Syrah Resources Ltd [ASX:SYR] shares are seeing their third consecutive day of significant price growth. Since Monday’s closing price of $1.01, Syrah Resources shares have climbed by over 38%.
At time of writing, they are sitting at $1.39 apiece, up 17.23% from yesterday.
This massive surge is likely a result of today’s release of their Q1 2019 preliminary update on its Balama operations, which showed the company had outperformed its guidance for the operation.
Highlights from today’s update
The Balama Graphite Operation is the largest natural graphite producer in the world, supplying graphite to both industrial and emerging technology markets.
The update showed that Balama produced 48 kilo tonnes of natural flake graphite, which is three kilo tonnes over their 45 kilo tonne guidance.
As of 31 March, Syrah had US$62 million in cash, a figure which rests above their guidance of US$55–57 million. While $5 million worth of Q1 payments have been postponed to Q2, accounting for this would still put the cash figure at the top end of their guidance.
The month of March also saw record-making production of around 19 kilo tonnes, due to ‘higher recovery, plant availability and utilisation’.
The weighted average graphite price of $469 per tonne was also achieved, which resulted in their sales volume sitting at the upper end of the guidance.
What this means for Syrah Resources
The fact the Syrah managed to outperform their Q1 guidance is commendable, and does reflect the potential of the company.
However, the $469 per tonne graphite price still sits significantly lower than previous guidance figures of up to $600 per tonne.
Also, FY18 saw a reported loss of $29 million for the company, due to doubled costs from 2017.
Their one-year return is currently down 55.29%, so they certainly have some more growing to do.
That being said, with graphite being a highly sought-out material in the tech sector in the race to build better batteries and faster computers, there is ample opportunity for further growth.
The 2019 Q1 Quarterly Activities and Cash Flows reports are set to be released on 29 April. These will provide a clearer picture as to how Syrah Resources is performing.
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