Syrah Resources has announced plans to undertake a AU$104 million capital raising as it looks to overhaul its balance sheet and accelerate production of critical battery materials.
The company announced a fully underwritten 1 for 1.32 accelerated non-renounceable entitlement offer at 10.5 cents per share. The raising is heavily backed by Syrah’s largest shareholder, AustralianSuper, which has committed to taking up its full entitlement and sub-underwriting the remainder of the offer.
Beyond the equity raise, Syrah has entered non-binding agreements with the US International Development Finance Corporation (DFC) and the US Department of Energy (DOE). These proposals aim to reset the company’s debt, converting a significant portion of existing loans into equity and new convertible notes.
Under the deal, US$31 million of the existing DFC loan would be converted into 425 million new Syrah shares.
If the deal is finalised, the DFC will emerge as a cornerstone investor with an approximate 20 per cent shareholding in the company.
The move underscores the increasing strategic importance of Syrah’s assets, the Balama graphite mine in Mozambique and the Vidalia active anode material (AAM) facility in the US, as Western nations look to build a secure battery supply chain independent of China.
The combined funding package is expected to provide pro-forma liquidity of approximately US$198 million. The restructure also ensures Syrah will face no cash interest or principal repayments for the next three years.
“Syrah will have a robust balance sheet with pro-forma liquidity of US$198 million to support ramp up at Balama and Vidalia and provide a pathway to near term sustainable cash flow generation,” said Syrah Managing Director and CEO Shaun Verner.
“The strong alignment with the DFC, DOE, and AustralianSuper underscores the strategic importance of our assets in developing a secure, ex-China supply chain for critical battery materials.”
The fresh capital will be used to fund ramp-up of Balama to targeted production levels and working capital at the Vidalia plant to achieve commercial sales.
The equity raising will also provide the company with financial flexibility to operate and ramp-up assets as the active anode material market evolves.