Mozambique Mining: Syrah Resources to raise $110m for Balama graphite project

– Graphite developer Syrah Resources is hoping to raise A$110-million through a share placement and pro-rata accelerated nonrenounceable entitlement offer to fund the development of its Balama project, in Mozambique, and to provide working capital.

The company said on Tuesday that some 7.4-million new shares would be offered to eligible institutional investors at A$3.38 each, to raise an initial A$25-million.

The entitlement offer will be conducted on the basis of one new share for every 10.5 shares held, and will also be priced at A$3.38 a share, to raise a further A$85-million.

The offer price represented a 10.2% discount to the theoretical ex-rights price and an 11.1% discount to Syrah’s last closing price on September 18.

The Balama operation is expected to produce an average of 365 000 t/y of graphite concentrate during its first ten years of production, to deliver free cash flow of $160-million a year.

Syrah reported that it had extensively reviewed potential financing options to see it through to the ramp-up of the Balama project, and for an acceleration of the battery anode material strategy.

“During this review, it has become clear that debt funding is an expensive option at this time. In addition, given restrictions on the use of funds and other encumbrances proposed by debt financiers, debt funding would limit Syrah’s flexibility to accelerate its value-adding strategic options,” the company said, adding that an equity raising was in the best interest of both the company and its shareholders.(source: miningweekly.com)