It's fair to say that the Syrah Resources Ltd (ASX: SYR) share price hasn't had the easiest of years in 2023 so far. This ASX graphite share started the year at just over $2 a share. But today, Syrah Resources shares are at just 90 cents each at the time of writing. That means the company is down more than 56% in 2023 so far.
Syrah shares are also down 66% from their all-time high of more than $2.65 a share in late 2021:
So what's gone so wrong for this ASX graphite share?
Well, 2023 has seen a number of less-than-favourable events so far which seems to have dented investor confidence in Syrah shares.
As we covered at the time, the main culprit was the quarterly update that Syrah released late last month. This informed investors that the company's sales were flat on a quarter-on-quarter basis. This was thanks primarily to weakness in Chinese markets.
Syrah's Balama operation also ran into some issues over the period. Inventory positions meant the company took a hit with its production numbers and costs at the project. Because of these issues, Syrah announced it would "moderate production from Balama until demand conditions and sales orders at economic prices warrant higher capacity utilisation".
Needless to say, investors were not impressed with this news. Syrah shares fell more than 10% when this report was released.
New shares could mean more pain for Syrah investors
But another hurdle is looming for Syrah shares that might continue to drag on the company's share price performance.
Last month, Syrah revealed it would be issuing up to $150 million worth of capital notes to superannuation fund AustralianSuper. These notes have been earmarked for capital works at Syrah's Balama and Vidalia projects as well as " funding options for operating strategy and project development".
Shareholders are being asked to vote on the issuance of these convertible notes to AustralianSuper in July. If shareholders approve, it will result in these notes being converted into additional Syrah shares.
This might cause further issues for the Syrah share price, as this action will significantly dilute the company's share count. It will also see AustralianSuper raise its stake in Syrah from the current 17% or so to as high as 30% if the dilution gets the green light.
Since AustralianSuper is expanding its ownership of Syrah so significantly, it will dilute all other shareholders' ownership of the company. So it's not too surprising to see the Syrah share price come under pressure in light of all this.
As such, there might be a few more tough months in store for Syrah's immediate future. But let's see what happens. At the current Syrah share price, this ASX graphite share has a market capitalisation of $606 million.
