Sales & Marketing April 2017 0
Disclaimer 1 1
Syrah’s Balama deposit has the largest defined reserve and is the only fully funded listed graphite project Syrah Resources’ low-grade 160 stockpiles at 2 – 9% TGC will be greater than most other proposed projects’ head grade 140 Volt Resources 18.9 Mt at 120 Syrah Resources 9% TGC cut- off 100 Magnis Tonnage (Mt) Resources 80 60 Battery Minerals 40 Northern Graphite Energizer Resources 20 Kibaran Focus Mason Resources Graphite Graphite Eagle Graphite 0 0 5 10 15 20 25 30 Grade (% TGC) Source: Syrah Resources, Corporate Reports. bubble size representative of defined reserve. (1) ASX and TSX listed projects only and excludes Chinese producers Unfunded (2) Cut-off grade for Northern Graphite (Ontario, Canada) is 1% TGC (3) Cut-off grade for Energizer Resources (Madagascar) is 4.5% TGC (4) Cut-off grade for Kibaran Resources (Tanzania) is 5% TGC (5) Cut-off grade for Battery Minerals (Mozambique) is 4.4% TGC Fully funded (6) Cut-off grade for Focus Graphite (Quebec, Canada) is 3.1% TGC (7) Cut-off grade for Mason Graphite (Quebec, Canada) is 6% TGC (8) Cut-off grade for Volt Resources (Tanzania) is 1.3% to 1.8% TGC 2 2 (9) TGC = Total graphitic carbon
Major project metrics highlight the attractiveness the Balama investment Capital Intensity Strip Ratio (US$ invested or proposed / tonne of capacity) (tonne of waste per tonne of graphite ore) 4.0 2.00 3.0 1.50 1.00 2.0 0.50 1.0 0.6 0.04 0.00 0.0 Syrah USA Mozambique Canada Canada Canada Canada Australia Mozambique Tanzania Tanzania Australia Australia Australia Syrah Tanzania Tanzania Tanzania USA Canada Canada Madagascar Cash cost per tonne at full production Production Capacity (US$/t) (ktpa) 800 400 350 600 300 200 400 286 100 200 0 0 Mozam… Mozam… Syrah Tanzania Mozambique Mozambique Tanzania Australia Mozambique Australia Australia Australia USA Canada Syrah Canada Canada Tanzania Tanzania Australia Canada Canada Australia Source: Syrah Resources, Corporate Reports 3 3 Note: Competitor location based on location of proposed mine, not company headquarters.
Syrah’s graphite is in demand, and characteristics provide production and cost advantages Characteristics of Syrah Resources’ graphite Optimal flake size 1 -100 mesh maximises production yield for battery Syrah Resources Spherical Graphite market. +100 mesh material primarily for industrial markets. Crystallisation 2 Balama graphite has a fully ordered crystalline structure. 3 High production yields Spherical graphite production yield of 45% - 55%, compared to typical yields of 30% - 40%. 4 Degree of spheroidisation Well rounded spherules, increased tap density and anode efficiency. Syrah Resources Flake Graphite 5 Purity level Concentrate High ore graphite content eases purification to 99.95%+ that increases anode life and conductivity. 4 4 Source: Syrah Resources
There is a value in use benefit to using Syrah Resources graphite at multiple stages of processing 1kg of natural flake graphite to produce a spherical graphite product Micronizing Balama graphite is Syrah Resources’ Graphite 1 easier and higher yielding compared 1 kg with other commercial flake graphite. Bi-products & waste ~ 55% Due to high density, composition and 100% 2 flake thickness, Balama graphite 60% 45% 44% 44% requires fewer shaping stages to Energy 0 reach target density 38% 38% 40% 60% No significant difference to 3 purification process compared to 100% Bi-products & waste ~60% other flake graphite. 1 kg Increasing flake graphite concentrate 4 Competitor’s Graphite carbon content improves product yield while reducing purification input Stages of processing (acid/energy) and process costs. Product 1 2 3 4 5 5 Processing Syrah Resources Flake Spherical Feedstock Grinding Shaping Purification Graphite has an advantageous value Graphite in use between 5 - 10% per tonne. Relative + 5-10% yield + 3% yield Benefits 10-20% fewer stages 60% less acid spent 5 5 Source: Syrah Resources Notes: Assumes processing of -100# Natural Flake Graphite with; Syrah at 98% TGC, and competitor at 95% TGC
In 2016, approximately 75% of natural flake graphite was sourced from China Norway 10,000t Russia Canada 9,000t 5,000t Ukraine 11,000t China 490,000t India 25,000t Madagascar Brazil 8,000t Zimbabwe 90,000t <5,000t Global Total ~650,000t Source: Syrah Resources, Benchmark Minerals 6
By 2020 Syrah will be the largest individual graphite producer in the world with ~40% market share Norway 10,000t Russia 9,000t China 400,000t India 25,000t Mozambique 350,000t (100% SYR Namibia capacity) 20,000t Brazil 60,000t Madagascar 16,000t Global Total ~900,000t Source: Syrah Resources 7
Syrah Resources will be a first quartile producer both during ramp up and at full capacity Flake Graphite C1 Cost Curve (Not concentrate TGC adjusted, first 12 months of production for Syrah Resources, 2017/18) 0% 25% 50% 75% 100% 2020 Variable costs 70% Fixed Costs 30% 0% 25% 50% 75% 100% Source: Syrah Resources 8 8 Notes: Cost curves include current operating graphite mines that accounted for ~95% of global production in 2016.
