SYR - graphite mining

[tread]

Hi,

I thought it might be worth starting a thread on this. Looks like some interesting developments:

https://www.australianmining.com.au/news/syrah-reaches-production-milestone-balama-graphite-operation/

DISC: holding
This is not investment advice

[Entrep]

Anyone here following Syrah?

[kiora]

Its in my brothers portfolio
https://www.marketscreener.com/quote/stock/SYRAH-RESOURCES-LIMITED-10355302/consensus/
https://www.stuff.co.nz/motoring/300497139/tesla-inks-deal-to-get-key-battery-component-outside-china

[Scrunch]

Its in my brothers portfolio
https://www.marketscreener.com/quote/stock/SYRAH-RESOURCES-LIMITED-10355302/consensus/
https://www.stuff.co.nz/motoring/300497139/tesla-inks-deal-to-get-key-battery-component-outside-china

SYR (Syrah) are indeed interesting, particularly as they have joined the Tesla stable of mining off-take agreements (23 Dec 2021 and 29 Dec 2021 clarification). Their appeal is a huge graphite resource.

Their two big negative factors are location (Mozambique) and the length of time they have been operating while frequently losing money.

Graphite is a strange resource. The resource needed for mining is frequently smaller than the resources that potentially exist in the surrounding area. This means the likely resource is a lot larger than either Proven and Probable or Measured and Indicated figures would indicate. These resources are only moved into these categories with more extensive drilling. Its also one where flake size distribution, cut-off and ability to concentrate / purify matter. A higher grade pre-concentration could be lower value if it has a poor flake size distribution or has the wrong impurity mix. There is also a lot of variation in the pricing by flake size that different companies have used. DYOR but double-check your numbers.

There are also wildly varying cut-off grades being applied. A good example of this is RNU vs EGR's Epanko.

Epanko (owned by EGR - 21 June 2017)
Epanko resource is 30.7Mt @ 9.9% (8% cut-off). From quoted reports it is also 113.3Mt @ 7.2% (5% cut). From graphed grade-tonnage curves it would appear be about 175Mt @ 6.1% (2.5% cut) [this figure may be old].
Proven resource is 5.7Mt @ 8.4% (5% cut-off). Proven and Probable is 11.7Mt @ 8.32% (5% Cut). Because of the planned speed of mining, at a 5% cut-off, only 10% has been drilled to proven and probable (11.7/113.3).

RNU (21 July 2020 upgrade announcement)
RNU resource is 87.4Mt @ 7.5% (2.3% cut-off). Proven and Probable is at 51.5Mt @ 7.4% (With 15.8Mt @ 8.4% of this in Proven) so 59% has been drilled to P&P. In slides RNU has claimed to have the 2nd largest proven resource in the world. While correct, its arguably misleading.

RNU is correct that they have drilled a sufficiently to have 3x EGR's proven resource and their 87.4Mt is nearly 3x that of EGR's 30.7Mt.

BUT
If you look at resource size at a 2.3% and 2.5% cut-off, EGR's is broadly double that of RNU (175Mt @ 6.1% vs 87.4MT @ 7.5%). If EGR's bigger and Syrah massively bigger (see below), any assertion of being #2 in the world for resource size is bordering on misleading.

So back to Syrah
Their resource is Huge. Huge. Huge. In 2019 Measured is was 23.5Mt @ 17.5%, Indicated 378MT @ 11.2% and Inferred of 1,020MT @ 9.8%.
The proven and probable resource estimates were probably done 10+ years ago and much of the proven estimate has been mined, hence not appearing in RNU's analysis. But RNU claiming to have the 2nd largest proven resource with 16Mt @ 8.4% while Syrah has a resource estimate of 1,422Mt @ 10.0% does make you need to think what's real.

The quoted 50 year life is based on ore reserves being depleted at 2Mt/yr. If all the inferred was drilled so it could enter the mine life calculation, this would be a circa 700 year mine life. That's seriously huge.

There isn't going to be a shortage of graphite. What may be in short supply is graphite that can be readily purified and shaped to spherical graphite standards for EV batteries. There may also be a shortage of processing capacity for Spherical graphite (although that is only one of the uses of Graphite). Both EGR and RNU have plans at difference stages of advancement to produce spherical graphite. IMO that's where the money will be made.

Disc - Holding EGR but not RNU or SYR.

[kiora]

That portfolio also holding AGY
https://stocknessmonster.com/charts/agy.asx/
https://stocknessmonster.com/announcements/agy.asx-6A1084631/

[troyvdh]

Thanks kiora...what about GW1....(what about NMT...lithium)...

[kiora]

I don't follow mining shares
On first glance GW1 looks rather speculative?
https://stocknessmonster.com/announcements/gw1.asx-6A1081683/
JBmurc poster more into resource companies
https://www.sharetrader.co.nz/search.php?searchid=668449

[troyvdh]

OK...no worries.