Syrah Hits Record 24kt Graphite Output and Raises US$72M for Growth

Balama Delivers Strong Production and Cost Improvements

Syrah Resources (ASX:SYR) recorded a standout quarter at its Balama graphite mine in Mozambique, producing 24,000 tonnes of natural graphite with an 86% recovery rate and a consistent 95% fixed carbon grade. This output marks a continuation of operational improvements, with a month-long campaign at quarter-end delivering 16kt at an impressive 87% recovery, pushing production quality to new highs.

Costs during operating periods averaged US$523 per tonne FOB Nacala/Pemba, with medium-term guidance targeting US$430–480/t at a 20kt monthly production rate, assuming diesel prices normalise. Despite geopolitical tensions affecting global supply chains, Balama’s diesel and consumables supply remained stable, though Syrah is proactively managing risks by optimising solar and battery usage at the site.

Syrah also signed a multi-year binding offtake agreement with NextSource for up to 68kt of Balama graphite over seven years, underpinning demand visibility for its premium product. Natural graphite sales to third parties reached 20kt in the quarter at a weighted average price of US$630 per tonne CIF, boosted by a higher coarse flake sales proportion and a large breakbulk shipment to Indonesia supporting ex-China AAM production.

Shipping costs averaged US$88 per tonne but are expected to rise next quarter due to the ongoing Middle East conflict, adding pressure to logistics expenses.

Vidalia Facility Advances Qualification Toward Commercial Sales

The Vidalia Active Anode Material (AAM) facility in the US remains in a testing and qualification phase, with production volumes limited to support customer qualification processes. Syrah has offtake agreements with Tesla and Lucid for the 11.25ktpa facility, but commercial sales timing hinges on customer qualification progress and evolving US policy factors.

Vidalia’s product quality continues to meet stringent contractual and technical specifications, validated through internal and third-party testing. The facility’s steady-state operating cost guidance is US$4.30–4.80/kg AAM, with expected US Section 45X Production Credits estimated at US$7–9 million annually before phase-down starting in 2030.

Expansion plans for Vidalia to 45ktpa depend on securing further customer commitments and project financing, with the board expected to review progress toward a final investment decision later this year.

Financial Position Strengthened by Equity Raise and Strategic Funding

Syrah closed a US$72 million equity raising in April 2026, primarily to fund Balama’s ramp-up to targeted production levels and working capital at Vidalia to achieve commercial sales. The company ended the quarter with US$52 million in cash, including US$43 million in restricted reserves linked to its US Department of Energy (DOE) and International Development Finance Corporation (DFC) loans.

Additionally, Syrah is advancing non-binding Strategic Funding Proposals with the DFC, DOE, and AustralianSuper to restructure debt, convert a portion of indebtedness into equity and convertible notes, and eliminate cash interest and principal repayments for three years. These proposals, if executed, would provide up to US$178 million in pro forma liquidity, significantly enhancing financial flexibility amid challenging market conditions.

Several events of default related to the DOE and DFC loans remain unresolved but are expected to be addressed through these strategic funding arrangements.

US Trade Policy Reversal Alters Market Dynamics

The US International Trade Commission (ITC) reversed its preliminary affirmative determination on antidumping and countervailing duties (AD/CVD) on Chinese graphite AAM imports, concluding that these imports do not materially retard the establishment of a domestic US AAM industry. This unexpected negative final determination means that previously anticipated AD/CVD rates of 160–170% will not be imposed, reshaping competitive dynamics in the US market.

Despite this, other US tariffs on Chinese graphite and synthetic AAM remain in place, with ongoing government policies encouraging ex-China and domestic supply chains. Syrah’s integrated mineto-anode supply chain positions it well to benefit from these evolving policy settings, supported by US government initiatives such as Section 45X Production Credits and the One Big Beautiful Bill Act, which incentivise non-Chinese critical mineral inputs.

Global electric vehicle sales dipped 4% in the March 2026 quarter, weighed down by softness in the US and China, while China’s anode production surged 50% year-on-year, intensifying competition. The ex-China AAM market remains constrained amid tariff uncertainties and pricing pressures, with synthetic graphite producers facing margin challenges due to overcapacity and high feedstock costs.

ESG Credentials and Community Engagement as Differentiators

Syrah continues to emphasise its environmental, social, and governance (ESG) leadership, certified against rigorous benchmarks such as the Initiative for Responsible Mining Assurance (IRMA) and ISO standards. The company is the first graphite operation globally to achieve IRMA Level 50 performance, a key differentiator against Chinese competitors.

At Balama, Syrah is advancing community development initiatives with a US$5 million investment over five years and maintains strong engagement with local and provincial authorities to align operations with community interests.

Looking Ahead to Commercial Sales and Market Growth

Syrah targets commercial AAM sales from Vidalia in the second half of 2026, with positive operating cash flow expected from mid-2027 onwards. The company’s medium-term ambition includes ramping Balama production to 200–240ktpa, which would reduce unit costs and support sustainable cash flow generation.

Market watchers will note the importance of Syrah’s progress in customer qualification at Vidalia and the execution of strategic funding proposals, which together will shape the company’s ability to capitalise on growing ex-China demand for natural graphite and AAM amid shifting US trade policies and global EV market fluctuations.

Syrah’s recent capital raise builds on momentum from a substantial retail entitlement offer that brought AustralianSuper close to a 50% stake, reinforcing institutional backing for its growth strategy. The company’s ongoing engagement with Tesla amid an extended offtake dispute deadline also remains a critical factor for future revenue visibility.

With global EV sales showing signs of volatility and US trade policy developments introducing uncertainty, Syrah’s path to commercialisation and financial stability will be closely watched by investors and industry participants alike.

Multi-year offtake agreement and US$72 million equity raising underpin the company’s strategic positioning amid these challenges.