Syrah Resources Limited

Thank you for standing by and welcome to the Cyber Resources Q1 quarterly report update. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. 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, and thanks for joining the call with me this morning. I have Stephen Wells, our Chief Financial Officer, and Viren Heera, our GM of Business Development and Investor Relations. And as always, we'll reference some of the slides released along with the report on today's call. First quarter of 2025 saw enormous uncertainty in electric vehicle, battery, and anode material markets, with the US and Chinese government policy announcements and particularly tariff implementation seeing changes to industry participant strategies and financial positions. Chinese dominance of sales growth, supply chain development and EV penetration extended further during the quarter, whilst the US drove clear policy intent towards critical minerals independence and levelling the playing field for US manufacturers. Measures being taken by both EV and lithium-ion battery manufacturers and governments outside China are having major implications for the evolution of the industry. Whilst the global market for EVs and their input cell and processed material components are being buffeted by a series of high-impact policy decisions and demand changes, there is major opportunity for Syrah with available operating capacity in both ex-China natural graphite feedstock and US anode material productions. Given increasing urgency for ex-China risk diversification, getting Balama and Vidalia to commercial production levels with long-term high-quality purchases is the core objective of the team. Therefore, despite the major market and policy dislocations, we approach the remainder of the year with a positive view of our pathways, subject to the timing of our two major tasks, restarting Balama and commencing commercial sales from Vidalia. Saira's operating position remained challenged in the first quarter with Bulama impacted by ongoing protest disruption unresolved since the Mozambique national elections last year and reliance on increased support from the national and provincial governments in the remaining elements of resolution of the issue. Strong progress was made later in the quarter and subsequent to quarter end, which I will cover shortly. And we're increasingly confident that resolution is now close. At Bedalia, whilst we're making good progress towards qualification and ex-China policy settings have seen significantly increased customer demand in the coming years, the company is still incurring costs awaiting the commencement of commercial sales, which are impacted by the volatility around Chinese supplier dominance and OEM and battery manufacturer addictions of sub-cost pricing behaviours, Continued negative working capital was therefore evident to the company in the first quarter. Given the strategic critical mineral position held by SARA and our unique capital deployment and operating experience outside China, we continue to work collaboratively with funding agencies in the US ESE and DOE regarding ongoing working capital support through the external impacts on the company and the implications for the loans in place. Progress towards Bulama's operating resumption and Vidalia sales is being made, and we're focused on cash conservation whilst targeting the soonest possible positive operating cash flow. Both upstream and downstream market conditions, ex-China are developing strongly in favour of Syrah with increased demand and supportive pricing in these segments, and there is genuine interest around supply chain opportunities for collaboration to accelerate available capacity. In light of international policy and market volatility and our challenging operating and cash flow position, Syrah's focus into 2025 has simply been to drive all activity towards resumption of production and sales of natural graphite from Balama and qualification and sales efforts for anode material from Vidalia, whilst minimising our cash burn. Our development progress and production readiness beyond others in the ex-China integrated anode material and input feedstock markets continues to extend given the lack of progress in most projects. But production and sales volumes are critical for us, ensuring that we can take advantage of that head start. Turning to slide five and the overview of the quarter. There was no production at Balama due to the protracted protest actions at site, despite the reduced impact of nationwide unrest related to the Mozambique national elections as the quarter revolved. CSIRA continued to support community, labour and security efforts through the ongoing disruptions and achieved a resolution agreement with the protesting farmers, authorised by the provincial resettlement authorities, which now requires final implementation. Given the restricted ability of the Mozambican government agencies to provide unimpeded access to site during the remaining illegal opportunistic protests, SARA's declared force majeure status at Bulama remained in place, but we believe we're very close to resolution. The final available natural graphite sales of just over 1,000 tonnes were made from inventory. Almost all finds in the sales mix with the sales price of over $800 a tonne sit for this small volume. And at the end of the quarter, all available inventory had been depleted. We do, however, retain significant inventory feedstock at Bedelia. Production at Bedelia continued only for qualification purposes, with ramp-up timing awaiting certainty on commercial sales to minimise operating costs and working capital. We continue to achieve strong progress on anode material technical qualification processes with a range of customers, including quality and performance testing, process reviews, measurement processes, and customer line audit visits. Positively, our second multi-year binding offtake for anode material was announced with lucid motives, and strong commercial progress was made towards further offtakes in line with policy developments. Higher volumes and earlier demand is evident for ex-China material, given the direction of the new US administration towards supply chain independence, evidenced by a number of executive orders and policy changes. Our expectation remains that we will achieve Bedelia anode material commercial sales this year, with timing dependent on qualification progress and enhanced by changes to US and China government policy, competing tariff volumes of Chinese anode material supply to North America, and greater urgency in customer procurement strategies. A final investment decision on Vidalia's expansion to a potential 45,000 tonne production capacity is dependent on Vidalia sales from phase two and definitive outcomes in customer and financing commitments, which have ratcheted in intensity. The company had a quarter end cash balance of US $66 million, including US $44 million of restricted cash under the loan facilities, as well as $47 million in undrawn liquidity under the DSC Loan Tranche 1 for Bulama. And Steve will talk further on this in a few moments. Lastly, in summary, and as mentioned, government policy evolution continued through the quarter at pace, including progress with the US Department of Commerce and US International Trade Commission determining that the US anode material industry's development had been harmed by imports, of graphite anode material products from China at unsustainable and unfair prices, with preliminary countervailing duty determination expected by late next month. Significant tariffs were implemented which impact both artificial graphite anode material and natural graphite anode material, providing an important mechanism to support US producers such as Bedelia, consistent with the overall policy direction of the US. Further review of and