The Syrah Resources Ltd (ASX: SYR) share price is having a strong start to the week.
In morning trade, the ASX battery materials share is up 16% to 66 cents.
Why is this ASX battery material share jumping?
Investors have been buying Syrah Resources shares this morning after the company announced a potential cash injection that eases concerns that another highly dilutive capital raising could be coming.
According to the release, the United States International Development Finance Corporation (DFC) board of directors has approved a US$150 million conditional loan commitment to the company's wholly owned subsidiary, Twigg Exploration and Mining.
If completed, the DFC loan will fund capital requirements of the Balama Graphite Operations in Mozambique. This includes feasibility studies for the development of Balama's vanadium resource, the current and future expansion of Balama's tailings storage facility (TSF), and working and sustaining capital for the Balama operations.
Syrah notes that the proposed loan for Balama is aligned with DFC's commitment to fostering trade and investment deals and partnerships between the United States and Africa.
What are the terms?
The loan is for a maximum principal amount of US$150 million and a term of up to 13 years. Interest on the DFC loan will be fixed at applicable long-dated US Treasury rates plus a margin.
However, the ASX battery materials share warns that whilst the approval of the conditional loan commitment demonstrates DFC's intention to support the Balama operation, there is no certainty that a loan from DFC will ultimately be provided. It remains subject to the completion of due diligence, negotiation of terms and legal documentation, DFC management approval, and Syrah board approvals.
Syrah's managing director and CEO, Shaun Verner, said:
The DFC Board's approval of the DFC loan to Twigg demonstrates the importance of Balama, which is the largest integrated graphite mining and processing operation globally, to the critical minerals strategy of the US. Together with the US Department of Energy loan for the expansion of Syrah's downstream business, DFC loan funding will position Syrah as a strategic partner in bolstering supply chain security for critical minerals required for the electric vehicle and energy transition in the US.
