Vidalia costs rise

PERTH (miningweekly.com) – Graphite miner Syrah Resources is on track to start production at its expanded Vidalia active anode material (AAM) facility, in Louisiana, by the December quarter, subject to the completion of construction, final testing, and successful commissioning.

The company’s board approved the initial expansion of the production facility to 11 250 t/y AAM in February last year, with the project’s capital cost estimated at $176-million.

Syrah on Tuesday told shareholders that with construction of the initial expansion project now nearing full completion, the total capital cost estimate has been revised to $198-million.

The company also updated the operating budget as part of operational readiness, and the steady-state operating cost estimate for the expanded facility has been revised to $364/kg AAM, representing a 17% increase to the operating cost estimate at the final investment decision.

Capital cost escalation is associated with unanticipated labour-intensive construction costs to maintain the project schedule and for mechanical corrections. At quarter end, installed capital costs, excluding Syrah owner’s team costs, operational readiness costs and Department of Energy loan related costs, of $161-million had been spent on the Vidalia initial expansion project.

Syrah in April completed the definitive feasibility study to expand Vidalia to 45 000 t/y, inclusive of the 11 250 t/y production capacity currently being built. The study estimated that the further expansion of Vidalia would require a capital investment of $539-million, including a $38-million contingency.

Syrah told shareholders on Tuesday that the company is progressing transition engineering and optimisation activities, permitting and other long lead procurement activities ahead  of a final investment decision proposal on the Vidalia further expansion projectto be considered by the Syrah board. 

The company is progressing operational and customer commitment activities to underpin readiness for a final investment decisioon as quickly as possible. However, Syrah now expects to finalise a final investment decision during the first half of 2024 given the need to further progress funding options appropriate to the company’s overall financial position and equity market conditions.

Detailed engineering, long-lead items and other procurement, and construction activities will follow a Syrah board approved final investment decision sequentially.

Meanwhile, Syrah on Tuesday also reported that graphite production in the three months to September reached 18 t at its Balama project, in Mozambique, up from the 15 t produced in the June quarter.

A production campaign was run over 32 days up to quarter end. The campaign continued into October 2023 to increase finished product inventory positions given improved market conditions. Balama operations were otherwise paused earlier in the quarter, awaiting improved market demand for Balama natural graphite products. By quarter end, Syrah had implemented all measures identified for the revised Balama operating mode outlined in the June 2023 quarterly activities report.

Balama C1 costs for the production campaign in September 2023 were around $484/t, and were higher than guidance due to diesel price escalation since March 2022, lower than targeted production of around $33/t and lower than targeted recovery.

C1 fixed costs for the shut-down period were around $4-million a month, on average, with further variable mining and product logistics costs of around $1-million a month in preparation for the production campaign and for ongoing product sales.