Syrah Resources has been classified as a late stage Phase I company and rated '2' on the five point PortfolioDirect rating scale where a '5' rating is the...

Syrah Resources has been classified as a late stage Phase I company and rated '2' on the five point PortfolioDirect rating scale where a '5' rating is the lowest risk category. Syrah has a resource big enough to sustain production indefinitely. Optimising its return on capital will require constraints on mine output, not output maximisisng. With costs of production well below current market prices, Syrah (and other potential new entrants) will be tempted to grab additional share of a small market segment by dropping prices. While the milestone risks associated with Syrah Resources appear low by the standards of the industry, there is unlikely to be any event that will result in the market reassessing the capacity of the company to move forward. Permitting, funding and offtake agreements could prompt some modestly positive share price movements but, with expectations so high already, the downside market risks are also higher than normal. On balance, the probability of Syrah Resources continuing to offer higher than normal investment returns has been rated as low.