Syrah’s Balama production ramp up will be driven by the strong global demand growth profile Natural Flake Graphite Demand Forecast ktpa 1,000 2016 – 2020 Sector CAGR 900 New 55% energy 800 vehicles 700 120% Energy storage 600 13% Consumer goods 500 4% Other 400 300 0% Steel products 200 100 0 2016 2017 2018 2019 2020 Source: Syrah Resources 9 9 Notes: Steel sector includes refractory bricks, foundries and recarburising products. Other includes lubricants, brakes, friction products and pencils. New energy vehicles includes battery electric and plug in hybrid
Syrah’s premium product will command a premium price Flake prices are determined based on a range of value in The market already appreciates this value. An additional use variables such as graphite content, flake size and +1% of TGC equates to a +4 - +7% value uplift, depending impurity levels. on the flake size. Graphite Price Variables % price change per % change in TGC 12% Battery grade Battery grade 10% 8% ~7% Graphite content 6% Small flake Large flake High Graphite Content High Graphite Content 4% Low Impurities Low Impurities ~4% 2% 0% 100µm -2% Apr Sept Feb Sep Feb Small flake Large flake 2015 2015 2016 2016 2017 Low Graphite Content Low Graphite Content 85-87% to 90% (+100 Mesh -80 Mesh) High Impurities High Impurities 90% to 94-97% (+100 Mesh -80 Mesh) 90% to 94-97% ( -100 Mesh) Flake size 90% to 94-97% (+80 Mesh) Source: Syrah Resources analysis, Benchmark Minerals price data 10 10
Price has historically been driven by steel and industrial applications; in the next phase by battery demand Graphite Price (USD, real 2016 terms) USD$ 1,400 Post Japan, Korea & China New price Depressed prices for depression industrialization driver; 25 years as the global 1,200 recovery and stimulates lithium steel market recovers WW2 build up steel markets. batteries from post war fall in demand 1,000 800 ? 600 China’s GFC stimulus 400 and then re-adjustment 200 0 1925 1935 1945 1955 1965 1975 1985 1995 2005 2015 2025 Source: USGS, Syrah Resources 11 11 Notes: for low grade fines
Our market views – Battery driven demand growth, satisfied by Syrah supply. Quality advantage in price. We believe maximum supply capacity of natural flake graphite is <500ktpa due to China increasing costs, grade depletion and increasing environmental regulations. Supply Syrah Resources’ imminent and high quality additional supply meets the Ex - China incremental demand required from global graphite market. Steel market to remain a major demand sector but we expect growth in demand Traditional to be flat as China closes steel capacity but increases EAF steel production. Demand We believe the battery market is set for significant growth as demand for new New energy vehicles reaches approx. 4 million in 2020 and 7- 9 million in 2025. We believe today’s prices are cutting into the 3 rd quartile of the cost curve. Prices Flake will continue to be driven by size, graphite content and impurity levels. Price We believe prices will support a high quality spherical product made with natural Spherical graphite as it improves battery energy density and reduces total battery cost. Source: Syrah Resources 12 12
Syrah’s marketing strategy is to be diversified across end user markets and geographies China direct flake & tolling Europe Hairong Traders Morgan SSI Offtake Hairong 15 to 25ktpa 4ktpa* Morgan Marubeni Refractory Hiller Marketing Offtake Producer SSI Carbon 14ktpa* 100ktpa* 15ktpa SSI 30ktpa Chalieco Offtake Marubeni 80ktpa Offtake 20ktpa South East Asia Taiwan South America End Use Sector Industrial Recarburiser Lithium ion battery 13 Currently under negotiation * Flake equivalent, spherical demand
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