Syrah Resources Limited

Thank you all for standing by and welcome to the QC quarterly update. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question at that time, you'll need to press star one on your telephone. And I'd like to hand the conference over to your first speaker, Mr. Sean Verner. Thank you. Please go ahead.

Good morning everyone and thank you for dialling in today. With me on the call is Stephen Wells, our Chief Financial Officer. Today we'll work through the September quarterly presentation released along with our quarterly report covering operations, projects, market conditions and the outlook for natural graphite, active anode material and its end use markets. Starting on slide three, we're strongly encouraged by EV and battery anode market conditions, which have improved materially through 2021 year to date. along with operational progress that Q3 has seen with Bellarmine's transition to sustainable operations and product, project and customer developments in Vidalia with regard to active anode material. The underlying thematic of electrification in the transport sector by lithium ion battery EVs is clear with industry transforming capital being committed and invested by both OEMs and battery makers. increasing customer demand and strongly supportive government policy developing across key consumer regions. SARA's long-term value proposition is fundamentally underpinned by the accelerating electrification of the global transport fleet, graphite mining maintaining its high intensity in use in lithium ion batteries, which is a primary battery technology for EVs for the foreseeable future. Palama being the world's largest integrated natural graphite operation and our downstream strategy to become a large scale producer of value added active anode material products for the battery supply chain. Electrification of the transport sector is accelerating with substantial capacity commitments and investment from auto OEMs and battery makers being made in rapid succession, particularly in the US. We're seeing urgency from policy makers and the supply chain to facilitate the transition to EVs and this is finally translating to moves in the anode material market to secure longer term strategic supply. Graphite status as a strategic critical raw material has been reaffirmed through updated analysis by key governments as it is expected to remain the primary anode material in lithium-ion batteries and the anode technology that our industry interactions confirm is planned for the vast majority of the expansions being planned. BALAMA is the best global natural graphite resource on many parameters. With capital invested, our operations, sales and logistics infrastructure well established and ramped up again. but with strong opportunity for greater production and cost efficiencies as volumes increase and integration into SARA's downstream production is executed. As demand has grown significantly through the course of 2021, BALAMA's criticality to the current and future sustainable supply of natural graphite in the battery supply chain has become more and more apparent. We continue to make very strong progress towards becoming a major producer of natural graphite active anode material in the US with the potential to supply both domestically and to satisfy a portion of European export markets. We believe our operation in Vidalia is the most viable and progressed alternative customers have outside Asia for large-scale, localised and ESG-verifiable natural graphite active anode material supply. This progress, which we'll talk about further today, and Vidalia's vertical integration with Valama provide a compelling strategic value proposition to auto OEMs, battery manufacturers and governments. Our market and government interactions have accelerated markedly since the production of integrated products from Vidalia and have continued to demonstrate strong focus on environmental, social and governance factors. Slide 4 emphasises our clear ESG credentials which we provide significant detail on in the quarterly sustainability update released alongside this report on the CSIRA website today. The work SIRA has undertaken in Mozambique over the past seven years and an ever increasing focus in Vidalia differentiate us from many incumbent players and the hard work visible in our demonstrated operating performance today is auditable compared to the blue sky commitments of potential projects which might appear simple on paper but may face a long hard road to implement. Moving now to slide five and to provide some key points on SARA's third quarter. Health, safety and environment performance remains outstanding. Our TRIFA at Balaama was zero in the September quarter and was achieved with continued rehiring and greater number of contractors on site Balaama's TRIFA has remained below one since late 2018 and our TRIFA at Bedelia was also zero in the September quarter. We recorded a number of positive COVID-19 cases at Balaama through this quarter. All were fully recovered by quarter end. CSIRA has robust COVID-19 protocols in place and pleasingly these allowed us to effectively manage its alarm without interruption to contain transmission both on site and any impact in the community. EV end user demand growth, the most important leading indicator for CSIRA, continued to flourish in Q3 with forecasts for EV sales in 2021 now approaching 6 million units. Battery capacity commitments and strategic alignment in the supply chain are accelerating to keep up with significant growth in predicted EV demand and electrification strategies being announced by the auto OEMs. At Bulama we were pleased with performance through the quarter despite container shipping disruption impacting sales and limiting production. Importantly, the September month operational performance was excellent and clearly demonstrated our capability to operate sustainably. 15,000 tonnes was produced at 85% recovery and $430 a tonne C1 costs, the low end of our target range at 15,000 tonnes per month. During the September quarter overall, shipping disruption constrained our ability to match production with underlying customer demand. Bulama produced 25,000 tonnes of natural graphite and C1 cash costs were much higher at $684 a tonne at an average production rate of approximately 8,000 tonnes per month. We drive toward our target unit cost position through increases in production volumes and other improvement initiatives that continue to be embedded as we demonstrated in September. We sold and shipped 18,000 tonnes of natural graphite, 12,000 tonnes rolling into the December quarter due to shipping schedule changes. Disruption across the global liner shipping industry continues to impact our ability to supply the volumes being demanded by our customers, but we're working through solutions to current challenges and expect improvements from this quarter onwards. Our weighted average basket price for sales increased to US$490 per tonne CIF with further strengthening of prices evident post the end of the quarter. At Vidalia we're making very good commercial progress with target customers and we're engaged with a number of these customers on multi-year purchase commitments for Vidalia active anode material. Qualification testing is continuing with more than 10 target customers. and we are receiving excellent iterative technical feedback for our active anode material from our operation at Vidalia. Detailed engineering and procurement on Vidalia's initial expansion with Worley Group is progressing well. We're completing an updated appraisal of capital costs prior to moving to a final investment decision. Target customer interest and ExChina battery market growth is driving consideration of accelerated expansion options of Vidalia beyond initial 10,000 tonnes production capacity. The BFS we released last year showed the relevant cost economies of scaling active anode material production at Vidalia. We're advancing the key Vidalia workstreams across operations, customer qualification and offtake, product development, expansion, engineering and procurement and financing to position for a final investment decision on the 10,000 tonne active anode material facility in this December 2021 quarter, subject to required progress in the customer and funding streams. I'll now pass over to Steve to talk through our balance sheet position and some information on the market.

