and back over a dollar... so what follows ?
Sources said the $419 million company was looking for between $50 million and $100 million in fresh equity, and a deal was expected to launch in coming days. And there's plenty of reasons why Syrah could need new capital.
High on the list is restarting its flagship Balama graphite project in Mozambique, which has been sitting idly for the past half year. Operations at Balama were halted by Syrah in July, as the global market for batteries sustained a pandemic-induced hammering, which was the final straw for the project. Syrah had already announced production cuts at Balama late last year due to weakening market conditions, and that was followed by a company restructure in 2019's September quarter that saw the staff head count at Balama cut by 30 per cent.
However, a tightening graphite market could mean its time for Balama to restart. In a note to clients a fortnight ago, UBS analysts said the graphite market was supportive of Balama restarting in 2021, and in their base case scenario the project would be restarted before March.
While it's been offline, UBS reckoned the Balama project had been burning around $US10 million cash each quarter. Syrah had $US44 million cash on its balance sheet as of September 30 this year and no debt, according to a quarterly activities report published in October.
The other big reason Syrah could need capital would be to finance the development of its graphite production facility at Vidalia, in the United States. Syrah said it had completed a bankable feasibility study (BFS) on the project at the start of December, and it would cost $US138 million to build a 10 kilo tonne per annum processing facility. The completion of the BFS meant Syrah could start having "commercial discussion for project development to progress with potential offtake partners and financiers," the company said.