At time of writing, the share price of Syrah Resources Limited [ASX:SYR] is down 1.94%, trading at $1.01.
The Syrah Resources share price has been battered over the last 12 months, down more than 60% in this period:
As the most shorted stock on the ASX, there appear to be some large bets on a further decline. We take a look at Syrah Resources quarterly report and assess whether or not it is a bargain at this price.
Syrah Resources share price falls at commencement of trading, quarterly report highlights
Following the morning release of its quarterly report, the Syrah Resources share price opened lower.
The major takeaway from the release is an 8% lower graphite output due to ‘minor equipment issues’.
The company produced 44kt of graphite in Q2 versus 48kt in Q1.
Among other highlights (or lowlights) from the report were:
- Higher operating cash costs of US$567 a tonne missing their target of approximately US$400 a tonne by the end of this year
- Weighted average price of US$457 a tonne, down from US$469 in Q1
- US$64.7 million in cash at end of Q2, excluding Retail Entitlement Offer proceeds of $US21.2 million
- Targeting production of between 205 and 245kt this year
Is Syrah Resources a bargain?
With a significant chunk of cash on hand (around a quarter of its market cap) and Roskill forecasting a period of rapid growth in the graphite market due to the EV market, Syrah Resources may appeal to investors looking for a bargain.
The company is also expecting a small cash outflow of US$1 million in Q3, so it is not in immediate danger of a collapse and can likely afford to wait for improvements in graphite prices.
But due to the steady downwards trend over the course of the year, it may be unwise to try to defy the chart.
Summing it up then, Syrah may look cheap on paper but now might not be the most opportune moment to take the plunge.
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Graphene is also worth looking into, as the super-material is made from graphite. Find out what companies are advancing this potentially revolutionary product.
For Money Morning