It has been an incredibly turbulent year for shareholders of leading graphite miner Syrah Resources Ltd (ASX: SYR).
At one stage this year its share price had risen by as much as 67% to $6.72, before plummeting all the way down to just $2.62. Thankfully for shareholders there was a bit of good news for them today at long last.
Syrah's share price received an almighty boost after reports in the Australian Financial Review speculated that mining giant South32 Ltd (ASX: S32) and an unnamed Asia-based miner are interested in taking advantage of the collapse in its share price by launching a takeover offer.
This sent Syrah's share price hurtling skywards and at the time of writing it is higher by around 13% to $2.98. As the graphite miner is one of the most shorted shares on the ASX, I wouldn't be surprised if part of today's strong gain is the result of short sellers scrambling to close their positions.
Whether or not a takeover approach from South32 does materialise, only time will tell. But I can definitely see the appeal, especially with graphite demand for the use in the anode of lithium ion batteries expected to rise considerably over the next decade.
Whilst Syrah may be behind with production at its world class Balama project, prices continue to remain favourable for the miner. If they continue to remain high when production finally commences in the second quarter of 2017, then the delay won't end up costing the company.
I believe Syrah would fit in well with South32's diverse mining operations and wouldn't be surprised to see a takeover launched.
But I wouldn't suggest investors buy shares purely on the back of this speculation. If an offer fails to materialise I can see short sellers piling in again and the share price plunging.
