Syrah Resources Limited

Q2 2026 was marked by softer-than-expected natural graphite production and sales due to policy uncertainty and weak market conditions. Balama produced 2,000 tons in completing a Q1 campaign, and natural graphite sales were 7,000 tons; the weighted average sales price was $736/ton CIF, up 17% from Q1 2026. Operating cash outflow was $19 million, including $12 million of customer receipts, versus $27 million in the March 2026 quarter. The company ended the quarter with $98 million of cash, including $31 million unrestricted and $67 million restricted cash. Management expects Vidalia commercial anode material sales to begin in the second half of 2026 and still expects positive operating cash flow from Vidalia from mid-2027 onward, if achieved. Balama ramp-up to targeted levels remains dependent on market demand and policy support.

Shaun Verner emphasized that Syrah’s near-term results were hurt by weak ex-China demand, slower inventory drawdown, and competition from Chinese-controlled supply moving into the ex-China market. His tone was cautious on the current market but confident on the strategic picture, repeatedly stressing that graphite and anode demand should grow over the medium term and that policy support is critical. He also framed Syrah as a long-lead-time, differentiated supplier with a lead advantage in ex-China critical minerals.

Steve Wells focused on liquidity and funding structure. He said the quarter started with $62 million in total cash, ended with $98 million after the equity raise settled, and included an $8 million 45X production tax credit received after quarter-end related to the 2025 tax year. He also highlighted that $23 million of restricted cash is available for Balama and $18 million for Vidalia, and noted that the non-binding strategic proposals are intended to provide further liquidity and balance sheet support.

Analysts focused on Vidalia qualification timing, pricing terms on the Tesla and Lucid contracts, the likely path to first commercial sales, and how cash balances and restricted cash would evolve. Shaun said Tesla and Lucid pricing was fixed from the time of signing, that qualification processes are confidential but progressing well, and that commercial sales are expected to commence in the second half of 2026. On cash, Steve explained that Vidalia burn is about $2 million per month today and that the strategic proposals include both balance sheet reset measures and additional liquidity; they also said the DFC arrangements could provide another $15 million draw if needed. Management also said the new Mozambique supply from Chinese-controlled operators is still too early to quantify, but it is already affecting ex-China competition.