Syrah falls as it cuts production
PERTH (miningweekly.com) – The share price of graphite miner Syrah Resources crashed on Tuesday after the company announced that it would be reducing production volumes in the fourth quarter of the year, and undertake an immediate review of cost reductions at both its Balama graphite project, in Mozambique, and across the company.
Graphite production during the fourth quarter will be dropped by around 5 000 t a month, with the miner saying that the decreased production would allow Syrah to focus on further increasing fixed carbon grade and product quality to develop value in use differentiation, and to manage supply to allow for pricing differentials based on quality, grade and consistency.
Furthermore, Syrah will also undertake a strategic and operational review next year.
“In response to the sudden and material decrease in spot graphite prices impacting price negotiations and contract renewals, we have taken immediate action to reduce our production volumes in the fourth quarter to levels sufficient to maintain operations and continue our production optimisation activities,” said CEO and MD Shaun Verner.
“During this period, we will focus on increases to product grade and consistency to drive our product differentiation. Although a difficult decision, we believe that this action is in the best interest of shareholders to preserve long term value.
Verner said that the available liquidity and cost reduction initiatives would allow Syrah flexibility to manage its near-term production volumes in line with demand growth, and to ensure that price premiums reflected Syrah’s long-term supply of high-quality graphite.
Syrah has meanwhile warned of a likely non-cash post-tax impairment charge of between $60-million and $70-million for the half-year, and an inventory write-down of a further $5-million.
Syrah shares traded at a low of 41.5c a share on Tuesday, down from a high of 51.7c a share.
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