Syrah Resources (SYR) Q2 2024 earnings summary

Executive summary

• U.S. Inflation Reduction Act transition rules delayed non-China graphite sourcing requirements to 2027, creating near-term uncertainty and delaying Vidalia AAM sales to early 2025.

• Balama produced 24kt natural graphite at 78% recovery, with 10kt sold at $735/t, focusing on cost management and campaign-based operations.

• Vidalia 11.25ktpa AAM facility ramped up, with on-spec samples sent to customers and positive feedback from three tier-one manufacturers, but overall utilization remains low as production is paced to demand.

• Cash balance at quarter end was $82 million, including $41 million restricted for Vidalia; $150 million DFC loan for Balama expected to close soon.

• Global EV demand grew 24% year-over-year in Q2 2024, with China leading growth and a shift toward plug-in hybrids.

Financial highlights

• Quarter-end cash balance was $82 million, including $41 million restricted for Vidalia.

• Balama C1 costs were $460/t (FOB) during operating periods; fixed costs under $4 million/month in non-operating periods.

• Weighted average sales price for natural graphite was $735/t CIF, with a higher proportion of coarse flake in the mix.

• Receipts from customers were $12.5 million for the quarter; net cash used in operating activities was $(26.1) million.

• Net cash inflows from financing activities were $12.2 million, primarily from a retail entitlement offer.

Outlook and guidance

• Vidalia AAM sales are now expected from early 2025, with ramp-up volumes aligned to customer qualification and demand.

• Further expansion at Vidalia is contingent on customer commitments, offtake agreements, and government policy clarity.

• Balama production will be campaign-based, with potential further reductions if Chinese import demand does not improve.

• Balama C1 cost guidance remains $430–480/t at 20kt/month production; targeting $350–390/t at full capacity.

• Further cost-saving measures and campaign production at Balama to manage cash and inventory until market conditions improve.