Syrah Resources Limited

Thank you for standing by and welcome to the Cyber Resources Q4 quarterly report update. All participants are in a listen-only mode. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Sean Verner, Managing Director and CEO. Please go ahead.

Thank you for joining the call. With me this morning are Stephen Wells, our Chief Financial Officer, and Viren Heera, our GM of Business Development and Investor Relations. We'll reference some of the slides released along with the report on today's call. The final quarter of 2024 saw both continuing EV industry growth but significant uncertainties ahead of the global lithium-ion battery, anode material and graphite markets. Chinese dominance of sales growth and EV penetration continues, but policy and commercial uncertainty in the major ex-China markets of the US and Europe is evident, as measures being taken by both manufacturers and governments have major implications for the evolution of the industry. The global markets for EVs and their input cell and processed material components are being buffeted by a series of high-impact policy decisions, and commercial positioning across China, the US and the EU. Syrah's operating position was severely challenged in the final quarter, with Balama impacted by ongoing process disruption and the Mozambique national election impacts, and Vidalia making progress towards qualification but still incurring costs awaiting the completion of qualification processes and commercial sales. Continued negative working capital was therefore evident. At the same time however, major progress on funding support was achieved with the disbursement under the DFC loan and ongoing interaction with both the DFC and DOE regarding external impacts on the company and their implications for the loans in place. In light of international policy and market volatility and our challenging operating and cash flow position, SARA's strategy into 2025 is simply to drive all focus towards resumption of production and sales of natural graphite from Bulama and qualification and sales of anode material from Vidalia, whilst minimising cost and cash burn. Our development progress and production readiness beyond others in the ex-China integrated anode material and input feedstock markets continues to extend. But production and sales volumes are critical to ensuring we can take advantage of market and policy conditions as they evolve. So turning to slide five and the overview of the quarter, there was no production at Balama due to protracted protest actions at site and the impacts of nationwide unrest related to the Mozambique national elections. And I'll come back to this in a moment. Syra declared force majeure at Balama as a result of this situation. There was lower natural graphite sales, so 9,000 tonnes in total from inventory, with a significantly higher proportion of fines in the sales mix and low course flake inventory available. At the end of the quarter, most inventory had been depleted, with only 2,000 tonnes remaining in Mozambique. Production at Vidalia was undertaken only for qualification purposes with ramp-up timing awaiting certainty on commercial sales in order that we minimise operating costs and working capital. We made continued strong progress in Vidalia on anode material technical qualification processes with customers and continued commercial progress in further off-takes in line with policy developments. Vidalia anode material sales are expected this year. with the timing dependent on qualification progress, US government policy clarification, competing tariffed volumes of Chinese anode material supply to North America and finalised customer strategies. An FID on Vidalia's expansion to 45,000 tonnes of production capacity is awaiting Vidalia sales from Phase 2 and is dependent on customer and financing commitments. noting the award of a US $165 million US Inflation Reduction Act Section 48C tax credit toward capital for this project post-quarter end. We're highly focused on progressing qualification and further uptakes as quickly as possible to facilitate expansion. And importantly, Syrah achieved the Initiative for Responsible Mining Assurance, or IRMA50, level of performance for BALANA, the first graphite producer globally to achieve this milestone and a major recognition of Syrah's sustainability credentials. The company had a quarter-end cash balance of US$87 million, including US$58 million restricted cash, and Steve will talk further on this shortly. And lastly, significant government policy evolution continued through the quarter, including US Department of Commerce and US International Trade Commission investigations into imports of graphite anode material products from China and their prices and volumes. Further review and definition around the foreign entity of concern requirements in the US and China implemented permanent licence control requirements on graphite exports. But let me begin with the situation and the way forward at Palama. Just prior to the end of Q3 and the Mozambique national elections in October, we began to deal with a community protest action which impacted our ability to freely access the Palama operating site, leading to later demobilisation of most of our personnel. This protest action caused by a small number of landholders is related to dissatisfaction with resettlement land and compensation received prior to the commencement of the Balama operation. Over the course of development of the mine, the processing facility and support infrastructure, around 800 small farms were resettled through a detailed joint government and company process. The commencement of the protest coincided with the beginning of disruptions leading into and following the Mozambique national elections. And as a result, SARA saw major challenges in accessing government assistance in resolution of the issues at Balama throughout the whole quarter. This led to ongoing production disruption and consequently there was no production volume from Balama in Q4. There's been no damage to equipment or infrastructure at the plant site. protesters remaining outside the operating area. The confirmation of national election results in December 2024 and the inauguration of the new president earlier this month has seen a reduction in country-wide disruption, the appointment of new representatives and the return of focus to other issues at departmental level. And accordingly, post-quarter end, the government engagement and focus on resolution of the dispute has increased significantly. The company is absolutely committed to resolution aligned with both the legal framework under the Palama Mining Agreement and to utilising the processes available to us to ensure a long-term alliance solution. The government is supportive of seeing the operation back in production as soon as possible and is working with the company towards resolution. Could any deficiency be demonstrated in either the historical resettlement processes or outcomes? the company remains very open to rectification through the appropriate mechanisms. Importantly, historical audits to date and third-party independent reviews of our resettlement practices through various accreditation processes, including consultants for funding and as part of our IRMA audits, have seen Syrah as a positive and responsible developer and operator. And a recent resettlement audit from a provincial government-appointed committee demonstrated the company has complied with all legislative requirements. As we continue to demonstrate through external review and through our quarterly sustainability reporting, including today's update, SARA is dedicated to ongoing positive community and country contribution in Mozambique, and particularly in our eight local host communities. The highest level of employment in the district, significant investment in education, health, training and infrastructure, as well as promotion of sustainable income generation programs and agriculture across the community, the company has already made a major contribution to development and we're committed to ensuring that this benefit continues to flow and is fairly distributed. We are hopeful that resolution of the issues impacting Galama's operation will be achieved shortly, facilitating resumption of maintenance and inspections in readiness for production to reconnect. and all efforts are going towards ensuring this is the case. Turning now to slide six, I'll hand over to Steve to talk through the current funding position and interactions with our lenders, which provides the buffer to navigate the return to Belama operations and commercial sales from Vidalia.

