It is still confident of declaring commercial production this year.

 

Syrah, which only started production at its US$200 million flagship Balama graphite operation in Mozambique earlier this year, had been ramping up operations and seeing improving recoveries, but while it was able to deliver an 83% increase over the June quarter to 38,700t, it fell short of its reduced target of 39,000-40,000t.

 

Year-to-date production is 71,100t, but it will now only produce 101,000-106,000t for 2018 with the loss of a further 30,000t production for the December quarter, assuming replacement of the fire damaged unit takes the expected five weeks.

 

It had hoped to produce up to 180,000t this year.

 

Production for the current quarter is expected to be 30,000-35,000t, although the company expects C1 cash costs and its production run rate to be in line with guidance. Recoveries are targeting 70%, up from 57% in August as improvements are made.

 

Looking for positives, the company said it had finalised a binding mining agreement in September, and seen attrition cells for fines and flake circuits showing significant improvement in average graphite fixed carbon grade with initial trials demonstrating ability to achieve around 98% fixed carbon.

 

Sales for the September quarter were 20,000t for 36,000t nine months year to date, with an additional 19,000t allocated to sales orders at Nacala, with prices slightly improved.

 

The company still needs to deal with the fulfilment of existing contracts due to its delays, and hopes to roll over the remaining 2018 contract volumes and prices into 2019, while finalising new contracts.

 

The company's Battery Anode Material project continues to advance with the installation of milling equipment on site in Louisiana underway, with the expectation that it will begin producing unpurified spherical graphite by year end followed by purified spherical graphite production soon after.

 

A review of a 2014 vanadium scoping study is expected to be completed within weeks. 

 

Syrah had US$100 million in cash at the end of September, including the proceeds of a $67.4 million placement. A subsequent share purchase plan raised a further A$6.3 million of $14 million that was sought.

 

The company expects to spend some US$23.6 million for the fourth quarter, up from $21 million last quarter, including $500,000 to replace the destroyed classifier unit.

 

Balama is promoted as a 50-year asset with 250,000-3000,000tpa graphite concentrate production capability.

 

Syrah's troubles and its dilutionary raisings have seen its shares test new lows, with the shares falling a further 5.3% this morning to A$1.875, levels it has not traded at in six years, and well off December's peak of $4.95.

 

The entire company was worth $637 million.