Post on 08-May-2015
Syrah Resources
Symposium SeriesSYRAH RESOURCES LIMITED
26-27 November 2012
This document has been prepared by Syrah Resources Ltd (“the Company”) to provide summary information about the Company and its associated entities and their activities current as at the date of this document. The information contained in this document is of general background and does not purport to be complete.
This document is not and should not be considered as an offer or an invitation to acquire any securities issued by the Company and will not form part of any contract for the acquisition of securities. In particular, this document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Securities may not be offered or sold in the United States unless the Securities have been registered under the US Securities Act of 1933 or an exemption from registration is available.
This document is for information purposes only and is not financial product or investment advice, nor a recommendation to acquire securities in the Company. It has been prepared without taking into account the objectives, financial situation or needs of individuals. Past performance information given in this document is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.
This document includes certain statements, opinions, projections, forecasts and other forward-looking information which, while considered reasonable by the Company, are inherently subject to significant uncertainties and contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results included in this document. Recipients of this document are cautioned that forward-looking statements are not guarantees of future performance – they must make their own independent investigations, consideration and evaluation of the opportunity to invest in the Company. By accepting this document, recipients agree that if they wish to investigate, consider or evaluate any opportunity to invest in the Company, they will make and rely solely upon their own investigations and enquiries and will not in any way rely upon this document.
Any statements, opinions, projections, forecasts and other forward-looking information contained in this document do not constitute any commitments, representations or warranties by the Company and its associated entities, directors, agents and employees, including any undertaking to update any such information. Except as required by law, and only to the extent so required, directors, agents and employees of the Company shall in no way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatsoever nature arising in any way out of, or in connection with, the information contained in this document. The Company has prepared this document based on information available to it at the time of preparation and subject to the qualifications in this document. To the maximum extent permitted by law, none of the Company, its affiliates or any of their respective related bodies corporate or other affiliates or its or their directors, officers, employees, representatives, agents or advisors (each a Limited Party and together the Limited Parties) take any responsibility for the contents of this document or any action taken by any recipient on the basis of any information in the document. The Limited Parties do not accept any liability or responsibility for any expenses, losses, damages or costs incurred by any recipient as a result of their receipt or use of this document and the information in this document being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise. No Limited Party makes any representation or warranty, express or implied, as to the currency, accuracy, completeness, reliability, fairness or correctness of the information contained in this document or about the Company generally or any opportunity to invest in the Company in the future.
The Limited Parties make no recommendations as to whether recipients should participate in any offer or issue of securities by the Company or make any other investment in the Company and recipients represent, warrant and agree that they have not relied on any statements made by any Limited Party in relation to the Company, or any potential investment in the Company generally.
FiguresAll figures in this document are in Australian dollars (AUD) unless stated otherwise. This document is confidential and not for further distribution This document contains certain confidential information. It is provided by the Company on the basis that, by accepting this document, persons to whom this document is given agree to keep the information strictly confidential and not to disclose it to anyone within their organisation except on a need-to-know basis and subject to these restrictions, or to anyone outside their organisation.The release, publication or distribution of this document in jurisdictions outside Australia may be restricted by law. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. By accepting this document, you represent and warrant that you are a person to whom an offer of securities may be made without a disclosure document (as defined in the Corporations Act 2001 (Cth) (Corporations Act)) on the basis that you are exempt from the disclosure requirements of Part 6D.2 in accordance with Section 708(8) or 708(11) of the Corporations Act.
