction and interest etc), what's the incentive for them to trigger the stop? Credit Suisse holds ~12m shares and that hasn't changed as far as I know.

Anytime you find yourself blaming manipulation, ask yourself "If I am so sure this is manipulation, then why am I being manipulated?" If the company is good - other instos and investors will jump on board quickly after any stops are deliberately triggered.

Anyway, I am surprised the graphite fad lasted so long anyway - SYR might be just catching up to the end of the fad.

 

[Country Lad]

I dont know much about warrants, but im pretty sure the other site you are referring to is full of conspiracy theorists who always blame shorters for any form of stock fall..

Let me set the scene with 2 holders of the stock.

The first one has the person sitting at screen watching the price fall saying to himself "goodness me, the price is falling". Then again and again, "it is still falling maybe I should buy more, they look cheap now. Yes, that's it, I'll average down." Followed a few days later by "that's a huge fall now it can't be my fault I am losing money so it is those rotten manipulators shorting the stock".

The second holder sitting at the screen saying "hmm, interesting movements going on, trading is very much on the sell side, market sentiment turned negative, I'll review my stop." Followed by "There goes my stop, all sold. On to next trade."

Substitute the above for nearly every stock that falls unexpectedly.

Cheers
Country Lad

 

[Vader]

I'll put another theory out there... we know that CSE (who share some board members with SYR) hold 11m shares, which in the current situation is just under 5% of SYR shares. We also know that they have said in their quarterly reports that they are potentially on the lookout for suitable exploration acquisitions if they find something good and the terms make sense... they also have a history of returning sales proceeds back to their shareholders as a capital reduction payment (last done just over a year ago).

...so, question for you - if they are selling off part or all of their 11m shares, do they need to report it anywhere (other than the next CSE quarterly report) now that share issues by SYR over the last several months have pushed their holdings below 5%?

...there have also been some cheap options cashed in lately, which could explain some of the sell off too.

The volumes haven't been all that high - especially if it turns out to be CSE cashing out. I'd say it represents a nice little buying opportunity, but there always has to be a chance that it's something more sinister.

EDIT: From the most recent CSE half year report on March 1st:

Activities

Copper Strike’s strategy has been to complete a share-based transaction that will effectively utilise the
Company’s assets and expertise. This has not yet occurred because Copper Strike’s main asset is 11
million Syrah Resources Limited shares currently worth over $36 million. The volatility and positive outlook
for this asset has made it difficult to agree a long term value of Copper Strike shares with potential partners,
making a share based transaction difficult.

In the meantime, good exploration opportunities, such as the Victorian mineral sands project, are being
investigated. Preparations for drilling in the Warracknabeal, Victoria, area on Exploration Licence 5415
have been completed with drilling scheduled to start in early February 2013.

 

[basilio]

In a previous post I discussed the possibility that the collapse in SYR SP was due to market manipulation by companies that had sold mini warrants.

This discussion has been explored in detail on another stock forum and I don't really feel like copying and pasting the comments from posters on that site. But I do think its worth following in the context of understanding what may be happening in the marketplace.

The forum is Share Scene. (Hope this is not considered inappropriate.)

 

[skyQuake]

What a massive load of bs on the other forum.

To say shorters are driving down the price of a stock to bust warrant holders is nonsense. Warrants don't work that way. 10m warrants issued doesnt mean 10m warrants have been actually sold. Issued =/= open interest, unlike options. Generally most of the volume is done on market thru market makers after the warrant has already been issued. Right now there aint many people in the warrants to make it worthwhile to "manipulate." Plus as skc said, the marketmakers hedge and gain nothing.

Combined warrant volume is about 10% of stock volume. Thats all you need to know right there.

I would also wager a large amount of money Credit Suisse will not chase a few hundred k in manipulation profit at the cost of a few million in ASIC fines + license suspensions + 1000 other instos deciding to squeeze their shorts for 10s of millions.


As for evil short sellers... Total short interest is about 1/2 mil. Which is about 1/4 of a day's volume. Doesn't seem like a credible threat of bashing down a stock that traded 14mil shares in the past 2 weeks.

What this DOES look like is regular insto LONG selling. Yes credit suisse has been the major seller, look at their S1XT crossings (and shaws) post market on the 4th Apr - 6 million shares. Those crossings were done at discounts to the last price which generally means its the end of a line of stock. They're DONE selling.
But the people they just dumped the stock to? Looks like weak hands because at the first sign of trouble, they bailed.

We'll get a bounce in SYR when the weak hands have dumped the last of their stock. Considering 6mil got crossed on the 4th and only 3.5mil have traded so far, I'd say wait for the bounce before trying to catch a 2nd handed falling knife.

Also, those conspiracy theorists on the other forums are nuts.