Syrah Reports 2.3kt Graphite Output, $72M Equity Raise, and Vidalia Progress

Balama Production Paused as Market Demand Softens

Syrah Resources (ASX:SYR) dialled back production at its flagship Balama Graphite Operation in Mozambique during the June quarter, producing just 2.3kt of natural graphite after completing the prior quarter’s campaign. The company deferred the next production run to September 2026, citing subdued ex-China demand and ongoing policy uncertainty as the main reasons for the pause. Despite this, Balama maintained a high recovery rate of 95% and a grade of 19% total graphitic carbon, reflecting operational robustness.

Natural graphite sales to third-party customers reached 7kt at an average CIF price of US$736 per tonne, buoyed by a relatively higher proportion of coarse flake sales. However, the market remains subdued, impacted by unfavourable US trade policy outcomes, including the final negative determination in the US antidumping and countervailing duty investigation, and unclear import tariff and China export control settings. Syrah noted competition from a new Chinese privately-held operation exporting fines into ex-China markets, underscoring the challenging environment for natural graphite feedstock diversification.

Vidalia Advances Anode Material Qualification Amid Commercial Ramp-Up Plans

In the United States, Syrah’s Vidalia Active Anode Material (AAM) facility produced approximately 150 tonnes of AAM during the quarter, focusing on final stages of customer qualification and process validation. The company is targeting commercial sales commencement in the second half of 2026, contingent on customer approvals and ongoing qualification progress. Syrah holds offtake agreements with Tesla and Lucid, with qualification activities intensifying despite earlier disputes having been resolved.

Vidalia’s AAM consistently meets or exceeds purity and battery performance specifications, with carbon purity around 99.99% and low impurity levels validated by Syrah, third-party labs, and customers. The facility demonstrated operational stability and readiness for ramp-up, with ongoing improvements in process controls and reliability. Syrah’s guidance for Vidalia’s steady-state operating costs remains US$4.30–4.80 per kilogram of AAM, supported by expected US government Section 45X Production Credits estimated at US$7–9 million annually prior to phase down starting in 2030.

$72 Million Equity Raise and Strategic Funding Proposals Bolster Liquidity

To support the medium-term ramp-up of Balama and working capital for Vidalia, Syrah completed a US$72 million equity raising during the quarter. This capital injection, alongside a US$8 million Section 45X Production Credit payment received post-quarter, underpins the company’s financial flexibility amid low current production and challenging market conditions.

Syrah is also advancing non-binding Strategic Funding Proposals from the US International Development Finance Corporation (DFC), US Department of Energy (DOE), and AustralianSuper. These proposals aim to restructure Syrah’s balance sheet by converting a substantial portion of debt into equity and convertible loan notes, provide additional liquidity, and eliminate cash interest and principal repayments for the next three years. The company targets financial close on these proposals by the end of 2026, which would significantly improve its balance sheet and support asset ramp-up.

Navigating Policy Shifts and Regulatory Changes

Syrah’s operations remain sensitive to evolving government policies. In Mozambique, a new mining law mandates increased state participation and value-addition requirements, but Syrah’s existing Balama Mining Agreement includes stability provisions protecting current arrangements. The company is actively engaging with Mozambican authorities and industry groups to influence the implementation regulations.

In the US, durable import tariffs on Chinese graphite products remain, with further trade measures under consideration. The Biden administration’s critical minerals and national security agenda, including supply chain transparency and mineral traceability initiatives, aligns with Syrah’s strategy to supply secure, ex-China graphite and AAM. These policy developments, combined with US government incentives such as the Section 45X Production Credits and the Inflation Reduction Act, bolster Syrah’s competitive positioning in the rapidly growing battery materials market.

Operational Safety and ESG Credentials Strengthen Market Position

Syrah reported zero recordable injuries (TRIFR of 0.0) at both Balama and Vidalia facilities during the quarter, reflecting strong safety management. The company highlights its ESG certifications and sustainability initiatives, positioning itself as a differentiated supplier relative to Chinese competitors. Syrah’s integrated mine-to-anode supply chain in the US is uniquely placed to support critical minerals and energy security objectives.

Financially, Syrah ended the quarter with a cash balance of US$98 million, including US$67 million in restricted cash tied to loan reserves and project accounts. Operating cash outflows were US$19 million, lower than prior quarters due to reduced Balama production and cost management. The company maintains unused financing facilities of US$82 million, providing runway for continued operations.