Important notice and disclaimer
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1. Company Overview
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Investment highlights
A globally significant, large flake, high grade natural graphite deposit Over 7km strike distance and up to 2km of surface width of outcropping graphite and vanadium
mineralisation High grade zone recently extended with additional drilling, grades reported are among the
highest recorded globally Metallurgy in preliminary test work indicates concentrate grades in excess of 97% C achievable Close to infrastructure and good main road access
Highly strategic flake graphite discovery at Balama, Mozambique
Attractive graphite market fundamentals High purity natural graphite price has increased from ~US$750/tonne in 2004 to current prices of
~US$1,800+/tonne(1)
Strong demand drivers including emerging green and energy technologies China supplies ~67% of global flake graphite but supply is likely to become constrained as it
imposes export restrictions, environmental standards, and deposits become increasingly difficult to mine
US and European Commission have both declared graphite a critical material4
Tom Eadie Non-Executive Chairman (since 2007) 30+ years experience in the Australian and international resource sector Also Executive Chairman of Copper Strike Ltd
Paul Kehoe Managing Director (since 2011) 15+ years experience in corporate finance and restructuring Accountant and geologist
Mike Chester Non-Executive Director (since 2011) 27+ years experience in investment banking, mining company research and
funds management Also Non-Executive Director of NuCoal Resources, Guildford Coal Ltd and
Black Fire Minerals Ltd
Alistair Campbell
Non-Executive Director (since 2011) 30 years mining industry experience Principal Consultant of OptiRes Pty Ltd
Board of Directors
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Current capital structure
Overview Syrah share price and volume – last 1 year
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2. Industry Overview
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Introduction to graphiteOverview Principal characteristics of graphite include:
−Resistant to corrosion and heat−Excellent conductor of heat and electricity−High lubricity, natural strength and
malleabilityNatural flake graphite (e.g. Balama deposit) Typically found as discrete flat flakes, >
0.1mm in size Used for higher value including battery
applications Priced by purity and/or flake size, up to
US$1,800/tonne+Natural amorphous graphite Low grade (70%-85% C) and extremely fine
grain size Pricing at US$600-$800/tonne, it requires
extensive and costly processing for higher value applications
World graphite market based on graphite type
Source: Mackie Research Capital 2011
Synthetic50%
Natural50%
Flake40%
Vein1%
Amorphous59%
2010 natural graphite world production ~925,000 – ~1,100,000 tonnes
Synthetic graphite Produced mainly from hydrocarbon
sources High purity, prices from US$10,000 –
$20,000/tonne Market size ~1Mtpa, of which ~50%
could potentially be substituted by high quality natural graphite if supply is available 8
Characteristics of a good flake graphite deposit
Large flake size – usually a higher purity of concentrate
Characteristic Balama
High grade – determines project cash costs and profitability/NPV at any given graphite price
High purity – higher purity requires less treatment to bring the graphite to above 97% C required for high value applications, such as Li-ion batteries
Latest metallurgy test work shows around half of concentrate in medium – jumbo flake size ranges
High grade zones over 20% identified; among highest recorded globally
97% C concentrate purity achieved in latest metallurgical testing
Flake size (mesh size)
80-85% C 94-97% C
Extra Large (+50) – +$1,800
Large (-50 +80) – $1,300-1,800
Medium (-80 +100) – $1,100-1,700
Fine (-100) – $1,150-1,450
Amorphous powder $600-800 –Source: Industrial Minerals Magazine, price date 18 Sep 2012.
US$/tonne
Translates directly to pricing
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China72%
India14%
Other14% Steel &
Refractory41%
Automotive Parts14%
Lubricants14%
Carbon Brushes
11%
Batteries10%
Other10%
Current supply and uses for natural graphite
Source: United States Geological Survey (2012) 10
Source: Mackie Research Capital, Company estimates.
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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Nat
ural
gra
phit
e (M
t)
India China Other
According to USGS, China’s supply decreased ~30% from 2008 to 2009
USGS estimated world resources: 77Mt
Natural graphite production
Current natural graphite industry uses
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Approximately 40% used in the steel & refractory industries across a range of graphite qualities
Higher quality, coarse flake demand to be driven primarily by batteries and emerging technologies
Natural flake graphite pricing and demand
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Source: Industrial Minerals Magazine.Note: Large flake graphite, 94-97% C, +80 mesh, average pricing.
Source: Industrial Minerals Magazine.
2.5Mtpa+
Up to 1.5Mtpa
Prices have increased over the past 5 years with battery technology the sleeper
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Benchmark graphite prices have more than doubled since 2007
Some softening in Chinese refractory and steel demand has recently weakened prices
US$
/ton
ne
2007 2008 2009 2010 2011 2012
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3. Balama Project
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Balama overview
Over 7km strike distance and up to 2km of surface width of outcropping graphite and vanadium
Balama is a high quality graphite deposit
Located 240 km west of Pemba port
Excellent metallurgy results achieved in testing
Drilling well advanced
− First ever drilling with 50 holes completed
Initial JORC Resource Estimates for both Balama West and East anticipated in late 2012 / early 2013
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Location
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Balama West – 400 to 500 million tonnes at 10% TGC and 0.20% V2O5
Balama East – 300 to 400 million tonnes at 11% TGC and 0.30% V2O5
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Exploration targets for Balama West and Balama East *
Exploration target based on depth of 200 metres over the areas drilled, and based on the weighted average grade for every drill hole with assay results to date
* This targeted tonnage and grade is conceptual in nature and there has been insufficient work to define a Mineral Resource under the JORC Code and it is uncertain if further exploration will result in the determination of a Mineral Resource.
