Graphite and vanadium developer Syrah Resources Ltd (ASX: SYR) saw its shares climb more than 18% today, before going into a trading halt, on rumours of a takeover offer valuing the company at more than $2 billion.
With a market cap of $826 million, after today's rise, that suggests Syrah shares could soar if the rumoured bid materialises. The company's shares are already up 155% in the past twelve months, as investors bank on rising demand for graphite and vanadium.
Both products are key materials used in the production of lithium ion batteries as well as a swag of products required by renewable energy projects such as energy storage. With the rise of lithium ion batteries likely to soar as they are used in electronic cars, smartphones and other consumer electronics goods, demand for the base materials is set to explode.
Syrah is perfectly poised for that trend, with its giant Balama project in Mozambique in Africa, containing an estimated 117 million tonnes of graphite – larger than the rest of the world's resources combined – as well as 1.15 billion tonnes of inferred vanadium resources.
Production is estimated to make Syrah the lowest cost graphite producer in the world, and the Australian Financial Review (AFR) says the capex spend on Balama mine and infrastructure is a low US$92 million.
The AFR says its sources suggest Glencore, one of the world's largest vanadium producers in the world, is keen to exert its dominance in that market, and buying Syrah would go a long way to meet those goals.
If interest in vanadium deposits is rising, one wonders how long it will be before the likes of Glencore turn their attention to the graphite miners such as Lamboo Resources Ltd (ASX: LMB), Triton Minerals Ltd (ASX: TON) and Kibaran Resources Ltd (ASX: KNL).
