Ann: Commercial Production Declared at Balama, page-38

DYOR. Not Advice.
Targets presented below are based on my research and calculations. You are encouraged to DYOR and make your own decisions.
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Haven't seen any Syrah Research reports lately so sharing my own analysis here. I've been following the graphite space closely for about 2 years now.

My assumption is that Syrah will aim to grow production to the 200kt to 250kt ballpark in CY2019. On this basis sharing the following price targets:

• If 2019 production lifts to 200 kt pa this gives a price target $3.33
• If 2019 production lifts to 250 kt pa this gives a price target $4.16

Definitely gives shareholders something to think about when Syrah provide production guidance for 2019.

Now explaining the above.

Current SYR production is 106 ktpa and BSM is producing at 6 ktpa.

• SYR @ MCAP $6.5M/kt of production ( divide current MCAP by number of 106 )
• BSM @ MCAP $6.9M/kt of production( divide current MCAP by number of 6 ).

Implies peer average value of 1 kt of graphite concentrate production is $6.7M as a proportion of Market Cap. Quite interesting that SYR and BSM's MCAPs on a per kilotonne of product basis are within 10% of each other. I would prefer to use more peers for analysis but there are only two listed graphite producers that I am aware of.

In September 2018, before the Balama Incident in October 2018, they were advising in September 2018 a CY 2019 production target of 250 to 300kt pa (see below from September 2018 presentation).

https://www.asx.com.au/asxpdf/20180919/pdf/43yfszx7t4zy78.pdf



Because of the fire incident in the primary classifier in October 2018 (now repaired), I am thinking they'll set a CY 2019 production target of 200 kt to 250 kt pa since production for 2018 was reduced by just under 40 kt pa.

https://www.asx.com.au/asxpdf/20181004/pdf/43yynnrvqyc660.pdf

We may see them set a target in the pending quarterly activities report ( we should see this issued by COB Thursday, if there is a significant difference in production guidance I will update this analysis ).

Average $6.7M per kt x 200 kt = MCAP $1,335M
Average $6.7M per kt x 250 kt = MCAP $1,669M

I've taken the capital structure from the latest Appendix 3B and calculated an expected share issue of 401M by end of 2019 ( currently at 344M if calculated based on share price and MCAP data in Yahoo Finance ). This 401M figure has been used for calculating fully-diluted share price targets that are based on MCAP projections above.

https://www.asx.com.au/asxpdf/20180910/pdf/43y5vq4rqf2y44.pdf

Whilst I don't currently hold and I'm not intending to buy, there is some clear upside there. This analysis doesn't take into account further upside that should come from increased profits when the Battery Anode Material facility in Louisiana comes online.

Furthermore Syrah and graphite sentiment generally hasn't been the best but it is certainly on the mend since the price doom we had in 2017. Syrah was also being heavily shorted but production issues are being resolved ( I really don't understand why we haven't seen a drop in shorts ... maybe a positive quarterly will help to resolve). General share market conditions have been poor in 2018 due to the two corrections that occurred but it's been a strong recovery in January. The Morgan Stanley report on Lithium I think rubbed off a bit on battery raw material stocks generally as well. EV market is definitely growing and graphite is out of its price slump.

I guess it is to some extent stating the obvious on targets ( a simple multiple of current MCAP based on production level ), but thought some might like the perspective that this type of analysis provides.

Motive for sharing? Sentiment for Syrah and for graphite generally should be much better!