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Graphite Company Raises Funds To Ensure 'Orderly Price Negotiations'

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(Kitco News) - Saying it needs more flexibility to tailor production to serve graphite demand, Syrah Resources announced financing of A$111.6 million (US$76.3 million) on Wednesday.

Syrah Resources Limited (ASX:SYR) is an Australian-based industrial minerals company, which runs the Balama Graphite Project in Mozambique. Syrah, which says it is the largest and first major new natural graphite operation developed outside of China, expects to produce 205-245kt this year.

In a news release Syrah said market dynamics require the company to operate more flexibly to ensure "orderly price negotiations":

Production at Balama is approaching a point where the trade-off between unit cash operating cost benefits versus the pricing impact of incremental supply into the market is more balanced. Increasing production too rapidly in the short term in order to target market penetration may not be optimal for pricing outcomes. CY2019 production is expected to be 205-245kt (revised from 250kt previously), dependent on production volume and quality performance and the ongoing assessment of optimal sales volume against demand and price.

Having regard to these factors, the Board of Syrah has decided that it is appropriate for the Company to raise additional capital.

The proceeds of the Capital Raising will provide Syrah with additional liquidity and greater flexibility to tailor Balama production ramp-up in accordance with global natural graphite demand, enabling orderly price negotiations.

The capital raising will consist of a A$55.8 million (US$38.2 million) convertible note and a A$55.8 million (US$38.2 million) entitlement offer.

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