Steve? Thanks, Sean. As mentioned, turning to slide six, this outlines our funding position at the end of the year. which put simply represents a combination of unrestricted cash and cash that is restricted under our loan arrangements with the DFC following the closing of that loan in the quarter and the DOE, which has been the case for some time. Restricted cash under the loan arrangements are typical of these types of facilities and split into cash that's available for funding each operation and reserves for typical lender protections. These splits are highlighted in the right-hand column of this page. As you can see from the chart, at the end of the year, we had a total of $87 million in total cash, with $30 million of that unrestricted cash. As at the end of the year, that included $20 million of cash from the disbursement of the DFC loan that was to be distributed from our Mozambique operating entity to support corporate expenses. This internal distribution was completed early this month and post-quarter end. Clearly, the key funding event through the quarter was the closing and funding of the DFC loan. a significant effort from all concerned, and funded through the challenging operating conditions of Balaama, reflecting recognition of the importance of Balaama to the graphite supply chain. From a uses of cash perspective, there was 19 million of net cash out through the quarter, with 8 million relating to Balaama, 6 relating to Vidalia, and 5 million relating to corporate expenses. As mentioned, cash burn is being minimised at Vidalia pending certainty of sales timing following qualification. And at Balaama, we are below our fixed cost targets, noting revenue from sales from inventory offsetting the cash outflow. The impacts of protest actions at Balaama resulted in certain events of default being triggered under the DOE and DSC loans, although there have been no payment defaults. Both counterparties recognised it as a challenging period in Mozambique more broadly and undertook significant diligence on the Saira Group and extensive diligence by DSC on our Mozambique operation, including our community engagements. The DSC also closed and funded the loan while the protests were impacting Bulama and following the Mozambique elections, so the situation was not new to them. The DSC have provided a conditional waiver for the events of default under that loan and we are continuing to work closely with them as well as the DOE. We announced following the end of the quarter that Syrah had been successful in its application for a tax credit relating to the further expansion of Adalia to 45,000 tonnes per annum. under the 48C program. Accessing the tax credit requires the achievement of certain milestones over the next four years, but the key benefits from SARA's perspective are twofold. Firstly, further demonstration of the importance of the Louisiana fertility to an independent supply chain in the US, and secondly, possible monetization of the tax credit in our funding strategy for the expansion of Bedalia. I'll now pass you back to Sean.