Syrah Resources shares peak on US$107m government loan


graphite miner Syrah Resources [ASX:SYR] announced that the U.S. government had conditionally committed to lending it up to US$107 million to develop an Active Anodic Materials (AAM) facility in Louisiana.

Shares of SYR are up 20% on the news and up 70% over the past 12 months.

The U.S. government loan deal comes after Syrah struck a supply deal with electric vehicle giant Tesla last December.


Syrah announces a loan of 107 million dollars

After a ‘extended approval process’ initiated in June 2021, Syrah has finalized a non-binding term sheet and has been offered a conditional commitment of US$107 million by the US Department of Energy (DOE).

The proposed loan is for a maximum term of 10 years, with interest on the loan to be fixed from the date of advance of the loan ‘at applicable long-term US Treasury rates.’

The loan will finance the expansion of SYR’s Vidalia AAM facility in Louisiana to 11,250 tons per year of AAM production capacity.

The proposed loan is made under the DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program.

The program aims to support US President Biden’s ambition to manufacture electric vehicles and battery technology materials in the United States.

Syrah said the DOE has US$17.7 billion in uncommitted loan authorization under the ATVM program.

Syrah thinks it’s a natural fit for the loan program, saying it’s looking to develop a vertically integrated natural graphite AAM supply option in the United States.

According to Syrah, if the loan is finalized, it will be the first-ever ATVM loan granted to a materials processing facility and the first ATVM loan since 2011.

Other loan recipients include Ford, Nissan and Tesla.

Jigar Shah, Director of Lending Programs at the DOE, commented:

“The conditional commitment offered to Syrah would be the first ever ATVM loan to support a supply chain manufacturing project and further demonstrates the DOE’s commitment to building a strong national supply chain for zero transportation solutions. episode.

“This reiterates President Biden’s commitment to strengthening critical mineral supply chains in the United States and increasing the American workforce to support domestic manufacturing of batteries for electric vehicles. Additionally, Vidalia’s initial expansion project provides a socially and environmentally responsible U.S. supply chain for graphite, which is critical to accelerating the deployment of batteries to power electric vehicles.

Vidalia Battery Anode Material Project Site Overview


Syrah Resources Share Price Outlook

Syrah and the DOE are targeting financial close of the loan by the end of June 2022 and the first loan advance in the September quarter of 2022.

Syrah CEO Shaun Verner said:

“The finalization of a term sheet and conditional commitment offer from the DOE for a loan under the ATVM program highlights Vidalia’s strategic position in the United States and provides strong validation of Syrah, Vidalia and Vidalia’s initial expansion. Importantly, the loan will allow Syrah to accelerate its growth strategy in its downstream business and support the rapidly growing electric vehicle and battery supply chain in the United States.

However, there are a few caveats.

Today’s announcement refers to a conditional commitment from the DOE.

A conditional commitment is offered before a loan is issued and indicates that the DOE “plans to support the Vidalia project, subject to certain conditions being met.”

The Syrah announcement acknowledged that at this point there is “there is no certainty that DOE loan funding will ultimately be committed to Syrah Technologies, or if committed, on terms and conditions consistent with the term sheet.”

In 2018, outlet Ars Technica wrote:

“In nearly a decade of operation, the ATVM program has only granted five loans, and none since 2011. Some electric vehicle (EV) start-ups are still awaiting a decision on loan applications made in 2009 and 2010 .”

Yet, despite being non-binding, today’s announcement shows that Syrah is getting noticed.

Syrah has a large graphite mine – a key input for battery technology.

And it’s developing a vertically integrated processing plant in the United States, one of the largest consumer markets, chaired by a pro-electric vehicle administration.

Syrah is in a good position, but now is the time to run.

And although lithium has taken the most of the limelight, the electric vehicle revolution cannot happen without lithium’s other siblings – copper, nickel, cobalt and, of course, graphite.

In 2021, eight of Australia’s top 10 performing stocks were lithium stocks.

But according to Money Morning’s latest report, there’s a smarter way to play lithium’s rise in 2022.

This is what could be called the “little brother” of lithium.

Go to ‘The NEXT Lithium?’ report here to learn more.


Kiryll Prakapenka,
For silver morning


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