Syrah Resources share price leaps 13% on big news day

Syrah Resources shares are on form on Thursday…

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The Syrah Resources Ltd (ASX: SYR) share price is having a strong day.

In early afternoon trade, the graphite producer's shares are up 13% to $2.13.

Why is the Syrah Resources share price racing higher?

There have been a few reasons for the strong gain by the Syrah Resources share price on Thursday.

The first is news that the company has been selected for a US government grant of up to US$220 million (A$350 million).

According to the release, Syrah has been selected by the US Department of Energy (DOE) as a recipient of the Bipartisan Infrastructure Law Battery Materials Processing and Battery Manufacturing grant.

This will support the financing of the potential expansion of the Vidalia active anode material (AAM) facility in Louisiana, US, to a 45ktpa AAM production capacity.

Management notes that if successfully concluded, the DOE grant would fund a significant proportion of the estimated capital costs for Vidalia's expansion.

Fellow ASX battery materials shares Novonix Ltd (ASX: NVX) and Piedmont Lithium Inc (ASX: PLL) were also selected for funding.

What else?

Also giving the Syrah Resources share price a lift is news that the company has entered into a non-binding memorandum of understanding with LG Energy Solution, a leading global manufacturer of lithium-ion batteries.

Syrah and LG Energy Solution will evaluate natural graphite AAM supply from the Vidalia AAM facility in the US

In addition, an offtake agreement for 2ktpa AAM from Vidalia will commence in 2025 and increase to at least 10ktpa AAM upon Vidalia's expansion to a 45ktpa AAM production capacity.

Anything else?

The announcements don't stop there. Syrah also revealed that its workers and contractors have returned to the Balama Graphite Operation in Mozambique.

However, further illegal industrial action disrupted a full operational restart and limited logistics movements. Industrial action continues to be driven by a small contingent of local employees and contractors.

Syrah is working towards recommencing full Balama operations and production, and logistics movements, as soon as possible.

Fourth and final

A final announcement reveals that the company produced 38kt of natural graphite at an 80% recovery rate during the third quarter of FY 2022.

Syrah also shipped a record 55kt at a weighted average sales price of US$688 per tonne. This was a quarter-on-quarter increase of 25% and 3.9%, respectively.

As a result, pleasingly, Balama still recorded a net operating profit after C1 and C2 costs over the quarter despite the disruptions mentioned above.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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