Syrah Resources Limited

Thank you for standing by and welcome to the CIRA Resources Q1 quarterly report update. 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.

Good morning and thank you for joining us on the call today. With me is our CFO, Steve Wells. The start of the year has seen extensive corporate and operational activity, and today we'll provide you with an update on that and our markets, including recent important developments in the reset of our balance sheet to position the company for long-term growth and success. Slide three of the presentation we released alongside the report today steps through the key elements of the investment thesis for Syrac. We have a clear advantage in natural graphite and active anode material markets as the integrated first mover outside China. No other company today has both an operating graphite mine and integration with a fully operational commercial scale active anode material facility and is positioned to supply into the US domestic battery manufacturing market. We strongly believe that this will deliver advantage as the market continues to bifurcate into China and ex-China demand pools, particularly considering that other new projects have long lead times and significant capital requirements in front of them. Secondly, the llama is the largest and highest grade natural graphite resource and operation outside China. Its scale and ore quality give us meaningful optionality as demand grows and as ex-China customers prioritise diversification, both for natural graphite feedstock in industrial and battery markets and for integrated active anode material production. Importantly, the equity raising and strategic funding proposals we commenced execution of last month will effectively reset our balance sheet. On a pro forma basis, as at 31 March 2026, Tyra will have up to $178 million in liquidity and no cash interest or principal repayments for three years. This provides a transformational improvement in financial flexibility and stability, setting the company up for the market development and production ramp-up pathway ahead. Lastly, we've strengthened alignment with the US government, both through the Development Finance Corporation and the Department of Energy, with both an immediate and future pathway to direct US government equity holding in Syrah. Proposed loan-to-equity transfer is a significant endorsement of the importance of Syrah's assets in securing critical mineral supply security for US energy and battery supply chain interests. Moving on to slide four now, our critical underpinning values at Zyra are safety and sustainability. As we continue to develop as a leading ex-China critical minerals producer, we are guided by three core objectives. Being positive for the communities in which we operate, being sustainable for the environment and providing secure, high quality supply for our customers. In the first quarter, performance against our key safety and sustainability metrics was very strong. The health, safety and security of employees and contractors will always remain CSIRO's highest priority. As we strive for zero harm in our operations, we saw our total reportable injury frequency rate remain very low at 0.4 incidents per million hours worked. Our safety focus is underpinned by our work on critical risk hazard management and infield leadership interactions, which are a daily priority for the leadership teams on site. For the full year of 2025, we saw continuing improvement trends in our injury frequency rates across both operations and further refinement of our asset risk profile. These trends and initiatives continued strongly through the first quarter of 2026. SARA's operations are clearly aligned to leading global sustainability in governance standards. Last year, Galama became the first graphite operation globally and the first mining operation in Mozambique to achieve the Initiative for Responsible Mining Assurance, or IRMA50, level of performance for sustainability. SARA has invested a decade towards strengthening our differentiated performance, including a strong safety record, investment in training and developing a highly skilled workforce, ongoing community interaction and development, human rights due diligence and reducing our global warming potential of integrated production to a level significantly below Chinese supply alternatives. Along with our ISO certifications and external auditing required under our US government funding arrangements, we continue to prioritise health and safety and environmental management systems, confirming our commitment operating sustainably and driving continuous improvement. This sustainability focus along with our lower global warming potential relative to other suppliers should provide CSIRO a competitive advantage on these parameters as the most sustainable source of integrated natural graphite anode material available at scale today. Moving to slide five and a more detailed look at our performance in the first quarter. The llama operated on a campaign basis during the quarter and delivered a total production of 24,000 tonnes. It's very pleasing to see that recoveries were above 86% in the quarter and there's been continual improvement over recent quarters. It's worth making a specific mention of the operational performance in the most recent production campaign through March where we produced 16,000 tonnes at 87% recovery whilst maintaining very high product quality. The team is confident that further improvement at higher throughput for greater cost efficiency is achievable. Since recommencing production after the non-operating period through most of the first half of 2025, the Bulama operational team has delivered increasingly strong performance. Given three-quarters of Bulama campaign periods now since the restart of operations and lifting of force majeure in mid-2025, Comparisons between quarterly periods demonstrate this continuous improvement and operating comparisons year-on-year will obviously be more relevant from half to onwards. Natural graphite sales in the quarter totaled 20,000 tonnes. The ex-China market for EVs, for batteries and for anode material were in a state of flux for most of the quarter with lower year-on-year EV demand growth, increasing energy storage growth and the head of the ITC decision specifically to the anode material market. This quarter included another great bulk shipment to Indonesia after the outcome of the International Trade Commission hearing, demonstrating continued demand for ex-China feedstock into the anode market. Confirmed demand drives our operating campaigns and our product inventory requirements. We're carefully monitoring the ex-China active unowned material demand position as customers adjust to a post-anti-dumping and countervailing duty case world. Our weighted average sales price for the quarter of US$630 per tonne was down 24% on the same quarter in 2025 when we sold a small volume of residual coarse flake inventory, but it was up 9% on the last quarter of 2025. largely reflecting customer and product mix. Our T1 cost during the operating periods was US$523 FOB per tonne, and freight averaged US$88 per tonne. Importantly, this provides a good basis for lower T1 costs as we target lifting capacity utilisation and increased volumes when demand is supportive. Along with indications of better than historical pricing as ex-China differentials are embedded, positive future cash flow opportunities are clearly subject to demands and threats. The llama has always had the potential to generate good margins at more than 50% capacity utilisation and a price premium is being achieved for ex-China sales compared to domestic and FOB China prices. At Vidalia, during the quarter, the operations team continued to build significant operating experience through small batch production periods and accelerating qualification interactions with multiple customers. We continue to work through customers' highly detailed and extensive qualification requirements, and we are making faster and more positive progress since the end of the anti-dumping countervailing duty case. Albeit, it's obviously slower for conversion to sales than we would have liked. We're also responding to continuing refinements that have been requested by customers with their own processes and requirements mature in newly developing battery operations and product mixes in the US. Our product's quality and performance is excellent, as the key technical performance outlined on slide 12 in the appendix of today's slides illustrates. We are absolutely confident that our product performs at the level required for customer consumption at mass production scale. We continue to deal constructively with a highly complex mix of policy, commercial and technical factors. We remain singularly focused on achieving sales as early as possible and the accelerating progress in qualification activity since the conclusion of the RTC case demonstrates both that there is domestic demand in the US for near-term sales and the policy environment is expected to remain positive for the next steps in commercial progress. Ongoing impacts arising from China's imposition of export licence controls and the potential for US tariffs and investment policies to favour domestically produced products mean that ex-China demand growth outlook remains positive. This will be important not just for Vidalia but also for continuing growth in development sales of natural graphite anode feedstock. We emphasise here the extensive work of our operating and commercial teams with our investment and development experience demonstrating the considerable time and capital required for others to follow, creating a sustainable lead time advantage for CSIRO. I'll hand over to Steve now to talk about the current financial position.

