The Syrah Resources Ltd (ASX: SYR) share price is on watch this morning after a production update from the Aussie graphite miner.
What did Syrah announce this morning?
Syrah announced the first production of purified spherical graphite from its Battery Anode Material (BAM) plant using Syrah’s Balama graphite.
Managing Director and CEO Shaun Verner hailed the production as a “significant step forward” and I’d be watching the Syrah share price in early trade.
Syrah remains committed to developing the first large-scale, fully-integrated natural graphite anode material production facility outside of China.
Spherical graphite is a key input for battery technologies such as those used in electric vehicles. Syrah shareholders are hoping the company can capitalise on the battery storage boom in the coming years.
Syrah’s BAM project update should please shareholders, who have seen the Syrah shares slide lower in 2019.
Why is the Syrah share price down this year?
Syrah shares have slid an astonishing 72.48% lower since the start of January to just $0.41 per share.
Syrah dropped out of the ASX 200 this year as its market capitalisation fell to $169 million. The Syrah share price is languishing at valuation levels not seen since early 2012.
The biggest factor affecting Syrah shares has been a weaker pricing environment amid global oversupply concerns.
What’s the outlook for Syrah shares?
Despite the share price slump in 2019, Syrah remains committed to its Louisiana plant and further development in the battery technology space.
Syrah’s Balama mine in Mozambique is the world’s largest high-grade graphite deposit, which is the bedrock of Syrah’s operations.
The company continues to strengthen its relationships with battery producers worldwide as it hopes to right the ship in coming years. Syrah achieved commercial production at its Balama site in January 2019 in a big step forward for the company.
Syrah shares have been under pressure for many years as delays and cost overruns have diminished shareholders’ hopes.
Should you buy Syrah shares?
While I am a shareholder myself, I think the Syrah share price isn’t at “buy worthy” levels just yet.
I think it would be wise to wait until Syrah shows signs of strong cash flow and consistent production before buying.
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Motley Fool contributor Kenneth Hall owns shares of Syrah 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 Scott Phillips.
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