MENU

Syrah Resources Ltd (ASX:SYR) shares just crashed to a 52-week low

Much to the dismay of its long-suffering shareholders, the Syrah Resources Ltd (ASX: SYR) share price returned to trade this morning and crashed almost 8% lower to a 52-week low of $2.15.

This latest decline means the graphite producer’s shares have now lost 52% of their value since the start of the year.

Why are Syrah Resources’ shares crashing lower again?

This morning the company’s shares returned from their trading halt following the release of a report on the damage caused by a fire at its Balama project in Mozambique.

According to the release, the fire occurred in the Primary Classifier section of the Balama process plant. The Primary Classifier distributes and classifies all milled material from the scrubber prior to flotation.

The initial investigation indicates that the fire originated during hot work activities below the unit during planned maintenance on piping.

The fire rendered the Primary Classifier inoperable, meaning the company has had to source a replacement from South Africa.

This is no easy feat and due to the time it takes for delivery, installation, and commissioning of the new unit, a return to production is not expected for five weeks. The repair bill has been estimated to be in the region of US$0.5 million.

Management has advised that options to by-pass the Primary Classifier are being reviewed, but they are not currently expected to deliver a material production result during the repair period. Mining and crushing activities will continue as normal.

What impact will this have on its operations and sales?

Syrah estimates a production loss of 30kt during the fourth quarter, meaning it has revised its production forecast down to 30kt to 35kt for the quarter. This will result in full year production of between 101kt and 106kt.

As a comparison, at the start of the year the company was targeting production of between 160kt and 180kt.

What now?

Syrah is quickly becoming known as a miner that over promises and under delivers.

So far in 2018 the company’s production has been negatively impacted by issues with its fines dryer, flotation level sensors, filter cloths, and now its Primary Classifier.

In light of this, I would suggest investors avoid Syrah’s shares at all costs until it has built up a track record of meeting its production targets.

Until then, I would suggest investors stick to the likes of BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

Alternatively, you could check out these blue chip shares that are kicking goals right now.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.