Thanks, Sean. Good morning, everybody. I'll turn your attention to slide six to cover the cash flow. We started the quarter and the financial year with $77 million In total cash across restricted and unrestricted cash balances, our net cash outflow from operations during the quarter of negative 27 million US dollars included receipts from sales of natural graphite shipments of 11 million US dollars. This was a higher cash outflow than the December 2025 quarter of negative 18 million dollars for several reasons, including receipts of a customer payment for a large volume brake bulk shipment being delayed into April for a March shipment, and certain once-off annual expenses falling due in the quarter, including corporate and Vidalia taxes and insurance and staff incentive payments. In addition, the group incurred legal costs associated with the debt restructuring and equity raise that was announced in March. We also built inventory from our Valama production campaign, leading to a working capital increase at Valama and ongoing expenses from Vidalia through this low production qualification period prior to the remedy phase also impacted by the one soft costs referenced earlier. Cash flow improvement should come as a result of the recent acceleration in the qualification process at Vidalia, which is expected to expedite ramp up in sales in the second half of 2026. At the same time, a critical focus remains on increasing sales from Bulama to facilitate improvement in cash flow in the quarters ahead and bring Bulama to operational cash flow break even as soon as possible. At the end of March, the company had a closing cash balance of US$52 million, of which there was US$9 million of unrestricted cash and US$43 million of restricted cash in both facilities under the various loans. Of the restricted cash, US$3 million is available to fund the Lima operating and capital costs, and restricted cash of US$13 million is available to fund the daily costs. Of note, the $72 million equity raising announced in late March is not captured in these figures given settlement of the transaction occurred in April. The funds from the equity raising and the expected forthcoming disbursement from the DFC loan will be applied to operating and group accounts as per the use of proceeds in the equity raising and strategic proposal presentation. We are also carefully monitoring the impacts of the Middle East conflict on near-term diesel price and availability and freight costs. And with that, I'll hand it back to Sean.

