Syrah Faces Dilution and Operational Risks as Equity Raise and Loan Forbearance Unfold

Equity Raising Overview

Syrah Resources Ltd (ASX – SYR) has launched a fully underwritten equity raising to bolster its financial position and operational capacity. The capital raise comprises a A$20 million institutional placement and a A$50 million 1-for-5.42 pro-rata accelerated non-renounceable entitlement offer priced at A$0.26 per new share. This offer price represents a significant discount of 31.6% to Syrah’s recent closing price and 26.8% to the theoretical ex-rights price.

The retail entitlement offer component opened on 6 August 2025 and is scheduled to close on 20 August 2025. Eligible retail shareholders in Australia and New Zealand can subscribe for new shares proportional to their holdings as of 1 August 2025. The offer is fully underwritten by Jarden Australia Pty Ltd, with AustralianSuper Pty Ltd providing sub-underwriting support up to approximately A$30 million.

Loan Forbearance and Financial Support

In parallel with the equity raise, Syrah has secured a two-year forbearance agreement with the US Department of Energy (DOE) concerning its DOE loan. This agreement defers approximately US$16 million in principal and interest payments until the loan’s maturity in April 2032, providing the company with crucial liquidity and operational flexibility. An additional 0.5% interest rate has been fixed over the loan life, increasing the all-in fixed interest rate to 4.48%.

Furthermore, Syrah has obtained an extension of a waiver on its US International Development Finance Corporation (DFC) loan, enabling further disbursements to fund operations at the Balama Graphite Operation in Mozambique. Planned disbursements include US$6.5 million in August and US$4.5 million in October 2025, subject to loan restructuring and conditions.

Operational and Strategic Implications

The proceeds from the equity raising will primarily fund operating costs at Syrah’s Vidalia Active Anode Material facility in the United States, maintain a reserve account linked to the DOE loan forbearance agreement, cover transaction costs, and support general corporate purposes. This financial package aims to underpin Syrah’s pathway to sustainable cash flow and facilitate the ramp-up of commercial sales at Vidalia.

AustralianSuper, Syrah’s largest shareholder with a current stake of approximately 32.5%, has committed to take up its full entitlement under the institutional offer and to sub-underwrite the retail entitlement offer. Depending on the final subscription levels, AustralianSuper’s shareholding could increase to as much as 38.9%, potentially consolidating its influence within the company.

Risks and Market Context

Syrah faces a complex operating environment characterized by market volatility, regulatory challenges, and geopolitical factors. The company’s operations are influenced by US tariffs on Chinese graphite imports, evolving battery market dynamics, and the ongoing qualification of products at Vidalia. The recent notice from Tesla alleging default under an offtake agreement adds an element of uncertainty, although Syrah is actively engaged in resolving the matter.

Operational risks at both the Balama and Vidalia facilities, including production ramp-up challenges and supply chain constraints, remain pertinent. The company’s ability to successfully execute its expansion plans and secure further offtake agreements will be critical to its medium-term prospects.