definition around FEOC requirements in the U.S., both in terms of entities to be designated FEOC, which is foreign entities of concern, and under what criteria, and the application of those rules to different tax credit and subsidy arrangements. And finally, China restricting some exports of graphite products to several destinations utilizing their government license controls, causing market disruption, including in some areas in the U.S. All of these elements are of major concerns to OEMs and lithium-ion battery manufacturers in the US. I'll now move to the situation and the way forward at Bulama. As we discussed in January, just prior to the end of Q3 last year and the Mozambique national elections in October, we began to deal with a community protest action which impacted our ability to freely access the Bulama operating site and led to the demobilisation of most of our personnel. This action was initially driven by a small number of landholders related to dissatisfaction with resettlement compensation received under the joint CSIRA, Mozambique government and local community resettlement programs from 2016 onward. Notably, all of which were in line with both legislation and international practice guidelines. Through this quarter, CSIRA has worked extensively with the government resettlement teams and the farmers directly and has achieved a headline settlement agreement and a plan for implementation. Unfortunately, throughout the extended protest, the inability of the authorities to support mine access and control some illegal behaviour has seen other opportunistic individuals join the protest action. So whilst we now have farmer, community, employee, stakeholder and government support to implement the plan for restart, a small number of these protesters have continued to impede access. As we've previously talked about, SARA has experienced challenges in receiving an appropriate level of government and legal enforcement support in resolution of the issues at Bulama. This situation, however, has improved later in the March quarter and we're now more confident of near-term resolution to provide the conditions for restart. Protest action has obviously led to ongoing production disruption and consequently there was no volume produced at Bulama during the quarter. There's been no intentional damage to equipment or infrastructure at the plant site with the protesters remaining outside the operating area. More broadly, the increased acceptance of national election results through the quarter and the effective commencement of new government ministers and various appointees has seen a reduction in country-wide disruption and the return of focus to broader security, economic and social improvement, all positives for the operating and investment climate. Challenges still exist. but we expect continued improvement from here. We remain absolutely committed to resolution aligned with both the legal framework under the Balaama Mining Agreement and to utilising the processes available to us to ensure a long-term solution. We think the plan in place will achieve that and the government representatives are aligned with wanting Balaama in production and generating value. We emphasise again that historical audits and third-party independent reviews of our resettlement practices through various accreditation processes, including consultants for funding, and as part of our ERMA audits, have seen CIRA as a positive and responsible developer and operator. And that, in addition to complying with all legislative requirements, we continue to invest in valuable community developments in infrastructure, health, education, and sustainable income generation for the broader community. We're dedicated to ongoing positive community and country contribution in Mozambique, particularly in our eight local host communities. We're optimistic that resolution of the issues impacting Bulama's operation will be achieved shortly, facilitating resumption of inspections and maintenance initially in readiness for production to recommence, and all efforts are going towards ensuring this is the case. Importantly, given the very challenging supply conditions for natural graphite, both inside China and from ex-China suppliers into the industrial markets, And with the ramp up of new ex-China anode material capacity, Syrah has a positive near-term sales outlook and there's solid customer demand for restocking and ongoing sales specific to Balama. I'll now hand over to Steve to talk through the current funding position and interactions with our lenders and the important part of which provides support for us to navigate the return to Balama operations and commercial sales from the day of.

Thanks, Sean. Good morning, everybody. Turning to slide seven, this slide outlines our funding position at the end of the first quarter, which represents a combination of unrestricted cash and cash that is restricted under our loan arrangements with the Development Finance Corporation, which closed and funded in late 2024, and the Department of Energy Loan, which has been in place since 2022. Restricted cash under the loan arrangements are typical of these types of facilities, and are split into cash 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 $66 million in total cash, with $22 million of that unrestricted cash, including cash from the disbursement of the DFC loan that was then distributed from our Mozambique operating entity to support corporate expenses. The DFC loan for $150 million includes $100 million in Tranche 1, with $53 million of that drawn to date and a further $47 million still available, subject to meeting various loan requirements. In terms of unrestricted cash, there was $8 million of net cash out throws through the quarter, with $3 million relating to corporate expenses, $3 million relating to Vidalia and $2 million relating to Bulama. The unrestricted cash outflow for Vidalia relates to the payment of interest and principal, which is the subject of current discussions with the DOE, while the BALAMA-related costs relate to logistics costs not covered by the DFC loan to our Mozambique subsidiary and payable by the parent absent production and sales of the BALAMA operation. As mentioned previously, cash burn is being minimised at Vidadia pending certainty of sales timing following qualification, and at BALAMA we are below our fixed cost targets. The impacts of protest actions at BALAMA resulted in certain events of default being triggered under the DOE and DFC loans, although there have been no payment defaults. Both counterparties recognise it is a challenging period in Mozambique more broadly and undertook significant diligence on the Saira Group and extensive diligence by DFC on our Mozambique operation, including our community engagements. The DFC also funded the loan while the protests were impacting Balama and following the Mozambique election, so the situation was not new to them. The DFC provided a conditional waiver for the events of default relating to the Balama loan, and we are continuing to work closely with them. We announced during the quarter that SIRA had been successful in its application for a tax credit relating to the further expansion of Adalia to 45,000 tonnes per annum, issued under the 48C program. Accessing the tax credit requires the achievement of certain milestones over the next four years, but the key benefits from SIRA's perspective are, A, a further demonstration of the importance of the Louisiana facility to an independent supply chain in the U.S., and B, possible monetisation of the tax credit in our funding strategy for the expansion of Vidalia. We've also commenced processes on accessing significant 45X tax credits under that program relating to operating costs for the first few operating years since the completion of construction at Vidalia. I'll now pass you back to Sean.