Ground Breakers: Syrah raising $250 million for US plant expansion
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The largest mining raising of 2022 so far has been issued by Syrah Resources (ASX:SYR), which is chasing $250 million in fresh equity after announcing the expansion of its Vidalia active anode materials plant in Louisiana.
The decision to construct the full scale 11,250tpa plant in the Bayou comes after a landmark offtake deal with Tesla that, when announced, seemed to leave as many questions as answers.
After a brief consultation last year with the ASX, Syrah offered a few more nitty gritty details on the Tesla arrangement.
Syrah, which also owns the Balama graphite mine in Mozambique, will send around 8000t a year to Elon Musk and Co., conditional on final specifications of the AAM product being provided by the end of this year.
The total estimated capital costs of the Vidalia initial expansion approved today by Syrah’s board will come in at US$176 million, with US$165 million remaining to spend.
The full underwritten institutional placement and 1 for 5.9 non-renounceable entitlement offer will raise around US$178m ($250m).
It will fully fund the installed capital costs for Vidalia, fund additional costs associated with Vidalia including expansion studies and product development this year, transaction costs and an expansion of the Balama TSF as well as working capital and sustaining capex at the African mine.
As with most materials critical to the battery supply chain, a large supply deficit is expected in graphite by the middle of the decade.
By 2026 Syrah says the rapid growth of the battery manufacturing pipeline in North America will see volumes demanded from Vidalia exceed its expanded capacity.
It has kickstarted an updated BFS to study an expansion to 45,000tpa, underpinned by the “world class” Balama resource.
First production from the Vidalia expansion is expected in the September quarter of 2023.
“Announcing the Vidalia FID and fully funding the Vidalia Initial Expansion are pivotal steps for Syrah in its history and in its strategy to becoming a vertically integrated producer of natural graphite AAM,” Syrah MD Shaun Verner said.
“We now have greater certainty over the project and financing for the Vidalia Initial Expansion and our path to entering the downstream AAM market, with the start of production scheduled for the September 2023 quarter.”
“Further, funds from the equity raising will contribute towards studies for potential future expansion of Vidalia to a 45ktpa AAM production capacity and working capital and capital costs at Balama, and ensures that the Company will maintain a strong balance sheet.”
Simon Lee’s Emerald Resources (ASX:EMR) has reiterated its confidence in its $117 million all scrip bid for unlisted junior gold miner Bullseye Mining after a disgruntled Chinese shareholder of Bullseye lobbed its own all cash offer.
Pitched as a premium to the Emerald bid, Au Xingao’s conditional 31c a share offer, which will rise to 35c if some conditions are met, emerged on Friday amid a dispute between related 14.85% Bullseye shareholder Xinhe and the company’s board.
Xinhe has applied to the Takeovers Panel in a bid to unwind the Emerald deal.
According to Emerald “Bullseye have advised that the Xingao proposal is highly conditional and does not constitute or give rise to an offer which is capable of acceptance by its shareholders.”
Au Xingao has said it would up its offer from 31c a share to 35c a share if it gets 40% acceptance and is granted the opportunity to complete due diligence by Bullseye’s board, something that seems unlikely given its strong support and recommendation for the Emerald merger.
Bullseye’s flagship asset is the North Laverton Gold Project, where it is currently producing gold at the Bungarra open pit.
In a release accompanying news of the bid, Au Xingao director Luke Huang said they did not want exposure to Emerald’s Cambodian assets, which includes the 100,000ozpa Okvau mine.
Emerald’s managing director Morgan Hart today defended the company’s record in the south-east Asian nation and the quality of its portfolio.
“Emerald’s offer remains open for acceptance and we look forward to Bullseye shareholders joining us and participating in the growth of Bullseye’s highly prospective gold exploration tenements alongside our own advanced exploration opportunities in Cambodia to create further value for our shareholders,” Hart said.
“We take significant pride in our highly credentialed gold project development team who have delivered an operating Okvau gold mine on time and on budget, generating substantial cashflows, creating a new industry for Cambodia and bringing opportunities and benefits for the people of Cambodia.”