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Here’s why the Syrah (ASX:SYR) share price jumped to a 52-week high today

High

The Syrah Resources Ltd (ASX: SYR) share price has continued its positive run and is pushing higher again on Tuesday.

At one stage today, the graphite producer’s shares were up almost 7% to a 52-week high of 95 cents.

When the Syrah share price hit that level, it meant it had gained a remarkable 116% since this time last month.

Why did the Syrah share price charge higher today?

This morning Syrah announced the completion of a bankable feasibility study (BFS) for the expansion of its natural graphite Active Anode Material (AAM) facility in Vidalia, Louisiana, United States.

This is part of its strategy of becoming the first vertically integrated producer of natural graphite AAM outside of China.

According to the release, the BFS confirms the strong business case for Syrah’s natural graphite AAM production at its Vidalia facility.

In light of this, the company has commenced the Front End Engineering and Design (FEED) for an initial 10ktpa AAM facility at Vidalia in the first quarter of 2021. After which, it intends to increase its capacity in line with growing market demand.

Its study found that the capital cost will be US$138 million, with all-in operating costs of US$3,149 per tonne of AAM. The latter compares to the spot AAM price of US$5,471 per tonne.

Management commentary.

Syrah’s Managing Director and CEO, Shaun Verner, was pleased with the study and notes that spot prices are potentially at a low point of the cycle.

He commented: “The BFS confirms strong positive economics for commercial scale natural graphite AAM production at Vidalia, with robust operating margins implied compared to current observed spot natural graphite AAM prices, which are arguably at the low point of the cycle.”

“Vidalia vertically integrated with Balama presents a unique value proposition: scale; independence and localisation with USA battery production; critical mineral security; and ESG auditability back to the graphite source. The completion of the BFS further enhances engagement with potential offtake customers, financiers, and Government, and represents an exciting milestone in the execution of our USA and vertical integration strategy, which commenced in 2016,” he added.

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Returns as of 6th October 2020

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.

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