SYR

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22.0¢ syrah resources limited

Ann: December Quarterly Activities Report Presentation, page-38

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FiendishRedbeard

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31/01/19

02:03

Post #: 37272795
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Originally posted by CaptainBarnacles: ↑

I had the impression on the 11th Oct (after the fire) that we would be at a run rate of 63 ktpq and CF +ve at the end of Dec. Also Q4 net outflow of USD 23.6m. I also note that the CY production range was 250 to 300 kt subject to demand.

Well obviously the run rate is lower if the target is 47.5 kt mid-point, now CF +ve in q2, and Q4 did have a net outflow roughly in range before the VAT refund - which seems to be a surprise, and wasn't mentioned, so $28.7m adjusted outflow. The fire remediation apparently only cost about USD 0.5m. Now we are going for 250 kt, with the current production looking like it is being throttled back - I assume because the market looks terrible.

I suspect the market isn't looking that great, and we are in need of some good fortune to justify raising the production for the final 3 quarters to 70 ktpq. We could be looking at a market that is not easily absorbing Balama's production, and at the same time the production is pushing the prices down to sub economic levels. I suspect that Balama will not reach cashflow positive in Q2.

I think they are planning on selling heaps more quality flake to hit their targets, but I suspect they will kill the flake price in that market, and gain a greater competitive response from incumbents with sunk costs. I suspect the flake deficit of 150 ktpa is looking like a convenient myth. I suspect we will be in for a few years war of attrition in all parts of the market - not just fines - until less economic flake competitors mothball their plants, and some other deposits are economically mined out. And then Balama will be in business.

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The never wavering shorts on SYR and alot of posters over the years figured out those concerns years ago. They didn't need to wait for the plant to be built or production reports like the one this week.

SYR Price at posting: $1.74 Sentiment: Sell Disclosure: Not Held
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Ann: December Quarterly Activities Report Presentation, page-38

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Ann: December Quarterly Activities Report Presentation, page-38

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