The Syrah Resources Ltd (ASX: SYR) share price is having a year to forget.
With the graphite producer's shares down almost 4% to 57 cents today, it means they have now lost approximately 70% of their value since the start of 2023.
Why has the Syrah share price crashed deep into the red?
Investors have been rushing to the exits again this year after weak graphite prices forced the company to pause production at the Balama operation in Mozambique.
Prices dropped to such low levels that Syrah was reporting unit costs that were higher than the price received. This has seen the implementation of fixed 30-day high-capacity utilisation production campaigns followed by shutdown periods determined by inventory levels to improve cost efficiency.
However, this has still not been enough to stop the rot. For the second quarter of FY 2023, Syrah reported cash receipts of US$9.58 million and an operating cash outflow of US$29.5 million.
In light of the above, it will come as no surprise to learn that earlier this year the company sought to shore up its balance sheet by raising additional funds. Syrah raised $150 million through the issue of new convertible notes to AustralianSuper.
In other news, this month it was announced that Syrah would be kicked out of the ASX 200 index at the next quarterly rebalance. This is likely to have added extra selling pressure on its shares this week.
Is this a buying opportunity?
The team at Macquarie appear to believe the weakness in the Syrah share price could be a buying opportunity for brave investors.
Last month, the broker put an outperform rating and a $1.30 price target on the company's shares. This suggests that its shares could more than double in value over the next 12 months.
Time will tell if the broker has made the right call.