Thank you Sean and good morning everybody. CSIRA ended the quarter with a cash balance of US$74 million. CSIRA's cash outflow for the quarter was US$11 million, slightly less than the second quarter, and included working capital associated with the LLAMA, which due to shipping-related challenges Sean has alluded to, didn't operate at the optimum capacity through the quarter, although the capability is clearly in place. Also, as with prior quarters, we continue to invest in the expansion project at Bedelia with detailed engineering and ongoing payments of certain long lead items to facilitate the transition to construction from an FID in the fourth quarter. We expect cash outflows in Q4 to be higher than Q3, depending on shipping, but also given certain seasonal factors of alarm as well as further investment at Bedelia. We are comfortable with the liquidity position of the company. and the ability to fund Balaama's ramp-up under a range of natural graphite and container shipping market scenarios, as well as project-related costs at Vidalia through to FID. Our objective is to secure new funding for the construction costs beyond FID for Vidalia's expansion. Turning now to slide six. Slide six shows our primary leading indicator, which is global electric vehicle sales. Strong positive momentum in EV sales continued through Q3, with global EV sales growing 111% quarter-on-quarter in Q3 2021 to over 1.6 million units, compared to less than 800,000 units in the third quarter of 2020 and less than 500,000 units in the third quarters of preceding years. Sales growth is evident across consumer geographies, including China, Europe and the USA. Global EV sales are expected to reach almost 6 million units in 2021, which would represent double 2020 volumes, albeit COVID impacted and only marginally higher than 2019, but at almost 40% annual growth rate over the last five years. The increase in EV sales continues to drive increasing demand for anode material, While upstream raw material demand lags both EV demand and active anode material production growth, however, we are seeing, for example, Chinese monthly active anode material production increasing further and achieving 60,000 tonnes in September, significantly higher than the same quarter last year. Further anode capacity additions are currently proposed in China and ongoing anode precursor imports into South Korea from China with further potential growth plan to support the major South Korean battery manufacturers. Downstream EV demand is continuing to work through the supply chain and positively affect the upstream markets, and we are certainly seeing strong demand and price increases in the natural graphite fines market, particularly given challenges through the Chinese domestic production high season. I'll now pass you back to Sean.