Thanks, Steve. And moving to slide seven, I'll make some additional comments about the recent funding initiatives that we announced last month. The Equity Raising and Strategic Funding Proposal Package is an important milestone for the company, providing stability and positioning SARA for long-term growth. Package strengthens our balance sheet, provides significant liquidity and delivers flexibility to grow as natural graphite and anode material markets and government policy continue to evolve. We're targeting financial close for the strategic funding proposals in the second half of this year and we look forward to keeping everyone up to date as we progress through that process with our key stakeholders. Moving to slide eight, which outlines the US government policy initiatives that are supportive of SARA's position. Firstly, we of course note the recent development in March of the US International Trade Commission's negative determination in the US active anode material anti-dumping and countervailing duty case, which led to the reversal of preliminary specific tariffs on Chinese anode imports. Whilst we were disappointed with that outcome, the Department of Commerce investigation findings of significant dumping and subsidisation by the Chinese anode material industry hold and are a powerful message that we expect will continue to influence US policy development and the potential application of other tariffs. For example, through continuing review of Section 232 actions and Section 301 tariffs, as well as other policy related to tax credits, strategic stockpiling and development support. The US government is highly incentivised to develop and support local anode material manufacturing capability for unfettered access to a critical industrial input and to protect the US market from China trade practices. There are many potential policy leavers that are supportive of CSIRA, some in place now and some potentially in the future. These include the remaining 35% tariffs on Chinese anode material imports, Section 45X production tax credits available for daily use today, estimated at $7 to $9 million per year prior to phase-down in 2030, the huge importance of ExChina's supply of anode material to enable battery manufacturers and auto OEMs to continue to qualify for 45X tax credits of their own, which currently deliver more than a billion dollars each annually to the major players, and the US Government's Defence Logistics Agency tender for natural graphite, as well as the US $12 billion Project Vault to stockpile critical minerals, including graphite products. SARA also retains a US $165 million Section 48C tax credit awarded to Vidalia for further Phase 2. These policy positions improve the economics of producing active anode material in the US, directly benefiting Australia and strengthening demand for Palama feedstock globally. Looking at the right-hand side of this slide, expected ex-China demand growth for lithium ion batteries remains attractive, and US existing demand and future growth will require a greater proportion of ex-China supply of active anode material. to ensure supply chain security and to maintain cell and auto manufacturer eligibility for the tax credits mentioned earlier. Finally, on slide 9, we provide some additional details about the outlook for our operations and business overall. We're well positioned to increase production levels subject to market demand as the ex-China market grows. Over the medium term, ramp-up of Salama to targeted levels is dependent on both policy developments which are expected to enhance support for ex-China producers and overall market growth in both industrial and battery segments. These will obviously be the key factors in the timing of positive cash flow from Palana. At the day there, we're ready to ramp up immediately and we expect the commencement of commercial Aquedano material sales in the second half of 2026. our expectations for positive operating cash flow from the operation from year 2027. And finally, as outlined earlier, our pro-forma liquidity after the equity raising strategic funding proposals is approximately $178 million, providing significant financial flexibility to ramp up our operations towards targeted levels and to continue to develop this And as we move towards increased sales from both assets, we continue to discuss, particularly with US customers, the required conditions for further capacity expansion at Bedelia. With that, we're happy to move to questions, and thank you, John, for joining the call today.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Austin Yun from Macquarie. Please go ahead.

Morning, Sean, the team. Just a couple of questions for me, please. The first one is just on the broader market, given the short-term prices going up, if you could share some colour on the synthetic side, do you see any increase in price from that end? The second question is around the operational metrics. Like in the last quarter, you indicated that the graphite production could be just over 30,000 times. I can see it came below that. Just trying to understand the draw behind it. Thank you.

