News Column

Syrah reported to be the subject of takeover bid

July 11, 2014

SYDNEY: Shares in Australia-listed Syrah Resources surged as much as 30 percent yesterday on speculation that the graphite and vanadium prospector could be in Glencore Plc's sights as a takeover target.

The Australian Financial Review, in an online report, said Glencore was understood to have made an "informal approach" that could value Syrah at up to A$2 billion (R20.26bn). Syrah holds rights over the Balama graphite and vanadium deposit in northern Mozambique and has seen a meteoric rise in its shares over the past two and a half years.

Citing unidentified sources, the report said Glencore, one of the world's largest producers of primary vanadium, is keen to exert control over the wider vanadium market.

Glencore declined to comment.

Syrah said only that from time to time it received informal, confidential and non-binding inquiries from various parties regarding Syrah's interest in entering takeover discussions. |None of these inquiries had involved formal talks.

Syrah says Balama had an inferred vanadium resource of 1.15 billion tons - enough to meet global demand for 50 years. It is about four times larger than Glencore's Rhovan deposit in South Africa.

In December last year the Mozambican government granted Syrah Resources a 25-year mining licence for graphite and vanadium at Balama.

China dominates production of graphite but is under pressure to reserve more of its output for internal use as demand from the battery |sector grows owing to the surge in demand for electric cars. Graphite is a key material in lithium-ion batteries needed to power such vehicles.

Analysis by Shaw Stockbroking forecasts development of vanadium reserves at the mine would add |$50-$60 million (R536.8-R644.1m) to the capital cost of the overall |project but would produce about 4 000 tons of saleable vanadium worth $120m (R1.29bn) at today's vanadium price of $30 (R322.06) per kilogram.

Vanadium is primarily used in steelmaking as a rust retardant and hardener. - Reuters

Cape Argus

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Source: Cape Argus (South Africa)

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