Balama West
Drilling results at Balama West have wide intercepts of very high grade graphite and vanadium:−BMDD0006: 196m @16.9% TGC and
0.41 V2O5 from 100m to 296m
−BMDD0007: 186m @ 16.7% TGC and 0.46 V2O5 from 131 m to 318m
−BMDD0009: 58.0m @ 20.0% TGC and 0.36% V2O5 from 4.5m to 62.5m
−BMDD0012: 79.0m @ 20.4% TGC and 0.42% V2O5 from 15.4m to 94.4m
Highest grades reported of 30.3% TGC and 0.88% V2O5 over 2m
Balama West now has two zones of very high grade graphite and vanadium mineralisation at or near surface
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Balama West (cont.)
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Two very high grade zones intersected to date at Balama West
The first has widths up to 196m and averaging between 10 – 17% TGC. This zone is open to the west and east
The second has widths up to at least 100m and averages between 15 – 22% TGC. This zone is open to the north, west and east
Both zones outcrop at surface or with minimal cover
Stacked Cross sections
Balama EastSyrah has completed 25 diamond
drill holes at Balama East. Drill holes announced include:−BMDD0021: 218.4m @ 12.3%
TGC and 0.39% V2O5
−BMDD0022: 290.4m @ 13.8% TGC and 0.41% V2O5
−BMDD0023: 302.6m @ 13.7% TGC and 0.38% V2O5
Very high grade zones of greater than 15% TGC outcrop at surface
Very coarse flake graphite – visually appears to be coarser grained than Balama West
Sushi Zone has flake sizes up to 6mm in length
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Balama East (cont.)
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Cross section
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Metallurgy
Metallurgical test work has been conducted on a 58 kg sample of Balama graphitic material by Mintek(1)
Final results show a graphitic carbon concentrate of 97.02%
Recoveries at ~94%, with low levels of ash, volatile, moisture and sulphur
Graphitic carbon Ash Volatiles Moisture Sulphur
97.02% 2.24% 0.16% 0.57% 0.01%
+50 (Jumbo)5%
50-100 (Medium -
Large)42%
-100 - +200 (Fine)45%
-200 (Amorphous)
8%
47% of the concentrate has a flake size in the medium to jumbo range, with the mix of flake sizes considered ideal for meeting the requirements of different markets
Above attributes mean that the product could potentially besold into premium end market segments attracting higher prices
Overview Flake size results
19(1) Owned by the South African Government, Mintek is South Africa’s national mineral research organisation.
Balama infrastructure
Balama is located 240 km west of deep water port facilities at Pemba, the third largest port in Mozambique
Less than 1km from major road connecting the project directly to airport and sea port
Nearby Balama township provides access to schools, medical facilities, shops and labour – electricity to Balama in process of being upgraded
Large regional dam, Chipembe, located only 14km from the project. Mozambique Government has made an offer for water rights. Positive response took one day!
Above: Pemba Port.
Above: Road from Pemba to Balama.20
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4. Upside Opportunities
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Vanadium prospectivity at Balama
Above: Balama coarse flake graphite sample with green vanadium bearing mica.
Vanadium represents significant potential upside although economics are very favourable on the graphite alone
−Roscoelite, the main vanadium ore mineral, has been shown to separate from the graphite during flotation
2010 vanadium production for the world was ~56.5kt
−Over 87% is used as a steel alloy for strength with other uses in chemicals and catalysts
−Future developments in battery technology
−Largest project globally is Xstrata’s Rhovan project which has a measured and indicated resource of 72.30Mt at 0.5% V2O5
(1)
Best vanadium drill result at Balama:
−BMDD0007: 94.0m @ 0.57% V2O5
−BMDD0022: 21.6m @ 0.68% V2O5
−BMDD0023: 109m @ 0.50% V2O5 22
Other exploration opportunitiesTanzania mineral sands
Syrah controls >1,000km2 of landholding
World class Kwale deposit 70km to the north
All prospects are lightly drilled and have open zones of mineralisation
−Fungoni Prospect: Historical drilling shows very high grades containing over 15% HM. Drill intercepts include 4m @ 27.8% HM and 4m @ 24.9% HM with excellent assemblage – zircon 25% of HM
−Syrah has drillied at Fungoni (8000m)
−Tajiri Prospect: Drill intercepts include 14m @ 9.2% HM and 9m @ 12.3% HM
Uranium & Copper prospectivity at Lunga, Zambia
18km long radiometric anomaly with palaeodrainage pattern and numerous Cu occurrences
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The End