So with regards to the broader market, yeah, artificial synthetic graphite has a couple of factors impacting price, seeing some The first is increased demand, specifically around data centre and energy storage specific usage and growth outlook in that market segment. And the second is some price pressure or some cost pressure. from arising from the Middle East conflict and availability of input materials and price of input materials. So that is largely only impacting the artificial graphite space at this stage. We haven't seen much flow through to the natural graphite market, but clearly if both of those factors continue, there will be further flow through to the broader active and earth material market. With regards to the operational side, as we've always said, the production volumes largely reflect the immediate demand and inventory requirements and that's the primary reason the actual production performance of Bulama was outstanding from a recovery and quality perspective. It was just the timing of the campaigns related to demand, and that demand was obviously impacted through the quarter around the uncertainty in advance of the RTC hearings or the RTC case outcome. But, you know, positively, we saw a large volume brake-bolt shipment to Indonesia post that hearing outcome and we have a view that there is still positive demand ahead to the ex-China markets based on diversification of supply and also further policy measures. So hopefully that answers both questions.

Thank you. We'll pass on.

Thank you. Once again, to ask a question, please press star 1 on your phone. The next question comes from Andrew Harrington from Petra Capital. Please go ahead.

Morning, Vince. Thanks for your time. I have a few questions. Simple one, if the revenue from that last delivery had come in for the March quarter, what would have been the total for the quarter just to perhaps normalise that period?

Yeah, it's probably about $5 million that shifted from Q1 to Q2.

Okay, thank you. What's the situation with Tesla? Is there any updates there?

Yeah, as we said in the call and in the presentation, we continue to work through the qualification processes. We've seen an acceleration in the interaction around from a number of clusters, particularly close to the anti-dumping case outcome. I think the whole of the US market and the ex-China market was looking for a degree of certainty and whilst that case didn't go our way, the certainty that's provided now seems to have encouraged you know, a number of customers to move ahead more quickly. And, you know, as we said in the call, we are positive about the potential of sales of active anode material at commercial levels in the second half of this year.

Is there still a date in the calendar we should look for in terms of the use to provide sort of the sort of extensions, et cetera? What is the status there?

There is an outstanding date around the cure plan for the determination letter that still sits out there with Cessna, which is the 1st of June.

Okay, thank you. And if I may, one more. What's the sort of view in terms of ramping up and you're producing essentially to demand and on campaigns that you ideally want to produce at a rate, you know, much higher than you are now, obviously, but could you produce continuously at a smaller rate of 100 a year or what's your view when you get there and whether that would even work?

We're operating at an annualised rate of 100 to 120 across the past few quarters. The key determinant of the ramp up from here on is the growth in both the industrial and battery segments. The key driver this year of demand in the battery segment will be VCR's Indonesia facility and the demand there. We have a strong view that US and other ex-China customers are still absolutely motivated to see ex-China purchase and ex-China sourcing. There are still real challenges out there with export licence controls of material out of China, eligibility for tax credits etc which incentivise US buyers in particular. of anode material to purchase X China. So we think that BTR Indonesia will still have a solid demand profile and potentially growing demand profile through the course of this year. So that's the major driver this year. We're also doing a lot of work around increasing our position in the industrial markets both for fines and coarse plate graphite. We're not in a position to give guidance around what that ramp-up profile looks like, and we're really just starting to see now, post the anti-dumping outcome, some of the purchasing intent ex-China from the consumers of the material in the US. So it'll probably take another quarter or two to flow through. But as I said, both from Vidalia, from the perspective of acceleration around qualification and from the extra on the sale of material from Valama post the case outcome, we have a positive view of where demand will go.

Thank you. I'll pass it on. Thank you.

Thank you. Once again, to ask a question, please press star 1 on your phone. We'll pause for a moment to allow any last questions to join the queue. The next question is a follow-up from Andrew Harrington from Petro Capital. Please go ahead.

Sorry, Sean, I wanted to pass it on. In terms of BTR Indonesia, how does the US view them in terms of ex-China or not ex-China? How does it fit?

I think it's still evolving to some extent. From the perspective of the anti-dumping and countervailing duties case and investigation, that was specifically related to exports of material from China. We saw that a very significant proportion of natural graphite exports or imports into the US shifted from China to Indonesia. through the period of that investigation which coincided with Indonesia's ramp up. So it's certainly, that facility was not captured under the scope of that anti-dumping and countervailing duties investigation. In other areas, BCR is seen as a designated prohibited foreign entity with regard to eligibility to some tax credits. And from that perspective, the Indonesian facility under its current ownership structure is deemed a Chinese-owned facility related to those tax credits. So the answer is complex, depending on which policy element we're talking about. And it's also evolving because there is still guidance to be issued by US authorities around ex-China facilities.

Right. Okay. Thank you.

All right. Thank you.

Thank you. At this time, we're showing no further questions. That does conclude our conference for today. Thank you for participating. You may now disconnect.