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Why Syrah Resources Ltd shares just hit a 52-week high

In morning trade the Syrah Resources Ltd (ASX: SYR) share price has climbed almost 5% higher to a 52-week high of $4.93 following the release of a sales and marketing update.

This latest gain means the graphite miner’s shares are now up 64% in just the last six months despite being the most shorted share on the local share market.

What was in the update?

According to the update released this morning, Syrah has signed its first spot sales agreement with China-based Yichang Xincheng Graphite Co Ltd and a binding three-year agreement with Germany’s CS Additive GmbH.

Yichang Xincheng is a leading global producer of specialty expandable graphite and CS Additive is leading producer of speciality carbon and sulphur products.

Furthermore, the company has confirmed the appointment of Magus Marketing in India to assist with distribution in the Indian subcontinent where it has already received orders.

Management believes that these agreements provide further diversification across geography and end use markets, in line with its sales and marketing strategy.

According to management, the first shipment to Yichang Xincheng is due shortly, after which a long-term contract is expect to be agreed.

Which will be great news for the company as the expandable graphite market is a key market for large and jumbo flake sizes and has high growth potential. Pleasingly it is also one of the highest value added uses for natural graphite.

Should you invest?

Like lithium miners Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE), I think Syrah has a bright future ahead of it due to the rise of electric vehicles and renewable energy.

However, with Syrah’s full-year results just around the corner, I would suggest investors hold off making an investment until they have been released. I’m interested to see the average price that Syrah is commanding for graphite and its expectations for FY 2018.

Judging by its share price gains over the last six months, many investors appear to expect Syrah to report a high average realised price. Short sellers, on the other hand, appear to be expecting the company to disappoint.

In the meantime, I think these exciting growth shares would be great options for investors.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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